THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EXEMPTION FROM, OR OTHERWISE IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF SUCH ACT. IN ADDITION, THE SECURITIES REPRESENTED
HEREBY ARE SUBJECT TO THE LIMITATIONS ON TRANSFER SET FORTH IN THE FOURTH
AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, DATED AS OF SEPTEMBER 18, 1996,
BETWEEN THE CORPORATION AND CERTAIN HOLDERS OF THE CORPORATION'S SECURITIES. A
COPY OF THE FOURTH AMENDED AND RESTATED SHAREHOLDERS AGREEMENT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE FURNISHED
WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO THE CORPORATION.
DECRANE AIRCRAFT HOLDINGS, INC.
No. 96-ING September 18, 1996
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES that INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL
CORPORATION, a Delaware corporation, is entitled to purchase from DECRANE
AIRCRAFT HOLDINGS, INC, an Ohio corporation (the "Corporation"), for value
received, 187,500 shares of the Common Shares, without par value (the "Common
Stock") of the Corporation at the price (the "Exercise Price") of $4 per share,
at any time or from time to time during the period commencing on the Closing
Date and ending at 5:00 P.M. on the tenth anniversary of the Closing Date (the
"Expiration Date"); PROVIDED, HOWEVER, that this Warrant may not be exercised
for Common Stock by any Regulated Holder to the extent that such exercise will
result in a violation of any Applicable Law.
Reference is made to the Amended and Restated Credit Agreement (as the
same may be amended from time to time, the "Amended Restated Credit Agreement")
among the Corporation (in such capacity, the "Borrower"), the Lenders (as
defined therein), and Internationale Nederlanden (U.S.) Capital Corporation
("ING"), as agent for the Lenders. In order to induce ING to enter into the
Amended and Restated Credit Agreement and to make certain loans and provide
other financial accommodations to the Borrower thereunder, the Corporation has
agreed to issue to ING this warrant (this "Warrant") to purchase Common Stock of
the Corporation.
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Warrant, the following
terms shall have the following meanings:
"AFFILIATE" shall mean, with respect to any person, any Person that
directly or indirectly through one or more intermediaries Controls, is
Controlled by or is under common Control with such Person.
"ALLOCABLE NUMBER" shall have the meaning given to such term in
Section 4.2.
"AMENDED AND RESTATED CREDIT AGREEMENT" shall have the meaning given
to such term in the Preamble.
"APPLICABLE LAW" shall mean 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.
"ASSET SALE" shall mean (a) the sale of all or substantially all of
the assets of the Corporation or (b) a merger or consolidation of or otherwise
involving the Corporation (other than a merger or consolidation solely involving
a merger of a wholly-owned Subsidiary of the Corporation with or into another
wholly-owned Subsidiary of the Corporation).
"BORROWER" shall have the meaning given to such term in the preamble.
"BUSINESS DAY" shall mean 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 shall mean a Business Day on which such exchange is open for
trading.
"CALL" shall have the meaning given to such term in Section 5.3
hereof.
"CALL CLOSING" shall have the meaning given to such term in Section
5.3 hereof.
"CALL NOTICE" shall have the meaning given to such term in Section 5.3
hereof.
"CALL PRICE" shall mean 120% of the Put Market Value Per Share;
PROVIDED, HOWEVER, that if at the time of determination of the Call Price,
Warrant Shares shall consist in any part of securities or property other than
Common Stock, the Call Price shall include a cash amount per Warrant Share equal
to that portion of the fair value (determined in accordance with the Valuation
Procedure) of such securities or property allocable to each Warrant Share.
"CHANGE OF CONTROL" shall mean an Event of Default specified in
Section 10(k) of the Amended and Restated Credit Agreement.
"CLOSING DATE" shall mean September 18, 1996.
"COMMISSION" shall mean the Securities and Exchange Commission (or a
successor thereto).
"COMMON STOCK" shall have the meaning specified in the Preamble.
"CONTROL" shall mean, 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 a Person, whether through the ownership of voting
securities, by contract or otherwise.
"CONVERTIBLE SECURITIES" shall have the meaning given to such term in
Section 4.4.1(b).
"CORPORATION" shall have the meaning given to such term in the
Preamble.
"DELIVERY DATE" shall have the meaning given to such term in Section
4.3(a).
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"EQUIVALENT NONVOTING SECURITY", with respect to any security (a
"first security") issued or to be issued by any Person, shall mean a security
(an "equivalent security") of such Person that is identical in rights and
benefits to such first security, except that (a) the equivalent security
shall not be entitled to vote on any matter on which holders of voting
securities of such Person are entitled to vote, other than as required by
Applicable Law or with respect to any amendment or repeal of any provision of
the Organizational Documents of such Person or any other agreement or
instrument pursuant to which the equivalent security was issued which
provision specifically affects such equivalent security, (b) subject to such
reasonable restrictions as any affected Regulated Holder may request
(including, without limitation, any restriction necessary to prevent the
violation by such Regulated Holder of any provision of Applicable Law with
respect to its Ownership of voting securities), the equivalent security shall
be convertible in a one-to-one ratio into the first security and (c) the
terms of the equivalent security shall include such provisions requested by
any affected Regulated Holder as are reasonable and equitable to ensure that
(i) the equivalent security is treated comparably to the first security with
respect to dividends, distributions, stock splits, reclassifications, capital
reorganizations, mergers, consolidations and other similar events and
transactions, (ii) the conversion right provided in clause (b) above is
equitably protected and (iii) the acquisition of the equivalent security will
not cause such Regulated Holder to violate Applicable Law.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE FORM" shall mean an exchange form satisfactory to the
Corporation (in its reasonable judgment).
"EXCLUDED SECURITIES" shall mean:
(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 (A) conversion or exercise of any of
the Corporation's convertible preferred stock outstanding at the Closing Date,
or (B) exercise of the Warrants or upon exercise of any warrants issued in
connection with a refinancing of the obligations of the Borrower under the
Amended and Restated Credit Agreement;
(iii) securities issued by the Corporation in a Qualified Public
Offering;
(iv) securities issued pursuant to the direct or indirect BONA FIDE
acquisition by the Corporation of any Person, whether by merger, purchase of
stock, purchase of assets or otherwise;
(v) securities issued upon exercise of conversion or exchange
rights, options or subscription calls, warrants, commitments or claims, provided
that the foregoing are outstanding on the Closing Date or are issued hereafter
in compliance with Section 5.2 hereof, and
(i) Common Stock or options to purchase Common Stock issued to
directors, officers, employees or consultants of the Corporation or the issuance
of Common Stock upon the exercise of any such options; PROVIDED, HOWEVER, that
the aggregate amounts of all such Common Stock or Common Stock which may be
acquired upon the exercise of such options shall not exceed an aggregate of
17.05% of the Common Stock (on a Fully-Diluted Basis).
"EXECUTIVE OFFICER" shall mean, with respect to the Corporation, its
Chairman or President.
"EXERCISE FORM" shall mean an exercise form satisfactory to the
Corporation (in its reasonable judgment).
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"EXERCISE PRICE" shall mean $4 per share of Common Stock, subject to
adjustment from time to time in the manner provided in Section 4.4.
"EXPIRATION DATE" shall mean the tenth anniversary of the Closing
Date.
"FINANCIAL OFFICER" shall mean the Chief Financial Officer, Treasurer
or Assistant Treasurer of the Corporation.
"FISCAL YEAR" shall mean, with respect to the Corporation, the
one-year period ending on December 31 of any year.
"FULLY DILUTED STOCKS" means, as applied to the calculation of the
number of shares of Common Stock outstanding at any time, after giving effect to
(a) all shares of Common Stock outstanding at the time of determination, (b) all
shares of Common Stock issuable upon the exercise of any option, warrant
(including the Warrants) or similar right to purchase Common Stock outstanding
at the time of determination and then exercisable at a per share price equal to
or less than the price per share of Common Stock being determined and (c) all
shares of Common Stock issuable upon the conversion or exchange of any security
convertible into or exchangeable for shares of Common Stock outstanding at the
time of determination and then so convertible or exchangeable at a conversion or
exchange price equal to or less than the price per share of Common Stock being
determined. Such calculation will not be made in accordance with the "treasury
method."
"GAAP" shall have the meaning specified in the Amended and Restated
Credit Agreement.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"HOLDER" shall have the meaning given to such term in Section 3.1.
"ING" shall have the meaning given to such term in the Preamble.
"IPO PRICE" shall mean the price per Common Share at which the Common
Stock is offered in any Qualified Public Offering.
"LIQUIDATION EQUIVALENT" shall mean the per share cash amount,
determined in accordance with the Valuation Procedure, which would be paid to
holders of Common Stock outstanding (on a Fully-Diluted Basis) on the date of
determination assuming (a) the actual receipt by the Corporation of the
Corporation, as applicable, of the full amount of the consideration proposed to
be paid or exchanged for the capital stock or assets of the Corporation in the
relevant transaction (net of reasonable expenses incurred in connection with
such transaction which are payable to Persons who or which are not Affiliates of
Major Stockholder) and (b) the liquidation of the Corporation and all of its
Subsidiaries immediately thereafter. For the purposes of determining the
Liquidation Value, (i) the exercise price of options or warrants to acquire
Common Stock which are deemed to have been exercised for the purpose of
determining the number of shares of Common Stock outstanding on a Fully-Diluted
Basis, shall be deemed to have been received by the Corporation and (ii) the
liquidation preference or indebtedness, as the case may be, represented by
securities which are deemed exercised for or converted into Common Stock for the
purpose of determining the number of shares of Common Stock outstanding on a
Fully Diluted Basis, shall be deemed to have been eliminated or cancelled. If
any transaction requiring the determination and payment of the Liquidation
Equivalent shall involve a purchase price adjustment based on the closing
balance sheet of the Corporation or any of its Subsidiaries as of the closing
date of such transaction, which results in a reduction in the purchase price,
each Holder shall be obligated to remit to the purchaser such Holder's PRO RATA
share of such amount, unless the amount of such adjustment has not been finally
determined
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within 180 days following the closing of such transaction, in which case each
Holder shall be obligated to remit to such purchaser such Holder's PRO RATA
share of the amount of such adjustment (as finally determined). Each Holder
shall be entitled to receive its full PRO RATA share of any adjustment in favor
of the sellers in a transaction involving a purchase price adjustment when and
as paid to all such Holders.
