AMENDED AND RESTATED WARRANT AGREEMENT
THIS AMENDED AND RESTATED WARRANT AGREEMENT dated as of December 16,
1997 (as amended, restated, supplemented or modified from time to time, the
"Warrant Agreement") between IT Partners, Inc., a Delaware corporation (the
"Issuer"), and Creditanstalt Corporate Finance, Inc. having offices at Two
Greenwich Plaza, Greenwich, Connecticut 06830 ("Creditanstalt").
W I T N E S S E T H:
WHEREAS, pursuant to the Loan and Security Agreement dated as of May 30,
1997, as amended by that certain First Amendment to Loan and Security
Agreement dated as of October 17, 1997 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement")
among Issuer, the financial institutions named therein as lenders (the
"Lenders"), Creditanstalt-Bankverein, as the issuing bank (the "Issuing
Bank"), and Creditanstalt as the agent for the Lenders (in such capacity, the
"Agent"), Creditanstalt as sole lender under the Loan Agreement agreed to make
certain loans (the "Loans") to the Issuer upon the terms, and subject to the
conditions, set forth in the Loan Agreement; and
WHEREAS, in order to induce Creditanstalt to structure and to provide
the Loans, the Issuer executed and delivered a Warrant Agreement dated as of
May 30, 1997, as amended by that certain First Amendment to Warrant Agreement
dated as of July 11, 1997, as further amended by that certain Second Amendment
to Warrant Agreement dated as of October 27, 1997 (as amended, the "Original
Warrant Agreement") and issued to Creditanstalt warrants exercisable for up to
412,579 shares of Common Stock or Convertible Preferred Stock as hereinafter
described; and
WHEREAS, the Issuer, the Lenders, the Issuing Bank, and the Agent wish
to enter into a Second Amendment to Loan and Security Agreement dated as of
the date hereof (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement Amendment") to
increase the aggregate maximum amount of Loans available to Issuer thereunder
from Fourteen Million Dollars ($14,000,000) to Thirty-Five Million Dollars
($35,000,000); and
WHEREAS, in connection with and to induce Creditanstalt as sole lender
under the Loan Agreement to enter into the Loan Agreement Amendment, the
Issuer has agreed to amend and restate the Original Warrant Agreement, as
further set forth herein, in order to provide for the issuance of certain
additional Warrants and make certain other changes set forth herein;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. (a) As used in this Warrant Agreement,
unless otherwise defined herein, terms defined in the Loan Agreement (as in
effect on the date hereof, whether or not the Loan Agreement is thereafter
terminated or expires according to its terms) shall have such defined meanings
when used herein and the following terms shall have the following meanings,
unless the context otherwise requires:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under direct or indirect common
control with such Person. For purposes of this definition, a Person shall be
deemed to control another Person if such first Person possesses directly or
indirectly the power to (i) vote 10% or more of the securities having ordinary
voting power for the selection of directors of such Person or (ii) direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, by contract or otherwise.
In addition, as to Creditanstalt, "Affiliate" shall include any partnership a
majority of the partners of which are officers, directors, employees or
Affiliates of Creditanstalt, and as to the Issuer, "Affiliate" shall not
include Creditanstalt or any Affiliate of Creditanstalt which is a holder of
any Warrants.
"Business Combination Options" shall mean options to purchase Common
Stock of the Issuer which (a) are issued to employees of Subsidiaries acquired
by the Issuer after the date hereof or to employees of the Issuer hired after
the date hereof; (b) in the aggregate do not exceed 12% of the Common Stock
issued by the Issuer as a portion of the purchase price in Acquisitions
consummated by the Issuer after the date hereof (other than any Acquisition of
LanVantage, Inc.) and (c) have an exercise price equal to the fair market
value of the Common Stock on the date such option is granted, as determined in
good faith by the Board of Directors of the Issuer and giving effect to any
Acquisition consummated on such date.
"Closing Date" shall mean December 16, 1997, the date of the closing of
the Loan Agreement Amendment.
"Commission" shall mean the Securities and Exchange Commission or any
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
"Common Stock" shall mean the Common Stock, par value $.01 per share, of
the Issuer, which has voting rights, and shall include any stock into which
such Common Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock and all other stock of any class or
classes (however designated) of the Issuer the registered holders of which
have the right, without limitation as to amount, either to all or to a share
of the balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to preference.
"Composite Transaction Tape" shall mean a security price reporting
service that includes all transactions in a security on each of the exchanges
and in the over-the-counter market.
"Convertible Preferred Stock" shall mean the Series B Preferred Stock,
par value $.01 per share, of the Issuer which is convertible into Common Stock
of the Issuer, and shall include any stock into which such Series B Preferred
Stock shall have been changed or any stock resulting from any reclassification
of such Series B Preferred Stock.
"Current Market Price Per Share" shall mean, with respect to any share
of the Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite
Transaction Tape, the
average of the daily closing prices for the 30 consecutive trading
days immediately prior
to such date as reported on the Composite Transactions Tape (as
adjusted for any stock
dividend, split, combination or reclassification that occurred during
such 30-day
period); or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape
but is then listed or admitted to trading on a national securities
exchange, the average
of the daily last sale prices regular way of the Common Stock, for the
30 consecutive
trading days immediately prior to such date (as adjusted for any stock
dividend, split,
combination or reclassification that occurred during such 30-day
period), on the
principal national securities exchange on which the Common Stock is
traded or, in case no
such sale takes place on any such day, the average of the closing bid
and asked prices
regular way, in either case on such national securities exchange; or
(iii) if the Common Stock is not then reported on the Composite
Transaction Tape
but is then traded in the over-the-counter market, the average of the
daily closing sales
prices, or, if there is no closing sales price, the average of the
closing bid and asked
prices, in the over-the-counter market, for the 30 consecutive trading
days immediately
prior to such date (as adjusted for any stock dividend, split,
combination or
reclassification that occurred during such 30-day period), as reported
by the National
Association of Securities Dealers' Automated Quotation System, or, if
not so reported, as
reported by the National Quotation Bureau, Incorporated or any
successor thereof, or, if
not so reported the average of the closing bid and asked prices as
furnished by any
member of the National Association of Securities Dealers, Inc.
selected from time to time
by the Board of Directors of the Issuer for that purpose; or
(iv) if no such prices are then furnished, the higher of (x) the
Exercise Price
and (y) the fair market value of a share of Common Stock as determined
by agreement
between the holders of a majority of the Warrants and the Issuer or,
in the absence of
such an agreement, by an independent investment banking firm or an
independent appraiser
engaged by the Issuer (in either case the cost of which engagement
will be borne by the
Issuer) and reasonably acceptable to the holders of a majority of the
Warrants;
provided, however, that between the date hereof and 60 days from the date
hereof, the Current Market Price Per Share of the Common Stock shall not be
less than $5.00 per share.
"Equity of the Issuer" shall mean the total stockholders' equity of the
Issuer, determined in accordance with generally accepted accounting
principles. The amount of Equity of the Issuer represented by any Warrant
Shares shall be determined by subtracting from total Equity of the Issuer the
aggregate amount distributable as a preference upon dissolution of the Issuer
to the holders of any then outstanding shares of any class or series of
preferred stock (other than the Convertible Preferred Stock), dividing the
balance obtained by the number of shares of Common Stock then outstanding or
issuable upon conversion of any Convertible Preferred Stock then outstanding,
and multiplying that per share amount by the aggregate number of Warrant
Shares.
"Equity Warrants" shall mean the warrants issued pursuant to the Series
A Preferred Stock and Warrant Purchase Agreement, dated as of May 30, 1997, as
amended by that certain First Amendment to Preferred Stock and Warrant
Purchase Agreement dated as of July 11, 1997, as further amended by that
certain Second Amendment to Preferred Stock and Warrant Purchase Agreement
dated as of October 27, 1997, as further amended by that certain Third
Amendment to Preferred Stock and Warrant Purchase Agreement dated as of
October 31, 1997, and as further amended by that certain Fourth Amendment to
Preferred Stock and Warrant Purchase Agreement dated as of the date hereof (as
such may be amended, restated, supplemented or otherwise modified from time to
time), among the Issuer, Creditanstalt, FF-ITP, L.P. and certain shareholders
of the Issuer named therein.
"Equity Warrant Shares" shall mean the shares of Common Stock issued or
issuable upon exercise of the Equity Warrants.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute.
"Exempted Securities" shall mean (A) Warrant Shares, (B) shares of the
Issuer's capital stock issued as a stock dividend described in subsection
12(b), (C) shares of Series A Preferred Stock issued as preferred in kind
dividends on the Series A Preferred Stock; (D) options and warrants as listed
on Schedule I attached hereto and shares of capital stock issuable upon
exercise thereof; (E) the Business Combination Options and shares of capital
stock issuable upon exercise thereof; (F) options to be granted to employees
of the Issuer and its Subsidiaries to purchase up to 351,029 shares of Common
Stock of the Issuer at an exercise price of not less than fair market value on
the date such option is granted, as determined in good faith by the Board of
Directors of the Issuer and giving effect to any Acquisitions consummated on
or before such date, and shares of capital stock issuable upon exercise
thereof, (G) 34,364 shares of Common Stock issuable to Terry Hardcastle on or
before February 2, 1998 for an aggregate purchase price of $66,666; (H)
103,093 shares of Common Stock issued to Chris Corbett at an aggregate
purchase price of $200,000; (I) 29,516 shares of Common Stock issued to FF-ITP
on October 31, 1997; (J) additional Equity Warrants for the purchase of
188,680 shares of Common Stock or Convertible Preferred Stock; and (K) 222,222
shares of Convertible Preferred Stock issuable to Creditanstalt at an
aggregate purchase price of $1,000,000. The limits in clauses (C), (D), (E),
(F), (J), and (K) shall be proportionately adjusted for dividends and other
distributions payable in and for subdivisions and combinations of shares of
Common Stock.
"Exercise Price" shall mean the exercise price of a Warrant, which shall
be $.01 per Warrant.
"Expiration Date" shall mean, with respect to any Warrant issued
hereunder, 5:00 p.m., New York time, on the tenth anniversary of the date on
which such Warrant became exercisable.
"Indebtedness" shall mean, collectively but without duplication, (a) all
indebtedness, obligations or other liabilities for borrowed money or evidenced
by debt securities, debentures, acceptances, notes or other similar
instruments, which would, in accordance with GAAP, be classified as long-term
debt, together with the current maturities thereof, (b) all indebtedness
outstanding under any revolving credit, line of credit or similar agreement
providing for borrowings (and any extensions or renewals thereof),
notwithstanding that any such indebtedness is created within one year of the
expiration
of such agreement; and (c) the principal component of Capital Lease
Obligations, in each case calculated on a consolidated basis for Issuer and
its Subsidiaries in accordance with GAAP.
"Mandatory Exchange" shall have the meaning given to such term in
subsection 16(c).
"Mandatory Redemption" shall have the meaning given to such term in
subsection 16(a)(i).
"Non-Attributable Stock" shall mean shares of Common Stock or
Convertible Preferred Stock which have been previously sold, or were issued
pursuant to the exercise of Warrants which were previously sold, either (a) in
a widely dispersed public offering; (b) in a private placement in which no
purchaser, individually or in concert with others, acquired Warrants, Common
Stock, Convertible Preferred Stock or any combination thereof, representing
(upon conversion, in the case of the Convertible Preferred Stock, and upon
exercise for Common Stock, in the case of the Warrants) more than 2% of the
outstanding Common Stock; (c) in compliance with Rule 144 (or any rule which
is a successor thereto) of the Securities Act or (d) into the secondary market
in a market transaction executed through a registered broker-dealer in blocks
of no more than 2.0% of the shares outstanding of the Issuer in any six month
period.
"Non-Public Warrant Shares" shall mean Warrant Shares that have not been
sold to the public and bear the legend set forth in subsection 14(b).
"Non-Surviving Combination" shall mean any merger, consolidation or
other business combination by the Issuer with one or more Persons in which the
Issuer is not the survivor, or a sale of all or substantially all of the
assets of the Issuer to one or more such other Persons.
"Operating Cash Flow" shall mean, for any period for which the same is
computed, the sum of (i) the Issuer's and its Subsidiaries' consolidated net
income (loss) for such period, plus (ii) the Issuer's and its Subsidiaries'
interest expense for such period, plus (iii) the Issuer's and its
Subsidiaries' depreciation and amortization for financial reporting purposes
for such period, plus (iv) the Issuer's and its Subsidiaries' income tax
expense for such period, computed in each case on a consolidated basis in
accordance with generally accepted accounting principles.
"Put Closing Date" shall have the meaning given to such term in
subsection 16 (a)(iii).
"Put Period" shall mean the period commencing on November 30, 2001 and
ending at 5:00 p.m., New York time, on the Expiration Date; provided that in
the event that, on or before November 30, 2001, all indebtedness outstanding
under the Loans has been repaid in full and all loan commitments under the
Loan Agreement have been terminated, said period shall commence on the date of
said repayment of indebtedness and termination of loan commitments.
"Put Price" shall have the meaning given to such term in subsection
16(a)(i).
"Put Right" shall have the meaning given to such term in subsection
16(a)(i).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"Series A Preferred Stock" shall mean the Issuer's Series A Preferred
Stock, $.01 par value per share, and shall include any stock into which such
Series A Preferred Stock shall have been changed or any stock resulting from
any reclassification of such Series A Preferred Stock.
"Series A Warrants" shall mean the stock purchase warrants issued on May
30, 1997 pursuant to this Warrant Agreement entitling the record holder
thereof to purchase from the Issuer at the Warrant Office an aggregate of
412,579 shares of Common Stock or Convertible Preferred Stock (in the
percentages and to the extent provided in subsections 6(e) and 6(f) hereof and
subject in each case to adjustment as provided in Section 12) at the Exercise
Price at any time before 5:00 p.m., New York time, on the Expiration Date.
"Series B Warrants" shall mean the stock purchase warrants issued
pursuant to this Warrant Agreement entitling the record holder thereof to
purchase from the Issuer at the Warrant Office an aggregate of 45,000 shares
of Common Stock or Convertible Preferred Stock (in the percentages and to the
extent provided in subsections 6(e) and 6(f) hereof and subject in each case
to adjustment as provided in Section 12) at the Exercise Price at any time
before 5:00 p.m., New York time, on the Expiration Date.
