WARRANT AGREEMENT
Dated as of
May 7, 1999
between
TULTEX CORPORATION
and
FIRST UNION NATIONAL BANK
as Warrant Agent
Warrants for
Common Stock of
Tultex Corporation
TABLE OF CONTENTS
Page
ARTICLE I Definitions
SECTION 1.01. Definitions
SECTION 1.02. Other Definitions
SECTION 1.03. Rules of Construction
ARTICLE II Warrant Certificates
SECTION 2.01. Form and Dating
SECTION 2.02. Execution and Countersignature
SECTION 2.03. Warrant Registrar
SECTION 2.04. Warrantholder Lists
SECTION 2.05. Transfer and Exchange
SECTION 2.06. Replacement Certificate
SECTION 2.07. Outstanding Warrants
SECTION 2.08. Temporary Warrants
SECTION 2.09. Cancelation
SECTION 2.10. CUSIP Numbers
ARTICLE III Exercise Terms
SECTION 3.01. Exercise
SECTION 3.02. Exercise Periods
SECTION 3.03. Expiration
SECTION 3.04. Manner of Exercise
SECTION 3.05. Issuance of Warrant Shares
SECTION 3.06. Fractional Warrant Shares
SECTION 3.07. Reservation of Warrant Shares
SECTION 3.08. Compliance with Law
ARTICLE IV Antidilution Provisions
SECTION 4.01. Changes in Common Stock
SECTION 4.02. Cash Dividends and Other Distributions
SECTION 4.03. Common Stock Issue
SECTION 4.04. Issuance of Rights or Options
SECTION 4.05. Combination; Liquidation
SECTION 4.06. Other Events
SECTION 4.07. Superseding Adjustment
SECTION 4.08. Minimum Adjustment
SECTION 4.09. Notice of Adjustment
SECTION 4.10. Notice of Certain Transactions
SECTION 4.11. Adjustment to Warrant Certificate
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ARTICLE V Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement
SECTION 5.02. Suspension
SECTION 5.03. Blue Sky
SECTION 5.04. Accuracy of Disclosure
SECTION 5.05. Indemnification
SECTION 5.06. Additional Acts
SECTION 5.07. Expenses
ARTICLE VI Warrant Agent
SECTION 6.01. Appointment of Warrant Agent
SECTION 6.02. Rights and Duties of Warrant Agent
SECTION 6.03. Individual Rights of Warrant Agent
SECTION 6.04. Warrant Agent's Disclaimer
SECTION 6.05. Compensation and Indemnity
SECTION 6.06. Successor Warrant Agent
ARTICLE VII Miscellaneous
SECTION 7.01. SEC Reports
SECTION 7.02. Persons Benefiting
SECTION 7.03. Rights of Holders
SECTION 7.04. Amendment
SECTION 7.05. Notices
SECTION 7.06. Governing Law
SECTION 7.07. Successors
SECTION 7.08. Multiple Originals
SECTION 7.09. Table of Contents
SECTION 7.10. Severability
APPENDIX A PROVISIONS RELATING TO WARRANTS
EXHIBIT A Form of Warrant Certificate
EXHIBIT B Form of Election to Exercise
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Warrant Agreement") is made and entered
into as of May 7, 1999, between TULTEX CORPORATION, a Virginia corporation (the
"Company"), and FIRST UNION NATIONAL BANK, a national banking association, as
warrant agent (the "Warrant Agent").
RECITALS
A In connection with the Invitation and Consent Solicitation
(the "Invitation and Solicitation") by the Company, dated April 12, 1999, to
holders ("Noteholders") of the Company's 10 5/8% Notes due 2005 and 9 5/8% Notes
due 2007 (collectively, the "Notes"), the Company has agreed to issue warrants
to purchase shares of the Company's common stock ("Common Stock") to Noteholders
in respect of (1) Notes that were validly tendered prior to the Consent Date (as
defined in the Invitation and Solicitation), and not withdrawn, but not accepted
for purchase by the Company and (2) Notes that were validly consented prior to
the Consent Date, and not revoked, without being tendered, as described in the
Invitation and Solicitation.
B. The Company will issue warrants to acquire, in the
aggregate, 10,350,000 shares of the Common Stock at an exercise price of $0.8125
per share and warrants to acquire, in the aggregate, 5,175,000 shares of the
Common Stock at an exercise price of $1.425 per share (collectively, the
"Warrants"). Warrants of each exercise price will be issued pro rata, based on
the principal amount of Notes held, to Noteholders eligible to receive them.
C. The Company desires to enter into this Agreement to set
forth the terms and conditions of the Warrants and the rights of the holders
thereof.
D. The Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent has been directed by the Noteholders to enter
into this Warrant Agreement and to act in connection with the issuance,
exchange, transfer, substitution and exercise of the Warrants.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby agreed and acknowledged, the
parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any specified Person means (i) any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified
Person or (ii) any other Person who is a director or executive officer (A) of
such specified Person, (B) of any subsidiary of such specified Person or (C) of
any Person described in clause (i) above. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate" shall also mean any beneficial owner of shares representing 5% or
more of the total voting power of all classes of Capital Stock of such Person
entitled to vote in the election of directors, managers or trustees ("Voting
Stock") (on a fully diluted basis) or of rights or warrants to purchase such
Voting Stock (whether or not currently exercisable) and any Person who would be
an Affiliate of any such beneficial owner pursuant to the first sentence hereof.
"Board of Directors" or "Board" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day that is not a Saturday, Sunday or other
day on which banking institutions in New York State are authorized or required
by law to close.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Certificated Warrants" means certificated Warrants in fully registered
definitive form.
"Closing Price" means the last sale price, regular way, on such date
or, if no sale takes place on such date, the average of the closing bid and
asked prices on such date, in each case as officially reported on the principal
national securities exchange on which any Common Stock is then listed or
admitted to trading.
"Combination" means an event in which the Company consolidates with,
merges with or into, or conveys, transfers or leases all or substantially all of
its assets to, another Person.
"Current Market Value" per share of Common Stock or any other security
at any date means (i) if the security is not registered under the Exchange Act,
(a) the value of the security, determined in good faith by the Board of
Directors and certified in a board resolution, based on the most recently
completed arm's-length transaction between the Company and a Person other than
an Affiliate of the Company, the closing of which occurs on such date or shall
have occurred within the six-month period preceding such date, or (b) if no such
transaction shall have occurred on such date or within such six-month period,
the value of the security as determined by a nationally recognized investment
banking firm or (ii) if the security is registered under the Exchange Act, the
average of the daily Closing Prices (or the equivalent in an over-the-counter
market) for each Business Day during the period commencing 15 Business Days
before such date and ending on the date one day prior to such date, or if the
security has been registered under the Exchange Act for less than 15 consecutive
Business Days before such date, the average of the
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daily Closing Prices (or such equivalent) for all of the Business Days before
such date for which daily Closing Prices are available; provided, however, that
if the Closing Price is not determinable for at least ten Business Days in such
period, the "Current Market Value" of the security shall be determined as if the
security were not registered under the Exchange Act.
"CUSIP Number" means:
(a) in respect of the Warrants and the Warrant Shares prior to
the effectiveness of a Registration Statement therefor, a private
placement number; and
(b) in respect of the Warrants and the Warrant Shares after
the effectiveness of a Registration Statement therefor, a CUSIP Number.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which such
Warrant is exercised pursuant to Section 3.04.
"Holder" or "Warrantholder" means the Person in whose name a Warrant is
registered on the Warrant Registrar's books.
"IAI" has the meaning set forth in Appendix A hereto.
"Issue Date" means the date on which the Warrants are initially issued.
"Officer" means the Chairman of the Board of Directors, the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Warrant Agent. Such counsel may be an employee of or counsel
to the Company or the Warrant Agent, or in the case of an opinion of counsel
required to be provided by a Holder, an employee of, or regular outside counsel
to, such Holder.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
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"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means the Securities Act of 1933, as amended.
"Warrant Agent" means the party named as such in this Warrant Agreement
until a successor replaces it and, thereafter, means the successor.
"Warrant Agreement" means this Warrant Agreement as amended or
supplemented from time to time.
"Warrant Certificates" mean the registered certificates issued by the
Company under this Warrant Agreement representing the Warrants.
"Warrant Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Warrant Agent assigned by the Warrant
Agent to administer its corporate trust matters.
"Warrant Shares" mean the shares of Common Stock for which the Warrants
are exercisable or which have been issued upon exercise of Warrants.
SECTION 1.02. Other Definitions.
Defined in
Term Section
- ---- -------
"Advice" 5.01
"Common Shelf Registration Statement" 5.01
"Effectiveness Period" 5.01
"Exercise Price" 3.01
"Expiration Date" 3.02(b)
"Holders' Information" 5.01
"Registration Statement" 5.01
"Stock Registrar" 3.07
"Stock Transfer Agent" 3.05
"Successor Company" 4.05(a)
"Warrant Registrar" 2.03
"Warrant Shelf Registration Statement" 5.01
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires: (i) a defined term has the meaning assigned to it; (ii) an accounting
term not otherwise defined has the meaning assigned to it in accordance with
generally accepted accounting principles as in effect from time to time; (iii)
"or" is not exclusive; (iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural include the
singular.
