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Exhibit 4.5
WARRANT AGREEMENT
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This Warrant Agreement (the "Warrant") shall be effective as of the
_____ day of June, 2001, by and between MAZEL STORES, INC. ("Stores") an Ohio
corporation, WHOSE MAILING ADDRESS IS ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, and
THE PROVIDENT BANK ("Agent"), an Ohio banking corporation, whose mailing address
is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, LASALLE BANK NATIONAL
ASSOCIATION ("LaSalle"), a national banking association whose mailing address is
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and NATIONAL CITY BANK
("NCB," and together with Agent and LaSalle, collectively "Lenders"), a national
banking association whose mailing address is National City Center, ▇.▇. ▇▇▇
▇▇▇▇, ▇▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
W I T N E S S E T H:
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WHEREAS, Stores and Odd-Job Acquisition Corp., a Delaware corporation,
and HIA Trading Associates, a New York General Partnership (collectively,
"Borrower") and Lenders are parties to that certain Asset Based Loan and
Security Agreement dated as of March 10, 1998, as amended by that certain First
Amendment to Asset Based Loan and Security Agreement dated as of July 31, 1999,
that certain Second Amendment to Asset Based Loan and Security Agreement dated
as of May 15, 2000 and that certain Third Amendment to Asset Based Loan and
Security Agreement of even date herewith (collectively, the "Agreement");
WHEREAS, the Agreement, as amended, requires execution and delivery of
this Warrant as a condition to Lenders' Obligations thereunder;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, the parties agree as follows:
1. GRANT OF WARRANT.
1.1 GRANT. Stores hereby grants to Lenders this Warrant, which is
exercisable in whole or in part and otherwise as provided herein, to purchase an
aggregate of up to _________________ Common Shares, no par value, of Stores (as
they may be hereinafter adjusted, the "Warrant Shares"), at an exercise price of
One Cent ($.01) per share (as such exercise price may be hereinafter adjusted,
the "Exercise Price") and representing ten percent (10%) of the issued and
outstanding shares of Stores.
1.2 SHARES TO BE ISSUED; RESERVATION OF SHARES. Stores covenants and
agrees that all Warrant Shares will, upon issuance, be duly authorized, validly
issued and outstanding, fully paid and non-assessable, and free from all taxes,
excluding income or franchise taxes, liens and charges with respect to the
issuance thereof. Stores further covenants and agrees that so long as this
Warrant remains outstanding, during the Exercise Period (as hereinafter
defined), Stores will at all times have authorized and reserved sufficient
Common Shares to provide for the exercise of this Warrant in full.
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1.3 CANCELLATION. Lenders acknowledge and agree that in the event that
on or before September 1, 2001: (a) Borrower has repaid in full all of the
Obligations (as defined in the Agreement), this Warrant shall be cancelled and
be of no further force and effect; (b) Borrower has consummated an investment
transaction with a source of subordinated capital in an amount not less than
$10,000,000, upon terms and conditions acceptable to Lenders, including
acceptable standstill and blockage rights, this Warrant shall will be cancelled
and be of no further force and effect; or (c) Borrower has consummated an
investment transaction with a source of subordinated capital in an amount less
than Ten Million Dollars ($10,000,000), upon terms and conditions acceptable to
Lenders, this Warrant shall be cancelled and be of no further force and effect,
but only to the extent of ten percent (10%) of the Warrant Shares for each
$1,000,000 of subordinated capital raised and funded to Borrower by such date.
2. EXERCISE.
2.1 EXERCISE OF WARRANT. This Warrant becomes exercisable on September
2, 2001, and must be exercised on or before September 2, 2011 (the "Exercise
Period"), provided, however, that Lenders may not exercise this Warrant unless
permitted to do so by applicable law. A permitted direct or indirect assignee or
assignees of Lenders (each a "Holder") may exercise this Warrant by (a)
surrendering this Warrant, with the form of exercise notice attached hereto as
EXHIBIT A duly executed by any such Holder and with the form of assignment
attached hereto as EXHIBIT B duly executed by Lenders or other registered
holder, and (b) making payment to Stores of the aggregate Exercise Price for the
applicable Warrant Shares in cash, by certified check or bank check or by wire
transfer to an account designated by Stores. Upon any partial exercise of this
Warrant, Stores shall forthwith cancel the surrendered Warrant and issue a
replacement warrant identical in all respect to the surrendered Warrant, except
that the number of Warrant Shares shall be reduced accordingly.
