[Exhibit 1
Conformed
as Executed]
================================================================================
WARRANT AGREEMENT
By and Between
CONSOLIDATED LOGISTICS & DELIVERY, INC.,
PARIBAS CAPITAL FUNDING LLC,
EXETER VENTURE LENDERS, L.P.
and
EXETER CAPITAL PARTNERS IV, L.P.
---------------------------
Dated as of January 29, 1999
----------------------------
================================================================================
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (this "Agreement") dated as of January 29, 1999 and
entered into by and between CONSOLIDATED DELIVERY & LOGISTICS, INC., a Delaware
corporation (the "Company"), and PARIBAS CAPITAL FUNDING LLC ("PCF"), EXETER
VENTURE LENDERS, L.P. and EXETER CAPITAL PARTNERS IV, L.P. (collectively,
"Exeter") (each of PCF and Exeter, a "Purchaser" and collectively, the
"Purchasers").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, in connection with the Purchasers making certain loans to the
Company on the terms and conditions set forth in the Subordinated Loan
Agreement, the Company has agreed to issue and sell to the Purchasers on the
date hereof, certain common stock purchase warrants, as hereinafter described
(the "Warrants") to purchase initially in the aggregate, subject to the terms of
Section 9 hereof, 506,250 shares of Common Stock, par value $.001 per share, of
the Company (the "Common Stock");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1.
DEFINED TERMS
(a) The following terms when used in this Agreement, including its preamble
and recitals, shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Actual Investor IRR" shall have the meaning provided in Section 16(i).
"Additional Shares" means any shares of Common Stock issued after the date
hereof except (i) Common Stock issued upon the exercise of any Warrant, (ii)
securities issued by the Company on or prior to the Closing Date (and securities
issued upon the direct or indirect conversion or exercise of any securities
(including, but not limited to, warrants, options, rights or other convertible
or exchangeable securities) issued by the Company on or prior to the Closing
Date), (iii) Equity Securities issued pursuant to Section 10 of this Agreement
(iv) with respect to any Holder, shares of Common Stock purchased by such Holder
from the Company, and (v) the issuance or sale of any securities (including
stock options) of the Company issued pursuant to any stock option or stock bonus
or incentive plan or arrangement of the Company in effect on the date hereof for
the benefit of its officers, directors or employees.
"Affiliate" shall mean, as applied to any Person, any other Person directly
or indirectly controlling (including, but not limited to, all directors and
officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to "control" another Person
if such Person possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such other Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall have the meaning provided in the preamble of this
Agreement.
"Applicable Law" shall mean all provisions of laws, statutes, ordinances,
rules, regulations, permits or certificates of any Governmental Authority
applicable to such Person or any of its assets or property, and all judgments,
injunctions, orders and decrees of all courts, arbitrators or Governmental
Authorities in proceedings or actions in which such Person is a party or by
which any of its assets or properties are bound.
"Business Day" shall mean any day except Saturday, Sunday and any day which
in New York shall be a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close.
"Certificate" shall mean the Certificate of Incorporation of the Company,
as amended through the date hereof.
"Change of Control" shall mean, at any time and for any reason whatsoever
(i) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the
1934 Act, other than Management Investors (as defined in the Subordinated Loan
Agreement)) shall become the "beneficial owner" (as defined in Rules 13(d) and
13(d)-5 under the 1934 Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time) of 30% or more of any class of capital stock of the Company having
ordinary voting power in the election of directors of the Company, (ii) the
Board of Directors of the Company shall cease to consist of a majority of
Continuing Directors or (iii) any Change of Control under and as defined in the
Credit Agreement or the Subordinated Loan Agreement.
"Closing Date" shall mean the initial date of issuance of Warrants under
this Agreement.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the 1933 Act.
"Common Stock" shall have the meaning provided in the recitals of this
Agreement.
"Common Stock Per Share Market Value" means the price per share of Common
Stock obtained by dividing (A) the Market Value by (B) the number of shares of
Common Stock outstanding (on a Fully-Diluted Basis) at the time of
determination.
"Company" shall have the meaning provided in the preamble of this
Agreement.
-2-
"Continuing Directors" shall mean the directors of the Company on the
Closing Date and each other director of the Company, if such other director's
nomination for election to the Board of Directors of the Company is recommended
by a majority of the then Continuing Directors.
"Credit Agreement" shall mean the Loan and Security Agreement dated as of
July 14, 1997, among the Company, certain of its Subsidiaries and the Bank (as
defined in the Subordinated Loan Agreement), as amended by the Modification
Agreement (as defined in the Subordinated Loan Agreement) and as such agreement
may, subject to Section 6.17 of the Subordinated Loan Agreement, be further
amended, restated, extended, replaced, supplemented, restructured or otherwise
modified or refinanced pursuant to a Permitted Refinancing (as defined in the
Subordinated Loan Agreement) from time to time (in whole or in part without
limitation as to terms, extensions of maturities, increasing the amount of
borrowings or other conditions or covenants), including all related notes,
collateral documents, guarantees, Interest Rate Contracts (as defined in the
Subordinated Loan Agreement), instruments and agreements entered into in
connection therewith, as the same may be amended, modified, supplemented,
restated, restructured, replaced or refinanced pursuant to a Permitted
Refinancing (as defined in the Subordinated Loan Agreement) from time to time.
"Election Period" shall have the meaning provided in Section 14(d).
"Equity Securities" shall mean all shares of capital stock of the Company,
all securities convertible into or exchangeable for shares of capital stock of
the Company, and all options, warrants, and other rights to purchase or
otherwise acquire from the Company shares of such capital stock, or securities
convertible into or exchangeable for shares of such capital stock.
"Exercise Price" shall have the meaning provided in Section 5.
"Exeter" shall have the meaning provided in the preamble to this Agreement.
"Exeter Cancelable Warrants" shall have the meaning provided in Section
16(i).
"Exeter Holdback Warrants" shall have the meaning provided in Section
16(i).
"Expiration Date" shall have the meaning provided in Section 5.
"Fully Diluted Basis" means, as applied to the calculation of the total
number of shares of Common Stock outstanding at any time, after giving effect to
(a) all shares of Common Stock outstanding at the time of determination and (b)
without duplication, the additional amount of shares of Common Stock that would
be issuable if all outstanding rights, as of the time of calculation, to
purchase, exchange or convert Equity Securities were exercised and then so
convertible or exchangeable at a conversion or exchange price equal to or less
than the Market Price per share of Common Stock at such time.
"Governmental Authority" means any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States of America or foreign.
"Holdback Period" shall have the meaning provided in Section 16(i).
-3-
"Holder" means any Purchaser (so long as it holds any Warrants or Warrant
Shares) and any other registered holder of any of the Warrants or Warrant
Shares.
"Independent Financial Expert" means a nationally recognized investment
banking firm (a) that does not (and whose directors, officers, employees and
Affiliates do not) have a direct or indirect material financial interest in the
Company, (b) that has not been, and, at the time it is called upon to serve as
an Independent Financial Expert under this Agreement is not (and none of whose
directors, officers, employees or Affiliates is) a promoter, director or officer
of the Company, (c) that has not been retained during the preceding two years by
the Company for any purpose, and (d) that is otherwise qualified to serve as an
independent financial advisor. Any such Person may receive customary
compensation and indemnification by the Company for opinions or services it
provides as an Independent Financial Expert.
"Independent Third Party" shall mean any Person who, prior to such sale,
does not own in excess of 5% of the Company's Common Stock on a Fully Diluted
Basis, who is not controlling, controlled by or under common control with any
such 5% owner of the Company's Common Stock and who is not the spouse, ancestor
or descendant (by birth or adoption) of any such 5% owner of the Company's
common stock.
"Issuance Notice" shall have the meaning provided in Section 15.
"Investor Pro Forma IRR" shall have the meaning provided in Section 16(i).
"Management Shareholder" shall be Xxxxxx X. Xxx Xxxx, Xx.
"Market Price" means, with respect to a share of Common Stock on any
Business Day:
(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices on such day of the Common
Stock on all domestic securities exchanges on which the Common Stock is
then listed, or, if there have been no sales on any such exchange on such
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, if on any such day the Common Stock is
not so listed, the average of the representative bid and asked prices
quoted on NASDAQ as of 4:00 P.M., New York time, on such day, or if on any
day such security is not quoted on NASDAQ, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 20 days
consisting of the day as of which "Market Price" is being determined and
the nineteen consecutive Business Days prior to such day; or
(b) if the Common Stock is not Publicly Traded at the time of
determination, the Common Stock Per Share Market Value.