"Series C Issuance Date" shall mean the date on which the Series C
Warrants when aggregated with all other capital stock of the Issuer (other
than shares of Non-Attributable Stock) currently held or previously held by or
currently issuable to Creditanstalt or its Affiliates, would not, upon and
giving effect to such issuance, represent in excess of 24.99% of the Equity of
the Issuer.
"Series C Warrants" shall mean the stock purchase warrants issued or to
be issued pursuant to this Warrant Agreement entitling the record holder
thereof to purchase from the Issuer at the Warrant Office an aggregate of
155,000 shares of Common Stock or Convertible Preferred Stock (in the
percentages and to the extent provided in subsections 6(e) and 6(f) hereof and
subject in each case to adjustment as provided in Section 12) at the Exercise
Price at any time before 5:00 p.m., New York time, on the Expiration Date.
"Subsidiary" shall mean, as to any Person, a corporation of which shares
of stock having ordinary voting power (other than stock having such power only
by reason of the happening of a contingency) to elect a majority of the board
of directors or other managers of such corporation are at the time owned, or
the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Warrant Agreement shall refer to a Subsidiary or Subsidiaries of the Issuer.
"Trigger Date" shall have the meaning given to such term in subsection
16(a)(i).
"Valuation Amount" shall mean, as of any date, the greater of (x) zero
or (y) an amount equal to Operating Cash Flow for the most recently ended
twelve months preceding the date of determination multiplied by six (6), less
the principal amount of Indebtedness of Issuer on such date of determination,
plus the aggregate amount of cash and/or cash equivalents held by the Issuer
on such date of determination; provided, however, that if the holders exercise
their Put Right in connection with the termination of the Loan Agreement and
the repayment in full of the Loans thereunder, then, for purposes of this
definition, the amount of Indebtedness used to calculate the Valuation Amount
shall be the principal amount of Indebtedness outstanding immediately prior to
such repayment and termination.
"Warrant Certificate" shall mean certificate evidencing one or more
Warrants, substantially in the form of Exhibit B-1 attached hereto with
respect to the Series B Warrants and Exhibit C-1 attached hereto with respect
to the Series C Warrants, with such changes therein as may be required to
reflect any adjustments made pursuant to Section 12.
"Warrant Holders" shall mean Creditanstalt or an Affiliate thereof and
such other Persons to whom Creditanstalt or an Affiliate thereof transfers
Warrants in compliance with the terms of this Warrant Agreement, and for
purposes of Section 15 shall include holders of Non-Public Warrant Shares.
"Warrant Office" shall mean the office or agency of the Issuer at which
the Warrant Register shall be maintained and where the Warrants may be
presented for exercise, exchange, substitution and transfer, which office or
agency will be the office of the Issuer at 1006 Highland Drive, Silver Spring,
Maryland 20910, which office or agency may be changed by the Issuer pursuant
to notice in writing to the Persons named in the Warrant Register as the
holders of the Warrants.
"Warrant Register" shall mean the register, substantially in the form of
Exhibit D attached hereto, maintained by the Issuer at the Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock or Convertible
Preferred Stock issued or issuable upon exercise of the Warrants, or Common
Stock issued or issuable upon conversion of the Convertible Preferred Stock,
in each case as the number of such shares may be adjusted from time to time
pursuant to Section 12 and the provisions of the Issuer's Certificate of
Incorporation.
"Warrants" shall mean the stock purchase warrants issued or issuable
pursuant to this Warrant Agreement entitling the record holder thereof to
purchase from the Issuer at the Warrant Office an aggregate of 612,579 shares
of Common Stock or Convertible Preferred Stock (in the percentages and to the
extent provided in subsections 6(e) and 6(f) hereof and subject in each case
to adjustment as provided in Section 12) at the Exercise Price at any time
after the issuance of such Warrant and before 5:00 p.m., New York time, on the
Expiration Date; individually, a "Warrant."
(b) For all purposes of this Warrant Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) "Herein," "hereof" and "hereunder" and other words of similar
import refer to this Warrant Agreement as a whole and not to any particular
Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender shall
also be deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement shall
be deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation,
each of the representations and warranties of the Issuer in Section 3 hereof
is separate and is not limited, qualified or modified by the existence,
wording or satisfaction of any other representation of the Issuer in Section 3
or otherwise;
(v) All references herein (in covenants or otherwise) to any
action(s) which are to be taken (or which are prohibited from being taken) by
any Person, the Issuer or any Subsidiary shall apply to such Person, the
Issuer or such Subsidiary, as the case may be, whether such action is taken
directly or indirectly; and
(vi) All references herein to actions by the Issuer or any
Subsidiary (including, without limitation, actions denoted by terms such as
"create," "sell," "transfer" or "dispose of") mean such action whether
voluntary or involuntary, by operation of law or otherwise.
Section 2. Issuance of Warrants. The Issuer hereby agrees to issue
and
deliver to Creditanstalt or, at the option of Creditanstalt, an Affiliate
thereof, the Warrants and one or more Warrant Certificates evidencing the
Warrants as set forth in this Section 2. No payment shall be required from
Creditanstalt or its Affiliate in consideration of its receipt of the
Warrants.
(a) On the Closing Date, Issuer shall issue to Creditanstalt the
Series B Warrants entitling Creditanstalt to purchase from the Issuer an
aggregate of 45,000 shares of Common Stock or Convertible Preferred Stock,
which Series B Warrants shall be immediately exercisable.
(b) On the Series C Exercise Date, Issuer shall issue to Creditanstalt
the Series C Warrants entitling Creditanstalt to purchase from the Issuer an
aggregate of 155,000 shares of Common Stock or Convertible Preferred Stock,
which Series C Warrants shall be exercisable only upon such issuance.
Section 3. Representations and Warranties. The Issuer hereby
represents and warrants to Creditanstalt, for the benefit of Creditanstalt and
any other Warrant Holder, as follows:
(a) The Issuer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to conduct its business as presently conducted
and as intended to be conducted, has the corporate power and authority to
execute and deliver this Warrant Agreement and the Warrant Certificates,
to issue the Warrants and to perform its obligations under this Warrant
Agreement and the Warrant Certificates, has the corporate power and authority
and legal right to own and lease its properties and is duly qualified and in
good standing as a foreign corporation in each jurisdiction in which it owns
or leases real property or in which the conduct of its business requires such
qualification, except where failure to be so qualified could not be reasonably
expected to have a material adverse effect on the business, properties,
financial condition or results of operations of the Issuer and its
Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this
Warrant Agreement and the Warrant Certificates, the issuance of the Warrants
and the issuance of the Warrant Shares upon the exercise of the Warrants and
the issuance of Common Stock upon conversion of the Convertible Preferred
Stock have been duly authorized by all necessary corporate action and do not
and will not violate, or result in a breach of, or constitute a default under,
or require any consent under, or result in the creation of any lien, charge or
encumbrance upon the assets of the Issuer pursuant to, any law, statute,
ordinance, rule, regulation, order or decree of any court, governmental body
or regulatory authority or administrative agency having jurisdiction over the
Issuer or its Subsidiaries or the Issuer's Certificate of Incorporation or any
contract, mortgage, loan agreement, note, lease or other instrument binding
upon the Issuer or its Subsidiaries or by which their properties are bound.
(c) This Warrant Agreement has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of
the Issuer. When the Warrants and Warrant Certificates have been issued as
contemplated hereby, (i) the Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations of the Issuer and
(ii) the Warrant Shares, when issued upon exercise of the Warrants in
accordance with the terms hereof, and the Common Stock, when issued upon
conversion of the Convertible Preferred Stock in accordance with the terms of
the Issuer's Certificate of Incorporation relating to the Convertible
Preferred Stock, will be duly authorized, validly issued, fully paid and
nonassessable shares of the Common Stock and Convertible Preferred Stock, as
applicable, with no personal liability attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 10,000,000
shares of Common Stock, par value $.01 per share, of which 3,640,174 shares
are issued and outstanding and 2,000,000 shares of Preferred Stock, par value
$.01 per share, of which 450,000 shares are designated as Series A Preferred
Stock, of which 231,800 shares are issued and outstanding, and 1,400,000
shares are designated as Series B Preferred Stock, none of which are issued
and outstanding. Except as set forth on Schedule I hereto, there are no
outstanding options, warrants, subscriptions, rights, convertible or
exchangeable securities or other agreements or plans under which the Issuer
may be or become obligated to issue, sell or transfer shares of its capital
stock of other securities. The Convertible Preferred Stock has no voting
rights, except as required by law, and is convertible on a share-for-share
basis into Common Stock of the Issuer. To the Issuer's best knowledge, other
than the Stockholder Agreement dated May 30, 1997 (as amended, restated,
supplemented or otherwise modified from time to time) by and among the Issuer,
Daniel J. Klein, Jamie Blech, Martin F. Kandl and Haeyoung Kandl, Stanley
Nice, John Clement, Creditanstalt, FF-ITP, L.P. and subsequent stockholders,
there are no voting agreements, voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of the Issuer
or any Subsidiary.
(e) Except as set forth on Schedule II hereto, no holder of securities
of the Issuer has any right to the registration of such securities under the
Securities Act and any applicable state securities law.
(f) Each of the Subsidiaries of the Issuer is listed on Schedule III
to this Warrant Agreement. All outstanding shares of capital stock of such
Subsidiaries have been duly authorized and validly issued and are fully paid
and nonassessable and are owned beneficially and of record by the Issuer free
and clear of all Liens, options or claims of any kind. There are no
outstanding options, warrants, subscriptions, rights, convertible securities
or other agreements or plans under which Subsidiary of the Issuer may become
obligated to issue, sell or transfer shares of its capital stock or other
securities.
Section 4. Registration, Transfer and Exchange of Certificates.
(a) The Issuer shall maintain, at the Warrant Office, the Warrant
Register for registration of the Warrants and Warrant Certificates and
transfers thereof. On the Closing Date, the Issuer shall register the
Warrants and Warrant Certificates in the Warrant Register in the name of
Creditanstalt or an Affiliate thereof, as the case may be. The Issuer may
deem and treat the registered holders of the Warrant Certificates as the
absolute owners thereof and the Warrants represented thereby (notwithstanding
any notation of ownership or other writing on the Warrant Certificates made by
any person) for the purpose of any exercise thereof or any distribution to the
holders thereof, and for all other purposes, and the Issuer shall not be
affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of
any outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon
any such registration of transfer, new Warrant Certificates evidencing such
transferred Warrants shall be issued to the transferee and the surrendered
Warrant Certificates shall be canceled. If less than all the Warrants
evidenced by Warrant Certificates surrendered for transfer are to be
transferred, new Warrant Certificates shall be issued to the holder
surrendering such Warrant Certificates evidencing such remaining number of
Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and
representing in the aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except
for any tax or other governmental charge imposed in connection therewith.
Except as provided in subsection 14(b) each Warrant Certificate issued upon
transfer or exchange shall bear the legend set forth in subsection 14(b) if
the Warrant Certificate presented for transfer or exchange bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent number of Warrants, but only upon receipt of
evidence satisfactory to the Issuer of such loss, theft or destruction of such
Warrant Certificate and, if requested, indemnity satisfactory to it. The
Issuer acknowledges that a written indemnity by Creditanstalt or, if an
Affiliate of Creditanstalt is the holder of such lost, stolen or destroyed
Warrant Certificate, by such Affiliate, shall be satisfactory to the Issuer
for such purpose. No service charge shall be made for any such substitution,
but all expenses and reasonable charges associated with procuring such
indemnity and all stamp, tax and other governmental duties that may be imposed
in relation thereto shall be borne by the holder of such Warrant Certificate.
Each Warrant Certificate issued in any such substitution shall bear the legend
set forth in subsection 14(b) if the Warrant Certificate for which such
substitution was made bore such legend.
Section 6. Duration and Exercise of Warrants.
(a) A Warrant evidenced by a Warrant Certificate shall be exercisable
in whole or in part by the registered holder thereof on any Business Day after
the issuance of such Warrant, and on or before 5:00 P.M., New York time, on
the Expiration Date.
(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer at the Warrant
Office, and upon payment of the aggregate Exercise Price for the number of
Warrant Shares in respect of which such Warrants are being exercised in lawful
money of the United States of America and/or by surrender to the Issuer of
shares of Common Stock then owned by the Warrant Holder and valued for
purposes hereof at their Current Market Price Per Share at the time of
exercise. In lieu of exercising Warrants pursuant to the immediately
preceding sentence, the Warrant Holder shall have the right to require the
Issuer to convert the Warrants, in whole or in part and at any time or times
(the "Conversion Right"), into Warrant Shares, by surrendering to the Issuer
the Warrant Certificate evidencing the Warrants to be converted, accompanied
by the form of conversion notice on the reverse thereof or attached thereto
which has been duly completed and signed. Upon exercise of the Conversion
Right, the Issuer shall deliver to the Warrant Holder (without payment by the
Warrant Holder of any Exercise Price) that number of Warrant Shares which is
equal to the quotient obtained by dividing (x) the value of the number of
Warrants being converted at the time the Conversion Right is exercised
(determined by subtracting the aggregate Exercise Price for all such Warrants
immediately prior to the exercise of the Conversion Right from the aggregate
current market price (determined on the basis of the Current Market Price Per
Share) of that number of Warrant Shares purchasable upon exercise of such
Warrants immediately prior to the exercise of the Conversion Right (taking
into account all applicable adjustments pursuant to Section 12, including
without limitation any adjustments which would be made pursuant to subdivision
(7) of subsection 12(c) upon exercise of the Warrants being converted) by (y)
the Current Market Price Per Share of one share of Common Stock (or the number
of shares of Common Stock into which one share of Convertible Preferred Stock
can be converted if the Warrants are being converted into Convertible
Preferred Stock) immediately prior to the exercise of the Conversion Right.
Any references in this Warrant Agreement to the "exercise" of any Warrants,
and the use of the term "exercise" herein, shall be deemed to include (without
limitation) any exercise of the Conversion Right. Any exercise of a Warrant
hereunder may be made subject to the satisfaction of one or more conditions
(including, without limitation, the consummation of a sale of the capital
stock of the Issuer or a merger or other business combination involving the
Issuer) which are set forth in a writing which is made a part of or is
appended to the aforementioned form of election to purchase or conversion
notice (as the case may be) by the Warrant Holder.