2.2 ISSUANCE OF WARRANT SHARES. Any Warrant Shares purchased hereunder
shall be and are deemed to be issued to such Holder as the record owner of such
shares as of the close of business on the date upon which the Warrant exercise
notice was duly delivered and payment of the Exercise Price was tendered to
Stores pursuant to Section 2.1 hereof. A certificate or certificates for the
Warrant Shares so purchased shall be delivered by Stores to such Holder promptly
upon exercise.
3. ADJUSTMENT TO WARRANT SHARES.
3.1 ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any
change in the common shares, no par value, of Stores (the "Common Shares") by
reason of any subdivision or combination of shares or any stock dividend, stock
split, recapitalization or reclassification, the type and number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to the record
date for such dividend or distribution, or the effective date of such
recapitalization or reclassification, shall be adjusted to that type and number
of Warrant Shares which Lenders and/or Holders would have been entitled to
receive as a result of the dividend, distribution, recapitalization or
reclassification had the Warrant been exercised immediately prior to that date.
In addition, the Exercise Price shall be adjusted to the extent necessary to
entitle the Lenders and/or Holders to receive the Warrant Shares, as so
adjusted, upon the payment of the same amount of money as would
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have entitled such Lenders and/or Holders to receive the Warrant Shares
immediately prior to such record or effective date.
3.2 EXCHANGE, SUBSTITUTION OR OTHER CHANGE. In the event of any change
in the Common Shares by reason of any exchange, substitution or otherwise (other
than a subdivision or combination of shares, or stock dividend, stock split,
recapitalization or reclassification, or a reorganization, merger, consolidation
or sale of assets, provided for elsewhere in this Article 3), the type and
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to the effective date of such exchange, substitution or other change,
shall be adjusted to that type and number of Warrant Shares which the Lenders
and/or Holders would have owned and been entitled to receive as a result of the
exchange, substitution or other change had this Warrant been exercised
immediately prior to such exchange, substitution or change. In addition, the
Exercise Price shall be adjusted to the extent necessary to entitle the Lenders
and/or Holders to receive the Warrant Shares, as so adjusted, upon the payment
of the same amount of money as would have entitled such Lenders and/or Holders
to receive the Warrant Shares immediately prior to such effective date.
3.3 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If any
of the following transactions (each a "Special Transaction") shall become
effective: (a) a capital reorganization (other than a subdivision or combination
of shares or a stock dividend, stock split, recapitalization or
reclassification, or an exchange of shares or a substitution or other change,
provided for elsewhere in this Article 3); (b) a consolidation or merger of
Stores with and into another entity (where Stores is not the surviving entity or
where there is a change in, or distribution with respect to, the Common Shares);
or (c) a sale or conveyance of all or substantially all of Stores' assets, then,
as a condition of the Special Transaction, lawful and adequate provision shall
be made so that the Lenders and/or Holders shall thereafter have the right to
purchase and receive upon exercise of this Warrant, in lieu of the Warrant
Shares immediately theretofore issuable upon exercise of this Warrant, such
shares of stock, other securities, cash or other assets (collectively, "Other
Property") as may be issued or payable in, or pursuant to, the terms of such
Special Transaction to the holders of Common Shares for which this Warrant could
have been exercised immediately prior to such Special Transaction. Stores shall
not effect any Special Transaction unless prior to, or simultaneously with, the
closing, the successor entity (if other than Stores) resulting from such
consolidation or merger, or the entity acquiring such assets, shall assume by a
written instrument executed and mailed by certified mail or delivered to the
Lenders and/or Holders at the address(es) of the Lenders and/or Holders
appearing on the books of Stores, the obligation of Stores or such successor
entity to deliver to the Lenders and/or Holders such Other Property, as in
accordance with the foregoing provisions, upon the exercise of this Warrant.