"Market Value" means the price that would be paid for the entire common
equity of the Company on a going-concern basis in an arm's-length transaction
between a willing buyer and a willing seller (neither acting under compulsion),
using valuation techniques then prevailing in the securities industry (but
without giving effect to any discount in respect of a minority interest
-4-
and giving effect to any value attributed to the rights of the Holders to
receive dividends and distributions as provided in Section 10 hereof) and
determined in accordance with the Valuation Procedure, and assuming full
disclosure and understanding of all relevant information and a reasonable period
of time for effectuating such sale. For the purposes of determining the Market
Value, (a) the exercise price of options or warrants to acquire Common Stock
which are deemed to have been exercised for the purpose of determining the
number of shares of Common Stock outstanding on a Fully-Diluted Basis, shall be
deemed to have been received by the Company and (b)(i) the liquidation
preference or indebtedness, as the case may be, represented by securities which
are deemed exercised for or converted into Common Stock for the purpose of
determining the number of shares of Common Stock outstanding on a Fully-Diluted
Basis and (ii) any contractual limitation in respect of the shares of Common
Stock relating to voting rights, shall be deemed to have been eliminated or
canceled.
"NASDAQ" means the National Association of Securities Dealers, Inc.,
Automated Quotation System.
"New Securities" shall mean any common stock of the Company of any class
and any other equity security of the Company, whether authorized now or in the
future, and any rights, options or warrants to purchase any such capital stock
("Options"), and securities (including, without limitation, debt obligations) of
any type whatsoever, that are, or may become, convertible into or exchangeable
for any such capital stock or Options; provided, that "New Securities" shall not
include (i) securities issued to officers, directors or employees of the Company
pursuant to any stock option or stock bonus or incentive plan or arrangement,
(ii) shares sold by the Company in a public offering, (iii) shares of Common
Stock issued as consideration in any merger or recapitalization of the Company
or issued as consideration for the acquisition of another Person or business or
all or substantially all of the assets of another Person and (iv) securities
issued upon the exercise of Options or upon the conversion of any securities
convertible or exchangeable into any capital stock or Options.
"Offer Election Notice" shall have the meaning provided in Section 14(d).
"Offer Election Period" shall have the meaning provided in Section 14(d).
"Offer Notice" shall have the meaning provided in Section 14(d).
"Offer Right" shall have the meaning provided in Section 14(d).
"Offered Warrants" shall have the meaning provided in Section 14(d).
"Offeror" shall have the meaning provided in Section 14(d).
"Organizational Documents" means, with respect to any Person, each
instrument or other document that (a) defines the existence of such Person,
including its articles or certificate of incorporation, as filed or recorded
with an applicable Governmental Authority or (b) governs the internal affairs of
such Person, including its bylaws, in each case as amended, supplemented or
restated.
-5-
"PCF" shall have the meaning provided in the preamble of this Agreement.
"PCF Cancelable Warrants" shall have the meaning provided in Section 16(i).
"PCF Holdback Warrants" shall have the meaning provided in Section 16(i).
"Permitted Transferee" shall mean any "Lender" under and as defined in the
Subordinated Loan Agreement or any Affiliate, officer, director, partner or
employee thereof, any Affiliate of any Holder or any officer, director, partner
or employee of any Holder.
"Person" or "Persons" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
"Publicly Traded" means, with respect to any security, that such security
is (a) listed on a domestic securities exchange, (b) quoted on NASDAQ or (c)
traded in the domestic over-the-counter market, which trades are reported by the
National Quotation Bureau, Incorporated.
"Purchaser" shall have the meaning provided in the preamble of this
Agreement.
"Refinancing Agreement" shall mean any "refinancing" of the Subordinated
Loan Agreement or any Refinancing Agreement (i.e., borrowing under a different
credit agreement in which Paribas Capital Funding LLC is not a party and using
the proceeds of such borrowing to repay all obligations under such refinanced
agreement).
"Registration Rights Agreement" shall mean the registration rights
agreement, dated as of January 29, 1999, by and among the Company and the
Purchasers.
"Regulated Holder" means any stockholder of the Company (i) that, directly
or indirectly because of its ownership by an entity that is subject to
Regulation Y, is subject to the provisions of Regulation Y and (ii) that holds
Common Stock or Warrants to purchase Common Stock.
"Regulation Y" means Regulation Y of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 225 (or any successor to such Regulation).
"Reorganization" shall have the meaning provided in Section 9(g).
"Requisite Holders" means Holders holding Warrants and/or Warrant Shares
representing at least a majority of all Warrant Shares issued or issuable upon
exercise of Warrants outstanding on the date of determination.
"Section 12(d) Transaction" shall have the meaning provided in Section
12(d).
"Subordinated Loan Agreement" means the Senior Subordinated Loan Agreement,
dated as of January 29, 1999, among the Company and the Purchasers, as amended,
amended and restated, supplemented, restructured or otherwise modified from time
to time (in whole or in part and without limitation as to terms, conditions or
covenants and without regard to the principal
-6-
amount thereof) and in effect, including all related notes, collateral
documents, guaranties, instruments and agreements entered into in connection
therewith, and any successive restructurings, renewals, extensions or
refinancings thereof.
"Tag-Along Notice" shall have the meaning provided in Section 15(b).
"Target IRR" shall have the meaning provided in Section 16(i).
"Valuation Procedure" means, with respect to the determination of any
amount or value required to be determined in accordance with such procedure, a
determination (which shall be final and binding on the Company and the Holders)
made (i) by agreement among the Company and the Requisite Holders within 20 days
following the event requiring such determination or (ii) in the absence of such
an agreement, by an Independent Financial Expert selected in accordance with the
further provisions of this definition. If required, an Independent Financial
Expert shall be selected within five days following the expiration of the 20-day
period referred to above, either by agreement among the Company and the
Requisite Holders or, in the absence of such agreement, by lot from a list of
four potential Independent Financial Experts remaining after the Company
nominates three, the Requisite Holders nominate three, and each side eliminates
one potential Independent Financial Expert. The Independent Financial Expert
shall be instructed by the Company and the Requisite Holders to make its
determination within 20 days of its selection. The fees and expenses of an
Independent Financial Expert selected hereunder shall be paid by the Company
unless the Independent Financial Expert's determination pursuant to the
Valuation Procedure is within 5% of the amount proposed by the Company in
connection with the Valuation Procedure and not agreed to by the Requisite
Holders, in which case such fees and expenses shall be paid 50% by the Holders
(on a pro rata basis) participating in the transaction to which the
determination relates and 50% by the Company.
"Warrant Certificates" shall have the meaning provided in Section 2.
"Warrant Documents" means this Agreement, the Subordinated Loan Agreement,
the Warrant Certificates and the Registration Rights Agreement.
"Warrant Number" shall have the meaning provided in Section 9.
"Warrant Shares" means (a) the shares of Common Stock issued or issuable
upon exercise of a Warrant in accordance with Section 5 or upon exchange of a
Warrant in accordance with Section 5, (b) all other securities or other property
issued or issuable upon any such exercise or exchange in accordance with this
Agreement and (c) any securities of the Company distributed with respect to, or
issued upon the conversion of, the securities referred to in the preceding
clauses (a) and (b); provided, however, Warrant Shares shall cease to be Warrant
Shares when they have been distributed to the public pursuant to an offering
registered under the 1933 Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the 1933 Act or any successor
rule.
"Warrants" shall have the meaning provided in the recitals of this
Agreement.
-7-
SECTION 2.
WARRANT CERTIFICATES
The Company will issue and deliver certificates evidencing the Warrants
(the "Warrant Certificates") in accordance with Section 3.17 of the Subordinated
Loan Agreement. Warrant Certificates shall be dated the date of issuance by the
Company.
SECTION 3.
EXECUTION OF WARRANT CERTIFICATES;
MUTILATED OR MISSING WARRANT CERTIFICATES
Warrant Certificates shall be signed on behalf of the Company by its
Chairman of the Board or its President or a Vice President of the Company. Each
Warrant Certificate shall also be manually signed on behalf of the Company by
its Secretary or an Assistant Secretary of the Company.
In case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company shall, upon request of the Holder of any such Warrant
Certificate, issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested, also
reasonably satisfactory to the Company.
SECTION 4.
REGISTRATION/RESERVATION OF WARRANT SHARES
The Company shall number and register the Warrant Certificates in a
register as they are issued. The Company may deem and treat the registered
Holders of the Warrant Certificates as the absolute owners thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary. The Warrants shall be registered initially in such name or names as
the Purchaser shall designate.
The Company shall at all times reserve and keep available shares of Common
Stock, free from preemptive rights, out of the aggregate of its authorized but
unissued Common Stock, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of Warrants.
The Company covenants that all Warrant Shares and other capital stock
issued upon exercise of Warrants or upon conversion of Warrant Shares will, upon
payment of the Exercise Price therefor (in the case of an exercise of Warrants)
and issue thereof, be validly authorized and issued, fully paid, nonassessable,
free of preemptive rights (except as may be granted by this Agreement) and free
from all taxes, liens, charges and security interests with respect to the issue
thereof.