"MARKET PRICE" shall mean, with respect to a share of Common Stock on
any Business Day, the Market Value Per Share.
"MARKET VALUE" shall mean the highest of (i) the net book value as
determined by reference to the Corporation's financial statements for the most
recently ended fiscal quarter, or (ii) or an amount equal to (y) the product of
(A) 5.67 and (B) the Corporation's EBITDA (as defined in the Amended and
Restated Credit Agreement) LESS Capital Expenditures (as defined in the Amended
and Restated Credit Agreement) permitted under the Amended and Restated Credit
Agreements and the Securities Purchase Agreement, in each event for the
twelve-month period preceding the most recently ended fiscal quarter, LESS (x)
amounts outstanding under the Amended and Restated Credit Agreement and the
Securities Purchase Agreement, or (iii) the price that would be paid for the
entire common equity interest in the Corporation 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 techniques then prevailing in
the securities industry and always determined in accordance with the Valuation
Procedures, and assuming full disclosure and understanding 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 or
warrants to acquire Common Stock which are deemed to have been exercised for the
purpose of determining the number of shares of Common Stock outstanding on a
fully Diluted Basis, shall be deemed to have been received by the Corporation,
(ii) the liquidation preference or indebtedness, as the case may be, represented
by securities which are deemed exercised for or converted into Common Stock for
the purpose of determining the number of shares of Common Stock outstanding on a
Fully Diluted Basis, (iii) any contract limitation in respect of the shares of
Common Stock, including their transfer, voting and other rights and (iv) any
liquidity arising by contract law in respect of the shares of Common Stock and
any voting rights or control rights amongst the Stockholders, shall be deemed to
have been eliminated or cancelled.
"MARKET VALUE PER SHARE" shall mean 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.
"OPTIONS" shall have the meaning given to such term in Section
4.4.1(b) hereof.
"ORGANIZATIONAL DOCUMENTS" shall mean, 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 ANTI-DILUTION INSTRUMENTS" shall mean any option, warrant,
convertible security or other rights to acquire Common Stock, whether
outstanding as of the Closing Date or hereafter issued, together with any
agreements relating thereto, which provide for anti-dilution or other
adjustments in the number of shares of Common Stock and/or exercise or
conversion price, EXCEPT for anti-dilution or other adjustment rights
provided under the Senior Subordinate Documents.
"OWN" shall mean, with respect to any security, to own, hold or
Control. Owns and Ownership shall have correlative meanings.
"PARTICIPATION NOTICE" shall have the meaning given to such term in
Section 5.2(b) hereof.
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"PARTICIPATION PERIOD" shall have the meaning given to such term in
Section 5.2(b) hereof.
"PERSON" shall mean and include any natural person, company,
partnership, joint venture, corporation, business trust or unincorporated
organization.
"PROPERTY" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"PROPORTIONATE PERCENTAGE" shall mean, 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).
"PUT" shall have the meaning given to such term in Section 5.2 hereof.
"PUT CLOSING" shall have the meaning given to such term in Section 5.3
hereof.
"PUT EVENT" shall mean any of the following:
(a) a Change of Control;
(b) as Asset Sale;
(c) the repayment in full of all borrowings under the Amended
and Restated Credit Agreement and the termination of all
borrowing commitments other than in connection with any
transaction otherwise constituting a Put Event or any
transaction constituting a Call Event or the acceleration of
all borrowings under the Amended and Restated Credit
Agreement; or
(d) the filing of a registration statement under the Securities
Act which relates to a Qualified Public Offering.
"PUT EVENT NOTICE" shall have the meaning given to such term in
Section 5.3 (a) hereof.
"PUT MARKET PRICE" shall mean, with respect to a share of Common Stock
on any Business Day, the Put Market Value Per Share.
"PUT MARKET VALUE" shall mean the highest of the following:
(i) the price that would be paid for the entire common equity
interest in the Corporation 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 techniques then
prevailing in the securities industry and always determined in
accordance with the Valuation Procedures, and assuming full disclosure
and understanding of all relevant information and a reasonable period
of time for effectuating such sale,
(ii) the net book value of the Corporation determined by
reference to the Corporation's financial statements as of the most
recently ended fiscal quarter, or
(iii) an amount equal to (A) six times earnings before interest,
income taxes, depreciation and amortization (determined in accordance
with GAAP) as of the 12 month period immediately preceding the most
recently ended fiscal quarter MINUS (B) amounts outstanding under the
Amended and Restated Credit Agreement and the Securities Purchase
Agreement MINUS (C) any other indebtedness (as defined
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in accordance with GAAP, but excluding obligations of the Corporation
in respect of (w) this Warrant (x) the warrants issued in connection
with the Original Credit Agreement (as that term is defined in the
Amended and Restated Credit Agreement), (y) the warrants issued under
the Senior Subordinate Agreement, ( ) the warrants issued under the
Securities Purchase Agreement and the 1996 (September) Securities
Purchase Agreement (as that term is defined in the Amended and
Restated Credit Agreement) PLUS (D) cash and cash equivalents of the
Corporation.
For the purposes of determining the Put Market Value, (i) the exercise price of
options or warrants to acquire Common Stock which are deemed to have been
exercised for the purpose of determining the number of shares of Common Stock
outstanding on a Fully-Diluted Basis, shall be deemed to have been received by
the Corporation, (ii) the liquidation preference or indebtedness, as the case
may be, represented by securities which are deemed exercised for or converted
into Common Stock for the purpose of determining the number of shares of Common
Stock outstanding on a Fully Diluted Basis, (iii) any contract limitation in
respect of the shares of Common Stock, including their transfer, voting and
other rights and (iv) any illiquidity arising by contract law in respect of the
shares of Common Stock and any voting rights or control rights amongst the
Stockholders, shall be deemed to have been eliminated or cancelled.
"PUT MARKET VALUE PER SHARE" shall mean the price per share of Common
Stock obtained by dividing (A) the Put Market Value by (B) the number of shares
of Common Stock outstanding (on a Fully-Diluted Basis) at the time of
determination.
"PUT NOTICE" shall have the meaning given to such term in Section
5.3(b) hereof.
"PUT PRICE" shall mean the Put Market Value Per Share; PROVIDED,
HOWEVER, that, if at the time of determination of the Put Price, Warrant Shares
shall consist in any part of securities or property other than Common Stock, the
Put Price shall include a cash amount per Warrant Share equal to that portion of
the fair value (determined in accordance with the Valuation Procedure) of such
securities or property allocable to each Warrant Share.
"QUALIFIED PUBLIC OFFERING" shall mean an underwritten public offering
of the Common Stock registered under the Securities Act, (a) which offering
results in net proceeds to the Corporation of at least $25,000,000, and (b)
after which the shares of Common Stock are Publicly Traded and shares of Common
Stock held by persons other than Affiliates of the Corporation have a Market
Price of at least $55,000,000.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Fourth Amended and
Restated Registration Rights Agreement, dated as of September 18, 1996 among the
Corporation and certain other parties thereto (as amended from time to time).
"REGULATED HOLDER" shall mean any Holder subject to any provisions of
Applicable Law (including without limitation the Bank Holding Company Act of
1956, as amended, (12 U.S.C. Section 1841 ET SEQ.) and the regulations
promulgated thereunder) limiting the quantity of kind or securities (or any
class thereof) of the Corporation which such Holder is permitted to Own.
"SALE NOTICE" shall have the meaning given to such term in Section
3.3(d) hereof.
"SECTION 7.4 TRANSACTION" shall have the meaning given to such term in
Section 7.4.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES PURCHASE AGREEMENT" shall mean that certain Securities
Purchase Agreement, dated as of November 2, 1994, among the Corporation, Electra
Investment Trust P.L.C. and Electra Associates, Inc., as
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[illegible] from time to time, and the Warrants to Purchase Common Stock of the
Corporation, dated the date [illegible] to Electra Investment Trust PLC or
its registered assigns and to Electra Associates, Inc. or its registered
assigns.
"SELLER NOTES" shall mean promissory notes issued by a transferee
(or an Affiliate thereof) as [illegible] in connection with any transfer of
stock and/or other assets.
"SENIOR SUBORDINATE AGREEMENT" shall mean that certain Fifth
Amendment to the Senior Subordinate [illegible] and Warrant Purchase
Agreement, dated as of November 2, 1994, between the Corporation, Banc One
[illegible] Partners Corporation and others party thereto
"SENIOR SUBORDINATE DOCUMENTS" shall mean the Senior Subordinate
Agreement and that certain Warrant Purchase Common Stock of DeCrane Aircraft
Holdings, Inc., dated the date hereof, issued to Banc One [illegible] Partners
Corporation or its registered assigns.
"SHAREHOLDERS AGREEMENT" shall mean that certain Fourth Amended and
Restated Shareholders Agreement, dated as of September 18, 1996, between the
Corporation and certain holders of the Corporation's Securities.
"SUBSIDIARY" shall mean, at any time, any 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 directly or
indirectly through one or more Subsidiaries, by the Corporation.
"TRANSFER" shall mean any sale, transfer, assignment, or other
disposition of any interest in, with or without consideration, any security
(other than a pledge or hypothecation).
"TRI-STAR TECHNOLOGIES" shall mean Tri-Star Technologies, a general
partnership organized under the bylaws of the State of California.
"UNIDEC" shall mean Tri-Star Electronics Europe S.A., Mezzovico
(formerly known as, Unidec, S.A. Mezzovico), a corporation organized under the
laws of Switzerland.