3.4 ADJUSTMENT UPON ISSUANCE OF COMMON SHARES OR COMMON SHARE
EQUIVALENTS. In the event of issuance of any Common Shares, or any options,
warrants or other rights or options to subscribe for or to purchase any Common
Shares (collectively, the "Options"), or any securities convertible into or
exchangeable for Common Shares or for any Options (together with the Options,
the "Common Share Equivalents"), other than an issuance pursuant to employee
benefit and compensation plans existing as of the date of this Warrant or an
issuance of Common Shares at Fair Market Value as defined in this Section 3.4,
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to any such issuance shall not be adjusted except to the extent
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necessary for the Lenders and/or Holders to receive, upon exercise of this
Warrant, at least seven percent (7%) of the Common Shares on a fully-diluted
basis immediately after any such issuance. In addition, in any event the
Exercise Price shall be adjusted to the extent necessary to entitle the Lenders
and/or Holders to receive the Warrant Shares, as adjusted, upon the payment of
the same amount of money as would have entitled such Lenders and/or Holders to
receive the Warrant Shares immediately prior to any such issuance. For purposes
of this Warrant, Fair Market Value on a particular date shall mean the average
of the high and low sales prices of a Common Share as reflected in the report of
consolidated trading of the principal public trading market for such shares on
such date (or if no such shares were so traded on such date, on the next
preceding date that such shares were so traded), as published in the Midwest
Edition of THE WALL STREET JOURNAL; provided, however, that if no Common Shares
have been publicly traded for more than ten (10) days immediately preceding such
date, then Fair Market Value shall be as determined in good faith by Stores'
Board of Directors.
3.5 NOTICE. Whenever the number of Warrant Shares issuable hereunder is
to be adjusted as provided herein or a dividend or distribution (in cash, stock
or otherwise and including any liquidating distributions) is to be declared by
Stores, or a definitive agreement has been entered into with respect to a
capital reorganization or reclassification of the capital stock of Stores, a
consolidation or merger of Stores with and into another entity or a sale or
conveyance of all or substantially all of Stores' assets, Stores shall forthwith
cause to be sent to Lenders and/or Holders, at least fifteen (15) days prior to
the record date specified in (a) below or at least thirty (30) days before the
date specified in (b) below, a notice stating in reasonable detail the relevant
facts and any resulting adjustments and the calculation thereof, if applicable,
and stating (if applicable):
(a) the date to be used to determine (i) which holders of Common Shares
will be entitled to receive notice of such dividend, distribution,
subdivision or combination, and (ii) the date as of which such
dividend, distribution, subdivision or combination will be made;
or, if a record is not to be taken, the date as of which the
holders of Common Shares of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined; or
(b) the date on which a capital reorganization or reclassification of
the capital stock of Stores, a consolidation or merger of Stores
with and into another entity or a sale or conveyance of all or
substantially all of Stores' assets is expected to become
effective, and the date as of which it is expected that holders of
Common Shares of record shall be entitled to exchange their Common
Shares for securities or other property deliverable upon
consummation of such transaction.
3.6 FRACTIONAL INTERESTS. Stores shall not be required to issue
fractions of Common Shares or other securities on the exercise of this Warrant.
If any fraction of a common share or other security would, except for the
provisions of this Section 3.6, be issuable upon the exercise of this Warrant,
Stores shall, upon such issuance, purchase such fraction for an amount in cash
equal to the Fair Market Value of such fraction.
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3.7 EFFECT OF ALTERNATE SECURITIES. If at any time, as a result of an
adjustment made pursuant to this Article 3, the Lenders and/or Holders shall
thereafter become entitled to receive any securities of Stores other than Common
Shares, then the number of such other securities receivable upon exercise of
this Warrant shall be subject to adjustment from time to time on terms as nearly
equivalent as practicable to the provisions with respect to Common Shares
contained in this Article 3.
3.8 SUCCESSIVE APPLICATION. The provisions of this Article 3 shall
similarly apply to successive events covered by this Article 3.
4. PUT RIGHTS. At any time from September 2, 2006 until September 2,
2011, during which time the Common Shares are:
(a) no longer held of record by at least 300 people, or
(b) neither listed on any national securities exchange nor
authorized to be quoted on an inter-dealer quotation system
of any registered national securities association,
in either case within the meaning of Rule 13e-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any similar successor
rule, the Lenders and/or any Holder of this Warrant and/or Warrant Shares may
furnish a written request for repurchase to Stores. Stores shall, not more than
five (5) days after receipt of such a request, repurchase all of the Warrant
Shares which are the subject of such request, for a purchase price equal to the
number of Warrant Shares being repurchased, multiplied by the following formula:
(EBITDA x 5.0) - funded debt plus cash. To the extent that Stores is unable to
pay the entire purchase price in cash from Excess Cash Flow, as defined below,
or is prohibited as a matter of law, Stores shall immediately execute a cognovit
promissory note for the amount of the deficiency (the "Put Note"). The principal
amounts outstanding under the Put Note shall earn interest at the Prime Rate, as
defined in the Agreement, or the maximum rate allowed by law, whichever is
lower, and the Put Note shall require that any and all Excess Cash Flow be
immediately applied, first to reduce accrued but unpaid interest and second to
reduce the unpaid principal balance outstanding under the Put Note. For purposes
of this Article 4, Excess Cash Flow shall have the same meaning as such term is
defined in the Agreement.
