NOTE PURCHASE AGREEMENT
AMONG
▇▇▇▇▇▇ INDUSTRIES, INC.
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
AVONDALE ▇▇▇▇▇, INC.
Dated as of December 28, 1995
NOTE PURCHASE AGREEMENT ("Agreement"), dated as of December 28, 1995, among
▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation having its principal address at
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, Ashley Corporate Center, Charleston, South
Carolina 29405 (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual with a principal
place of business at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
("Gintel"), and AVONDALE ▇▇▇▇▇, INC., an Alabama corporation having its
principal address at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
("Avondale")(Gintel and Avondale are sometimes hereinafter collectively referred
to as the "Purchasers," and individually as a "Purchaser").
W I T N E S S E T H
WHEREAS, each of the Purchasers desire to lend the Company $7,500,000, or
an aggregate of $15,000,000 (the "Loan") and the Company intends to make a
common stock rights offering (the "Rights Offering"), on the terms and
conditions set forth in the Standby Agreement (as defined below), to the holders
of shares of the Company's common stock, $.25 par value per share (the "Common
Stock"), to raise sufficient funds to repay $11,250,000 of the Loan; and
WHEREAS, the Purchasers are willing to act as standby purchasers of the
Company with respect to the Rights Offering, all in accordance with the terms
set forth in a Standby Agreement among the Company and the Purchasers, such
Standby Agreement to be in the form annexed hereto as Schedule A (the "Standby
Agreement"); and
WHEREAS, to evidence the Loan, the Company desires to issue and sell, and
the Purchasers desire to purchase from the Company, Subordinated 10% Promissory
Notes of the Company in the aggregate principal amount of $15,000,000, with
Gintel acquiring two notes, each in the original principal amount of $3,750,000
(the "Initial Gintel Note" and the "Gintel Subordinated Note"), the Initial
Gintel Note to be exchangeable as herein provided; and
WHEREAS, in connection with, and as partial consideration for, that portion
of the Loan being made by Gintel, the Company, subject to its prior receipt of
all requisite consents, desires to issue and sell to Gintel five-year warrants
(the "Warrants") to purchase up to 125,000 shares of Common Stock of the Company
at $7.00 per share (the "Warrant Shares"); and
WHEREAS, should the Rights Offering fail to be consummated on or before May
31, 1996, or upon the earlier happening of certain other events set forth
herein, the parties desire that Avondale have the right to exchange its
$7,500,000 subordinated note (the "Avondale Note") for a convertible 10%
subordinated note of the Company in like principal amount (the "Avondale
Replacement Note"), such Avondale Replacement Note to be convertible into shares
of Common Stock of the Company at the rate of $7.00 per share; and
WHEREAS, should the Rights Offering fail to be consummated on or before May
31, 1996, or upon the earlier happening of certain other events set forth
herein, the parties desire that Gintel have the right, subject to the prior
receipt by the Company of all requisite consents, to exchange his Initial Gintel
Note for a convertible 10% subordinated note of the Company in like principal
amount (the "Gintel Replacement Note"), such Gintel Replacement Note to be
convertible into shares of Common Stock of the Company at the rate of $7.00 per
share.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1. Purchase and Sale of Notes.
1.1 Purchase and Sale of Notes. The Company agrees to sell to the
Purchasers, and the Purchasers agree to purchase from the Company, at a closing
(the "Closing") to take place on such date as the parties hereto shall agree,
but in no event later than February 28, 1996 (the "Closing Date"), and subject
to the conditions hereinafter set forth in Sections 1.2 and 1.3 below,
$15,000,000 aggregate principal amount of Subordinated 10% Promissory Notes of
the Company due January 31, 1999 at a price equal to 100% of the aggregate
principal amount of the Notes, such Notes to be subordinated to certain
indebtedness of the Company on the terms and conditions further set forth in the
Notes. To evidence the Loan, Avondale will be issued the Avondale Note and
Gintel will be issued the Initial Gintel Note and the Gintel Subordinated Note
(the Avondale Note, the Initial Gintel Note and the Gintel Subordinated Note are
sometimes hereinafter collectively referred to as the "Notes"). The Initial
Gintel Note, the Gintel Subordinated Note and the Avondale Note are
substantially in the forms of Schedules B, C and D annexed hereto, respectively,
shall be dated as of the Closing Date, and shall be paid for, in the amount set
forth on the face of each Note, by wire transfer of immediately available funds
to such account of the Company as shall have been designated to the Purchasers.
1.2 Conditions to the Purchasers' Obligations. The obligations of the
Purchasers to purchase the Notes as provided for herein shall be subject to the
fulfillment, or waiver by the Purchasers, on or before the Closing Date, of each
of the following conditions:
1.2.1 Representations and Warranties. The representations and warranties of
the Company contained in Section 5 hereof shall be true and correct, in all
material respects, on and as of the Closing Date and the Company shall have
delivered to the Purchasers a certificate of the President of the Company to
such effect.
1.2.2 Compliance with Agreement. The Company, in all material respects,
shall have performed and complied with all agreements and conditions contained
in this Agreement that are required to be performed or complied with by it on or
before the Closing Date and the Company shall have delivered to the Purchasers a
certificate of the President of the Company to such effect.
1.2.3 Bank Financing. The Company shall have consummated the bank financing
described in Schedule 1.2.3 annexed hereto (the "Bank Financing") on or before
the Closing Date.
1.2.4 Registration Rights Agreements. The Company shall have executed and
delivered to Avondale and Gintel a registration rights agreement, in or
substantially in the form annexed hereto as Schedule E (the "Registration Rights
Agreement"), pursuant to which, among other things, the Company, if requested by
Avondale and/or Gintel, shall register for sale, pursuant to the Securities Act
of 1933, as amended (the "Securities Act"), any shares of Common Stock of the
Company acquired pursuant to the Standby Agreement, issuable upon the conversion
of all or any portion of the Gintel Replacement Note and/or the Avondale
Replacement Note and/or issuable upon the exercise of all or any portion of the
Warrants.
1.2.5 Opinion of Counsel. The Company shall have delivered a favorable
opinion, dated the Closing Date and addressed to the Purchasers, from counsel
for the Company, substantially in the form of Schedule 1.2.5 annexed hereto.
1.2.6 Fairness Opinion. The Board of Directors of the Company, acting upon
the recommendation of a specially appointed Independent Committee of the Board
of Directors of the Company (the "Independent Committee"), shall have received
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇") to the effect that
the transactions contemplated by this Agreement and the Rights Offering are fair
from a financial point of view to the Company and the holders of Common Stock of
the Company and such opinion shall not have been withdrawn as of the Closing
Date.
1.2.7 Board Approval. The Board of Directors of the Company, based upon the
recommendation of the Independent Committee and the fairness opinion described
in Section 1.2.6 above, shall have [unanimously (except any director of the
Company participating in the transactions contemplated by this Agreement shall
have abstained)] approved the transactions contemplated by this Agreement, and
each director of the Company who owns Common Stock shall have agreed to vote, at
any stockholders' meeting of the Company, all shares of Common Stock
beneficially owned by him in favor of the Rights Offering, the issuance of the
Warrants and any other proposal relating to any of the transactions contemplated
by this Agreement.
1.2.8 Approvals and Consents. There shall have been obtained by the Company
and the Purchasers all consents, approvals, authorizations, waivers, permits and
orders, necessary or required for purposes of legally consummating the
transactions contemplated by this Agreement, including, without limitation, any
consent and/or waiver required from Prudential Insurance Company of America
("Prudential"), and all such consents, approvals, authorizations, permits and
orders shall be reasonably acceptable to the Purchasers.
1.2.9 Legal Actions or Proceedings. No action or proceeding by any
governmental authority or other person shall have been instituted or threatened
which could reasonably be expected to enjoin, restrain or prohibit, or could
reasonably be expected to result in substantial damages in respect of any
provision of this Agreement or the consummation of the transactions contemplated
hereby or by the Rights Offering.
1.2.10 Certificate of Principal Financial Officer. There shall have been
delivered to the Purchasers, dated as of the Closing Date, a certificate of the
principal financial officer of the Company to the effect that he is familiar
with this Agreement, that he has reviewed the affairs of the Company and its
subsidiaries, and that, to the best of his knowledge, there exists no condition,
act or omission to act which would constitute an event of default under the
Notes or which with notice or lapse of time, or both, would constitute such an
event of default.
1.2.11 Financial Statements. The Company shall have delivered to the
Purchasers the audited financial statements of the Company as of September 30,
1995, which financial statements contain the unqualified opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP (the "September 30, 1995 Financial Statements").
1.2.12 Acceptable Subordination Agreement. The Purchasers, in connection
with the Bank Financing, shall have entered into subordination agreements in
form and substance acceptable to them with the lenders in the Bank Financing.
1.2.13 Satisfactory Information. The Annual Report of the Company on Form
10-K for the fiscal year ended September 30, 1995 and the balance sheets of the
Company delivered or to be delivered to the Purchasers in accordance with
Sections 5.7 (iii) and (iv) shall not contain disclosure of any material adverse
facts which have not been previously disclosed to Avondale.
1.3 Conditions to the Company's Obligations. The obligations of the Company
to sell the Notes as provided for herein shall be subject to the fulfillment, or
waiver by the Company, on or before the Closing Date, of each of the following
conditions:
1.3.1 Representations and Warranties. The representations and warranties of
each Purchaser contained in Section 7 hereof shall be true and correct, in all
material respects, on and as of the Closing Date and each Purchaser shall have
delivered to the Company an executed certificate to such effect.
1.3.2 Compliance with Agreement. Each Purchaser, in all material respects,
shall have performed and complied with all agreements and conditions contained
in this Agreement that are required to be performed or complied with by him or
it, as the case may be, on or before the Closing Date and each Purchaser shall
have delivered to the Company a certificate to such effect.
1.3.3 Bank Financing. The Company shall have consummated the Bank Financing
on or before the Closing Date.
1.3.4 Fairness Opinion. The Board of Directors of the Company, acting upon
the recommendation of the Independent Committee, shall have received the opinion
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to the effect that the transactions contemplated by this
Agreement and the Rights Offering are fair from a financial point of view to the
Company and the holders of Common Stock of the Company and such opinion shall
not have been withdrawn as of the Closing Date.
1.3.5 Approvals and Consents. There shall have been obtained by the
Purchasers and the Company all consents, approvals, authorizations, waivers,
permits and orders necessary or required for purposes of legally consummating
the transactions contemplated by this Agreement, including, without limitation,
any consent and/or waiver required from Prudential, and all such consents,
approvals, authorizations, permits and orders shall be reasonably acceptable to
the Company.
1.3.6 Legal Actions or Proceedings. No action or proceeding by any
governmental authority or other person shall have been instituted or threatened
which could reasonably be expected to enjoin, restrain or prohibit, or could
reasonably be expected to result in substantial damages in respect of, any
provision of this Agreement or the consummation of the transactions contemplated
hereby or by the Rights Offering.
1.3.7 September 30, 1995 Financial Statements. The Company shall have
delivered to the Purchasers copies of the September 30, 1995 Financial
Statements.
1.4 Closing. The Closing of the purchase and sale of the Notes on the
Closing Date shall take place at the offices of ▇▇▇▇ & Preist LLP at 11:00 a.m.
on the Closing Date or at such other time and place as the Company and the
Purchasers mutually agree upon. At the Closing, the parties shall deliver the
Notes and make the respective payments therefor.
Section 2. Issuance and Sale of Warrants.
In connection with, and in partial consideration for, that portion of the
Loan being funded by Gintel, the Company hereby agrees, subject to its prior
receipt of all requisite approvals and consents, including, without limitation,
those of the New York Stock Exchange (the "NYSE") and/or the Company's
stockholders, to issue and sell to Gintel the Warrants. The Warrants shall be in
the form annexed hereto as Schedule F. The Company hereby covenants to seek
promptly the approvals and consents contemplated in this Section 2.
Section 3. Transactions Upon Consummation of the Rights Offering.
Standby Agreement. If the Rights Offering is consummated on or before May
31, 1996, then Gintel and Avondale shall act as standby purchasers pursuant to
the Standby Agreement.
Section 4. Transactions Upon No Consummation of the Rights Offering or
Other Triggering Events.
4.1 Exchange of Avondale Note. If, (a) by May 31, 1996, the Rights Offering
is not consummated, or (b) an Event of Default occurs (as defined in the
Avondale Note or the Initial Gintel Note) or, if prior to May 31, 1996, (c) the
stockholders of the Company vote to not approve the Rights Offering and the
transactions contemplated hereby and thereby, (d) the Company publicly announces
that it will not proceed with the Rights Offering or (e) any other event takes
place which effectively prohibits the Company from lawfully consummating the
Rights Offering by May 31, 1996 (the date of occurrence of any of the events
described in clauses (a) through (e) above being referred to as the "Conversion
Date"), then Avondale, at any time within the 30-day period immediately
following the Conversion Date, may exchange the Avondale Note for the Avondale
Replacement Note, such Avondale Replacement Note to be substantially in the form
annexed hereto as Schedule G and to be convertible, at Avondale's option at any
time within the 90-day period immediately following the Conversion Date, into
shares of Common Stock of the Company at the rate of $7.00 per share, all as set
forth in the Avondale Replacement Note. The Company shall provide the Purchasers
with prompt written notice of the occurrence of any of the events described in
clauses (a) through (e) above.
4.2 Gintel Exchange of Initial Gintel Note. Gintel, subject to the prior
receipt by the Company of all requisite consents, including, if necessary, that
of the NYSE and/or the Company's stockholders, may, within the 30-day period
immediately following the Conversion Date, exchange the Initial Gintel Note for
the Gintel Replacement Note, such Gintel Replacement Note to be substantially in
the form annexed hereto as Schedule H, and to be convertible, at Gintel's option
at any time within the 90-day period immediately following the Conversion Date,
into shares of Common Stock of the Company at the rate of $7.00 per share, all
as set forth in the Gintel Replacement Note.
4.3 Avondale Rights. The parties hereto acknowledge that Avondale's ability
to exercise its rights under the Standby Agreement, to exchange the Avondale
Note for the Avondale Replacement Note and to convert the Avondale Replacement
Note into Common Stock of the Company does not require NYSE and/or stockholder
approval, and that Avondale and the Company will be permitted to effect such
exercise, exchange and/or conversion in accordance with the terms of this
Agreement and the agreements and promissory notes referred to herein whether or
not the necessary NYSE and/or stockholder approvals are obtained to permit the
transactions involving Gintel under this Agreement.
Section 5. Representations and Warranties of the Company.
In order to induce the Purchasers to acquire the Notes, the Company
represents and warrants to each of the Purchasers as follows:
5.1 Organization and Standing. (a) The Company is a corporation duly
organized and validly existing, is in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. The Company is duly
qualified as a foreign corporation and is in good standing in all other
jurisdictions in which such qualification is required, provided, however, that
the Company need not be qualified in a jurisdiction in which its failure to
qualify would not have a material adverse effect on its operations or financial
condition.
(b) Except as set forth on Schedule 5.1 annexed hereto, the Company owns,
directly or indirectly through subsidiaries, all of the issued and outstanding
capital stock of each of the subsidiaries of the Company set forth on Schedule
5.1 annexed hereto (collectively, the "Subsidiaries"). Each of the Subsidiaries
is duly organized and validly existing, is in good standing under the laws of
the state of its incorporation, and has all requisite power and authority to
carry on its business as now conducted and as proposed to be conducted.
(c) Each Subsidiary is duly qualified as a foreign corporation and is in
good standing in all other jurisdictions in which such qualification is
required, provided, however, that such Subsidiary need not be qualified in a
jurisdiction in which its failure to qualify would not have a material adverse
effect on its operations or financial condition.
(d) True and accurate copies of the Company's Certificate of Incorporation
and Bylaws, and the Certificate of Incorporation and Bylaws of each Subsidiary,
each as presently in effect, have been delivered to counsel for the Purchasers.
5.2 Capitalization. (a) The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, of which 6,878,506 shares are
validly issued and outstanding, fully paid and nonassessable and listed for
trading on the NYSE, and were issued in compliance with all applicable federal
and state securities laws, and 2,000,000 shares of preferred stock, $1.00 par
value per share, of which no shares are issued and outstanding. Except as set
forth on Schedule 5.2 annexed hereto, and as contemplated by the transactions
that are the subject of this Agreement and the Rights Offering, there are no
options, warrants, conversion privileges, preemptive rights or other rights
presently outstanding to purchase any of the authorized but unissued capital
stock of the Company.
(b) The authorized capital stock of each Subsidiary is set forth on
Schedule 5.2 annexed hereto. Each outstanding share of capital stock of each
Subsidiary has been validly issued and is fully paid and non-assessable and was
issued in compliance with all applicable federal and state securities laws.
There are no options, warrants, conversion privileges, preemptive rights or
other rights presently outstanding to purchase any of the authorized but
unissued capital stock of any Subsidiary.
(c) Except as contemplated by the Registration Rights Agreement and as set
forth on Schedule 5.2 annexed hereto, there are no registration rights with
respect to the Company's securities currently outstanding or other rights
currently outstanding which could require the Company to register for sale
pursuant to the Securities Act any securities of the Company.
5.3 Authorization. All corporate action on the part of the Company and its
Subsidiaries and their respective officers, directors and shareholders that are
necessary for the authorization, execution, delivery and performance of all
obligations of the Company under this Agreement, the Registration Rights
Agreement and the Standby Agreement, and for the authorization, issuance and
delivery of the Notes, the Avondale Replacement Note, the Gintel Replacement
Note and the Warrants have been taken. Except as set forth on Schedule 5.3
annexed hereto, this Agreement, the Notes, the Avondale Replacement Note, the
Gintel Replacement Note, the Warrants, the Standby Agreement and the
Registration Rights Agreement, constitute and will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
respective terms, and will not violate any provision of law, any order of any
court or other agency of government, the Certificate of Incorporation or By-Laws
of the Company or any provision of any indenture, agreement or other instrument
by which the Company or any of its Subsidiaries, or any of their respective
properties or assets is bound or affected.