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ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating. Provisions relating to Warrants are set
forth in the Appendix, which is hereby incorporated in and expressly made a part
of this Warrant Agreement. The Warrant Certificates shall each be substantially
in the form of Exhibit A hereto, which is hereby incorporated in and expressly
made a part of this Warrant Agreement. The Warrant Certificates may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Warrant Certificate shall be dated the date that it is executed by the
Company and countersigned by the Warrant Agent.
SECTION 2.02. Execution and Countersignature. Two Officers shall sign
the Warrant Certificates for the Company by manual or facsimile signature. If an
Officer whose signature is on a Warrant Certificate no longer holds that office
at the time the Warrant Agent countersigns the Warrant Certificate, the Warrant
Certificate shall be valid nevertheless. A Warrant shall not be valid until an
authorized signatory of the Warrant Agent manually countersigns the Warrant
Certificate. The signature shall be conclusive evidence that the Warrant has
been authenticated under this Warrant Agreement. The Warrant Agent shall
countersign and make available for delivery Warrant Certificates as set forth in
the Appendix. The Warrant Agent may appoint an agent reasonably acceptable to
the Company to countersign the Warrants. Any such appointment shall be evidenced
by an instrument signed by a Warrant Officer, a copy of which shall be furnished
to the Company. Unless limited by the terms of such appointment, an agent of the
Warrant Agent may countersign Warrants whenever the Warrant Agent may do so.
Each reference in this Warrant Agreement to countersigning by the Warrant Agent
includes countersigning by such agent. Warrant No. 1 issued to U.S. Bank
National Association shall be valid notwithstanding it is not authenticated by
the Warrant Agent.
SECTION 2.03. Warrant Registrar. The Company shall maintain an office
or agency where Warrants may be presented for registration of transfer, exchange
or exercise (the "Warrant Registrar"). The Warrant Registrar shall keep a
register of the Warrants and of their transfer, exchange or exercise. The
Company may have one or more co- registrars. The term Warrant Registrar includes
any co-registrars. The Company initially appoints the Warrant Agent as Warrant
Registrar in connection with the Warrants.
The Company shall enter into an appropriate agency agreement with any
Warrant Registrar not a party to this Warrant Agreement. The agreement shall
implement the provisions of this Warrant Agreement that relate to such agent.
The Company shall notify the Warrant Agent of the name and address of any such
agent. If the Company fails to maintain a Warrant Registrar, the Warrant Agent
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 6.05. The Company or any of its domestically organized
wholly owned subsidiaries may act as Warrant Registrar.
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The Company may remove any Warrant Registrar upon written notice to
such Warrant Registrar and to the Warrant Agent; provided, however, that no such
removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Warrant Registrar and delivered to the Warrant Agent or (2)
notification to the Warrant Agent that the Warrant Agent shall serve as Warrant
Registrar until the appointment of a successor in accordance with clause (1)
above. The Warrant Registrar may resign at any time upon written notice;
provided, however, that the Warrant Agent may resign as Warrant Registrar only
if the Warrant Agent also resigns as Warrant Agent in accordance with Section
6.06. The Company and the Warrant Agent may deem and treat the Person in whose
name a Warrant Certificate is registered as the absolute owner of such Warrant
Certificate for all purposes whatsoever and neither the Company nor the Warrant
Agent shall be affected by notice to the contrary.
SECTION 2.04. Warrantholder Lists. The Warrant Agent shall preserve in
as current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Warrantholders. If the Warrant Agent is not the
Warrant Registrar, the Company shall furnish, or cause the Warrant Registrar to
furnish, to the Warrant Agent, at such times as the Warrant Agent may request in
writing, a list in such form and as of such date as the Warrant Agent may
reasonably require of the names and addresses of Warrantholders.
SECTION 2.05. Transfer and Exchange. The Warrants shall be issued in
registered form and shall be transferable only upon the surrender of a Warrant
Certificate for registration of transfer and in compliance with Appendix A. When
a Warrant is presented to the Warrant Registrar with a request to register a
transfer, the Warrant Registrar shall register the transfer as requested if the
requirements of Section 8-401(a) of the Uniform Commercial Code are met. When
Warrants are presented to the Warrant Registrar with a request to exchange them
for an equal number of Warrants of other denominations, the Warrant Registrar
shall make the exchange as requested if the requirements of Section 8-401(a)(1)
and (2) of the Uniform Commercial Code are met. To permit registration of
transfers and exchanges, the Company shall execute and the Warrant Agent shall
countersign Warrant Certificates at the Warrant Registrar's request. The Company
may require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or exchange pursuant to
this Section 2.05. All Warrants issued upon any transfer or exchange pursuant to
the terms of this Warrant Agreement will evidence the same Warrants as the
Warrants surrendered upon such transfer or exchange.
SECTION 2.06. Replacement Certificate. If a mutilated Warrant is
surrendered to the Warrant Agent or if the Holder of a Warrant claims that the
Warrant Certificate has been lost, destroyed or wrongfully taken, the Company
shall execute and the Warrant Agent shall countersign a replacement Warrant
Certificate if the requirements of Section 8-405 of the Uniform Commercial Code
are met (other than, if such holder is an IAI, paragraph (a)(2) of such
Section), such that the Holder (i) notifies the Company or the Warrant Agent
within a reasonable time after he has notice of such loss, destruction or
wrongful taking and the Warrant Agent does not register a transfer prior to
receiving such notification, (ii) makes such request to the Company or the
Warrant Agent prior to the Warrant being acquired by a protected purchaser as
defined in
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Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and (iii)
satisfies any other reasonable requirements of the Warrant Agent. If required by
the Warrant Agent or the Company, and if such Holder is not an IAI, such Holder
shall furnish an indemnity bond sufficient in the judgment of the Warrant Agent
to protect the Company and the Warrant Agent from any loss that either of them
may suffer if a Warrant is replaced. The Company and the Warrant Agent may
charge the Holder for their expenses in replacing a Warrant Certificate. Every
replacement Warrant is an additional obligation of the Company. The provisions
of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement of mutilated, lost,
destroyed or wrongfully taken Securities.
SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time
are all Warrant Certificates executed by the Company and countersigned by the
Warrant Agent except for those canceled by it, those delivered to it for
cancelation and those described in this Section 2.07 as not outstanding. A
Warrant does not cease to be outstanding because an Affiliate of the Company
holds the Warrant. A Warrant ceases to be outstanding if the Company holds the
Warrant. If a Warrant Certificate is replaced pursuant to Section 2.06, it
ceases to be outstanding unless the Warrant Agent and the Company receive proof
satisfactory to them that the replaced Warrant Certificate is held by a
protected purchaser.
SECTION 2.08. Temporary Warrants. In the event that Definitive Warrants
(as defined in the Appendix) are to be issued under the terms of this Warrant
Agreement, until such Definitive Warrants are ready for delivery, the Company
may prepare and the Warrant Agent shall countersign temporary Warrant
Certificates. Temporary Warrant Certificates shall be substantially in the form
of Definitive Warrants but may have variations that the Company considers
appropriate for temporary Warrants. Without unreasonable delay, the Company
shall prepare and the Warrant Agent shall countersign Definitive Warrants and
deliver them in exchange for temporary Warrant Certificates upon surrender of
such temporary Warrant Certificates.
SECTION 2.09. Cancelation. The Company at any time may deliver Warrant
Certificates to the Warrant Agent for cancelation. The Warrant Agent and no one
else shall cancel all Warrant Certificates surrendered for registration of
transfer, exchange, exercise or cancelation and deliver canceled Warrant
Certificates to the Company pursuant to written direction by an Officer. The
Company may not issue new Warrant Certificates to replace Warrants Certificates
that have been exercised or Warrants which the Company has purchased or
otherwise acquired. The Warrant Agent shall not countersign Warrant Certificates
to replace canceled Warrant Certificates other than pursuant to the terms of
this Warrant Agreement.
SECTION 2.10. CUSIP Numbers. The Company shall obtain and thereafter
maintain a CUSIP Number in respect of the Warrants and a CUSIP Number in respect
of the Common Stock, and the Warrant Agent shall use "CUSIP" numbers in notices
to Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Warrant Certificates or as contained in any notice and that reliance may
be placed only on the other identification numbers printed on the Warrant
Certificates, and any such notice shall not be affected by any defect in or
omission of such numbers.
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ARTICLE III
Exercise Terms
SECTION 3.01. Exercise. The Company is issuing Warrants to acquire, in
the aggregate, 10,350,000 shares of the Common Stock at an exercise price of
$0.8125 per share and warrants to acquire, in the aggregate, 5,175,000 shares of
the Common Stock at an exercise price of $1.425 per share (the "Exercise
Price"). Warrants having each Exercise Price will be issued pro rata, based on
the principal amount of Notes held, to Noteholders eligible to receive them.
Each Warrant shall initially entitle the Holder thereof, subject to adjustment
pursuant to the terms of this Warrant Agreement, to purchase shares of Common
Stock at the Exercise Price applicable to the particular Warrant.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and conditions
set forth herein, the Warrants shall be exercisable at any time and from time to
time on any Business Day after the Issue Date; PROVIDED, HOWEVER, that holders
of Warrants will be able to exercise their Warrants only if (i) the Common Shelf
Registration Statement relating to the Warrant Shares is effective or (ii) the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act, and the Warrant Shares are qualified for sale or exempt from
qualification under the applicable securities laws of the states or other
jurisdictions in which such Holders reside.
