FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of August 1, 2000, by and among
Delta Financial Corporation, a Delaware corporation (the "Company"), each of
Delta Funding Corporation, a New York Corporation ("Delta Funding"), DF Special
Holdings Corporation, a Delaware corporation ("DF Special Holdings"), Fidelity
Mortgage, Inc., a Delaware Corporation, DFC Financial of Canada Limited, an
Ontario, Canada corporation, DFC Funding of Canada Limited, an Ontario, Canada
corporation, Continental Property Management Corp., a New York corporation
(collectively, the "Subsidiary Guarantors") and The Bank of New York, as trustee
(the "Trustee"), under the Indenture referred to below.
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
previously entered into an Indenture dated as of July 23, 1997 (the "Indenture")
relating to the Company's 9 1/2% Senior Notes Due 2004 (the "Notes");
WHEREAS, Section 9.2 of the Indenture provides that the Company, the
Subsidiary Guarantors and the Trustee may, with the written consent of the
holders of at least a majority in principal amount of the outstanding Notes,
amend or supplement the Indenture as provided herein;
WHEREAS, the holders of a majority in principal amount of the outstanding
Notes (the "Consenting Noteholders") have consented to this First Supplemental
Indenture and agreed with the Company to consummate a restructuring of the Notes
as described in the Term Sheet of Informal Noteholder Committee for
Restructuring attached hereto as ANNEX A (the "Term Sheet"); and
WHEREAS, all acts and things prescribed by law and by the Company's and
the Subsidiary Guarantors' Certificates of Incorporation and By-laws (each as
now in effect) necessary to make this First Supplemental Indenture a valid
instrument legally binding on the Company and the Subsidiary Guarantors for the
purposes herein expressed, in accordance with its terms, have been duly done and
performed;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company, the Subsidiary Guarantors and the Trustee hereby agree for the benefit
of each other and the equal and ratable benefit of the holders of the Notes as
follows:
1. AMENDMENT OF ARTICLE 1, SECTION 1.1.
(a) The last sentence of the definition of "Asset Sale" included in
Section 1.1 of the Indenture is hereby deleted in its entirety and replaced by
the following:
"Notwithstanding the foregoing, the following will not be deemed to be Asset
Sales: (i) an issuance of Equity Interests by a Wholly-Owned Restricted
Subsidiary to the Company or to another Wholly-Owned Restricted Subsidiary; (ii)
a Restricted Payment that is permitted by Section 4.7; (iii) a disposition by a
Restricted Subsidiary to the Company or a Wholly-Owned Restricted Subsidiary or
by the Company to a Wholly-Owned Restricted Subsidiary of the Company; and (iv)
the sale, conveyance or any other disposition by the Company or any Restricted
Subsidiary, of Residual Receivables and/or Servicing Receivables in connection
with the consummation of the Interim Financing (as defined in and subject ot the
terms and conditions set forth in the Term Sheet)."
(b) Subclause (ii) of the definition of "Permitted Liens" included in
Section 1.1 of the Indenture is hereby amended by adding the following at the
end thereof:
"PROVIDED FURTHER, HOWEVER, that the preceding proviso shall not be applicable
to Liens on Residual Receivables and/or Servicing Receivables (and/or the
Capital Stock of Restricted Subsidiaries of the Company substantially all of the
assets of which are Residual Receivables and/or Servicing Receivables) incurred
in connection with the consummation of the Interim Financing."
(c) The definition of Servicing Receivables included in Section 1.1 of the
Indenture is hereby amended and restated as follows:
""Servicing Receivables" means all rights arising by virtue of being the
Servicer of Receivables, including without limitation, the right to receive
servicing fees, ancillary income, reinvestment income, prepayment premiums,
reimbursements for advances, or any interest in such rights, whether or not such
rights or interests are certificated; PROVIDED, HOWEVER, that Servicing
Receivables excludes the right to be or to replace the servicer except in
connection with the securitization, whole loan sale or pledge of Receivables
under Warehouse Lines."
(d) The following definition is added to Section 1.1 of the Indenture:
" "TERM SHEET" means the Term Sheet of Informal Noteholder Committee as attached
as ANNEX A to the First Supplemental Indenture, dated August 1, 2000."