5.4 Validity of Common Stock. The Common Stock issuable upon the exercise
of the rights to be issued in the Rights Offering, upon any conversion of the
Gintel Replacement Note and/or the Avondale Replacement Note or upon any
exercise of the Warrants have been duly authorized and validly reserved and,
upon issuance in accordance with the terms thereof, shall be duly and validly
issued, fully paid and nonassessable and duly authorized for listing on the
NYSE, subject to official notice of issuance.
5.5 Governmental and Other Consents. Except as set forth on Schedule 5.5
annexed hereto, all consents, approvals, orders or authorizations of, or
registrations, qualifications, designations, declarations or filings with, any
federal or state governmental authority or any other person on the part of the
Company which are, or will be, necessary to be obtained by the Company for the
valid execution, delivery and performance of this Agreement, the Registration
Rights Agreement and the Standby Agreement by the Company and the consummation
of the transactions contemplated hereby and thereby, or the issuance, delivery
or enforcement of the Notes, the Avondale Replacement Note, the Gintel
Replacement Note and the Warrants, have been made or obtained.
5.6 Actions Pending. Except as set forth on Schedule 5.6 annexed hereto, no
claim, suit, action or legal, administrative, arbitration or other proceeding
or, to the best knowledge and belief of the Company, investigation by any
governmental agency, pertaining to the business, products or assets of the
Company or any Subsidiary, including, but not limited to, matters involving
environmental, safety or health standards, or employment matters as currently in
effect, or products liability or product safety, or any change in the zoning or
building ordinances affecting the properties or leasehold interests of the
Company and its Subsidiaries is pending or, to the best knowledge and belief of
the Company, has been threatened, nor, to the best knowledge and belief of the
Company, do any facts exist which might lead to any such proceedings, which
might materially adversely affect the business, operations or financial
condition of the Company and its Subsidiaries, taken as a whole, or any of their
respective properties or assets. The foregoing includes, without limiting its
generality, actions pending or threatened (or any basis therefor known to the
Company) involving the prior employment of any employees or prospective employee
of the Company or any Subsidiary, or the use, in connection with the Company's
business, of any information or techniques which might be alleged to be
proprietary to their former employer.
5.7 Financial Statements. The Company has furnished or will furnish to each
Purchaser (i) the audited consolidated balance sheet of the Company as of
September 30, 1994 and the related consolidated statements of operations and
cash flows of the Company for the year then ended (the "Audited Financial
Statements"), audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the independent public accountants
retained by the Company, (ii) the unaudited consolidated balance sheet of the
Company as of July 1, 1995 and the related unaudited consolidated statements of
operations and cash flows of the Company for the nine-month period ended July 1,
1995 (the "Unaudited Financial Statements") as contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended July 1, 1995, as the same
was filed with the Securities and Exchange Commission (the "Commission"), (iii)
the unaudited consolidated balance sheet of the Company as of September 30, 1995
and the related unaudited consolidated statements of operations and cash flows
of the Company for the year then ended and (iv) the unaudited consolidated
balance sheet of the Company as of October 31, 1995 and the related unaudited
consolidated statements of operations and cash flows of the Company for the
month then ended and, if completed prior to the Closing Date, the unaudited
consolidated balance sheets of the Company as of the end of each subsequent
month and the related unaudited consolidated statements of operations and cash
flows of the Company for the months then ended. Such financial statements are
and will be complete and correct, have been and will be prepared in accordance
with generally accepted accounting principles consistently applied ("GAAP") and
fairly present and will fairly present the financial position of the Company as
of their respective dates and the results of its operations for the periods then
ended; provided, that unaudited financial statements shall be subject to normal
year-end adjustments and may not contain all notes which would be required by
GAAP. Except as set forth on such balance sheets, the Company has no, and will
have no, material liability or obligation, absolute or contingent, as of the
respective dates of such balance sheets, which liability or obligation would be
required to be included thereon in accordance with GAAP. Except as set forth on
Schedule 5.7 annexed hereto, there has been no material change in the Company's
business, prospects, condition, affairs, operations, properties, or assets since
September 30, 1995.
5.8 Title to Properties. Except for the liens securing the indebtedness of
the Company referenced in the notes to the September 30, 1995 financial
statements of the Company, and as contemplated by the Bank Financing, the
Company has good and marketable title to all of its respective real property and
owns outright all of its respective other properties and assets, including,
without limitation, those reflected on the balance sheet as of September 30,
1995 (other than properties and assets disposed of in the ordinary course of
business since the date of such balance sheet).
5.9 Patents and Trademarks. Except as listed on Schedule 5.9 annexed
hereto, the Company does not own or possess any patents, trademarks,
servicemarks, tradenames, copyrights or licenses (hereinafter collectively
referred to as the "Intangible Rights"). Except as set forth on Schedule 5.9
annexed hereto, each of the Intangible Rights is held free from contractual
restrictions and any other restrictions except those imposed by law or
governmental regulation and those which are not material. Except as set forth on
such Schedule 5.9 annexed hereto, no material claims relating to the Intangible
Rights have been asserted with respect to which notice has been delivered to the
Company and not subsequently withdrawn. All such Intangible Rights are valid,
enforceable and in good standing and the Company is not infringing any material
Intangible Rights of any other person. Except as set forth on Schedule 5.9
annexed hereto, the Company has the right to continue to use its Intangible
Rights without any limitation or restriction which would or might materially
adversely interfere with its business. No additional Intangible Right is
required by the Company to continue conducting its business as presently
conducted.
5.10 Tax Matters. The Company has timely filed all federal, state, local
and foreign tax returns, estimates and reports required by any governmental
authority to be filed and has paid in full (a) all taxes, charges and
assessments shown to be due by such returns, estimates or reports or otherwise
due with respect to the periods covered thereby and (b) all deficiencies,
interest and penalties imposed in connection therewith. The Company knows of no
audits, assessments, notices of deficiency, claims or demands for taxes or
proposed deficiencies against the Company for any federal, state, local or
foreign taxes.
5.11 Reports. (a) The Company has filed with the Commission all reports and
registration statements and all other filings required to be filed with the
Commission for the past three years under the rules and regulations of the
Commission, copies of which have been delivered to the Purchasers. At their
respective times of filing, no such report, registration statement or other
filing contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. All such
reports, registration statements and other filings, at their respective times of
filing, complied with all applicable rules and regulations of the Commission,
including, without limitation, the Securities Act, and the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(b) The Company has provided or will provide the Purchasers with copies of
the most recent draft of the Company's proposed Annual Report on Form 10-K for
the year ended September 30, 1995. Such draft Form 10-K does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they are being made, not misleading.
5.12 Use of Proceeds. The Company will apply the proceeds from the sale of
the Notes, simultaneously with the Closing, to working capital, repayment of any
interim loans and general corporate needs.
5.13 ERISA. (a) With respect to each employee benefit plan (as defined in
Section 3(3) of ERISA), each oral or written incentive or deferred compensation
plan or agreement and each other employee-related plan, program, agreement or
arrangement with respect to which the Company or any other member of the
Controlled Group has or may have any liability (hereinafter referred to as a
"Benefit Plan"): (i) there has been no violation of any applicable provision of
ERISA; (ii) each Benefit Plan intended to qualify under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code") or for any other
tax-exempt or tax-favored status under the Code so qualifies; (iii) neither the
Company nor any other member of the Controlled Group is subject to any
outstanding or potential liability or obligation, direct or indirect (other than
the obligation to make contributions or pay insurance premiums, all of such
contributions or premiums having been made or paid (as appropriate) in full on a
timely basis), relating to any such Benefit Plan; (iv) there are no actual or
potential claims or actions (other than claims for benefits in the normal
course) relating to any such Benefit Plan; (v) no Benefit Plan which is an
employee pension benefit plan (within the meaning of Section 3(2) of ERISA) has
any amount of unfunded benefit liabilities (within the meaning of Section
4001(a)(18) of ERISA), nor has a Reportable Event (within the meaning of Section
4043(c) of ERISA) occurred with respect to any such Benefit Plan; and (vi) no
Benefit Plan is a multi-employer plan (within the meaning of Sections 3(37) or
4001(a)(3) of ERISA).
(b) For purposes of this Section 5.13: (i) the term "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as amended; and (ii) the term
"Controlled Group" shall mean a group composed of the Company and each other
corporation or other organization under common control with the Company within
the meaning of Section 4001(a)(14) of ERISA or Sections 414(b), (c), (m) or (o)
of the Code.
5.14 Environmental. Except as set forth on Schedule 5.14 annexed hereto,
the Company has obtained all permits, licenses and other authorizations which
are required under all environmental laws, including laws relating to emissions,
discharges, releases or threatened releases or pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water, ground
water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes, except to the extent failure to obtain any such permit, license or
other authorization does not have (and is not likely to have) a material adverse
effect on the business, condition (financial or otherwise), operation,
properties, performance or prospects of the Company and its Subsidiaries, taken
as a whole. Except as set forth on Schedule 5.14 annexed hereto, the Company and
each Subsidiary is in compliance with all material terms and conditions of the
required permits, licenses and authorizations, and is also in compliance with
all other material requirements, obligations, schedules and timetables contained
in those laws or contained in any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, and no claim or assessment with respect thereto has been
made, or to the Company's knowledge, threatened, except to the extent failure to
comply or any such claim or assessment does not have (and is not likely to have)
a material adverse effect on the business, condition (financial or otherwise),
operations, properties, performance or prospects of the Company and its
Subsidiaries, taken as a whole.
5.15 Absence of Certain Changes or Events. Except as set forth on Schedule
5.15 annexed hereto, since September 30, 1995, there has been:
(i) no change in the condition (financial or otherwise) of the business and
operations of the Company, which, either singly or in the aggregate, is (or is
likely to be) materially adverse to the Company;
(ii) no sales of goods or services or other transactions of the Company
other than those occurring in the ordinary and regular course of business;
(iii) no material change in the manner of conducting the business of the
Company;
(iv) no material adverse change in the working capital position of the
Company; and
(v) no financial or other commitments or obligations incurred by the
Company except such as may be incidental to carrying on the ordinary and regular
course of business.
5.16 Material Misstatements or Omissions. No representation or warranty by
the Company to the Purchasers in this Agreement or in any Schedule hereto, or in
any of the other documents or agreements contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading. All of the Schedules hereto
applicable to the Company and its Subsidiaries will constitute representations
and warranties by the Company herein. All representations, covenants and
warranties made by or on behalf of the Company in this Agreement will be deemed
to have been relied upon by the Purchasers (notwithstanding any investigation by
the Purchasers).
5.17 Survival. All representations, warranties and covenants made in this
Agreement by the Company shall survive until three years and one month from the
Closing Date.
Section 6. Covenants of the Company.
The Company covenants and agrees that, unless the Purchasers shall
otherwise consent in writing, it will:
6.1 NYSE or Stockholder Approvals. Undertake to use its best efforts to
obtain promptly from the NYSE and/or the stockholders of the Company approval of
(i) the Gintel standby arrangement for the Rights Offering, (ii) the ability of
Gintel to exchange the Initial Gintel Note for the Gintel Replacement Note
following the Conversion Date and (iii) the issuance and sale to Gintel of the
Warrants.
6.2 Rights Offering. Undertake to attempt to consummate a Rights Offering
to the holders of its Common Stock as contemplated in the Standby Agreement. The
Company agrees to use its best efforts to prepare and file with the Commission
the appropriate registration statement covering the Rights Offering as soon as
practicable and to use its best efforts to cause such Rights Offering
registration statement to become effective under the Securities Act as soon
thereafter as possible and to solicit proxies from its stockholders for any
approvals necessary under applicable NYSE rules to consummate or lawfully permit
the Rights Offering, the Standby Agreement, the ability of Gintel to exchange
the Initial Gintel Note for the Gintel Replacement Note following the Conversion
Date and the issuance and sale of the Warrants.
6.3 Financial Statements. As long as the Notes are outstanding, furnish or
cause to be furnished to each Purchaser the following financial statements and
information, which shall be prepared in accordance with GAAP:
6.3.1 As soon as available, but in any event, within ninety days after the
close of each fiscal year of the Company (or such longer period as permitted
pursuant to Rule 12b-25 under the Exchange Act ("Rule 12b-25"), provided that
the Company has filed, with respect to the report incorporating the financial
statements referenced below, the appropriate extension of time with the
Commission), audited consolidated balance sheets of the Company as of the close
of such period, and related audited consolidated statements of operations and
cash flows of the Company for such fiscal year, together with (a) copies of the
reports and certificates relating thereto of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other
independent certified public accountants of recognized national standing
selected by the Company and (b) a certificate of such accountants to the effect
that they are familiar with the terms and provisions of the Notes and that in
making their audit they have not discovered any condition, act or omission to
act which would constitute an event of default or which with notice or lapse of
time, or both, would constitute such an event of default, under the Notes;
6.3.2 As soon as available, but in any event, within forty five days after
the close of each of the first three quarters of each fiscal year of the Company
(or such longer period as permitted pursuant to Rule 12b-25 under the Exchange
Act, provided that the Company, with respect to the report incorporating the
financial statements referenced below, has filed the appropriate extension of
time with the Commission), unaudited consolidated balance sheets of the Company
as of the last day of such quarter and related unaudited consolidated statements
of operations and cash flows for such period;
6.3.3 As soon as reasonably practicable, all other reports as the Company
shall, from time to time, distribute to its stockholders ; and
6.3.4 Concurrently with its dissemination to the senior lenders of the
Company, all other reports as the Company shall, from time to time, disseminate
to its senior lenders.
6.4 Notes Tendered. Honor the rights of Avondale to tender the Avondale
Note and Gintel to tender the Initial Gintel Note to the extent of their then
outstanding principal amounts plus accrued and unpaid interest in fulfilling his
or its obligation to acquire shares of Common Stock pursuant to the Standby
Agreement.
6.5 Information Regarding the Purchasers. Provide the Purchasers with draft
copies, prior to the time of their filing with the Commission, the NYSE and any
other regulatory body, of all registration statements, proxy statements and
other documents and reports which identify and discuss the Purchasers and the
Rights Offering. The Company shall provide the Purchasers with ample opportunity
to review and comment on all such documents and to approve statements made about
them (such comments to be limited to information relating to the Purchasers and
the Rights Offering), and the Company, prior to the time of filing, shall make
such revisions to these documents and reports as the Purchasers may request,
such revisions not to be unreasonably denied by the Company.
6.6 Other Information. As long as the Notes are outstanding, provide each
Purchaser with such information concerning the operations of the Company as any
Purchaser may from time to time reasonably request in writing, provided that the
Purchasers agree to keep such information confidential, and at reasonable
intervals permit representatives of each of the Purchasers full and free access
during normal business hours to the properties, books and records of the
Company, provided, however, that the Company shall not be obligated pursuant to
this Section 6.6 to provide any information which it reasonably considers to be
a trade secret or similar confidential information. In addition, each Purchaser
agrees that to the extent he or it receives from the Company material non-public
information, he or it, as the case may be, will not effect trades in the
Company's securities while in possession of such material non-public
information.
Section 7. Representations and Warranties of the Purchasers.
Each Purchaser represents and warrants to the Company as follows:
7.1 Organization and Authorization. Such Purchaser, if an individual has
the legal capacity to enter into this Agreement and to undertake the
transactions contemplated hereby and, if a corporation, is duly organized and
validly existing, is in good standing under the laws of the state of its
incorporation, and has all requisite corporate power and authority to carry on
its business as now conducted and as proposed to be conducted.
7.2 Valid and Binding. All corporate action on the part of Avondale and its
respective officers, directors and shareholders that are necessary for the
execution, delivery and performance of all obligations of Avondale under this
Agreement, the Standby Agreement and the Registration Rights Agreement have been
taken. Each of this Agreement, the Standby Agreement and the Registration Rights
Agreement, when and if executed and delivered by each Purchaser in accordance
with the terms contained herein and therein, will constitute the legal, valid
and binding obligation of such Purchaser and will be enforceable against such
Purchaser in accordance with its respective terms and will not violate any
provision of law, any order of any court or other agency of government, or any
provision of any indenture, agreement or other instrument by which such
Purchaser or any of his or its respective properties or assets is bound or
affected and, with respect to Avondale, its Certificate of Incorporation or
By-laws.
7.3 Investment Representations.
7.3.1 Each Purchaser has had an opportunity to ask questions of, and to
receive information from, the Company and persons acting on the Company's behalf
concerning the transactions contemplated herein and in the Rights Offering, and
to obtain any additional information necessary to verify the accuracy of the
information and data received by such Purchaser. Such Purchaser acknowledges
receipt and examination of the following information, in addition to, and not in
limitation of, any other information obtained by such Purchaser or his or its
representatives in connection with such Purchaser's investigations and
examinations of the Company:
7.3.1.1 The Annual Report of the Company on Form 10-K for the fiscal year
ended September 30, 1994, as the same was filed with the Commission;
7.3.1.2 The Quarterly Report of the Company on Form 10-Q for the fiscal
quarter ended July 1, 1995, as the same was filed with the Commission;
7.3.1.3 The unaudited consolidated financial statements of the Company as
of September 30, 1995; and
7.3.1.4 The unaudited consolidated balance sheets and related statements of
operations and cash flows of the Company referenced in Section 5.7 (iv).
It is understood and agreed that the foregoing shall in no way affect,
diminish, or derogate from the representations and warranties made by the
Company hereunder.
7.3.2 Each Purchaser is an "accredited investor," as such term is defined
under Rule 501(a) promulgated by the Commission under the Securities Act, and he
or it, as the case may be, has knowledge of the business and affairs of the
Company, has sufficient knowledge and experience in business matters to evaluate
the merits and risks of an investment in the Company, has adequate means of
providing for his or its, as the case may be, current needs and possible
contingencies, has no need for liquidity of his or its, as the case may be,
investment in the Company and would be able to bear the economic risk of a
complete loss of his or its, as the case may be, proposed investment hereunder.