5. RIGHTS OF LENDERS. Prior to the issuance of the Warrant Shares
upon due exercise thereof, no Holder of this Warrant shall be entitled to any
rights of a shareholder in Stores with respect to the Warrant Shares.
6. REGISTRATION RIGHTS.
6.1 DEMAND REGISTRATIONS.
(a) At any time after August 1, 2001, the holders of a majority
of the Registrable Securities shall be entitled to request
registration (a "Demand Request") under the Securities Act of
1933, as amended (the "Securities Act") of all or
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any portion of their Registrable Securities. Registrable
Securities means any Common Share or other securities issued
or issuable under this Warrant. For purposes of this Warrant,
a Person will be deemed to be the holder of Registrable
Securities whenever such Person has the right to acquire,
directly or indirectly, such Registrable Securities (upon
conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not
such acquisition has actually been effected. As to any
particular securities constituting Registrable Securities,
such securities will cease to be Registrable Securities when
they have been (x) effectively registered under the
Securities Act and disposed of in accordance with the
registration statement covering them, or (y) sold to the
public through a broker, dealer or market maker pursuant to
Rule 144 (or any similar provision then in force) under the
Securities Act. Under this Article 6, a Person is any
individual or entity. A registration requested pursuant to
this Section 6.1(a) is referred to in this Article 6 as a
Demand Registration. The Demand Request shall specify the
approximate number and type of Registrable Securities
requested to be registered and the intended method of
distribution thereof (which may include an underwritten
registration on a firm commitment basis). Within ten days
after receipt of a Demand Request, Stores shall give written
notice of such requested registration to each other holder of
Registrable Securities and shall include in such registration
all Registrable Securities with respect to which Stores has
received written requests for inclusion therein and the
intended method of distribution thereof within 30 days after
the receipt by Stores of the Demand Request; provided,
however, that in no event will Stores be required to file the
first Demand Registration prior to September 10, 2001.
(b) The holders of the Registrable Securities as a group shall be
entitled to request two Demand Registrations. A registration
shall not count as a Demand Registration until it has become
effective under the Securities Act and any blue sky laws of
any applicable state and remains so effective until the
earlier of (i) the date all Registrable Securities included
therein have been sold pursuant thereto, or (ii) so long as
at least 75% of the Registrable Securities included therein
have been sold, the time periods for which such registration
statement is required to be maintained as effective under
Section 6.6(b) have expired, unless such registration
statement is withdrawn at the request of the holders of a
majority of the Registrable Securities included therein
(other than a withdrawal described in Section 6.1(d)).
(c) All Registrable Securities requested to be included in a
Demand Registration shall be included unless the offering is
to be underwritten and the managing underwriters advise
Stores in writing that all of the Registrable Securities
requested to be included may not be sold without adversely
affecting the marketability of the offering. In such case,
the number of such Registrable
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Securities included in the offering shall be allocated pro
rata among the holders of such Registrable Securities on the
basis of the total number of Registrable Securities requested
by each such holder to be included. If all Registrable
Securities requested to be included in the Demand
Registration are so included, Stores may include in the
Demand Registration other securities to be sold by Stores for
its own account or to be sold by other Persons, unless the
managing underwriters advise Stores in writing that in their
opinion the inclusion of such other securities will cause the
number of Registrable Securities and other securities
requested to be included in the offering to exceed the number
which may be sold without adversely affecting the
marketability of the offering.