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue
and cause to be delivered to or upon the written order of the registered
holders of such Warrants and in such name or names as such registered holders
may designate, a certificate for the Warrant Share or Warrant Shares issued
upon such exercise of such Warrants. Any Persons so designated to be named
therein shall be deemed to have become holders of record of such Warrant Share
or Warrant Shares as of the date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant
Certificate are exercised at any time, a new Warrant Certificate or
Certificates shall be issued for the remaining number of Warrants evidenced by
such Warrant Certificate. Each new Warrant Certificate so issued shall bear
the legend set forth in subsection 14(b) if the Warrant Certificate presented
in connection with partial exercise thereof bore such legend unless the
transfer restrictions referred to in such legend are no longer applicable
pursuant to subsection 14(d). All Warrant Certificates surrendered upon
exercise of Warrants shall be canceled.
(e) At the election of a Warrant Holder made at the time of exercise,
the Warrant Shares to be issued upon such exercise may be either Common Stock
or Convertible Preferred Stock (or a combination thereof), provided that the
Warrant Holder shall not have the right to have issued to it upon exercise
Common Stock which, when aggregated with all other shares of Common Stock
(other than shares of Non-Attributable Stock) currently or previously held by
or currently issuable without restriction to the Warrant Holder, will exceed
4.99% of the then outstanding Common Stock unless such Warrant Holder
certifies that such Warrants have previously been transferred either (i) in a
widely dispersed public offering of the Warrants, or (ii) in a private
placement in which no purchaser, individually or in concert with others, would
have acquired more than 2% of the outstanding Common Stock if the Warrants so
transferred had been exercised for Common Stock, or (iii) in compliance with
Rule 144 (or any rule which is a successor thereto) of the Securities Act, or
(iv) into the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2.0% of the shares
outstanding of the Issuer in any six month period; provided further that if
the Warrant Holder is a bank or an Affiliate of a bank subject to the
provisions of the Bank Holding Company Act of 1956, as amended, such Common
Stock, together with all other shares of Common Stock currently or previously
held by or currently issuable without restriction to such Warrant Holder and
its Affiliates (not including Non-Attributable Stock), will not exceed 4.99%
of the then outstanding Common Stock. In the event two or more Warrant
Holders attempt to exercise Warrants for Common Stock simultaneously and, if
permitted, such exercises would cause the 4.99% limitation to be exceeded,
then the Issuer shall notify the Warrant Holders who had attempted to exercise
Warrants for Common Stock and each such Warrant Holder shall be entitled to
exercise for
Common Stock only such number of Warrants as shall equal the product of (i)
the number of Warrants the Warrant Holder sought to exercise for Common Stock
times (ii) a fraction, the numerator of which is the maximum number of
Warrants which may be exercised for Common Stock without exceeding the 4.99%
limitation and the denominator of which is the maximum number of Warrants
sought to be exercised for Common Stock by such Warrant Holders.
(f) Notwithstanding the foregoing provisions of this Section 6, in no
event shall any Warrant be exercisable for shares of Common Stock or
Convertible Preferred Stock which, when aggregated with all other capital
stock of the Issuer (other than shares of Non-Attributable Stock) currently
held or previously held by or currently issuable without restriction to
Creditanstalt or its Affiliates, would, upon issuance, represent in excess of
24.99% of the Equity of the Issuer unless such shares, when issued, would
constitute Non-Attributable Stock.
Section 7. No Fractional Shares. The Issuer shall not be required to
issue fractional shares of Common Stock or Convertible Preferred Stock upon
exercise of the Warrants but shall pay for any such fraction of a share an
amount in cash equal to the then Current Market Price Per Share of one share
of Common Stock multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
the Warrants, provided that the Issuer shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificate or any certificate for Warrant Shares in a name other than
that of the registered holder of a Warrant Certificate surrendered upon the
exercise of a Warrant, and the Issuer shall not be required to issue or
deliver such certificate unless or until the person or persons requesting the
issuance thereof shall have paid to the Issuer the amount of such tax or shall
have established to the satisfaction of the Issuer that such tax has been
paid.
Section 9. Stockholder Rights.
(a) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice as a stockholder in
respect of the meetings of stockholders or the election of directors of the
Issuer or any other matter, or any rights whatsoever as a stockholder of the
Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as imposing any obligation on the
registered holders thereof to purchase any securities or as imposing any
liabilities on such holders as stockholders of the Issuer, whether such
obligation or liabilities are asserted by the Issuer or by creditors of the
Issuer.
Section 10. Reservation and Issuance of Warrant Shares; Certain
Corporate Actions.
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the
Warrants and conversion of the Convertible Preferred Stock, the number of
shares of Common Stock and Convertible Preferred Stock deliverable upon
exercise of all outstanding Warrants and conversion of Convertible Preferred
Stock.
(b) The Issuer covenants that all Warrant Shares will, upon issuance
in accordance with the terms of this Warrant Agreement and the Issuer's
Certificate of Incorporation, be fully paid and nonassessable and free from
all taxes (except as otherwise contemplated in Section 8 hereof) with respect
to the issuance thereof and from all liens, charges and security interests
(other than any created by or on behalf of any Warrant Holder).
(c) So long as any Warrants are outstanding, the Issuer shall make no
amendment of its Certificate of Incorporation which would affect the
authorization, dividend, put, voting, liquidation, conversion, exchange or
notice rights or additional remedies provisions of the Convertible Preferred
Stock without the written consent of all of the Warrant Holders.
(d) The Issuer will not, by amendment of its Certificate of
Incorporation or through any consolidation, merger, reorganization, transfer
of assets, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant Agreement or the Warrant Certificates. Without limiting
the generality of the foregoing, the Issuer (i) will not permit the par value
or the determined or stated value of any shares of the Issuer's Common Stock
or Convertible Preferred Stock receivable upon the exercise of the Warrants to
exceed the amount payable therefor upon such exercise, (ii) will take all such
action as may be necessary or appropriate in order that the Issuer may validly
and legally issue fully paid and nonassessable shares of the Issuer's Common
Stock or Convertible Preferred Stock (as the case may be), upon the exercise
of the Warrants from time to time outstanding, including, without limitation,
amending its Certificate of Incorporation to reduce or eliminate the par value
of the Common Stock, (iii) will not take any action which results in an
adjustment in the number of Warrant Shares obtainable upon the exercise of any
Warrants if the total number of shares of the Issuer's Common Stock (or other
securities) issuable after such action upon the exercise of all of the
then-outstanding Warrants would exceed the total number of shares of the
Issuer's Common Stock (or other securities) then authorized by the Issuer's
Certificate of Incorporation and available for purpose of issuance upon such
exercise, (iv) will not have any authorized Common Stock other than its
existing authorized Common Stock, and (v) will not amend its Certificate of
Incorporation to change any terms of its Common Stock.
(e) If the Issuer proposes, prior to the Expiration Date, to enter
into a transaction that would constitute a Non-Surviving Combination, if
consummated, the Issuer shall give written notice thereof to each of the
Warrant Holders promptly after an agreement is reached with respect to the
Non-Surviving Combination but in any event no less than thirty (30) days prior
to the consummation thereof. Such notice shall describe the proposed
transaction in reasonable detail and specify the consideration to be received
by the Warrant Holders in respect thereto and/or any adjustment to be made to
the number of Warrant Shares obtainable upon the exercise of the Warrants as a
result of such Non-Surviving Combination. The Issuer shall also furnish to
each Warrant Holder all notices and materials furnished to its stockholders in
connection with such transaction as and when such notices and materials are
furnished to its stockholders. The Issuer agrees that it will not enter into
an agreement providing for a Non-Surviving Combination or effect any such
Non-Surviving Combination unless the party to such transaction that is the
surviving entity thereof or the purchaser or purchasers of substantially all
of the assets of the Issuer (the "Survivor") (i) shall be obligated to
distribute or pay to each Warrant Holder, upon payment of the Exercise Price
prior to the Expiration Date, the number of shares of stock or other
securities or other property (including any cash) of the Survivor that would
have been distributable or payable on account of the Warrant Shares if such
Warrant Holder's Warrants had been exercised immediately prior to such
Non-Surviving Combination (or, if applicable, the record date therefor), as
such number of shares or other securities or other property may thereafter be
adjusted pursuant to Section 12 of this Warrant Agreement and (ii) shall
assume by written instrument all of the obligations of the Issuer under this
Warrant Agreement.
Section 11. Obtaining of Governmental Approvals and Stock Exchange
Listings. Subject, in the case of any registration under the Securities Act,
to the limitations set forth in Section 15, the Issuer will, at its own
expense, from time to time take all action which may be necessary to obtain
and keep effective any and all permits, consents and approvals of governmental
agencies and authorities which are or become requisite in connection with the
issuance, sale, transfer and delivery of the Warrant Certificates and the
exercise of the Warrants and the issuance, sale, transfer and delivery of the
Warrant Shares and all action which may be necessary so that such Warrant
Shares, immediately upon their issuance upon the exercise of Warrants and
conversion of the Convertible Preferred Stock, will be listed on each
securities exchange, if any, on which the Common Stock and/or Convertible
Preferred Stock is then listed.
Section 12. Adjustment of Number of Warrant Shares Purchasable.
(a) The number of shares of Common Stock or Convertible Preferred
Stock purchasable upon the exercise of each Warrant is subject to adjustment
from time to time upon the occurrence of any of the events enumerated in this
Section 12 at any time or from time to time after the date hereof and prior to
the Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common Stock or
Convertible Preferred Stock in shares of its capital stock (whether shares of
Common Stock, Convertible Preferred Stock or of capital stock of any other
class), (ii) split or subdivide the outstanding Common Stock or Convertible
Preferred Stock or (iii) combine the outstanding Common Stock or Convertible
Preferred Stock into a smaller number of shares, each Warrant outstanding at
the time of the record date for such dividend or of the effective date of such
split, subdivision or combination shall thereafter entitle the holder of such
Warrant to receive the aggregate number and kind of shares which, if such
Warrant had been exercised immediately prior to such time, such holder would
have owned or have become entitled to receive by virtue of such dividend,
subdivision or combination. Such adjustment shall be made successively
whenever any event listed above shall occur and, if a dividend which is
declared is not paid, each Warrant outstanding shall again entitle the holder
thereof to receive the number of shares of Common Stock or Convertible
Preferred Stock as would have been the case had such dividend not been
declared. If at any time, as a result of an adjustment made pursuant to this
subsection 12(b), the holder of any Warrant thereafter exercised shall become
entitled to receive any shares of capital stock of the Issuer other than
shares of Common Stock and Convertible Preferred Stock, thereafter the number
of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Section 12, and the provisions of this Warrant Agreement
with respect to the Warrant Shares shall apply on like terms to such other
shares.
(c) If the Issuer shall issue any shares of Common Stock without
consideration or at a price per share less than the Current Market Price Per
Share of the Common Stock as at the date of such issuance, including any
shares of Common Stock deemed to have been issued pursuant to this subsection
12(c) but excluding any Exempted Securities, each Warrant outstanding on the
date of such issuance shall thereafter entitle the holder of such Warrant to
receive a number of shares of Common Stock or Convertible Preferred Stock
equal to the product of (i) the number of shares of Common Stock or
Convertible Preferred Stock to which the holder of such Warrant was entitled
immediately prior to such issuance and (ii) the quotient that is obtained by
dividing:
(X) the total number of shares of Common Stock outstanding
immediately after such issuance (including any shares of Common Stock deemed
to have been issued pursuant to this subsection 12(c))
by
(Y) the sum of
(i) the number of shares of Common Stock outstanding
immediately prior to such issuance plus
(ii) the number of shares of Common Stock which the
aggregate consideration received (or deemed to be received) by the Issuer upon
such issuance would purchase at such Current Market Price Per Share.
For purposes of any adjustment of the number of shares of Common Stock or
Convertible Preferred Stock obtainable upon the exercise of any Warrants
pursuant to this subsection 12(c), the following provisions shall be
applicable:
(1) In the case of the issuance of Common Stock for cash, the
consideration therefor shall be deemed to be the amount of cash paid therefor,
without deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Issuer in connection with the issuance or
sale thereof.
(2) In the case of the issuance of Common Stock for a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined by agreement between the
holders of a majority of the Warrants outstanding and the Issuer or, in the
absence of such an agreement, by an independent investment banking firm or an
independent appraiser engaged by the Issuer and reasonably acceptable to the
holders of a majority of the Warrants outstanding (in either case the cost of
which engagement will be borne by the Issuer). In the case of any issuance of
Common Stock upon the exercise of any warrants, options or other rights or the
conversion or exchange of any convertible or exchangeable securities, the
aggregate consideration received by the Issuer upon such issuance shall be
deemed to include the consideration, if any, received by the Issuer as
consideration for the issuance of such warrants, options or rights or such
convertible or exchangeable securities (excluding any cash received on account
of accrued interest or accrued dividends) and, in the case of any conversion
or exchange of securities, shall not include any amount attributable to the
converted or exchanged securities. If any warrant, option or right to
purchase or subscribe for any Common
Stock or convertible securities is issued in connection with the issuance or
sale of other securities by the Issuer, together comprising one integrated
transaction in which no specific consideration is allocated to such warrant,
option, right or security, such warrant, option, right, or security shall be
deemed to have been issued for no consideration.
(3) If (a) the Issuer shall issue warrants or options to
purchase or rights to subscribe for Common Stock other than Exempted
Securities, and (b) the consideration, if any, received by the Issuer as
consideration for the issuance of such warrants, options or rights plus the
minimum aggregate consideration required to be paid upon exercise of such
warrants, options or rights (the amount of such consideration to be determined
in each case as set forth above) shall be less than the product of the Current
Market Price Per Share on the date of such issuance multiplied by the maximum
number of shares of Common Stock deliverable upon such exercise, then such
aggregate maximum number of shares shall be deemed to have been issued at the
time such warrants, options or rights were issued and for a consideration
equal to such minimum aggregate consideration.