7.4 Governmental and Other Consents. All consents, approvals, orders or
authorizations of, or registrations, qualifications, designations, declarations
or filings with, any federal or state governmental authority or any other person
on the part of each Purchaser which are, or will be, necessary to be obtained by
the Purchasers for the valid execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Standby Agreement by such
Purchaser and the consummation of the transactions contemplated hereby and
thereby have been made or obtained.
7.5 Material Misstatements or Omissions. No representation or warranty by
the Purchasers to the Company in this Agreement or in any of the other documents
or agreements contemplated by this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained herein or therein not
misleading. All representations, covenants and warranties made by or on behalf
of the Purchasers in this Agreement will be deemed to have been relied upon by
the Company (notwithstanding any investigation by the Company).
7.6 Survival. All representations, warranties and covenants made in this
Agreement by the Purchasers shall survive until three years and one month
following the Closing Date.
Section 8. Covenants of the Purchasers.
8.1 Standby Agreement for Unsubscribed Shares in Rights Offering. The
Purchasers shall enter into the Standby Agreement pursuant to which, among other
things, the Purchasers shall agree to acquire all shares of Common Stock not
subscribed for by stockholders of the Company in the Rights Offering, all in
accordance with the terms and conditions set forth in the Standby Agreement.
Notwithstanding the foregoing, the parties acknowledge that the Company will not
issue more than 1,607,143 shares of Common Stock in the Rights Offering, that
Gintel's and Avondale's maximum aggregate standby commitment will not exceed the
difference obtained by subtracting from $11,250,000, the aggregate of all
subscription proceeds received by the Company from stockholders in the Rights
Offering and that Gintel's and Avondale's individual maximum standby commitments
shall not exceed $3,750,000 and $7,500,000, respectively.
8.2 Gintel Rights. Gintel hereby covenants and agrees that he will not
subscribe for any shares of Common Stock underlying any of the subscription
rights to be issued to him, as a stockholder in the Company, in the Rights
Offering.
Section 9. Indemnification. (a) The Company will indemnify and hold
harmless each Purchaser (subject to the provisions of Section 9(d) below) and
the directors, officers, employees and agents of each Purchaser from and against
any and all losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement, of any action, suit or proceeding or any
claim asserted (collectively, the "Losses")), to which they, or any of them, may
become subject as a result of, or arising out of, any material inaccuracy in, or
any material breach of, any representation, warranty, covenant or agreement of
the Company contained in this Agreement or in any of the other agreements or
instruments contemplated by this Agreement, including, without limitation, the
Registration Rights Agreement, the Standby Agreement, the Notes, the Warrants,
the Avondale Replacement Note and the Gintel Replacement Note. This indemnity
agreement will be in addition to any liability that the Company might otherwise
have.
(b) Each Purchaser severally, but not jointly, will indemnify and hold
harmless the Company and the directors, officers, employees and agents of the
Company from and against any and all Losses to which they, or any of them, may
become subject as a result of, or arising out of, any material inaccuracy in, or
any material breach of, any representation, warranty, covenant or agreement of
such Purchaser contained in this Agreement or in any of the other agreements
contemplated by this Agreement, including, without limitation, the Registration
Rights Agreement and the Standby Agreement. This indemnity agreement will be in
addition to any liability that each Purchaser might otherwise have.
(c) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against any
indemnifying party or parties under this Section, notify each such indemnifying
party of the commencement of such action, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party will not relieve it from
any liability that it may have to any indemnified party otherwise than under
this Section. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in, and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and, after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation previously incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its counsel in any such action, but the fees and expenses of such counsel
will be at the expense of such indemnified party unless (i) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party has reasonably concluded that
there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying party has
not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the fees and expenses of counsel will be at the expense of
the indemnifying party or parties. All such fees and expenses will be reimbursed
promptly as they are incurred. An indemnifying party will not be liable for any
settlement of any action or claim effected without its or his written consent
(such consent not to be unreasonably withheld) or, in connection with any
proceeding or related proceeding in the same jurisdiction, for the fees and
expenses of more than one separate counsel for all indemnified parties.
(d) The parties hereto acknowledge and agree that the representations and
warranties made by the Company to ▇▇. ▇▇▇▇▇▇ in Section 5 hereof are being made
to him without any liability therefor following the Closing Date. Nothing in
this Agreement or in any of the other documents or instruments referred to
herein shall create in ▇▇. ▇▇▇▇▇▇, or grant ▇▇. ▇▇▇▇▇▇, a right, following the
Closing Date, to commence a cause of action against the Company for, or to seek
indemnification for losses arising out of or relating to, a breach by the
Company of any of its representations or warranties contained in Section 5
herein.
Section 10. Miscellaneous.
10.1 Notices. All notices, requests, demands or other communications to or
upon the respective parties hereto shall be deemed to have been given or made,
and all financial statements, information and the like required to be delivered
hereunder shall be deemed to have been delivered, when sent by registered or
certified mail or by overnight courier, postage prepaid, addressed to the
parties at their addresses set forth on the first page of this Agreement, or to
such other address as any of them shall specify in writing to the other parties
hereto, with copies
in the case of the Company, to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
in the case of Gintel, to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
in the case of Avondale, to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III
10.2 Amendment. This Agreement and the Schedules annexed hereto may not be
changed or terminated orally and may only be amended with the written consent of
the Company and the Purchasers. This Agreement shall be binding upon the Company
and the Purchasers and their successors and permitted assigns.
10.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.4 References and Headings. All references to gender or number in this
Agreement shall be deemed interchangeable to refer to the masculine, feminine,
neuter, singular or plural, as the sense of the context requires. The Section
headings contained herein are inserted for convenience of reference only and are
not intended to define or limit the contents of any such Section of this
Agreement.
10.5 Fees and Expenses. The Company shall pay the reasonable legal fees and
disbursements of counsel to the Purchasers in connection with the transactions
contemplated hereby and in the Rights Offering, whether or not the closing under
this Agreement or the Rights Offering is consummated.
10.6 Governing Law. This Agreement is executed and delivered in, and shall
be construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
PURCHASERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AVONDALE ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Vice President & CFO
SCHEDULES
SCHEDULE A - STANDBY AGREEMENT
SCHEDULE B - INITIAL GINTEL NOTE
SCHEDULE C - GINTEL SUBORDINATED NOTE
SCHEDULE D - AVONDALE NOTE
SCHEDULE E - REGISTRATION RIGHTS AGREEMENT
SCHEDULE F - WARRANTS
SCHEDULE G - AVONDALE REPLACEMENT NOTE
SCHEDULE H - GINTEL REPLACEMENT NOTE
SCHEDULE 1.2.3 - BANK FINANCING
SCHEDULE 1.2.5 - OPINION OF COUNSEL
SCHEDULE 5.1 - SUBSIDIARIES
SCHEDULE 5.2 - CAPITAL OF SUBSIDIARIES; REGISTRATION RIGHTS
SCHEDULE 5.3 - AUTHORIZATION
SCHEDULE 5.5 - GOVERNMENTAL AND OTHER CONSENTS
SCHEDULE 5.6 - ACTIONS PENDING
SCHEDULE 5.7 - ADVERSE CHANGE
SCHEDULE 5.9 - PATENTS AND TRADEMARKS
SCHEDULE 5.14 - ENVIRONMENTAL
SCHEDULE 5.15 - CHANGE OF EVENTS
Schedule A
▇▇▇▇▇▇ INDUSTRIES, INC.
Common Stock,
Par Value $.25 per share
STANDBY AGREEMENT
New York, New York
__________ __, 1996
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Avondale ▇▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇ Industries, Inc., a Delaware corporation (the "Company") proposes to
issue (the "Rights Offering"), upon the terms and subject to the conditions set
forth in the Prospectus (as hereinafter defined), rights (the "Rights") to
purchase 1,719,627 shares of its Common Stock, $.25 par value per share (the
"Common Stock"), exercisable at $ 7.00 per share and evidenced by
non-transferable certificates (the "Rights Certificates"). Such Rights will be
exercisable during the period from the date hereof through 5:00 p.m., New York
City time, on ________, 1996. The date on which the Rights Offering expires is
referred to as the "Expiration Date." The offer of Common Stock pursuant to the
Rights is hereinafter referred to as the "Rights Offering." The Rights and the
Common Stock issuable and issued upon exercise thereof are hereinafter sometimes
collectively referred to as the "Securities."
The Securities are described in the Prospectus referred to below. You have
advised us that you desire to purchase from the Company that number of shares of
Common Stock which equals the excess, if any, of 1,607,143 shares [$11,250,000
in value] over that number of shares subscribed for in the Rights Offering upon
the expiration thereof (the "Unsubscribed Securities" or the "Shares"). You are
each sometimes hereinafter individually referred to as a Standby Purchaser and
collectively as the Standby Purchasers and the Company hereby confirms its
agreement with each of you as follows:
1. Purchase and Sale of Unsubscribed Securities. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell the Unsubscribed
Securities to the Standby Purchasers in the proportion set forth in Schedule A
hereto, and each Standby Purchaser severally agrees to purchase the Unsubscribed
Securities from the Company in the proportion set forth in Schedule A hereto, at
a purchase price of $7.00 per share. Notwithstanding the foregoing, the parties
acknowledge that the Company will not issue more than 1,607,143 shares of Common
Stock in the Rights Offering, that the Standby Purchasers' maximum aggregate
standby commitment will not exceed the difference obtained by subtracting from
$11,250,000 the aggregate of all subscription proceeds received by the Company
from stockholders in the Rights Offering and that ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ and
Avondale ▇▇▇▇▇, Inc.'s individual maximum standby commitments shall not exceed
$3,750,000 and $7,500,000, respectively.
2. Payment and Delivery. Payment for the Unsubscribed Securities shall be
made by the Standby Purchasers to the Company, at the election of the Standby
Purchasers, either by (a) tendering to the Company for credit against the
subscription price (to the extent of the then outstanding principal amount of,
and any accrued and unpaid interest on), those certain 10% Subordinated Notes of
the Company dated January __, 1996 issued to the Standby Purchasers or (b) wire
transfer to an account designated by the Company. Such payment and delivery
shall be made at 10:00 A.M., New York City Time, on the fifth business day
following the Expiration Date, the date and time of such payment and delivery
being herein called the "Closing Date". The Securities so to be delivered will
be in such denominations and registered in such names as the Standby Purchasers
request, and will be made available to the Standby Purchasers for inspection not
less than one full business day prior to the Closing Date.
3. Registration Statement and Prospectus; Public Offering. The Company will
file with the Securities and Exchange Commission (the "Commission"), pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations adopted by the Commission under it (the "Rules"), a
registration statement, including a preliminary prospectus, relating to the
Securities, and such amendments to such registration statement as may have been
required to the date of this Agreement. The term "preliminary prospectus" means
any preliminary prospectus (as referred to in Rule 430 of the Rules) included at
any time as a part of the registration statement and any preliminary prospectus
included in the registration statement at the Effective Date (as defined below)
that omits information with respect to the Securities and the offering of the
Securities permitted to be omitted from the registration statement when it
becomes effective pursuant to Rule 430A of the Rules ("Rule 430A Information").
If a further amendment to the registration statement is required to be filed
pursuant to Rule 424(b) of the Rules, such further amendment (the "Final
Amendment") to the registration statement, including a form of prospectus,
necessary to permit such registration statement to become effective will be
prepared by the Company and submitted to the Standby Purchasers and will
promptly be filed by the Company with the Commission. The registration statement
as amended at the time it becomes effective (the "Effective Date"), including
financial statements and all exhibits, is called the "Registration Statement."
The term "Prospectus" means the prospectus containing the Rule 430A Information
as first filed with the Commission pursuant to Rule 424(b) of the Rules or, if
no such filing pursuant to Rule 424(b) of the Rules is required, means the form
of final prospectus included in the Registration Statement at the Effective
Date.
4. Representations and Warranties. The Company represents and warrants to
and agrees with the Standby Purchasers that:
1. On the Effective Date and the date the Prospectus is first filed (if
required) with the Commission pursuant to Rule 424(b) and, if the Prospectus is
not filed pursuant to Rule 424(b) of the Rules, on the date of any filing
pursuant to Rule 424(b) of the Rules, when any post-effective amendment to the
Registration Statement becomes effective or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date, the
Registration Statement, the Prospectus and any such amendment or supplement will
comply in all material respects, with the requirements of the Securities Act and
the Rules, and no part of the Registration Statement, the Prospectus or any such
amendment or supplement will include any untrue statement of a material fact or
omit to state a material fact required to be stated in it or necessary to make
the statements in it not misleading; except that this representation does not
apply to statements or omissions made in reliance on and in conformity with
information relating to the Standby Purchasers furnished in writing to the
Company by the Standby Purchasers expressly for use in the Registration
Statement, Prospectus, amendment or supplement.
2. The holders of outstanding shares of capital stock of the Company and
warrants, options or other securities to purchase shares of capital stock of the
Company are not entitled to any preemptive rights to subscribe for the Shares.
All holders, if any, of shares of common stock or other securities of the
Company having rights to have such securities registered in the Registration
Statement have waived such rights or such rights have expired by reason of lapse
of time following notification of the Company's intent to file the Registration
Statement.
3. The Company is a corporation duly organized and validly existing, is in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to carry on its business as described in the
Prospectus. The Company is duly qualified as a foreign corporation and is in
good standing in all other jurisdictions in which such qualification is
required, provided however, that the Company need not be qualified in a
jurisdiction in which its failure to qualify would not have a material adverse
effect on its operations or financial condition. Each "significant" subsidiary
of the Company (as defined in Rule 1.02 of the Commission's Regulation S-X, the
"Subsidiaries") is duly organized and validly existing, is in good standing
under the laws of its state of incorporation, has all requisite power and
authority to duly carry on its business as described in the Prospectus and is
duly qualified as a foreign corporation and is in good standing in all other
jurisdictions in which such qualification is required, provided, however, that
such Subsidiary need not be qualified in a jurisdiction in which its failure to
qualify would not have a material adverse effect on its operations or financial
condition.
4. The Company has a duly authorized and outstanding capitalization as set
forth in the Prospectus and the Securities conform to the description thereof
contained therein and such description conforms with the rights set forth in the
instruments defining the same.
5. The financial statements and schedules filed with and as part of the
Registration Statement present fairly the financial position of the Company and
the Subsidiaries as of the respective dates thereof and the results of
operations of the Company and the Subsidiaries for the respective periods
covered thereby, all in conformity with generally accepted principles of
accounting applied on a consistent basis throughout the entire period involved
and from period to period. Since the respective dates of such financial
statements there has been no material adverse change in the condition or general
affairs of the Company or of any of the Subsidiaries, financial or otherwise,
other than as referred to in the Prospectus.
6. The Rights Certificates, Rights and Common Stock issuable upon exercise
of the Rights have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable and the holders thereof will not
be subject to personal liability by reason of being such holders; such
securities are not subject to the preemptive rights of any stockholder of the
Company; and the Common Stock has been duly authorized for listing on the New
York Stock Exchange upon official notice of issuance.
7. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who are certifying the financial statements filed
with the Commission as a part of the Registration Statement, are independent
public accountants as required by the Securities Act and the Rules.
8. The issuance of the Rights Certificates and the Securities and the
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated and the compliance with the terms of the Rights Certificates
and this Agreement will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or give rise to rights of
termination under, any deed of trust, lease, sublease, the Certificate of
Incorporation or by-laws of the Company or of any of the Subsidiaries, or any
indenture, mortgage, or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries, or the property of any of them, is bound, or any applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of the Subsidiaries, or the properties or operations of any of
them.
Each of the Standby Purchasers represents and warrants to the Company that
he or it (as the case may be), as of the date of this Agreement, has the
financial wherewithal to honor his or its respective commitments hereunder.
5. Subscription Offer. The Company will offer to holders of its Common
Stock of record at the close of business on _____________, 1996 the right to
purchase shares of Common Stock at a price of $7.00 per share on the basis of
one right to purchase one-quarter of one share of Common Stock for every share
of Common Stock held. The Company will, or will cause its Transfer Agent to,
mail Rights Certificates to such holders of Common Stock as promptly as
practicable after the Registration Statement becomes effective, and in any event
will complete such mailing not later than midnight on the day next succeeding
the effective date of the Registration Statement, unless you shall consent to a
later time in writing.
At the time of the commencement of the mailing ("Time of Mailing") of the
Rights Certificates to such holders, the Company will notify each of the Standby
Purchasers of such mailing, and the Company will advise each of the Standby
Purchasers daily during the period of such offer of the subscriptions received
and of sales. Not later than 10 A.M., New York City Time, on the first full
business day following the Expiration Date, the Company will notify each Standby
Purchaser by telephone of the total number of shares of Common Stock subscribed
for by holders of Rights Certificates and the resulting amount of Unsubscribed
Securities and will confirm such notice in writing. The Standby Purchasers shall
be entitled to rely on such notice as to the amount of Unsubscribed Securities
to be purchased by them in accordance with Schedule A hereto.
6. Restricted Nature of Unsubscribed Securities. Each of the Standby
Purchasers acknowledges that the Unsubscribed Securities, in its or his hands,
as the case may be, will be restricted securities which may not be sold or
offered for sale in the absence of an effective registration statement as to
such Unsubscribed Securities under the Securities Act or an opinion of counsel
satisfactory to the Company that such registration is not required. In this
regard, the parties hereto have entered into a Registration Rights Agreement,
substantially in the form of Schedule B hereto, pursuant to which, among other
things, the Company granted the Standby Purchasers certain registration rights
with respect to the Unsubscribed Securities.
7. Certain Covenants of the Company. In further consideration of the
agreements of the Standby Purchasers herein contained, the Company covenants as
follows:
(1) The Company will not at any time, whether before or after the
Registration Statement shall have become effective, file or make any amendment
or supplement to the Registration Statement or Prospectus of which you shall not
have previously been advised and furnished a copy, or to which you shall
reasonably object in writing.