(b) No Warrant shall be exercisable after April 15, 2007 (the
"Expiration Date").
SECTION 3.03. Expiration. A Warrant shall terminate and become void as
of the earlier of (i) the close of business on the Expiration Date or (ii) the
date such Warrant is exercised. The Company shall give notice not less than 90,
and not more than 120, days prior to the Expiration Date to the Holders of all
then outstanding Warrants to the effect that the Warrants will terminate and
become void as of the close of business on the Expiration Date; PROVIDED,
HOWEVER, that if the Company fails to give notice as provided in this Section
3.03, then the Expiration Date shall be extended to, and shall instead occur, on
the date which is 90 days after such notice is actually given.
SECTION 3.04. Manner of Exercise.
(a) Warrants may be exercised upon:
(i) surrender to the Warrant Agent at the office of the
Warrant Agent of the related Warrant Certificate, together with a properly
completed and executed Election to Exercise in the form attached hereto as
Exhibit B to purchase Common Stock; and
(ii) payment to the Warrant Agent, for the account of the
Company, of the Exercise Price for each Warrant Share or other security issuable
upon the exercise of such Warrants then exercised.
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Such payment shall be made:
(i) in cash or by certified or official bank check payable to
the order of the Company or by wire transfer of funds to an account designated
by the Company for such purpose;
(ii) by a tender of Notes pursuant to Section 3.04(b);
(iii) by a tender of cash pursuant to Section 304(a)(i) hereof
and Notes pursuant to Section 3.04(b) hereof; or
(iv) by delivery of Warrant Certificates pursuant to Section
3.04(c) hereof.
(b) To the extent that any Holder of any Warrant Certificate surrenders
with such Warrant Certificate any Note then held by such Holder, such Holder
shall be deemed to have paid that portion of the Exercise Price equal to one
hundred percent (100%) of the principal of such Note which the Holder thereof
directs the Company to accept as payment of the Exercise Price, which Note shall
be canceled and not reissued. To the extent that the principal amount of such
tendered Note is greater than the amount of the Exercise Price paid by surrender
thereof, the Company shall deliver a new Note to the tendering Holder thereof,
in accordance with the provisions of the indenture pursuant to which the Notes
were issued, in the principal amount equal to the amount not so applied to
payment of the Exercise Price. At the time of the issuance of the shares of
Common Stock pursuant to the exercise of the Warrants of any Holder, the Company
shall pay all accrued and unpaid interest on the principal amount of any Note of
such Holder canceled pursuant to this Section 3.04(b) up to but excluding the
date of such issuance. For purposes of Rule 144 under the Securities Act, 17
C.F.R. ss. 230.144, a tender of the principal of any Notes in payment of the
Exercise Price shall not be deemed a prepayment of the Notes, but rather a
conversion of such Notes, pursuant to the terms of the Notes, such indenture,
this Agreement and the Warrants, into Common Stock.
(c) In the event that any Holder of Warrant Certificates delivers such
Warrant Certificates to the Company and notifies the Company in writing that
such Holder intends to exercise all, or any portion of, the Warrants represented
by such Warrant Certificates to satisfy its obligation to pay the Exercise Price
in respect thereof by virtue of the provisions of this Section 3.04(c), such
Holder shall become entitled to receive, instead of the number of shares of
Common Stock such Holder would have received had the Exercise Price been paid
pursuant to Section 3.04(a)(i) or Section 3.04(b) hereof, a number of shares of
Common Stock in respect to the exercise of such Warrants equal to the product
of:
(i) the number of shares of Common Stock issuable upon such
exercise of such Warrant Certificate (or, if only a portion of such Warrant
Certificate is being exercised, issuable upon the exercise of such portion);
MULTIPLIED BY
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(ii) the quotient of:
(A) the difference of:
(I) the Current Market Value per share of
Common Stock at the time of such exercise; MINUS
(II) the Exercise Price per share of Common
Stock at the time of such exercise;
DIVIDED BY
(B) the Current Market Value per share of Common
Stock at the time of such exercise.
For purposes of Rule 144 under the Securities Act, 17 C.F.R. ss. 230.144, the
exercise of any Warrants in accordance with this Section 3.04(c) shall be deemed
to be a conversion of such Warrants, pursuant to the terms of this Agreement and
the Warrants, into Common Stock.
(d) Subject to Section 3.02, the rights represented by the
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or from time to time in part and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration
Date, a new Warrant Certificate representing the remaining Warrants shall be
issued. The Warrant Agent shall countersign and deliver the required new Warrant
Certificates, and the Company, at the Warrant Agent's request, shall supply the
Warrant Agent with Warrant Certificates duly signed on behalf of the Company for
such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06, upon
the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.04, the Warrant Agent shall requisition from
the Company, and the Company shall issue and, if appointed, cause the transfer
agent for the Common Stock ("Stock Transfer Agent") to countersign and deliver
to or upon the written order of the Holder and in such name or names as the
Holder may designate, a certificate or certificates for the number of full
Warrant Shares so purchased upon the exercise of such Warrants or other
securities or property to which it is entitled, registered or otherwise, to the
Person or Persons entitled to receive the same (including any depositary
institution so designated by a Holder), together with cash as provided in
Section 3.06 in respect of any fractional Warrant Shares otherwise issuable upon
such exercise. Such certificate or certificates shall be deemed to have been
issued and any Person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrant Certificates and payment of the per share Exercise Price, as
aforesaid; PROVIDED, HOWEVER, that if, at such date, the transfer books for the
Warrant Shares shall be closed, the certificates for the Warrant Shares in
respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall next be opened and until such date the Company
shall be under no duty to deliver any certificates for such Warrant
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Shares; provided further, however, that such transfer books, unless otherwise
required by law, shall not be closed at any one time for a period longer than 20
calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be exercised in full at the same time by the same Holder,
the number of full Warrant Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Warrant Shares which
may be purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.06, be issuable upon the exercise of
any Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to the Current Market Value per Warrant Share, as determined on the
day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall at all
times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock (the "Stock Registrar") shall at
all times until the Expiration Date reserve such number of authorized shares as
shall be required for such purpose. The Company will keep a copy of this Warrant
Agreement on file with the Stock Transfer Agent if such Stock Transfer Agent is
appointed. The Company will supply such Stock Transfer Agent, if appointed, with
duly executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
3.06. The Company will furnish to such Stock Transfer Agent, if appointed, a
copy of all notices of adjustments (and certificates related thereto)
transmitted to each Holder. Before taking any action which would cause an
adjustment pursuant to Article IV to reduce the Exercise Price below the then
par value (if any) of the Common Stock, the Company shall take any and all
corporate action which may, in the opinion of counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights, free from all taxes and free from all liens, charges and
security interests with respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in this
Warrant Agreement to the contrary, in no event shall a Holder be entitled to
exercise a Warrant unless (i) a registration statement filed under the
Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) in the opinion of counsel (which may be given by an employee
of, or regular outside counsel to, such Holder) the exercise of such Warrants is
exempt from the registration requirements of the Securities Act and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holders reside.