If and so long as the outstanding Common Stock may be listed on any
securities exchange in the United States, the Company shall use its best efforts
to cause all reserved
-8-
Warrant Shares to be listed on each such exchange upon official notice of
issuance upon such exercise.
SECTION 5.
WARRANTS; EXERCISE OF WARRANTS
Subject to the terms of this Agreement, each Holder shall have the right,
which may be exercised at any time or from time to time until 5:00 p.m., New
York time, on January 29, 2009 (the "Expiration Date") to receive from the
Company the number of fully paid and nonassessable Warrant Shares which the
Holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price then in effect for such Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., New York time, on the Expiration Date
shall become void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time; provided that the occurrence
of the Expiration Date shall not relieve the Company of any obligation to any
Holder which arose pursuant to the terms of this Agreement prior to such date.
The price at which each Warrant shall be exercisable (as such price may be
adjusted from time to time, in accordance with the terms hereof, the "Exercise
Price") shall initially be $.001 per share. The Common Stock shall have a par
value of no greater than the then effective Exercise Price.
A Warrant may be exercised upon surrender to the Company at its address set
forth on the signature pages hereto of the Warrant Certificate or Warrant
Certificates to be exercised with the form of election to purchase attached
thereto duly completed and signed, and upon payment to the Company of the
Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price may be
made, at the option of the applicable Holder, (i) by cash, certified or bank
cashier's check or wire transfer, (ii) by surrendering to the Company the number
of Warrants which, when exercised, would entitle the Holder thereof to that
number of Warrant Shares which is equal to (A) such aggregate Exercise Price
divided by (B) the excess of (x) the product of the number of Warrant Shares
which may be purchased with one Warrant, multiplied by the Market Price per
share of Common Stock minus (y) the Exercise Price, (iii) by surrendering to the
Company the number of shares of Common Stock which is equal to (A) such
aggregate Exercise Price divided by (B) the Market Price per share of Common
Stock or (iv) any combination of the foregoing.
Subject to the provisions of Sections 6 and 8, upon such surrender of
Warrants and payment of the Exercise Price the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as such Holder may designate a certificate or
certificates for the number of full Warrant Shares issuable upon the exercise of
such Warrants (and such other consideration as may be deliverable upon exercise
of such Warrants) together with, at the sole option of the Company, cash for
fractional Warrant Shares as provided in Section 7. Such certificate or
certificates shall be deemed to have been issued and the Person so named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise Price,
irrespective of the date of delivery of such certificate or certificates for
Warrant Shares.
-9-
Each Warrant shall be exercisable, at the election of the Holder thereof,
either in full or from time to time in part and, in the event that a Warrant
Certificate is exercised in respect of fewer than all of the Warrant Shares
issuable on such exercise at any time prior to the date of expiration of the
Warrants, a new certificate evidencing the remaining Warrant or Warrants will be
issued and delivered pursuant to the provisions of this Section 5 and of Section
2.
All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Holders during normal business hours at its office.
SECTION 6.
PAYMENT OF TAXES
The Company will pay all taxes and other governmental charges (including
all documentary stamp taxes, but excluding all foreign, federal, state or local
income taxes payable by a Holder) in connection with the issuance or delivery of
the Warrants hereunder, including all such taxes attributable to the initial
issuance or delivery of Warrant Shares upon the exercise of Warrants and payment
of the Exercise Price. The Company shall not, however, be required to pay any
tax that may be payable in respect of any subsequent transfer of the Warrants or
any transfer involved in the issuance and delivery of Warrant Shares in a name
other than that in which the Warrants to which such issuance relates were
registered, and, if any such tax would otherwise be payable by the Company, no
such issuance or delivery shall be made unless and until the Person requesting
such issuance has paid to the Company the amount of any such tax, or it is
established to the reasonable satisfaction of the Company that any such tax has
been paid.
SECTION 7.
FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be presented for exercise
in full at the same time by the same Holder, the number of full Warrant Shares
which shall be issuable upon the exercise thereof shall be computed on the basis
of the aggregate number of Warrant Shares purchasable on exercise of the
Warrants so presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 7, be issuable on the exercise of any Warrants (or
specified portion thereof), the Company shall, at its sole option, pay an amount
in cash equal to the Market Price of the Warrant Share so issuable multiplied by
such fraction.
SECTION 8.
LIMITATIONS ON CERTAIN HOLDERS
Notwithstanding anything in this Agreement or any Warrant Certificate to
the contrary, no Regulated Holder and no transferee of such Regulated Holder,
may exercise the Warrants for a number of Warrant Shares which would permit such
Regulated Holder, together with its Affiliates and transferees, to own or
control a number of Warrant Shares greater than that permitted by Applicable Law
including, without limitation, Regulation Y.
-10-
SECTION 9.
ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE
AND EXERCISE PRICE
The number of shares of Common Stock issuable upon the exercise of each
Warrant (the "Warrant Number") is initially one. The Warrant Number is subject
to adjustment from time to time upon the occurrence of any event enumerated in,
or as otherwise provided in this Section 9.
(a) Adjustment for Change in Capital Stock. If the Company:
(i) subdivides or reclassifies its outstanding shares of Common Stock
into a greater number of shares or declares a stock dividend on its Common Stock
in shares of its capital stock (whether Additional Shares or capital stock of
another class);
(ii) combines or reclassifies its outstanding shares of Common Stock
into a smaller number of shares; or
(iii) issues by reclassification of its Common Stock any shares of its
capital stock;
then the Warrant Number in effect immediately prior to such action shall be
adjusted so that the Holder of any Warrant thereafter exercised may receive the
aggregate number and kind of shares of capital stock of the Company which it
would have owned immediately following such action if such Warrant had been
exercised immediately prior to such action. The adjustment shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification and shall become effective immediately after the
record date in the case of a dividend. Such adjustment shall be made
successively whenever any event listed above shall occur. If, as a result of an
adjustment made pursuant to this paragraph, the Holder of any Warrant thereafter
exercised shall become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors of the Company shall in
good faith determine the allocation of each adjusted Exercise Price between or
among shares of such classes of capital stock.
(b) Additional Issuance. If the Company at any time shall issue any
Additional Shares at a price less than the Market Price or any other Equity
Securities (excluding any such issuance for which the number of Warrant Shares
purchasable hereunder shall have been adjusted pursuant to subsection (a) of
this Section 9), which are exercisable or convertible for Additional Shares at
an exercise or conversion price less than the Market Price, the Warrant Number
after such issuance shall be determined by multiplying the Warrant Number by a
fraction, (i) the denominator of which shall be the number of shares of Common
Stock on a Fully Diluted Basis immediately prior to such issuance plus the
number of shares that the aggregate consideration to be received by the Company
for the total number of such Additional Shares issued or issuable in connection
with the conversion or exercise of such other Equity Securities (including the
issue price of any such other Equity Securities) would purchase at the Market
Price and (ii) the numerator of which shall be the number of shares of Common
Stock on a Fully Diluted Basis immediately after such issuance; provided, that
with respect to the issuance of Equity Securities that are exercisable or
convertible into Additional Shares at an exercise or
-11-
conversion price less than the Market Price and after the corresponding
adjustment to the Warrant Number provided for in the sentence immediately
preceding this proviso is effected, the Warrant Number shall not be successively
adjusted under this Section 9(b) upon the exercise or conversion of such Equity
Securities; and provided, further, with respect to any adjustment made pursuant
to this Section 9(b) upon the issuance of any Equity Securities which are
convertible or exchangeable for Additional Shares, (i) notwithstanding the
foregoing proviso, if such other Equity Securities by their terms provide, with
the passage of time or otherwise, for any increase in the consideration payable
to the Company, or decrease in the number of Additional Shares issuable, upon
the exercise or conversion thereof, the Warrant Number, as adjusted pursuant to
this Section 9(b), shall, upon any such increase or decrease becoming effective,
be recomputed in a manner consistent with this Section 9(b) to reflect such
increase or decrease and (ii) upon the expiration of any such other Equity
Securities or any rights of conversion or exchange under any such other Equity
Securities, to the extent not previously exercised or converted, the Warrant
Number, as adjusted by this Section 9(b) shall, upon such expiration, be
recomputed in a manner consistent with this Section 9(b), taking into account
the number of Additional Shares actually issued upon the conversion or exercise
thereof and the amount of consideration actually received by the Company in
connection with the original issuance of such Equity Securities and such
conversion or exercise; provided, further, however, that no readjustment
pursuant to the immediately preceding proviso, shall have the effect of
decreasing the Warrant Number (or increasing the Exercise Price in connection
with any corresponding adjustment made under Section 9(k)) by an amount in
excess of the amount of the adjustment initially made in respect of the issuance
of such other Equity Securities (calculated by adjusting the amount of such
readjustment to account for all adjustments made to the Warrant Number (and
Exercise Price) after the date of the initial adjustment). Shares of Common
Stock owned by or held for the account of the Company or any subsidiary on such
date shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be effective immediately after such issuance. Such
adjustment shall be made successively whenever any such event shall occur. If
the Company at any time shall issue two or more securities as a unit and one or
more of such securities shall be Additional Shares or other Equity Securities
subject to this subsection (b), the consideration allocated to each such
security shall be determined in good faith by the Board of Directors of the
Company.