(2) The Company will use its best efforts to cause the Registration
Statement to become effective and will advise you immediately, and confirm the
advice in writing, (i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, shall have become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the necessity of amending or supplementing the Prospectus or any amended
Prospectus in order to then meet the requirements of the Securities Act, (iii)
of any request of the Commission for amendment or supplementation of the
Registration Statement or Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any preliminary or amended preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the institution of any proceedings for any of such purposes. The Company will
use its best efforts to prevent the issuance of any such stop order or of any
order preventing or suspending such use and to obtain as soon as possible the
lifting thereof, if issued.
(3) The Company will deliver to the Standby Purchasers, without charge,
from time to time until the effective date of the Registration Statement, as
many copies of each preliminary or amended preliminary prospectus as the Standby
Purchasers may reasonably request, and the Company hereby consents to the use of
such copies for purposes permitted by the Securities Act. The Company will
deliver to the Standby Purchasers, without charge, as soon as the Registration
Statement shall have become effective and thereafter from time to time as
requested, such number of copies of the Prospectus (as supplemented or amended,
if the Company shall have made any supplements or amendments to the Prospectus)
as the Standby Purchasers may reasonably request. The Company has furnished or
will furnish to you two signed copies of the Registration Statement as
originally filed and of all amendments thereto, whether filed before or after
the Registration Statement becomes effective, and three copies of all exhibits
filed therewith or incorporated therein by reference and signed copies of all
consents and certificates of experts.
(4) The Company will comply to the best of its ability with the Securities
Act and the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder so as to permit the
continuance of sales of, and dealings in, the Securities under the Securities
Act and the Exchange Act. Subject to the provisions of subsection (a) of this
Section 7, if at any time when a Prospectus is required to be delivered under
the Securities Act (i) an event shall have occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein not untrue or misleading or to make the Prospectus comply with the
Securities Act or (ii) the proposed offering of the Securities makes it
necessary to amend or supplement the Prospectus, the Company promptly will amend
or supplement the Prospectus (and if a Post-Effective Amendment to the
Registration Statement is necessary in connection therewith, will promptly
prepare and file the same and will use its best efforts to cause the same to
become effective) as necessary to permit the lawful use of the Prospectus in
connection with the distribution of the Securities.
(5) The Company will comply to the best of its ability with blue sky laws
so as to permit the continuance of sales of and dealings in the Unsubscribed
Securities thereunder. The Company, however, shall not be obligated to qualify
as a foreign corporation or file any general consent to service of process under
the laws of any such jurisdiction or subject itself to taxation as doing
business in any such jurisdiction. The Company will take the necessary action to
qualify the Securities (and, to the extent necessary, the Rights Certificates)
in connection with the offer and sale thereof by the Company, under the laws of
such jurisdictions as may be deemed advisable by the Company in respect of the
offer of the Securities to the holders of its Common Stock and Rights
Certificates.
(6) The Company will make generally available to its security holders, by
mailing to its then security holders, as soon as practicable and in no event
later than the 15th full calendar month following the calendar quarter in which
the Effective Date falls, an earnings statement satisfying the provisions of
Section 11 (a) of the Securities Act and Rule 158 of the Rules.
(7) The Company will pay and bear all costs and expenses in connection with
(i) the preparation, printing and filing with the Commission of the Registration
Statement (including financial statements and exhibits), preliminary
prospectuses and Prospectus and any amendments or supplements thereto, (ii) the
printing of this Agreement and the agreements and other printed matter used by
you in connection with the marketing of the Securities and the publication of
any related advertisements, (iii) the issue and delivery of the Unsubscribed
Securities hereunder to the Standby Purchasers, including all Federal and other
taxes on the issue by or any transfer of the Unsubscribed Securities from the
Company to the Standby Purchasers (but not on any transfer by the Standby
Purchasers of the Unsubscribed Securities or of the right to receive the same),
(iv) the qualifying of the Securities and the Rights Certificates under the laws
of certain jurisdictions as aforesaid, including filing fees and fees and
disbursements of counsel (who may be counsel for the Standby Purchasers) in
connection therewith, (v) the cost of furnishing to the Standby Purchasers
copies of the Registration Statement, preliminary and amended preliminary
prospectuses and Prospectus and all supplements and amendments thereto, as
herein provided and (vi) the legal expenses of the Standby Purchasers incidental
to the preparation of, and the consummation by the Standby Purchasers of the
transactions contemplated by, this Agreement.
(8) The Company will do all things necessary to maintain the
exerciseability of the Rights, including, but not limited to, maintaining at all
times sufficient reserved, authorized but unissued shares of Common Stock for
issuance upon exercise thereof.
(9) The Company will use its best efforts to add the Standby Purchasers as
additional insureds on any insurance policy which provides insurance against
liabilities which may be asserted in connection with the Rights Offerings.
8. Conditions of Obligations of the Standby Purchasers and of Company. The
obligations of the Standby Purchasers to purchase and pay for the Unsubscribed
Securities which they have agreed to purchase hereunder are subject to the
accuracy (as of the date hereof and the Closing Date) of and compliance with the
representations and warranties of the Company herein, to the accuracy of the
statements of officers of the Company made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder, and to the
following additional conditions.
(1) The Registration Statement shall have become effective not later than
5:30 P.M., New York City Time, on __________, 1996 or at such later time on such
later date as you may agree to in writing; and prior to the Closing Date, no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been instituted or
shall be pending, or, to your knowledge or the knowledge of the Company, shall
be contemplated by the Commission, and any request on the part of the Commission
for additional information shall have been complied with.
(2) The Time of Mailing shall have occurred not later than 5:30 P.M., New
York City Time, on ___________, 1996 or at such later time on such date as you
may agree to in writing; prior to the Time of Mailing, the issuance and sale of
the Securities shall have been approved by all requisite corporate action.
(3) At the Time of Mailing, and at the Closing Date, there shall have been
delivered to you a signed opinion of Blau ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C., as
counsel for the Company, dated as of the Time of Mailing and the Closing Date,
respectively, in form and substance satisfactory to ▇▇▇▇ & Priest LLP, counsel
for the Standby Purchasers.
(4) At the Time of Mailing, and at the Closing Date, there shall have been
delivered to you a signed letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, in form and substance
reasonably satisfactory to you, dated as of the Time of Mailing and the Closing
Date, respectively.
(5) At the Time of Mailing, (i) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all
statements which are required to be stated therein in accordance with the
Securities Act and the Rules and in all material respects shall conform to the
requirements of the Securities Act and the Rules, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) since the respective dates as of which information is given
there shall have been no material adverse change in the business, properties or
financial condition of the Company from that set forth in the Registration
Statement and the Prospectus, except changes which the Registration Statement
indicates might occur after the effective date of the Registration Statement,
and since September 30, 1995 there shall have been no material transaction,
contract or agreement entered into by the Company other than in the ordinary
course of business which is not referred to in the Registration Statement, and
(iii) no action, suit or proceeding at law or in equity shall be pending or, to
the knowledge of the Company, threatened against the Company or any Subsidiary
which would be required to be set forth in the Registration Statement other than
as set forth therein, and no proceeding shall be pending or, to the knowledge of
the Company, threatened against the Company or any Subsidiary before or by any
Federal, state or other commission, board or administrative agency wherein an
unfavorable decision, ruling or finding would materially adversely affect the
business, property, financial condition or income of the Company, other than as
set forth in the Registration Statement; and the Standby Purchasers shall have
received, at the Time of Mailing, certificates of the President or a
Vice-President, and the Treasurer or an Assistant Treasurer, of the Company,
dated as of the Time of Mailing, evidencing compliance with the provisions of
this subsection (e).
(6) All proceedings taken at or prior to the Time of Mailing and the
Closing Date, respectively, in connection with the authorization, issue and sale
of the Securities and the authorization and issue of the Rights Certificates
shall be reasonably satisfactory in form and substance to you and to your
counsel, and such counsel shall have been furnished with all such documents,
certificates and opinions as it reasonably requests to verify the accuracy and
completeness of any of the representations, warranties, or statements, the
performance of any covenants of the Company, or the compliance with any of the
conditions, herein contained.
(7) At the Closing Date, the Company shall have delivered to the Standby
Purchasers a certificate of the President of the Company dated the Closing Date
certifying that the representations and warranties of the Company set forth
herein are true and correct as of the Closing Date.
In case any of the conditions specified above in this Section 8 shall not
have been fulfilled, this Agreement may be terminated by either of you on notice
to the Company.
The obligation of the Company to sell and deliver the Unsubscribed
Securities is subject to the following conditions: The Registration Statement
shall have become effective not later than 5:30 P.M., New York City Time, on
___________, 1996, or at such later time or on such later date as the Company
may agree to in writing; and prior to the Closing Date, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending, or,
to your knowledge or the knowledge of the Company, shall be contemplated by the
Commission. In case any of the conditions specified in this paragraph shall not
have been fulfilled, this Agreement, upon notice to you, may be terminated by
the Company.
9. Indemnification. (1) The Company will indemnify and hold harmless each
of the Standby Purchasers and its respective directors, officers, employees and
agents, and each person, if any, who controls each Standby Purchaser within the
meaning of Section 15 of the Securities Act against any and all losses, claims,
damages and liabilities, joint or several (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted)
(collectively, the "Losses"), to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law, or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based on any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto, or the omission or alleged omission to state in such
document a material fact required to be stated in it or necessary to make the
statements in it not misleading, provided that the Company will not be liable to
the extent that such loss, claim, damage or liability is based on an untrue
statement or omission or alleged untrue statement or omission (i) made in
reliance on and in conformity with information furnished in writing to the
Company by or on behalf of the Standby Purchaser expressly for use in the
document or (ii) in a preliminary prospectus if the Prospectus corrects the
untrue statement or omission or alleged untrue statement or omission which is
the basis of the loss, claim, damage or liability for which indemnification is
sought and a copy of the Prospectus was not sent or given to such person at or
before the confirmation of the sale to such person in any case where such
delivery is required by the Securities Act, unless such failure to deliver the
Prospectus was a result of noncompliance by the Company with Section 7(c). This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.
(2) The Standby Purchasers will indemnify and hold harmless the Company and
its directors, officers, employees and agents, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act, to
the same extent as the foregoing indemnity from the Company to the Standby
Purchasers, but only insofar as Losses arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in or in
reliance on and in conformity with information furnished in writing to the
Company by or on behalf of the Standby Purchasers expressly for use in
preparation of the documents in which the statement or omission is made or
alleged to be made. This indemnity agreement will be in addition to any
liability that the Standby Purchasers might otherwise have.
(3) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such indemnifying
party of the commencement of such action, enclosing a copy of all papers served,
but the omission so to notify such indemnifying party will not relieve it from
any liability that it may have to any indemnified party otherwise than under
this Section. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in, and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and, after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation previously incurred by the indemnified party
in connection with the defense. The indemnified party will have the right to
employ its counsel in any such action, but the fees and expenses of such counsel
will be at the expense of such indemnified party unless (i) the employment of
counsel by the indemnified party has been authorized in writing by the
indemnifying party, (ii) the indemnified party has reasonably concluded that
there may be a conflict of interest between the indemnifying party and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying party has
not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the fees and expenses of counsel will be at the expense of
the indemnifying party or parties. All such fees and expenses will be reimbursed
promptly as they are incurred. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent or, in
connection with any proceeding or related proceeding in the same jurisdiction,
for the fees and expenses of more than one separate counsel for all indemnified
parties.
10. Representations, Warranties and Agreements to Survive Delivery. The
representations, warranties, indemnities and agreements of the Company and the
Standby Purchasers made in this Agreement will remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Company, or any Standby Purchaser or controlling person and will survive
delivery of and payment for the Unsubscribed Securities.
11. Termination. Notwithstanding any provision to the contrary contained
herein, either of the Standby Purchasers shall have the right to terminate this
Agreement, by written notice addressed to the Company, if the Rights Offering is
not consummated by May 31, 1996.
12. Obligations. The parties hereto acknowledge that the obligations of the
Standby Purchasers under this Agreement are several and not joint.
13. Miscellaneous. (a) This Agreement contains the entire agreement among
the parties hereto with respect to the subject matter herein, and cannot be
modified, changed, discharged or terminated except by an instrument in writing
signed by the party against whom the enforcement of any modification, change,
discharge or termination is sought.
(b) Any notice, request, instruction or other document to be given
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail or overnight courier as follows:
(i) If to the Company:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
Ashley Corporate Center
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
with a copy to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(ii) If to the Standby Purchasers, at their respective addresses specified
on page one hereof or to such other address as any party hereto hereinafter
designates in writing to any other party hereto, with a copy, in the case of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
and with a copy, in the case of Avondale ▇▇▇▇▇, Inc. to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III
(c) The captions herein are inserted for convenience only and shall not
affect the construction of this Agreement.
(d) This Agreement is executed and delivered in, and shall be construed in
accordance with, and governed by, the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
(e) This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
Very truly yours,
▇▇▇▇▇▇ INDUSTRIES, INC.
By: ______________________
Title: President
Accepted and Agreed to as of
the Date First Above Written:
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AVONDALE ▇▇▇▇▇, INC.
By: ______________________
Title:
SCHEDULE A
ALLOCATION OF UNSUBSCRIBED SECURITIES
The first 750,000 shares of Unsubscribed Securities will be purchased by
Avondale ▇▇▇▇▇, Inc.
The next block of Unsubscribed Securities will be purchased by the Standby
Purchasers as follows, subject to Avondale ▇▇▇▇▇, Inc.'s maximum cumulative
Standby Commitment of $7,500,000:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ - 50%
Avondale ▇▇▇▇▇, Inc. - 50%
The balance of the Unsubscribed Securities will be purchased by ▇▇. ▇▇▇▇▇▇,
subject to his maximum cumulative Standby Commitment of $3,750,000.
Schedule B
▇▇▇▇▇▇ INDUSTRIES, INC.
10% SUBORDINATED PROMISSORY NOTE
$3,750,000.00 Charleston, South Carolina
January __, 1996
▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation (the "Company"), the
principal office of which is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, Ashley
Corporate Center, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for value received hereby
promises to pay to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or his registered assigns (the "Holder"),
the sum of THREE MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100
($3,750,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof on the terms and conditions set forth hereinafter.
Interest on the unpaid principal amount hereof shall be payable as herein set
forth. The entire principal amount hereof and any unpaid accrued interest
hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) January 31, 1999 or (ii) when declared due and payable by the Holder upon
the occurrence of an Event of Default (as defined below). Payment for all
amounts due hereunder shall be made by wire transfer of immediately available
funds to such account of the Holder as shall have been designated to the
Company. This Note is issued in connection with the transactions described in
Section 1.1 of that certain Note Purchase Agreement between the Company and the
Holders described therein, dated as of December 28, 1995 (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement. This Note is the
Initial Gintel Note referred to in the Purchase Agreement and is issued to the
Holder in addition to the Gintel Subordinated Note (as such term is defined in
the Purchase Agreement) in like principal amount on the date hereof. As set
forth in the Purchase Agreement, the Company anticipates effecting a Rights
Offering to, among other things, raise the funds necessary to repay this Note.
Moreover, the Holder of this Note has agreed, subject to the prior receipt by
the Company of all requisite consents, including, if necessary, that of the New
York Stock Exchange (the "NYSE") and/or the Company's stockholders, to serve as
a standby purchaser of the Company in the Rights Offering. Notwithstanding
anything to the contrary set forth herein, the Holder of this Note may apply the
then outstanding amount of all principal and accrued and unpaid interest under
this Note to satisfy his obligations as a standby purchaser in the Rights
Offering. In the event that the Rights Offering is not consummated prior to May
31, 1996, or upon the occurrence of any of the other events referred to in
Section 4.1 of the Purchase Agreement, then the Holder may, commencing at the
Conversion Date (as such term is defined in the Purchase Agreement) and subject
to the prior receipt by the Company of all requisite consents, including, if
necessary, that of the NYSE and/or the Company's stockholders, exchange this
Note for the Gintel Replacement Note (as such term is defined in the Purchase
Agreement) on the terms set forth in the Purchase Agreement (a "Note Exchange").
The following is a statement of the rights of the Holder of this Note
and the conditions to which this Note is subject, and to which the Holder
hereof, by the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.
2. Interest. The unpaid principal balance of this Note shall bear interest
compounded annually, from the date hereof until paid in like money, at a rate
(based on a 360-day year) equal to ten percent (10%) per annum, such interest to
be payable on June 30 and December 31 in each year. Any accrued but unpaid
interest shall be payable in full upon maturity or prior prepayment of this
Note. In the event that the principal amount of this Note is not paid in full
upon maturity, interest shall continue to accrue at the rate provided in the
previous sentence plus five percent (5%) on the balance of any unpaid principal
and unpaid interest until such balance is paid.