(4) If (a) the Issuer shall issue (i) securities (other than
Exempted Securities) which are by their terms convertible into or exchangeable
for Common Stock or (ii) warrants or options to purchase or rights to
subscribe for any such convertible or exchangeable securities, and (b) the
consideration received by the Issuer for any such securities or any such
warrants, options or rights (excluding any cash received on account of accrued
interest or accrued dividends) plus the minimum aggregate consideration (not
including any amount attributed to the converted or exchanged securities), if
any, to be received by the Issuer upon the conversion or exchange of such
securities or upon the exercise of such warrants, options or rights and the
conversion or exchange of the securities received upon such exercise, as the
case may be (the amount of such consideration to be determined in each case as
set forth above) shall be less than the product of the Current Market Price
Per Share on the date of such issuance multiplied by the maximum number of
shares deliverable upon conversion of or in exchange for such convertible or
exchangeable securities or upon the exercise of any such warrants, options or
rights and subsequent conversion or exchanges thereof, then such securities,
warrants, options or rights shall be deemed to have been exercised and/or
converted or exchanged, and the aggregate maximum number of shares of Common
Stock shall be deemed to have been issued at the time such securities,
warrants, options or rights were issued for a consideration equal to such
minimum aggregate consideration.
(5) Upon any reduction in the exercise price of Common Stock
deliverable upon exercise of any of such warrants, options or rights as are
referred to in this subsection 12(c) or any reduction in the amount of
consideration required to be paid or the conversion or exchange price or ratio
payable upon conversion or exchange of any of such convertible or exchangeable
securities, in each case other than a change resulting from any antidilution
provisions thereof which are no more favorable in such instance to the holder
thereof than the provisions of this Section 12 are to the Warrant Holders, (i)
if an adjustment shall previously have been made pursuant to this subsection
12(c) in respect of such warrants, options or rights or such securities, the
number of shares of Common Stock or Convertible Preferred Stock obtainable
upon the exercise of the Warrants shall forthwith be readjusted to such number
of shares as would have obtained had the adjustment made upon the issuance of
such warrants, options, rights or
securities as have not been exercised, converted or exchanged prior to such
change (or any prior adjustment made pursuant to this subdivision (5)) been
made upon the basis of such change, and (ii) if an adjustment has not
previously been made pursuant to this subsection 12(c) in respect of such
options or rights or such securities, then such warrants, options or rights or
such securities shall be deemed to have been granted or issued (as the case
may be) for purposes of this subsection 12(c) as of the date of such
reduction, and any adjustments required to be made pursuant to this subsection
12(c) as a result of such deemed grant or issuance shall forthwith be made
effective as of such date.
(6) All grants or issuances of options or other rights to
acquire shares of Common Stock (or securities convertible into or exchangeable
for shares of Common Stock) issued to any officer, director or employee of the
Issuer or of any Subsidiary of the Issuer or to members of the immediate
family of any of them ("Management Options"), and all issuances of shares of
Common Stock (or securities convertible into or exchangeable for shares of
Common Stock) under or pursuant to such Management Options shall, for purposes
of subsection 12(c), be deemed to be granted and issued for no consideration
except to the extent cash or notes are paid therefor.
(7) If and when any Warrants shall be exercised as set forth
herein, (i) if there shall be any outstanding warrants (other than the
Warrants) or options to purchase or rights to subscribe for shares of Common
Stock or any outstanding warrants (other than the Warrants) or options to
purchase or rights to subscribe for or securities which are by their terms
convertible into or exchangeable for Common Stock which in each case would, if
issued on the date of such Warrant exercise, result in an adjustment pursuant
to either of subdivisions (3) or (4) of this subsection 12(c), then such
warrants or options shall be deemed to have been exercised in full immediately
prior to the exercise of such Warrants for a consideration equal to the
consideration, if any, received by the Issuer upon the issuance of such
options or rights plus the minimum aggregate consideration required to be paid
upon exercise of such options or rights (the amount of such consideration to
be determined in each case as set forth above), and (ii) if there shall be any
outstanding securities which are by their terms convertible into or
exchangeable for Common Stock at the time of such warrant exercise or at any
time thereafter which in each case would, if issued on the date of such
Warrant exercise, result in an adjustment pursuant to subdivision (4) of this
subsection, then such securities shall be deemed to have been converted or
exchanged in full immediately prior to the exercise of such Warrants for a
consideration equal to the aggregate consideration received by the Issuer for
any such securities plus the minimum aggregate consideration (not including
any amount attributed to the converted or exchanged securities), if any,
required to be paid upon the conversion or exchange of such securities (the
amount of such consideration to be determined in each case as set forth
above); provided that any adjustment made pursuant to this subdivision (7) of
subsection 12(c) shall only be made with respect to such Warrants as are then
being exercised.
(8) Shares of Common Stock owned by or held for the account of
the Issuer or any majority-owned Subsidiary shall not be deemed outstanding
for the purpose of any computation made pursuant to this subsection 12(c).
Any adjustment required to be made pursuant to this subsection 12(c) shall be
made successively whenever the date of issuance or deemed issuance of any such
Common Stock or any such options, rights or convertible or exchangeable
securities is fixed (which date of issuance shall be the record date for such
issuance if a record date therefor is fixed) and, in the event that (A) such
shares or options, rights, warrants or convertible or exchangeable securities
are not so issued, or (B) any such option, right, warrant or convertible or
exchangeable security (or the conversion or exchange right thereunder) expires
according to its terms without having been exercised, converted or exchanged,
each Warrant outstanding shall, as of the date of cancellation of such
issuance in the case of clause (A) above and the date of such expiration in
the case of clause (B) above, entitle the holder thereof to receive the number
of shares of Common Stock or Convertible Preferred Stock as would have been
the case had the date of such issuance of such unissued options, rights,
warrants or convertible or exchangeable securities not been fixed or such
expired options, rights, warrants or convertible or exchangeable securities
not been issued, as the case may be. If any adjustment is
made pursuant to either of subdivisions (3) or (4) of this subsection 12(c)
upon the granting or issuance of any warrants, options or other rights or any
convertible or exchangeable securities or any adjustment or readjustment is
made pursuant to subdivision (5) of this subsection 12(c), then any adjustment
required to be made hereunder upon the exercise of any such warrants, options
or other rights or upon the exchange or conversion of any such convertible or
exchangeable securities (including any deemed exercise, conversion or exchange
pursuant to subdivision (7) of this subsection 12(c)) shall be made only to
the extent that the number of shares of Common Stock or Convertible Preferred
Stock purchasable upon the exercise of a Warrant shall not previously have
been increased pursuant to this subsection 12(c) upon such grant or issuance
(or upon such adjustment or readjustment made pursuant to subdivision (5) of
this subsection 12(c), if applicable).
(d) In case the Issuer shall make a distribution to all holders of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Issuer is the continuing corporation) of
evidences of its indebtedness, cash or other assets, each Warrant outstanding
on the date of such distribution shall thereafter entitle the holder of such
Warrant to receive a number of shares of Common Stock and Convertible
Preferred Stock equal to the product of (i) the number of shares of Common
Stock and Convertible Preferred Stock to which the holder of such Warrant was
entitled immediately prior to such date of distribution and (ii) a fraction of
which the numerator shall be the then Current Market Price Per Share of Common
Stock on such date and of which the denominator shall be the then Current
Market Price Per Share of Common Stock on such date less the fair market
value, as determined by agreement between the holders of a majority of the
Warrants and the Issuer or, in the absence of such an agreement, by an
independent investment banking firm or an independent appraiser engaged by the
Issuer and reasonably acceptable to the holders of a majority of the Warrants
(in either case the cost of which engagement will be borne by the Issuer) of
the portion of the assets or evidences of indebtedness, or the portion of the
cash, so to be distributed applicable to one share of then-outstanding Common
Stock. Such adjustment shall be made successively whenever a date for such
distribution is fixed (which date of distribution shall be the record date for
such distribution if a record date therefor is fixed) and, if such
distribution is not so made, each Warrant outstanding shall again entitle the
holder thereof to receive the number of shares of Common Stock and Convertible
Preferred Stock as would have been the case had such date of distribution not
been fixed.
(e) In the event of any capital reorganization of the Issuer, or of
any reclassification of the Common Stock (other than a subdivision or
combination of outstanding shares of Common Stock), or in case of the
consolidation of the Issuer with or the merger of the Issuer with or into any
other corporation or of the sale of the properties and assets of the Issuer
as, or substantially as, an entirety to any other corporation, each Warrant
shall after such capital reorganization, reclassification of Common Stock,
consolidation, merger or sale be exercisable upon the terms and conditions
specified in this Warrant Agreement, for the number of
shares of stock or other securities or assets to which a holder of the number
of Warrant Shares purchasable (at the time of such capital reorganization,
reclassification of Common Stock, consolidation, merger or sale) upon exercise
of such Warrant would have been entitled upon such capital reorganization,
reclassification of Common Stock, consolidation, merger or sale; and in any
such case, if necessary, the provisions set forth in this Section 12 with
respect to the rights thereafter of the holders of the Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or assets thereafter deliverable on
the exercise of the Warrants.
(f) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Issuer, the other provisions of this Section 12 are
not strictly applicable or (if strictly applicable) would not fairly 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 an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock or Convertible Preferred Stock
purchasable upon the exercise of each Warrant from that which would otherwise
be determined pursuant to this Section 12.
(g) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that
any adjustments which by reason of this subsection 12(g) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 12 shall be made to the
nearest cent or to the nearest hundredth of a share, as the case may be.
(h) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of
shares as are stated on the Warrant Certificates initially issuable pursuant
to this Warrant Agreement.
(i) If any question shall at any time arise with respect to the number
of Warrant Shares purchasable following any adjustment pursuant to this
Section 12, such question shall be determined by agreement between the holders
of a majority of the Warrants and the Issuer or, in the absence of such an
agreement, by an independent investment banking firm or an independent
appraiser engaged by the Issuer (in either case the cost of which engagement
will be borne by the Issuer) and reasonably acceptable to the Issuer and the
holders of a majority of Warrants and such determination shall be binding upon
the Issuer and the holders of the Warrants.
(j) Anything in this Section 12 to the contrary notwithstanding:
(1) the Issuer shall be entitled to make such increases in the
number of Warrant Shares purchasable upon the exercise of each Warrant, in
addition to those adjustments required by this Section 12, as it in its sole
discretion shall determine to be advisable in order that any consolidation or
subdivision of the Common Stock, or any issuance wholly for cash or any shares
of Common Stock at less than the Current Market Price Per Share, or any
issuance
wholly for cash or shares of Common Stock or securities which by their terms
are convertible into or exchangeable for shares of Common Stock or any stock
dividend, or any issuance of rights, options or warrants referred to
hereinabove in this Section 12, hereinafter made by the Issuer to the holders
of its Common Stock shall not be taxable to them; and
(2) no adjustment in the number of Warrant Shares purchasable
shall be required in the event the Issuer pays a cash dividend to holders of
Common Stock and/or Convertible Preferred Stock; provided that the Issuer also
pays a cash dividend to all holders of Warrants which dividend shall be
calculated as if the Warrants had been exercised.
Section 13. Notices to Warrant Holders; Notices of Issuances and Dividends.
(a) Upon any adjustment of the number of Warrant Shares purchasable
upon exercise of a Warrant pursuant to Section 12, the Issuer shall promptly
but in any event within 20 days thereafter, cause to be given to each of the
registered holders of the Warrants at its address appearing on the Warrant
Register by registered mail, postage prepaid, return receipt requested a
certificate signed by its chairman, president or chief financial officer
setting forth the number of Warrant Shares purchasable upon exercise of a
Warrant as so adjusted and describing in reasonable detail the facts
accounting for such adjustment and the method of calculation used. Where
appropriate, such certificate may be given in advance and included as a part
of the notice required to be mailed under the other provisions of this Section
13.
(b) In the event:
(i) that the Issuer shall authorize the issuance to all holders
of Common Stock or Convertible Preferred Stock of rights or warrants to
subscribe for or purchase capital stock of the Issuer or of any other
subscription rights or warrants; or
(ii) that the Issuer shall authorize the distribution to all
holders of Common Stock or Convertible Preferred Stock of evidences of its
indebtedness or assets (including, without limitation cash dividends or cash
distributions payable out of consolidated earnings or earned surplus or
dividends payable in Common Stock or Convertible Preferred Stock); or
(iii) of any consolidation or merger to which the Issuer is a
party and for which approval of any stockholders of the Issuer is required, or
of the conveyance or transfer of the properties and assets of the Issuer
substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination); or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Issuer; or
(v) that the Issuer proposes to take any other action which
would require an adjustment in the number of Warrant Shares or other
securities or assets to which each Warrant Holder is entitled pursuant to
Section 12;
then the Issuer shall cause to be given to each of the registered holders of
the Warrants at its address appearing on the Warrant Register at least 20
calendar days prior to the applicable record date, if any, hereinafter
specified, or, if no such record date is specified, 20 calendar days prior to
the taking of any action referred to in clauses (i) through (v) above, by
registered mail, postage prepaid, return receipt requested, a written notice
stating (i) the date as of which the holders of record of Common Stock or
Convertible Preferred Stock to be entitled to receive any such rights,
warrants or distribution are to be determined, or (ii) the date on which any
such consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective, or (iii) the date on which such
other action is to be effected, and the date as of which it is expected that
holders of record of Common Stock or Convertible Preferred Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up or other action. The failure
to give the notice required by this Section 13 or any defect therein shall not
affect the legality or validity of any distribution, right, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up or other action referred to above, or the vote upon any such
action.
(c) Prior to the expiration or exercise of all outstanding Warrants,
the Issuer shall furnish to each Warrant Holder:
(i) as soon as available, but in any event within 90 days after
the end of each fiscal year of the Issuer, either (A) a copy of the Issuer's
Annual Report on Form 10-K (or any successor form) and any documents
incorporated by reference into such form for the prior fiscal year, as filed
with the Commission under the Exchange Act, or (B) a copy of the consolidated
balance sheet of the Issuer and its consolidated Subsidiaries as at the end of
such year and the related consolidated statement of income and retained
earnings and of cash flow for such year, setting forth in each case in
comparative form the figures for the previous year certified by certified
independent public accountants not unacceptable to Creditanstalt, and the
consolidated balance sheet of the Issuer and its consolidated Subsidiaries as
at the end of such fiscal year, showing inter-company eliminations, and the
related consolidating statements of income and retained earnings and changes
in financial position of the Issuer and its consolidated Subsidiaries for such
year, showing inter-company eliminations, setting forth in each case in
comparative form the figures for the previous fiscal year, certified by a firm
of nationally recognized independent certified public accountants;
(ii) as soon as available but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal year
of the Issuer, either (A) a copy of the Issuer's Quarterly Report on Form 10-Q
(or any successor form) for the preceding fiscal quarter, as filed with the
Commission under the Exchange Act, or (B) the unaudited consolidated balance
sheet of the Issuer and its consolidated Subsidiaries as at the end of each
such quarter and the related unaudited consolidated statements of income and
retained earnings and of cash
flow of the Issuer and its consolidated Subsidiaries for such quarter and the
portion of the fiscal year through such date setting forth in each case in
comparative form the figures for the same period of the previous fiscal year,
reviewed by independent certified public accountants and certified by the
chief financial or accounting officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and
(iii) promptly after the sending or filing thereof, as the case
may be, copies of any reports, certificates, budgets, definitive proxy
statements or financial statements which Issuer sends to its stockholders and
copies of any regular periodic and special reports or registration statements
which Issuer files with the Commission (or any governmental agency substituted
therefor), including, but not limited to, any report or registration statement
which Issuer files with any national securities exchange;
(iv) no later than April 30 of each year, a certificate of the
chairman, president or chief financial officer of the Issuer setting forth the
number of Warrant Shares purchasable upon exercise of a Warrant as of the end
of the preceding fiscal year and a description in reasonable detail of any
adjustments in such number during the preceding fiscal year;
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied consistently
throughout the periods reflected therein (except as approved by such
accountants and officer and disclosed therein). So long as the Loan Agreement
remains in effect, compliance by the Issuer with the provisions of Section 7.2
thereof shall be deemed to be compliance with subsections 13(c)(i) and
13(c)(ii).