(c) Distribution of Evidences of Indebtedness or Assets. If the Company at
any time shall fix a record date for the making of a distribution to the holders
of its Common Stock or other class of common stock (including any such
distribution to be made in connection with a consolidation or merger in which
the Company is to be the continuing corporation) of evidences of its
indebtedness or assets (excluding dividends paid in or distributions of Company
capital stock for which the Warrant Number shall have been adjusted pursuant to
subsection (a) of this Section 9 or dividends or distributions which have been
paid to the Holder pursuant to Section 10) the Warrant Number after such record
date shall be determined by multiplying the Warrant Number immediately prior to
such record date by a fraction, of which the denominator shall be the Market
Price per share of Common Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company and
described in a statement mailed by certified mail to each Holder) of the portion
of the assets or evidences of indebtedness to be distributed to a holder of one
share of Common Stock, and the numerator shall be such Market Price per share of
Common Stock. Such adjustment shall become effective immediately
-12-
after such record date. Such adjustment shall be made whenever such a record
date is fixed; and in the event that such distribution is not so made, the
number of Warrant Shares purchasable hereunder shall again be adjusted to be the
number that was in effect immediately prior to such record date.
(d) Consideration Received. For purposes of any computation respecting
consideration received pursuant to subsections (b) and (c) of this Section 9,
the following shall apply:
(i) in the case of an issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash (without any deduction being made
for any commissions, discounts or other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection therewith);
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof (irrespective of the
accounting treatment thereof) as determined in accordance with the Valuation
Procedure; and
(iii) in the case of the issuance of other Equity Securities, the
aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such securities plus
the additional minimum consideration, to be received by the Company upon the
conversion, exchange or exercise thereof (the consideration in each case to be
determined in the same manner as provided in clauses (i) and (ii) of this
subsection).
(e) When De Minimis Adjustment Deferred. No adjustment in the Warrant
Number need be made unless the adjustment would require an increase or decrease
of at least one-tenth of one percent in the Warrant Number. Any adjustments that
are not made shall be carried forward and taken into account in any subsequent
adjustment, provided that no such adjustment shall be deferred beyond the date
on which a Warrant is exercised. All calculations under this Section 9 shall be
made to the nearest 1/10th of a share.
(f) Notice of Adjustment. Whenever the Warrant Number is adjusted, the
Company shall provide the notices required by subsection 12(a) hereof. Whenever
the Warrant Number is required to be adjusted, as herein provided, the Company
shall mail by first class, postage prepaid, to each Holder, notice of such
adjustment or adjustments and a certificate of a firm of nationally recognized
independent public accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company) setting forth the
Warrant Number after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
(g) Reorganizations. In case of any capital reorganization, other than in
the cases referred to in subsections 9(a), (b) or (c) hereof, or the
consolidation or merger of the Company with or into another Person (other than a
merger or consolidation in which the Company is the surviving entity and which
does not result in any reclassification of the outstanding shares of Common
Stock into shares of other stock or other securities or property), or the sale
of all or substantially all of the property or assets of the Company other than
in the cases referred to in
-13-
Subsections 9(a), (b) or (c) hereof (collectively, such actions being
hereinafter referred to as "Reorganizations"), there shall thereafter be
deliverable upon exercise of any Warrant (in lieu of the number of shares of
Warrant Shares theretofore deliverable) the number of shares of stock or other
securities or property to which a Holder, of the number of shares of Common
Stock that would otherwise have been deliverable upon the exercise of such
Warrant, would have been entitled upon such Reorganization if such Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a duly
adopted resolution certified by the Company's Secretary or Assistant Secretary,
shall be made in the application of the provisions herein set forth with respect
to the rights and interests of Holders so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to any shares
or other property thereafter deliverable upon exercise of Warrants. The Company
shall not effect or permit any such Reorganization unless (i) the successor
entity resulting from such Reorganization or the Person purchasing such assets
is a corporation duly organized and validly existing under the laws of a state
of the United States and (ii) prior to or simultaneously with the consummation
of such Reorganization the successor entity (if other than the Company)
resulting from such Reorganization or the Person purchasing such assets shall
expressly assume, by a supplemental Warrant Agreement or other acknowledgment
executed and delivered to the Holder(s) in form and substance satisfactory to
the Requisite Holders, the obligation to deliver to each such Holder such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase, and all other obligations and
liabilities under this Agreement. No non-cash distributions of Common Stock
shall be made to a Regulated Holder or its Affiliate or transferee which would
cause such Regulated Holder, Affiliate or transferee to be in violation of any
Applicable Law.
(h) Form of Warrants. Irrespective of any adjustments in the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrant Certificates initially issuable pursuant to
this Agreement.
(i) Adjustments in Other Securities. If as a result of any event or for any
other reason, any adjustment is made which increases the number of shares of
Common Stock issuable upon conversion, exercise or exchange of, or in the
conversion or exercise price or exchange ratio applicable to, any Equity
Securities outstanding on the Closing Date, then a corresponding adjustment
shall be made hereunder to adjust the number of shares of Common Stock issuable
upon exercise of the Warrants, but only to the extent that no such adjustment
has been made pursuant to subsection 9(a), (b) or (c) with respect to such event
or for such other reason.
(j) Other Dilutive Events. If any corporate action shall occur as to which
the provisions of this Section 9 are not strictly applicable but as to which the
failure to make any adjustment would adversely affect the purchase rights or
value represented by the Warrants in accordance with the essential intent and
principles of this Section 9 (which are to place the Holder in a position as
nearly equal as possible to the position the Holder would have occupied had the
Holder purchased shares of Common Stock on the date hereof) then, in each such
case, the Company shall appoint a firm of independent certified public
accountants of recognized
-14-
national standing (which may be the regular auditors of the Company) to give
their written advice upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 9, necessary to
preserve, without dilution, the purchase rights represented by Warrants. Upon
receipt of such written advice, the Company will promptly mail a copy thereof to
Holders and will make the adjustments described therein.
(k) Exercise Price Adjustment. Whenever the Warrant Number is adjusted as
herein provided, the Exercise Price payable upon exercise of this Warrant shall
be adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the Warrant Number
immediately prior to such adjustment, and of which the denominator shall be the
Warrant Number immediately thereafter; provided, however, notwithstanding any to
the contrary contained in this Section 9(k), the Company will not be required to
reduce the Exercise Price below the par value of its Common Stock or reduce the
par value of its Common Stock.
(l) Dissolution, Liquidation or Winding Up. Notwithstanding any other
provision of this Agreement, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, each Holder shall be
entitled to share, with respect to the Warrant Shares issuable upon exercise of
the Holder's Warrants, equally and ratably in any cash or non-cash distributions
payable to holders of Common Stock, less the aggregate Exercise Price payable
upon the exercise of such Warrants. The Company shall give notice to each Holder
at the earliest practicable time (and, in any event, not less than 20 days
before the date of such dissolution, liquidation or winding-up, as the case may
be) and each Holder of outstanding Warrants shall be entitled to share equally
and ratably in any cash or noncash distributions payable to holders of Common
Stock. In case of any such voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall hold in escrow any funds or other
property which a Holder is entitled to receive in respect of such Holder's
Warrant Shares at the time of any distribution. No such Holder will be entitled
to receive payment of any such distribution until such Holder has surrendered
the Warrant Certificates evidencing such Warrant to the Company. From and after
such voluntary or involuntary dissolution, liquidation or winding up with
respect to the Company, all rights of the Holders, except the right to receive
such distribution, without interest, upon the surrender of the Warrant
Certificates, shall cease and terminate and such Warrants shall not thereafter
be transferred (except with the consent of the Company) and such Warrants shall
not be deemed to be outstanding for any other purpose whatsoever. For the
purposes of this Agreement, neither the voluntary sale, lease, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Company, nor the consolidation or merger of the Company with one or more other
corporations, shall be deemed to be a liquidation, dissolution or winding up,
voluntary or involuntary, with respect to the Company.
(m) Miscellaneous. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the Holders shall become entitled to
purchase any securities of the Company other than, or in addition to, shares of
Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in this Section 9, and
the provisions of
-15-
Sections 5, 6, 7 and 8 with respect to the Warrant Shares or the Common Stock
shall apply on like terms to any such other securities.