2. AMENDMENT OF ARTICLE 4, SECTION 4.10.
The third paragraph of Section 4.10 of the Indenture is hereby amended by
adding the following after the end thereof:
"The restrictions contained in this paragraph shall not be applicable to the
sale or other conveyance or disposition by the Company or any Restricted
Subsidiary of Residual Receivables and Servicing Receivables (and/or the Capital
Stock of Restricted Subsidiaries substantially all of the assets of which are
Residual Receivables and/or Servicing Receivables) in connection with the
consummation of the Interim Financing (as defined in and subject to the terms
and conditions set forth in the Term Sheet)."
3. PLEDGE OF RESIDUAL RECEIVABLES. Notwithstanding anything to the
contrary, the sale, conveyance or other disposition of, or the creation of a
Lien on Residual Receivables and Servicing Receivables (and/or the Capital Stock
of Restricted Subsidiaries substantially all of the assets of which are Residual
Receivables and/or Servicing Receivables) by the Company, or any Restricted
Subsidiary in connection with the consummation of the Interim Financing (as
defined in and subject to the terms and conditions set forth in the Term Sheet)
shall not be deemed a breach or violation of any covenant, representation,
warranty or provision in the Indenture.
4. GUARANTEE OF INDEBTEDNESS. Notwithstanding anything to the contrary,
the Guarantee of the Company of any Indebtedness secured by Residual Receivables
and/or Servicing Receivables (and/or the Capital Stock of Restricted
Subsidiaries substantially all of the assets of which are Residual Receivables
and/or Servicing Receivables) by the Company, or any Restricted Subsidiary in
connection with the consummation of the Interim Financing (as defined in and
subject to the terms and conditions set forth in the Term Sheet) shall not be
deemed a breach or violation of any covenant, representation, warranty or
provision in the Indenture.
5. EFFECTIVENESS. This First Supplemental Indenture shall be effective as
of the date hereof. If (i) the definitive terms of the Exchange Offer (as
defined in the Term Sheet) have not been agreed with the Consenting Noteholders
on or prior to September 1, 2000 or (ii) if the Company does not consummate the
Exchange Offer by exchanging New Notes (as defined in the Term Sheet) for Notes
with the Exchanging Holders on or prior to October 15, 2000, an Event of Default
shall be deemed to have occurred at such time under the Indenture.
6. CONSTRUCTION. For all purposes of this First Supplemental Indenture,
except as otherwise herein expressly provided or unless the context otherwise
requires: (i) the terms and expressions used herein shall have the same meanings
as corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
First Supplemental Indenture refer to this First Supplemental Indenture as a
whole and not to any particular Section hereof.
7. TRUSTEE ACCEPTANCE. The Trustee accepts the amendment of the Indenture
effected by this First Supplemental Indenture and agrees to execute the trust
created by the Indenture, as hereby amended, but only upon the terms and
conditions set forth in the Indenture, as hereby amended, including the terms
and provisions defining and limiting the liabilities and responsibilities of the
Trustee, which terms and provisions shall in like manner define and limit its
liabilities and responsibilities in the performance of the trust created by the
Indenture, as hereby amended. Without limiting the generality of the foregoing,
the Trustee has no responsibility for the correctness of the recitals of fact
herein contained which shall be taken as the statements of the Company and makes
no representations as to the validity, enforceability against the Company, or
sufficiently of this First Supplemental Indenture.
8. INDENTURE RATIFIED. Except as expressly amended hereby, the Indenture
is in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
9. HOLDERS BOUND. This First Supplemental Indenture shall form a part of
the Indenture for all purposes, and every Holder of the Notes heretofore or
hereafter authenticated and delivered shall be bound hereby.
10. SUCCESSORS AND ASSIGNS. This First Supplemental Indenture shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
11. COUNTERPARTS. This First Supplemental Indenture may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, and all of such counterparts shall together constitute one and the
same instrument.
12. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW THEREOF.
[SIGNATURE BLOCK ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company, the Subsidiary Guarantors and the Trustee
have caused this First Supplemental Indenture to be signed and executed as of
the day and year first above written.