3. Events of Default. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of this Note may, in the sole discretion of the Holder, so long as such
condition exists, (a) declare the entire principal and unpaid accrued interest
hereon immediately due and payable and (b) subject to the prior receipt by the
Company of all requisite consents, including, if necessary, that of the NYSE
and/or the Company's stockholders, effect a Note Exchange, by notice in writing
to the Company:
(i) (a) Default in the payment of the principal when due under this Note,
the Gintel Subordinated Note or the Avondale Note, and (b) default in the
payment of the unpaid accrued interest under this Note, the Gintel Subordinated
Note or the Avondale Note when due and payable if such default in the payment of
accrued interest is not cured by the Company within ten (10) days after the
Holder or Avondale, as the case may be, has given the Company written notice of
such default; or
(ii) The institution by the Company or any material Subsidiary of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by
it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the Company
or any material Subsidiary, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the taking of
corporate action by the Company or any material Subsidiary in furtherance of any
such action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company or any material Subsidiary (and service of process in
connection therewith on the Company or any material Subsidiary) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or any material Subsidiary or all
orders or proceedings thereunder affecting the operations or the business of the
Company or any material Subsidiary stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days after
the appointment without the consent or acquiescence of the Company or any
material Subsidiary of any trustee, receiver or liquidator of the Company or any
material Subsidiary or of all or any substantial part of the properties of the
Company or any material Subsidiary, such appointment shall not have been
vacated; or
(iv) Any event of default or default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, even if such Senior Indebtedness is not, in
fact, accelerated by the holder; or
(v) Any failure by the Company to comply with, perform or observe any term,
covenant or agreement contained in the Purchase Agreement, this Note, the Gintel
Subordinated Note, the Avondale Note, the Registration Rights Agreement, the
Standby Agreement or any other agreement, instrument or documents entered into
in connection therewith, which failure continues for a period of 30 days after
written notice thereof by the Holder to the Company; or
(vi) Any change of control of the Company which, for purposes of this
Section 3(vi), shall be deemed to have occurred if (i) any person, other than
any person who, as of the date of the Purchase Agreement, beneficially owns 5%
of more of the outstanding capital stock of the Company, whether alone or as
part of a group (including any individual, firm, partnership or other entity)
together with all Affiliates and Associates (as defined under Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended) of such person, but excluding (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company or (C) the Company or any subsidiary of the Company is
or becomes the Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all of substantially all of the Company's assets;
or
(vii) the Company or any material Subsidiary shall be subject to a final
judgment by a court of competent jurisdiction (which is no longer being
appealed) in an amount in excess of $1,000,000.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
4.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company concurrently being incurred by the Company with
SunTrust Bank, Atlanta, First Union Bank of South Carolina and NatWest Bank,
N.A., (ii) all indebtedness of the Company to banks, insurance companies or
other financial institutions regularly engaged in the business of lending money
(collectively, "Bank Debt"), which is outstanding on the date hereof and which
is for money borrowed by the Company (whether or not secured), (iii) up to $6
million of additional Bank Debt provided that such additional Bank Debt is
advanced to the Company prior to such time as the conversion privileges set
forth in the Avondale Replacement Note and the Gintel Replacement Note have
either been exercised in their entirety, canceled or terminated and (iv) any
refinancings of the indebtedness described in clauses (i) through (iii) above.
4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to a payment obligation
under any Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior Indebtedness
to accelerate the maturity thereof, then, unless and until such event of default
shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of or interest on this Note, unless within three (3) months
after the happening of such Event of Default, the maturity of such Senior
Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment.
5.1 Optional Prepayment. The Company may not prepay this Note, in whole or
in part, without the prior consent of the Holder hereof and the holders of the
Avondale Note and the Gintel Subordinated Note. If the Company shall prepay this
Note pursuant to this Section 5, it shall cause notice thereof, specifying the
date and amount of prepayment, to be given by registered or certified mail to
the holders of the Avondale Note and the Gintel Subordinated Note at their
last-known post office addresses of which the Company shall have received
written notice, at least 10 days prior to the date fixed for such prepayment.
Notice of prepayment having been given as aforesaid, this Note, the Avondale
Note and the Gintel Subordinated Note, or the portions thereof so to be prepaid
shall, on the date designated in such notice, become due and payable in the
principal amounts thereof to be prepaid. In the event that this Note, the
Avondale Note and/or the Gintel Subordinated Note are outstanding and a partial
prepayment is made, each of this Note, the Avondale Note and the Gintel
Subordinated Note shall be prepaid pro rata to the then outstanding principal
amounts thereof.
5.2 Mandatory Prepayment. The Company shall immediately use any proceeds
received by it from any stockholder of the Company upon the exercise by such
stockholder of rights issued in the Rights Offering, to repay, pro rata with the
Avondale Note, based upon the then outstanding principal amount in relation to
the then outstanding principal amount of the Avondale Note, the outstanding
principal amount and any unpaid and accrued interest hereunder and the Holder
hereof shall accept such prepayment.
6. Notifications by the Company. In case at any time:
(1) there shall be any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with, or
sale of all or substantially all of the assets of the Company to, another
corporation; or
(2) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of such cases, the Company shall give written
notice to the registered Holder of this Note of the date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such written
notice shall be given not less than 30 days and not more than 60 days prior to
the action in question and not less than 30 days and not more than 80 days prior
to the record date or the date on which the Company's transfer books are closed
in respect thereto and such notice may state that the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or to a favorable vote of stockholders, if either is required.
7. Assignment. The rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and copies of all notices to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be given to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon the Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
10. Collection. If the Holder shall institute any action to enforce
collection of this Note, there shall become due and payable from the Company, in
addition to the unpaid principal amount and interest under this Note, all costs
and expenses of that action (including, but not limited, to reasonable
attorneys' fees) and the Holder shall be entitled to judgment for all such
additional amounts.
11. Governing Law. This Note is executed and delivered in, and shall be
construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
12. Headings; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this ____
day of January, 1996.
▇▇▇▇▇▇ INDUSTRIES, INC.
By____________________________
-------------------------------
Schedule C
▇▇▇▇▇▇ INDUSTRIES, INC.
10% SUBORDINATED PROMISSORY NOTE
$3,750,000.00 Charleston, South Carolina
January __, 1995
▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation (the "Company"), the
principal office of which is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, Ashley
Corporate Center, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for value received hereby
promises to pay to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or his registered assigns (the "Holder"),
the sum of THREE MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100
($3,750,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof on the terms and conditions set forth hereinafter.
Interest on the unpaid principal amount hereof shall be payable as herein set
forth. The entire principal amount hereof and any unpaid accrued interest
hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) January 31, 1999, or (ii) when declared due and payable by the Holder upon
the occurrence of an Event of Default (as defined below). Payment for all
amounts due hereunder shall be made by wire transfer of immediately available
funds to such account of the Holder as shall have been designated to the
Company. This Note is issued in connection with the transactions described in
Section 1.1 of that certain Note Purchase Agreement between the Company and the
Holders described therein, dated as of December 28, 1995 (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement. This Note is the Gintel
Subordinated Note referred to in the Purchase Agreement and is issued to the
Holder in addition to the Initial Gintel Note (as such term is defined in the
Purchase Agreement) in like principal amount issued on the date hereof.
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.
2. Interest. The unpaid principal balance of this Note shall bear interest
compounded annually, from the date hereof until paid in like money, at a rate
(based on a 360-day year) equal to ten percent (10%) per annum, such interest to
be payable on June 30 and December 31 in each year. Any accrued but unpaid
interest shall be payable in full upon maturity or prior prepayment of this
Note. In the event that the principal amount of this Note is not paid in full
upon maturity, interest shall continue to accrue at the rate provided in the
previous sentence plus five percent (5%) on the balance of any unpaid principal
and unpaid interest until such balance is paid.
3. Events of Default. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of this Note may, in his sole discretion, so long as such condition
exists, declare the entire principal and unpaid accrued interest hereon
immediately due and payable, by notice in writing to the Company:
(i) (a) Default in the payment of the principal when due under this Note,
the Initial Gintel Note, the Gintel Replacement Note, the Avondale Note or the
Avondale Replacement Note, and (b) default in the payment of the unpaid accrued
interest under this Note, the Initial Gintel Note, the Gintel Replacement Note,
the Avondale Note or the Avondale Replacement Note, when due and payable if such
default in the payment of accrued interest is not cured by the Company within
ten (10) days after the Holder or Avondale, as the case may be, has given the
Company written notice of such default; or
(ii) The institution by the Company of any material Subsidiary of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by
it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the Company
or any material Subsidiary, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the taking of
corporate action by the Company or any material Subsidiary in furtherance of any
such action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company or any material Subsidiary (and service of process in
connection therewith on the Company or any material Subsidiary) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or any material Subsidiary or all
orders or proceedings thereunder affecting the operations or the business of the
Company or any material Subsidiary stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days after
the appointment without the consent or acquiescence of the Company or any
material Subsidiary of any trustee, receiver or liquidator of the Company or any
material Subsidiary or of all or any substantial part of the properties of the
Company or any material Subsidiary, such appointment shall not have been
vacated; or
(iv) Any event of default or default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, even if such Senior Indebtedness is not, in
fact, accelerated by the holder; or
(v) Any failure by the Company to comply with, perform or observe any term,
covenant or agreement contained in the Purchase Agreement, this Note, the
Initial Gintel Note, the Gintel Replacement Note, the Avondale Note, the
Avondale Replacement Note, the Registration Rights Agreement, the Standby
Agreement or any other agreement, instrument or documents entered into in
connection therewith, which failure continues for a period of 30 days after
written notice thereof by the Holder to the Company; or
(vi) Any change of control of the Company which, for purposes of this
Section 3(vi), shall be deemed to have occurred if (i) any person, other than
any person who, as of the date of the Purchase Agreement, beneficially owns 5%
or more of the outstanding capital stock of the Company, whether alone or as
part of a group (including any individual, firm, partnership or other entity)
together with all Affiliates and Associates (as defined under Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended) of such person, but excluding (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company or (C) the Company or any subsidiary of the Company is
or becomes the Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or
(vii) The Company or any material Subsidiary shall be subject to a final
judgment by a court of competent jurisdiction (which is no longer being
appealed) in an amount in excess of $1,000,000.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
4.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company concurrently being incurred by the Company with
SunTrust Bank, Atlanta, First Union Bank of South Carolina and NatWest Bank,
N.A., (ii) all indebtedness of the Company to banks, insurance companies or
other financial institutions regularly engaged in the business of lending money
(collectively, "Bank Debt"), which is outstanding on the date hereof and which
is for money borrowed by the Company (whether or not secured), (iii) up to $6
million of additional Bank Debt provided that such additional Bank Debt is
advanced to the Company prior to such time as the conversion privileges set
forth in the Avondale Replacement Note and the Gintel Replacement Note have
either been exercised in their entirety, canceled or terminated and (iv) any
refinancings of the indebtedness described in clauses (i) through (iii) above.
4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to a payment obligation
under any Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior Indebtedness
to accelerate the maturity thereof, then, unless and until such event of default
shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of or interest on this Note, unless within three (3) months
after the happening of such Event of Default, the maturity of such Senior
Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment. The Company may not, without the prior written consent of
Avondale, prepay this Note, in whole or in part. If the Company shall, with
Avondale's consent, prepay this Note pursuant to this Section 5, it shall cause
notice thereof, specifying the date and amount of prepayment, to be given by
registered or certified mail to the holders of the Initial Gintel Note and the
Avondale Note at their last-known post office addresses of which the Company
shall have received written notice, at least 10 days prior to the date fixed for
such prepayment. Notice of prepayment having been given as aforesaid, this Note,
the Initial Gintel Note and the Avondale Note, or the portions thereof so to be
prepaid shall, on the date designated in such notice, become due and payable in
the principal amounts thereof to be prepaid. In the event that this Note, the
Initial Gintel Note and/or the Avondale Note are outstanding and a partial
prepayment is made, each of this Note, the Initial Gintel Note and the Avondale
Note shall be prepaid pro rata to the then outstanding principal amounts
thereof.
6. Notifications by the Company. In case at any time:
(1) there shall be any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with, or
sale of all or substantially all of the assets of the company to, another
corporation; or
(2) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of such cases, the Company shall give written
notice to the registered Holder of this Note of the date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such written
notice shall be given not less than 30 days and not more than 60 days prior to
the action in question and not less than 30 days and not more than 80 days prior
to the record date or the date on which the Company's transfer books are closed
in respect thereto and such notice may state that the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or to a favorable vote of stockholders, if either is required.
7. Assignment. The rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and copies of all notices to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be given to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon the Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
10. Collection. If the Holder shall institute any action to enforce
collection of this Note, there shall become due and payable from the Company, in
addition to the unpaid principal amount and interest under this Note, all costs
and expenses of that action (including, but not limited to, reasonable
attorneys' fees) and the Holder shall be entitled to judgment for all such
additional amounts.
11. Governing Law. This Note is executed and delivered in, and shall be
construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
12. Headings; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this ____
day of January, 1996.
▇▇▇▇▇▇ INDUSTRIES, INC.
By____________________________
-------------------------------
Schedule D
▇▇▇▇▇▇ INDUSTRIES, INC.
10% SUBORDINATED PROMISSORY NOTE
$7,500,000.00 Charleston, South Carolina
January __, 1996
▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation (the "Company"), the
principal office of which is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, Ashley
Corporate Center, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, for value received hereby
promises to pay to AVONDALE ▇▇▇▇▇, INC., or its registered assigns (the
"Holder"), the sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100
($7,500,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof on the terms and conditions set forth hereinafter.
Interest on the unpaid principal amount hereof shall be payable as herein set
forth. The entire principal amount hereof and any unpaid accrued interest
hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) January 31, 1999, or (ii) when declared due and payable by the Holder upon
the occurrence of an Event of Default (as defined below). Payment for all
amounts due hereunder shall be made by wire transfer of immediately available
funds to such account of the Holder as shall have been designated to the
Company. This Note is issued in connection with the transactions described in
Section 1.1 of that certain Note Purchase Agreement between the Company and the
Holders described therein, dated as of December 28, 1995 (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement. This Note is the
Avondale Note referred to in the Purchase Agreement. As set forth in the
Purchase Agreement, the Company anticipates effecting a Rights Offering to,
among other things, raise the funds necessary to repay this Note. Moreover, the
holder of this Note has agreed, subject to the prior receipt by the Company of
all requisite consents, including, if necessary, that of the New York Stock
Exchange (the "NYSE") and/or the Company's stockholders, to serve as a standby
purchaser of the Company in the Rights Offering. Notwithstanding anything to the
contrary set forth herein, the Holder of this Note may apply the then
outstanding amount of all principal and accrued and unpaid interest under this
Note to satisfy its obligations as a standby purchaser in the Rights Offering.
In the event that the Rights Offering is not consummated prior to May 31, 1996,
or upon the occurrence of any of the other events referred to in Section 4.1 of
the Purchase Agreement, then the Holder may, commencing at the Conversion Date
(as such term is defined in the Purchase Agreement), exchange this Note for the
Avondale Replacement Note (as such term is defined in the Purchase Agreement) on
the terms set forth in the Purchase Agreement (a "Note Exchange").
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:
1 Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.
2. Interest. The unpaid principal balance of the Note shall bear interest
compounded annually, from the date hereof until paid in like money, at a rate
(based on a 360-day year) equal to ten percent (10%) per annum, such interest to
be payable on June 30 and December 31 in each year. Any accrued but unpaid
interest shall be payable in full upon maturity or prior prepayment of this
Note. In the event that the principal amount of this Note is not paid in full
upon maturity, interest shall continue to accrue at the rate provided in the
previous sentence plus five percent (5%) on the balance of any unpaid principal
and unpaid interest until such balance is paid.
3. Events of Default. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of this Note may, in the sole discretion of the Holder, so long as such
condition exists, (a) declare the entire principal and unpaid accrued interest
hereon immediately due and payable, and (b) effect a Note Exchange, by notice in
writing to the Company:
(i) (a) Default in the payment of the principal when due under this Note,
the Initial Gintel Note or the Gintel Subordinated Note, and (b) default in the
payment of the unpaid accrued interest under this Note, the Initial Gintel Note
or the Gintel Subordinated Note, when due and payable if such default in the
payment of accrued interest is not cured by the Company within ten (10) days
after the Holder or ▇▇▇▇▇▇ ▇▇▇▇▇▇, as the case may be, has given the Company
written notice of such default; or
(ii) The institution by the Company or any material Subsidiary of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by
it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the Company
or any material Subsidiary, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the taking of
corporate action by the Company or any material Subsidiary in furtherance of any
such action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company or any material Subsidiary (and service of process in
connection therewith on the Company or any material Subsidiary) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or any material Subsidiary or all
orders or proceedings thereunder affecting the operations or the business of the
Company or any material Subsidiary stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days after
the appointment without the consent or acquiescence of the Company or any
material Subsidiary of any trustee, receiver or liquidator of the Company or any
material Subsidiary or of all or any substantial part of the properties of the
Company or any material Subsidiary, such appointment shall not have been
vacated; or
(iv) Any event of default or default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, even if such Senior Indebtedness is not, in
fact, accelerated by the holder; or
(v) Any failure by the Company to comply with, perform or observe any term,
covenant or agreement contained in the Purchase Agreement, this Note, the
Initial Gintel Note, the Gintel Subordinated Note, the Registration Rights
Agreement, the Standby Agreement or any other agreement, instrument or documents
entered into in connection therewith, which failure continues for a period of 30
days after written notice thereof by the Holder to the Company; or
(vi) Any change of control of the Company which, for purposes of this
Section 3(vi), shall be deemed to have occurred if (i) any person, other than
any person who, as of the date of the Purchase Agreement, beneficially owns 5%
or more of the outstanding capital stock of the Company, whether alone or as
part of a group (including any individual, firm, partnership or other entity),
together with all Affiliates and Associates (as defined under Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended) of such person, but excluding (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company or (C) the Company or any subsidiary of the Company is
or becomes the Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or
(vii) the Company or any material Subsidiary shall be subject to a final
judgment by a court of competent jurisdiction (which is no longer being
appealed) in an amount in excess of $1,000,000.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
4.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company concurrently being incurred by the Company with
SunTrust Bank, Atlanta, First Union Bank of South Carolina and NatWest Bank,
N.A., (ii) all indebtedness of the Company to banks, insurance companies or
other financial institutions regularly engaged in the business of lending money
(collectively, "Bank Debt"), which is outstanding on the date hereof and which
is for money borrowed by the Company (whether or not secured), (iii) up to $6
million of additional Bank Debt provided that such additional Bank Debt is
advanced to the Company prior to such time as the conversion privileges set
forth in the Avondale Replacement Note and the Gintel Replacement Note have
either been exercised in their entirety, canceled or terminated and (iv) any
refinancings of the indebtedness described in clauses (i) through (iii) above.
4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an Event of
Default that has been declared in writing with respect to a payment obligation
under any Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior Indebtedness
to accelerate the maturity thereof, then, unless and until such Event of Default
shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of or interest on this Note, unless within three (3) months
after the happening of such Event of Default, the maturity of such Senior
Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment.
