UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Vernitron Corporation
(Name of Issuer)
Common Stock, $.01 par value per share
(Title of Class of Securities)
924359300
(CUSIP Number)
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Mr. Donald Ercole with copies to:
Banque Paribas John M. Reiss, Esq.
787 Seventh Avenue White & Case
New York, NY 10019 1155 Avenue of the Americas
212-841-2000 New York, NY 10036
212-819-8200
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
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April 25, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box ( ).
____________
Check the following box if a fee is being paid with this statement (X).
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SCHEDULE 13D
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CUSIP No. 924359300 Page 2 of 18 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Banque Paribas I.R.S. Identification No. 132937443
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) (X)
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED ( )
PURSUANT TO ITEMS 2(d) or 2(E)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Republic of France
NUMBER OF SHARES BENEFICIALLY 7 SOLE VOTING POWER
OWNED BY EACH REPORTING PERSON 0 (see discussion in Items 4 & 5)
WITH
8 SHARED VOTING POWER
0 (see discussion in Items 4 & 5)
9 SOLE DISPOSITIVE POWER
0 (see discussion in Items 4 & 5)
10 SHARED DISPOSITIVE POWER
0 (see discussion in Items 4 & 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
666,312 (see discussion in Items 4 & 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
(X)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.7% (see discussion in Items 4 & 5)
14 TYPE OF REPORTING PERSON
BK
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SCHEDULE 13D
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CUSIP No. 924359300 Page 3 of 18 Pages
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<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Paribas Principal, Inc. I.R.S. Identification No. 133529118
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ( )
(b) (X)
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED ( )
PURSUANT TO ITEMS 2(d) or 2(E)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of New York
NUMBER OF SHARES BENEFICIALLY 7 SOLE VOTING POWER
OWNED BY EACH REPORTING PERSON 0 (see discussion in Items 4 & 5)
WITH
8 SHARED VOTING POWER
0 (see discussion in Items 4 & 5)
9 SOLE DISPOSITIVE POWER
0 (see discussion in Item 5(b))
10 SHARED DISPOSITIVE POWER
0 (see discussion in Items 4 & 5)
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
776,388 (see discussion in Items 4 & 5)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
(X)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5% (see discussion in Items 4 & 5)
14 TYPE OF REPORTING PERSON
CO
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SCHEDULE 13D
VERNITRON CORPORATION
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D relates to the common stock, $.01 par
value per share (the "Common Stock") of Vernitron Corporation, a Delaware
corporation (the "Company"), the principal executive offices of which are
<PAGE>
located at 645 Madison Avenue, New York, New York 10022.
ITEM 2. IDENTITY AND BACKGROUND
This statement on Schedule 13D is being filed by (i) Paribas
Principal, Inc. ("PPI"), a New York corporation, and (ii) Banque Paribas
("Paribas"), a banking corporation organized under the laws of the Republic of
France which maintains branches in a number of jurisdictions, and which is
acting through its Grand Cayman Branch. PPI and Paribas are hereinafter
sometimes collectively referred to as the "Reporting Persons."
The principal business of PPI, a wholly-owned subsidiary of Paribas
and a small business investment company licensed by the Small Business
Administration under the Small Business Investment Act of 1958, as amended, is
that of making debt and equity investments in "small concerns" (as defined
under the regulations of the Small Business Administration). The address of
its principal business and of its principal office is 787 Seventh Avenue, New
York, New York 10019.
Paribas is a subsidiary of Compagnie Financiere de Paribas
("Compagnie Financiere"), a diversified holding company organized under the
laws of the Republic of France. The operating subsidiaries of Compagnie
Financiere de Paribas engage in a wide variety of banking, financial services,
manufacturing, trading, development and related activities. Through its Grand
Cayman Branch, which is licensed under the laws of that jurisdiction to engage
in banking activities, Paribas engages in lending activities, acceptance of
deposits, international trade financing, and trading activities. The
principal office address of Paribas is 3, rue d'Antin, Paris, France. The
principal business address of its Grand Cayman Branch is c/o 787 SEVENTH
AVENUE, NEW YORK, NEW YORK 10019.