(d) Stores shall not be obligated to effect a Demand Registration
within 120 days after the effective date of a previous
registration of securities by Stores under the Securities Act
if the holders of Registrable Securities were given piggyback
rights in such previous registration pursuant to Section 6.2
and all Registrable Securities requested to be included in
such registration pursuant to Section 6.2 were included
therein. Stores shall be entitled to postpone, for up to 90
days (or for up to 120 days if the Demand Request relating to
the registration statement is received during the last month
or the first quarter of any fiscal year) the filing of any
registration statement otherwise required to be prepared and
filed by it pursuant hereto if, at the time it receives a
Demand Request, Stores would be required to prepare for
inclusion or incorporation into the registration statement
any financial statements other than those that it customarily
prepares or would materially interfere with any financing,
refinancing, acquisition, disposition, corporate
reorganization or other material corporate transaction or
development involving Stores and Stores promptly gives the
holders of the Registrable Securities making the Demand
Request written notice of such determination; provided,
however, that if Stores shall so postpone the filing of a
registration statement, the holders of a majority of the
Registrable Securities making the Demand Request shall have
the right to withdraw the Demand Request by giving written
notice to Stores within 30 days after the receipt of notice
of postponement and, in the event of such withdrawal, the
withdrawn Demand Request shall be deemed not to have been
made and shall not count as a Demand Registration.
(e) The holders of a majority of the Registrable Securities
included in the Demand Registration shall have the right to
select the investment banker(s) and manager(s), if any, to
administer the Demand Registration, subject to the approval
of Stores, which approval shall not be unreasonably withheld,
delayed or conditioned.
(f) From and after the date hereof, Stores shall not grant to any
Person the right to request the Company to register any
Common Shares or any other debt or equity securities of
Stores, or any securities convertible or exchangeable into
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or exercisable for such securities, without the prior written
consent of the holders of a majority of the Registrable
Securities; provided, however, that Stores may without the
consent of such holders, grant rights to other Persons to (i)
participate in Piggyback Registrations so long as such rights
are subordinate to the rights of the holders of Registrable
Securities in any such registration; and (ii) request
registrations so long as the holders of Registrable Securities
are entitled to participate in any such registrations pari
passu with such Persons.
6.2 PIGGYBACK REGISTRATIONS. Whenever Stores proposes to register any
of its securities under the Securities Act (other than pursuant to a
registration on Form S-4 or S-8 or any successor or similar forms), whether or
not for sale for its own account, Stores will give prompt written notice to all
holders of Registrable Securities of its intention to effect such a registration
and will include in such registration all Registrable Securities with respect to
which Stores has received written requests for inclusion therein within 15 days
after the receipt of Stores' notice. All registrations requested pursuant to
this Section 6.2 are referred to herein as Piggyback Registrations.
6.3 PRIORITY ON PRIMARY PIGGYBACK REGISTRATIONS. If a Piggyback
Registration is an underwritten primary registration on behalf of Stores, and
the managing underwriters advise Stores in writing (with a copy to each party
hereto requesting registration of Registrable Securities) that in their opinion
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering without adversely affecting the
marketability of such offering, Stores will include in such registration (i)
first, the securities Stores proposes to sell, and (ii) second, the Registrable
Securities and any other securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities and such
other securities on the basis of the number of shares that each holder has
requested to be included in such registration.
6.4 PRIORITY ON SECONDARY PIGGYBACK REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
Stores' securities other than holders of Registrable Securities, and the
managing underwriters advise Stores in writing that in their opinion the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, Stores will include in such registration (i) first, the
Registrable Securities and any other securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities and such
other securities on the basis of the number of shares that each holder has
requested to be included in such registration, and (ii) second, any securities
Stores proposes to sell.
6.5 OTHER REGISTRATIONS. If Stores has previously filed a registration
statement with respect to Registrable Securities, and if such previous
registration has not been withdrawn or abandoned, Stores will not file or cause
to be effected any other registration of any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-4 or S-8 or any successor
forms), whether on its own behalf or at the request of any holder or holders of
such securities, until a period of at least 3 months has elapsed from the
effective date of such previous registration.
