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Exhibit 10.26
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT"), dated as of October 29, 1998
(the "CLOSING DATE"), is by and among ▇▇▇▇▇▇▇ Holdings, Inc., a Delaware
corporation ("HOLDINGS"), ▇▇▇▇▇▇▇ Company, a Delaware corporation (the
"COMPANY"), ▇▇▇▇▇▇▇ Holdings, LLC (the "INITIAL HOLDER"), and Ropes & ▇▇▇▇ (in
its capacity as escrow agent, the "ESCROW AGENT"). Capitalized terms used herein
and not otherwise defined have the meanings assigned to them in the Securities
Purchase Agreement referred to below.
RECITALS
WHEREAS, the Company, Holdings and the Initial Purchaser, as the
initial purchaser of the Notes referred to therein have entered into a
Securities Purchase Agreement dated as of October 29, 1998 (as amended, restated
or otherwise modified from time to time, the "SECURITIES PURCHASE AGREEMENT")
pursuant to which (i) the Company shall issue and sell to the Initial Holder the
Company Notes and (ii) Holdings shall issue and sell to the Initial Holder the
Holdings Notes.
WHEREAS, it is a condition to the purchase of the Notes by the Initial
Holder under the Securities Purchase Agreement that the Escrow Warrants (as
defined below) be delivered into escrow pursuant to this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. DEPOSIT OF ESCROW WARRANTS.
On the Closing Date, concurrently with the execution and
delivery of this Agreement, Holdings will deliver to the Escrow Agent (i) a
Warrant in the form of Exhibit A hereto to purchase 2,104,713.22 shares of
Holdings' Common Stock, duly executed by Holdings, issued in the name of the
Escrow Agent (the "A WARRANTS") and (ii) a Warrant in the form of Exhibit B
hereto to purchase 2,104,713.22 shares of Holdings' Common Stock, duly executed
by Holdings, issued in the name of the Initial Holder (the "B WARRANTS" and,
together with the A Warrants, the "ESCROW WARRANTS").
2. RELEASE OF ESCROW WARRANTS.
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The Escrow Agent shall hold the Escrow Warrants in escrow
pursuant to this Agreement, until authorized hereunder to deliver them as
follows:
If, on any Business Day on or after the Closing Date, the
Escrow Agent receives an executed written and certified notice from the Initial
Holder in the form of ANNEX A hereto (each, an "INTERIM RELEASE NOTICE"), the
Escrow Agent will assign all or the requested amount of the A Warrants as
specified in such Interim Release Notice. If, on or after the first anniversary
of the date hereof, the Escrow Agent receives an executed written and certified
notice from the Initial Holder in the form of ANNEX B-1 or ANNEX B-2 hereto
(each a "FINAL RELEASE NOTICE"), the Escrow Agent will release to the Initial
Holder the amount of the B Warrants specified in such Final Release Notice and
shall return the balance of the Escrow Warrants to Holdings for cancellation.
Notwithstanding the foregoing provisions of this paragraph, under no
circumstances shall a greater number of Escrow Warrants be so assigned or
released (excluding Escrow Warrants which are returned to Holdings for
cancellation) than 50% of the aggregate original Escrow Warrants, and in no
event shall fewer Escrow Warrants be returned to Holdings for cancellation than
Escrow Warrants to purchase 2,104,713.22 shares of Holdings' Common Stock.
Holdings hereby consents to any assignment of Escrow Warrants in accordance with
the terms of this Escrow Agreement and agrees to cancel any Escrow Warrants
returned to it by the Escrow Agent pursuant to this Agreement.
3. CERTAIN ADDITIONAL AGREEMENTS.
3.1. The Company, Holdings and the Initial Holder shall, upon
request by the Escrow Agent, execute and deliver to the Escrow Agent
such additional written instructions and certificates hereunder as may
be reasonably required by the Escrow Agent to give effect to the
provisions of Sections 1 and 2 hereof, including certifications as to
the existence of a valid exception from any applicable securities laws
in connection with the assignment of the Escrow Warrants under Section
2.
3.2. Holdings shall, upon request of the Initial Holder if
deemed to be necessary or desirable by the Initial Holder in connection
with the sale or refinancing of the Notes, at the option of the Initial
Holder either (i) permit any purchasers of Notes or Replacement Debt to
become party to the Registration Rights Agreement, by executing of a
joinder thereof; or (ii) enter into a registration rights agreement
with such purchasers (and, if required by the Initial Holder, with the
Initial Holder) in form and substance satisfactory to the Initial
Holder and Holdings.
3.3. The Initial Holder and Holdings may, as a condition to
the release of A Warrants to any purchaser of Notes or Replacement
Debt, require such purchaser to enter into a stockholders agreement (or
to execute a joinder of an existing stockholders agreement) in a form
reasonably acceptable to Holdings.
3.4. Holdings and the Initial Holder may, in connection with
the sale or refinancing of the Notes, modify or replace any A Warrants
to be used in the placement
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of such Notes or Replacement Debt, if deemed to be necessary or
desirable in connection with such sale or refinancing, in order to,
among other things, provide for additional antidilution and other
protections or other covenants.
4. ESCROW AGENT.
(a) The Escrow Agent shall have no duties or responsibilities,
including, without limitation, a duty to review or interpret the
Securities Purchase Agreement, except those expressly set forth herein.
Except for this Agreement, the Escrow Agent, in its capacity as such,
is not a party to, or bound by, any agreement that may be required
under, evidenced by, or arise out of the Securities Purchase Agreement.
(b) If the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions from any of the
undersigned with respect to the Escrow Warrants, which, in its opinion,
are in conflict with any of the provisions of this Agreement, it shall
be entitled to refrain from taking any action until it shall be
directed otherwise in writing by Holdings and the Initial Holder or by
order of a court of competent jurisdiction. The Escrow Agent shall be
protected in acting upon any notice, request, waiver, consent, receipt
or other document reasonably believed by the Escrow Agent to be signed
by the proper party or parties.
(c) The Escrow Agent shall not be liable for any error or
judgment or for any act done or step taken or omitted by it in good
faith or for any mistake of fact or law, or for anything that it may do
or refrain from doing in connection herewith, except for its own gross
negligence or willful misconduct, and the Escrow Agent shall have no
duties to anyone except Holdings, the Company and the Initial Holder
and their respective successors and permitted assigns.
(d) The Escrow Agent may consult legal counsel in the event of
any dispute or question as to the construction of this Agreement, or
the Escrow Agent's duties hereunder, and the Escrow Agent shall incur
no liability and shall be fully protected with respect to any action
taken or omitted in good faith in accordance with the opinion and
instructions of counsel.
(e) In the event of any disagreement between the undersigned
or any of them, and/or any other person, resulting in adverse claims
and demands being made in connection with or for the Escrow Warrants,
the Escrow Agent shall be entitled at its option to refuse to comply
with any such claim or demand, so long as such disagreement shall
continue, and in so doing the Escrow Agent shall not be or become
liable for damages or interest to the undersigned or any of them or to
any person named herein for its failure or refusal to comply with such
conflicting or adverse demands. The Escrow Agent shall be entitled to
continue to so refrain and refuse to so act until all differences shall
have been resolved by agreement and the Escrow Agent shall have been
notified thereof in writing signed by Holdings and the Initial Holder.