Section 14. Restrictions on Transfer.
(a) Each of Creditanstalt and its Affiliates who are issued Warrants
pursuant to this Agreement (i) represents that it is an "accredited investor"
within the meaning of the Securities Act and the rules and regulations
promulgated thereunder, (ii) represents that it has received adequate
information about the Issuer to determine the advisability of a purchase of
the Issuer's securities, (iii) represents that it is acquiring the Warrants
for its own account for investment and not with a view to any distribution or
public offering within the meaning of the Securities Act, except in any case
pursuant to the registration of such Warrants or Warrant Shares under the
Securities Act or pursuant to a valid exemption from such registration
requirement, (iv) acknowledges that the Warrants and the Warrant Shares
issuable upon exercise thereof have not been registered under the Securities
Act and (v) agrees that it will not sell or otherwise transfer any of its
Warrants or Warrant Shares except upon the terms and conditions specified
herein and that it will cause any transferee thereof to agree to take and hold
the same subject to the terms and conditions specified herein, provided that
the Warrant Holders may sell the Warrants or the Warrant Shares purchased upon
exercise of the Warrants and issued on conversion of the Convertible Preferred
Stock in one or more private transactions not requiring registration under the
Securities Act, as provided in Section 14(c) below.
(b) Except as provided in subsection 14(d) hereof each Warrant
Certificate and each certificate for the Warrant Shares issued to
Creditanstalt or an Affiliate thereof or to a
subsequent transferee thereof pursuant to subsection 14(c) shall include a
legend in substantially the following form (with such changes therein as may
be appropriate to reflect whether such legend refers to Warrants or Warrant
Shares), provided that such legend shall not be required if such transfer is
being made in connection with a sale which is exempt from registration
pursuant to Rule 144 under the Securities Act or if the opinion of counsel
referred to in subsection 14(c) is to the further effect that neither such
legend nor the restrictions on transfer in this Section 14 are required in
order to ensure compliance with the Securities Act:
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS
AND SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN AND ARE SUBJECT TO OTHER PROVISIONS OF THE AMENDED AND RESTATED WARRANT
AGREEMENT, DATED AS OF DECEMBER 16, 1997 (AS SUCH AGREEMENT MAY BE AMENDED,
RESTATED, SUPPLEMENTED OR MODIFIED FROM TIME TO TIME), BETWEEN THE ISSUER AND
CREDITANSTALT CORPORATE FINANCE, INC., A COMPLETE AND CORRECT COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(c) Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among Creditanstalt
and/or its Affiliates), the holder thereof shall give written notice to the
Issuer of such holder's intention to effect such assignment, transfer or sale,
which notice shall set forth the date of such proposed assignment, transfer or
sale and the identity of the proposed transferee. Each holder wishing to
effect such a transfer of any Warrant or Warrant Shares shall also furnish to
the Issuer an agreement by the transferee thereof that it is taking and
holding the same subject to the terms and conditions specified herein and,
unless the transferee is an Affiliate of such holder, a written opinion of
such holder's counsel, in form reasonably satisfactory to the Issuer, to the
effect that the proposed transfer may be effected without registration under
the Securities Act.
(d) The restrictions set forth in this Section 14 shall terminate and
cease to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an
opinion of counsel, in form reasonably satisfactory to the Issuer, to the
effect that compliance with such restrictions is not necessary in order to
comply with the Securities Act with respect to the transfer of the Warrants
and the Warrant Shares; provided, however, that after two (2) years from the
date of issuance of any Warrants (or such shorter period as may be provided by
Rule 144(k) promulgated under the Securities Act), such restrictions will
automatically terminate (without the necessity of any opinion of counsel) as
to such Warrants and as to any Warrant Shares issued in respect of such
Warrants upon exercise of the Conversion Right set forth in subsection 6(b)
above. Whenever such restrictions shall so terminate the holder of such
Warrants and/or Warrant Shares shall be entitled to receive from the Issuer,
without expense (other than transfer taxes, if any), Warrant
Certificates or certificates for such Warrant Shares not bearing the legend
set forth in subsection 14(b) at which time the Issuer will rescind any
transfer restrictions relating thereto.
(e) With a view to making available to Creditanstalt and its
Affiliates and subsequent holders of the Warrant Shares the benefits of
certain rules and regulations of the Securities and Exchange Commission
(including, without limitation, Rules 144 and 144A under the Securities Act)
which may permit the sale of Warrants and Warrant Shares to the public or
certain other institutions without registration, the Issuer agrees to take any
and all such actions as may be required of it to make available to
Creditanstalt and its Affiliates and such subsequent holders such benefits,
including without limitation, to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act or any
successor provision thereto from and after the date the Issuer first becomes
subject to the provisions of Section 13 or 15(d) of the Exchange Act;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Issuer under the Securities Act and the
Exchange Act from and after the date the Issuer first becomes subject to the
provisions of Section 13 or 15(d) of the Exchange Act; and
(iii) so long as Creditanstalt or an Affiliate thereof owns any
Warrants or Warrant Shares, furnish to Creditanstalt forthwith upon request a
written statement by the Issuer as to its compliance with the reporting
requirements of Rule 144 or any successor provision thereto, and of the
Securities Act and the Exchange Act, (to the extent not previously furnished
to Creditanstalt under subsection 13(d)) a copy of the most recent annual or
quarterly report of the Issuer filed with the Commission, in each case from
and after the date the Issuer first becomes subject to the provisions of
Section 13 or 15(d) of the Exchange Act, and such other reports and documents
of the Issuer and other information in the possession of or reasonably
obtainable by the Issuer as Creditanstalt and its Affiliates and subsequent
holders of the Warrants may reasonably request in availing itself of any rule
or regulation of the Commission allowing Creditanstalt and its Affiliates and
subsequent holders of the Warrants to sell any such securities without
registration.
Section 15. Registration.
(a) (i) Upon the written demand of any Warrant Holder to the Issuer
(a "Demand") at any time and from time to time after the Closing Date
requesting that the Issuer effect the registration under the Securities Act of
Warrants or Non-Public Warrant Shares of such Warrant Holder, the Issuer will
promptly give written notice (a "Demand Notice") of such Demand to all other
Warrant Holders. Each other Warrant Holder may request that the Issuer effect
the registration under the Securities Act of additional Warrants or Non-Public
Warrant Shares of such Warrant Holder by delivering written notice to the
Issuer specifying such number of Warrants or Non-Public Warrant Shares within
20 days of receipt of the Demand Notice. In the event that the Issuer
receives requests for the registration under the Securities Act of at least an
aggregate of 20% of the Warrants or Non-Public Warrant Shares (or if less than
an aggregate of 20% of the Warrants or Non-Public Warrant Shares are
outstanding, the remainder of the Warrants and Non-Public Warrant Shares then
outstanding) within such 20-day period the Issuer shall give written notice (a
"Registration Notice") to all Warrant Holders and holders of unregistered
Equity Warrant Shares that the Issuer will be filing a registration statement
pursuant to this subsection 15(a) and will thereupon use its reasonable best
efforts promptly to effect the registration under the Securities Act of (i)
the Warrants or Non-Public Warrant Shares which Warrant Holders have requested
to be registered within 20 days of the Demand Notice, (ii) additional Warrants
and Non-Public Warrant Shares which Warrant Holders have requested to be
registered within 10 days of the Registration Notice and (iii) unregistered
Equity Warrant Shares which the holders thereof have requested to be
registered within 10 days of the Registration Notice. Promptly within 20 days
of the Registration Notice, the Issuer will notify all Warrant Holders whose
Warrants or Non-Public Warrant Shares are to be included in the registration
and all holders of unregistered Equity Warrant Shares whose unregistered
Warrant Shares are to be included in the registration of the number of
additional Warrants, Non-Public Warrant Shares and unregistered Equity Warrant
Shares requested to be included therein.
(ii) If the registration of which the Issuer gives notice
pursuant to subsection 15(a)(i) is for an underwritten public offering, only
Warrants, Non-Public Warrant Shares and unregistered Equity Warrant Shares
which are to be included in the underwriting may be included in such
registration, and the selling Warrant Holders shall, after reasonable
consultation with the Issuer, have the right to designate the managing
underwriter(s) in any such underwritten public offering with the consent of
the Issuer (which consent shall not be unreasonably withheld).
Notwithstanding any other provision of this Section 15(a), if the underwriter
advises the Warrant Holders and holders of Equity Warrant Shares in writing
that marketing factors require a limitation of the number of Warrants, Warrant
Shares and Equity Warrant Shares to be underwritten, then (A) the maximum
number of Warrants, Warrant Shares and Equity Warrant Shares to be sold
pursuant to such registration shall not exceed the maximum number of Warrants,
Warrant Shares and Equity Warrant Shares which the managing underwriter then
considers, in good faith, to be appropriate based on market conditions and
other relevant factors (including pricing) (the "Maximum Number") and (B) if
the total quantity of Warrants, Warrant Shares and Equity Warrant Shares
desired to be sold exceeds the Maximum Number, the Warrant Holders shall be
entitled to include in the offering the full amount of Warrants and Warrant
Shares which they desire to include, provided that if the Maximum Number is
insufficient to cover the full amount which the Warrant Holders desire to
include, the Warrant Holders, as a group, shall be entitled to sell up to the
Maximum Number in proportion to the amount of Warrants and Warrant Shares that
each proposes to sell. Only after the Warrant Holders have been entitled to
include the full amount of Warrants and Warrant Shares which they desire to
include shall the holders of Equity Warrant Shares be entitled to sell Equity
Warrant Shares up to the Maximum Number, and, if the Maximum Number is
insufficient to cover the full amount which the holders of Equity Warrant
Shares desire to include, the holders of Equity Warrant Shares shall be
entitled to sell up to the Maximum Number in proportion to the amount of
Equity Warrant Shares that each proposes to sell. Holders who include
Warrants, Warrant Shares or Equity Warrant Shares in a registration pursuant
to subsection 15(a) shall bear the cost of any underwriters' discounts and
commissions and transfer taxes, if any, relating to their Warrants, Warrant
Shares or Equity Warrant Shares which are sold.
(b) The Issuer is obligated to effect any and all demand registrations
under subsection 15(a) and, with respect to each such registration, the Issuer
shall bear all expenses other than underwriting discounts and commissions, if
any, in connection with registrations, filings or qualifications pursuant to
subsection 15(a), including without limitation all registration, filing and
qualification fees, printers' and accounting fees, the fees and disbursements
of counsel for the Issuer and the fees and disbursements of one counsel for
the selling Warrant Holders, provided that (i) a registration will not
constitute a demand registration under subsection 15(a) until it has been
declared effective under the Securities Act, and (ii) no Person other than
holders of Warrants, Non-Public Warrant Shares and Equity Warrant Shares shall
have any right to have securities included in any registration under
subsection 15(a).
(c) If, at any time after the date hereof, the Issuer proposes to
register any of its securities under the Securities Act (except pursuant to a
registration statement filed on Form S-8 or Form S-4 or such other form as
shall be prescribed under the Act for the same purposes), it will at each such
time give written notice (which notice shall state the intended method of
disposition thereof by the prospective sellers) to all holders of outstanding
Warrants and Non-Public Warrant Shares of its intention to do so and the
proposed minimum offering price per Warrant or Warrant Shares and upon the
written request of any holder thereof given within 10 days after the Issuer's
giving of such notice, the Issuer will use its reasonable best efforts to
effect the registration of the Warrants and/or Non-Public Warrant Shares which
it shall have been so requested to register by including the same in such
registration statement all to the extent required to permit the sale or other
disposition thereof in accordance with the intended method of sale or other
disposition given in each such request. If the registration of which the
Issuer gives notice pursuant to this subsection 15(c) is for an underwritten
public offering, only Warrants or Non-Public Warrant Shares which are to be
included in the underwriting may be included in such registration, and the
Issuer shall have the right to designate the managing underwriter(s) in any
such underwritten public offering; provided that (i) the Issuer shall use its
best efforts to cause the managing underwriter(s) to include the Warrants or
Non-Public Warrant Shares requested to be included in the registration in the
underwriting; (ii) if the managing underwriter(s) advises the holders of the
Warrants or Non-Public Warrant Shares in writing that the total amount of
securities which they and the Issuer intend to include in such offering is
sufficiently large to materially and adversely affect the success of such
offering, the amount of securities to be offered for the accounts of all
holders or Warrants and Non-Public Warrant Shares shall be reduced pro rata
(based upon the amount of securities each such Person sought to include in the
offering) to the extent necessary to reduce the total amount of securities to
be included in the offering to the amount recommended by such managing
underwriter(s) (which amount may be zero, if so recommended by such managing
underwriter(s). Any registration statement filed pursuant to this subsection
15(c) may be withdrawn at any time at the discretion of the Issuer.