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6.6 REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Article 6, except as otherwise required by Section 6.1, Stores will use
its best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof and
pursuant thereto Stores will as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement with respect to
such Registrable Securities and thereafter use its best
efforts to cause such registration statement to become
effective (provided that before filing a registration
statement or prospectus or any amendments or supplements
thereto, Stores will furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered
by such registration statement copies of all such documents
proposed to be filed, which documents will be subject to the
review of such counsel);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for a period of either (i)
not less than six months (subject to extension pursuant to
Section 6.11(b)) or, if such registration statement relates
to an underwritten offering, such longer period as in the
opinion of counsel for the underwriters a prospectus is
required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer, or (ii)
such shorter period as will terminate when all of the
securities covered by such registration statement have been
disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in
such registration statement (but in any event not before the
expiration of any longer period required under the Securities
Act), and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by
such registration statement until such time as all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in the registration statement;
(c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such
registration statement (including each preliminary
prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of
such jurisdictions as any seller reasonably requests and do
any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate
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the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that
Stores will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject
itself to taxation in any such jurisdiction or (iii) consent
to general service of process in any such jurisdiction;
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be
delivered under the Securities Act, upon discovery that, or
upon the discovery of the happening of any event as a result
of which, the prospectus included in such registration
statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not
misleading in the light of the circumstances under which they
were made, and, at the request of any such seller, Stores
will prepare and furnish to such seller a reasonable number
of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by
Stores are then listed and, if not so listed, to be listed on
a national securities exchange or over-the-counter market
such as the NASD automated quotation system and, if listed on
the NASD automated quotation system, use its best efforts to
secure designation of all such Registrable Securities covered
by such registration statement as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1
promulgated under the Exchange Act or, failing that, to
secure NASDAQ authorization for such Registrable Securities
and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such
with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of
such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions
as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation,
effecting a stock split or a combination of Common Shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition
pursuant to such registration
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statement and any attorney, accountant or other agent
retained by any such seller or underwriter, all financial and
other records, pertinent corporate documents and properties
of Stores, and cause Stores' officers, directors, employees
and independent accountants to supply all information
reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission;
(k) permit any holder of Registrable Securities which holder, in
its sole and exclusive judgment, might be deemed to be an
underwriter or a controlling person of Stores, to participate
in the preparation of such registration or comparable
statement and to require the insertion therein of material,
furnished to Stores in writing, which in the reasonable
judgment of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any Common Shares included in
such registration statement for sale in any jurisdiction,
Stores will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(m) obtain a comfort letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing
under the underwriting agreement), signed by Stores'
independent public accountants, in customary form and
covering such matters of the type customarily covered by
comfort letters as the holders of a majority of the
Registrable Securities being sold reasonably request; and
(n) provide a legal opinion of Stores' outside counsel addressed
to each holder (in form or substance satisfactory to each
such holder and its counsel) of Registrable Securities
included in such registration, dated the effective date of
such registration statement (and, if such registration
includes an underwritten public offering, dated the date of
the closing under the underwriting agreement), with respect
to the registration statement, each amendment and supplement
thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating
thereto in customary form and covering such matters of the
type customarily covered by legal opinions of such nature.
6.7 REGISTRATION EXPENSES.
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Stores will pay all expenses incident to Stores' performance of or
compliance with this Article 6, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, listing fees, printing expenses, messenger and delivery expenses, and fees
and disbursements of counsel for Stores and all independent certified public
accountants, underwriters (excluding discounts and commissions) and all other
Persons retained by Stores (all such expenses being collectively referred to
herein as Registration Expenses). To the extent Registration Expenses are not
required to be paid by Stores, each holder of securities included in any
registration hereunder will pay those Registration Expenses allocable to the
registration of such holder's securities so included, and any Registration
Expenses not so allocable will be borne by all sellers of securities included in
such registration in proportion to the aggregate selling price of the securities
to be so registered.