5.1 Optional Prepayment. The Company may not prepay this Note, in whole or
in part, without the prior consent of the Holder hereof and the holders of the
Initial Gintel Note and the Gintel Subordinated Note. If the Company shall
prepay this Note pursuant to this Section 5, it shall cause notice thereof,
specifying the date and amount of prepayment, to be given by registered or
certified mail to the holders of the Initial Gintel Note and the Gintel
Subordinated Note at their last-known post office addresses of which the Company
shall have received written notice, at least 10 days prior to the date fixed for
such prepayment. Notice of prepayment having been given as aforesaid, this Note,
the Initial Gintel Note and the Gintel Subordinated Note, or the portions
thereof so to be prepaid shall, on the date designated in such notice, become
due and payable in the principal amounts thereof to be prepaid. In the event
that this Note, the Initial Gintel Note and/or the Gintel Subordinated Note are
outstanding and a partial prepayment is made, each of this Note, the Initial
Gintel Note and the Gintel Subordinated Note shall be prepaid pro rata to the
then outstanding principal amounts thereof.
5.2 Mandatory Prepayment. The Company shall immediately use any proceeds
received by it from any stockholder of the Company upon the exercise by such
stockholder of rights issued in the Rights Offering, to repay, pro rata with the
Initial Gintel Note, based upon the then outstanding principal amount in
relation to the then outstanding principal amount of the Initial Gintel Note,
the outstanding principal amount and any unpaid and accrued interest hereunder
and the Holder hereof shall accept such prepayment.
6. Notifications by the Company. In case at any time:
(1) there shall be any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with, or
sale of all or substantially all of the assets of the Company to, another
corporation; or
(2) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of such cases, the Company shall give written
notice to the registered Holder of this Note of the date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such written
notice shall be given not less than 30 days and not more than 60 days prior to
the action in question and not less than 30 days and not more than 80 days prior
to the record date or the date on which the Company's transfer books are closed
in respect thereto and such notice may state that the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or to a favorable vote of stockholders, if either is required.
7. Assignment. The rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and copies of all notices to Avondale ▇▇▇▇▇, Inc. shall be given to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon the Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
10. Collection. If the Holder shall institute any action to enforce
collection of this Note, there shall become due and payable from the Company, in
addition to the unpaid principal amount and interest under this Note, all costs
and expenses of that action (including, but not limited to, reasonable
attorneys' fees) and the Holder shall be entitled to judgment for all such
additional amounts.
11. Governing Law. This Note is executed and delivered in, and shall be
construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
12. Headings; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this ____
day of January, 1996.
▇▇▇▇▇▇ INDUSTRIES, INC.
By________________________________
--------------------------------
Schedule E
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of January__, 1996, by and among ▇▇▇▇▇▇ INDUSTRIES,
INC., a Delaware corporation (the "Company"), and each of the persons listed on
Schedule I annexed hereto (collectively, the "Holders" and individually, the
"Holder").
W I T N E S S E T H:
WHEREAS, pursuant to a Note Purchase Agreement dated as of December 28,
1995 (the "Purchase Agreement"), by and among the Company and the Holders, the
Company is selling certain subordinated promissory notes of the Company (the
"Notes") in the aggregate principal amount of $15,000,000, one of which Notes is
in the principal amount of $7,500,000 and is exchangeable as herein provided
(the "Avondale Note") and another of which Notes is in the principal amount of
$3,750,000 and may be exchangeable as herein provided (the "Initial Gintel
Note");
WHEREAS, the Company intends to make a common stock rights offering (the
"Rights Offering") to the holders of shares of the Company's common stock, $.25
par value per share (the "Common Stock"), and the Holders are willing to act as
standby purchasers with respect to the Rights Offering pursuant to a standby
agreement among the Company and the Holders (the "Standby Agreement");
WHEREAS, as set forth in the Purchase Agreement, if, (a) by May 31, 1996,
the Rights Offering is not consummated, or (b) an "Event of Default occurs (as
defined in the Avondale Note or the Initial Gintel Note) or, if prior to May 31,
1996, (c) the stockholders of the Company vote to not approve the Rights
Offering and the transactions contemplated thereby and in the Purchase
Agreement, (d) the Company publicly announces that it will not proceed with the
Rights Offering or (e) any other event takes place which effectively prohibits
the Company from lawfully consummating the Rights Offering by May 31, 1996 (the
date of occurrence of any of the events described in clauses (a) through (e)
above being referred to as the "Conversion Date"), then the Holders shall have
the right (subject, in the case of ▇▇▇▇▇▇ ▇▇▇▇▇▇, to the Company's receipt of
any requisite consents) to exchange the Avondale Note and the Initial Gintel
Note for certain convertible 10% subordinated notes of the Company in like
principal amounts (the "Replacement Notes"), such Replacement Notes to be
convertible into shares of Common Stock of the Company at the rate of $7.00 per
share;
WHEREAS, in connection with the sale by the Company of the Notes, the
Company is agreeing, subject to its prior receipt of all requisite approvals and
consents, including, without limitation, those of the New York Stock Exchange
and/or the Company's stockholders, to issue and sell to one of the Holders,
five-year warrants (the "Warrants") to purchase up to 125,000 shares of the
Company's Common Stock at $7.00 per share; and
WHEREAS, the Company and the Holders agree that the Holders shall have the
registration rights set forth herein with respect to any shares of Common Stock
acquired by the Holders pursuant to the Standby Agreement, upon the conversion
of the Replacement Notes and/or upon the exercise of the Warrants or any shares
issued or issuable in respect of such Common Stock upon any stock dividend,
recapitalization or similar event (collectively, the "Registrable Shares").
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the parties hereby agree as follows:
1. Restrictive Legend. Each certificate representing the Registrable Shares
shall (unless otherwise permitted or unless the securities evidenced by such
certificate shall have been registered under the Securities Act of 1933, as
amended (the "Securities Act")) be stamped or otherwise imprinted with a legend
in the following form (in addition to any legend required under applicable state
securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
1.0.1 In addition, the Company may place, or instruct its transfer agent
and registrar to place, stop transfer orders against certificates which have the
aforementioned restrictive legend thereon. For purposes of this Agreement,
"Restricted Securities" shall mean securities of the Company which are required
to bear the aforementioned legend thereon.
1.1 Upon request of a Holder holding Registrable Shares which are
Restricted Securities, the Company shall remove the foregoing legend from the
certificate or issue to such Holder a new certificate therefor free of any
transfer legend and without any stop transfer against such Registrable Shares,
if, with such request, the Company shall have received either an opinion of
counsel or a "no-action" letter referred to in Section 2 hereof to the effect
that any transfer by such Holder of the Registrable Shares evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws or the Shares have been sold pursuant to an effective registration
statement under the Securities Act. The Company shall promptly reimburse the
transferring holder for all reasonable legal fees and expenses incurred by such
Holder in obtaining the legal opinion or "no action" letter referenced in this
Section 1(b).
2. Notice of Proposed Transfers. Prior to any proposed transfer of any
Restricted Securities (other than under circumstances described in Sections 3
and 4 hereof), the Holder thereof shall give written notice (the "Notice") to
the Company of such Holder's intention to effect such transfer. Each Notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied (except in transactions in
compliance with Rule 144) by either (i) a written opinion of legal counsel, who
shall be reasonably satisfactory to the Company, addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, or (ii) a "no action" letter from
the staff of the Securities and Exchange Commission (the "Commission") to the
effect that the distribution of such Securities without registration will not
result in a recommendation by the staff of the Commission that action be taken
with respect thereto, whereupon the Holder of such Restricted Securities shall
be entitled to transfer such Restricted Securities in accordance with the terms
of the Notice. The Company shall promptly reimburse the transferring Holder for
all reasonable legal fees and expenses incurred by such Holder in obtaining the
legal opinion or "no action" letter referenced in this Section 2(a).
2.1 Prior to any proposed transfer requested in the Notice and as a
condition thereto, each Holder will, if requested by the Company, and if
required because any of the Restricted Securities are not to be sold pursuant to
an effective registration statement under the Securities Act or a "no action"
letter or an opinion of counsel described in the foregoing subsection, deliver
to the Company (i) an investment covenant signed by the proposed transferee,
(ii) an agreement by such transferee to the impression of the restrictive legend
set forth in Section 1(a) on the certificates representing the Registrable
Shares to be transferred to such transferee, (iii) an agreement by such
transferee that the Company may place a "stop transfer order" with its transfer
agent and registrar, if any, with respect to the Shares proposed to be
transferred, (iv) an agreement by the transferee to assume the transferor's
obligations under this Agreement, and (v) an agreement by the transferee to
indemnify the Company to the same extent as set forth in Subsection (c) below.
Any transferee complying with this Subsection (b) shall also be deemed a
"Holder" for purposes of the registration rights under Sections 3 and 4 herein.
2.2 Each Holder agrees to indemnify the Company against any and all losses,
claims, damages, expenses or liabilities to which the Company may become subject
under any federal or state securities law, at common law, or otherwise, insofar
as such losses, claims, damages, expenses or liabilities arise out of or are
based upon (i) any transfer by such Holder of such Registrable Shares in
violation of the Securities Act, or the rules and regulations promulgated
thereunder, (ii) any transfer by such Holder of Shares in violation of the
provisions of this Section 2 or (iii) any untrue statement or omission to state
any material fact in connection with such Holder's investment representations or
with respect to the facts and representations supplied to counsel to the Company
upon which its opinion as to a proposed transfer by such Holder was given.
3. Demand Registration. At any time after receipt by any Holder of
Registrable Shares that the Company receives a written request executed by one
or more of the Holders (the "Initiating Holder") requesting registration of a
number of shares of Common Stock at least equal to (i) thirty percent (30%) or
more of the Registrable Shares then held by the Holders or (ii) the entire
remaining number of Registrable Shares owned by the Initiating Holder, the
Company will give notice of such request to each other Holder (the "Other
Holders") and give them the right to participate therein in accordance with this
Section 3.
3.1 As soon as practicable after receipt of the request given pursuant to
Subsection (a) above, the Company shall prepare and file a registration
statement (the "Registration Statement") under the Securities Act covering the
Registrable Shares requested to be sold under a Registration Statement (the
"Registered Shares") and shall otherwise comply with its obligations under
Section 5.
3.2 The Company's obligations under this Section 3 shall be limited to six
(6) effective Registration Statements under the Securities Act, three of which
may be initiated by each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Avondale ▇▇▇▇▇, Inc. or their
respective transferees in accordance with Section 8(b) hereof.
3.3 If a registration pursuant to this Section 3 is for a registered public
offering involving an underwriting, the Company shall so advise the Holders. In
such event, the right of any Holder to registration shall be conditioned upon
such Holder's participation in the underwriting arrangements required by this
Section 3(d), and the inclusion of such Holder's Registrable Shares in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with the Initiating Holder and Other Holders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company, but subject to the reasonable
approval of the Initiating Holder. Notwithstanding any other provision of this
Section 3, if the managing underwriter advises the Company in writing that
market factors require a limitation of the number of shares to be underwritten,
then the Company shall so advise the Initiating Holder and the Other Holders,
and the number of shares that may be included in the registration and
underwriting shall be allocated, first, to the Initiating Holder, and second,
among the Other Holders in proportion to the number of shares proposed to be
included in such registration by such Other Holders. No Registrable Shares
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. To facilitate the allocation
of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any holder to the
nearest one hundred (100) shares. If any such limitation results in the
Initiating Holder being able to sell less than 75% of the Registrable Shares
requested to be included by the Initiating Holder in such offering, the offering
shall not be counted as a demand registration by the Initiating Holder for the
purposes of Section 3(c).
If any Holder disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holder. The Registrable Securities and/or other
securities withdrawn from such underwriting shall also be withdrawn from such
registration.
4. Piggy Back Registration Rights. At any time after the receipt by the
Holders of any Registrable Shares, the Company will send written notice to the
Holders then owning Restricted Securities as defined in Section 1(a)(ii), at
least twenty (20) days prior to the filing of each and every Registration
Statement filed by the Company, whether or not pursuant to this Agreement (other
than a Registration Statement covering exclusively securities under an employee
option or stock purchase plan, a merger, acquisition or similar transaction) and
give to such Holders the right to have included therein any Registrable Shares
then held by the Holders. Such notice must specify the proposed offering price
and the plan of distribution. The Company must receive written notice from such
Holders within fifteen days after the date of the Company's written notice,
indicating the full name and address of each Holder desiring to have Registrable
Shares included for sale in such Registration Statement and the number of
Registrable Shares requested to be covered.
4.1 If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
4(a). In such event the right of any Holder to registration pursuant to Section
4 shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of Registrable Securities in the underwriting to the extent
provided in this Section 4(b).
All Holders proposing to distribute their securities through such
underwriting shall, together with the Company, enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company. The Company shall use its reasonable best efforts
to cause the managing underwriter of such proposed underwritten offering to
permit the Registrable Shares proposed to be included in such registration to be
included in the registration statement for such offering on the same terms and
conditions as any similar securities of the Company included therein.
Notwithstanding any other provision of this Section 4, the Company shall be
entitled to include in the registration all of the shares which the Company
desires to sell for its own account, and if the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Shares to be
included in such registration. The Company shall so advise all Holders
requesting to participate in such registration, and the number of shares that
may be included in the registration and underwriting by all Holders shall be
allocated among them, as nearly as practicable, first, to Avondale ▇▇▇▇▇, Inc.
and, second, to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or his or its respective transferees. To
facilitate the allocation of shares in accordance with the above provisions, the
Company may round the number of shares allocated to any Holder to the nearest
one hundred (100) shares.
If any Holder disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting also shall be withdrawn from such registration, and shall not be
transferred prior to one hundred eighty (180) days after the effective date of
the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
5. Miscellaneous Registration Provisions.
5.1 In connection with any Registration Statement filed pursuant to
Sections 3 or 4 hereof:
5.1.1 The Company's obligation under this Agreement to include Registrable
Shares in a Registration Statement shall mean shares of Common Stock or any
security received by a Holder in exchange or upon reclassification of the
present Common Stock;
5.1.2 the Holders of Registered Shares (herein "Registering Holders") shall
furnish to the Company in writing such appropriate information (relating to the
intention of such Holders as to proposed methods of sale or other disposition of
the Registered Shares) and the identity of and compensation to be paid to any
proposed underwriters to be employed in connection therewith as the Company, any
underwriter, or the Commission or any other regulatory authority may request;
5.1.3 the Registering Holders and the Company shall enter into the usual
and customary form of underwriting agreement agreed to by the Company and any
underwriter with respect to any such offering, if required, and such
underwriting agreement shall contain the customary reciprocal rights of
indemnity and contribution between the Company, the underwriters, and the
selling shareholder, including the Registering Holders, to the extent set forth
in Subsections (g) and (h) herein;
5.1.4 the Registering Holders shall agree that they shall execute, deliver
and/or file with or supply to the Company, any underwriters, the Commission
and/or any state or other regulatory authority such information, documents,
representations, undertakings and/or agreements necessary to carry out the
provisions of the registration covenants contained in this Agreement and/or to
effect the registration or qualification of their Registrable Shares under the
Securities Act and/or any of the laws and regulations of any state or
governmental instrumentality;
5.1.5 the Registering Holders shall furnish the Company with such
questionnaires and other documents regarding their identity and background as
the Company may reasonably request; and
5.1.6 the Company's obligation to include the Registering Holders'
Registrable Shares in a Registration Statement shall be subject to the written
agreement of the Holders to offer the Registrable Shares in the same manner and
on the same terms and conditions as the other securities of the same class are
being offered pursuant to the Registration Statement, if such shares are being
underwritten.
5.2 if and whenever the Company is required to effect the registration of
any Registrable Shares pursuant to Section 3 or 4, the Company will use its best
efforts to effect such registration to permit the sale of such Registrable
Shares in accordance with the intended method or methods of disposition thereof,
and pursuant thereto it will, as promptly as is practicable:
5.2.1 before filing a Registration Statement or prospectus or any
amendments or supplements thereto, furnish to the counsel of the Holders of the
Registrable Shares covered by such Registration Statement copies of all
documents proposed to be filed, which documents will be made available on a
timely basis, for review by such counsel to the Holders;
5.2.2 prepare and file with the Commission, as soon as practicable, and use
its best efforts to cause to become effective, a Registration Statement to be
offered on such form under the Securities Act as the Initiating Holder and the
Company or, if not filed pursuant to Section 3 hereof, the Company, determines
and for which the Company then qualifies;
5.2.3 prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Shares covered
by such Registration Statement until the earlier of such time as all of such
Registrable Shares have been disposed of in accordance with the intended methods
of disposition set forth in such Registration Statement or the expiration of one
hundred eighty (180) days after such Registration Statement becomes effective;
provided that such one hundred eighty (180) day period shall be extended in the
case of a registration pursuant to Section 3 hereof for such number of days that
equals the number of days elapsing from (A) the date the written notice
contemplated by Section 5(b)(vii) hereof is given by the Company to (B) the date
on which the Company delivers to the Selling Holders the supplement or amendment
contemplated by Section 5(b)(vii) hereof;
5.2.4 furnish to the Holders and to any underwriter of Registrable Shares
such number of conformed copies of such Registration Statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such Registration Statement
(including each preliminary prospectus and any summary prospectus) and any
amendment or supplement thereto, in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such Registration
Statement or prospectus, and such other documents, as the Holders or such
underwriter may reasonably request, and, if requested, a copy of any and all
transmittal letters or other correspondence to, or received from, the Commission
or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering;
5.2.5 make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of such Registration Statement at the earliest
possible moment;
5.2.6 if required by a Holder, (A) furnish to each Holder and to any
underwriter an opinion of counsel for the Company addressed to each Holder and
underwriter and dated the date of the closing under the underwriting agreement
(if any) (or if such offering is not underwritten, dated the effective date of
the Registration Statement), (B) use its best efforts to furnish to each Holder
a "cold comfort" or "special procedures" letter addressed to each Holder and
signed by the independent public accountants who have audited the Company's
financial statements included in such Registration Statement and (C) make such
representations and warranties to the Holders and, in connection with any
underwritten offering, to the underwriters, in each such case covering
substantially the same matters with respect to such Registration Statement (and
the prospectus included therein) as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters and in
underwriting agreements in underwritten public offerings of securities and such
other matters as the Holders may reasonably request, and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, provided, however, that the Company shall not be obligated
to cause the legal counsel and accountants' letters contemplated by this
Subsection (b)(vi) to be delivered to the Holders if the Company would be
required to incur unreasonable expenses to cause such letters to be delivered.