"VALUATION PROCEDURE" shall mean, with respect to the determination
of any amount or value required to be determined in accordance with such
procedure, a determination (which shall be final and binding on the
Corporation and the Holder) made (i) by agreement among the Corporation and
the Holder 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 required, an Appraiser shall be selected within 10 days
following the expiration of the 30-day period referred to above, either by
agreement among the Corporation and the Holder or, in the absence of such
Agreement, by lot from a list of four potential Appraisers remaining after
the Corporation nominates three, the Holder nominates three, and each side
eliminates one potential Appraiser. The Appraiser shall be instructed by the
Corporation and the Holder to make its determination within thirty (30) days
of its selection. All fees and expenses of an Appraiser selected hereunder
shall be borne by the Holder. As used herein, "Appraiser" shall mean a
nationally-recognized investment banking firm.
"WARRANT" shall mean any warrant issued in the form of this Warrant
(except as provided in Section 3.3(b)), duly executed on behalf of the
Corporation.
"WARRANT REGISTER" shall have the meaning given to such term in
Section 3.1.
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Warrant in accordance with Section 4.1 or upon exchange of this [unreadable]
other securities or other property issued or issuable upon any such exercise or
exchange in accordance with this Warrant and (c) any securities of the
Corporation distributed with respect to the securities referred to in the
preceding clauses (a) and (b). As used in this Warrant, the phrase "Warrant
Shares then held" by any Holder or Holders shall mean Warrant Shares held at the
time of determination by such Holder or Holders, and shall include Warrant
Shares issuable upon exercise of Warrants held at the time of determination by
such Holder or Holders.
SECTION 1.2. INTERPRETATION. Unless the context of this Warrant
clearly require otherwise, references to the plural include the singular, to
the singular include the plural, and to the part include the whole. The term
"including" is not limiting and the term "or" has the inclusive meaning
represented by the term "and/or." The words "hereof," "herein," "hereunder,"
and similar terms in this Warrant refer to this Warrant as a whole and not to
any particular provisions of this Warrant. References to "Articles,"
"Sections," "Subsections," "Exhibits," and "Schedules" are to Articles,
Sections, Subsections, Exhibits and Schedules, respectively, of this Warrant,
unless otherwise specifically provided. Terms defined herein may be used in
the singular or the plural. Any capitalized terms used herein which are not
specifically defined herein have the meaning given to them in the Amended and
Restated Credit Agreement.
ARTICLE II
ISSUANCE OF WARRANT; CLOSING
SECTION 2.1. ISSUANCE OF WARRANT. This Warrant evidences the right
to purchase, on or before 5:00 p.m. on the Expiration Date, a total of 187,500
shares of Common Stock of the Corporation as a price per share equal to the
Exercise Price. At the Closing Date, such shares of Common Stock represent
62.1% of the outstanding shares of Common Stock and 1.575% of the outstanding
shares of Common Stock on a fully diluted basis (which determination (a) assumes
the exercise of all outstanding options or Convertible Securities, whether or
not currently exercisable or convertible, and irrespective of the exercise or
conversion price and other related terms, and (b) not be made in accordance with
the "treasury method"). The number of Warrant Shares which may be purchased
upon exercise of such Warrant and the Exercise Price to be paid for such Warrant
Shares are subject to adjustment in the manner provided in Article 4.
ARTICLE III
REGISTRATION; EXCHANGE; TRANSFER; TAXES
SECTION 3.1. FORM OF WARRANT. The Company shall register this
Warrant in a warrant register (the "Warrant Register"). The Warrant Register
shall set forth the number of this Warrant, the name and address of the holder
(a "Holder"), and the original number of Warrant Shares purchasable upon the
exercise hereof. The Warrant Register will be maintained by the Corporation and
will be available for inspection by any Holder at the principal office of the
Corporation or such other location as the Corporation may designate to the
Holders in the manner set forth in Section 9.1. The Corporation shall be
entitled to treat the Holder of this 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 persons. The
Corporation shall not be liable for complying with a request by a fiduciary or
nominee of a fiduciary to register a transfer of this 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 Corporation's participation therein amounts to bad faith.
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SECTION 3.2. EXCHANGE OF WARRANT FOR WARRANTS. (a) The Holder may
exchange this Warrant for another Warrant or Warrants of like kind and tenor
representing in the aggregate the right to purchase the same number of
Warrant Shares which could be purchased pursuant to this Warrant. In order
to effect an exchange permitted by this Section 3.2, the Holder shall deliver
to the Corporation this Warrant 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. Within ten (10) Business Days of receipt of such a request, the
Corporation shall issue, register and deliver to the Holder thereof each
Warrant to be issued in such exchange.
(b) Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the Holder being satisfactory) of the ownership
and the loss, theft, destruction or mutilation of this Warrant, and in the
case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Corporation (if the Holder is a creditworthy
financial institution or other creditworthy institutional investor its own
agreement being satisfactory) or, in the case of any such mutilation, upon
surrender of this Warrant, the Corporation shall (at its expense) execute and
deliver in lieu of this Warrant a new Warrant 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 Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
any Person.
(c) The Corporation shall pay all taxes (other than any
applicable income or similar taxes payable by a Holder of this Warrant)
attributable to an exchange of this Warrant pursuant to this Section 3.2;
PROVIDED, HOWEVER, that the Corporation shall not be required to pay any tax
which 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 this Warrant.
SECTION 3.3. TRANSFER WARRANT. (a) Subject to Section 3.3(c) hereof,
this Warrant may be transferred by the Holder by delivering to the Corporation
this Warrant accompanied by a properly completed Assignment Form. Within ten
(10) Business Days of receipt of such Assignment Form the Corporation shall
issue, register and deliver to the Holder, subject to Section 3(c) 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 which could be purchased
pursuant this Warrant. 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 Corporation. 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 Corporation in its discretion.
(b) Each Warrant issued in accordance with this Section 3.3
shall bear the restrictive legend set forth on this Warrant, unless the Holder
or transferee thereof supplies to the Corporation an opinion of counsel,
reasonably satisfactory to the Corporation, that the restrictions described in
such legend are no longer applicable to such Warrant.
(c) The transfer Warrants and Warrant Shares shall be
permitted, so long as such transfer is pursuant to a transaction that
complies with, or is exempt from, the provisions of the Securities Act, and
the Corporation may require an opinion of counsel (which may be internal
counsel to a Holder) in form and substance reasonably satisfactory to it to
such effect prior to effecting any transfer of Warrants or Warrant Shares.
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ARTICLE IV
EXERCISE OF WARRANT: EXCHANGE FOR WARRANT SHARES
SECTION 4.1. EXERCISE OF WARRANTS. On any Business Day prior to the
Expiration Date, a Holder may exercise this Warrant, in whole or in part, by
delivering to the Corporation this Warrant accompanied by a properly completed
Exercise Form 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 such Warrant shall be for a whole number of
Warrant Shares only. At the option of the Holder, all or any portion of the
amount that would otherwise be required to be paid by the Holder by check may be
paid by the Holder's agreeing to reduce a like amount of principal of the term
loans outstanding under the Amended and Restated Credit Agreement (such
reduction to be effected net of any "success" fee payable to the Holder in
connection with such exercise and by reducing installments of such term loans in
the inverse order of the maturity thereof).
SECTION 4.2. EXCHANGE FOR WARRANT SHARES. On any Business Day prior
to the Expiration Date, a Holder may exchange this Warrant, in whole or in part,
for Warrant Shares by delivering to the Corporation this 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 this 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 by (B) the Allocable Number of
Warrant Shares by (ii) the Market Price as of the close of business on the date
of delivery of the Exchange Form. The Allocable Number need not be a whole
number.
SECTION 4.3. ISSUANCE OF COMMON STOCK. (a) 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) this Warrant and
(iii) any required payments of the Exercise Price, the Corporation shall issue
and deliver to the Holder a certificate or certificates, registered in the name
or names set forth on such notice, representing the Warrant Shares being
purchased or to be received upon such exchange.
(b) If a Holder shall exercise or exchange this Warrant for less
than all of the Warrant Shares which could be purchased or received thereunder,
the Corporation shall issue to the Holder, 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 this Warrant so exchanged reduced by the Allocable Number of Warrant
Shares. Each Warrant surrendered pursuant to Section 4.1 or 4.2 shall be
canceled.
(c) The Corporation shall not be required to issue fractional
shares of Common Stock upon the exercise or exchange of this Warrant. If any
fraction of a share of Common Stock would be issuable on the exercise or
exchange of this Warrant, the Corporation may, in lieu of issuing such
fractional share, pay to such Holder for any such fraction of a share an amount
in cash equal to the product obtained by multiplying (i) such fraction by (ii)
the Market Price in effect on the Delivery Date.
(d) The Corporation shall pay all taxes (other than any
applicable income or similar taxes payable by a Holder of this Warrant)
attributable to the initial issuance of Warrant Shares upon the exercise or
exchange of this Warrant, PROVIDED, HOWEVER, that the Corporation shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance of any Warrants or any certificate for Warrant Shares in a name
other than that of the Holder of this Warrant.
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(e) If permitted by Applicable Law, the person in whose name
any certificate for shares of Common Stock is issued upon exercise or
exchange of this Warrant shall for all purposes be deemed to have become the
holder of record of such shares on the Delivery Date, irrespective of the
date of delivery of such certificate, except that if the Delivery Date is a
date when the stock transfer books of the Corporation are closed, such person
shall be deemed to have become the holder of record of such shares at the
close of business on the next succeeding date on which the stock transfer
books are open.
(f) If any shares of Common Stock required to be reserved for
purposes of the exercise or exchange of this Warrant require registration or
approval under any Applicable Law, the Corporation will in good faith and as
expeditiously as possible cause such shares to be registered or seek such
approval, as applicable. The Corporation may suspend the exercise of any
Warrant so affected for the period during which such registration or approval is
required but not in effect.
(g) Any Exercise Form or Exchange Form delivered under Section
4.1 or 4.2 may condition the exercise or exchange of this Warrant on the
consummation of a sale contemplated by Section 5.3, 5.4, 5.5 or 5.6, or on the
consummation of a sale of Warrant Shares pursuant to a public offering
registered under the Securities Act, and such exercise or exchange shall not be
deemed to have occurred except concurrently with the consummation of any such
sale.
SECTION 4.4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The number and kind of Warrant Shares purchasable upon exercise of each
Warrant shall be subject to adjustment from time to time in accordance with this
Section 4.4.