6.8 INDEMNIFICATION.
(a) Stores agrees to indemnify and hold harmless, to the extent
permitted by law, each holder of Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities, joint or
several, to which such holder or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of material fact contained (A) in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or (B) in any application or other document or communication (in this
Section 6.8 collectively called an "application") executed by or on behalf of
Stores or based upon written information furnished by or on behalf of Stores or
based upon written information furnished by or on behalf of Stores filed in any
jurisdiction in order to qualify any securities covered by such registration
statement under the "blue sky" or securities laws thereof, or (ii) any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, and Stores will
reimburse such holder and each such director, officer and controlling person for
any legal or any other expenses incurred by them in connection with
investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that Stores will not be liable in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or omission made in such registration statement, any such
prospectus or preliminary prospectus or any amendment or supplement thereto, or
in any application, in reliance upon, and in conformity with, written
information prepared and furnished to Stores by such holder expressly for use
therein or by such holder's failure to deliver a copy of the prospectus or any
amendments or supplements thereto after Stores has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, Stores will indemnify such underwriters, their officers and directors
and each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will furnish to
Stores in writing such information and affidavits as Stores reasonably requests
for use in connection with any such registration statement or
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prospectus and, to the extent permitted by law, will indemnify and hold harmless
Stores, its directors and officers and each other Person who controls Stores
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities, to which such holder or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, to the extent
that such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) result from (i) any untrue
statement of material fact contained in the registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or in
any application or (ii) any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission is made in such registration
statement, any such prospectus or preliminary prospectus or any amendment or
supplement thereto, or in any application, in reliance upon and in conformity
with written information prepared and furnished to Stores by such holder
expressly for use therein; provided, however, that the obligation to indemnify
will be individual to each holder and will be limited to the net amount of
proceeds received by such holder from the sale of Registrable Securities
pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder will (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Section 6.8 will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. Stores
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Stores'
indemnification is unavailable for any reason.
6.9 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
(a) No Person may participate in any registration hereunder which
is underwritten unless such Person (i) agrees to sell such Person's securities
on the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriter(s), except that no holder of Registrable
Securities will be required to sell more than the number of Registrable
Securities that such holder has requested Stores to include in any registration)
and (ii) completes and executes all questionnaires,
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powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements; provided
that no holder of Registrable Securities included in any underwritten
registration will be required to make any representations or warranties to
Stores or the underwriters other than representations and warranties regarding
such holder and such holder's intended method of distribution.
(b) Each Person that is participating in any registration
hereunder agrees that, upon receipt of any notice from Stores of the happening
of any event of the kind described in Section 6.6(e) above, such Person will
forthwith discontinue the disposition of its Registrable Securities pursuant to
the registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 6.6(e). In
the event Stores will give any such notice, the applicable time period mentioned
in Section 6.6(b) during which a registration statement is to remain effective
will be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to this Section 6.9(b) to and
including the date when each seller of a Registrable Security covered by such
registration statement will have received the copies of the supplemented or
amended prospectus contemplated by Section 6.6(e).
6.10 CURRENT PUBLIC INFORMATION. Stores will file all reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder, and will take such further
action as any holder or holders of Registrable Securities may reasonably
request, all to the extent required to enable such holders to sell Registrable
Securities pursuant to (i) Rule 144 promulgated under the Securities Act (as
such rule may be amended from time to time) or any similar rule or regulation
hereafter adopted by the Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Commission.
Upon request, Stores shall deliver to any holder of Registrable Securities a
written statement as to whether it has complied with such requirements.
7. MISCELLANEOUS.
7.1 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be enforceable by the Lenders and/or any Holder and their respective
heirs, executors, successors and permitted assigns. Stores may not assign any of
its rights or obligations hereunder without the written consent of the Lenders
and/or Holders. In addition, and whether or not any express assignment will have
been made, the provisions of this Warrant which are for the benefit of the
holders of any Registrable Securities (or any portion thereof) as such will be
for the benefit of and enforceable by any subsequent holder of any Registrable
Securities (or of such portion thereof).
7.2 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. This Agreement,
including the validity hereof and the rights and obligations of the parties
hereunder, and all amendments and supplements hereof and all waivers and
consents hereunder, shall be construed in accordance with and governed by the
domestic substantive laws of the State of Ohio without giving effect to any
choice of law or conflicts of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction. Each of
the parties hereto, to the extent that it may lawfully do so, hereby consents to
service of process, and to be sued, in the State of Ohio and consents to the
jurisdiction of the courts of the State of Ohio and the United States District
Court for
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the Northern District of Ohio, as well as to the jurisdiction of all courts to
which an appeal may be taken from such courts, for the purpose of any suit,
action or other proceeding arising out of any of its obligations hereunder or
with respect to the transactions contemplated hereby, and expressly waives any
and all objections it may have as to venue in any such courts. Each of the
parties hereto further agrees that a summons and complaint commencing an action
or proceeding in any of such courts shall be properly served and shall confer
personal jurisdiction if served personally or by certified mail (return receipt
requested) in accordance with Section 6.4 or as otherwise provided under the
laws of the State of Ohio. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED BY
OR AGAINST IT IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
7.3 AMENDMENTS. The parties may, from time to time, enter into written
amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Warrant or changing in any manner the rights of either of the
parties hereunder. No amendment, supplement or modification shall be binding on
either party unless made in writing and signed by a duly authorized
representative of each party. Notwithstanding anything else in this Section 7.3,
the provisions of Article 6 of this Warrant may be amended or waived only upon
the prior written consent of Stores and the holders of a two-thirds (2/3rds)
majority of the Registrable Securities.