5.2.7 immediately notify the Holders in writing (A) at anytime when a
prospectus relating to a registration hereunder is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (B)
of any request by the Commission or any other regulatory body or other body
having jurisdiction for any amendment of or supplement to any Registration
Statement or other document relating to such offering, and in either such case,
at the request of a Holder, prepare and furnish to such Holders a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall not 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, in light of the circumstances under which they are
made, not misleading;
5.2.8 use its best efforts to list all such Registrable Shares covered by
such Registration Statement on the principal securities exchange and
inter-dealer quotation system on which a class of common equity securities of
the Company is then listed, and to pay all fees and expenses in connection
therewith;
5.2.9 upon the transfer of shares by a Holder in connection with a
registration hereunder (other than to an "affiliate" of the Company as such term
is defined in Rule 144(a)), furnish unlegended certificates representing
ownership of the Registrable Shares in such denominations as shall be requested
by the Holders or the underwriters;
5.2.10 promptly notify the Holders and the managing underwriter, if any,
and if requested by any such Person, confirm such advice in writing,
(A) of the issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose,
(B) of the Company's becoming aware at any time that the representations
and warranties of the Company contemplated by Section 5(b)(vii)
(C) above have ceased to be true and correct, and (C) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Shares for sale in any jurisdiction or the initiation or
threat of any proceeding for such purpose;
5.2.11 if reasonably requested by the managing underwriter, if any, or a
majority in interest of the Registrable Shares being sold in connection with an
underwritten offering, immediately include in a prospectus supplement or
post-effective amendment to such Registration Statement such information as the
managing underwriter or such majority in interest of the Registrable Shares
being sold reasonably request to have included therein relating to the plan of
distribution with respect to such Registrable Shares, including, without
limitation, information with respect to the amount of Registrable Shares being
sold to such underwriters and any other terms of the underwritten (or
best-efforts underwritten) offering of the Registrable Shares to be sold in such
of offering; and make all required filings of such prospectus supplement or
post-effective amendment to such Registration Statement as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment to such Registration Statement;
5.2.12 prior to any public offering of Registrable Shares, register or
qualify or reasonably cooperate with the Holders, the managing underwriter, if
any, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any Holder or managing
underwriter reasonably requests and do any and all other facts or things
necessary to enable the disposition in such jurisdictions of the Registrable
Shares covered by such Registration Statement;
5.2.13 cooperate and assist in any filings required to be made with the
NASD and any performance of any due diligence investigation by any underwriter
(including any "qualified independent underwriter" as required to be retained in
accordance with the rules and regulations of the NASD); and
5.2.14 otherwise use its best efforts to comply with the Securities Act,
the Exchange Act, all applicable rules and regulations of the Commission and all
applicable state blue sky and other securities laws, rules and regulations.
5.3 The Company shall pay all out-of-pocket expenses and disbursements
incurred by the Company and the Holders in connection with the Registration
Statements filed by it pursuant to Sections 3 or 4, including, without
limitation, all legal and accounting fees, Commission filing fees, National
Association of Securities Dealers ("NASD") filing fees, printing costs,
registration or qualification fees and expenses to comply with Blue Sky or other
state securities laws, the fees of other experts, and any expenses or other
compensation paid to the underwriters; provided, however, that such registration
expenses shall not include underwriting commissions and discounts and transfer
taxes, if any.
5.4 The Company shall be obligated to keep any Registration Statement filed
by it under Sections 3 and 4 effective under the Securities Act for a period of
180 days after the actual effective date of such Registration Statement and to
prepare and file such supplements and amendments necessary to maintain an
effective Registration Statement for such period. As a condition to the
Company's obligation under this Subsection (d), the Registering Holders will
execute and deliver to the Company such written undertakings as the Company and
its counsel may reasonably require in order to assure full compliance with
relevant provisions of the Securities Act.
5.5 The Company shall use its best efforts to register or qualify the
Registered Shares under such securities or blue sky laws in such jurisdictions
within the United States as the Registering Holders may reasonably request;
provided, however, that the Company reserves the right, in its sole discretion,
not to register or qualify such Registered Shares in any jurisdiction where such
Registered Shares do not meet with the requirements of such jurisdiction after
having taken reasonable steps to meet such requirements or where the Company is
required to qualify as a foreign corporation to do business in such jurisdiction
and is not so qualified therein or is required to file any general consent to
service of process.
5.6 In the event all the Registered Shares have not been sold on or prior
to the expiration of the period specified in Subsection (d) above, the
Registering Holders hereby agree that the Company may deregister by
post-effective amendment any shares covered by the Registration Statement, but
not sold on or prior to such date. The Company agrees that it will notify the
Registering Holders of the filing and effective date of such post-effective
amendment.
5.7 The Registering Holders agree that upon notification by the Company
that the prospectus in respect to any public offering covered by the provisions
hereof is in need of revision, they shall immediately upon receipt of such
notification (i) cease to offer or sell any securities of the Company which must
be accompanied by such prospectus; (ii) return all such prospectuses in their
hands to the Company; and (iii) shall not offer or sell any securities of the
Company until they have been provided with a current prospectus and the Company
has given them notification permitting them to resume offers and sales.
5.8 As a condition to the filing of a Registration Statement pursuant to
this Agreement, the Company shall indemnify and hold harmless the Registering
Holders and the underwriter(s) and controlling person(s) of such underwriter(s)
who may purchase from or sell for the Registered Holders, any Registrable
Shares, from and against any and all losses, claims, damages, expenses or
liabilities caused by any failure of the Company to comply with the Securities
Act or any rule or regulation promulgated thereunder in connection with the
registration of the Registrable Securities or any untrue statement of a material
fact contained in the Registration Statement, any post-effective amendment to
such registration statements, or any prospectus included therein required to be
filed or furnished by reason of this Agreement 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 or liabilities are caused by any such untrue
statements or alleged untrue statements or omissions based upon information
furnished or required to be furnished in writing to the Company by the party
seeking indemnification expressly for use therein; which indemnification shall
include each person, if any, who controls any such underwriter within the
meaning of the Securities Act and each officer, director, employee and agent of
such underwriter; provided, however, that the Company shall not be obligated to
so indemnify the Registering Holders or any such underwriter or other person
referred to above unless the Registering Holders or underwriter or other person,
as the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any registration statement or any prospectus required to
be filed or furnished by reason of this Agreement or caused by any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement or
omission based upon information furnished in writing to the Company by the
Holder or underwriter expressly for use therein.
5.9 Each party entitled to indemnification under paragraph (h) above (the
"Indemnified Party") shall, promptly after receipt of notice of any claim or the
commencement of any action against such Indemnified Party in respect of which
indemnity may be sought, notify the party required to provide indemnification
(the "Indemnifying Party") in writing of the claim or the commencement thereof;
provided that the failure of the Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which it may
have to an Indemnified Party pursuant to the provisions of paragraph (h), unless
the Indemnifying Party was materially prejudiced by such failure, and in no
event shall such failure relieve the Indemnifying Party from any other liability
which it may have to such Indemnified Party. If any such claim or action shall
be brought against an Indemnified Party, it shall notify the Indemnifying Party
thereof and the Indemnifying Party shall be entitled to participate therein,
and, to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable (except to the extent the
proviso to this sentence is applicable, in which event it will be so liable) to
the Indemnified Party under paragraph (h) for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation: provided that each
Indemnified Party shall have the right to employ separate counsel to represent
it and assume its defense (in which case, counsel to the Indemnifying Party
shall not represent it) if (i) upon the advice of counsel, the representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party will not have the right to assume the defense of such claim or action on
behalf of such Indemnified Party), or (ii) in the event the Indemnifying Party
has not assumed the defense thereof within ten (10) days of receipt of notice of
such claim or commencement of action, in which case the fees and expenses of one
such separate counsel shall be paid by the Indemnifying Party. If any
Indemnified Party employs such separate counsel it will not enter into any
settlement agreement which is not approved by the Indemnifying Party, such
approval not to be unreasonably withheld. If the Indemnifying Party so assumes
the defense thereof (and by so assuming shall be solely responsible for
liabilities relating to such claim or action, and shall release the Indemnified
Party from such liabilities to the extent permitted by law, except to the extent
the Indemnified Party is not entitled to be indemnified pursuant to paragraph
(h), it may not agree to any settlement of any such claim or action as the
result of which any remedy or relief, other than monetary damages for which the
Indemnifying Party shall be responsible hereunder, shall be applied to or
against the Indemnified Party, without the prior written consent of the
Indemnified Party. No Indemnified Party will consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or action. In any action hereunder
as to which the Indemnifying Party has assumed the defense thereof with counsel
satisfactory to the Indemnified Party, the Indemnified Party shall continue to
be entitled to participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the Indemnifying Party shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof.
5.10 If for any reason the indemnification provided for above is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by the indemnified
party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.
6. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
6.1 Make and keep public information available at all times, as those terms
are understood and defined in Rule 144 under the Securities Act (as such Rule
may be amended from time to time) or any similar rule hereinafter adopted by the
Commission;
6.2 File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
6.3 Take such further action as any Holder may reasonably request, all to
the extent required from time to time, to enable such Holder to sell Registrable
Shares without registration under the Securities Act, including, without
limitation, issuing appropriate instructions to the Company's transfer agent and
registrar and exchanging legended certificates for certificates without legend
and processing in requisite time frames counsel opinions, if any.
7. No Other Registration Rights. The Company represents and warrants to the
Holders that except as set forth in this Agreement and the Purchase Agreement,
there are no other registration rights with respect to the Company's securities
currently outstanding or other rights currently outstanding which could require
the Company to register for sale pursuant to the Securities Act any securities
of the Company (collectively, "Registration Rights"). In addition, the Company
covenants and warrants to the Holders that at all times while the Holders have
the right to request the registration of Registrable Shares hereunder, the
Company will not, without the prior written consent of the Holders, grant to any
person Registration Rights, the effect of which could (a) limit, in any
registration statement subsequently filed by the Company, the number of
Registrable Shares that the Purchasers may include in such registration
statement or (b) otherwise adversely affect the priority of the Registration
Rights being granted to the Holders hereunder.
8. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and the successors and assigns of the Company and
the permitted transferees of the Holders.
8.1 Upon acquisition of any Registrable Shares, the Holders agree that the
Registrable Shares shall not be transferable except upon the conditions set
forth in this Agreement, which conditions are intended to insure compliance with
the provisions of the Securities Act. Each Holder in any transfer subject to
Section 2 herein shall cause any proposed transferee of Registrable Shares held
by that Holder to agree to take and hold those securities subject to the rights
and obligations and upon the conditions specified in this Agreement.
8.2 This Agreement contains the entire agreement among the parties hereto
with respect to the subject matter herein, and cannot be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom the enforcement of any modification, change, discharge or
termination is sought.
8.3 References to the Holders or some of them by use of masculine pronoun
is for convenience only and shall, where appropriate, be deemed to be reference
by feminine or neuter pronouns. 8.4 Any notice, request, instruction or other
document to be given hereunder shall be in writing and shall be delivered
personally or sent by registered or certified mail as follows: (i) If to the
Company: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, Ashley Corporate Center ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: President
With a copy to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(ii) If to the Holders, at the address specified next to their respective
names on Schedule I hereto or to such other address as any party hereto
hereinafter designates in writing to any other party hereto, and
in the case of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
and, in the case of Avondale ▇▇▇▇▇, Inc., to:
King & Spalding
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, III
Upon receiving notice from a Holder (or any permitted transferee of an
Holder) that Registrable Shares have been transferred and if the transferee is
entitled to any rights under this Agreement, the Company shall give notices to
such transferee as contemplated by this Agreement.
8.5 The captions herein are inserted for convenience only and shall not
affect the construction of this Agreement.
8.6 This Agreement is executed and delivered in, and shall be construed in
accordance with, and governed by, the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
8.7 This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: ______________________________
Name:
Title:
HOLDERS:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AVONDALE ▇▇▇▇▇, INC.
By: ______________________________
Name:
Title:
SCHEDULE I
Holders
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Avondale ▇▇▇▇▇, Inc.
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Schedule F
THIS WARRANT AND THE UNDERLYING COMMON STOCK HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
THEREOF.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON ____________, 2001, OR IF NOT A
BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT
FOLLOWING BUSINESS DAY.
WARRANT TO PURCHASE
125,000 Shares of Common Stock
WARRANT TO PURCHASE
COMMON STOCK
OF
▇▇▇▇▇▇ INDUSTRIES, INC.
TRANSFER RESTRICTED -- SEE SECTION 6.02
This certifies that, for good and valuable consideration, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
an individual with a principal place of business at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and his registered, permitted assigns
(collectively, the "Warrantholder" or "Holder"), is entitled to purchase from
▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation (the "Company"), subject to the
terms and conditions hereof, at any time before 5:00 P.M., New York time, on
________________, 2001 (or, if such day is not a business day, at or before 5:00
P.M., New York time on the next following business day), the number of fully
paid and non-assessable shares of Common Stock, par value $.25 per share, of the
Company (the "Common Stock") stated above at the exercise price of $7.00 per
share (the "Exercise Price"). The Exercise Price and the number of shares
purchasable hereunder are subject to adjustment as provided in Article II
hereof. This Warrant is being issued to the Holder in accordance with Section 2
of that certain Note Purchase Agreement dated as of December 28, 1995 among the
Holder, the Company and Avondale ▇▇▇▇▇, Inc. (the "Purchase Agreement").
Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
ARTICLE I
Duration and Exercise of Warrant
Section 1.01: Duration of Warrant. Subject to the terms contained herein,
this Warrant may be exercised at any time before 5:00 P.M., New York time, on
_______________, 2001 (the "Expiration Date"), (or, if such day is not a
business day, at or before 5:00 P.M., New York time, on the next following
business day). If this Warrant is not exercised at or before 5:00 P.M., New York
time, on the Expiration Date, it shall become void, and all rights hereunder
shall thereupon cease.
Section 1.02: Exercise of Warrant.
(a) The Warrantholder may exercise this Warrant, in whole or in part, upon
surrender of this Warrant with the Subscription Form hereon duly executed, to
the Company at its corporate office at 4130 Faber Place, Suite 200, Ashley
Corporate Center, Charleston, South Carolina, or to such office as duly
designated by the Company to the Warrantholder, together with the full Exercise
Price for each Warrant Share to be purchased by tendering in lawful money of the
United States, or by certified check or bank draft payable in United States
Dollars to the order of the Company.
(b) Upon receipt of this Warrant with the Subscription Form duly executed
and accompanied by payment of the aggregate Exercise Price for the Warrant
Shares for which this Warrant is then being exercised, the Company will cause to
be issued certificates for the total number of whole shares of Common Stock for
which this Warrant is being exercised (adjusted to reflect the effect of the
provisions contained in Article II hereof, if any, and as provided in Section
4.04 hereof) in such denominations as are required for delivery to the
Warrantholder, and the Company shall thereupon deliver such certificates to the
Warrantholder. If at the time this Warrant is exercised a registration statement
is not in effect to register under the Securities Act, the Warrant Shares
issuable upon exercise of this Warrant, the Company may require the
Warrantholder to make such representations, and may place such legends on
certificates representing the Warrant Shares, as may be reasonably required in
the opinion of counsel to the Company to permit the Warrant Shares to be issued
without such registration.
(c) In case the Warrantholder shall exercise this Warrant with respect to
less than all of the Warrant Shares that may be purchased under this Warrant,
the Company will execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
(d) The Company covenants and agrees that it will pay when due and payable
any and all stock transfer and similar taxes which may be payable in respect of
the issue of this Warrant or in respect of the issue of any Warrant Shares. The
Company shall not, however, be required to pay any tax imposed on income or
gross receipts or any tax which may be payable in respect of any transfer
involved in the issuance or delivery of this Warrant or at the time of
surrender.
ARTICLE II
Adjustment of Warrant Shares Stock
Purchasable and of Exercise Price
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article II, provided, however, that the adjustments
contemplated by Sections 2.01(b), (c) and (g) below shall no longer be
applicable or have any force or effect following such time as the conversion
privileges set forth in the Avondale Replacement Note and the Gintel Replacement
Note have either been exercised in their entirety, canceled or terminated.
Section 2.01: Mechanical Adjustments.
(a) Anti-Dilution Provisions; Adjustment of Purchase Price. The Exercise
Price shall be subject to adjustment from time to time as hereinafter provided.
Upon each adjustment of the Exercise Price, the number of Warrant Shares shall
thereafter be the amount obtained by multiplying the Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
(b) Purchase Price Adjustment Formulas. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common Stock (other
than shares of Common Stock issued as permitted by Section 2.01(g) herein) for a
consideration per share less than the Exercise Price in effect immediately prior
to such issue or sale, then forthwith the Exercise Price shall be reduced to a
price (calculated to the nearest $0.0001) determined by dividing (1) an amount
equal to the sum of (aa) the number of shares of Common Stock acquired or
acquirable by all purchasers immediately prior to such issue or sale multiplied
by the then existing Exercise Price, and (bb) the net consideration, if any,
received and deemed received by the Company upon such issue or sale, by (2) an
amount equal to the sum of (xx) the total number of shares of Common Stock
acquired or acquirable by the Holder under this Warrant and (yy) the total
number of shares of Common Stock issued in connection with such issue or sale.
No adjustment of the Exercise Price, however, shall be made in an amount less
than $0.0001 per share, but any such lesser adjustment shall be carried forward
and shall be made at the time and together with the next subsequent adjustment
which together with any adjustments so carried forward shall amount to $0.0001
per share or more.