SECTION 4.4.1. ADJUSTMENT UPON ISSUANCE OF COMMON STOCK. (a) If, at
any time after the Closing Date, the Corporation shall issue or sell (or, in
accordance with Section 4.4.1(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 determined as of the date of such issuance or sale,
then, effective immediately upon such issuance or sale, 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, by (B) a
fraction, the numerator of which shall be the sum of (x) the product obtained by
multiplying (1) the number of shares of Common Stock outstanding (on a Fully-
Diluted Basis) immediately prior to such issuance or sale by (2) the Market
Price as of the date of such issuance or sale, and (y) the consideration, if
any, received by the Corporation upon such issuance or sale, and the denominator
of which shall be the product obtained by multiplying (C) the number of shares
of Common Stock outstanding (on a Fully-Diluted Basis) immediately after such
issuance or sale, by (D) such Market Price. Upon each such adjustment of the
Exercise Price hereunder, the number of Warrant Shares which may be obtained
upon exercise of this Warrant shall be increased to the number of shares
determined by multiplying (A) the number of Warrant Shares which could be
obtained upon exercise of this Warrant immediately prior to such adjustment by
(B) a fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment.
(b) For the purpose of determining the adjusted Exercise Price
under Section 4.4.1(a), the following shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any
manner issues or grants any rights or options to subscribe for or to
purchase (A) Common Stock or (B) any stock or other securities convertible
into or exchangeable for Common Stock (such rights or options being herein
called "Options" and such convertible or exchangeable stock or securities
being herein called "Convertible Securities"), and the price per share for
which Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Market Price determined as of the date of issuance or grant of such
Options, then the total maximum number of
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shares of Common Stock issuable upon the exercise of such Options
(or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options)
shall be deemed to be outstanding and to have been issued and sold
by the Corporation for such price per share. For purposes of this
paragraph, the price per share for which Common Stock is issuable
upon excercise of Options or upon conversion or exchange of
Convertible Securities issuable upon exercise of Options shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for the issuing or
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon the
exercise of all such Options, plus in the case of such Options
which relate to Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the
Corporation upon issuance or sale of such Convertible Securities
and the conversion or exchange thereof, 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. No further
adjustment of the Exercise Price shall be made upon the actual
issuance of such Common Stock or of such Convertible
Securities upon the Exercise of such Options or upon actual
issuance of such Common Stock upon conversion or exchange of such
Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in any
manner issues or sells any Convertible Securities having an
exercise or conversion or exchange price per share of Common Stock
which is less than the Market Price determined as of the date of
such issuance or sale, then the maximum number of shares of Common
Stock issuable upon the conversion or exchange of such Convertible
Securities shall be deemed to be outstanding and to have been
issued and sold by the Corporation for such lower price per share.
For purposes of this paragraph, the price per share for which
Common Stock is issuable upon conversion or exchange of Convertible
Securities is determined by dividing (A) the total amount received
or receivable by the Corporation as consideration for the issuance
or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (B) the
total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities. No
further adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities, and if any such issuance or sale of
such Convertible Securities is made upon exercise of any Options
for which adjustments of the Exercise Price had been or are
required to be made pursuant to other provisions of this Section
4.4.1(b), no further adjustment of the Exercise Price shall be made
by reason of such issuance or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase
price provided for in any Options, the additional consideration, if
any, payable upon the issuance, conversion or exchange of any
Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
change at any time, then the Exercise Price in effect at the time
of such change shall be readjusted to the Exercise Price which
would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or
sold and the number of Warrant Shares shall be correspondingly
readjusted.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination
of any right to convert or exchange any Convertible Securities
without the exercise of such Option or right, the Exercise Price
then in effect and the number of Warrant Shares acquirable
hereunder shall be adjusted to the Exercise Price and the number of
shares which would have been in effect at the time of such
expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been issued.
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(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common Stock,
Options or Convertible 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
Corporation therefor. If any Common Stock, Options or Convertible
Securities are issued or sold for consideration other than cash,
then the amount of the consideration other than cash received by
the Corporation shall be the fair value of such consideration
determined by the Board of Directors of the Corporation.
(vi) 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 Corporation or any Subsidiary of the
Corporation, and the disposition of any shares so owned or
held shall be considered an issue or sale of Common Stock.
(vii) RECORD DATE. If the Corporation maintains a record of the
holders of Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common Stock,
Options or in 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.
SECTION 4.4.2. SUBDIVISIONS OR COMBINATIONS OF COMMON STOCK. If, at
any time after the Closing Date, (a) the number of shares of Common Stock
outstanding is increased by a dividend or other distribution payable in shares
of Common Stock or by a subdivision or split-up of shares of Common Stock or (b)
the number of shares of Common Stock outstanding is decreased by a combination
or reverse stock split of shares of Common Stock, then, in each case, effective
as of the effective date of such event retroactive to the record date, if any,
of such event, (i) the Exercise Price shall be adjusted to a price determined
by multiplying (A) the Exercise Price in effect immediately prior to such
event by (B) a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such event, and (ii) the number of Warrant
Shares subject to purchase upon the exercise of this Warrant shall be
adjusted effective at such time, to a number equal to the product of (A) the
number of Warrant Shares subject to purchase upon the exercise of this
Warrant immediately prior to such event by (B) a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding after giving
effect to such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event.
SECTION 4.4.3. CAPITAL REORGANIZATION OR CAPITAL RECLASSIFICATIONS.
If, at any time after the Closing Date, there shall be any capital
reorganization or any reclassification of the capital stock of the
Corporation (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), then in each case the
Corporation shall cause effective provision to be made so that this Warrant
shall, effective as of the effective date of such event retroactive to the
record date, if any, of such event, be exercisable or exchangeable for the
kind and number of shares of stock, other securities, cash or other property
to which a holder of the number of shares of Common Stock deliverable upon
exercise or exchange of this Warrant would have been entitled upon such
reorganization or reclassification and any such provision shall include
adjustments in respect of such stock, securities or other property that shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Warrant.
SECTION 4.4.4. CONSOLIDATIONS AND MERGERS. If, at any time after the
Closing Date, the Corporation shall consolidate with, merge with or into, or
sell all or substantially all of its assets or property to, another corporation,
then the Corporation shall cause effective provision to be made so that this
Warrant shall, effective as of the effective date of such event retroactive to
the record date, if any, of such event, be exercisable or
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exchangeable for the kind and number of shares of stock, other securities, cash
or other property to which a holder of the number of shares of Common Stock
deliverable upon exercise or exchange of such Warrant would have been entitled
upon such event.
SECTION 4.4.5. NOTICE; CALCULATIONS; ETC. Whenever the Exercise
Price and the number of Warrant Shares shall be adjusted as provided in this
Section 4.4, the Corporation shall provide to the Holder of this Warrant a
statement, signed by an Executive Officer, 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 this Warrant after giving effect
to such adjustment. All calculations under this Section 4.4 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 Sections 4.4.1, 4.4.2 and
4.4.3 shall apply to successive events or transactions of the type covered
thereby.
SECTION 4.4.6. CERTAIN ADJUSTMENTS. (a). Subject to the limitations
set forth in Section 4.4, the Corporation 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 this Warrant, in addition to those
adjustments required by this Section 4.4, 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 securities which by
their terms are convertible into or exchangeable for shares of Common Stock, or
any stock dividend, or any issuance of rights, options or warrants hereinafter
made by the Corporation to the holders of its Common Stock shall not be taxable
to such holders.
(b). In the event that the Corporation in any manner issues or
grants Options or Convertible Securities, or any other transaction,
circumstances or events occur which give rise to anti-dilution adjustments under
Other Anti-Dilution Instruments, but not the Warrants, then the Corporation will
promptly make proportional, equitable and corresponding adjustments in the
number of shares of Common Stock issuable upon exercise of the Warrants to
protect the Holders against dilution as a result of such events.
SECTION 4.4.7. EXCLUDED TRANSACTIONS; INCLUDED TRANSACTIONS.
Notwithstanding any other provision of this Section 4.4, no adjustment shall be
made pursuant to this Section 4.4 in respect of the issuance of Excluded
Securities. Notwithstanding any other provision of this Section 4.4, Penalty
Warrants (as defined in the Securities Purchase Agreement) shall not be deemed
Excluded Securities and shall be deemed to have been issued by the Corporation
without consideration.
SECTION 4.4.8. ADJUSTMENT RULES. (a) Any adjustments pursuant to
this Section 4.4 shall be made successively whenever an event referred to herein
shall occur, except that, notwithstanding any other provision of this Section
4.4, 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.
(b) Notwithstanding any other provision of this Warrant, the
actual amount payable by a Holder in connection with the exercise of this
Warrant shall not be less than the par value per share of the Common Stock,
unless and until the Exercise Price, as adjusted pursuant to this Section 4.4,
has been reduced to an amount less than 1% of the par value per share of the
Common Stock. Before taking any action which would cause an adjustment pursuant
to this Section 4.4 which would reduce the Exercise Price below 1% of the par
value per share, the Corporation shall be required to take any corporate action
which may be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
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SECTION 4.4.9. REGULATED HOLDERS. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel), the receipt
by such Regulated Holder of Warrant Shares (or any security included therein)
upon any exercise or exchange pursuant to this Article IV would cause such
Regulated Holder to violate any provision of Applicable Law with respect to
its Ownership of voting securities of the Corporation, then the Corporation
will use its best efforts (including without limitation using its best
efforts to cause its Organizational Documents to be amended) to create an
Equivalent Nonvoting Security with respect to Warrant Shares (or any such
security included therein), and such Regulated Holder shall be entitled to
receive upon such exercise or exchange, in lieu of such number (as it shall
specify) of shares or other units of Warrant Shares (or any such security
included therein) otherwise receivable by such Regulated Holder, the same
number of shares or other units of such Equivalent Nonvoting Security.
ARTICLE V
CERTAIN OTHER RIGHTS
SECTION 5.1. PAYMENTS IN RESPECT OF DIVIDENDS AND DISTRIBUTIONS.