The attached Schedule I is a list of the executive officers and
directors of PPI, Paribas and Compagnie Financiere, which contains the follow-
ing information with respect to each such person: (i) name; (ii) business
address; (iii) present principal occupation or employment and the name,
principal business and address of any corporation or other organization in
which such employment is conducted; and (iv) place of citizenship.
During the last five years, neither PPI, Paribas nor, to the best of
PPI's or Paribas' knowledge, any person named on Schedule I hereto has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a Credit Agreement, dated as of April 25, 1996, among
the Company, Paribas (as agent) and various financial institutions party
thereto (the "Credit Agreement"), Paribas and such other financial
institutions provided loans to the Company to effect, in part, certain
transactions. In connection therewith, the Company, Paribas and PPI entered
into a Warrant Purchase Agreement, dated as of April 25, 1996 (the "Warrant
Purchase Agreement"). Pursuant to the Warrant Purchase Agreement the Company
issued warrants (the "Warrants") to Paribas and PPI whereby certain rights
were granted to Paribas relating to the Common Stock of the Company as partial
consideration to be paid in connection with the Credit Agreement and certain
rights were granted to PPI relating to the Common Stock of the Company for a
consideration of $1,000, in connection with PPI's option to provide additional
financing to the Company.
Pursuant to the Warrant Purchase Agreement, the Company issued (i)
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to Paribas a warrant to purchase 666,312 shares of Common Stock exercisable at
any time on or after the date thereof and prior to April 25, 2006, at an
exercise price equal to $.01 and (ii) to PPI a warrant to purchase 776,388
shares of Common Stock exercisable at any time on or after the date thereof
and prior to April 25, 2006, at an exercise price equal to $1.25. All cash
payments in connection with the purchase of shares of Common Stock have been
and are expected to be from working capital of Paribas or PPI, as the case may
be.
ITEM 4. PURPOSE OF THE TRANSACTION
The shares (or the rights to purchase shares pursuant to the
Warrants), the ownership of which is reported hereby, were acquired for
investment purposes. The Reporting Persons reserve the right from time to
time to acquire additional shares, or to dispose of some or all of their
shares. The Reporting Persons may from time to time discuss with management
of the Company various ideas with a view to enhancing the value of the shares.
However, none of the Reporting Persons nor, to the best knowledge of any of
the Reporting Persons, any of the persons set forth on Schedule I, has any
current plans or proposals, except as expressly provided in the Warrant
Purchase Agreement or the Warrants, that relate to or would result in (a) the
acquisition by any person of additional securities of the Company or the
disposition of securities of the Company; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation of the Company or
any of its subsidiaries; (c) a sale or transfer of a material amount of assets
of the Company or any of its subsidiaries; (d) any change in the present board
of directors or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on
the board; (e) any material change in the present capitalization or dividend
policy of the Company; (f) any other material change in the Company's business
or corporate structure; (g) changes in the Company's charter, by-laws or
instruments corresponding thereto, or other actions which may impede the
acquisition or the control of the Company by any person; (h) any of the
Company's securities being delisted from a national securities exchange or
ceasing to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities exchange or association; (i) any of the
Company's securities becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as
amended; or (j) any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Based upon the outstanding number of shares set forth in the
Company's Form 10K for the fiscal year ended December 31, 1995 (filed by the
Company with the Securities and Exchange Commission on March 26, 1996) (i)
Paribas' beneficial ownership of 666,312 shares of Common Stock (all of which
Paribas has the option to purchase pursuant to the Warrant issued to it)
constitutes beneficial ownership of 4.7% of the total number of shares of
outstanding Common Stock and (ii) PPI's beneficial ownership of 776,388 shares
of Common Stock (all of which PPI has the option to purchase pursuant to the
Warrant issued to it) constitutes beneficial ownership of 5.5% of the total
number of shares of outstanding Common Stock. Paribas may be deemed to be the
beneficial owner of the shares of Common Stock of the Company owned by PPI and
PPI may be deemed to be the beneficial owner of the shares of Common Stock of
the Company owned by Paribas.
(b) (i) Paribas has the sole power to vote or to direct the vote
of, and sole power to dispose or direct the disposition of, zero shares of
Common Stock of the Company. Pursuant to the Warrant Purchase Agreement,
Paribas has the right to acquire 666,312 shares of Common Stock, as to which
it neither has nor shares voting or dispositive power as of the date hereof.