(c) Constructive Issuances of Stock; Convertible Securities; Rights and
Options; Stock Dividends. For the purposes of Section 2.01(b), the following
provisions (i) to (vi), inclusive, shall also be applicable:
(i) In case at any time the Company shall in any manner grant any rights to
subscribe for or to purchase, or options for the purchase of, Common Stock or
any stock or securities convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein called "Convertible
Securities"), whether or not such rights or options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible Securities
(determined by dividing a) the total amount, if any, received or receivable by
the Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options, plus, in the case of any
such rights or options which relate to such Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange thereof,
by b) the total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon the conversion or exchange of all
such Convertible Securities issuable upon the exercise of such rights or
options) shall be less than the Exercise Price in effect immediately prior to
the time of the granting of such rights or options, then the total maximum
number of shares of Common Stock issuable upon the exercise of such rights or
options or upon the conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such rights or options
shall (as of the date of granting of such rights or options) be deemed to be
outstanding and to have been issued for the price per share determined as set
forth hereinabove. Except as provided in clause (iii) below, no further
adjustments of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of such rights or
options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(ii) In case at any time the Company shall in any manner issue or sell any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by dividing a)
the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by b) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then the total maximum number of shares of Common stock
issuable upon conversion or exchange of all such Convertible Securities shall
(as of the date of the issue or sale of such Convertible Securities) be deemed
to be outstanding and to have been issued for such price per share; provided,
that, except as otherwise specified in clause (iii) below, (x) no further
adjustments of the Exercise Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities, and (y)
if any such issue or sale of such Convertible Securities is made upon exercise
of any rights to subscribe for or to purchase or any option to purchase any such
Convertible Securities for which adjustments of the Exercise Price have been or
are to be made pursuant to other provisions of this Section 2.01(c), no further
adjustment of the Exercise Price shall be made by reason of such issue or sale.
(iii) If the purchase price provided for in any right or option referred to
in clause (i) of this Section 2.01(c), or the rate at which any Convertible
Securities referred to in clauses (i) and (ii) of this Section 2.01(c) are
convertible into or exchangeable for Common Stock, shall change or a different
purchase price or rate shall become effective from time to time (other than
under or by reason designed to protect against dilution) then, upon becoming
effective, the Exercise Price then in effect hereunder shall forthwith be
increased (but in no event to an amount greater than the Exercise Price that
would be in effect without giving effect to the issuance of such Convertible
Securities, rights or options) or decreased to such Exercise Price as would have
obtained had the adjustments made upon the issuance of such rights or options or
Convertible Securities been made upon the basis of (and the total consideration
received therefor) (a) the issuance of the number of shares of Common Stock
theretofore actually delivered upon the exercise of such options or rights or
upon the conversion or exchange of such Convertible Securities, (b) the issuance
of all Common Stock and all other rights, options and Convertible Securities
issued after the issuance of such rights, options or Convertible Securities, and
(c) the original issuance at the time of such change of any such options, rights
and Convertible Securities then still outstanding. On the expiration of any such
option or right or the termination of any such right to convert or exchange such
Convertible Securities, the Exercise Price then in effect hereunder shall
forthwith be increased (but in no event to an amount greater than the Exercise
Price that would be in effect without giving effect to the issuance of such
Convertible Securities, rights or options) or decreased to such Exercise Price
as would have obtained (x) had the adjustments made upon the issuance of such
rights or options or Convertible Securities been made upon the basis of the
issuance of only the number of shares of Common Stock theretofore actually
delivered (and the total consideration received therefor) upon the exercise of
such rights or options or upon the conversion or exchange of such Convertible
Securities and (y) had adjustments been made on the basis of the Exercise Price
as adjusted under the immediately preceding clause (x) for all issues or sales
of Common Stock or rights, options or Convertible Securities made after the
issuance of such rights or options or Convertible Securities. If the purchase
price provided for in any right or option referred to in clause (i) of this
Section 2.01(c), or the rate at which any Convertible Securities referred to in
clauses (i) and (ii) of this Section 2.01(c) are convertible into or
exchangeable for Common Stock, shall decrease at any time to an amount below the
Exercise Price then in effect under or by reason of provisions with respect
thereto designed to protect against dilution, then in the case of the delivery
of shares of Common Stock upon the exercise of any such right or option or upon
conversion or exchange of any such Convertible Securities, the Exercise Price
then in effect hereunder shall forthwith be decreased to such Exercise Price as
would have obtained had the adjustments made upon issuance of such right or
option or Convertible Securities been made upon the basis of the issuance of
(and the total consideration received for) the shares of Common Stock delivered
as aforesaid.
(iv) In case at any time the Company shall declare a dividend or make any
other distribution upon any stock of the Company payable in Common Stock or
Convertible Securities, any Common Stock or Convertible Securities, as the case
may be, issuable in payment of such dividend or distribution shall be deemed to
have been issued or sold without consideration.
(v) In case at any time any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such Common Stock or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount payable to the Company
therefor, without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by the
Company in connection therewith. In case any shares of Common Stock or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash payable to the Company
shall be deemed to be the fair value of such consideration as reasonably
determined by the Board of Directors of the Company, without deduction therefrom
of any expenses incurred or any underwriting commissions or concessions or
discounts paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued in
connection with any merger of another corporation into the Company, the amount
of consideration therefor shall be deemed to be the fair value as reasonably
determined by the Board of Directors of the Company of such portion of the
assets of such merged corporation as such Board shall determine to be
attributable to such Common Stock, Convertible Securities, rights or options, as
the case may be.
(vi) In case at any time the Company shall take a record of the holders of
its Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock or in Convertible Securities, or (b)
to subscribe for or purchase Common Stock or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
(d) Effect of Certain Dividends. In case at any time the Company shall
declare a dividend upon the Common Stock (other than a dividend payable in
Common Stock) payable otherwise than out of net earnings after taxes for the
prior fiscal year, the Exercise Price in effect immediately prior to the
declaration of such dividend shall be reduced by an amount equal, in the case of
a dividend in cash, to the amount thereof payable per share of Common Stock or,
in the case of any other dividend, to the fair value thereof per share of Common
Stock as determined by the Board of Directors of the Company. Such reductions
shall take effect as of the date on which a record is taken for the purpose of
such dividend, or, if a record is not taken, the date as of which the holders of
record of Common Stock entitled to such dividend are to be determined. As used
in this Section 2.01(d), the term "dividend" shall mean any distribution to the
holders of Common Stock as such.
(e) Stock Splits and Reverse Splits. In case at any time the Company shall
subdivide its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Shares immediately prior to
such subdivision shall be proportionately increased, and conversely, in case at
any time the Company shall combine its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
immediately prior to such combination shall be proportionately reduced. Except
as provided in this Section 2, no adjustment in the Exercise Price and no change
in the number of Warrant Shares so purchasable shall be made pursuant to this
Section 2 as a result of or by reason of any such subdivision or combination.
(f) Effect of Reorganization and Asset Sales. If any capital reorganization
or reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another corporation, or the sale of all or
substantially all of its assets to another corporation, shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then as a
condition of such reorganization, reclassification, consolidation, merger or
sale, lawful and adequate provision shall be made whereby the Holder of this
Warrant shall thereafter have the right to receive, upon the terms and
conditions herein contained, upon exercise of this Warrant in accordance with
Section 1.02 above, in lieu of the shares of the Common Stock of the Company
immediately theretofore receivable upon the exercise of this Warrant, such
shares of stock, securities or assets as may be issued or payable with respect
to or in exchange for a number of outstanding shares of such Common Stock equal
to the number of shares of such stock immediately theretofore so receivable had
such reorganization, reclassification, consolidation, merger or sale not taken
place, and in any such case appropriate provision shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Exercise Price
and of the number of shares issuable upon exercise) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise of this Warrant. The Company
shall not effect any such consolidation, merger or sale unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and mailed or
delivered to each Holder, the obligation to deliver to such holder such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to receive, and containing the express assumption of
such successor corporation of the due and punctual performance and observance of
each provision of this Warrant to be performed and observed by the Company and
of all liabilities and obligations of the Company hereunder.
(g) Excluded Shares. Notwithstanding the foregoing, no adjustments to the
Exercise Price shall be made or required with respect to (a) the issuance of
Common Stock as required upon the exercise of rights granted in the Rights
Offering or pursuant to any conversion of the Avondale Replacement Note or the
Gintel Replacement Note (each such capitalized term as defined in the Note
Purchase Agreement) and stock reserved for such purpose, (b) the issuance of
Common Stock pursuant to existing Stock Option Plans of the Company covering not
more than 323,400 shares of the Company's existing Common Stock, and (c) the
sale of not more than 250,000 shares of the Company's existing Common Stock (net
of repurchases) to employees, officers and consultants of the Company pursuant
to option or stock purchase plans hereafter adopted (in addition to shares
issued as contemplated in (b) above).
(h) Accountants' Certificate. Upon each adjustment of the Exercise Price
and upon each change in the number of shares of Common Stock issuable upon the
exercise of this Warrant and in the event of any change in the rights of the
Holder of this Warrant by reason of other events herein set forth, then and in
each such case, the Company will promptly obtain a certificate of a firm of
independent certified public accountants of recognized standing selected by the
Company's Board of Directors (who may be the regular auditors of the Company),
stating the adjusted Exercise Price and the new number of shares so issuable, or
specifying the other shares of stock, securities or assets and the amount
thereof receivable as a result of such change in rights, and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. The Company will promptly mail a copy of such accountants'
certificate to the registered Holder of this Warrant.
(i) Reservation of Stock Issuable Upon Exercise. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the exercise of the Warrant
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of the Warrant; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of the Warrant, in addition to such other remedies as shall
be available to the Holder of this Warrant, the Company will use its best
efforts to take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes; provided, if such
corporate action is not taken by the date 45 days preceding the date on which
this Warrant is exercisable, then the right to purchase shares pursuant to this
section shall be extended to a date 45 days after the effective date under the
Delaware General Corporation Law of any corporate act that makes available
sufficient authorized and unissued shares for purchase pursuant hereto.
Section 2.02: Notice of Adjustment. Whenever the number of Warrant Shares
or the Exercise Price is adjusted as herein provided, the Company shall prepare
and deliver to the Warrantholder a certificate signed by its Chairman of the
Board, President, any Vice President, Treasurer or Secretary, setting forth the
adjusted number of Warrant Shares purchasable upon the exercise of this Warrant
and the Exercise Price of such Shares after such adjustment, setting forth a
brief statement of the facts requiring such adjustment and setting forth the
computation by which adjustment was made.
Section 2.03: No Adjustment for Dividends. Except as provided in Section
2.01 of this Agreement, no adjustment in respect of any cash dividends shall be
made during the term of this Warrant or upon the exercise of this Warrant.
Section 2.04: Form of Warrant After Adjustments. The form of this Warrant
need not be changed because of any adjustments in the Exercise Price or the
number or kind of the Warrant Shares, and any Warrant theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
Section 2.05: Preservation of Purchase Rights in Certain Transactions.
(a) In case of any consolidation of the Company with or a merger of the
Company into another corporation or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, upon any such consolidation, merger, sale or conveyance and the
surviving entity is a publicly traded company, the Company agrees that a
condition of such transaction shall be that the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrantholder
an agreement granting the Warrantholder the right until the Expiration Date,
upon payment of the Exercise Price in effect immediately prior to such action,
to receive upon exercise of this Warrant the kind and amount of shares and other
securities and property which he would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had this Warrant been exercised immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article II. The provisions
of this Section 2.05 shall similarly apply to successive consolidations,
mergers, sales or conveyances.
(b) In case of any consolidation of the Company with or a merger of the
Company into another corporation or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, upon any such consolidation, merger, sale or conveyance and the
surviving entity is a non-publicly traded company, the Company agrees that a
condition of such transaction will be that the Company shall mail to the
Warrantholder at the earliest applicable time (and, in any event, not less than
20 days before any record date or other date set for definitive action) written
notice of the record date for such transaction to take place. Such notice shall
also set forth facts as shall indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the Exercise Price of
and the kind and amount of the shares of stock and other securities and property
deliverable upon exercise of this Warrant.
ARTICLE III
Compliance with the Securities Act
The Holder acknowledges that the Warrant Shares, in his hands, will be
restricted securities which may not be sold or offered for sale in the absence
of an effective registration statement under the Securities Act or an opinion of
counsel satisfactory to the Company that such registration is not required. With
respect to any offer, sale or other disposition of any Warrant Shares, the
Holder will give written notice to the Company prior thereto, describing briefly
the manner thereof, together with a written opinion of such Holder's counsel, to
the effect that such offer, sale or other distribution may be effected without
registration or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice and reasonably satisfactory opinion,
if so requested, the Company, as promptly as practicable, shall notify such
Holder that such Holder may sell or otherwise dispose of the Warrant Shares, all
in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Article III that the opinion of
counsel for the Holder is not reasonably satisfactory to the Company, the
Company shall so notify the Holder promptly after such determination has been
made. Each certificate representing the Warrant Shares thus transferred shall
bear a legend as to the applicable restrictions on transferability in order to
ensure compliance with the Securities Act, unless in the opinion of counsel for
the Company such legend is not required, in order to ensure compliance with the
Securities Act. The Company may issue stop transfer instructions to its transfer
agent and registrar in connection with such restrictions.
ARTICLE IV
Other Provisions Relating
to Rights of Warrantholder
Section 4.01: No Rights as Shareholder; Notice to Warrantholder. Nothing
contained in this Warrant shall be construed as conferring upon the
Warrantholder or his transferees the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any meeting of
shareholders for the election of directors of the Company or of any other matter
or any rights whatsoever as shareholders of the Company, except to the extent
specifically provided for herein.
Section 4.02: Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms
as to indemnity or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as, and in substitution for, this
Warrant.
Section 4.03: Reservation of Shares.
(a) The Company covenants and agrees that at all times it shall reserve and
keep available for the exercise of this Warrant such number of authorized shares
of Common Stock or other securities as are sufficient to permit the exercise in
full of this Warrant.
(b) The Company shall use its best efforts to maintain or secure the
listing of the Warrant Shares upon the securities exchange or automated
quotation system, if any, upon which shares of its Common Stock are then listed.
(c) The Company covenants that all shares of Common Stock issued on
exercise of this Warrant will be validly issued, fully paid, non-assessable and
free of preemptive rights.
Section 4.04: No Fractional Shares. Anything contained herein to the
contrary notwithstanding, the Company shall not be required to issue any
fraction of a share in connection with the exercise of this Warrant. In any case
where the Warrantholder would, except for the provisions of this Section 4.04,
be entitled under the terms of this Warrant to receive a fraction of a share
upon exercise of this Warrant and receipt of the Exercise Price, the Company
shall not be required to issue any fraction of a share, but rather, will adjust
the aggregate Exercise Price for such fraction of a share to which the
Warrantholder would otherwise be entitled.
ARTICLE V
Treatment of Warrantholder
Prior to due presentment for registration or transfer of this Warrant, the
Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
the purpose of any exercise hereof and for all other purposes of the Company
shall not be affected by any notice to the contrary.
ARTICLE VI
Split-Up, Combination,
Exchange and Transfer of Warrant
Section 6.01: Split-Up, Combination, Exchange and Transfer of Warrant.
Subject to and limited by the provisions of Section 6.02 hereof, this Warrant
may be split up, combined or exchanged for another Warrant or Warrants
containing the same terms to purchase a like aggregate number of Warrant Shares.
If the Warrantholder desires to split up, combine or exchange this Warrant, he
shall make such request in writing delivered to the Company and shall surrender
to the Company this Warrant and any other Warrants to be so split up, combined
or exchanged. Upon any such surrender for a split-up, combination or exchange,
the Company shall execute and deliver to the person entitled thereto a Warrant
or Warrants, as the case may be, as so requested. The Company shall not be
required to effect any split-up, combination or exchange which will result in
the issuance of a Warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
Section 6.02: Restrictions on Transfer. This Warrant may be exercised and
this Warrant and the Warrant Shares may not be sold, hypothecated, assigned or
transferred (a "Transfer"), except only in accordance with and subject to the
provisions of the Securities Act and the rules and regulations promulgated
thereunder. The Warrantholder shall have the benefit of the certain registration
rights for the Warrant Shares as provided in that certain Registration Rights
Agreement dated as of December ___, 1995 among the Company, the Holder and
Avondale ▇▇▇▇▇, Inc.
ARTICLE VII
Other Matters
Section 7.01: Successors and Assigns. All the covenants and provisions of
this Warrant shall be binding upon and inure to the benefit of the Company and
the Holder and their respective successors and assigns.
Section 7.02: Amendments and Waivers. The provisions of this Warrant,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waiver or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Holder. The Warrantholder shall be bound by any consent authorized by this
Section whether or not certificates representing his Warrant have been marked to
indicate such consent.
Section 7.03: Counterparts. This Warrant may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
Section 7.04: Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 7.05: Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
Section 7.06: Integration/Entire Agreement. This Warrant is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This Warrant
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
Section 7.07: Notices. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & ▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and copies of all notices to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be given to:
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Notice or demand pursuant to this Warrant to be given or made by the
Warrantholder to or on the Company shall be sufficiently given or made if sent
by first class mail or overnight courier, postage prepaid, to the Warrantholder
at his last known address as it shall appear on the books of the Company.
Section 7.08: Headings. The Article and Section headings herein are for
convenience only and are not part of this Warrant and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the ____ day of ____________, 19___.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: ________________________
(Corporate Seal)
ATTEST:
--------------------------------
Secretary
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ____________________________ hereby sells, assigns and
transfers unto ________________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _____ ____________________ attorney, to transfer said
Warrant Certificate on the books of the within-named Company with respect to the
number of Warrants set forth below, with full power of substitution in the
premises:
Name(s) of
Assignee(s) Address No. of Warrants
And if said number of Warrants shall not be all the Warrants represented by
the Warrant Certificate, a new Warrant Certificate is to be issued in the name
of said undersigned for the balance remaining of the Warrants represented by
said Warrant Certificate.
Dated: ________________, _____.
----------------------------------------
Note: The above signature should correspond exactly
with the name on the face of this Warrant
Certificate.
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
▇▇▇▇▇▇ INDUSTRIES, INC.
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and tenders herewith payment of
the purchase price in full in the form of cash or a certified or official bank
check in the amount of $ .
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name_______________________________
(Please Print Name, Address and Social Security No.)
Signature___________________________ Note: The above
signature should correspond exactly with the name on
the first page of this Warrant Certificate or with the
name of the assignee appearing in the assignment form
below.
And if said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder less any fraction of a share paid in cash.