In the event of such
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disagreement which continues for 90 days or more, the Escrow Agent in
its discretion may, but shall be under no obligation to, file a suit in
interpleader for the purpose of having the respective rights of the
claimants adjudicated and may deposit with the court all documents and
property held hereunder. Holdings agrees to pay all reasonable
out-of-pocket costs and expenses incurred by the Escrow Agent in such
action, including reasonable attorney's fees and disbursements.
(f) The Escrow Agent is hereby indemnified by Holdings from
all losses, costs and expenses of any nature incurred by the Escrow
Agent arising out of or in connection with this Agreement or with the
administration of its duties hereunder, unless such losses, costs or
expenses shall have been caused by the Escrow Agent's willful
misconduct or gross negligence. Such indemnification shall survive
termination of this Agreement until extinguished by any applicable
statute of limitations.
(g) The Escrow Agent does not have any interest in the Escrow
Warrants deposited hereunder but is serving as escrow holder only and
having only possession thereof. This paragraph shall survive
notwithstanding any termination of this Agreement or the resignation of
the Escrow Agent.
(h) The Escrow Agent (and any successor Escrow Agent) may at
any time resign as such by giving written notice of its resignation to
the parties hereto at least 30 days prior to the date specified for
such resignation to take effect. Upon the effective date of such
resignation, the Escrow Warrants shall be delivered by it to such
successor escrow agent or as otherwise shall be instructed in writing
by Holdings and the Initial Holder; whereupon the Escrow Agent shall be
discharged of and from any and all further obligations arising in
connection with this Agreement. If at that time the Escrow Agent has
not received such instruction, the Escrow Agent's sole responsibility
after that time shall be to safekeep the Escrow Warrants until receipt
of a designation of successor Escrow Agent, or a joint written
instruction as to disposition of the Escrow Warrants by Holdings and
the Initial Holder or a final order of a court of competent
jurisdiction mandating disposition of the Escrow Warrants.
(i) The Escrow Agent hereby accepts its appointment and agrees
to act as escrow agent under the terms and conditions of this Agreement
and acknowledges receipt of the Escrow Warrants. Holdings agrees to pay
to the Escrow Agent as payment in full for its services hereunder the
Escrow Agent's compensation in accordance with the ordinary and usual
hourly rates for its services. Holdings further agrees to reimburse the
Escrow Agent for all reasonable out-of-pocket expenses, disbursements
and advances incurred or made by the Escrow Agent in the performance of
its duties hereunder (including reasonable fees, and out-of-pocket
expenses and disbursements, of its counsel).
5. NOTICES. Any notices or other communications required or permitted
hereunder shall be effective if in writing and delivered personally or sent by
telecopier, overnight courier,
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Federal Express, United Parcel Service, registered or certified mail, postage
prepaid, addressed as follows:
IF TO THE INITIAL HOLDER:
▇▇▇▇▇▇▇ Holdings, LLC
c/o Fenway Partners, Inc.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
IF TO HOLDINGS:
▇▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with copies to
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: 404-581-8330
and
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
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IF TO THE COMPANY:
▇▇▇▇▇▇▇ Company
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
IF TO THE ESCROW AGENT:
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Unless otherwise specified herein, such notices or other communications shall be
deemed effective (a) on the date delivered, if delivered personally, (b) one
Business Day after being delivered, if delivered by telecopier with confirmation
of good transmission, (c) one Business Day after being sent by overnight
courier, if sent by overnight courier, (d) two Business Days after being sent by
Federal Express or United Parcel Service, if sent by Federal Express or United
Parcel Service, or (e) three Business Days after being sent, if sent by
registered or certified mail. Each of the parties hereto shall be entitled to
specify a different address by giving notice as aforesaid to each of the other
parties hereto.
6. TERMINATION. This Agreement shall automatically terminate upon the
final distribution of the Escrow Warrants in accordance with the terms hereof.
7. GOVERNING LAW; JURISDICTION.
7.1. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts, without regard to conflict of law rules thereof.
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7.2. CONSENT TO JURISDICTION. Each of the parties agrees that
all actions, suits or proceedings arising out of or based upon this
Agreement or the subject matter hereof may be brought and maintained in
the federal district court in Boston, Massachusetts and of any
Massachusetts state court sitting in the city of Boston (each, a
"MASSACHUSETTS COURT"). Each of the parties hereby by execution hereof
(i) hereby irrevocably submits to the jurisdiction of such court in
Boston, Massachusetts, for the purpose of any action, suit or
proceeding arising out of or based upon this Agreement or the subject
matter hereof and (ii) hereby waives to the extent not prohibited by
applicable law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding, any claim
that it is not subject personally to the jurisdiction of one of the
above-named courts, that it is immune from extraterritorial injunctive
relief or other injunctive relief, that its property is exempt or
immune from attachment or execution, that any such action, suit or
proceeding may not be brought or maintained in one of the above-named
courts should be dismissed on the grounds of forum non conveniens,
should be transferred to any court other than one of the above-named
courts, should be stayed by virtue of the pendency of any other action,
suit or proceeding in any court other than one of the above-named
courts, or that this Agreement or the subject matter hereof may not be
enforced in or by the above-named courts. Each of the parties hereto
hereby consents to service of process in any such suit, action or
proceeding in any manner permitted by the laws of the Commonwealth of
Massachusetts, agrees that service of process by registered or
certified mail, return receipt requested, at the address specified in
or pursuant to Section 5 hereof is reasonably calculated to give actual
notice and waives and agrees not to assert by way of motion, as a
defense or otherwise, in any such action, suit or proceeding any claim
that service of process made in accordance with Section 5 hereof does
not constitute good and sufficient service of process. The provisions
of this Section 7.2 shall not restrict the ability of any party to
enforce in any court any judgment obtained in the federal district
court in Boston, Massachusetts or any Massachusetts Court.
7.3. WAIVER OF JURY TRIAL. To the extent not prohibited by any
applicable law that cannot be waived, each of the parties hereto hereby
waives, and covenants that it will not assert (whether as plaintiff,
defendant, or otherwise), any right to trial by jury in any forum in
any respect of any issue, claim, demand, cause of action, action, suit
or proceeding arising out of or based upon this Agreement or the
subject matter hereof, in each case whether now existing or hereafter
arising and whether in contract or tort or otherwise. Any of the
parties hereto may file an original counterpart or a copy of this
Section 7.3 with any court as written evidence of the consent of each
of the parties hereto to the waiver of his or its right to trial by
jury.
7.4. RELIANCE. Each of the parties hereto acknowledges that it
has been informed by each other party that the provisions of this
Section 7 constitute a material inducement upon which such party is
relying and will rely in entering into this Agreement and the
transactions contemplated hereby.
8. MISCELLANEOUS.
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8.1. ENTIRE AGREEMENT; WAIVERS. This Agreement constitutes the
entire agreement among the parties hereto pertaining to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written,
of the parties with respect to such subject matter. No waiver of any
provision of this Agreement (a) shall be deemed to or shall constitute
a waiver of any other provision hereof (whether or not similar), (b)
shall constitute a continuing waiver unless otherwise expressly
provided therein or (c) shall be effective unless in writing and
executed by each party against whom it is to be enforced.
8.2. AMENDMENT OR MODIFICATION, ETC. The parties hereto may
not amend or modify this Agreement except in such manner as may be
agreed upon by a written instrument executed by all of the parties
hereto. Any written amendment, modification or waiver executed by all
of the parties hereto shall be binding upon all such parties and their
respective successors and assigns.