DELTA FINANCIAL CORPORATION
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
DELTA FUNDING CORPORATION
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
DF SPECIAL HOLDINGS CORPORATION
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
FIDELITY MORTGAGE, INC.
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
DFC FINANCIAL OF CANADA LIMITED
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
<PAGE>
DFC FUNDING OF CANADA LIMITED
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
CONTINENTAL PROPERTY MANAGEMENT CORP.
By: /S/ RICHARD BLASS _
Name: Richard Blass
Title: Executive Vice President
THE BANK OF NEW YORK, Indenture Trustee
By:/S/ JULIE SALOVITCH-MILLER
Name: Julie Salovitch-Miller
Title: Vice President
<PAGE>
ANNEX A
Delta Financial Corporation and Subsidiaries
TERM SHEET OF INFORMAL NOTEHOLDER COMMITTEE
FOR RESTRUCTURING (THE "RESTRUCTURING TERM SHEET")
DEBTORS AND OLD Delta Financial Corporation ("DELTA HOLDINGS"),
SECURITIES and all of its subsidiaries (collectively the
"DEBTORS") that are guarantors of the 9.5%
Senior Notes of Delta Holdings (the "OLD
Notes").
OVERVIEW Certain holders of Old Notes, consisting of
beneficial owners of a majority in principal
amount thereof, shall consent to a supplemental
indenture (the "FIRST SUPPLEMENTAL INDENTURE")
that shall permit the Debtors to pledge, or
transfer to a special purpose entity, of
interest-only and residual certificates
("RESIDUALS") and Servicing Receivables, or
rights therein, to initially obtain
approximately $16 million of interim financing
(the "INTERIM FINANCING") from an interim
finance lender. The negative pledge under the
Old Notes Indenture shall continue to apply to
$150MM of Residuals until the Exchange Offer
occurs, and thereafter the terms of the
Exchange Offer shall govern. This $150MM shall
be Senior Residuals, except if the Company
deposits $7.125 million into escrow,
simultaneous with such deposit, such $150
million requirement shall be modified to $112.5
million of Senior Residuals and $42.5 million
of other Residuals. Except for this negative
pledge, pending consummation of the Exchange
Offer, the Debtors will be permitted to do
financings currently permitted under the Old
Notes Indenture.
The capitalization of the Debtors shall be
restructured (the "EXCHANGE OFFER") through an
exchange offer. Holders of Old Notes tendering
into the exchange shall receive new notes and
warrants. At the time the Exchange Offer is
consummated, the new notes indenture shall permit
one or more financing transactions utilizing
Residuals and Servicing Receivables to raise
capital for the company, subject to all the
limitations herein. The Exchange Offer shall
include covenant-stripping amendments to the Old
Notes Indenture.
It shall be a default under the Old Notes
Indenture if the Consenting Noteholders and the
Debtors have not reached definitive agreement on
the terms of an exchange offer on or before
September 1, 2000.
NEW SECURITIES Each holder of Old Notes who tenders into the
Exchange Offer shall receive a PRO RATA share
of a new issue of up to $150.0 million
NEW SENIOR SECURED NOTES aggregate principal amount 9.5% Senior Secured
Notes (the "NEW NOTES") of Delta Holdings.
SEE TERM SHEET FOR NEW NOTES, ATTACHED HERETO AS
ANNEX A.
NEW WARRANTS Each holder of Old Notes who tenders into the
Exchange Offer shall receive a PRO RATA share
of a new issue of warrants (the "WARRANTS") of
Delta Holdings for 10% of the currently issued
and outstanding common stock of Delta
Holdings. SEE TERM SHEET FOR NEW WARRANTS,
ATTACHED HERETO AS ANNEX B.
INTERIM FINANCING The Consenting Noteholders shall agree to
CONSENT permit the Interim Financing (the "INTERIM
FINANCING CONSENT"). The First Supplemental
Indenture shall lift the negative pledge from
certain Residuals and all other applicable
covenants to the extent necessary in order to
permit the Interim Financing.
COUPON PAYMENT At the time of the Interim Financing Consent
the Debtors shall direct the interim finance
lender to make payments out of the proceeds of
the Interim Financing directly to the indenture
trustee for the Old Notes to pay the August 1,
2000 coupon on the Old Notes.