(b) If any shares of Common Stock required to be reserved for
purposes of the exercise of Warrants require, under any other Federal or state
law or applicable governing rule or
11
regulation of any national securities exchange, registration with or approval of
any governmental authority, or listing on any such national securities exchange
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved by such
governmental authority or listed on the relevant national securities exchange,
as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at any time
and from time to time the Company shall (i) pay a dividend or make a
distribution on the Common Stock in shares of Common Stock or other shares of
Capital Stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) increase or
decrease the number of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock issuable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving effect to such adjustment, the Holder of each
Warrant shall be entitled to receive the number of shares of Common Stock upon
exercise of such Warrant that such Holder would have owned or have been entitled
to receive had such Warrants been exercised immediately prior to the happening
of the events described above (or, in the case of a dividend or distribution of
Common Stock, immediately prior to the record date therefor). An adjustment made
pursuant to this Section 4.01 shall become effective immediately after the
distribution date, retroactive to the record date therefor in the case of a
dividend or distribution in shares of Common Stock or other shares of Capital
Stock, and shall become effective immediately after the effective date in the
case of a subdivision, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In the event that
at any time and from time to time the Company shall distribute to all holders of
Common Stock (i) any dividend or other distribution (including any dividend or
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of cash, evidences of its indebtedness,
shares of its Capital Stock or any other properties or securities or (ii) any
options, warrants or other rights to subscribe for, purchase, or which are
convertible into, any of the foregoing (other than, in the case of clause (i)
and (ii) above, (A) any dividend or distribution described in Section 4.01, (B)
any rights, options, warrants or securities described in Section 4.03 or Section
4.04 and (C) any cash dividends or other cash distributions from current or
retained earnings other than extraordinary cash dividends), then the number of
shares of Common Stock issuable upon the exercise of each Warrant immediately
prior to such record date for any such dividend or distribution shall be
increased to a number determined by multiplying the number of shares of Common
Stock issuable upon the exercise of such Warrant immediately prior to such
record date for any such dividend or distribution by a fraction, the numerator
of which shall be the Current Market Value per share of Common Stock on the
record date for such dividend or distribution, and the denominator of which
shall be such Current Market Value per share of
12
Common Stock less the sum of (x) the amount of cash, if any, distributed per
share of Common Stock and (y) the then fair value (as determined in good faith
by the Board of Directors, whose determination shall be evidenced by a board
resolution filed with the Warrant Agent, a copy of which will be sent to Holders
upon request) of the portion, if any, of the distribution applicable to one
share of Common Stock consisting of evidences of indebtedness, shares of stock,
securities, other property, warrants, options or subscription or purchase
rights; and subject to Section 4.08, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
record date by the above fraction. Such adjustments shall be made, and shall
only become effective, whenever any dividend or distribution to which this
Section 4.02 applies is made; provided, however, that the Company is not
required to make an adjustment pursuant to this Section 4.02 if at the time of
such distribution the Company makes the same distribution to Holders of Warrants
as it makes to holders of Common Stock pro rata based on the number of shares of
Common Stock for which such Warrants are exercisable (whether or not currently
exercisable). No adjustment shall be made pursuant to this Section 4.02 which
shall have the effect of decreasing the number of shares of Common Stock
issuable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.03. Common Stock Issue. In the event that at any time or from
time to time the Company shall issue shares of Common Stock for a consideration
per share that is less than the Current Market Value per share of Common Stock
as of the issuance date of such shares, the number of shares of Common Stock
issuable upon the exercise of each Warrant immediately after such issuance date
shall be determined by multiplying the number of shares of Common Stock issuable
upon exercise of each Warrant immediately prior to such issuance date by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately preceding the issuance of such shares plus the number of
additional shares of Common Stock to be issued in such transaction, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately preceding the date for the issuance of such shares plus the total
number of shares of Common Stock which the aggregate consideration expected to
be received by the Company upon the issuance of such shares (as determined in
good faith by the Board of Directors, whose determination shall be evidenced by
a board resolution filed with the Warrant Agent, a copy of which will be sent to
Holders upon request) would purchase at the Current Market Value per share of
Common Stock as of the date of such issuance; and, subject to Section 4.08, in
the event of any such adjustment, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such date
of issuance by the aforementioned fraction; provided, however, that no
adjustment to the number of Warrant Shares issuable upon the exercise of the
Warrants or to the Exercise Price shall be made as a result of (i) the issuance
of shares of Common Stock in bona fide public offerings that are underwritten or
in which a placement agent is retained by the Company, (ii) the issuance of
shares of Common Stock (including upon exercise of options) pursuant to the
terms of and in order to give effect to the 1996 Stock Incentive Plan as in
effect on the date hereof, as it may be amended from time to time, and (iii) the
issuance of shares of Common Stock in connection with acquisitions of products
and businesses other than to Affiliates of the Company. Such adjustment shall be
made, and shall only become effective, whenever such shares are issued. No
adjustment shall be made pursuant to this Section 4.03 which shall have the
effect of decreasing the number of shares of Common Stock issuable upon exercise
of each Warrant or increasing the Exercise Price.
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SECTION 4.04. Issuance of Rights or Options. In the event that at any
time or from time to time the Company shall issue to holders of Common Stock (i)
rights, options or warrants to acquire (provided, however, that no adjustment
shall be made under Section 4.03 or 4.04 upon the exercise of such rights,
options or warrants), or (ii) securities convertible or exchangeable into
(provided, however, that no adjustment shall be made under Section 4.03 or 4.04
upon the conversion or exchange of such securities (other than issuances
specified in (i) or (ii) which are made as the result of anti-dilution
adjustments in such securities)), Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share that is
less than the Current Market Value per share of Common Stock in effect
immediately prior to such issuance other than in connection with the adoption of
a shareholder rights plan by the Company, the number of shares of Common Stock
issuable upon the exercise of each Warrant immediately after such issuance shall
be determined by multiplying the number of shares of Common Stock issuable upon
exercise of each Warrant immediately prior to such issuance by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
securities plus the number of additional shares of Common Stock offered for
subscription or purchase or into which such securities are convertible or
exchangeable, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, warrants or securities plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company upon
the exercise, conversion or exchange of such rights, options, warrants or
securities (as determined in good faith by the Board, whose determination shall
be evidenced by a board resolution filed with the Warrant Agent, a copy of which
will be sent to Holders upon request) would purchase at the Current Market Value
per share of Common Stock as of the record date; and, subject to Section 4.08,
in the event of any such adjustment, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such date
of issuance by the aforementioned fraction; provided, however, that no
adjustment to the number of Warrant Shares issuable upon the exercise of the
Warrants or to the Exercise Price shall be made as a result of the issuance of
options to acquire additional shares of Common Stock pursuant to the terms of
and in order to give effect to the Company's 1996 Stock Incentive Plan and 1996
Director Compensation Plan, as in effect on the date hereof, as they may be
amended or replaced from time to time. Such adjustment shall be made, and shall
only become effective, whenever such rights, options, warrants or securities are
issued. No adjustment shall be made pursuant to this Section 4.04 which shall
have the effect of decreasing the number of shares of Common Stock issuable upon
exercise of each Warrant or increasing the Exercise Price.
SECTION 4.05. Combination; Liquidation. (a) Except as provided in
Section 4.05(b), in the event of a Combination, each Holder shall have the right
to receive upon exercise of the Warrants the kind and amount of shares of
Capital Stock or other securities or property which such Holder would have been
entitled to receive upon completion of or as a result of such Combination had
such Warrant been exercised immediately prior to such event or to the relevant
record date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide, and deliver to the Warrant Agent, an
Opinion of Counsel to the effect
14
that the surviving or acquiring Person (the "Successor Company") in such
Combination has entered into an agreement with the Warrant Agent confirming the
Holders' rights pursuant to this Section 4.05(a) and providing for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article IV. The provisions of this Section 4.05(a) shall
similarly apply to successive Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of the Company, the
Holders of the Warrants shall be entitled to receive, upon surrender of their
Warrant Certificates, such cash distributions on an equal basis with the holders
of Common Stock or other securities issuable upon exercise of the Warrants, as
if the Warrants had been exercised immediately prior to such event, less the
Exercise Price. In the event of any Combination described in this Section
4.05(b), the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding-up of the Company, the Company, shall deposit promptly
with the Warrant Agent the funds, if any, necessary to pay the Holders of the
Warrants the amounts to which they are entitled as described above. After such
funds and the surrendered Warrant Certificates are received, the Warrant Agent
shall make payment to the Holders by delivering a check in such amount as is
appropriate (or, in the case of consideration other than cash, such other
consideration as is appropriate) to such Person or Persons as it may be directed
in writing by the Holders surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which the
foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors, fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then the
Board of Directors shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of the Board of Directors, to
protect such purchase rights as aforesaid, but in no event shall any such
adjustment have the effect of increasing the Exercise Price or decreasing the
number of shares of Common Stock issuable upon exercise of the Warrants.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any
rights, options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article IV, if any thereof shall not have been
exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of Article IV as
if (i) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; PROVIDED,
HOWEVER, that no such readjustment (except by reason of an intervening
adjustment under Section 4.01) shall have the effect of decreasing the number of
Warrant Shares issuable upon the exercise of each Warrant or
15
increasing the Exercise Price by an amount in excess of the amount of the
adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding sections of this Article IV shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of the Warrants that would otherwise be required shall be made unless
and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% the Exercise Price or the
number of shares of Common Stock issuable upon exercise of the Warrants
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required by this
Article IV and not previously made, would result in a minimum adjustment. For
the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrants is adjusted, as herein provided, the Company shall
deliver to the Warrant Agent a certificate of a firm of independent accountants
selected by the Board of Directors (who may be the regular accountants employed
by the Company) setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including a
description of the basis on which (i) the Board of Directors determined the then
fair value of any evidences of indebtedness, other securities or property or
warrants, options or other subscription or purchase rights and (ii) the Current
Market Value of the Common Stock was determined, if either of such
determinations were required), and specifying the Exercise Price and the number
of shares of Common Stock issuable upon exercise of the Warrants after giving
effect to such adjustment. The Company shall promptly cause the Warrant Agent to
mail a copy of such certificate to each Holder in accordance with Section 7.05.