8.3. HEADINGS, ETC. Section and subsection headings are not to
be considered part of this Agreement, are included solely for
convenience, are not intended to be full or accurate descriptions of
the content thereof and shall not affect the construction hereof. This
Agreement shall be deemed to express the mutual intent of the parties,
and no rule of strict construction shall be applied against any party.
8.4. SEVERABILITY. In the event that any provision hereof
would, under applicable law, be invalid or unenforceable in any
respect, such provision shall (to the extent permitted by applicable
law) be construed by modifying or limiting it so as to be valid and
enforceable to the maximum extent compatible with, and possible under,
applicable law. The provisions hereof are severable, and in the event
any provision hereof should be held invalid or unenforceable in any
respect, it shall not invalidate, render unenforceable or otherwise
affect any other provision hereof.
8.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute but one and the same instrument.
8.6. SUCCESSORS AND ASSIGNS. All of the terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective permitted transferees,
successors and assigns (each of which shall be deemed to be a party
hereto for all purposes hereof). Except as expressly provided herein,
this Agreement shall not confer any right or remedy upon any person
other than the parties and their respective transferees, successors and
assigns.
[Escrow Agreement Signature Page(s) Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HOLDINGS:
▇▇▇▇▇▇▇ HOLDINGS, INC.
By
-----------------------
Name:
Title:
THE COMPANY:
▇▇▇▇▇▇▇ COMPANY
By
-----------------------
Name:
Title:
THE INITIAL HOLDER:
▇▇▇▇▇▇▇ HOLDINGS, LLC
By:
-----------------------
Name:
Title:
ROPES & ▇▇▇▇, as Escrow Agent
By:
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Title: A member of the Firm
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ANNEX A TO ESCROW AGREEMENT
FORM OF INTERIM RELEASE NOTICE
▇▇▇▇▇▇▇ HOLDINGS, LLC
NOTICE
Date: __________
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ Holdings; Warrant Escrow Agreement
Ladies and Gentlemen:
Reference is hereby made to the Escrow Agreement dated as of October
29, 1998 (the "ESCROW AGREEMENT"), by and among ▇▇▇▇▇▇▇ Company, a Delaware
corporation (the "COMPANY"), ▇▇▇▇▇▇▇ Holdings, Inc., a Delaware Corporation
("HOLDINGS"), ▇▇▇▇▇▇▇ Holdings, LLC (the "INITIAL HOLDER"), and Ropes & ▇▇▇▇ (in
its capacity as escrow agent, the "ESCROW AGENT"). Capitalized terms used herein
and not otherwise defined in this Release Notice have the meanings assigned to
them in the Escrow Agreement.
In connection with the Initial Holder's (i) assignment of $_____ in
original principal amount of the Company Notes and/or $_____ in original
principal amount of the Holdings Notes or (ii) the sale by Holdings or the
Company of Replacement Debt, in each case to ____________ (the "ASSIGNEE"), the
Initial Holder hereby directs that the Escrow Agent assign A Warrants
constituting a right to acquire as of the date of the Escrow Agreement, and
subject to adjustment in accordance with the terms of the A Warrants, __ shares
of Holdings' Common Stock to the Assignee.
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Thank you in advance for your prompt attention to this Interim Release
Notice. By executing this Notice, the undersigned certifies that the above
specified conditions to the release, assignment and delivery of the specified A
Warrants have been satisfied.
Very truly yours,
▇▇▇▇▇▇▇ Holdings, LLC
By:
----------------------
Name:
Title:
cc: ▇▇▇▇▇▇▇ Holdings, Inc.
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ANNEX B-1 TO ESCROW AGREEMENT
FORM OF FINAL RELEASE NOTICE
▇▇▇▇▇▇▇ HOLDINGS, LLC
NOTICE
Date: __________
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ Holdings; Warrant Escrow Agreement
Ladies and Gentlemen:
Reference is hereby made to the Escrow Agreement dated as of October
29, 1998 (the "ESCROW AGREEMENT"), by and among ▇▇▇▇▇▇▇ Company, a Delaware
corporation (the "COMPANY"), ▇▇▇▇▇▇▇ Holdings, Inc., a Delaware Corporation (
"HOLDINGS"), ▇▇▇▇▇▇▇ Holdings, LLC (the "INITIAL HOLDER"), and Ropes & ▇▇▇▇ (in
its capacity as escrow agent, the "ESCROW AGENT"). Capitalized terms used herein
and not otherwise defined in this Release Notice have the meanings assigned to
them in the Escrow Agreement.
The Initial Holder continues to hold $_______ in original principal
amount of the Company Notes and/or $_______ in original principal amount of the
Holdings Notes (it being understood that Replacement Debt shall not be deemed to
constitute "Notes" for purposes of this Release Notice). Therefore, the Initial
Holder directs that the Escrow Agent release to the Initial Holder such
percentage of the B Warrants as is equal to the percentage of the A Warrants
which remain in escrow as of the date hereof. Pursuant to the Escrow Agreement,
upon such release of B Warrants, all other Escrow Warrants remaining in escrow
as of the date hereof shall be returned to Holdings for cancellation.
Thank you in advance for your prompt attention to this Final Release
Notice. By executing this Notice, the undersigned certifies that the above
specified conditions to the release of the specified Escrow Warrants have been
satisfied.
Very truly yours,
▇▇▇▇▇▇▇ Holdings, LLC
By:
-----------------------
Name:
Title:
cc: ▇▇▇▇▇▇▇ Holdings, Inc.
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ANNEX B-2 TO ESCROW AGREEMENT
FORM OF FINAL RELEASE NOTICE
▇▇▇▇▇▇▇ HOLDINGS, LLC
NOTICE
Date: __________
Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Re: ▇▇▇▇▇▇▇ Holdings; Warrant Escrow Agreement
Ladies and Gentlemen:
Reference is hereby made to the Escrow Agreement dated as of October
29, 1998 (the "ESCROW AGREEMENT"), by and among ▇▇▇▇▇▇▇ Company, a Delaware
corporation (the "COMPANY"), ▇▇▇▇▇▇▇ Holdings, Inc., a Delaware Corporation
("HOLDINGS"), ▇▇▇▇▇▇▇ Holdings, LLC (the "INITIAL HOLDER"), and Ropes & ▇▇▇▇ (in
its capacity as escrow agent, the "ESCROW AGENT"). Capitalized terms used herein
and not otherwise defined in this Release Notice have the meanings assigned to
them in the Escrow Agreement.
The Initial Holder no longer holds any Company Notes or Holdings Notes
(it being understood that Replacement Debt shall not be deemed to constitute
"Notes" for purposes of this Release Notice). Therefore, the Initial Holder
directs that the Escrow Agent release to the Initial Holder such percentage of B
Warrants which is equal to 50% of the percentage of the A Warrants which remain
in escrow. Pursuant to the Escrow Agreement, upon such release of B Warrants,
all other Escrow Warrants remaining in escrow as of the date hereof shall be
returned to Holdings for cancellation.
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Thank you in advance for your prompt attention to this Final Release
Notice. By executing this Notice, the undersigned certifies that the above
specified condition to the release of the specified Escrow Warrants have been
satisfied.