LOCK-UP AGREEMENT
PARTIES TO LOCK-UP Certain holders of Old Notes will
become party to a Lock-up Agreement with the
Debtors (such holders being the "CONSENTING
NOTEHOLDERS").
COMMITTEE ADVISORS During the Lock-up Period, and until the hot
back-up servicer is in place, and thereafter
(if applicable) following the occurrence of an
Event of Default under either of the Old Notes
Indenture (if the Exchange Offer is not
consummated) or the New Notes Indenture, the
Debtors shall pay the fees and expenses of
Ropes & Gray (counsel to the Informal
Committee) and Houlihan Lokey Howard & Zukin
Capital ("HLH&Z") (financial advisor to the
Informal Committee). All such fees shall be
paid under retainer agreements similar in form
to the payment agreement between the Company
and Ropes & Gray, with retainer amounts for
HLH&Z acceptable to the Informal Committee and
HLH&Z in their reasonable discretion.
The Debtors shall give the Informal Committee's
advisors full reasonable access to all legal,
operational and financial materials to allow them
to monitor the Debtor's operations and status.
COVENANTS OF DEBTORS The Debtors shall use their best efforts to
DURING LOCK-UP PERIOD have the Exchange Offer consummated with not
less than the percentage of holders of Old Notes
required under the Old Notes Indenture tendering
into the exchange, so as to be consummated not
later than October 15, 2000. Failure to consummate
by October 15, 2000 shall constitute an Event of
Default under the Old Notes Indenture, as amended
by the First Supplemental Indenture.
Until consummation of the Exchange Offer, the
Debtors shall not engage in any transaction
outside the ordinary course of business, or enter
into any agreement to consummate such a
transaction.
ONGOING COVENANTS OF During the Lock-up Period and thereafter, the
DEBTORS Debtors shall make all preparations to be able
to facilitate the effectuation of a transfer of
servicing and other matters necessary for the
bondholders to effectively realize on the
collateral being pledged should a default occur in
the future. These preparations shall include
implementing a hot-back-up servicer within 150
days after consummation of the Exchange Offer, if
the Exchange Offer is consummated, or as quickly
as is practicable if the Exchange Offer is not
consummated, such servicer to be satisfactory to
the Informal Committee. The requirements for a hot
back-up servicer shall be extinguished upon the
Debtors reaching a liquidity threshold to be
agreed upon prior to September 1, 2000.
REPRESENTATIONS OF Each Consenting Noteholder shall represent and
CONSENTING NOTEHOLDERS warrant, in favor of the Debtors and the
Indenture Trustee, that it is the beneficial owner
of a stated amount of Old Notes.
TERMINATION OF LOCK-UP The passage of October 15, 2000 without
PERIOD AND OBLIGATIONS consummation of the Exchange Offer.
OF CONSENTING
NOTEHOLDERS
FORM OF DOCUMENTATION All documentation (including all documentation
contemplated by Annexes A and B hereto) to be
satisfactory in form and substance to both the
Consenting Noteholders and to the Debtors in
their respective sole discretion. The Debtors
and their officers and directors shall provide
such certificates, representations and
warranties as the Consenting Noteholders shall
require.
<PAGE>
AUGUST 1, 2000
ANNEX A
Restructuring of Delta Financial Corporation
and Subsidiaries
TERM SHEET FOR
9.5% SENIOR SECURED NOTES DUE 2004 (THE "NEW NOTES")1
ISSUER Delta Financial Corporation ("DELTA HOLDINGS"),
under a trust indenture with an indenture trustee
(the "INDENTURE TRUSTEE") mutually acceptable to
the Debtors and the Consenting
Noteholders.
GUARANTORS All subsidiaries of Delta Holdings, which
currently are guarantors of the Old Notes, plus
all additional subsidiaries which are not
contractually prohibited from being a guarantor
(subject to further review).
PRINCIPAL AMOUNT up to $150,000,000
INTEREST 9.5% per annum, payable semiannually in arrears on
February 1 and August 1 of each year (each an
"INTEREST PAYMENT DATE"). Interest shall be deemed
to accrue as of the last interest payment date
under the Old Notes.
MATURITY August 1, 2004.