The Warrant Agent shall be entitled to rely on such certificate and shall be
under no duty or responsibility with respect to any such certificate, except to
exhibit the same from time to time, to any Holder desiring an inspection thereof
during reasonable business hours. The Warrant Agent shall not at any time be
under any duty or responsibility to any Holder to determine whether any facts
exist which may require any adjustment of the Exercise Price or the number of
shares of Common Stock or other stock or property issuable on exercise of the
Warrants, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making such adjustment or the
validity or value of any shares of Common Stock, evidences of indebtedness,
warrants, options, or other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event that the
Company shall propose to (a) pay any dividend payable in securities of any class
to the holders of its Common Stock or to make any other non-cash dividend or
distribution to the holders of its Common
16
Stock, (b) offer the holders of its Common Stock rights to subscribe for or to
purchase any securities convertible into shares of Common Stock or shares of
stock of any class or any other securities, rights or options, (c) issue any (i)
shares of Common Stock, (ii) rights, options or warrants entitling the holders
thereof to subscribe for shares of Common Stock or (iii) securities convertible
into or exchangeable or exercisable for Common Stock (in the case of (i), (ii)
and (iii), if such issuance or adjustment would result in an adjustment
hereunder), (d) effect any capital reorganization, reclassification,
consolidation or merger, (e) effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company or (f) make a tender offer or exchange
offer with respect to the Common Stock, the Company shall within five days after
any such action or offer send to the Warrant Agent a notice and the Warrant
Agent shall within five days after receipt thereof send the Holders a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer. Such notice shall be mailed by the Warrant Agent to
the Holders at their addresses as they appear in the books of the Warrant
Registrar, which shall specify the record date for the purposes of such
dividend, distribution or rights, or the date such issuance or event is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed, and shall briefly indicate the effect, if any, of
such action on the Common Stock and on the number and kind of any other shares
of stock and on other property, if any, and the number of shares of Common Stock
and other property, if any, issuable upon exercise of each Warrant and the
Exercise Price after giving effect to any adjustment pursuant to Article IV
which will be required as a result of such action. Such notice shall be given as
promptly as possible and (x) in the case of any action covered by clause (a) or
(b) above, at least 10 days prior to the record date for determining holders of
the Common Stock for purposes of such action or (y) in the case of any other
such action, at least 20 days prior to the date of the taking of such proposed
action or the last date for participation therein by the holders of Common
Stock, whichever shall be the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are stated in the Warrant Certificates initially
issued pursuant to this Warrant Agreement. The Company, however, may at any time
in its sole discretion make any change in the form of Warrant Certificate that
it may deem appropriate to give effect to such adjustments and that does not
affect the substance of the Warrant Certificate, and any Warrant Certificate
thereafter issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so changed.
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement. Subject to
Section 5.02, the Company shall cause to be filed pursuant to Rule 415 (or any
successor provision) of the Securities Act not later than 90 days after the
Issue Date, a shelf registration statement relating to
17
the offer and sale of the Warrants by the Holders from time to time in
accordance with the methods of distribution elected by such holders and set
forth in such registration statement (the "Warrant Shelf Registration
Statement"), and shall use its reasonable best efforts to cause the Warrant
Shelf Registration Statement to be declared effective under the Securities Act
on or before 150 days after the Issue Date, and shall cause to be filed a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof (the "Common Shelf
Registration Statement", and together with the Warrant Shelf Registration
Statement, the "Registration Statements") and shall use its reasonable best
efforts to cause the Common Shelf Registration Statement to be declared
effective on or before 150 days after the Issue Date. The Company shall use its
reasonable best efforts to cause (a) the Warrant Shelf Registration Statement to
remain continuously effective until the earliest of (i) such time as all
Warrants have been sold thereunder, (ii) three years after its effective date
and (iii) such time as all Warrants can be sold without restriction under the
Securities Act and (b) the Common Shelf Registration Statement to remain
continuously effective until the earlier of (i) such time as all Warrants have
been exercised and (ii) the third anniversary of the effective date of the
Common Shelf Registration Statement. In connection with any Registration
Statement, (i) the Company shall furnish to the Warrant Agent, prior to the
filing with the Commission, a copy of any Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the prospectus
included therein and shall use its reasonable best efforts to reflect in each
such document, when filed with the Commission, such comments as the Warrant
Agent may reasonably propose, (ii) before filing any Registration Statement or
prospectus or any amendments or supplements thereto, the Company will furnish to
the Holders of the Warrants and the Warrant Shares, their counsel, and the
underwriters, if any, and their counsel, successive drafts of all such documents
proposed to be filed at such times as will permit a reasonable period for the
review thereof; the Company shall use its reasonable best efforts to reflect in
each such document, when filed with the Commission, such comments as any Holder
of Warrants or Warrant Shares shall make and shall not file any registration
statement or amendment thereto or any prospectus or any supplement thereto
(including such documents incorporated by reference) to which the holders of a
majority of the Warrant or Warrant Shares to be registered shall reasonably
object based on their review of such drafts, (iii) the Company shall furnish to
each Holder, without charge, at least one conformed copy of any Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing, all
exhibits thereto (including those incorporated by reference), (iv) the Company
shall, for so long as any Registration Statement is effective, deliver to each
Holder, without charge, as many copies of the prospectus (including each
preliminary prospectus) included in such Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request, and the
Company consents to the proper use of the prospectus therein and any amendment
or supplement thereto by each of the selling Holders in connection with the
offering and sale of the Warrants or the exercise, offering or sale of Warrant
Shares, as the case may be, covered by such prospectus and any amendment or
supplement thereto, (v) the Company may require each Holder of Warrants to be
sold pursuant to the Warrant Shelf Registration Statement or to be exercised in
connection with the Common Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of such
Warrants or Warrant Shares as may be required by such Registration Statement
(the "Holders' Information"), and the Company may exclude from such registration
the Transfer
18
Restricted Warrants (as defined in the Appendix) of any Holder that fails to
furnish such information within a reasonable time after receiving such request,
(vi) the Company shall, if requested, promptly incorporate in a prospectus
supplement or post-effective amendment to such Registration Statement such
information as a majority in interest of the Holders reasonably agree should be
included therein and shall make all required filings of such prospectus
supplement or post-effective amendment as soon as practicable following
notification of the matters to be incorporated in such prospectus supplement or
post-effective amendment, (vii) the Company shall enter into such agreements
(including underwriting agreements) as are appropriate, customary and reasonably
necessary in connection with any such Registration Statement and (viii) the
Company shall (A) make reasonably available for inspection by a representative
of, and counsel acting for, Holders of a majority of the Warrants and any
underwriter participating in any disposition of Warrants, all relevant financial
and other records, pertinent corporate documents and properties of the Company,
(B) use its reasonable best efforts to have its officers, directors, employees,
accountants and counsel supply all relevant information reasonably requested by
such representative, counsel or any such underwriter in connection with such
Registration Statement, and (C) if requested by Holders of a majority of
Warrants, their counsel or the managing underwriters (if any) in connection with
such Registration Statement, use its reasonable best efforts to cause (x) its
counsel to deliver an opinion relating to the Registration Statement and the
Warrants or Warrant Shares, as the case may be, in customary form, (y) its
officers to execute and deliver all customary documents and certificates
requested by Holders of a majority of the Warrants, their counsel or the
managing underwriters (if any) and (z) its independent public accountants to
provide a comfort letter or letters in customary form, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.
(b) The Company shall notify Holders and, if requested,
confirm in writing (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):
(i) when any Registration Statement and any amendment
thereto has been filed with the Commission and when such Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments
or supplements to any Registration Statement or the prospectus included therein
or for additional information or if the Company discovers that such Registration
Statement or prospectus contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Warrants
or the Warrant Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
19
(v) of the happening of any event that requires the
making of any changes in any Registration Statement or the prospectus included
therein in order that the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
The Company shall make every reasonable effort to obtain the withdrawal
at the earliest possible time of any order suspending the effectiveness of any
Registration Statement. If any event contemplated by clauses (ii) through (v)
occurs during the period for which the Company is required to maintain an
effective Registration Statement, the Company shall promptly prepare and file
with the Commission a post-effective amendment to the Registration Statement or
a supplement to the related prospectus or file any other required document so
that, as thereafter delivered, the prospectus shall not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Each Holder agrees that, upon receipt of any
notice from the Company pursuant to clauses (ii) through (v), such Holder shall
discontinue disposition of such Warrants or Warrant Shares until such Holder's
receipt of copies of a supplemental or amended prospectus or until advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed. If the Company shall give any notice under clauses (ii) through
(v) during the period that the Company is required to maintain an effective
Registration Statement (the "Effectiveness Period"), such Effectiveness Period,
in the case of the Warrant Shelf Registration Statement, shall be extended by
the number of days during such period from and including the date of the giving
of such notice to and including the date when each seller of Warrants or Warrant
Shares covered by such Registration Statement shall have received (x) the copies
of a supplemental or amended prospectus (if an amended or supplemental
prospectus is required) or (y) the Advice (if no amended or supplemental
prospectus is required).
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of each of the Warrant
Shelf Registration Statement and the Common Shelf Registration Statement for up
to two 45 consecutive-day periods (except for the 45 consecutive-day period
immediately prior to the Expiration Date) if the Company's Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides notice that such determination was made to the
Holders of the Warrants; provided, however, that in no event shall the Company
be required to disclose the business purpose for such suspension if the Company
determines in good faith that such business purpose must remain confidential.
SECTION 5.03. Blue Sky. The Company shall use its best efforts to
register or qualify the Warrants and the Warrant Shares under all applicable
securities laws, blue sky laws or similar laws of all jurisdictions in the
United States and Canada in which any holder of Warrants may or may be deemed to
purchase Warrants or Warrant Shares upon the exercise of Warrants and shall use
its best efforts to maintain such registration or qualification for so long as
it is required to cause the Warrant Shelf Registration Statement (in the case of
the Warrants) and the Common Shelf Registration Statement (in the case of the
Warrant Shares) to remain effective under the
20
Securities Act pursuant to Section 5.01; provided, however, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 5.03 or
to take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents and
warrants to each Holder and agrees for the benefit of each Holder that (i) each
of the Warrant Shelf Registration Statement and the Common Shelf Registration
Statement and any amendment thereto will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading and (ii) each
of the prospectus furnished to such Holder for delivery in connection with the
sale of Warrants and the prospectus delivered to such Holder upon the exercise
of Warrants and the documents incorporated by reference therein will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall have no liability under
clauses (i) or (ii) of this Section 5.04 with respect to any such untrue
statement or omission made in any Registration Statement in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Holders specifically for inclusion therein.