Very truly yours,
▇▇▇▇▇▇▇ Holdings, LLC
By:
-----------------------
Name:
Title:
cc: ▇▇▇▇▇▇▇ Holdings, Inc.
-14-
15
EXHIBIT A
THIS WARRANT AND ANY SHARES OF STOCK PURCHASABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.
No. W-2 2,104,713.22 Shares
WARRANT TO PURCHASE
October 29, 1998
SHARES OF COMMON STOCK
OF
▇▇▇▇▇▇▇ HOLDINGS, INC.
Incorporated Under the Laws of the State of Delaware
THIS CERTIFIES THAT, for value received, and subject to the provisions
hereinafter set forth, Ropes & ▇▇▇▇, in its capacity as escrow agent, or its
registered assigns is entitled to purchase from ▇▇▇▇▇▇▇ Holdings, Inc., a
Delaware corporation ("Holdings"), during the period specified in this Warrant,
2,104,713.22 shares (subject to adjustment as hereinafter provided) of the duly
authorized, validly issued, fully paid and non-assessable Common Stock, par
value $0.01 per share, of Holdings (the "Common Stock") at an initial exercise
price of $0.01 per share (the "Initial Exercise Price"). Certain capitalized
terms used in this Warrant are defined in Section 9.
1. DURATION. The right to subscribe for and purchase shares of Common Stock
represented hereby shall commence on the date of issuance of this Warrant and
shall expire at 5:00 P.M., Eastern Time, on October 29, 2005 (the "Expiration
Date").
2. METHOD OF EXERCISE OR CONVERSION; PAYMENT, ISSUANCE OF NEW WARRANT; TRANSFER
AND EXCHANGE.
2.1. METHOD OF EXERCISE.
2.1.1. EXERCISE. This Warrant may be exercised by the holder
hereof, in whole or in part, during normal business hours on any
business day on or prior to the Expiration Date, by surrender of this
Warrant to Holdings at its principal office, accompanied by a
subscription substantially in the form attached to this Warrant duly
16
executed by such holder and accompanied by (a) wire transfer of
immediately available funds, (b) certified or official bank check
payable to the order of Holdings or (c) delivery to Holdings of a
principal amount of Company Notes or Holdings Notes (provided that any
Capitalized Interest shall be included in principal for purposes of
determining such amount), in each case in the amount obtained by
multiplying (i) the number of shares of Common Stock (without giving
effect to any adjustment thereof pursuant to the provisions hereof) for
which this Warrant is then being exercised, as designated in such
subscription, by (ii) the Initial Exercise Price, and such holder shall
thereupon be entitled to receive the number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock (or Other
Securities) determined as provided in Sections 4 and 5.
2.1.2. CONVERSION. This Warrant may be converted by the holder
hereof, in whole or in part, into shares of Common Stock (or Other
Securities), during normal business hours on any business day on or
prior to the Expiration Date, by surrender of this Warrant to Holdings
at its principal office, accompanied by a conversion notice
substantially in the form attached to this Warrant duly executed by
such holder, and such holder shall thereupon be entitled to receive a
number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) equal to:
(a) the excess of
(i) (x) the number of shares of Common Stock
(or Other Securities) determined as provided in
Sections 4 and 5 hereof which such holder would be
entitled to receive upon exercise of this Warrant for
the number of shares of Common Stock designated in
such conversion notice multiplied by (y) the Current
Market Price of each such share of Common Stock (or
such Other Securities) so receivable upon such
exercise
over
(ii) (x) the number of shares of Common
Stock (without giving effect to any adjustment
thereof pursuant to the provisions hereof) for which
this Warrant may be exercised, as designated in such
conversion notice, multiplied by (y) the Initial
Exercise Price
divided by
(b) such Current Market Price of each such share of Common
Stock (or Other Securities).
For all purposes of this Warrant (other than this Section 2.1), any
reference herein to the exercise of this Warrant shall be deemed to
include a reference to the conversion of this
17
Warrant into Common Stock (or Other Securities) in accordance with the
terms of this Section 2.1.2.
2.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant shall have been surrendered to Holdings as
provided in Section 2.1 hereof, and at such time the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock (or
Other Securities) shall be issuable upon such exercise as provided in Section
2.3 hereof shall be deemed to have become the holder or holders of record
thereof.
2.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable after
each exercise of this Warrant, in whole or in part, Holdings at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the holder hereof or, subject to the
provisions of the Stockholders Agreement, as such holder (upon payment by such
holder of any applicable transfer taxes) may direct:
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the current Market Price per share on the
business day next preceding the date of such exercise; and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, dated the date hereof and calling in the
aggregate on the face or faces thereof for the number of shares of
Common Stock equal (without giving effect to any adjustment thereof
pursuant to the terms hereof) to the number of such shares called for
on the face of this Warrant minus the number of such shares designated
by the holder upon such exercise as provided in Section 2.1 hereof.
2.4. EXCHANGE OF WARRANT. This Warrant is exchangeable at the aforesaid
principal office of Holdings for Warrants for the purchase of the same aggregate
number of shares of Common Stock, each new Warrant to represent the right to
purchase such number of shares of Common Stock as the holder hereof shall
designate at the time of such exchange. All Warrants issued on transfers or
exchanges shall be dated the date hereof and shall be identical with this
Warrant except as to the number of shares of Common Stock issuable pursuant
hereto.
2.5. COMPANY TO REAFFIRM OBLIGATIONS. Holdings will, at the time of or
at any time after each exercise of this Warrant, upon the request of the holder
hereof, acknowledge in writing its continuing obligation to afford to such
holder all rights to which such holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided that if any such
holder shall fail to make any such request, the failure shall not affect the
continuing obligation of Holdings to afford such rights to such holder.
18
3. STOCK FULLY PAID; RESERVATION OF SHARES. Holdings represents, warrants,
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and non-assessable. Holdings further
covenants and agrees that during the period within which the rights represented
by this Warrant may be exercised, Holdings will at all times have authorized and
reserved solely for the purpose of the issuance upon exercise of this Warrant a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant.
If any shares of Common Stock required to be reserved for issuance upon
exercise of this Warrant require registration or qualification with any
governmental authority under any federal or state law before such shares may be
so issued, Holdings will in good faith and as expeditiously as reasonably
possible use reasonable efforts to cause such shares to be duly registered or
qualified.
Holdings will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in order that Holdings
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its reasonable efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable
Holdings to perform its obligations under this Warrant.
4. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE UPON EXERCISE; EXERCISE PRICE. The
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this Section 4) be issuable upon such
exercise, as designated by the holder hereof pursuant to Section 2.1 hereof, by
a fraction (a) the numerator of which shall be the Initial Exercise Price and
(b) the denominator of which shall be the Exercise Price in effect on the date
of such exercise. The "Exercise Price" shall initially be the Initial Exercise
Price and shall be adjusted and readjusted from time to time as provided in this
Section 4 and, as so adjusted or readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by this Section 4.
4.1. SUBDIVISION OR COMBINATION OF SHARES. If Holdings, at any time
while this Warrant is outstanding, shall subdivide (by stock split or otherwise)
or combine (by consolidation or otherwise) any outstanding shares of Common
Stock, the Exercise Price shall be (a) proportionately decreased, to the nearest
one hundredth of one cent, in the case of a subdivision of shares, to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision or (b) proportionately increased, to the nearest one
hundredth of one cent, in the case of a combination of shares, to reflect the
decrease in the total
19
number of shares of Common Stock outstanding as a result of such combination, as
of the effective date of such subdivision or combination, or if Holdings shall
take a record of holders of Common Stock for the purpose of so subdividing or
combining, as of the applicable record date, whichever is earlier.