(n) Regulated Holders. If, in the written opinion of counsel to any
Regulated Holder (which may be internal counsel), the receipt by such Regulated
Holder of Warrant Shares (or any security included therein) upon any exercise or
exchange pursuant to this Section 9 or the receipt of any dividend or
distribution pursuant to Section 10 would cause such Regulated Holder to violate
any provision of Applicable Law with respect to its ownership of securities of
the Company, then the Company shall cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such securities in
a prompt and orderly manner, including providing (and authorizing such Regulated
Holder to provide) financial and other information concerning the Company to any
prospective purchaser of such securities sufficient in the written opinion of
counsel to such Regulated Holder (which may be internal counsel) needed to
prevent such exercise or exchange or the receipt of such dividend or
distribution from causing the ownership of the capital stock or voting
securities of such Regulated Holder to exceed the quantity of such capital stock
as such Regulated Holder is permitted under Applicable Law to own.
SECTION 10.
PAYMENTS IN RESPECT OF DIVIDENDS AND DISTRIBUTIONS
If the Company pays any dividend or makes any distribution (whether in
cash, property or securities of the Company) on its capital stock (other than
with respect to any series of preferred stock of the Company), then the Company
shall simultaneously pay to each Holder of Warrants, other than to any Holder of
Warrants delivering a written notice to the Company within 10 Business Days of
the notice delivered to such Holder pursuant to Section 12 hereof, an amount
equal to the dividend or distribution which would have been paid to such Holder
on the Warrant Shares receivable upon the exercise in full of such Warrant had
such Warrant been fully exercised immediately prior to the record date for such
dividend or distribution or, if no record is taken, the date as of which the
record holders of shares of Common Stock entitled to such dividend or
distribution are to be determined; provided however, that in the event the
receipt by any Holder of any such asset distribution would result in a violation
of Applicable Law applicable to such Holder, such Holder shall be entitled to
receive an amount of cash in lieu of such asset distribution equal to the value
(determined in accordance with the Valuation Procedure) of the asset
distribution which would otherwise be received by such Holder.
SECTION 11.
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to the Holders that the
representations and warranties contained in the Subordinated Loan Agreement
(including, without limitation, those representations and warranties
incorporated by reference therein as though specifically set forth herein) are
incorporated by reference herein and are true and correct as of the date hereof.
-16-
SECTION 12.
COVENANTS
(a) Notices of Certain Actions. In the event that the Company:
(i) shall have authorized the issuance of rights or warrants to
subscribe for or purchase capital stock of the Company since the last notice
delivered pursuant to this Section 12(a)(i) or the date hereof, whichever is
later, or of any other subscription rights or warrants to purchase capital stock
to holders of any type of capital stock of the Company since the last notice
delivered pursuant to this Section 12(a)(i) or the date hereof, whichever is
later; or
(ii) shall authorize a dividend or other distribution of evidences of
its indebtedness, cash or other property or assets to holders of any type of
capital stock of the Company; or
(iii) proposes to become a party to any consolidation or merger for
which approval of any stockholders of the Company will be required, or to a
conveyance or transfer of all or substantially all of the properties and assets
of the Company or of any capital reorganization or reclassification or change of
any type of capital stock of the Company; or
(iv) commences a voluntary or involuntary dissolution, liquidation or
winding up; or
(v) fails to comply with the provisions of this Agreement; or
(vi) proposes to take any other action which would require an
adjustment pursuant to Section 9; or
(vii) proposes any refinancing of the Credit Agreement, the
Subordinated Loan Agreement or any Refinancing Agreement; or
(viii) sends any notice or information to the holders of Common Stock
of the Company or the Company becomes aware of any potential Change of Control;
then the Company shall provide a written notice to each Holder stating (i) the
date as of which the holders of record of capital stock are to be entitled to
receive any such rights or warrants to subscribe for or purchase capital stock
of the Company, (ii) the record date of such dividend or other distribution of
evidence of its indebtedness, cash or other property or assets, (iii) the
material terms of any such consolidation or merger and the expected effective
date thereof, and the material terms of any such conveyance or transfer, and the
date on which any such conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of capital stock will be entitled to exchange
their shares for securities or other property, if any, deliverable upon such
reclassification, conveyance, transfer, dissolution, liquidation or winding up,
(iv) the nature of the lack of compliance, any corrective action taken and any
rights or remedies which such lack of compliance has bestowed on the Holders,
(v) a notice as is required by Section 9(f), (vi) a copy of such notice sent to
the holders of Common Stock of the Company with respect to any
-17-
such potential Change of Control and (vii) the material terms of any refinancing
of either the Credit Agreement, the Subordinated Loan Agreement or any
Refinancing Agreement (including delivery of the definitive credit documents to
be executed in connection therewith together with any other information
reasonably requested by any Holder of Warrants and/or Warrant Shares) and the
expected effective date thereof. Such notice shall be given not later than ten
(10) Business Days prior to the effective date (or the applicable record date,
if earlier) of such event.
(b) Financial Statements and Reports. The Company shall furnish, without
duplication, to each Holder the information described in Sections 5.01(a)
through (k) of the Subordinated Loan Agreement and such other information
relating to the Company and its subsidiaries and their operations and financial
condition as any Holder shall reasonably request.
(c) Information Rights and Access Rights. Each Holder shall have the right,
whether or not such Holder has exercised or exchanged any Warrants, (to the
extent such information is reasonably related to the Holder's investment) to
receive lists of stockholders or other information respecting the Company, to
inspect the books and records of the Company and to visit the properties of the
Company, and to discuss the affairs, finances and accounts of the Company or its
subsidiaries with, and be advised as to the same, by its and their officers.
Nothing contained in this Agreement shall be construed as conferring upon any
Holder, prior to its exercise of any Warrant, the right to vote or to consent or
to receive notice as stockholders in respect of meetings of stockholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company, except as expressly provided
hereunder or under Applicable Law.
(d) Regulated Holders. i) Notwithstanding any other provision of this
Agreement to the contrary, except as provided in this subsection 12(d), without
the prior written consent of any Regulated Holder, the Company shall not,
directly or indirectly, redeem, purchase or otherwise acquire, convert or take
any action (including any amendment to the Certificate) with respect to the
voting rights of, or undertake any other action or transaction (including any
merger, consolidation or recapitalization) affecting, any shares of its capital
stock or other voting securities if the result of the foregoing would be to
cause the ownership of the capital stock of the Company by such Regulated
Holder, or the ownership of voting securities of the Company (or any class
thereof) by such Regulated Holder, to exceed the quantity of such capital stock
or voting securities (or any class thereof) that such Regulated Holder is
permitted under Applicable Law to own. Any action or transaction referred to in
the preceding sentence shall be referred to herein as a "Section 12(d)
Transaction". If the Company proposes to undertake any action or transaction
which could constitute a Section 12(d) Transaction, it shall provide the Holders
at least 15 days prior written notice thereof. If, in the written opinion of
counsel to any Regulated Holder (which may be internal counsel) delivered within
10 days following receipt of such notice, such action or transaction constitutes
a Section 12(d) Transaction with respect to such Regulated Holder, then the
Company shall delay undertaking such Section 12(d) Transaction for the purpose
of using its best efforts to agree on a manner in which to restructure such
action or transaction in a manner reasonably satisfactory to the Company and
such Regulated Holder so that it no longer would constitute a Section 12(d)
Transaction. If the Company and such Regulated Holder are unable to agree,
within 20 days of the delivery of such written opinion, upon a manner in which
to so restructure such Section 12(d) Transaction, and such Section 12(d)
-18-
Transaction is a bona fide action or transaction proposed by the Company in good
faith, then the Company shall be permitted to undertake such Section 12(d)
Transaction if prior to or concurrently with doing so, at the election of such
Regulated Holder, the Company shall cooperate with such Regulated Holder in any
efforts by such Regulated Holder to dispose of some or all of such Warrants or
Warrant Shares in a prompt and orderly manner, including providing (and
authorizing such Regulated Holder to provide) financial and other information
concerning the Company to any prospective purchaser of such Warrants or Warrant
Shares sufficient in the written opinion of counsel to such Regulated Holder
(which may be internal counsel) needed to prevent such Section 12(d) Transaction
from causing the ownership of the capital stock or voting securities of such
Regulated Holder to exceed the quantity of such capital stock as such Regulated
Holder is permitted under Applicable Law to own.
(ii) If it becomes unlawful for any Regulated Holder to continue to
hold some or all of the Warrants or Warrant Shares held by it, or restrictions
are imposed on any Regulated Holder by Applicable Law which, in the reasonable
judgment of such Regulated Holder, make it unduly burdensome to continue to hold
such Warrants or Warrant Shares, the Company shall take such actions as
reasonably requested by such Regulated Holder, including, but not limited to,
cooperating with such Regulated Holder in any efforts by such Regulated Holder
to dispose of some or all of such Warrants or Warrant Shares in a prompt and
orderly manner, including providing (and authorizing such Regulated Holder to
provide) financial and other information concerning the Company to any
prospective purchaser of such Warrants or Warrant Shares.