(d) If a registration under subsection 15(a) or 15(c) shall be in
connection with an underwritten public offering, each holder of Warrants or
Non-Public Warrant Shares shall be deemed to have agreed by acquisition of
such Warrants or Non-Public Warrant Shares not to effect any sale or
distribution, including any sale pursuant to Rule 144 or Rule 144A, of any
Warrants or Non-Public Warrant Shares, and to use such holder's reasonable
best efforts not to effect any such sale or distribution of any other equity
security of the Issuer or of any security convertible into or exchangeable or
exercisable for any equity security of the Issuer (other than
as part of such underwritten public offering) within seven days before or 90
days after the effective date of such registration statement (and the Issuer
hereby also so agrees and agrees to cause each holder of any equity security,
or of any security convertible into or exchangeable or exercisable for any
equity security, of the Issuer purchased from the Issuer at any time other
than in a public offering, so to agree).
(e) As a condition to the inclusion of a holder's Warrants or
Non-Public Warrant Shares in any registration statements, each such holder of
Warrants or Non-Public Warrant Shares requesting registration thereof will
furnish to the Issuer such information with respect to such holder as is
required to be disclosed in the registration statement (and the prospectus
included therein) by the applicable rules, regulations and guidelines of the
Commission promptly upon the Issuer's request for such information. Failure
of a holder to furnish such information or agreement shall not affect the
obligation of the Issuer under this Section 15 to the remaining holders who
furnish such information.
(f) If and whenever the Issuer is required under this Section 15 to
use its reasonable best efforts to effect the registration of Warrants or
Non-Public Warrant Shares under the Securities Act, the Issuer shall:
(i) as expeditiously as possible and subject to the limitations
set forth in subsections 15(a) and 15(c), prepare and file with the Commission
a registration statement on the appropriate form with respect to such Warrants
or Non-Public Warrant Shares and use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing;
(ii) as expeditiously as possible, prepare and file with the
Commission such amendments and supplements (including post-effective
amendments and supplements) to the registration statement covering such
Warrants or Non-Public Warrant Shares and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
and usable for resale for a period necessary to complete the distribution of
such securities, but in no event in excess of 24 months plus any period during
which the holders of Warrants or Warrant Shares are obligated to refrain from
selling because the Issuer is required to amend or supplement the prospectus
under subsection 15(f)(iv), and to comply with the provisions of the
Securities Act with respect to the disposition of all Warrants or Non-Public
Warrant Shares covered by such registration statement during such period in
accordance with the intended method of disposition of the sellers set forth
therein;
(iii) as expeditiously as possible, furnish to each seller of
such Warrants or Non-Public Warrant Shares registered, or to be registered
under the Securities Act, and to each underwriter, if any, of such Warrants or
Non-Public Warrant Shares such number of copies of a prospectus and
preliminary prospectus in conformity with the requirements of the Securities
Act, and such other documents as such seller or underwriter may reasonably
request in order to facilitate the public sale or other disposition of such
Warrants or Non-Public Warrant Shares;
(iv) as expeditiously as possible, notify each seller of such
Warrants or Non-Public Warrant Shares if, at any time when a prospectus
relating to such Warrants or Non-Public Warrant Shares, is required to be
delivered under the Securities Act, any event shall have occurred as a result
of which the prospectus then in use with respect to such Warrants or
Non-Public Warrant Shares would include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or for any other reason it shall be
necessary to amend or supplement such prospectus in order to comply with the
Securities Act and prepare and furnish to all sellers as promptly as possible,
and in any event within ninety (90) days of such notice, a reasonable number
of copies of a supplement to or an amendment of such prospectus which will
correct such statement or omission or effect such compliance;
(v) as expeditiously as possible, use its reasonable best efforts
to register or qualify such Warrants or Non-Public Warrant Shares under such
other securities or blue sky laws of such jurisdictions as such seller shall
reasonably request and do any and all other acts and things which may be
reasonably necessary to enable such seller to consummate the public sale or
other disposition in each such jurisdiction of the Warrants or Non-Public
Warrant Shares owned by such seller and included in such registration
statement, provided that the Issuer shall not be required to consent to the
general service of process or to qualify to do business in any jurisdiction
where it is not then qualified;
(vi) use its reasonable best efforts to keep the holders of such
Warrants or Non-Public Warrant Shares informed of the Issuer's best estimate
of the earliest date on which such registration statement or any
post-effective amendment or supplement thereto will become effective and will
promptly notify such holders and the managing underwriters, if any,
participating in the distribution pursuant to such registration statement of
the following: (A) when such registration statement or any post-effective
amendment or supplement thereto becomes effective or is approved; (B) of the
issuance by any competent authority of any stop order suspending the
effectiveness or qualification of such registration statement or the
prospectus then in use or the initiation or threat of any proceeding for that
purpose; and (C) of the suspension of the qualification of any Warrants or
Non-Public Warrant Shares included in such registration statement for sale in
any jurisdiction;
(vii) make available to its security holders, as soon as
practicable, an earnings statement covering a period of at least twelve months
which satisfies the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder;
(viii) cooperate with the sellers of such Warrants or Non-Public
Warrant Shares and the underwriters, if any, of such Warrants or Non-Public
Warrant Shares; give each seller of such Warrants or Non-Public Warrant
Shares, and the underwriters, if any, of such Warrants or Non-Public Warrant
Shares and their respective counsel and accountants, such access to its books
and records and such opportunities to discuss the business of the Issuer with
its officers and independent public accountants as shall be necessary to
enable them to conduct a reasonable investigation within the meaning of the
Securities Act and, in the event that Warrants or Non-Public Warrant Shares
are to be sold in an underwritten offering, enter into an underwriting
agreement containing customary representations and warranties, covenants,
conditions and indemnification provisions, including without limitation the
furnishing to the underwriters of a
customary opinion of independent counsel to the Issuer and a customary
"comfort" letter from the Issuer's independent public accountants;
(ix) provide a CUSIP number for all Warrants and Non-Public
Warrant Shares not later than the effective date of the registration
statement;
(x) as to all registrations under subsection 15(a) and all
registrations under subsection 15(c), pay all costs and expenses incident to
the performance and compliance by the Issuer of this Section 15, including
without limitation (A) all registration and filing fees; (B) all printing
expenses; (C) all fees and disbursements of counsel and independent public
accountants for the Issuer; (D) all blue sky fees and expenses (including fees
and expenses of counsel in connection with blue sky surveys); (E) all transfer
taxes; (F) the entire expense of any special audits required by the rules and
regulations of the Commission; (G) the cost of distributing prospectuses in
preliminary and final form as well as any supplements thereto and (H) the fees
and expenses of one counsel for the holders of the Warrants or Non-Public
Warrant Shares being registered; and
(xi) as to the first registration under subsection 15(a) which is
in respect of an underwritten offering, as expeditiously as possible, take
such actions as the underwriters reasonably request in order to expedite or
facilitate the disposition of the Warrants or Non-Public Warrant Shares to be
included in such offering (including, without limitation, effecting a stock
split, stock dividend or a combination of shares of Common Stock).
(g)(i) The Issuer will indemnify and hold harmless each seller of
Warrants or Non-Public Warrant Shares, each director, officer, employee and
agent of each seller, and each other person, if any, who controls such seller
within the meaning of the Securities Act or the Exchange Act from and against
any and all losses, claims, damages, liabilities and legal and other expenses
(including costs of investigation) caused by any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
under which such Warrants or Non-Public Warrant Shares were registered under
the Securities Act, any prospectus or preliminary prospectus contained therein
or any amendment or supplement thereto, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses are caused by any such
untrue statement or omission or alleged untrue statement or omission based
upon information relating to such seller and furnished to the Issuer in
writing by such seller expressly for use therein, and provided that the Issuer
will not be liable to any Person who participates as an underwriter in the
offering or sale of Warrants or Non-Public Warrant Shares or any other Person,
if any, who controls such underwriter within the
meaning of the Securities Act under the indemnity agreement in this subsection
15(g) with respect to any preliminary prospectus or the final prospectus or
the final prospectus as amended or supplemented, as the case may be, to the
extent that any such loss, claim, damage or liability of such underwriter or
controlling Person results from the sale by such underwriter of Warrants or
Non-Public Warrant Shares to a Person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented,
whichever is most recent, if the Issuer has previously furnished copies
thereof to such underwriter, or from a sale to a Person in a state where the
offering has not been registered or qualified, if the Issuer has notified the
seller and any underwriter involved in such sale of the states where the
offering has been registered or qualified.
(ii) It shall be a condition to the obligation of the Issuer to
effect a registration of Warrants or Non-Public Warrant Shares under the
Securities Act pursuant hereto that (X) each seller, severally and not
jointly, indemnify and hold harmless the Issuer and each person, if any, who
controls the Issuer within the meaning of the Securities Act or the Exchange
Act to the same extent as the indemnity from the Issuer in the foregoing
paragraph, but only with reference to any breach by such seller of any
agreement between such seller, and the Issuer with respect to the offering and
with reference to information relating to such seller furnished to the Issuer
in writing by such seller expressly for use in the registration statement, any
prospectus or preliminary prospectus contained therein or any amendment or
supplement thereto and (Y) each seller, in the event that Warrants or
Non-Public Warrant Shares are to be sold in an underwritten offering, enters
into an underwriting agreement containing customary representations and
warranties, covenants, conditions and indemnification provisions.
(iii) In case any claim shall be made or any proceeding
(including any governmental investigation) shall be instituted involving any
indemnified party in respect of which indemnity may be sought pursuant to this
subsection 15(g), such indemnified party shall promptly notify the
indemnifying party in writing of the same, provided that failure to notify the
indemnifying party shall not relieve it from any liability it may have to an
indemnified party otherwise than under this subsection 15(g). The
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party in such proceeding and shall pay the fees and disbursements
of such counsel. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and disbursements of such
counsel shall be at the expense of such indemnified party unless (A) the
indemnifying party shall have failed to retain counsel for the indemnified
party as aforesaid, (B) the indemnifying party and such indemnified party
shall have mutually agreed to the retention of such counsel or (C)
representation of such indemnified party by the counsel retained by the
indemnifying party would, in the reasonable opinion of the indemnified party,
be inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding, provided that the Issuer shall not be liable for the fees and
disbursements of more than one additional counsel for all indemnified parties.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(h) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in subsection 15(g) is
due in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, the Issuer or the applicable
sellers, as the case may be, shall contribute to the aggregate losses, claims,
damages and liabilities incurred (including legal or other expenses reasonably
incurred in connection with the investigating or defending of same) by the
other and for which such indemnification was sought. In determining the amount
of contribution to which the respective parties are entitled, there shall be
considered the relative benefits received by each party from the offering of
the securities included in the registration statement (taking into account the
portion of the proceeds of the offering realized by each), the parties'
relative knowledge and
access to information concerning the matter with respect to which the claim
was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances; provided, however, that (i) in no case shall any seller of
Warrants or Non-Public Warrant Shares be required to contribute any amount in
excess of the total public offering price of the Warrants or Non-Public
Warrant Shares sold by him and (ii) 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. For purposes of this subsection 15(h), each
person who controls any seller of Warrants or Non-Public Warrant Shares or the
Issuer shall have the same rights to contribution as such seller or the
Issuer. Any party entitled to contribution shall, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against the Issuer or
the seller of Warrants or Non-Public Warrant Shares under this subsection
15(h), notify the Issuer or such seller, as the case may be, but the omission
to so notify the Issuer or such seller, as the case may be, shall not relieve
it from any other obligation it may have hereunder or otherwise.
(i) After the date hereof, the Issuer shall not grant to any holder of
securities of the Issuer any registration rights which have a priority greater
than or equal to those granted to holders of Warrants or Non-Public Warrant
Shares pursuant to this Section 15 without the prior written consent of the
holders of at least a majority of the aggregate outstanding Warrants and
Non-Public Warrant Shares, voting as a single group.
Section 16. Mandatory Redemption, Put Rights and Mandatory Exchange.
(a)(i) Subject to the limitations hereinafter set forth, (A)
if the Issuer takes any action with respect to its capital stock (including
without limitation any purchase of its shares or any combination of shares or
reverse stock split and elimination of fractional shares) which would cause
the capital stock currently or previously held by or currently issuable
without restriction to Creditanstalt and its Affiliates (not including
Non-Attributable Stock) to exceed 24.99% of the Equity of the Issuer, then
prior to or simultaneously with such action, the Issuer shall purchase from
Creditanstalt and/or its Affiliates such number of Warrants, Warrant Shares
or other shares of capital stock as will reduce the shares of capital stock
currently or previously held by or currently issuable without restriction to
Creditanstalt and its Affiliates (not including Non-Attributable Stock) to
24.99% of the Equity of the Issuer (any such mandatory purchase being herein
called a "Mandatory Redemption"); and (B) any holder of Warrants and/or
Warrant Shares shall have the right at any time, and from time to time, during
the Put Period, at its option, upon written notice to the Issuer, to require
the Issuer to purchase all or a portion of the Warrants and/or Warrant Shares
held by such holder (any such right being herein called a "Put Right"). The
price to be paid to the holder upon a Mandatory Redemption or the exercise of
a Put Right shall be an amount equal to the Valuation Amount at the date the
event causing such Mandatory Redemption occurs or the date the notice
exercising such Put Right is given to the Issuer, as the case may be (the
"Trigger Date"), multiplied by a fraction the denominator of which is the
number of issued and outstanding shares of Common Stock of the Issuer at the
Trigger Date, calculated on a fully diluted basis in accordance with generally
accepted accounting principles, and the numerator of which is (Y) the
aggregate number of shares of Common Stock of the Issuer (i) comprising the
Warrant Shares to be purchased by the Issuer, and/or (ii) issuable upon
exercise of the Warrants to be purchased by the Issuer, and/or (iii) issuable
upon conversion of the Convertible Preferred Stock comprising the Warrant
Shares to be purchased by the Issuer, and/or (iv) issuable upon conversion of
the Convertible Preferred Stock issuable upon exercise of the Warrants to be
purchased by the Issuer (assuming Convertible Preferred Stock, rather than
Common Stock, is then issuable under such Warrants), and/or (v) comprising any
other shares of capital stock of the Issuer then held or previously held by
Creditanstalt or its Affiliates (excluding Non-Attributable Stock) (the "Put
Price").
(ii) The Put Rights described in subsection 16(a)(i)(B) shall
terminate upon (i) the effectiveness of a registration statement filed by the
Issuer with the Commission with respect to a public offering of shares of
Common Stock with proceeds paid to the Issuer and any selling stockholders of
not less than $40,000,000 or (ii) the consummation by the Issuer of a
transaction that constitutes a Non-Surviving Combination.