PPI has sole power to vote or to direct the vote of, and sole power to dispose
or direct the disposition of, zero shares of Common Stock of the Company.
Pursuant to the Warrant Purchase Agreement, PPI has the right to acquire
<PAGE>
776,388 shares of Common Stock, as to which it neither has nor shares voting
or dispositive power as of the date hereof.
(c) During the past sixty days, neither PPI, Paribas nor, to the
best knowledge of PPI or Paribas, any of the persons set forth on Schedule I,
has effected any transactions in shares of Common Stock except pursuant to the
Warrant Purchase Agreement and the Warrants.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
Warrant Purchase Agreement. The Company, Paribas and PPI entered
into a Warrant Purchase Agreement, dated as of April 25, 1996.
Subject to the terms and conditions set forth therein, the Company
agreed in the Warrant Purchase Agreement (i) to issue to Paribas a warrant
exercisable for 666,312 shares of Common Stock of the Company, $0.01 par
value, at an exercise price of $.01 per share and (ii) to issue to PPI a
warrant exercisable for 776,388 shares of Common Stock of the Company, $0.01
par value, at an exercise price of $1.25 per share.
The Warrant Purchase Agreement provides that at any time and from
time to time after the date thereof, upon the request of the holders of a
majority of the Registrable Securities (as defined therein), the Company will
promptly give written notice of such requested registration to all registered
holders of Registrable Securities, and thereupon the Company, in accordance
with the provisions thereof, will use its best efforts to effect the
registration under the Securities Act of 1933 of (A) the Registrable
Securities which the Company has been so requested to register for disposition
in accordance with the intended method or methods of disposition stated in
such request, and (B) all other Registrable Securities which the Company has
been requested to register by the holders thereof by written request given to
the Company within 20 days after the giving of such written notice by the
Company (which request shall specify the intended method of disposition of
such Registrable Securities), all to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered. The Company shall be required
to effect no more than two "long-form registrations" but there shall be no
limit on "short-form registrations".
In addition, Paribas, PPI or the subsequent holders of the
Registrable Securities have the right, subject to the conditions of the
Warrant Purchase Agreement, to request that such Registrable Securities be
included in registered offerings planned by the Company.
Pursuant to the Warrant Purchase Agreement, the holders of the
Warrants (or the Common Stock for which the Warrants are exercised), as a
group, are entitled to have up to two of its representatives attend all
meetings of the Board of Directors of the Company at the expense of the
Company.
The Warrant Purchase Agreement also gives the holders of the
Warrants (or the Common Stock for which the Warrants are exercised) "tag-
along" rights in the event that Stephen W. Bershad arranges for the sale,
transfer or other disposition of more than 1,137,031 shares of his Common
Stock.
Except as described in Item 4 above and in this Item 6, neither PPI,
Paribas nor, to the best knowledge of PPI or Paribas, any of the individuals
identified in Schedule I has any contract, arrangement, understanding or
relationship with any person with respect to any security of the Company.
<PAGE>
Warrant. The Company authorized the issuance of a warrant (the
"Paribas Warrant"), dated April 25, 1996, to Paribas to purchase, pursuant to
the terms and conditions thereof, 666,312 shares of Common Stock, $0.01 par
value, of the Company at an exercise price of $.01.
Warrant. The Company authorized the issuance of a warrant (the "PPI
Warrant" and together with the Paribas Warrant, the "Warrants"), dated April
25, 1996, to PPI to purchase, pursuant to the terms and conditions thereof,
776,388 shares of Common Stock, $0.01 par value, of the Company at an exercise
price of $1.25.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
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Exhibit No. Description
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1 Warrant Purchase Agreement, dated as of April 25, 1996, among the Company, PPI and Paribas.
2 Warrant, dated April 25, 1996, exercisable into 666,312 shares of Common Stock, issued to Paribas
by the Company.
3 Warrant, dated April 25, 1996, exercisable into 776,388 shares of Common Stock, issued to PPI by
the Company.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: May 6, 1996
BANQUE PARIBAS
By: /s/ Donald Ercole
Name: Donald Ercole
Title: Vice President
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: May 6, 1996
PARIBAS PRINCIPAL, INC.