SECTION 5.05. Indemnification. (a) In connection with any Registration
Statement, the Company shall indemnify and hold harmless each Holder (including,
without limitation, the Initial Purchaser), its affiliates, their respective
officers, directors, employees, representatives and agents, and each person, if
any, who controls such Holder within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 5.05 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of Warrants
or Warrant Shares), to which that Holder may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any violation by the Company of the Securities Act, (ii) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (iii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Holder promptly upon demand for
any legal or other expenses reasonably incurred by that Holder in connection
with investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information; and
provided, further, that with respect to any such untrue statement in or omission
from any related preliminary prospectus, the indemnity agreement contained in
this Section 5.05(a) shall not inure
21
to the benefit of any Holder from whom the person asserting any such loss,
claim, damage, liability or action received Warrants or Warrant Shares to the
extent that such loss, claim, damage, liability or action of or with respect to
such Holder results from the fact that both (A) a copy of the final prospectus
was not sent or given to such person at or prior to the written confirmation of
the sale of such Warrants (in the case of the sale of Warrants), to such person
and (B) the untrue statement in or omission from the related preliminary
prospectus was corrected in the final prospectus unless, in either case, such
failure to deliver the final prospectus was a result of noncompliance by the
Company with Section 5.01. This indemnity agreement will be in addition to any
liability which the Company may otherwise have to a Holder. If the offering
pursuant to any Registration Statement is made through underwriters, no action
or failure to act on the part of such underwriters (whether or not any such
underwriter is an affiliate of any Holder) shall affect the obligations of the
Company to indemnify any Holder or any other Person pursuant to the provisions
hereof. The Company shall also indemnify underwriters, selling brokers,
dealer-managers and similar securities industry professionals participating in
the distribution (in each case as described in the Registration Statement),
their officers and directors and each person who controls such persons within
the meaning of the Securities Act or the Exchange Act to the same extent as
provided above with respect to the indemnification of the Holders of the
Securities if requested by such Holders.
(b) In connection with any Registration Statement each Holder,
severally and not jointly, shall indemnify and hold harmless the Company, its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 5.05 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to made the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information furnished to
the Company by such Holder, and shall reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Warrants, in the case of
the Warrant Shelf Registration Statement, or the Current Market Value of Warrant
Shares at the time they were received in the case of the Common Stock Shelf
Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.05 of
22
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to Section 5.05(a) or 5.05(b), notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 5.05 except to the extent that it
has been materially prejudiced (through the forfeiture of substantive rights or
defenses) by such failure; and provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 5.05. If any such claim
or action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 5.05 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 5.05(a) and 5.05(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on
23
claims that are the subject matter of such proceeding.
(d) If the indemnification provided for above is unavailable
or insufficient to hold harmless an indemnified party under Section 5.05(a) or
5.05(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the indemnifying party, on the one hand, and the
indemnified party, on the other, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party, on the one hand,
and the indemnified party, on the other, with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. In the
case of the Company and the Holders, the relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to the Company or information supplied by the Company, on the one hand,
or to any Holders' Information supplied by such Holder, on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 5.05(d) were to be determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 5.05(d) shall be deemed to include,
for purposes of this Section 5.05(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
or preparing to defend any such action or claim. Notwithstanding the provisions
of this Section 5.05(d), an indemnifying party that is a Holder shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Warrants sold, in the case of the Warrant Shelf Registration
Statement, and the Current Market Value of the Warrant Shares at the time they
were received, in the case of the Common Stock Registration Statement, by such
indemnifying party to any purchaser exceeds the amount of any damages which such
indemnifying party has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The agreements contained in this Section 5.05 shall
survive the sale of the Securities pursuant to the Registration Statements and
shall remain in full force and effect, regardless of any termination or
cancelation of this Warrant Agreement or any investigation made by or on behalf
of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the issuance
or sale of any Common Stock or other securities issuable upon the exercise of
the Warrants requires registration or approval of any governmental authority
(other than the registration requirements under the Securities Act), or the
taking of any other action under the laws of the United States or
24
any political subdivision thereof before such securities may be validly offered
or sold in compliance with such laws, then the Company covenants that it will,
in good faith and as expeditiously as reasonably possible, use its reasonable
best efforts to secure and maintain such registration or approval or to take
such other action, as the case may be. The Company shall promptly notify the
Warrant Agent in writing when (i) the Company has obtained all such governmental
approvals and authorizations and (ii) such approvals and authorizations
thereafter cease to be in effect.
SECTION 5.07. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article V will be
borne by the Company, including without limitation: (i) all SEC, stock exchange
or National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all reasonable fees and expenses incurred in connection with the
compliance with state securities or blue sky laws, (iii) all expenses of any
Persons incurred by or on behalf of the Company in preparing or assisting in
preparing, printing and distributing the Warrant Shelf Registration Statement,
the Common Shelf Registration Statement or any other registration statement,
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Article V, (iv) the fees and
disbursements of the Warrant Agent as agreed, (v) the fees and disbursements of
counsel for the Company and the Warrant Agent as agreed, (vi) the fees and
disbursements of one firm of attorneys (in addition to any local counsel) chosen
by a majority of the Holders of Warrants in the case of each of the Warrant
Shelf Registration Statement and the Common Stock Registration Statement and
(vii) the fees and disbursements of the independent public accountants of the
Company, including the expenses of any special audits or comfort letters
required by or incident to such performance and compliance.
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
provisions of this Warrant Agreement and the Warrant Agent hereby accepts such
appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) AGENT FOR THE
COMPANY. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship or agency or trust for or
with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) COUNSEL. The Warrant Agent may consult with counsel
satisfactory to it (and may require an Opinion of Counsel before it acts or
refrains from acting), and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in accordance with the advice of such counsel.
25
(c) DOCUMENTS. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.
(d) NO IMPLIED OBLIGATIONS. The Warrant Agent shall be
obligated to perform only such duties as are specifically set forth herein and
in the Warrant Certificates, and no implied duties or obligations of the Warrant
Agent shall be read into this Warrant Agreement or the Warrant Certificates
against the Warrant Agent. The Warrant Agent shall not be under any obligation
to take any action hereunder which may tend to involve it in any expense or
liability for which it does not receive indemnity if such indemnity is
reasonably requested. The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of any of the Warrant
Certificates countersigned by the Warrant Agent and delivered by it to the
Holders or on behalf of the Holders pursuant to this Warrant Agreement or for
the application by the Company of the proceeds of the Warrants. The Warrant
Agent shall have no duty or responsibility in case of any default by the Company
in the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) NOT RESPONSIBLE FOR ADJUSTMENTS OR VALIDITY OF STOCK. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Common Stock issuable upon exercise of each Warrant or
the Exercise Price, or with respect to the nature or extent of any adjustment
when made, or with respect to the method employed, or herein or in any
supplemental agreement provided to be employed, in making the same. The Warrant
Agent shall not be accountable with respect to the validity or value of any
shares of Common Stock or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or upon any adjustment
pursuant to Article IV, and it makes no representation with respect thereto. The
Warrant Agent shall not be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates upon the surrender of any Warrant Certificate for the purpose
of exercise or upon any adjustment pursuant to Article IV, or to comply with any
of the covenants of the Company contained in Article IV.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant Agent and
any stockholder, director, officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrants or other securities of the Company or its
affiliates and may otherwise deal with the Company or its affiliates with the
same rights it would have if it were not Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent shall not
be
26
responsible for and makes no representation as to the validity or adequacy of
this Warrant Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Warrant Agreement or the Warrant
Certificates other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company agrees to pay the
Warrant Agent from time to time reasonable compensation for its services as
agreed and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel as agreed. The Company shall
indemnify the Warrant Agent against any loss, liability or expense (including
reasonable agents' and attorneys' fees and expenses) incurred by it without
negligence or bad faith on its part arising out of or in connection with the
acceptance or performance of its duties under this Warrant Agreement. The
Warrant Agent shall notify the Company promptly of any claim for which it may
seek indemnity. The Company need not reimburse any expense or indemnify against
any loss or liability incurred by the Warrant Agent through willful misconduct,
negligence or bad faith. The Company's payment obligations pursuant to this
Section 6.05 shall survive the termination of this Warrant Agreement.
SECTION 6.06. Successor Warrant Agent. (a) THE COMPANY TO PROVIDE AND
MAINTAIN WARRANT AGENT. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) RESIGNATION AND REMOVAL. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than 60 days after the date
on which such notice is given unless the Company otherwise agrees. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent. At any time that
the Warrant Agent is also acting as Trustee under the Indenture and holders of
the Notes remove the Trustee pursuant to Section 7.08 of the Indenture, the
Company shall remove the Warrant Agent pursuant to this Section 6.06(b).