(a) If, at any time prior to the earlier of (i) the Expiration Date and (ii)
the consummation of a Qualified Public Offering, the Corporation pays any
dividend or makes any distribution (whether in cash, property, or securities
of the Corporation) on its capital stock which does not result in an
adjustment under Section 4.4, then the Corporation 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 Common Stock entitled to
such dividend or distribution are to be determined.
(b) If, in the written opinion of counsel to any Regulated
Holder (which counsel may be internal counsel), the distribution to such
Regulated Holder of any security of the Corporation pursuant to Section
5.1(a) would cause such Regulated Holder to violate any provision of
Applicable Law with respect to its Ownership of voting securities of the
Corporation, then the Corporation will use its best efforts (including,
without limitation, using its best efforts to cause its Organizational
Documents to be amended) to create an Equivalent Nonvoting Security with
respect to the security to be distributed and such Regulated Holder shall be
entitled to receive, in lieu of such number (as it shall specify) of shares
or other units of the security to be distributed pursuant to Section 5.1(a)
otherwise receivable by such Regulated Holder, the same number of shares or
other units of such Equivalent Nonvoting Security.
SECTION 5.2. PUT RIGHTS. (a) Not less than sixty (60) days prior to
any Put Event the Corporation shall give to each Holder written notice of such
Put Event (the "Put Event Notice"), which shall set forth in reasonable detail a
description of the transactions expected to result in such Put Event and the
anticipated effective date thereof.
(b) Subject to Section 5.2(a) hereof, if at any time (i)
within 50 days following delivery of a Put Event Notice (or at any time
following a Put Event if a Put Event Notice was required to be delivered to
the Holders pursuant to Section 5.3(a) but was not so delivered prior to the
occurrence of such Put Event or (ii) following the fifth anniversary of the
Closing Date, the Holder shall notify the Corporation in writing (the "Put
Notice") of its desire to cause the Corporation to repurchase all (but not
less than all) of the Warrant Shares issued or represented by this Warrant,
such Holder shall have the right to require the Corporation to repurchase all
(but not less than all) of the Warrant Shares (or Warrants) represented by
this Warrant (the "Put") at a price per share equal to the Put Price. Upon
delivery of the Put Notice, the Corporation shall give notice to all other
Holders, and such Holders shall have the right to participate in such Put by
so notifying the Corporation (a "Participation Notice") within twenty (20)
days (the "Participation Period") after receipt of such notice.
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(c) Upon the expiration of any Participation Period (or upon
delivery of a Put Notice, if there is only one Holder at the time of such
delivery), the Put Price shall be determined. Within ten (10) Business Days
following such determination (or, if applicable, upon consummation of the Put
Event if later), the Corporation shall purchase, and such Holders shall sell,
the number of Warrant Shares (or Warrants) specified in the Put Notice and
all Participation Notices at a mutually agreeable time and place (the "Put
Closing").
(d) If the Corporation shall not have funds legally available
in the amount necessary to purchase all Warrant Shares and Warrants with
respect to which the Put has been exercised, then the Warrant Shares and
Warrants with respect to which each Holder has exercised the Put shall be
repurchased on a PRO RATA basis, in accordance with the number of Warrant
Shares held by each Holder. Any Put not satisfied in full pursuant to the
terms of this Section 5.2 shall remain an obligation of the Corporation until
such time as such satisfaction shall have occurred and the Company shall pay
interest on the amount of such obligation at the Base Rate (as defined in the
Amended and Restated Credit Agreement) plus 5% from the Put Closing to the
date on which such amount is paid in full. In the event that, based on the
values of the Corporation's assets and liabilities reflected in the books and
records of the Corporation, it would be unlawful, under applicable state
corporation laws, for it to purchase put shares, or pay the Put Price
therefor, the Corporation hereby agrees, if and to the extent permitted by
the Amended and Restated Credit Agreement and any other borrowing agreements
of the Corporation then in place and applicable law, to revalue its assets
and liabilities based upon their current fair market value, and to take such
other action as may be necessary, to cause such purchase to no longer be
unlawful.
(e) At the Put Closing, each Holder that has provided the
Corporation with a Participation Notice shall deliver to the corporation such
Holder's Warrant Shares or Warrants representing Warrant Shares and the
Corporation shall deliver to such Holder an amount equal to the product,
obtained by multiplying (i) the number of such Warrant Shares (issued or
represented by outstanding Warrants) by (ii) the Put Price (less, in the case
of the repurchase of Warrants, the per share exercise price), by cashier's or
certified check of a creditworthy bank payable to such Holder or by wire
transfer of immediately available funds to an account designated by such
Holder.
(f) After the Closing Date, the Corporation shall not grant
any other rights similar to the Put that are exercisable prior to the time at
which the Put is exercised or that are not expressly subordinated to the Put,
in form and substance reasonably acceptable to the Holders, to the rights of
Holders pursuant to the Put; PROVIDED, HOWEVER, that the Corporation shall be
entitled to grant put rights on a pari passu basis with the Put to a creditor
(or creditors) in connection with a refinancing by such creditor (or
creditors) of all obligations of the Corporation under the Amended and
Restated Credit Agreement. The Corporation shall not (and shall not permit
any Subsidiary of the Corporation to) enter into any contract or other
consensual arrangement that by its terms restricts the Corporation's ability
to honor the Put.
(g) Notwithstanding anything contained herein to the
contrary, the rights set forth in this Section 5.2 shall cease to be
exercisable upon the consummation of a Qualified Public Offering. However,
irrespective of the foregoing, the rights set forth in this Section 5.2 shall
be reinstated if, after the consummation of a Qualified Public Offering, (i)
Rule 144 under the Securities Act becomes unavailable to the Holders due to
actions or omissions by the Corporation or (ii) the Corporation ceases to be
subject to Sections 12(b) or 12(g) under the Exchange Act.
(h) After the Closing Date, the Corporation shall not enter
into any agreement, understanding or transaction other than the Amended and
Restated Credit Agreement pursuant to which the Company shall be required, or
makes a covenant, representation or warranty, to prevent or to contractually
impair the exercise of the put rights provided for in this Section 5.2 or the
obligation of the Corporation to pay the Put Price. If the Company is
unable, pursuant to the Amended and Restated Credit Agreement or in
accordance with applicable corporation statutes, to purchase all of the
Warrants and/or Warrant Shares which are the subject of a Put Notice,
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the Corporation shall if so requested in writing by the Holders exercising
put rights, (i) purchase in accordance with the Put Notice the maximum number
of such Warrants and/or Warrant Shares put which the Company may purchase and
(ii) in one or more installments, at the earliest time that the Company may
lawfully or contractually do so, purchase all remaining Warrants and/or
Warrant Shares put and pay interest at the Base Rate (as defined in the
Amended and Restated Credit Agreement) plus 5% on the amount of the aggregate
Put Price attributable to such remaining Warrants and/or Warrant Shares from
the Put Closing to the date on which such amount is paid in full. In the
event that, based on the values of the Corporation's assets and liabilities
reflected in the books and records of the Corporation, it would be unlawful,
under applicable state corporation laws, for it to purchase put shares, or
pay the Put Price therefor, the Corporation hereby agrees, if and to the
extent permitted by the Amended and Restated Credit Agreement and any other
borrowing agreements of the Corporation then in place and applicable law, to
revalue its assets and liabilities based upon their current fair market
value, and to take such other action as may be necessary, to cause such
purchase to no longer be unlawful.
(i) Notwithstanding anything contained herein to the
contrary, the rights of the Holders in relation to the holders of warrants
(other than Penalty Warrants (as defined in the Securities Purchase
Agreement)) issued pursuant to the Senior Subordinate Documents and the
Securities Purchase Agreement shall be as set forth in clauses (b) and (c) of
the Senior Subordinate Agreement (including, without limitation, that any
obligation of the Corporation shall be evidenced by a promissory note due
within 366 days and bearing interest at a rate of 14% per annum); PROVIDED,
HOWEVER, that clauses (b) and (c) of Section 7.03 of the Senior Subordinate
Agreement shall not be amended or modified without the prior consent of the
Holder.
SECTION 5.3. CALL RIGHTS. (a) Subject to Section 5.3(e), the
Corporation shall have the right, at any time after the fifth anniversary of
the Closing Date, to purchase all (but not less than all) of the Warrant
Shares (issued or represented by outstanding Warrants) held by all Holders
(the "Call") at a price per Warrant Share equal to the Call Price (less, in
the case of a repurchase of Warrants, the per share exercise price). The
Corporation may exercise the Call by delivering at least 10 days' prior
written notice (the "Call Notice") to the Holders. Upon delivery of the Call
Notice, the Call Price shall be determined.
(b) The closing (the "Call Closing") of the purchase of
Warrant Shares and Warrants pursuant to the Call shall take place, within 10
days following determination of the Call Price, at a mutually agreeable
place. At the Call Closing, the Corporation shall purchase from the Holders,
and the Holders shall sell to the Corporation, all of the Warrants and
Warrant Shares then held by the Holders at a price per share equal to the
Call Price.
(c) At the Call Closing, each Holder shall deliver to the
Corporation its Warrant Shares (or Warrants representing Warrant Shares),
against payment of an amount equal to the product obtained by multiplying (i)
the number of such Warrant Shares (or Warrant Shares represented by Warrants)
being repurchased by (ii) the Call Price (less, in the case of the repurchase
of Warrants, the aggregate exercise price for the Warrant Shares represented
thereby), by cashier's or certified check of a creditworthy bank payable to
such Holder or, at the option of such Holder, by wire transfer of immediately
available funds to an account designated by such Holder.
(d) If within twelve (12) months following the exercise of
the Call pursuant to clause (ii) of Section 5.3(a)(i) all or substantially
all of the Corporation's consolidated assets are sold for a consideration
that implies a value of the Corporation's equity per share of Common Stock
(on a Fully-Diluted Basis) which exceeds the Call Price, (ii) a merger or
consolidation of the Corporation at a consideration per share of Common Stock
(on a Fully-Diluted Basis) in excess of the Call Price, or (iii) ten percent
(10%) or more of the Common Stock outstanding as of the date of the Call
Notice is sold in a single transaction or series of related transactions, or
a public offering registered under the Securities Act is consummated, at a
price per share in excess of the Call Price, or (iv) a transaction occurs
under which a Holder would have had co-sale rights under Section 5 of the
Shareholders Agreement, then, in any such case, upon consummation of any such
transaction, each Holder shall
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be entitled to receive from the Corporation an amount in cash equal to such
excess multiplied by the number of Warrant Shares sold by such Holder under the
Call, payable by certified or cashier's check (of a bank reasonably acceptable
to such Holder) or wire transfer of immediately available funds to an account
designated by such Holder. In the event any issuance or sale during such 12-
month period is for non-cash consideration, the fair value of such consideration
shall be determined in accordance with the Valuation Procedure.