(e) Current Public Information. The Company will file all reports required
to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations adopted by the Commission thereunder, and will take such further
action as any Holder may reasonably request, all to the extent required to
enable such Holder to sell Warrant Shares pursuant to Rule 144 or Rule 144A
adopted by the Commission under the 1933 Act. Upon request, the Company will
deliver to any such Holder a written statement as to whether it has complied
with such requirements.
(f) Public Disclosures. The Company will not disclose any Holder's name or
identity as an investor in the Company in any press release or other public
announcement, unless such disclosure is required by Applicable Law or
governmental regulations or by order of a court of competent jurisdiction in
which case prior to making such disclosure the Company will give written notice
to such Holder describing in reasonable detail the proposed content of such
disclosure and will permit the Holder to review and comment upon the form and
substance of such disclosure.
(g) Certain Restrictions. The Company will not without the consent of the
Requisite Holders, take any action, corporate or otherwise, the effect of which
would be to alter, impair or affect adversely either the rights of the Holders
or the duties and obligations of the Company under the Warrant Documents.
(h) Specific Performance. Each Holder shall have the right to specific
performance by the Company of the provisions of this Agreement, in addition to
any other remedies it may have at law or in equity. The Company hereby
irrevocably waives, to the extent that it may do so under Applicable Law, any
defense based on the adequacy of a remedy at law which may be
-19-
asserted as a bar to the remedy of specific performance in any action brought
against the Company for specific performance of this Agreement by any Holder of
the Warrants or Warrant Shares.
SECTION 13.
AMENDMENTS AND WAIVERS
(a) Consent of Holders. No amendment, modification, termination or waiver
of any provision of this Agreement and the Warrant Certificates or consent to
any departure by the Company therefrom, shall in any event be effective without
the written concurrence of the Requisite Holders; provided, however, that
without the consent of each Holder affected, no amendment, modification,
termination or waiver may:
(i) make any change to the definition of "Requisite Holders";
(ii) make any change that adversely affects any Holder; or
(iii) make any change in the foregoing amendment and waiver
provisions.
After an amendment, modification, termination or waiver under this Section
13 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing such amendment, modification, termination or waiver.
Any failure of the Company to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such amendment,
modification, termination or waiver.
In connection with any amendment, modification, termination or waiver under
this Section 13, the Company may offer, but shall not be obligated to offer, to
any Holder who consents to such amendment, modification, termination or waiver,
consideration for such Holder's consent, so long as such consideration is
offered to all Holders.
(b) Solicitation of Holders. The Company will not effect any proposed
amendment, modification, termination or waiver of any of the provisions of this
Agreement or the Warrant Certificates unless each Holder (irrespective of the
amount of Warrants or Warrant Shares then owned by it) shall be informed thereof
by the Company prior to the effectuation thereof and shall be afforded the
opportunity of considering the same and shall be supplied by the Company with
information which is sufficient in the Company's reasonable discretion to enable
such Holder to make an informed decision with respect thereto. Executed or true
and correct copies of any amendment, modification, termination or waiver
effected pursuant to the provisions of this Section 13 shall be delivered by the
Company to each Holder of outstanding Warrants or Warrant Shares forthwith
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of outstanding Warrant Shares.
Any failure by the Company to deliver such copies shall not, however, in any way
impair or affect the validity of any such amendment, modification, termination
or waiver.
(c) Revocation and Effect of Consents. Until an amendment, modification,
termination or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Warrant or
Warrant Shares, even if notation of the
-20-
consent is not made on any Warrant Certificate or stock certificate. However,
any such Holder or subsequent Holder may revoke any such consent by notice to
the Company received before the date on which the Requisite Holders have
consented (and not theretofore revoked such consent) to such amendment,
modification, termination or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
modification, termination or waiver, which record date shall be at least ten
(10) Business Days prior to the first solicitation of such consent. If a record
date is fixed, then notwithstanding the last sentence of the immediately
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than ninety (90) days after such record date.
SECTION 14.
TRANSFERS; RIGHT OF FIRST OFFER
(a) Permitted Transferees. Each Holder shall be permitted, subject to the
provisions of subsection 14(e) below, to transfer any Warrants or Warrant Shares
(and the rights relating thereto under this Agreement and the other Warrant
Documents) to any Permitted Transferee.
(b) Limitations on Transfers. In addition to the rights of transfer under
Section 14(a), each Holder, subject to the provisions of subsections 14(c), (d)
and (e) below, shall be permitted to transfer any Warrants or Warrant Shares
(and the rights relating thereto under this Agreement and the other Warrant
Documents) to any other Person; provided that:
(i) such transfer is made pursuant to a registration statement under
the 1933 Act or Rule 144 promulgated under the 1933 Act; or
(ii) such transfer is made to a Person other than a Permitted
Transferee pursuant to an exemption from the registration requirements of the
1933 Act; provided, that if such transfer is being made pursuant to an exemption
from such registration requirements, then:
(A) if requested by the Company, counsel for such Holder (which
counsel may be internal counsel), shall furnish to the Company an opinion
to the effect that such transfer is being made pursuant such an exemption;
(B) the applicable transferee (or, in the case of an account
manager, the managed account on behalf of which the account manager is
acting) is an "accredited investor" as defined in Regulation D promulgated
under the 1933 Act; and
(C) such transferee represents to the Company in writing that it
is acquiring such Warrants or Warrant Shares solely for its own account (or
in the case of account managers, on behalf of managed accounts) and not as
nominee or agent for any other Person (other than for such managed
accounts, if applicable) and not with a view to, or for offer or sale in
connection with, any distribution thereof (within the meaning of the 1933
Act), without prejudice, however, to its right at all times to sell or
otherwise dispose
-21-
of all or any part of said Warrants or Warrant Shares pursuant to a
registration statement under the 1933 Act or pursuant to an exemption from
the registration requirements of the 1933 Act, and subject, nevertheless,
to the disposition of its property being at all times within its control.
(c) Warrant Register. The Company shall promptly register the transfer of
any outstanding Warrants in the Warrant register and any outstanding Warrant
Shares in a Common Stock register to be maintained by the Company upon surrender
thereof accompanied by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company, duly executed by the registered Holder
or Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Upon any such registration of transfer, a new Warrant
or Warrant Share, as the case may be, shall be issued and delivered with all
reasonable dispatch to the transferee(s) and such transferee(s) shall be deemed
to have become the Holder(s) of record of such Warrant or Warrant Share, as the
case may be, and the surrendered Warrant or Warrant Share, as the case may be,
shall be canceled and disposed of by the Company.
(d) First Offer Right. ii) If, at any time any Purchaser (an "Offeror")
wishes to make a transfer of Warrants in compliance with Section 14(b)(ii) above
(other than to a Person who is simultaneously therewith purchasing Loans from
such Offeror and agrees to be bound by the provisions of this Section 14(d)),
then, at least ten (10) Business Days before making any such transfer (the
"Offer Election Period"), the Offeror will deliver a written notice (the "Offer
Notice") to the Company. The Offer Notice will specify the proposed number of
Warrants to be the subject of such transfer (the "Offered Warrants") and
disclose in reasonable detail the proposed terms and conditions of the transfer.
(ii) The Company shall have the right to purchase all (but not less than
all) of the Offered Warrants, at the price and on the terms specified in the
Offer Notice (the "Offer Right") by delivering written notice of such election
(the "Offer Election Notice") to the Offeror as provided in this Section
14(d)(ii); provided that in the event the Company wishes to purchase Offered
Warrants but is prohibited from purchasing all of the Offered Warrants from the
Offeror by virtue of (and only of) the restrictions contained in Section
6.03(ii) of the Subordinated Loan Agreement limiting the amount of dividends
payable thereunder for such purposes (and each Purchaser hereby agrees that it
shall (or cause its relevant Affiliate to) waive any such restrictions on such
purchase under the Subordinated Loan Agreement in the event that (x) it or any
of its Affiliates desires to sell its Warrants and the Company elects to
purchase such Offered Warrants and (y) each other Purchaser (and/or each of its
Affiliates) with Loans under the Subordinated Loan Agreement agrees to waive
such restrictions), then the Company shall have the right to purchase such
lesser number (the "Maximum Permitted Number") of the Offered Warrants as the
Company shall be permitted to purchase under said Section 6.03(ii) at the price
and on the other relevant terms specified in the Offer Notice by delivering an
Offer Election Notice to the Offeror as specified in this Section 14(d)(ii).
Within five (5) Business Days after receipt of the Offer Notice (the "Election
Period"), the Company shall provide the Offer Election Notice to the Offeror,
specifying the number of Offered Warrants it has elected to purchase. If the
Company does not elect to purchase all (or, in the event the Company is
prohibited from purchasing all of the Offered Warrants pursuant to Section 6.03
of the Subordinated Loan
-22-
Agreement, the Maximum Permitted Number) of the Offered Warrants within the
Election Period, then the Offer Right shall expire and be of no further force
and effect.