(c) THE COMPANY TO APPOINT SUCCESSOR. In the event that at any
time the Warrant Agent shall resign, or shall be removed, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall
commence a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
27
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or similar law, or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar
official) of the Warrant Agent or of its property or affairs, or any public
officer shall take charge or control of the Warrant Agent or of its property or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent
and acceptance by the successor Warrant Agent of such appointment, the Warrant
Agent shall cease to be Warrant Agent hereunder; provided, however, that in the
event of the resignation of the Warrant Agent under this subsection (c), such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant Agent's notice of resignation and (ii) the appointment and acceptance of
a successor Warrant Agent hereunder.
(d) SUCCESSOR TO EXPRESSLY ASSUME DUTIES. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.
(e) SUCCESSOR BY MERGER. If the Warrant Agent consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Warrant Agent.
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act
the Company shall file with the SEC and provide the Warrant Agent and Holders
within 15 days after it files them with the SEC, copies of its annual report and
the information, documents and other reports that are specified in Sections 13
and 15(d) of the Exchange Act. In addition, following a public offering of the
common stock of the Company, the Company shall furnish to the Warrant Agent and
the Holders, promptly upon their becoming available, copies of the annual report
to stockholders and any other information provided by the Company to its public
stockholders generally.
28
SECTION 7.02. Persons Benefiting. Nothing in this Warrant Agreement is
intended or shall be construed to confer upon any Person other than the Company,
the Warrant Agent and the Holders any right, remedy or claim under or by reason
of this Warrant Agreement or any part hereof.
SECTION 7.03. Rights of Holders. Holders of unexercised Warrants are
not entitled to (i) receive dividends or other distributions, (ii) receive
notice of or vote at any meeting of the stockholders, (iii) consent to any
action of the stockholders, (iv) receive notice of any other proceedings of the
Company, (v) exercise any preemptive right or (vi) exercise any other rights
whatsoever as stockholders of the Company.
SECTION 7.04. Amendment. This Warrant Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Warrant Agreement as the Company and the
Warrant Agent may deem necessary or desirable (including without limitation any
addition or modification to provide for compliance with the transfer
restrictions set forth herein); provided, however, that such action shall not
adversely affect the rights of any of the Holders. Any amendment or supplement
to this Warrant Agreement that has an adverse effect on the interests of the
Holders shall require the written consent of the Holders of a majority of the
then outstanding Warrants. The consent of each Holder affected shall be required
for any amendment pursuant to which the Exercise Price would be increased, the
number of Warrant Shares issuable upon exercise of Warrants would be decreased
(other than pursuant to adjustments provided herein) or the antidilution
provisions in Article IV would be altered in a manner which adversely affects
the Holders. In determining whether the Holders of the required number of
Warrants have concurred in any direction, waiver or consent, Warrants owned by
the Company or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Warrant Agent shall be protected in relying on any such direction,
waiver or consent, only Warrants which the Warrant Agent knows are so owned
shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
29
SECTION 7.05. Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first-class mail addressed as follows:
if to the Company:
Tultex Corporation
101 Commonwealth Boulevard
Martinsville, Virginia 24112
Attention of: Regina C. Haynes, Corporate Secretary
if to the Warrant Agent:
First Union National Bank
Mail Code: 3C3 NC1153
1525 West W. T. Harris Boulevard
Charlotte, NC 28262
Attention of: Frances Beam
The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications. Any
notice or communication mailed to a Holder shall be mailed to the Holder at the
Holder's address as it appears on the records of the Warrant Agent and shall be
sufficiently given if so mailed within the time prescribed. Failure to mail a
notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders. If a notice or communication is
mailed in the manner provided above, it is duly given, whether or not the
addressee receives it.
SECTION 7.06. Governing Law. THIS WARRANT AGREEMENT AND THE WARRANTS
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF VIRGINIA BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 7.07. Successors. All agreements of the Company in this Warrant
Agreement and the Warrant Certificates shall bind its successors. All agreements
of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any number of
copies of this Warrant Agreement. Each signed copy shall be an original, but all
of them together represent the same agreement. One signed copy is enough to
prove this Warrant Agreement.
SECTION 7.09. Table of Contents; Headings. The table of contents and
headings of the Articles and Sections of this Warrant Agreement have been
inserted for convenience of reference
30
only, are not intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof.
SECTION 7.10. Severability. The provisions of this Warrant Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Warrant Agreement in any jurisdiction.
31
IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to
be duly executed as of the date first written above.
TULTEX CORPORATION
By:
---------------------------------
Name: O. Randolph Rollins
Title: Executive Vice President and General Counsel
FIRST UNION NATIONAL BANK,
as Warrant Agent,
By:
---------------------------------
Name:
Title:
32
APPENDIX A
PROVISIONS RELATING TO WARRANTS
1. Definitions
For the purposes of this Appendix A the following additional terms
shall have the meanings indicated below:
"Warrant" means a certificated Warrant (bearing the Restricted Warrant
Legend if the transfer of such Warrant is restricted by applicable law).
"IAI" means an institutional "accredited investor" as described in Rule
501(a)(1), (2), (3) or (7) under the Securities Act.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Restricted Warrant Legend" means the legend set forth in Section
2.3(b)(i) herein.
"Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Warrant" means all Warrants issued to QIBs in reliance on
Rule 144A.
"Transfer Restricted Warrants" means any Warrants that bear or are
required to bear the Restricted Warrant Legend.
2. The Securities
2.1 Form and Dating. Each Warrant shall initially be issued to QIBs in
reliance on Rule 144A or to institutional "accredited investors" pursuant to
another rule under the Securities Act. In the event of the effectiveness of a
shelf registration statement with respect to the Warrants, the Company shall
provide notice to the Warrant Agent not less than two Business Days prior to
such date.
2.2 Countersignature. The Warrant Agent shall countersign and make
available for delivery upon a written order of the Company, signed by an
Officer, Warrant Certificates (a) at an Exercise Price of $0.08125 per Warrant
Share entitling the Holders thereof to purchase in the aggregate not more than
10,350,000 Warrant Shares and (b) at an Exercise Price of $0.1.425 per Warrant
Share entitling the Holders thereof to purchase in the aggregate not more than
5,175,000 Warrant Shares.
2.3 Transfer and Exchange. (a) When Warrants are presented to the
Warrant Registrar with a request: (x) to register the transfer of such Warrants;
or (y) to exchange such Warrants for an equal principal amount of Warrants of
other authorized denominations, the Warrant Registrar shall register the
transfer if the requirements of Section 8-401(a) of the Uniform Commercial Code
are met or make the exchange as requested if the requirements of Section
8-401(a)(1) and (2) of the Uniform Commercial Code are met; PROVIDED, HOWEVER,
that the Warrants surrendered for transfer or exchange are accompanied by the
following additional information and documents, as applicable: (i) if such
Warrants are being delivered to the Warrant Registrar by a Holder for
registration in the name of such Holder, without transfer, a certification from
such Holder to that effect (in the form set forth on the reverse side of the
Warrant Certificate); or (ii) if such Warrants are being transferred to the
Company, a certification to that effect (in the form set forth on the reverse
side of the Warrant Certificate); or (iii) if such Warrants are being
transferred pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or in reliance upon another exemption from the
registration requirements of the Securities Act, (i) a certification to that
effect (in the form set forth on the reverse side of the Warrant Certificate)
and (ii) if the Company so requests in the circumstances contemplated by the
first legend set forth in Section 2.3(b)(i), an opinion of counsel (which may be
given by an employee of, or regular outside counsel to, a Holder) or other
evidence reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend set forth in Section 2.3(b)(i).
(b) Legend.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Warrant Certificate evidencing the Warrants (and all Warrants issued
in exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form (each defined term in the legend being defined
as such for purposes of the legend only):
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY
BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS
TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO
A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE WARRANTS ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS
2
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER
OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT
OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), SUBJECT TO THE COMPANY'S AND THE WARRANT AGENT'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL (WHICH MAY BE GIVEN BY AN EMPLOYEE OF, OR
REGULAR OUTSIDE COUNSEL TO, SUCH HOLDER), CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
Each Security will also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT AGENT
AND THE WARRANT REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
WARRANT AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted
Warrant, the Warrant Registrar shall permit the Holder thereof to exchange such
Transfer Restricted Warrant for a Warrant that does not bear the legends set
forth above and rescind any restriction on the transfer of such Transfer
Restricted Warrant if the Holder certifies in writing to the Warrant Registrar
that its request for such exchange was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the Warrant
Certificate).
(iii) After a transfer of any Warrant during the period of the
effectiveness of a Warrant Shelf Registration Statement with respect to such
Warrant all requirements pertaining to the Restricted Warrant Legend on such
Warrant shall cease to apply.
(c) Obligations with Respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Warrant Agent shall countersign, Warrants at the
Warrant Registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments,
3
or similar governmental charge payable in connection therewith.
(iii) Prior to the due presentation for registration of
transfer of any Warrant, the Company, the Warrant Agent and the Warrant
Registrar may deem and treat the person in whose name a Warrant is registered as
the absolute owner of such Warrant for all purposes whatsoever, and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.
(iv) All Warrants issued upon any transfer or exchange
pursuant to the terms of this Warrant Agreement shall evidence the same terms
and shall be entitled to the same benefits under this Warrant Agreement as the
Warrants surrendered upon such transfer or exchange.