4.2. CERTAIN DIVIDENDS. If Holdings, at any time while this Warrant is
outstanding, shall pay any stock dividend on the Common Stock, the Exercise
Price shall be adjusted, as of the date Holdings shall take a record of the
holders of the Common Stock, for the purpose of receiving such dividend (or if
no such record is taken, as of the date of such dividend), to the nearest one
hundredth of one cent, to the product obtained by multiplying the Exercise Price
in effect immediately prior to such subdivision or combination by a fraction (a)
the numerator of which shall be the total number of shares of the Common Stock
outstanding immediately prior to such dividend (plus in the event that Holdings
paid cash for fractional shares, the number of additional shares which would
have been outstanding had Holdings issued fractional shares in connection with
said dividends) and (b) the denominator of which shall be the total number of
shares of the Common Stock outstanding immediately after such dividend.
4.3. OTHER EVENTS. If any event occurs as to which the foregoing
provisions of Sections 4.1 and 4.2 are applicable or, if strictly applicable,
would not, in the good faith judgment of the Board, fairly and adequately
protect the purchase rights represented by the Warrants in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.4. ADJUSTMENT OF EXERCISE PRICE. If at any time, as a result of any
adjustments hereunder, the sum of the Exercise Price plus a proportionate
portion of the consideration paid by the holder for this Warrant shall be less
than the par value per share of Common Stock, then the price payable per share
of Common Stock by the holder hereunder in the event of an exercise of this
Warrant, in whole or in part, shall be an amount equal to the par value per
share of the Common Stock; PROVIDED that for purposes of any calculation of the
number of shares issuable upon exercise of this Warrant, any adjustment to the
price payable per share of Common Stock pursuant to this Section 4.4 shall be
disregarded.
5. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC.
In case Holdings after the date hereof (a) shall consolidate with or merge into
any other Person and shall not be the continuing or surviving corporation of
such consolidation or merger, or (b) shall permit any other Person to
consolidate with or merge into Holdings and Holdings shall be the continuing or
surviving Person but, in connection with such consolidation or merger, the
Common Stock or Other Securities shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (c) shall
transfer all or substantially all of its properties or assets to any other
Person or (d) shall effect a capital reorganization or reclassification of the
Common Stock or Other Securities, then, and in the case
20
of each such transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Warrant, the holder of this
Warrant, upon the exercise hereof at any time after the consummation of such
transaction, shall be entitled to receive (at the aggregate Exercise Price in
effect at the time of such consummation for all Common Stock or Other Securities
issuable upon such exercise immediately prior to such consummation), in lieu of
the Common Stock or Other Securities issuable upon such exercise prior to such
consummation, the greatest amount of securities, cash or other property to which
such holder would actually have been entitled as a shareholder upon such
consummation if such holder had exercised the rights represented by this Warrant
immediately prior thereto.
6. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price is adjusted pursuant to
Section 4 hereof, Holdings will promptly deliver to the holder of this Warrant
at its address set forth on Schedule I a certificate setting forth, in
reasonable detail, the event that triggered the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Exercise Price after giving effect to such adjustment.
7. DIVIDENDS/DISTRIBUTIONS. Holdings shall give the holder of this Warrant not
less than 15 days prior written notice of its intent to pay a dividend or make
any other distribution on any shares of its capital stock, and shall set forth
in such notice the amount and type of such dividend or distribution and the
share of capital stock on which such dividend or distribution will be paid. If
the holder of this Warrant does not elect to exercise this Warrant prior to such
dividend or distribution, an amount equal to the cash which the holder would
have received on the Common Stock had the holder exercised this Warrant
immediately prior to such dividend or distribution shall at the option of the
holder (a) be used as a credit against the Exercise Price or (b) be retained by
Holdings and paid to such holder upon the exercise of this Warrant.
8. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any rights as a
stockholder of Holdings or as imposing any obligation on such holder to purchase
any Securities or as imposing any liabilities on such holder as a stockholder of
Holdings, whether such obligation or liabilities are asserted by Holdings or by
creditors of Holdings.
9. DEFINITIONS. For the purposes of this Warrant, the following terms have the
following meanings:
"Board" shall mean the Board of Directors of Holdings.
"Common Stock" shall have the meaning as defined in the
introduction to this Warrant, such term to include any stock into which
such Common Stock shall have been changed or any stock resulting from
any reclassification of such Common Stock, and all other stock of any
class or classes (however designated) of Holdings the holders of which
have the right, without limitation as to amount, either to all or to a
share of the balance
21
of current dividends and liquidating dividends after the payment of
dividends and distributions on any shares entitled to preference.
"Company Notes" shall mean the Junior Subordinated Notes due
2010 of ▇▇▇▇▇▇▇ Company, a Delaware corporation, in the aggregate
original principal amount of $30,000,000, issued October 29, 1998.
"Current Market Price" shall mean on any date specified
herein, the average daily Market Price during the period of the most
recent 20 days, ending on such date, on which the national securities
exchanges were open for trading, except that if no Common Sock is then
listed or admitted to trading on any national securities exchange or
quoted in the over-the-counter market, the Current Market Price shall
be the Market Price on such date.
"Escrow Warrants" shall have the meaning provided in the
Securities Purchase Agreement.
"Expiration Date" shall have the meaning set forth in
Section 1.
"Holdings" shall have the meaning provided in the introduction
to this Warrant, such term to include any corporation which shall
succeed to or assume the obligations of Holdings hereunder in
compliance with Section 5 hereof.
"Holding Notes" shall mean the Junior Subordinated Notes due
2011 of Holdings, in the aggregate original principal amount of
$10,000,000, issued October 29, 1998.
"Initial Exercise Price" shall have the meaning set forth in
the first paragraph hereof.
"Majority Holders" shall mean at any time holders of Warrants
exercisable for more than 50% of the shares of Common Stock issuable
under the Warrants at such time outstanding; PROVIDED that, for
purposes of Section 10 hereof, ▇▇▇▇▇▇▇ Holdings, LLC shall be deemed to
be the holder of any Escrow Warrants until such time as such Warrants
have been released from escrow.
"Market Price" shall mean on any date specified herein, the
amount per share of Common Stock equal to (a) the last sale price of
Common Stock, regular way, on such date or, if no such sale takes place
on such date, the average of the closing bid and asked prices thereof
on such date, in each case as officially reported on the principal
national securities exchange on which Common Stock is then listed or
admitted to trading, or (b) if Common Stock is not then listed or
admitted to trading on any national securities exchange but is
designated as a national market system security by the NASD, the last
trading price of Common Stock on such date, or (c) if there shall have
been no trading on
22
such date or if Common Stock is not so designated, the average of the
closing bid and asked prices of Common Stock on such date as shown by
the NASD automated quotation system, or (d) if the Common Stock is not
then listed or admitted to trading on any national exchange or quoted
in the over-the-counter market, the fair market value thereof
determined in good faith by the Board.
"Other Securities" shall mean any stock (other than Common
Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holders of the Warrants at any time
shall be entitled to receive, or shall have received, upon the exercise
of the Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Section
5 hereof or otherwise.