(iii) The completion of all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption or the exercise of Put
Rights shall take place on the thirtieth (30th) day following respective
Trigger Date, unless another date is mutually agreed upon by the Issuer and
the selling holder (the "Put Closing Date"). The Put Prices for all such
purchases and sales shall be paid by the Issuer issuing to the selling holder
in immediately available funds against delivery of certificates representing
the Warrants and/or Warrant Shares to be purchased, duly endorsed for transfer
to the Issuer.
(b) The Put Prices for all purchases and sales of Warrants and Warrant
Shares pursuant to exercises of Put Rights shall be determined and calculated
in accordance with subsection 16(a) by the Issuer's regularly engaged
independent accountants. The Issuer shall cause such accountants to deliver
to the Issuer and the selling holder, not later than 15 days prior to the
completion of each purchase and sale under subsection 16(a), a written
statement, signed by such accountants, setting forth in reasonable detail the
respective purchase price and the calculation thereof and stating that such
calculation was based on the books and records of the Issuer and was made and
delivered pursuant to this Section 16.
(c) If the Issuer takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares) which
would cause the Common Stock currently or previously held by or currently
issuable without restriction to Creditanstalt and its Affiliates (other than
shares of Non-Attributable Stock) to exceed 4.99% of the aggregate number of
issued and outstanding shares of Common Stock, prior to or simultaneously with
such action, the Issuer shall exchange such portion of Common Stock for
Convertible Preferred Stock as will reduce the shares of Common Stock
currently or previously held by or currently issuable without restriction to
Creditanstalt and its Affiliates (not including "Non-Attributable Stock") to
4.99% of the aggregate number of issued and outstanding shares of Common Stock
(a "Mandatory Exchange").
(d) As used in this Section 16, "Warrant Shares" shall include all
shares of Common Stock and/or Convertible Preferred Stock and other securities
of the Issuer or its Affiliates issued to holders of the Issuer's Common Stock
and/or Convertible Preferred Stock in respect of stock dividends, stock splits
and other distributions and any recapitalizations, to the extent the same were
not included in any adjustment of the Warrant Shares issuable upon exercise of
Warrants pursuant to Section 12 hereof.
(e) The certificates representing the Warrants and the Warrant Shares
shall bear a legend indicating that the Warrants and Warrant Shares are
subject to the provisions of this Section 16.
(f) Notwithstanding any provision of this Warrant Agreement to the
contrary, all Warrants and Warrant Shares which are sold pursuant to an
effective registration statement under the Securities Act shall, upon such
sale, cease to be subject to the provisions of this Section 16.
Section 17. Amendments and Waivers. Any provision of this Warrant
Agreement may be amended, supplemented, waived, discharged or terminated by a
written instrument signed by the Issuer and the holders of not less than a
majority of the outstanding Warrants (or in the case of Sections 14, 15 and
16, the holders of a majority of the aggregate outstanding Warrants and
Non-Public Warrant Shares, voting as a single group), provided that (i) this
Agreement may not be amended, supplemented or waived so as to increase the
Exercise Price, reduce the number of Warrant Shares issuable upon exercise of
any Warrants, alter the period during which any Warrants may be exercised
(except to provide for a later Expiration Date), or reduce the Put Valuation
Amount, in each case without the consent of the holders of all outstanding
Warrants (and, with respect to any reduction in the Put Valuation Amount, all
outstanding Non-Public Warrant Shares), and (ii) this Section 17 may not be
amended or supplemented without the consent of the holders of all outstanding
Warrants and Non-Public Warrant Shares, voting as a single group, and no
waiver of the requirements of this Section 17 shall be binding upon any such
holder without its consent.
Section 18. Specific Performance. The parties agree that irreparable
damage will result in the event that the obligations of the Issuer under this
Warrant Agreement are not specifically enforced, and that any damages
available at law for a breach of any such obligations would be inadequate.
Therefore, the holders of the Warrants and/or Non-Public Warrant Shares shall
have the right to specific performance by the Issuer of the provisions of this
Warrant Agreement, and appropriate injunctive relief may be applied for and
granted in connection therewith. The Issuer hereby irrevocably waives, to the
extent that it may do so under
applicable law, any defense based on the adequacy of a remedy at law which may
be asserted as a bar to the remedy of specific performance in any action
brought against the Issuer for specific performance of this Warrant Agreement
by the holders of the Warrants and/or Non-Public Warrant Shares. Such
remedies and all other remedies provided for in this Warrant Agreement shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which may be available under this Warrant Agreement.
Section 19. Notices.
(a) Any notice or demand to be given or made by the Warrant Holders or
the holders of Warrant Shares to or on the Issuer pursuant to this Warrant
Agreement shall be sufficiently given or made if sent by registered mail,
return receipt requested, postage prepaid, addressed to the Issuer at the
Warrant Office.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall appear on the Warrant Register
or the Common Stock or Convertible Preferred Stock registry of the Issuer, as
the case may be.
Section 20. Binding Effect. This Warrant Agreement shall be binding
upon and inure to the sole and exclusive benefit of the Issuer, its successors
and assigns, Creditanstalt, Affiliates of Creditanstalt and the registered
holders from time to time of the Warrants and the Warrant Shares.
Section 21. Continued Validity. A holder of Warrant Shares shall
continue to be entitled with respect to such Warrant Shares to all rights and
subject to all obligations to which it would have been entitled or subject as
a Warrant Holder under Sections 14 through 24 of this Warrant Agreement. The
Issuer will, at the time of each exercise of any Warrant, in whole or in part,
upon the request of the holder of the Warrant Shares issued upon such exercise
thereof, acknowledge in writing, in form reasonably satisfactory to such
holder, its continuing obligation to afford to such holder all such rights,
provided, however, that if such holder shall fail to make any such request,
such failure shall not affect the continuing obligation of the Issuer to
afford to such holder all such rights.
Section 22. Counterparts. This Warrant Agreement may be executed in
one
or more separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
Section 23. New York Law. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 24. Benefits of This Warrant Agreement. Nothing in this
Warrant
Agreement shall be construed to give to any Person other than the Issuer and
the registered holders of the Warrants and the Warrant Shares any legal or
equitable right, remedy or claim under this Warrant Agreement.
Section 25. Voting and Consents to be on a Fully Converted Basis.
Wherever this Warrant Agreement calls for the written consent or vote of any
combinations of the holders of the Warrants, any of the Warrant Shares and/or
the Convertible Preferred Stock, voting as a single group, the Warrants shall
be counted as if they had been exercised for Common Stock and shares of
Convertible Preferred Stock shall be counted as if they had been converted to
Common Stock.
IN WITNESS WHEREOF the parties hereto have caused this Amended and
Restated Warrant Agreement to be duly executed and delivered by their proper
and duly authorized officers, as of the date and year first above written.
IT PARTNERS, INC.
By: /s/ Daniel J. Klein
--------------------
Daniel J. Klein
Chief Executive Officer
Attest: /s/Jamie E. Blech
---------------------
Jamie Blech
Secretary
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Robert M. Bibinger
----------------------
Robert M. Biringer
Executive Vice President
Attest: /s/ Carl Drake
---------------------
Carl Drake
Senior Associate
FIRST AMENDMENT TO AMENDED AND RESTATED
WARRANT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED WARRANT AGREEMENT (this
"First Amendment") is made and entered into as of this 31st day March, 1998
by and between IT PARTNERS, INC., a Delaware corporation (the "Issuer") and
CREDITANSTALT CORPORATE FINANCE, INC., having offices at Two Greenwich Plaza,
Greenwich, Connecticut 06830 ("Creditanstalt").
W I T N E S S E T H:
WHEREAS, pursuant to a certain Preferred Stock and Warrant Purchase
Agreement, dated as of May 30, 1997, as amended by the First Amendment to
Preferred Stock and Warrant Purchase Agreement dated July 11, 1997, as further
amended by the Second Amendment to Preferred Stock and Warrant Purchase
Agreement dated October 27, 1997, as further amended by the Third Amendment to
Preferred Stock and Warrant Purchase Agreement dated October 31, 1997, as
further amended by the Fourth Amendment to Preferred Stock and Warrant
Purchase Agreement dated December 16, 1997, and as amended and restated by the
Amended and Restated Preferred Stock and Warrant Purchase Agreement dated
January 8, 1998 (the "Original Purchase Agreement") among Issuer,
Creditanstalt and certain other parties, Creditanstalt purchased an aggregate
of 200,000 shares of the Issuer's Series A Redeemable Preferred Stock with
warrants for the purchase of up to 645,587 shares of either the Issuer's
common stock, $.01 par value (the "Common Stock") or the Issuer's Convertible
Preferred Stock, $.01 par value per share (the "Convertible Preferred Stock"),
and 222,222 shares of the Issuer's Convertible Preferred Stock (as such
figures may be adjusted pursuant to the terms of the Original Purchase
Agreement and the Issuer's Certificate of Incorporation);
WHEREAS, in connection with a certain Loan and Security Agreement dated
as of May 30, 1997 (the "Loan Agreement") among Issuer, the financial
institutions named therein, as lenders (the "Lenders"), Creditanstalt AG, as
the issuing bank, and Creditanstalt as the agent for the Lenders (in such
capacity, the "Agent"), the Issuer executed and delivered a Warrant Agreement
dated as of May 30, 1997, as amended by the First Amendment to Warrant
Agreement dated July 11, 1997, as further amended by the Second Amendment to
Warrant Agreement dated October 27, 1997, and as amended and restated by the
Amended and Restated Warrant Agreement dated December 16, 1997 (the "Warrant
Agreement") in favor of Creditanstalt, and issued to Creditanstalt warrants
exercisable for up to 612,579 shares of the Issuer's Common Stock or
Convertible Preferred Stock; and
WHEREAS, Creditanstalt and Issuer desire to amend and restated the
Original Purchase Agreement to provide for the purchase of shares of Issuer's
Convertible Preferred Stock by Indosuez IT Partners ("Indosuez") and Wachovia
Capital Associates, Inc. ("Wachovia"); and
WHEREAS, in connection with such proposed purchases of Convertible
Preferred Stock by Indosuez and Wachovia, the Issuer and Creditanstalt desire
to amend the Warrant Agreement in order to reflect such additional purchases
of Convertible Preferred Stock;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
Section 1. Definitions. As used in this First Amendment, unless
otherwise defined herein, terms defined in the Warrant Agreement shall have
the meaning set forth therein when used herein.
Section 2. Equity Warrants. The term "Equity Warrants," as set forth
in Section 1 of the Warrant Agreement is hereby deleted in its entirety and
the following definition is substituted in lieu thereof:
"Equity Warrants" shall mean the warrants issued pursuant to the
Purchase Agreement.
Section 3. Equity Warrant Shares. The term "Equity Warrant Shares,"
as
set forth in Section 1 of the Warrant Agreement, is hereby deleted in its
entirety and the following definition is substituted in lieu thereof:
"Equity Warrant Shares" shall mean the shares of Common Stock or
Convertible Preferred Stock issued or issuable upon exercise of the Equity
Warrants.
Section 4. Exempted Securities. The term "Exempted Securities," as
set forth in Section 1 of the Warrant Agreement, is hereby deleted in its
entirety and the following definition is substituted in lieu thereof:
"Exempted Securities" shall mean (A) Warrant Shares and Equity
Warrant Shares; (B) shares of the Issuer's capital stock issued as a stock
dividend described in subsection 12(b); (C) shares of the Series A Preferred
Stock and Convertible Preferred Stock issued pursuant to the Purchase
Agreement (as such agreement may be amended, restated, supplemented, or
otherwise modified from time to time); (D) shares of Series A Preferred Stock
issued as preferred in kind dividends on the Series A Preferred Stock; (E)
shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock; (F) options and warrants as listed on Schedule I attached hereto and
shares of capital stock issuable upon exercise thereof; (G) the Business
Combination Options and shares of capital stock issuable upon exercise
thereof; (H) options to be granted to employees of the Issuer and its
Subsidiaries to purchase up to 351,029 shares of Common Stock of the Issuer at
an exercise price of not less than fair market value on the date such option
is granted, as determined in good faith by the Board of Directors of the
Issuer and giving effect to any Acquisitions consummated on or before such
date, and shares of capital stock issuable upon exercise thereof; (I) 103,093
shares of Common Stock issued to Christopher A. and Merrie Corbett (jointly)
for an aggregate purchase price of $200,000; (J) 29,516 shares of Common Stock
issued to FF-ITP, L.P. pursuant to the Purchase Agreement; (K) 29,516 shares
of Common Stock issued to Christopher A. and Merrie Corbett (jointly) for an
aggregate purchase price of $100,000; (L)
14,758 shares of Common Stock issued to Martin and Haeyoung Kandl (jointly)
for an aggregate purchase price of $50,000; (M) 1,001 shares of Common Stock
issued to Thomas Gardner for an aggregate purchase price of $3,390. The
limits in clauses (E), (H), (I), (J), (K), (L) and (M) shall be
proportionately adjusted for dividends and other distributions payable in and
for subdivisions and combinations of shares of Common Stock.
Section 5. Purchase Agreement. Section 1 of the Warrant Agreement is
hereby amended by adding following the definition of "Operating Cash Flow" a
new definition of "Purchase Agreement" as follows:
"Purchase Agreement" shall mean the Preferred Stock and
Warrant Purchase Agreement, dated as of May 30, 1997, as amended by the First
Amendment to Preferred Stock and Warrant Purchase Agreement dated July 11,
1997, as further amended by the Second Amendment to Preferred Stock and
Warrant Purchase Agreement dated October 27, 1997, as further amended by that
certain Third Amendment to Preferred Stock and Warrant Purchase Agreement
dated October 31, 1997, as further amended by the Fourth Amendment to
Preferred Stock and Warrant Purchase Agreement dated December 16, 1997, as
amended and restated by the Amended and Restated Preferred Stock and Warrant
Purchase Agreement dated January 8, 1998, and as further amended and restated
by the Second Amended and Restated Preferred Stock and Warrant Purchase
Agreement dated March 31, 1998 (as such may be amended, restated, supplemented
or otherwise modified from time to time), by and between the Issuer,
Creditanstalt, FF-ITP, L.P., Credit Agricole Indosuez, Wachovia Capital
Associates, Inc., and certain stockholders of the Issuer named therein.