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1Capitalized terms defined in the Restructuring Term Sheet and not
otherwise defined herein are used herein with the meanings so defined.
<PAGE>
COLLATERAL Perfected first priority liens on all contractual
rights to be the servicer (and following exercise
of such right, in all rights arising by virtue of
the servicing rights) and upon the stock of all
subsidiaries of Delta Holdings.
Perfected first priority liens on the beneficial
interests in one or more (in the discretion of the
Consenting Noteholders) Delaware business trusts
that holds Residuals received by the Debtors (the
"RESIDUALS COLLATERAL TRUSTS"). The Residual
Collateral Trusts shall be restricted subsidiaries
and wholly owned subsidiaries of Delta Funding
Corporation and/or of DF Special Holdings
Corporation and each Residuals Collateral Trust
shall hold Residuals received by its parent.
In addition to liens relating to rights to be the
servicer, stock of subsidiaries, and the Residuals
Collateral Trusts, a lien on all other assets as
to which there is no contractual prohibition in
the granting of liens, including all unencumbered
assets (the "Other Assets"). Notwithstanding the
lien on the Other Assets, the Debtors will be
permitted to use, sell, lease or securitize Other
Assets in the ordinary course of business.
Amounts sufficient to meet the first coupon
payment on the New Notes shall be placed into
escrow (upon conclusion of the so-called NIMS
trade).
So long as the New Notes are outstanding, the
Debtors shall cause all Residuals to be
transferred to the Residuals Collateral Trust
immediately upon the Debtors' obtaining such
Residuals. Provided no Event of Default has
occurred and is continuing, the Debtors shall be
permitted to substitute other Residuals for the
Residuals within the Residuals Collateral Trusts
provided the Residuals being deposited were
received by the parent of the respective Residuals
Collateral Trust and the Residuals Coverage Ratio
is satisfied after giving pro forma effect to the
substitution.
DESCRIPTION OF RESIDUALS COVERAGE RATIO The value of
FINANCIAL COVENANTS Residuals and cash in the Residuals Collateral
Trust shall not be less than $165 million. Such
minimum value shall increase on the following
schedule:
on and after September 30, 2001 $170MM
on and after September 30, 2002 $175MM
on and after September 30, 2003 $200MM
on and after September 30, 2004 $210MM
The aggregate value of Senior Residuals in the
Residuals Collateral Trust shall initially be not
less than $150 million, or in the event Delta
Holdings has deposited $7.125 million into escrow
for coupon payments, such amount shall be
decreased to $112.5 million simultaneous with such
deposit. (The Residuals Collateral Trust shall
still be required to maintain the minimum values
of $165 million, and increasing after 9/30/01,
aggregate value of Residuals and cash, set forth
in the first sentence.). The value amount of
Senior Residuals in the Residuals Collateral Trust
shall be raised to $150MM on the third anniversary
of the issuance date and to $155.0 million after
the fourth anniversary of the Issuance Date.
Residuals which were created through net interest
margin securities transactions ("NIMS") shall be
deemed to be Senior Residuals when the outstanding
principal amount of all other securities issued in
the applicable NIMS has decreased to 20% or less
of their aggregate original principal amount. For
purposes of these covenants, the value of Senior
Residuals shall be calculated in accordance with
GAAP except using a discount rate of 12%, and the
value of all other Residuals shall be calculated
in accordance with GAAP except using a discount
rate of 18%.
MINIMUM CASH ON HAND The Debtors shall not have
less than $10,000,000 of cash and cash equivalents
on hand at any time (including any money held in
escrow), using the same requirements as in the
Debtor's warehouse lines of credit (the "Warehouse
Lines").
DESCRIPTION OF OTHER IN GENERAL: As under the Old Notes Indenture
COVENANTS (to the extent not inconsistent with this Term
Sheet) plus covenants set forth in the loan
documents for the Warehouse Lines [subject to
further review].
LIMITATIONS ON LIENS OR RIGHTS TO BE SERVICER OR
SALE OF STOCK OF SUBSIDIARIES: Prohibited without
consent of 51% of the New Notes.
TRANSACTIONS WITH AFFILIATES As customary for
secured bank loans.