"Person" shall mean an individual, a corporation, a
partnership, a trust, an unincorporated organization or a government
organization or an agency or political subdivision thereof.
"Securities" shall mean any debt or equity securities of
Holdings, whether now or hereafter authorized, and any instrument
convertible into or exchangeable for Securities or a Security.
"Security" shall mean one of the Securities.
"Securities Act" shall mean as of any date of the Securities
Act of 1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement dated as of October 28, 1998 among ▇▇▇▇▇▇▇ Company,
Inc., Holdings and the Purchasers listed therein.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participants in, the capital
stock of a corporation of any class.
"Warrants" shall mean the Warrants issued pursuant to the
Securities Purchase Agreement. The term "Warrants" shall include,
without limitation, this Warrant and any Warrants issued in
substitution or exchange for any thereof.
10. AMENDMENT AND WAIVER. Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Company and the
Majority Holders; PROVIDED, HOWEVER, that no such amendment or waiver shall
increase the Exercise Price, shorten the period during which the Warrants may be
exercised or modify any provision of this Section 10 without consent of the
holders of all Warrants then outstanding affected by such amendment or waiver.
23
11. GOVERNING LAW. This Warrant shall be governed by and construed in accordance
with the internal laws of the State of Delaware (without giving effect to the
choice of law principles of such state).
24
▇▇▇▇▇▇▇ Holdings, Inc.
By:
-----------------------
Name:
Title:
25
Schedule I
to Warrant
[To be completed upon release of Warrant from escrow]
26
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To ▇▇▇▇▇▇▇ Holdings, Inc.:
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder _________,
(1) shares of the Common Stock and herewith makes payment of $____________
therefor, and requests that the certificates for such shares be issued in the
name of, and deliver to ___________, whose address is
Dated:
-------------------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
-------------------------------------------------
(Street Address)
-------------------------------------------------
(City) (State) (Zip Code)
-----------------------------
(1) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any adjustment
for any stock or other securities or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be delivered upon exercise. In the
case of a partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the holder
surrendering the Warrant.
27
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto __________ the right
represented by such Warrant to purchase ________ (2) shares of Common Stock of
▇▇▇▇▇▇▇ Holdings, Inc. to which such Warrant relates, and appoints
_______________Attorney to make such transfer on the books of ▇▇▇▇▇▇▇ Holdings,
Inc. maintained for such purpose, with full power of substitution in the
premises.
Dated:
--------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
-------------------------------
(2) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any adjustment
for any stock or other securities or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be delivered upon exercise. In the
case of a partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the holder
surrendering the Warrant.
28
FORM OF CONVERSION NOTICE
To ▇▇▇▇▇▇▇ Holdings, Inc.:
The undersigned registered holder of the within Warrant hereby
irrevocably converts such Warrant with respect to _________ (3) shares of the
Common Stock which such holder would be entitled to receive upon the exercise
hereof, and requests that the certificates for such shares be issued in the name
of, and delivered to _________, whose address is
Dated:
--------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
--------------------------------
(Street Address)
--------------------------------
(City) (State) (Zip Code)
------------------------------
(3) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial conversion, the portion thereof as to
which this Warrant is being converted), in either case without making any
adjustment for additional shares of Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment provisions of
this Warrant, may be delivered upon exercise. In the case of a partial
conversion, a new Warrant or Warrants will be issued and delivered, representing
the unconverted portion of the Warrant, to the holder surrendering the Warrant.
29
EXHIBIT B
THIS WARRANT AND ANY SHARES OF STOCK PURCHASABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.
No. W-3 2,104,713.22 Shares
WARRANT TO PURCHASE
October 29, 1998
SHARES OF COMMON STOCK
OF
▇▇▇▇▇▇▇ HOLDINGS, INC.
Incorporated Under the Laws of the State of Delaware
THIS CERTIFIES THAT, for value received, and subject to the provisions
hereinafter set forth, ▇▇▇▇▇▇▇ Holdings, LLC, or its registered assigns is
entitled to purchase from ▇▇▇▇▇▇▇ Holdings, Inc., a Delaware corporation
("Holdings"), during the period specified in this Warrant, 2,104,713.22 shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock, par value $0.01 per share,
of Holdings (the "Common Stock") at an initial exercise price of $6.7315 per
share (the "Initial Exercise Price"). Certain capitalized terms used in this
Warrant are defined in Section 9.
1. DURATION. The right to subscribe for and purchase shares of Common Stock
represented hereby shall commence on the date of issuance of this Warrant and
shall expire at 5:00 P.M., Eastern Time, on October 29, 2005 (the "Expiration
Date").
2. METHOD OF EXERCISE OR CONVERSION; PAYMENT, ISSUANCE OF NEW WARRANT; TRANSFER
AND EXCHANGE.
2.1. METHOD OF EXERCISE.
2.1.1. EXERCISE. This Warrant may be exercised by the holder
hereof, in whole or in part, during normal business hours on any
business day on or prior to the Expiration Date, by surrender of this
Warrant to Holdings at its principal office, accompanied by a
subscription substantially in the form attached to this Warrant duly
executed by such holder and accompanied by (a) wire transfer of
immediately available funds, (b) certified or
30
official bank check payable to the order of Holdings or (c) delivery to
Holdings of a principal amount of Company Notes or Holdings Notes
(provided that any Capitalized Interest shall be included in principal
for purposes of determining such amount), in each case in the amount
obtained by multiplying (i) the number of shares of Common Stock
(without giving effect to any adjustment thereof pursuant to the
provisions hereof) for which this Warrant is then being exercised, as
designated in such subscription, by (ii) the Initial Exercise Price,
and such holder shall thereupon be entitled to receive the number of
duly authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) determined as provided in Sections 4
and 5.
2.1.2. CONVERSION. This Warrant may be converted by the holder
hereof, in whole or in part, into shares of Common Stock (or Other
Securities), during normal business hours on any business day on or
prior to the Expiration Date, by surrender of this Warrant to Holdings
at its principal office, accompanied by a conversion notice
substantially in the form attached to this Warrant duly executed by
such holder, and such holder shall thereupon be entitled to receive a
number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (or Other Securities) equal to:
(a) the excess of
(i) (x) the number of shares of Common Stock
(or Other Securities) determined as provided in
Sections 4 and 5 hereof which such holder would be
entitled to receive upon exercise of this Warrant for
the number of shares of Common Stock designated in
such conversion notice multiplied by (y) the Current
Market Price of each such share of Common Stock (or
such Other Securities) so receivable upon such
exercise
over
(ii) (x) the number of shares of Common
Stock (without giving effect to any adjustment
thereof pursuant to the provisions hereof) for which
this Warrant may be exercised, as designated in such
conversion notice, multiplied by (y) the Initial
Exercise Price
divided by
(b) such Current Market Price of each such share of Common
Stock (or Other Securities).
For all purposes of this Warrant (other than this Section 2.1), any
reference herein to the exercise of this Warrant shall be deemed to
include a reference to the conversion of this Warrant into Common Stock
(or Other Securities) in accordance with the terms of this Section
2.1.2.
31
2.2. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
business day on which this Warrant shall have been surrendered to Holdings as
provided in Section 2.1 hereof, and at such time the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock (or
Other Securities) shall be issuable upon such exercise as provided in Section
2.3 hereof shall be deemed to have become the holder or holders of record
thereof.