Section 6. Representations and Warranties. The Issuer hereby
represents and warrants to Creditanstalt, for the benefit of Creditanstalt and
any other Warrant Holder, as follows:
(a) The Issuer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to conduct its business as presently conducted
and as intended to be conducted, has the corporate power and authority to
execute and deliver this First Amendment, has the corporate power and
authority and legal right to own and lease its properties and is duly
qualified and in good
standing as a foreign corporation in each jurisdiction in which the conduct of
its business requires such qualification, except where failure to be so
qualified could not be reasonably expected to have a material adverse effect
on the business, properties, financial condition or results of operations of
the Issuer and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this
First Amendment have been duly authorized by all necessary corporate action
and do not and will not violate, or result in a breach of, or constitute a
default under, or require any consent under, or result in the creation of any
lien, charge or encumbrance upon the assets of the Issuer pursuant to, any
law, statute, ordinance, rule, regulation, order or decree of any court,
governmental body or regulatory authority or administrative agency having
jurisdiction over the Issuer or its Subsidiaries or the Issuer's Certificate
of Incorporation or any contract, mortgage, loan agreement, note, lease or
other instrument binding upon the Issuer or its Subsidiaries or by which their
properties are bound.
(c) This First Amendment has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of
the Issuer.
Section 7. Expenses. Issuer agrees to pay, immediately upon demand
by
Creditanstalt, all costs, expenses, attorneys' fees, and other charges and
expenses incurred by Creditanstalt in connection with the negotiation,
preparation, execution and delivery of this First Amendment and any other
instrument, document, agreement or amendment executed in connection with this
First Amendment.
Section 8. Limitation of Amendment. Except as expressly set forth
herein, this First Amendment shall not be deemed to waive, amend or modify any
term or condition of the Warrant Agreement, each of which is hereby ratified
and reaffirmed and shall remain in full force and effect, nor to serve as a
consent to any matter prohibited by the terms and conditions thereof.
Section 9. Counterparts. This First Amendment may be executed in any
number of counterparts and any party hereto may execute any counterpart, each
of which when executed and delivered will be deemed to be an original and all
of which, taken together, will be deemed but one and the same agreement.
Section 10. Governing Law; Jurisdiction. THIS FIRST AMENDMENT, AND
THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW).
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment under seal as of the date and year first above written.
"ISSUER"
IT PARTNERS, INC.
By: /s/ Daniel J. Klein
---------------------
Daniel J. Klein
Chairman of the Board
Attest: /s/Jamie E. Blech
------------------
Name:Jamie E. Blech
Title:
"CREDITANSTALT"
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Robert M. Biringer
-------------------------
Robert M. Biringer
Executive Vice President
By: /s/ Carl Drake
--------------------------
Carl Drake
SECOND AMENDMENT TO AMENDED AND RESTATED
WARRANT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED WARRANT AGREEMENT (this
"Second Amendment to First Restatement") is made and entered into as of this
27th day of July, 1998 by and between IT PARTNERS, INC., a Delaware
corporation (the "Issuer") and CREDITANSTALT CORPORATE FINANCE, INC., having
offices at Two Greenwich Plaza, Greenwich, Connecticut 06830
("Creditanstalt").
W I T N E S S E T H:
WHEREAS, the Issuer desires to enter into a certain 12% Series C Senior
Redeemable Preferred Stock Purchase Agreement, dated as of the date hereof
(the "Series C Purchase Agreement"), among Issuer and FBR Business Development
Capital ("FBR"), pursuant to which FBR will purchase an aggregate of 700
shares of the Issuer's 12% Series C Senior Redeemable Preferred Stock (the
"Series C Preferred Stock"); and
WHEREAS, the Company intends to enter into a stock purchase agreement
with Wachovia Capital Associates, Inc. ("Wachovia") pursuant to which Wachovia
may purchase up to 300 shares of Series C Preferred Stock; and
WHEREAS, in connection with a certain Loan and Security Agreement dated
as of May 30, 1997 (the "Loan Agreement") among Issuer, the financial
institutions named therein, as lenders (the "Lenders"), Creditanstalt AG, as
the issuing bank, and Creditanstalt as the agent for the Lenders (in such
capacity, the "Agent"), the Issuer executed and delivered a Warrant Agreement
dated as of May 30, 1997, as amended by the First Amendment to Warrant
Agreement dated July 11, 1997, as further amended by the Second Amendment to
Warrant Agreement dated October 27, 1997, (the "Original Warrant Agreement"),
as amended and restated by the Amended and Restated Warrant Agreement dated
December 16, 1997, and as amended by the First Amendment to Amended and
Restated Warrant Agreement dated March 31, 1998 (the "First Restated Warrant
Agreement") in favor of Creditanstalt, and issued to Creditanstalt warrants
exercisable for up to 612,579 shares of the Issuer's Common Stock or Series B
Convertible Preferred Stock (subject to adjustment pursuant to the First
Restated Warrant Agreement); and
WHEREAS, in connection with the execution, delivery and performance of
the Series C Purchase Agreement and the issuance of the Series C Preferred
Stock by the Issuer to FBR and Wachovia, the Issuer and Creditanstalt have
agreed to amend the First Restated Warrant Agreement and to waive certain
provisions thereunder in order to provide for the issuance of the Series C
Preferred Stock to FBR and Wachovia and the issuance of Common Stock as a
dividend upon redemption of the Series C Preferred Stock;
NOW, THEREFORE, in consideration of the premises, the terms and
conditions herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
Section 1. Definitions. As used in this Second Amendment to First
Restatement, unless otherwise defined herein, terms defined in the First
Restated Warrant Agreement shall have the meaning set forth therein when used
herein.
Section 2. Schedule I. The First Restated Warrant Agreement is hereby
amended by deleting Schedule I in its entirety and substituting in lieu
thereof a new Schedule I in the form attached as Schedule I hereto. All
references to Schedule I in the Warrant Agreement shall mean new Schedule I
attached hereto.
Section 3. Schedule II. The First Restated Warrant Agreement is hereby
amended by deleting Schedule II in its entirety and substituting in lieu
thereof a new Schedule II in the form attached as Schedule II hereto. All
references to Schedule II in the Warrant Agreement shall mean new Schedule II
attached hereto.
Section 4. Series C Preferred Stock. Section 1 of the First Restated
Warrant Agreement is hereby amended by adding following the definition of
"Series C Issuance Date" a new definition of "Series C Preferred Stock" as
follows:
"Series C Preferred Stock" shall mean the Issuer's 12% Series C
Senior Redeemable Preferred Stock, $.01 par value per share, and shall include
any stock into which such Series C Preferred Stock shall have been changed or
any stock resulting from any reclassification of such Series C Preferred
Stock.
Section 5. Series C Purchase Agreement. Section 1 of the Warrant
Agreement is hereby amended by adding following the definition of "Series C
Preferred Stock" a new definition of "Series C Purchase Agreement" as follows:
"Series C Purchase Agreement" shall mean the 12% Series C Senior
Redeemable Preferred Stock Purchase Agreement, dated as of July 27, 1998,
among Issuer and FBR Business Development Capital (as such may be amended,
restated, supplemented or otherwise modified from time to time).
Section 6. Waiver of Section 10(c). In connection with the
execution,
delivery and performance of the Series C Purchase Agreement and the
Certificate of Designation of the Series C Preferred Stock, the issuance of
shares of Series C Preferred Stock to FBR and Wachovia and the issuance of
Common Stock as a dividend upon redemption of the Series C Preferred Stock,
Creditanstalt hereby waives forever the application of the provisions of
Section 10(c) (restricting amendments to Issuer's Certificate of
Incorporation) and Section 10(d) (restricting the authorization of additional
Common Stock) of the Warrant Agreement.
Section 7. Representations and Warranties. The Issuer hereby
represents and warrants to Creditanstalt, for the benefit of Creditanstalt and
any other Warrant Holder, as follows:
(a) The Issuer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has the
corporate power and authority to conduct its business as presently conducted
and as intended to be conducted, has the corporate power and authority to
execute and deliver this Second Amendment to First Restatement, has the
corporate power and authority and legal right to own and lease its properties
and is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business requires such qualification,
except where failure to be so qualified could not be reasonably expected to
have a material adverse effect on the business, properties, financial
condition or results of operations of the Issuer and its Subsidiaries taken as
a whole.
(b) The execution, delivery and performance by the Issuer of this
Second Amendment to First Restatement have been duly authorized by all
necessary corporate action and do not and will not violate, or result in a
breach of, or constitute a default under, or require any consent under, or
result in the creation of any lien, charge or encumbrance upon the assets of
the Issuer pursuant to, any law, statute, ordinance, rule, regulation, order
or decree of any court, governmental body or regulatory authority or
administrative agency having jurisdiction over the Issuer or its Subsidiaries
or the Issuer's Certificate of Incorporation or any contract, mortgage, loan
agreement, note, lease or other instrument binding upon the Issuer or its
Subsidiaries or by which their properties are bound.
(c) This Second Amendment to First Restatement has been duly executed
and delivered by the Issuer and constitutes a legal, valid, binding and
enforceable obligation of the Issuer.
(d) As of the date hereof, and giving effect to all issuances on such date
of shares of Series C Preferred Stock and FBR Warrants, the authorized capital
stock of Issuer consists of (i) 20,000,000 shares of Common Stock of which
8,279,658 shares are issued and outstanding; and (ii) 6,000,000 shares of
Preferred Stock, of which 600,000 shares have been designated Series A
Preferred Stock, 347,230 of which are issued and outstanding; 5,000,000 shares
have been designated Series B Preferred Stock, 1,387,448 of which are issued
and outstanding; and 1,000 shares have been designated Series C Preferred
Stock, 700 of which will be issued and outstanding upon the closing of the
Second Amendment to First Restatement. An aggregate of 4,000,000 shares of
Common Stock are reserved for issuance on the exercise of the Warrants and the
Equity Warrants and conversion of the Series B Preferred Stock, and 2,000,000
shares of Series B Preferred Stock are reserved for issuance on exercise of
the Warrants and the Equity Warrants. As of the date hereof, an aggregate of
1,000,000 shares of Common Stock are reserved for issuance to employees of
Issuer and of Subsidiaries of Issuer. All of the issued and outstanding
shares of Common Stock, Series A Preferred Stock and Series B Preferred Stock
are, and upon issuance and payment therefor in accordance with the terms of
the Series C Purchase Agreement, all of the outstanding Series C Preferred
Stock will be, validly issued, fully paid and nonassessable. To the Issuer's
best knowledge, other than the Amended and Restated Stockholder Agreement
dated March 31, 1998, as amended (as further amended, restated, supplemented
or otherwise modified from time to time),
there are no voting agreements, voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of the Issuer
or any Subsidiary. Except as set forth on Schedule II hereto, no holder of
securities of the Issuer has any right to the registration of such securities
under the Securities Act and any applicable state securities law.
Section 8. Expenses. Issuer agrees to pay, immediately upon demand
by
Creditanstalt, all costs, expenses, attorneys' fees, and other charges and
expenses incurred by Creditanstalt in connection with the negotiation,
preparation, execution and delivery of this Second Amendment to First
Restatement and any other instrument, document, agreement or amendment
executed in connection with this Second Amendment to First Restatement.
Section 9. Limitation of Amendment. Except as expressly set forth
herein, this Second Amendment to First Restatement shall not be deemed to
waive, amend or modify any term or condition of the Warrant Agreement, each of
which is hereby ratified and reaffirmed and shall remain in full force and
effect, nor to serve as a consent to any matter prohibited by the terms and
conditions thereof.
Section 10. Counterparts. This Second Amendment to First Restatement
may be executed in any number of counterparts and any party hereto may execute
any counterpart, each of which when executed and delivered will be deemed to
be an original and all of which, taken together, will be deemed but one and
the same agreement.
Section 11. Governing Law; Jurisdiction. THIS SECOND AMENDMENT TO
FIRST
RESTATEMENT, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW).
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to First Restatement under seal as of the date and year first above
written.
"ISSUER"
IT PARTNERS, INC.
By:/s/Daniel J. Klein
-------------------
Daniel J. Klein
Chief Executive Officer
Attest:/s/ Jamie Blech
------------------
Jamie Blech
President
"CREDITANSTALT"
CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Robert M. Biringer
----------------------
Robert M. Biringer
Executive Vice President
By: /s/John G. Taylor
--------------------
Name:John G. Taylor
Title: Senior Associate
SCHEDULE I
List of outstanding options, warrants, subscriptions, rights, convertible or
exchangeable securities or other agreements or plans under which the Issuer
may be or become obligated to issue, sell or transfer shares of its capital
stock or other securities
1. Equity Warrants issued to FF-ITP, L.P. to purchase shares of Common
Stock (subject to the adjustments set forth in Section 2.08 of the Preferred
Stock and Warrant Purchase Agreement (as amended)) at an exercise price of
$.01 per share.
2. Equity Warrants issued to Creditanstalt Corporate Finance, Inc. to
purchase shares of Common Stock and/or Series B Preferred Stock (subject to
the adjustments set forth in Section 2.08 of the Preferred Stock and Warrant
Purchase Agreement (as amended)) at an exercise price of $.01 per share.
3. Shares of the Series B Preferred Stock of Issuer are convertible on a
share-for-share basis into Common Stock of the Issuer.
4. Shares of Common Stock issuable as a dividend upon redemption of the
Series C Preferred Stock, subject to the provisions of the Issuer's
Certificate of Incorporation.
The following items are for disclosure purposes only and are not to be
included in the definition of "Exempted Securities":
1. Earn out rights granted to certain sellers in connection with
Acquisitions consummated by the Issuer.
2. Unsecured Notes convertible into Common Stock, which were issued as a
portion of the purchase price in Acquisitions consummated by the Issuer.
SCHEDULE II
List of Registration Rights
1. Registration rights granted to the Purchasers, Initial Stockholders and
Subsequent Stockholders pursuant to the Amended and Restated Stockholder
Agreement dated March 31, 1998, as amended by the First Amendment to Amended
and Restated Stockholder Agreement (as further amended, restated, supplemented
or modified from time to time) by and among the Issuer, Daniel J. Klein, Jamie
Blech, Martin F. Kandl and Haeyoung Kandl, Stanley Nice, John Clement,
Creditanstalt Corporate Finance, Inc., FF-ITP, L.P., Indosuez IT Partners,
Indosuez IT Partners II, Wachovia Capital Associates, Inc., and subsequent
stockholders.
2. Registration rights to be granted pursuant to the Series C Purchase
Agreement (as amended, restated, supplemented or modified from time to time).