(iii) If the Company elects to purchase all (or the Maximum Permitted
Number, as applicable) of the Offered Warrants, the transfer of such Warrants
will be consummated as soon as practicable, but in any event within ten (10)
Business Days after the delivery of the Offer Election Notice by the Company;
provided, however, in the event that the Company elects to purchase the Offered
Warrants but is prohibited from purchasing all or any portion of the Offered
Warrants by the terms of Section 6.03 of the Subordinated Loan Agreement because
(and only because) a Default or an Event of Default (as each such term is
defined in the Subordinated Loan Agreement) is in existence at the time of the
proposed purchase, then (x) the Offeror shall not sell any Offered Warrants to
any third party for the 30-day period following the delivery of the Offer
Election Notice by the Company (the "Cure Period") and (y) if the Company cures
such Default or Event of Default during the Cure Period (and no other Default or
Event of Default is then in existence), the transfer of such Warrants as
contemplated above will instead be consummated as soon as practicable, but in
any event within ten (10) Business Days, after the date of such cure. If the
Company did not elect to purchase all of the Offered Warrants (or the Maximum
Permitted Number of Offered Warrants, as applicable) or is otherwise prohibited
from purchasing all or any portion of the Offered Warrants as a result of the
restrictions under Section 6.03 of the Loan Agreement proscribing such purchases
during the existence of a Default or an Event of Default after the lapse of the
Cure Period, the Offeror may, within one hundred and eighty (180) days after the
expiration of the later of the Offer Election Period or the Cure Period, as
applicable, transfer all or any portion of such Offered Warrants to one or more
third parties at a price not less than the price per Warrant specified in the
Offer Notice and on other terms no more favorable to the transferors in any
material respect than the terms specified in the Offer Notice.
(e) Transferees to be Bound. Each transferee acquiring Warrants or Warrant
Shares pursuant to this Agreement shall agree (so long as any such Warrant
Shares would continue to be Warrant Shares upon the consummation of such
transfer) in writing to be bound by the provisions of this Agreement prior to or
concurrently with any such acquisition of Warrants or Warrant Shares.
SECTION 15.
PREEMPTIVE RIGHTS; TAG-ALONG RIGHTS
(a) Preemptive Rights. The Company shall not issue or sell any New
Securities or sell any rights to subscribe for or options to purchase such New
Securities for cash or debt, unless the Company shall first provide to the
Holders notice (the "Issuance Notice") of its intent to offer such New
Securities. The Issuance Notice shall contain (i) a description of the New
Securities, (ii) the total number of New Securities authorized to be sold and
(iii) the price and payment terms. Each Holder shall have the right (pro rata)
according to its then respective ownership interest in the Company, determined
on a Fully Diluted Basis, to purchase the number of New Securities as will
enable such Holder to maintain its proportionate ownership interest in the
Company. Each Holder electing to purchase New Securities shall tender the
purchase price therefor within twenty (20) days from the date of the Issuance
Notice. During the ninety (90) day period following the delivery of the Issuance
Notice, the Company may sell any New
-23-
Securities described in the Issuance Notice which were not purchased by the
Holders, at a price equal to or greater than that specified in the Issuance
Notice. If such sale is not consummated within one hundred forty (140) days from
the date of Issuance Note, the Company shall not again sell New Securities
without again complying with this Section 15.
(b) Tag-Along. If the Management Shareholder shall propose to sell or
convey in a single transaction or in a series of related transactions a number
of shares of Common Stock or options or warrants to acquire Common Stock equal
to or greater than 5% of the then outstanding shares of Common Stock to an
Independent Third Party (other than in a sale pursuant to a registration
statement in which the Holders may exercise their "piggyback" registration
rights under the Registration Rights Agreement), the Management Shareholder
shall provide each Holder with written notice (the "Tag-Along Notice") setting
forth the terms and conditions of the proposed transfer, including the identity
of the Independent Third Party, the number of shares of Common Stock to be
transferred, the per share price to be paid for the shares of Common Stock to be
transferred and the type and nature of the consideration to be received
therefor; provided, however, notwithstanding the foregoing, the Management
Shareholder shall not be required to provide any Holder with a Tag-Along Notice,
and the Holders shall not be entitled to sell any Warrant Shares under this
Section 15(b), if the Management Shareholder proposes to sell or convey shares
of Common Stock on account of personal hardship, including, but not limited to,
(i) the commencement of a voluntary or involuntary case under the United States
Code entitled "Bankruptcy" by the Management Shareholder or his creditors, (ii)
a sale or other transfer pursuant to a separation agreement or a final decree or
judgment of divorce in favor of or against the Management Shareholder, or (iii)
a serious illness of the Management Shareholder or any parent, spouse, sibling
or child of the Management Shareholder. Each Holder, by written notice to the
Management Shareholder delivered within 10 days after the date of such Tag-Along
Notice, shall be entitled to require the Management Shareholder to include in
the proposed sale to the Independent Third Party in the same transaction all of
their Warrant Shares (or, if the Management Shareholder is selling less than all
of his Common Stock or the prospective transferee is not willing to purchase all
of the shares of Common Stock and Warrant Shares proposed to be sold by the
Management Shareholder and the Holders exercising their rights pursuant to this
Section 15(b), then the Management Shareholder and the Holders participating in
such sale shall each be entitled to sell their pro rata portion of the total
number of shares of Common Stock and Warrant Shares to be purchased by the
proposed transferee computed on the basis of the number of shares of Common
Stock or Warrant Shares, as the case may be, proposed to be sold by the
Management Shareholder or such Holder, as the case may be, on the same terms and
conditions set forth in the Tag-Along Notice. All fractional shares resulting
from the calculation contained in the prior sentence will be rounded to the
nearest whole share. The Management Shareholder shall use his best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Holders in any contemplated transfer. Following his compliance with the
foregoing, the Management Shareholder and any Holders who have elected to
participate in the contemplated transfer may, within 120 days after the
expiration of the 10-day period referenced above, transfer all of the shares
specified in the Tag-Along Notice to the transferee(s) specified in the
Tag-Along Notice at a price not less than the price per share specified in the
Tag-Along Notice and on other terms no less favorable to the transferors in any
material respect than the terms specified in the Tag-Along Notice.
-24-
SECTION 16.
MISCELLANEOUS
(a) Notices. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and shall be made by personal service, telecopy, United States mail or reputable
courier service:
(i) if to the Purchaser or subsequent Holder, at the address or
telecopy number set forth on the signature pages to this Agreement, or such
other address as shall be designated in a written notice delivered to the
Company; and
(ii) if to the Company, at the address or telecopy number set forth on
the signature pages to this Agreement, or such other address as shall be
designated in a written notice delivered to the other parties hereto.
Unless otherwise specifically provided herein, any notice or other
communication shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telecopy, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed.
(b) Failure or Indulgence Not Waiver: Remedies Cumulative. No failure or
delay on the part of any Holder in the exercise of any power, right or privilege
hereunder or under any other Warrant Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Agreement and the other
Warrant Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
(c) Severability. In case any provision in or obligation under this
Agreement or the Warrant Certificates shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
(d) Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
(e) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(f) Successors and Assigns. This Agreement shall be binding on the parties
hereto and their respective successors and assigns and shall insure to the
benefit of the parties hereto and the successors and assigns and Permitted
Transferees of each Holder.
(g) Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto or in connection herewith may be executed in any number of
counterparts
-25-
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
(h) Survival of Representation and Warranties, Entire Agreement. All
representations and warranties contained herein or made in writing or on behalf
of the Company in connection herewith shall survive the execution and delivery
of this Agreement and the Warrant Shares and the transfer by each Holder of any
Warrant Shares or any portion thereof on interest therein, and may be relied
upon by each Holder regardless of any investigation made at any time by or on
behalf of each Holder. This Agreement, the Subordinated Loan Agreement, the
Warrant Certificates and the Registrations Rights Agreement embody the entire
agreement and understanding between the parties hereto and supersede all prior
agreements and understandings, if any, relating to the subject matter hereof.