(e) Notwithstanding anything contained herein to the contrary,
the rights set forth in this Section 5.3 shall be subject to the terms of the
Amended and Restated Credit Agreement, and shall cease to be exercisable upon
the consummation of a Qualified Public Offering.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. By the
acceptance hereof, the Holder of this Warrant represents that it is acquiring
the Warrant for its own account for investment purposes only and not with a view
to any distribution or public offering in violation of the Securities Act.
SECTION 6.2. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation hereby represents and warrants to the Holder of this Note as
follows:
(a) ORGANIZATION. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, has all requisite power and
authority and has all material governmental licenses, approvals,
consents and authorizations necessary to own its property and assets
and to carry on its business as currently conducted and is qualified
to do business in each jurisdiction in which the nature of the
business conducted or the property owned or leased by it requires such
qualification except where the failure to be so qualified or licensed
would not have a material adverse effect on the business, condition,
operations or properties of the Corporation.
(b) CORPORATE POWER AND AUTHORITY; NO REQUIRED CONSENTS OR
APPROVALS. (i) The Corporation has the power to execute, deliver and
perform its obligations under this Warrant and the Registration Rights
Agreement.
(ii) The execution, delivery and performance by the Corporation
of this Warrant and the Registration Rights Agreement, the issuance of
Warrants and the issuance of Warrant Shares upon exercise of each
Warrant, have been duly authorized by all required corporate and
stockholder action of the Corporation and will not (i) violate any
provision of Applicable Law, any Organizational Document, or any
indenture or other material agreement or instrument to which the
Corporation is a party or by which the Corporation or any of its
properties are or may be bound, (ii) conflict with result in a breach
of or constitute (alone or with notice or lapse of time or both) a
default under any such indenture or other material agreement or
instrument to which the Corporation is a party, or by which the
Corporation or any of its properties are or may be bound, (iii)
results in the creation or imposition of any Lien upon any property of
the Corporation or (iv) require registration or filing with, or
consent, approval or any other action by any Governmental Authority
(other than any registration, filing, consent or approval or other
action that has been provided, granted or taken, as the case may be).
(c) ENFORCEABILITY. This Warrant and the Registration Rights
Agreement have been duly executed and delivered by the Corporation and
each constitute a legal, valid, binding and enforceable obligation of
the Corporation except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar event
affecting the enforcement of creditors rights generally and except as
enforceability may be subject to general principles of equity, whether
such
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principles are applied in a court of equity. The Warrant Shares, when
issued upon the exercise or exchange of a Warrant in accordance with
the terms hereof, will be duly authorized, validly issued, fully paid
and nonassessable shares of the Common Stock with no personal
liability attaching to the ownership thereof.
(d) CREDIT AGREEMENT. Each of the representations and
warranties of the Corporation set forth in or under the Amended and
Restated Credit Agreement is true and correct in all material
respects, and are hereby incorporated herein, with the same effect as
if stated in their entirety herein.
ARTICLE VII
COVENANTS OF THE CORPORATION
SECTION 7.1. NOTICES OF CERTAIN ACTIONS. (a) In the event that the
Corporation:
(i) shall authorize issuance to all holders of Common Stock of
rights or warrants to subscribe for or purchase capital stock of the
Corporation 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 Corporation will be
required, or to a conveyance or transfer of the properties and assets
of the Corporation 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;
(v) commences a Qualified Public Offering;
(vi) defaults under this Warrant; or
(vii) proposes to take any other action which would require an
adjustment pursuant to Section 4.4;
then the Corporation shall provide a written notice to the 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.
SECTION 7.2 FINANCIAL STATEMENTS AND REPORTS. The Corporation shall
furnish to the Holder hereof:
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(a) as soon as available but in any event within ninety (90)
days after the end of each Fiscal Year (commencing with the Fiscal Year ending
December 31, 1996), consolidated balance sheets, income statements and cash flow
statements of the Corporation 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 (subject to year end adjustments);
(b) as soon as available but in any event within thirty (30)
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 Corporation, 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;
(c) as soon as practicable and in any event not less than 30
days prior to the end of each fiscal year of the Corporation, an annual
operating budget for the Corporation for the succeeding fiscal year, containing
budget of profit and loss and cash flow (the "Budget"). Promptly upon
preparation thereof, the Corporation will furnish to the Holder any revisions
of such previously furnished Budgets; and
(d) promptly upon their becoming available, copies of any
statements, reports and other communications, if any, which the Corporation
shall have provided to its stockholders of filed with the Securities and
Exchange Commission or any national securities exchange;
SECTION 7.3. INFORMATION RIGHTS. The Holder of this Warrant shall
have all of the rights of a holder of Common Stock under Applicable Law, whether
or not such holder has exercised or exchanged any Warrants, to receive lists of
stockholders or other information respecting the Corporation, to inspect the
books and records of the Corporation and to visit the properties of the
Corporation.
SECTION 7.4. REGULATED HOLDERS. (a) Notwithstanding any other
provision of this Warrant to the contrary, except as provided in this Section
7.4, without the prior written consent of any Regulated Holder, the Corporation
shall not redeem, purchase or otherwise acquire, directly or indirectly,
convert, take any action (including any amendment to an Organizational Document)
with respect to the voting rights of, or undertake any other action or
transaction (including without limitation any merger, consolidation or
recapitalization) affecting, any shares of its capital stock or other voting
securities if the result of this foregoing would be to cause the Ownership of
the capital stock of any Person by such Regulated Holder, or the Ownership of
voting securities of any Person (or any class thereof) by such Regulated Holder,
to exceed the quantity of such capital stock or voting securities (or any class
thereof) that such Regulated Holder is permitted under Applicable Law to Own.
Any section or transaction referred to in the preceding sentence shall be
referred to herein as a "Section 7.4 Transaction". The Corporation shall be
permitted to undertake any Section 7.4 Transaction which would otherwise result
in the Ownership by any Regulated Holder of voting securities (or any class
thereof) in excess of the quantity permitted by Applicable Law if, in a manner
reasonably satisfactory to such Regulated Holder, the Corporation shall provide
or cause to be provided for such Regulated Holder (i) to receive in connection
with any such action or transaction a number of shares or other units of
Equivalent Nonvoting Securities equal to such excess in lieu of the same number
of shares or other units of the voting securities it would otherwise have
received or (ii) if it would not otherwise have received voting securities in
connection with such action or transaction, to exchange a number of shares or
other units of voting securities then held by such Regulated Holder equal to
such excess for the same number of shares or other units of Equivalent Nonvoting
Securities. If the Corporation proposes to undertake any action or transaction
which could constitute a Section 7.4 Transaction, it shall provide the Holders
at least 15 days prior written notice thereof. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel) delivered within
10 days following receipt of such notice, such action or transaction constitutes
a Section 7.4 Transaction with respect to such Regulated Holder, then the
Corporation shall delay undertaking such Section 7.4 Transaction for the purpose
of using its best efforts to agree on a manner in which to restructure such
action or transaction in a manner reasonably satisfactory to the
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Corporation and such Regulated Holder so that it no longer would constitute a
Section 7.4 Transaction. If the Corporation and such Regulated Holder are
unable to agree, within 20 days of the delivery of such written opinion, upon
a manner in which to so restructure such Section 7.4 Transaction and such
Section 7.4 Transaction is a bona fide action or transaction proposed by the
Corporation in good faith, then the Corporation shall be permitted to
undertake such Section 7.4 Transaction if prior to or concurrently with doing
so it purchases from such Regulated Holder, at a purchase price equal to the
Put Market Value Per Share, a number (specified by such Regulated Holder) of
Warrants (based on the number of Warrant Shares represented thereby) or
Warrant Shares sufficient, in the written opinion of counsel to such
Regulated Holder (which may be internal counsel), to prevent such Section 7.4
Transaction from causing the Ownership of the capital stock of any Person by
such Regulated Holder to exceed the quantity of such capital stock that such
Regulated Holder is permitted under Applicable Law to Own.
(b) If it becomes unlawful for any Regulated Holder to continue to
hold some or all of the Warrants or Warrant Shares held by it, or restrictions
are imposed on any Regulated Holder by Applicable Law which, in the reasonable
judgment of such Regulated Holder, make it unduly burdensome to continue to hold
such Warrants or Warrant Shares, the Corporation shall (i) cooperate with such
Regulated Holder in any efforts by such Regulated Holder to dispose of some or
all of such Warrants or Warrant Shares in a prompt and orderly manner, including
without limitation providing (and authorizing such Regulated Holder to provide)
financial and other information concerning the Corporation to any prospective
purchaser of such Warrants or Warrant Shares and (ii) at the request of such
Regulated Holder, take all steps (including without limitation using it best
efforts to cause its Organizational Documents to be amended) necessary to create
an Equivalent Nonvoting Security with respect to the Warrant Shares then held by
such Regulated Holder and permit such Regulated Holder to exchange Warrant
Shares for the same number of shares or other units of such Equivalent Nonvoting
Security; PROVIDED, HOWEVER, that nothing in this Section 7.4(b) shall require
the Corporation to register or qualify such Warrants or Warrant Shares under any
federal or state securities laws.
SECTION 7.5. MERGER OR CONSOLIDATION OF THE CORPORATION. The
Corporation will not merge or consolidate with or into, or sell, transfer, or
lease all or substantially all of its property to, any other corporation or
partnership unless the successor or purchasing entity, as the case may be (if
not the Corporation), 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 the Holder the securities, cash or property required by
Section 4.4.4 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 Warrant to be performed and
observed by the Corporation; 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 4.4.4.