REPORTING: Within 90 days following the end of
each fiscal year, KPMG (or such other firm of
internationally recognized accountants as is then
retained by the Company to audit its financial
statements) as part of its annual audit will
confirm that the methodology and assumptions
employed by the Debtor in determining the value of
the Residuals.
BACK-UP SERVICER: Within 150 days following the
Issuance Date, Delta Funding will, at its own
cost, enter into a "hot" back-up servicing
agreement (the "Servicing Agreement") with a
nationally recognized servicer, which will provide
for mapping and monthly back-up of information
relating to the mortgage loans underlying
Residuals created after 1996.
EVENTS OF DEFAULT As in the Old Notes Indenture,
breach of covenants or conditions under the New
Notes Indenture, and cross default to all
Warehouse Lines.
RELIEF FROM STAY. The Debtors shall consent to
relief from the automatic stay in the event of
a chapter 11 or chapter 7 filing.
COUPON PAYMENT. The Debtors shall certify 30 days
prior to the initial due date (without grace) of
each coupon payment on the New Notes that funds
necessary to pay the coupon payment have been
placed in escrow on terms identical to those for
the coupon required to be escrowed at the time of
the Exchange Offer.
CHANGE OF CONTROL PUT As in the Old Notes Indenture.
REGISTRATION RIGHTS The New Notes shall not be registered under
the Securities Exchange Act of 1934. The Debtors
shall register the New Notes at the request of 51%
of the beneficial holders of the New Notes.
AMENDMENTS Majority consent required for all non
ministerial amendments, including release of
collateral, approval of asset sales by
subsidiaries, permitting senior liens and
pari-passu debt and subordination of New Notes
to other debt; PROVIDED, HOWEVER, consent of
each holder shall be required for changes to
such holder's rights with respect to (i)
interest and principal payments and
redemption/call/put provisions, (ii) maturity
date, (iii) currency of payment, (iv) place of
payment and (v) right to bring suit for
interest and principal.
OTHER PROVISIONS Customary certification, notice and
reporting provisions for collateral monitoring
under a senior secured bank facility, including
quarterly and audited annual reporting.
Other provisions to be consistent with terms of
Indenture for the Old Notes or as otherwise agreed
by the Debtors and a majority of the Consenting
Noteholders.
<PAGE>
AUGUST 1, 2000
ANNEX B
Restructuring of Delta Financial Corporation
and Subsidiaries
TERM SHEET FOR
WARRANTS (THE "WARRANTS")1
ISSUER Delta Financial Corporation ("Delta Holdings").
NUMBER Warrants exercisable for common shares equal to
10% of currently issued and outstanding common
shares.
EXERCISE PERIOD The Warrants shall expire on the 10th
anniversary of their issuance. The Warrants (if
not previously exercised) shall expire and be of
no further force or effect upon payment of the New
Notes in full.
EXERCISE PRICE At issuance: $9.10 per share.
If equity buy-in of $15MM or more prior to the
second anniversary of their issuance, the exercise
price is reset to 110% of the per share equity
buy-in.
After the second anniversary, the exercise price
is $0.01 per share.
DIVIDENDS The Issuer shall provide prior notice to the
holders of Warrants of any record date for
dividends.
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1Capitalized terms defined in the Restructuring Term Sheet and not
otherwise defined herein are used herein with the meanings so defined.
<PAGE>
MAJOR CORPORATE Upon any sale or disposition of the company, or
TRANSACTIONS change of control, Warrant holders shall have
the right to exercise all Warrants. Warrant
holders shall have tag-along rights with Miller
family shares sold in any change of control
transaction.
ADJUSTMENTS; The number of Warrants shall be adjusted in the
ANTIDILUTION event of stock-splits, combinations,
reclassifications and stock-for-stock
distributions. In the event of any merger or other
such transaction, the holders of Warrants shall
receive as part of such transaction consideration
equal in amount and kind to the consideration
given to holders of common stock of the Issuer.
The Warrants shall also have provisions to prevent
dilution by below-market-price issuances of stock
or other equity interests.
REGISTRATION RIGHTS Demand registration rights.
MISCELLANEOUS Customary notice rights.
Customary rights and remedies, including the right
to specific performance.