7.4 NOTICES. Any notice or other communication to be given by any party
to any other party under this Agreement shall be in writing and shall be deemed
given when personally delivered, twenty-four (24) hours after being sent by
standard form of telecommunications, or thirty-six (36) hours after being sent
by Federal Express or other overnight courier service providing delivery
confirmation, or five (5) days after mailing by certified mail, postage prepaid,
address as follows:
(a) if to Stores to:
Mazel Stores, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: President
(b) if to Lenders to care of Agent:
The Provident Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Either party may from time to time give to the other party notice by certified
mail or overnight delivery service of other addresses to which communications to
such party shall be sent, in which event, notices to such parties shall
thereafter be sent by hand delivery, telecommunications, overnight courier
service or certified mail to such other address.
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7.5 NO IMPLIED WAIVER; RIGHTS ARE CUMULATIVE. The failure to exercise
or the delay in exercising by either party of any right, remedy, power or
privilege under this Warrant, shall not operate as a waiver thereof. The single
or partial exercise of any right, remedy, power or privilege under this Warrant
shall not preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
7.6 SEVERABILITY. If any provision of this Warrant is found to be
unenforceable for any reason whatsoever, such provision shall be deemed null and
void to the extent of such unenforceability but shall be deemed separable from
and shall not invalidate any other provision of this Warrant.
7.7 NO INCONSISTENT AGREEMENTS. Stores will not hereafter enter into
any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Warrant.
7.8 REMEDIES. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Warrant and that any party hereto will have the right to injunctive relief, in
addition to all of its other rights and remedies at law or in equity, to enforce
the provisions of this Warrant.
7.9 ENTIRE AGREEMENT. This Warrant constitutes the entire understanding
of the parties with respect to the subject matter hereof and supersedes all
prior discussions, agreements and representations, whether oral or written,
concerning the subject matter hereof.
7.10 COUNTERPARTS. This Warrant may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
Warrant.
[The balance of this page is intentionally left blank.]
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EFFECTIVE as of the date first above written.
AGENT,
LETTER OF CREDIT LENDER, AND
LENDER:
THE PROVIDENT BANK
By:
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Vice President
LENDER: LENDER:
NATIONAL CITY BANK LASALLE BANK
NATIONAL ASSOCIATION
By: By:
------------------------------- --------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President Assistant Vice President
STORES:
MAZEL STORES, INC.,
a Delaware corporation
By:
---------------------------
Name:
------------------------
Its:
-------------------------
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EXHIBIT A TO WARRANT AGREEMENT
[To be signed only upon exercise of Warrant]
To: MAZEL STORES, INC.
The undersigned Holder pursuant to that certain Warrant Agreement dated
___________, 2001 by and between Mazel Stores, Inc. and the other parties
thereto, hereby irrevocably elects to exercise the purchase right represented by
such Warrant, and to purchase thereunder, __________ Common Shares, no par
value, of Mazel Stores, Inc., and herewith makes payment of $__________
therefor, and requests that certificates for such shares be issued in the name
of, and be delivered to, _____________________________________________________,
whose address is _____________________________________________________________.
Dated:_________________ _____________________________________
Name
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EXHIBIT B TO WARRANT AGREEMENT
Notice of Assignment
FOR VALUE RECEIVED, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfer unto _______________________________,
whose address is ____________________________________________, all of the rights
of the undersigned under the within Warrant, with respect to _______ Common
Shares of Mazel Stores, Inc., and if such Common Shares shall not include all
the Warrant Shares issuable as provided in the within Warrant, requests that a
new Warrant of like tenor for the number of Warrant Shares not being transferred
hereunder be issued in the name of and delivered to [choose one] (a) the
undersigned, or (b) ______________________________, whose address is
__________________________________, and does hereby irrevocably constitute and
appoint __________________________ my Attorney-in-Fact to register such transfer
on the books of Mazel Stores, Inc. maintained for the purpose, with full power
of substitution in the premises.
Date:_____________________
By:____________________________
[Registered Holder]
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