(i) Subordinated Loan Prepayment. (A) If, upon prepayment in full, in cash,
of a Loan or Loans (as such term is defined in the Subordinated Loan Agreement)
on or after the first anniversary of the Funding Date (such term being used
herein as defined in the Subordinated Loan Agreement) and on or before the third
anniversary of the Funding Date pursuant to Section 2.02 of the Subordinated
Loan Agreement, a Purchaser shall have obtained on the original principal amount
of its respective Loan an aggregate annualized cash on cash internal rate of
return (calculated as of the date of such prepayment and as reasonably
determined by such Purchaser in accordance with traditional methods of making
such calculation, but, in any event, compounding on an annual basis) (the
"Actual Investor IRR"), a copy of such calculation to be provided to the
Company, through (1) the receipt of cash on or after the Funding Date in
connection with the payment of interest, dividends and fees and the prepayment
(including any prepayment penalty) of such Loan or Loans and the sale of such
Warrants and/or Warrant Shares on or before the date of such prepayment of such
Loan plus (2) the aggregate Market Price of any Warrant Shares held by such
Purchaser on the date of calculation (assuming the exercise of all of the
Warrants held by such Purchaser), and calculated as if such Purchaser held on
the date of calculation the amount of Loans made by such Purchaser on the
Funding Date, which is in either range of the target rates of return (the
"Target IRR") set forth below, then the Company shall be entitled to cancel
those number of Warrants held by such Purchaser (the "PCF Cancelable Warrants"
and the "Exeter Cancelable Warrants") representing those number of Warrant
Shares of such Purchaser (as such amounts are equitably adjusted from time to
time for stock splits, stock combinations and other similar transactions) set
forth opposite the applicable Target IRR (as prorated among affiliated entities
based on the Warrants originally issued to such affiliates); provided, that in
no event shall the cancellation of the PCF Cancelable Warrants or the Exeter
Cancelable Warrants, as the case may be, under this Section 16(i) exceed that
amount which shall (when subtracting such amount from such Purchaser's cash on
cash return) reduce the Actual Investor IRR of such Purchaser to a level below
the following Target IRRs:
-26-
PCF Exeter
Cancelable Cancelable
Target IRR Warrants Warrants
---------- ---------- ----------
Greater than 25% and less than or equal to 30% 12,500 6,250
Greater than 30% 37,500 18,750
The Company's right to cancel Warrants held by a Purchaser under this Section
16(i) shall be exercisable solely on the date on which all of the Loans shall
have been prepaid in full in accordance with the requirements of Section 2.02 of
the Subordinated Loan Agreement.
(B) Each of PCF and Exeter hereby covenant and agree to not sell or
otherwise transfer (other than to its respective Affiliates and other than as
may be required by Applicable Law; provided, that PCF and Exeter shall not
knowingly take any action, the direct result of which would require PCF or
Exeter, as the case may be, to dispose of the PCF Holdback Warrants or the
Exeter Holdback Warrants, as the case may be, in order to comply with Applicable
Law) during the period beginning on the date hereof through the third
anniversary of the Funding Date (the "Holdback Period") (i) in the case of PCF,
37,500 Warrants (the "PCF Holdback Warrants") as such amount is equitably
adjusted from time to time for stock splits, stock combinations and other
similar transactions and (ii) in the case of Exeter, 18,750 Warrants (the
"Exeter Holdback Warrants") as such amount is allocated pro rata among
affiliated entities holding Warrants and is equitably adjusted from time to time
for stock splits, stock combinations and other similar transactions. If, upon
the proposed sale by PCF of all of its Warrants and/or Warrant Shares (including
the PCF Holdback Warrants) or upon the proposed sale by Exeter of all of its
Warrants and/or Warrant Shares (including the Exeter Holdback Warrants), then
PCF or Exeter, as the case may be, shall compute its respective Actual Investor
IRR (x) by taking into account (1) all cash received on or after the Funding
Date through the date of such proposed sale in connection with the payment of
interest, dividends and fees and any prior prepayment of all Loan or Loans of
PCF or Exeter, as the case may be, and all prior sales of Warrants and/or
Warrant Shares plus (2) the aggregate Market Price of any Warrant Shares held on
the date of sale (assuming the exercise of all Warrants held by such Purchaser)
of PCF or Exeter, as the case may be, and (y) as if (i) all outstanding Loans of
PCF or Exeter, as the case may be, shall be prepaid pursuant to Section 2.02(a)
of the Subordinated Loan Agreement on the date of such proposed sale at the
prepayment penalty set forth in such Section 2.02(a) which would be payable on
such date if such Loans were prepaid on such date and (ii) all accrued but
unpaid interest, dividends and fees through the date of such proposed sale shall
be paid to PCF or Exeter, as the case may be, on the date of such proposed sale
(such calculation hereinafter referred to as the "Investor Pro Forma IRR"),
calculated as of the proposed sale date and as if such Purchaser held on the
date of such proposed sale the amount of Loans made by such Purchaser on the
Funding Date. If the Investor Pro Forma IRR of PCF or Exeter, as the case may
be, is less than 25%, then PCF or Exeter, as the case may be, may sell the PCF
Holdback Warrants or Exeter Holdback Warrants, as the case may be, at such time.
PCF or Exeter, as the case may be, shall provide the Company with a copy of the
Investor Pro Forma IRR of PCF or Exeter, as the case may be, two days prior to
the date of such sale (using the Market Price of the Warrant Shares on the date
prior to the date of such notice), and shall deliver a copy of the actual
calculation to the Company within 3 days after the consummation of such sale.
If the Investor Pro Forma IRR of PCF or Exeter, as the case may be, falls within
either Target IRR range set
-27-
forth in subparagraph (A) above (the "Target IRR Range"), then PCF or Exeter, as
the case may be, shall hold the PCF Holdback Warrants or Exeter Holdback
Warrants, as the case may be, until the earlier of (I) the expiration of the
Holdback Period or (II) an actual prepayment in full of a Loan or Loans of PCF
or Exeter, as the case may be, at which point the Actual Investor IRR will be
recalculated and, if within the Target IRR Range, the PCF Holdback Warrants and
the Exeter Holdback Warrants, as the case may be, will be subject to
cancellation in accordance with this Section 16(i). Upon expiration of the
Holdback Period, PCF and Exeter shall be entitled to exercise or sell any
remaining PCF Holdback Warrants or Exeter Holdback Warrants, as the case may be,
without further restriction under this Section 16(i)(B) but in accordance with
the other provisions of this Agreement.
(C) Notwithstanding anything in Sections 16(i)(A) or (B) hereof or in the
Subordinated Loan Agreement to the contrary, if the Company prepays more than
331/3% of any Loan or Loans of PCF or Exeter, as the case may be, on or after
the Funding Date and on or before the first anniversary of the Funding Date, PCF
or Exeter, as the case may be, shall be entitled to exercise or sell any and all
of its respective Warrants and/or Warrant Shares (including the PCF Holdback
Warrants or the Exeter Holdback Warrants, as the case may be) at any time and
from time to time in accordance with the other provisions of this Agreement and
the Company shall not be entitled to cancel any Warrants of PCF or Exeter, as
the case may be.
(D) For purposes of this Section 16(i), any reference to a Purchaser, PCF
or Exeter, shall be deemed to include its respective Affiliates.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
Notice Address: CONSOLIDATED DELIVERY &
-------------- LOGISTICS, INC.
000 Xxxxxxx Xxxx By /s/ Xxxxxx Xxx Xxxx, Xx.
Xxxxxxx, Xxx Xxxxxx 00000 -----------------------------
Tel: (000) 000-0000 Name: Xxxxxx Xxx Xxxx, Xx.
Fax: (000) 000-0000 Title: Chief Executive Officer
Attention: Xxxxxx X. Xxx Xxxx, Xx.
with a copy to:
Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Notice Address: PARIBAS CAPITAL FUNDING LLC
-------------
By /s/ Xxxxxxx X. Xxxxx
Paribas Capital Funding LLC -------------------------------
000 Xxxxxxx Xxxxxx Name: Xxxxxxx X. Xxxxx
Xxx Xxxx, Xxx Xxxx 00000 Title: Managing Director
Tel: (000) 000-0000
Fax: (000) 000-0000 By
Attention: Xxxxxx Xxxxxxx -------------------------------
Name:
Title:
with a copy to:
White & Case LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
Notice Address: EXETER VENTURE LENDERS, L.P.
--------------
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx By: Exeter Venture Advisors,
Xxx Xxxx, Xxx Xxxx 00000 Inc., its General Partner
Tel: (000) 000-0000
Tel: (000) 000-0000 By /s/ Xxxx Xxxxxxxxx
Attention: Xxxxx X. Xxx -------------------------------
Name: Xxxx Xxxxxxxxx
with a copy to: Title: Vice President
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Notice Address: EXETER CAPITAL PARTNERS IV, L.P.
--------------
By Exeter IV Advisors, L.P., its
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx General Partner
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000 By Exeter IV Advisors, L.P., its
Tel: (000) 000-0000 General Partner
Attention: Xxxxx X. Xxx
By /s/ Xxxx Xxxxxxxxx
with a copy to: -------------------------------
Name: Xxxx Xxxxxxxxx
X'Xxxxxxxx Graev & Karabell, LLP Title: Vice President
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
THE MANAGEMENT SHAREHOLDER -
ONLY WITH RESPECT TO SECTION
15(b) HEREOF:
By /s/ Xxxxxx Xxx Xxxx, Xx.
-------------------------------
Name: Xxxxxx X. Xxx Xxxx, Xx.