(d) No Obligation of the Warrant Agent. The Warrant Agent shall have no
obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Warrant Agreement or under
applicable law with respect to any transfer of any interest in any Warrant other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by, the terms of this Warrant Agreement, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
4
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
NO. __________ __________ Warrants
WARRANTS
TO PURCHASE SHARES OF COMMON STOCK OF
TULTEX CORPORATION
Tultex Corporation, a Virginia corporation (the "Company"),
for value received, hereby certifies that
----------------------------------------
or registered assigns, is the owner of the number of Warrants,
set forth above, each of which represents the right, subject to the terms and
conditions hereof and of the Warrant Agreement (as defined below), to purchase
from the Company at any time, or from time to time, from the date of original
issuance of the Warrants to the close of business on April 15, 2007 (or, if such
date is not a Business Day (as defined below), the first following Business Day)
subject to postponement of such date as provided in the Warrant Agreement, (the
"Exercise Period"), the number of shares of common stock, par value $___ per
share, of the Company (the "Common Stock") described in the Warrant Agreement
(each share of Common Stock issuable upon exercise of a Warrant is referred to
as a "Warrant Share"). Subject to the terms and conditions of the Warrant
Agreement of even date herewith between the Company and First Union National
Bank, as warrant agent (the "Warrant Agent"), the price per Warrant Share, with
respect to the Warrants represented by this Warrant Certificate shall be $_____
per share, adjusted as provided in Article IV of the Warrant Agreement (the
"Exercise Price"), payable in full as to each Warrant exercised at the time of
purchase. The term "Business Day" as used herein refers to any day of the week
other than a Saturday, Sunday or a day which in The City of New York or in the
city in which the principal office of the Warrant Agent is located shall be a
legal holiday or a day on which banking institutions are authorized or required
by law to close.
The Warrants may be exercised in whole or in part at any time
or from time to time during the Exercise Period. Any Warrants not exercised
during the Exercise Period shall become void, and all rights hereunder and all
rights in respect hereof and under the Warrant Agreement shall cease at the end
of the Exercise Period.
Each exercise of Warrants shall be made, and shall be deemed
effective for the purpose of determining the date of exercise, only upon
surrender hereof to the Company at the Company's principal executive office or
the principal office of the Warrant Agent (or any successor Warrant Agent), with
the form of Election to Exercise on the reverse hereof duly completed and
signed, and upon payment in full to the Warrant Agent for the account of the
Company of the Exercise Price in the manner as provided in the Warrant Agreement
and upon compliance with and subject to the conditions set forth herein and in
the Warrant Agreement.
A-1
All shares of Common Stock issued upon exercise of the Warrants will be validly
issued, fully paid and nonassessable shares of Common Stock.
This Warrant Certificate is issued under and in accordance
with the Warrant Agreement and is subject to the terms and provisions of the
Warrant Agreement, which terms and provisions are hereby incorporated by
reference herein and made a part hereof. The Warrant Agreement is available for
inspection by the registered holder at the principal office of the Warrant Agent
(or successor Warrant Agent).
The Company shall not be required upon the exercise of the
Warrants represented hereby to issue fractions of Warrant Shares or to
distribute share certificates that evidence fractional Warrant Shares. The
holder of this Warrant Certificate expressly waives its right to receive any
fraction of a Warrant Share or a share certificate representing a fraction of a
Warrant Share. Fractional Warrant Shares that otherwise would be issuable in
respect of such exercise shall be paid in cash as provided in the Warrant
Agreement, and the number of Warrant Shares issuable shall be rounded down to
the next nearest whole number. If the Warrants represented hereby are not
exercised in full, the Warrant Agent, on behalf of the Company, will issue to an
exercising holder a new Warrant Certificate representing the Warrants not
exercised.
This Warrant Certificate may be exchanged either separately or
in combination with other Warrant Certificates at the principal office of the
Warrant Agent (or successor Warrant Agent) for new Warrant Certificates
representing the same aggregate number of Warrants as were evidenced by the
Warrant Certificate or Warrant Certificates exchanged, upon surrender of this
Warrant Certificate and upon compliance with and subject to the conditions set
forth herein and in the Warrant Agreement.
The Warrants represented by this Warrant Certificate may be
transferred, in whole or in part (subject to restrictions set forth in the
Warrant Agreement), at the principal office of the Warrant Agent (or successor
Warrant Agent) by the registered holder hereof in person or by his attorney duly
authorized in writing, upon (i) surrender of this Warrant Certificate and (ii)
compliance with and subject to the conditions set forth herein and in the
Warrant Agreement. Upon any such transfer, a new Warrant Certificate or new
Warrant Certificates, representing in the aggregate the number of Warrants
represented by this Warrant Certificate, will be issued to the transferee. The
holder of this Warrant Certificate, by accepting this Warrant Certificate,
consents and agrees with the Company, the Warrant Agent and with every
transferee of Warrants represented by this Warrant Certificate that until due
presentation for the registration of transfer of this Warrant Certificate on the
Warrant register maintained by the Warrant Agent, the Company and the Warrant
Agent may deem and treat the person in whose name this Warrant Certificate is
registered as the lawful owner for all purposes whatsoever.
Nothing contained in the Warrant Agreement or in this Warrant
Certificate shall be construed as conferring on the holder of any Warrants or
his transferee any rights whatsoever as a shareholder of the Company.
This Warrant Certificate shall not be valid unless
countersigned manually by the Warrant Agent.
A-2
The Warrant Agreement and this Warrant Certificate shall be
deemed a contract made under the laws of the Commonwealth of Virginia and for
all purposes shall be construed in accordance with the laws of the Commonwealth
of Virginia without giving effect to the principles of conflicts of law thereof.
THE WARRANTS REPRESENTED HEREBY AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THE WARRANTS ARE SUBJECT TO THE CONDITIONS SPECIFIED
IN THE WARRANT AGREEMENT, DATED ___________, 1999, BETWEEN TULTEX CORPORATION
AND FIRST UNION NATIONAL BANK (THE "WARRANT AGREEMENT"). THE WARRANTS
REPRESENTED HEREBY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT THERETO
FOR SUCH WARRANTS UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR AN APPLICABLE
EXEMPTION UNDER THE ACT. THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THE WARRANTS REPRESENTED HEREBY MAY NOT BE SOLD OR TRANSFERRED WITHOUT AN
EFFECTIVE AND CURRENT REGISTRATION STATEMENT OR POST-EFFECTIVE AMENDMENT THERETO
FOR SUCH SHARES UNDER THE ACT OR AN APPLICABLE EXEMPTION UNDER THE ACT IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
THE ACT.
THE HOLDER OF THE WARRANTS REPRESENTED HEREBY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH WARRANTS,
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE WARRANTS ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) TO
AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING
THE WARRANT FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER
OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT
OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), SUBJECT TO THE COMPANY'S AND THE WARRANT
A-3
AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D)
OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL (WHICH MAY BE GIVEN BY
AN EMPLOYEE OF, OR REGULAR OUTSIDE COUNSEL TO, SUCH HOLDER), CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE WARRANT AGENT AND THE WARRANT REGISTRAR SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH WARRANT AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
A-4
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated:___________________
TULTEX CORPORATION
(CORPORATE SEAL) By: ______________________
Name:_____________________
Its: _____________________
By: ______________________
Name:_____________________
Its: Secretary
ATTEST:
__________________________
COUNTERSIGNED: FIRST UNION NATIONAL BANK,
as Warrant Agent
By: ______________________
Name:_____________________
Its: _____________________
A-5
EXHIBIT B
TULTEX CORPORATION
ELECTION TO EXERCISE
(To be executed upon exercise of Warrant)
TO TULTEX CORPORATION:
The undersigned hereby elects to exercise the right of
purchase represented by the within Warrant Certificate for, and to purchase
thereunder, _________________ shares of Common Stock, as provided for therein,
and tenders herewith payment of the purchase price in the manner provided below
in the amount of $________________________.
This election is governed by the Warrant Agreement dated May
7, 1999, between Tultex Corporation and First Union National Bank.
The undersigned elects to pay the Exercise Price as follows
(check appropriate blank):
_____ (a) In cash or by certified or official bank check
payable to the order of the Company or by wire transfer
of funds to an account designated by the Company;
_____ (b) By a tender of Notes pursuant to Section 3.04(b) of
the Agreement;
_____ (c) By a tender of cash pursuant to Section 3.04(a)(i)
of the Agreement and Notes pursuant to Section 3.04(b)
of the Agreement; or
_____ (d) By delivery of Warrant Certificates pursuant to
Section 3.04(c) of the Agreement.
Please issue a certificate or certificates for such shares of
Common Stock in the name of:
PLEASE INSERT SOCIAL SECURITY OR Name:__________________________
OTHER IDENTIFYING NUMBER OF
ASSIGNEE
_________________________ Address:__________________________
_________________________ Signature:________________________
------------------------
Note: The above signature
should correspond exactly with
the name on the face of the
Warrant Certificate or with
the name of assignee appearing
in the assignment form below.
Dated: ________________
B-1
B-2
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, _________________________ hereby sells, assigns and transfer
unto ____________________________ the within Warrant Certificate, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint ______________________ attorney in fact, to transfer said Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.
Dated: _______________
------------------------
Note: The above signature should
correspond exactly with the name
on the face of the Warrant
Certificate
B-3