SECTION 7.6 RESERVATION OF SHARES. The Corporation will at all
times have authorized, and reserve and keep available, free from preemptive
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
shares of Common Stock deliverable upon exercise or exchange of all
outstanding Warrants.
SECTION 7.7 CURRENT PUBLIC INFORMATION. At all times after the
Corporation has filed a registration statement with the Securities and Exchange
Commission pursuant to the requirements of either the Securities Act or the
Securities Exchange Act, the Corporation will file all reports required to be
filed by it under the Securities Act and the Securities Exchange Act and the
rules and regulations adopted by the Securities and Exchange Commission
thereunder, and will take such further action as any holder or holders of
restricted securities may reasonably request, all to the extent required to
enable such holders to sell Restricted Securities pursuant to Rule 144 or Rule
144A adopted by the Securities and Exchange Commission under the Securities Act
(as such rule may be amended from time to time) or any similar rule or
regulation hereafter adopted by the Securities and
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Exchange Commission. Upon request, the Company will deliver to such holders a
written statement as to whether it has complied with such requirements.
SECTION 7.8 PUBLIC DISCLOSURES. The Corporation will not disclose
any Holder's name or identity as an investor in the Company in any press release
or other public announcement or in any written consent of such Holder, unless
such disclosure is required by applicable law or governmental regulations or by
order of a court of competent jurisdictions in which case prior to making such
disclosure the Company will given written notice on such Holder describing in
reasonable detail the proposed content of such disclosure and will permit the
Holder to review and comment upon the form and substance of such disclosure.
ARTICLE VIII.
GUARANTEE
SECTION 8.1 THE GUARANTEE. Subject to the limitations set forth in
Section 8.8 hereof, the Subsidiaries of the Corporation identified under the
caption "SUBSIDIARY GUARANTORS" on the signature pages hereto (individually, a
"Subsidiary Guarantor" and, collectively, "Subsidiary Guarantors") hereby
jointly and severally guarantee to the Holder and its respective successors and
assigns the prompt payment in full when due of all amounts from time to time
owing to the Holder by the Corporation under this Warrant, in each case strictly
in accordance with the terms hereof (such obligations being herein collectively
called the "Guaranteed Obligations"). The Subsidiary Guarantors hereby further
jointly and severally agree that if the Corporation shall fail to pay in full
when due any of the Guaranteed Obligations, the Subsidiary Guarantors will
promptly pay the same, without any demand or notice whatsoever, and that in the
case of any extension of time of payment or renewal of any of the Guaranteed
Obligations, the same will be promptly paid in full when due in accordance with
the terms of such extension or renewal.
SECTION 8.2 OBLIGATIONS UNCONDITIONAL. Subject to the limitations
set forth in Section 8.8 hereof, the obligations of the Subsidiary Guarantors
under Section 8.1 hereof are absolute and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the obligations of the Corporation under this Warrant or any other agreement
or instrument referred to herein, or any substitution, release or exchange of
any other guarantee of or security for any of the Guaranteed Obligations, and,
to the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor, it being the intent of this
Section 8.2 that the obligations of the Subsidiary Guarantors hereunder shall be
absolute and unconditional, joint and several, under any and all circumstances.
Without limiting the generality of the foregoing, it is agreed that the
occurrence of any one or more of the following shall not alter or impair the
liability of the Subsidiary Guarantors hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to the
Subsidiary Guarantors, the time for any performance of or compliance
with any of the Guaranteed Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of this
Warrant or any other agreement or instrument referred to herein or
therein shall be done or omitted; or
(iii) any of the Guaranteed Obligations shall be modified,
supplemented or amended in any respect, or any right under this
Warrant or any other agreement or instrument referred to herein or
therein shall be waived or any other guarantee of any of the Guaranteed
Obligations or any security therefor shall be released or exchanged in
whole or in part otherwise dealt with.
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The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand
of payment, protest and all motions whatsoever, and any requirement that the
Holder exhaust any right, power or remedy or proceed against the Corporation
under this Warrant or any other agreement or instrument referred to herein, or
against any other Person under any other guarantee of, or security for, any of
the Guaranteed Obligations.
SECTION 8.3 REINSTATEMENT. The obligations of the Subsidiary
Guarantors under this Section 8 shall be automatically reinstated if and to
the extent that for any reason any payment by or on behalf of the Corporation
in respect of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise and
the Subsidiary Guarantors jointly and severally agree that they will
indemnify the Holder on demand for all reasonable costs and expenses
(including, without limitation, fees of counsel) incurred by such in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
SECTION 8.4 SUBROGATION. Each Subsidiary Guarantor hereby waives all
rights of subrogation or contribution, whether arising by contract or operation
of law (including, without limitation, any such right arising under the Federal
Bankruptcy Code of 1978, as amended) or otherwise by reason of any payment by it
pursuant to the provisions of this Section 8 and each Subsidiary Guarantor
further agrees with the Corporation for the benefit of each of its creditors
(including, without limitation, the Holder) that any such payment by it shall
constitute a contribution of capital by such Subsidiary Guarantor to the
Corporation (or an investment in the equity capital of the Corporation by such
Subsidiary Guarantor).
SECTION 8.5 CONTINUING GUARANTEE. The guarantee in this Section 8 is
a continuing guarantee, and shall apply to all Guaranteed Obligations whenever
arising.
SECTION 8.6 RIGHTS OF CONTRIBUTION. The Subsidiary Guarantors
hereby agree, as between themselves, that if any Subsidiary Guarantor shall
become an Excess Funding Guarantor (as defined below) by reason of the
payment by such Subsidiary Guarantor of any Guaranteed Obligations, each
other Subsidiary Guarantor shall, on demand of such Excess Funding Guarantor
(but subject to the next sentence), pay to such Excess Funding Guarantor an
amount equal to such subsidiary Guarantor's Pro Rata Share (as defined below
and determined, for this purpose, without reference to the Properties, debts
and liabilities of such Excess Funding Guarantor) of the Excess Payment (as
defined below) in respect of such Guaranteed Obligations. The payment
obligation of a Subsidiary Guarantor to any Excess Funding Guarantor under
this Section 8.6 shall be subordinate and subject in right of payment to the
prior payment in full of the obligations of such Subsidiary Guarantor under
the other provisions of this Section 8 and such Excess Funding Guarantor
shall not exercise any right or remedy with respect to such excess until
payment and satisfaction in full of all of such obligations.
For purposes of this Section 8.6, (i) "Excess Funding Guarantor"
shall mean, in respect of any Guaranteed Obligations, a Subsidiary Guarantor
that has paid an amount in excess of its Pro Rata Share of such Guaranteed
Obligations, (ii) "Excess Payment" shall mean, in respect of any Guaranteed
Obligations, the amount paid by an Excess Funding Guarantor in excess of its
Pro Rata Share of such Guaranteed Obligations and (iii) "Pro Rata Share"
shall mean, for any Subsidiary Guarantor, the ratio (expressed as a
percentage) of (x) the amount by which the aggregate present fair saleable
value of all Properties of such Subsidiary Guarantor (excluding any shares of
stock of any other Subsidiary Guarantor) exceeds the amount of all the debts
and liabilities of such Subsidiary Guarantor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Subsidiary Guarantor hereunder and any obligations of any
other Subsidiary Guarantor that have been Guaranteed by such Subsidiary
Guarantor) to (y) the amount by which the aggregate fair saleable value of
all Properties of the Corporation and all of the Subsidiary Guarantors
exceeds the amount of all the debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of the Corporation and the Subsidiary Guarantors hereunder) of
the Corporation.
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and all of the Subsidiary Guarantors, all as of the Closing Date. If any
Subsidiary becomes a Subsidiary Guarantor hereunder subsequent to the Closing
Date, then for the purposes of this Section 8.6 such subsequent Subsidiary
Guarantor shall be deemed to have been a Subsidiary Guarantor as of the Closing
Date and the aggregate present fair saleable value of the Properties, and the
amount of the debts and liabilities, of such Subsidiary Guarantor as of the
Closing Date shall be deemed to be equal to such value and amount on the date
such Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.
SECTION 8.7 GENERAL LIMITATION ON GUARANTEE OBLIGATIONS. In any action
or proceeding involving any state corporate law, or any state or Federal
bankruptcy, insolvency, reorganization or other law affecting the rights of
creditors generally, if the obligations of any Subsidiary Guarantor under
Section 8.1 hereof would otherwise, taking into account the provisions of
Section 8.7 hereof, be held or determined to be void, invalid or
unenforceable, or subordinated to the claims of any other creditors, on
account of the amount of its liability under said Section 8.1, then,
notwithstanding any other provision hereof to the contrary, the amount of
such liability shall, without any further action by such Subsidiary
Guarantor, the Holder or any other Person, be automatically limited and
reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or
proceeding.
SECTION 8.8 LIMITATION ON KERNER'S LIABILITY. It is understood and agreed
that the sole recourse of the Holder in respect of the obligations of Tri-Star
Technologies under this Section 8 shall be to the assets of Tri-Star
Technologies and that nothing contained herein shall create any obligation of or
right to look to Alexander Kerner or his assets individually for the
satisfaction of such obligations.
SECTION 8.9 LIMITATION ON GUTERMANN'S LIABILITY. It is understood and
agreed that the sole recourse of the Holder in respect of the obligations of
Unidec under this Section 8 shall be to the assets of Unidec and that nothing
contained herein shall create any obligation of or right to look to Silvia
Gutermann or her assets individually for the satisfaction of such obligations.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, demands and requests of any kind to be
delivered to any party hereto in connection with this Warrant shall be in
writing (i) delivered personally, (ii) sent by nationally-recognized overnight
courier, (iii) sent by first class, registered or certified mail, return receipt
requested or (iv) sent by facsimile, in each case to such party at its address
as follows (or such other address as shall be notified in writing):
(a) if to the Corporation, to:
DeCrane Aircraft Holdings, Inc.
155 Montrose West Ave., Suite 210
Copley, Ohio 44321
Attention: R. Jack DeCrane
Telephone: 330-668-2518
Telecopier: 330-668-3061
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(b) if to ING, to:
Internationale Nederlanden (U.S.)