2.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as practicable after
each exercise of this Warrant, in whole or in part, Holdings at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the holder hereof or, subject to the
provisions of the Stockholders Agreement, as such holder (upon payment by such
holder of any applicable transfer taxes) may direct:
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the current Market Price per share on the
business day next preceding the date of such exercise; and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, dated the date hereof and calling in the
aggregate on the face or faces thereof for the number of shares of
Common Stock equal (without giving effect to any adjustment thereof
pursuant to the terms hereof) to the number of such shares called for
on the face of this Warrant minus the number of such shares designated
by the holder upon such exercise as provided in Section 2.1 hereof.
2.4. EXCHANGE OF WARRANT. This Warrant is exchangeable at the aforesaid
principal office of Holdings for Warrants for the purchase of the same aggregate
number of shares of Common Stock, each new Warrant to represent the right to
purchase such number of shares of Common Stock as the holder hereof shall
designate at the time of such exchange. All Warrants issued on transfers or
exchanges shall be dated the date hereof and shall be identical with this
Warrant except as to the number of shares of Common Stock issuable pursuant
hereto.
2.5. COMPANY TO REAFFIRM OBLIGATIONS. Holdings will, at the time of or
at any time after each exercise of this Warrant, upon the request of the holder
hereof, acknowledge in writing its continuing obligation to afford to such
holder all rights to which such holder shall continue to be entitled after such
exercise in accordance with the terms of this Warrant, provided
that if any such holder shall fail to make any such request, the failure shall
not affect the continuing obligation of Holdings to afford such rights to such
holder.
3. STOCK FULLY PAID; RESERVATION OF SHARES. Holdings represents, warrants,
covenants and agrees that all shares of Common Stock which may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized, validly issued, fully paid and
32
non-assessable. Holdings further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, Holdings
will at all times have authorized and reserved solely for the purpose of the
issuance upon exercise of this Warrant a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this Warrant.
If any shares of Common Stock required to be reserved for issuance upon
exercise of this Warrant require registration or qualification with any
governmental authority under any federal or state law before such shares may be
so issued, Holdings will in good faith and as expeditiously as reasonably
possible use reasonable efforts to cause such shares to be duly registered or
qualified.
Holdings will (a) not increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the amount payable
therefor upon such exercise immediately prior to such increase in par value, (b)
take all such action as may be necessary or appropriate in order that Holdings
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its reasonable efforts to
obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to enable
Holdings to perform its obligations under this Warrant.
4. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE UPON EXERCISE; EXERCISE PRICE. The
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this Section 4) be issuable upon such
exercise, as designated by the holder hereof pursuant to Section 2.1 hereof, by
a fraction (a) the numerator of which shall be the Initial Exercise Price and
(b) the denominator of which shall be the Exercise Price in effect on the date
of such exercise. The "Exercise Price" shall initially be the Initial Exercise
Price and shall be adjusted and readjusted from time to time as provided in this
Section 4 and, as so adjusted or readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by this Section 4.
4.1. SUBDIVISION OR COMBINATION OF SHARES. If Holdings, at any time
while this Warrant is outstanding, shall subdivide (by stock split or otherwise)
or combine (by consolidation or otherwise) any outstanding shares of Common
Stock, the Exercise Price shall be (a) proportionately decreased, to the nearest
one hundredth of one cent, in the case of a subdivision of shares, to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision or (b) proportionately increased, to the nearest one
hundredth of one cent, in the case of a combination of shares, to reflect the
decrease in the total number of shares of Common Stock outstanding as a result
of such combination, as of the effective date of such subdivision or
combination, or if Holdings shall take a record of holders of Common Stock for
the purpose of so subdividing or combining, as of the applicable record date,
whichever is earlier.
4.2. CERTAIN DIVIDENDS. If Holdings, at any time while this Warrant is
outstanding, shall pay any stock dividend on the Common Stock, the Exercise
Price shall be adjusted, as of the date Holdings shall take a record of the
holders of the Common Stock, for the purpose of receiving such dividend (or if
no such record is taken, as of the date of such dividend), to the nearest one
hundredth of one cent, to the product obtained by multiplying the Exercise Price
in effect
33
immediately prior to such subdivision or combination by a fraction (a) the
numerator of which shall be the total number of shares of the Common Stock
outstanding immediately prior to such dividend (plus in the event that Holdings
paid cash for fractional shares, the number of additional shares which would
have been outstanding had Holdings issued fractional shares in connection with
said dividends) and (b) the denominator of which shall be the total number of
shares of the Common Stock outstanding immediately after such dividend.
4.3. OTHER EVENTS. If any event occurs as to which the foregoing
provisions of Sections 4.1 and 4.2 are applicable or, if strictly applicable,
would not, in the good faith judgment of the Board, fairly and adequately
protect the purchase rights represented by the Warrants in accordance with the
essential intent and principles of such provisions, then the Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of the Board, to protect such purchase rights as aforesaid.
4.4. ADJUSTMENT OF EXERCISE PRICE. If at any time, as a result of any
adjustments hereunder, the sum of the Exercise Price plus a proportionate
portion of the consideration paid by the holder for this Warrant shall be less
than the par value per share of Common Stock, then the price payable per share
of Common Stock by the holder hereunder in the event of an exercise of this
Warrant, in whole or in part, shall be an amount equal to the par value per
share of the Common Stock; PROVIDED that for purposes of any calculation of the
number of shares issuable upon exercise of this Warrant, any adjustment to the
price payable per share of Common Stock pursuant to this Section 4.4 shall be
disregarded.
5. ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC.
In case Holdings after the date hereof (a) shall consolidate with or merge into
any other Person and shall not be the continuing or surviving corporation of
such consolidation or merger, or (b) shall permit any other Person to
consolidate with or merge into Holdings and Holdings shall be the continuing or
surviving Person but, in connection with such consolidation or merger, the
Common Stock or Other Securities shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (c) shall
transfer all or substantially all of its properties or assets to any other
Person or (d) shall effect a capital reorganization or reclassification of the
Common Stock or Other Securities, then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and the
terms and in the manner provided in this Warrant, the holder of this Warrant,
upon the exercise hereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Exercise Price in effect at the
time of such consummation for all Common Stock or Other Securities issuable upon
such exercise immediately prior to such consummation), in lieu of the Common
Stock or Other Securities issuable upon such exercise prior to such
consummation, the greatest amount of securities, cash or other property to which
such holder would actually have been entitled as a shareholder upon such
consummation if such holder had exercised the rights represented by this Warrant
immediately prior thereto.
6. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price is adjusted pursuant to
Section 4 hereof, Holdings will promptly deliver to the holder of this Warrant
at its address set forth on
34
Schedule I a certificate setting forth, in reasonable detail, the event that
triggered the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board made any determination hereunder), and the Exercise Price after giving
effect to such adjustment.
7. DIVIDENDS/DISTRIBUTIONS. Holdings shall give the holder of this Warrant not
less than 15 days prior written notice of its intent to pay a dividend or make
any other distribution on any shares of its capital stock, and shall set forth
in such notice the amount and type of such dividend or distribution and the
share of capital stock on which such dividend or distribution will be paid. If
the holder of this Warrant does not elect to exercise this Warrant prior to such
dividend or distribution, an amount equal to the cash which the holder would
have received on the Common Stock had the holder exercised this Warrant
immediately prior to such dividend or distribution shall at the option of the
holder (a) be used as a credit against the Exercise Price or (b) be retained by
Holdings and paid to such holder upon the exercise of this Warrant.
8. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant
shall be construed as conferring upon the holder hereof any rights as a
stockholder of Holdings or as imposing any obligation on such holder to purchase
any Securities or as imposing any liabilities on such holder as a stockholder of
Holdings, whether such obligation or liabilities are asserted by Holdings or by
creditors of Holdings.
9. DEFINITIONS. For the purposes of this Warrant, the following terms have the
following meanings:
"Board" shall mean the Board of Directors of Holdings.
"Common Stock" shall have the meaning as defined in the
introduction to this Warrant, such term to include any stock into which
such Common Stock shall have been changed or any stock resulting from
any reclassification of such Common Stock, and all other stock of any
class or classes (however designated) of Holdings the holders of which
have the right, without limitation as to amount, either to all or to a
share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled
to preference.
"Company Notes" shall mean the Junior Subordinated Notes due
2010 of ▇▇▇▇▇▇▇ Company, a Delaware corporation, in the aggregate
original principal amount of $30,000,000, issued October 29, 1998.
"Current Market Price" shall mean on any date specified
herein, the average daily Market Price during the period of the most
recent 20 days, ending on such date, on which the national securities
exchanges were open for trading, except that if no Common Sock is then
listed or admitted to trading on any national securities exchange or
quoted in the over-the-counter market, the Current Market Price shall
be the Market Price on such date.
35
"Escrow Warrants" shall have the meaning provided in the
Securities Purchase Agreement.
"Expiration Date" shall have the meaning set forth in
Section 1.
"Holdings" shall have the meaning provided in the introduction
to this Warrant, such term to include any corporation which shall
succeed to or assume the obligations of Holdings hereunder in
compliance with Section 5 hereof.
"Holding Notes" shall mean the Junior Subordinated Notes due
2011 of Holdings, in the aggregate original principal amount of
$10,000,000, issued October 29, 1998.
"Initial Exercise Price" shall have the meaning set forth in
the first paragraph hereof.
"Majority Holders" shall mean at any time holders of Warrants
exercisable for more than 50% of the shares of Common Stock issuable
under the Warrants at such time outstanding; PROVIDED that, for
purposes of Section 10 hereof, ▇▇▇▇▇▇▇ Holdings, LLC shall be deemed to
be the holder of any Escrow Warrants until such time as such Warrants
have been released from escrow.
"Market Price" shall mean on any date specified herein, the
amount per share of Common Stock equal to (a) the last sale price of
Common Stock, regular way, on such date or, if no such sale takes place
on such date, the average of the closing bid and asked prices thereof
on such date, in each case as officially reported on the principal
national securities exchange on which Common Stock is then listed or
admitted to trading, or (b) if Common Stock is not then listed or
admitted to trading on any national securities exchange but is
designated as a national market system security by the NASD, the last
trading price of Common Stock on such date, or (c) if there shall have
been no trading on such date or if Common Stock is not so designated,
the average of the closing bid and asked prices of Common Stock on such
date as shown by the NASD automated quotation system, or (d) if the
Common Stock is not then listed or admitted to trading on any national
exchange or quoted in the over-the-counter market, the fair market
value thereof determined in good faith by the Board.
"Other Securities" shall mean any stock (other than Common
Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holders of the Warrants at any time
shall be entitled to receive, or shall have received, upon the exercise
of the Warrants, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Section
5 hereof or otherwise.
36
"Person" shall mean an individual, a corporation, a
partnership, a trust, an unincorporated organization or a government
organization or an agency or political subdivision thereof.
"Securities" shall mean any debt or equity securities of
Holdings, whether now or hereafter authorized, and any instrument
convertible into or exchangeable for Securities or a Security.
"Security" shall mean one of the Securities.
"Securities Act" shall mean as of any date of the Securities
Act of 1933, as amended, or any similar Federal statute then in effect.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement dated as of October 28, 1998 among ▇▇▇▇▇▇▇ Company,
Inc., Holdings and the Purchasers listed therein.
"Stock" shall include any and all shares, interests or other
equivalents (however designated) of, or participants in, the capital
stock of a corporation of any class.
"Warrants" shall mean the Warrants issued pursuant to the
Securities Purchase Agreement. The term "Warrants" shall include,
without limitation, this Warrant and any Warrants issued in
substitution or exchange for any thereof.
10. AMENDMENT AND WAIVER. Any term, covenant, agreement or condition in this
Warrant may be amended, or compliance therewith may be waived (either generally
or in a particular instance and either retroactively or prospectively), by a
written instrument or written instruments executed by the Company and the
Majority Holders; PROVIDED, HOWEVER, that no such amendment or waiver shall
increase the Exercise Price, shorten the period during which the
Warrants may be exercised or modify any provision of this Section 10 without
consent of the holders of all Warrants then outstanding affected by such
amendment or waiver.
11. GOVERNING LAW. This Warrant shall be governed by and construed in accordance
with the internal laws of the State of Delaware (without giving effect to the
choice of law principles of such state).
37
▇▇▇▇▇▇▇ Holdings, Inc.
By:
-----------------------
Name:
Title:
38
Schedule I
to Warrant
▇▇▇▇▇▇▇ Holdings, LLC
c/o Fenway Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
39
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To ▇▇▇▇▇▇▇ Holdings, Inc.:
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder ________, (1)
shares of the Common Stock and herewith makes payment of $________ therefor,
and requests that the certificates for such shares be issued in the name of,
and deliver to ________, whose address is
Dated:
----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
------------------------------
(1) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any adjustment
for any stock or other securities or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be delivered upon exercise. In the
case of a partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the holder
surrendering the Warrant.
40
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto _________ the right
represented by such Warrant to purchase _________ (2) shares of Common Stock of
▇▇▇▇▇▇▇ Holdings, Inc. to which such Warrant relates, and appoints
_______________Attorney to make such transfer on the books of ▇▇▇▇▇▇▇ Holdings,
Inc. maintained for such purpose, with full power of substitution in the
premises.
Dated:
----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
-------------------------------------
(2) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any adjustment
for any stock or other securities or property or cash which, pursuant to the
adjustment provisions of this Warrant, may be delivered upon exercise. In the
case of a partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the holder
surrendering the Warrant.
41
FORM OF CONVERSION NOTICE
To ▇▇▇▇▇▇▇ Holdings, Inc.:
The undersigned registered holder of the within Warrant hereby
irrevocably converts such Warrant with respect to _________ (3) shares of the
Common Stock which such holder would be entitled to receive upon the exercise
hereof, and requests that the certificates for such shares be issued in the
name of, and delivered to _________, whose address is
Dated:
----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of Warrant)
----------------------------------
(Street Address)
----------------------------------
(City) (State) (Zip Code)
---------------------------------
(3) Insert here the number of shares called for on the face of this
Warrant (or, in the case of a partial conversion, the portion thereof as to
which this Warrant is being converted), in either case without making any
adjustment for additional shares of Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment provisions of
this Warrant, may be delivered upon exercise. In the case of a partial
conversion, a new Warrant or Warrants will be issued and delivered, representing
the unconverted portion of the Warrant, to the holder surrendering the Warrant.