Capital Corporation
135 East 57th Street
New York, New York 10021
Attention: Corporate Finance Department
Telephone: 212/409-1521
Telecopier: 212/593-3362
Any notice, demand or request so delivered shall constitute valid notice under
this Warrant and shall be deemed to have been received (i) on the day of actual
delivery in the case of personal delivery, (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.
SECTION 9.2. 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 Corporation, 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
Corporation.
SECTION 9.3. AMENDMENTS AND WAIVERS. Any provision of this Warrant may be
amended or waived, but only pursuant to a written agreement signed by the
Corporation, the Subsidiary Guarantors and the Holder.
SECTION 9.4. SEVERABILITY. Any provision of this Warrant which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Warrant
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 9.5. SPECIFIC PERFORMANCE. Each Holder shall have the right to
specific performance by the Corporation of the provisions of this Warrant, in
addition to any other remedies it may have at law or in equity. The Corporation
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
Corporation for specific performance of this Warrant by the Holders of the
Warrants or Warrant Shares.
SECTION 9.6. BINDING EFFECT. This Warrant shall be binding upon and inure
to the benefit of the Corporation, each Holder and their respective successors
and assigns.
SECTION 9.7. ENTIRE AGREEMENT; GOVERNING LAW. THIS WARRANT (INCLUDING,
WITHOUT LIMITATION, THE OBLIGATIONS OF UNIDEC UNDER SECTION 8 HEREOF) SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Warrant
constitutes the entire understanding among the parties hereto with respect to
the subject matter hereof and supersede any prior agreements, written or oral,
with respect thereto. In the event of any conflict between the terms of this
Warrant and the terms of the Registration Rights Agreement or Shareholders
Agreement (except with respect to limitations on the transfer of Warrants and
Warrant Shares set forth therein), the terms of this Warrant shall be deemed to
govern.
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SECTION 9.8. BENEFITS OF THIS WARNING. Nothing in this Warrant shall be
construed to give to any person other than the Corporation and each Holder of a
Warrant or a Warrant Share any legal or equitable right, remedy or claim
hereunder.
SECTION 9.9. HEADINGS. The various headings of this Warrant are inserted
for convenience only and shall not affect the meaning or interpretation of this
Warrant or any provisions hereof or thereof.
SECTION 9.10. INDEMNIFICATION. The Corporation shall indemnify, defend
and hold the Holder harmless against all liability, loss or damagte, together
with all reasonable costs and expenses related thereto (including legal and
accounting fees and expenses), arising from, relating to, or connected with the
untruth, inaccuracy or breach of any representations, warranties or covenants
contained herein.
SECTION 9.11. EXPENSES. The Corporation will promptly (and in any event
within thirty (30) days of having any material or invoice therefor) pay all
reasonable fans, expenses and costs relating hereto, including, but not limited
to, (i) all transfer, stamp, documentary or other similar notes, assignments or
charges levied by any governmental or revenue authority in respect hereof or any
other document referred to herein, (ii) fees and expenses (including, without
limitation, reasonable attorneys' fees) incurred in respect of the enforcement
by Holders of the rights granted to Holders under this Warrant, and (iii) the
expenses relating to the consideration, organization, preparation or execution
of any amendments, waivers or consents requested by the Corporation pursuant to
the provisions hereof, whether or not any such amendments, waivers or consents
are executed.
SECTION 9.12. ATTORNEYS' FEES. In any action or proceeding brought by a
party to enforce any provision of this Warrant, the prevailing party shall be
entitled to recover the reasonable costs and expenses incurred by it in
connection with that action or proceeding (including, but not limited to,
attorneys' fees).
SECTION 9.13. FILINGS. The Corporation shall, at its own expense,
promptly execute and deliver, or cause to be executed and delivered, to the
Holder all applications, certificates, instruments and all other documents and
papers that such holder of Warrants may reasonably request in connection with
the obtaining of any consent, approval, qualification, or authorization of any
federal, provincial, state or local government (or any agency or commission
thereof) necessary or appropriate in connection with, or for the effective
exercise of, any Warrants then held by such holder.
SECTION 9.14. OTHER TRANSACTIONS. Nothing contained herein shall preclude
the Holder from engaging in any transaction. In addition to those contemplated
by this Warrant with the Corporation or any of its Affiliates in which the
Corporation or such Affiliate is not restricted hereby from engaging with any
other Person.
SECTION 9.15. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN)
OR ACTIONS OF THE HOLDERS, THE CORPORATION OR THE SUBSIDIARY GUARANTORS SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; THE
CORPORATION AND THE SUBSIDIARY GUARANTORS EACH HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
CORPORATION AND THE SUBSIDIARY GUARANTORS EACH FURTHER IRREVOCABLY
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CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE CORPORATION AND
THE SUBSIDIARY GUARANTORS EACH HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT
REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT THE CORPORATION OR ANY SUBSIDIARY
GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY
COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT
PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE CORPORATION AND THE SUBSIDIARY GUARANTORS EACH
HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
WARRANT.
SECTION 9.16. WAIVER OF JURY TRIAL. THE HOLDERS, THE CORPORATION AND
THE SUBSIDIARY GUARANTORS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS WARRANT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE HOLDERS, THE CORPORATION OR THE SUBSIDIARY GUARANTORS. THE
CORPORATION AND EACH OF THE SUBSIDIARY GUARANTORS ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER ACQUIRING THIS WARRANT.
IN WITNESS WHEREOF, DeCrane Aircraft Holdings, Inc. and each
Subsidiary Guarantor has caused this Warrant to be duly executed and delivered
by its authorized officers, all as of the date and year first above written.
DECRANE AIRCRAFT HOLDINGS, INC.
By: /s/ R Jack DeCrane
------------------------------
Name:
Title:
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SUBSIDIARY GUARANTORS
---------------------
ADS ACQUISITION, INC.
By /s/ R Jack De Crane
------------------------------
Title:
TRI-STAR HOLDINGS, INC.
By /s/ R Jack DeCrane
-------------------------------
Title:
TRI-STAR ELECTRONICS INTERNATIONAL, INC.
By /s/ R Jack DeCrane
-------------------------------
Title:
TRI-STAR TECHNOLOGIES, INC.
By /s/ R Jack DeCrane
-------------------------------
Title:
TRI-STAR TECHNOLOGIES
By Tri-Star Technologies,
Inc., as general partner
By /s/ R Jack DeCrane
--------------------------
Title:
TRI-STAR ELECTRONICS EUROPE S.A.,
MEZZOVICO
By /s/ [illegible]
-------------------------------
Title:
CORY HOLDINGS, INC.
By R Jack DeCrane
-------------------------------
Title:
-29-
CORY COMPONENTS, INC.
By /s/ R Jack DeCrane
-------------------------------
Title:
HOLLINGSEAD INTERNATIONAL, INC.
By /s/ R Jack DeCrane
-------------------------------
Title:
HOLLINGSEAD INTERNATIONAL LIMITED
By /s/ R Jack DeCrane
-------------------------------
Title:
-30-
DECRANE AIRCRAFT HOLDINGS, INC.
Common Stock Purchase Warrant
TABLE OF CONTENTS
Page
------
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II ISSUANCE OF WARRANT; CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.1. Issuance of Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III REGISTRATION; EXCHANGE; TRANSFER; TAXES. . . . . . . . . . . . . . . . . . . 9
SECTION 3.1 Form of Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2 Exchange of Warrant for Warrants . . . . . . . . . . . . . . . . . . . 10
SECTION 3.3 Transfer of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV EXERCISE OF WARRANT; EXCHANGE FOR WARRANT SHARES. . . . . . . . . . . . . . . 11
SECTION 4.1 Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.2 Exchange for Warrant Shares. . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.3 Issuance of Common Stock . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.4 Adjustment of Exercise Price and Number of Warrant Shares. . . . . . 12
SECTION 4.4.1. Adjustment upon Issuance of Common Stock . . . . . . . . . . . . . . 12
SECTION 4.4.2. Subdivisions or Combinations of Common Stock . . . . . . . . . . . . 14
SECTION 4.4.3. Capital Reorganization or Capital Reclassifications. . . . . . . . . 14
SECTION 4.4.4. Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.4.5. Notice; Calculations; Etc. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.4.6. Certain Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.4.7. Excluded Transactions; Included Transactions . . . . . . . . . . . . 15
SECTION 4.4.8. Adjustment Rules . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.4.9. Regulated Holders. . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE V CERTAIN OTHER RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1. Payments in Respect of Dividends and Distributions . . . . . . . . . . 16
SECTION 5.2. Put Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.3. Call Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VI REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.1. Representations and Warranties of the Holder . . . . . . . . . . . . . 19
SECTION 6.2. Representations and Warranties of the Corporation. . . . . . . . . . . 19
ARTICLE VII COVENANTS OF THE CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.1. Notices of Certain Actions . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.2. Financial Statements and Reports . . . . . . . . . . . . . . . . . . . 20
SECTION 7.3. Information Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.4. Regulated Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.5. Merger or Consolidation of the Corporation . . . . . . . . . . . . . . 22
SECTION 7.6. Reservation of Shares. . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.7. Current Public Information . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.8. Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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Page
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ARTICLE VIII. GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.1 The Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.2 Obligations Unconditional . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.3 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.4 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.5 Continuing Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.6 Rights of Contribution. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.7 General Limitation on Guarantee Obligations . . . . . . . . . . . . . . 25
SECTION 8.8 Limitation on Kerner's Liability. . . . . . . . . . . . . . . . . . . . 25
SECTION 8.9 Limitation on Gutermann's Liability . . . . . . . . . . . . . . . . . . 25
ARTICLE IX. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.2. No Voting Rights; Limitations of Liability . . . . . . . . . . . . . . 26
SECTION 9.3. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.4. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.5. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.6. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.7. Entire Agreement; Governing Law. . . . . . . . . . . . . . . . . . . . 26
SECTION 9.8. Benefit of this Warrant. . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.9. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.10. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.11. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.12. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.13. Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.14. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9.15. Forum Selection and Consent to Jurisdiction. . . . . . . . . . . . . . 27
SECTION 9.16. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . 28
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