By: /s/ Jeffrey Youle
Name: Jeffrey Youle
Title: Secretary
SCHEDULE I
The following tables set forth for the directors and executive officers
of Paribas Principal, Inc., Banque Paribas and Compagnie Financiere de Paribas
(i) the name and citizenship of each such person; (ii) the present principal
occupation or employment of each such person; and (iii) the name, principal
business and address of any business corporation or other organization in
which such occupation or employment is conducted.
<PAGE>
A.
EXECUTIVE OFFICERS AND DIRECTORS OF PARIBAS PRINCIPAL, INC.
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Present principal occupation or employment
Name/Position Citizenship and name and business address of employer
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M. Steven Alexander/ U.S. Managing Director
President, Manager and BANQUE PARIBAS,
Director NEW YORK BRANCH
787 Seventh Avenue
New York, NY 10019
Jeffrey J. Youle/ U.S. Senior Vice President
Secretary and Director BANQUE PARIBAS,
NEW YORK BRANCH
787 Seventh Avenue
New York, NY 10019
</TABLE>
<PAGE>
B.
EXECUTIVE OFFICERS AND DIRECTORS OF BANQUE PARIBAS
Except as otherwise noted, the address of each such person in this Part B
is 3, rue d'Antin, Paris, France.
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<CAPTION>
Present principal occupation or employment
Name/Position Citizenship and name and business address of employer
<S> <C> <C>
Michel Francois-Poncet/ French President of Supervisory Board
President of Supervisory Board BANQUE PARIBAS
President of Supervisory Board
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
Francois Morin/Vice President of French Vice President of Supervisory Board
Supervisory Board BANQUE PARIBAS
Vice President of Supervisory Board
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
Bernard Auberger/Member of French President
Supervisory Board CREDIT DU NORD
6/8, Boulevard Haussmann
75009 PARIS
Jean-Marc Bruel/Member of French Vice President
Supervisory Board RHONE POULENC
25, quai Paul Douner
92408 COURBEVOIE
Gilles Cosson/Member of French Counsel to Management Board
Supervisory Board of Compagnie Financiere de Paribas
c/o BANQUE PARIBAS
Michel Denis/Member of French Employee Representative
Supervisory Board BANQUE PARIBAS
Francois Henrot/Member of French President of Board of Management
Supervisory Board COMPAGNIE BANCAIRE
5, avenue Kleber
75016 PARIS
Philippe Deggilh/Member of French Employee Representative
Supervisory Board BANQUE PARIBAS
Raymond Levy/Member of French Honorary President
Supervisory Board RENAULT SA
15, quai Le Gallo
92100 Boulogne-Billancourt
<PAGE>
Gerard de la Martiniere/Member French Managing Director
of Supervisory Board AXA
21/23, avenue Matignon
75008 Paris
Didier Pineau-Valencienne/Member French President
of Supervisory Board SCHNEIDER
64/70, avenue Jean-Captiste Clemont
92646 Boulogne-Billancourt
Virin Moulin/Member of French Employee Representative
Supervisory Board BANQUE PARIBAS
Pierre Scohier/Member of Belgian Managing Director
Supervisory Board COMPAGNIE BELGE
DE PARICIPATIONS (COBEPA)
World Trade Center 1
162, boulevard Emile Jacqmain
Boite Postale 56
1210 Bruxelles
Pierre Vaillaud/Member of French Chairman
Supervisory Board TECHNIP
Tour Technip
La Defense 6 - Cedex 23
92090 Paris, La Defense
Andre Levy-Lang/ French President of Board of Management
President of Board of Management BANQUE PARIBAS
President of Board of Management
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
Philippe Dulac/Member of Board French Member of Board of Management
of Management BANQUE PARIBAS
Member of Board of Management
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
Dominique Hoenn/ French Member of Board of Management
Member of Board of Management BANQUE PARIBAS
Member of Board of Management
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
Christian Manset/ French Member of Board of Management
Member of Board of Management BANQUE PARIBAS
Member of Board of Management
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
<PAGE>
Amaury-Daniel de Seze/ French Member of Board of Management
Member of Board of Management BANQUE PARIBAS
Member of Board of Management
COMPAGNIE FINANCIERE DE
PARIBAS
5, rue d'Antin
Paris, France
Alain Louvel/Chief Executive French Chief Executive Officer
Officer, Banque Paribas, New BANQUE PARIBAS,
York Branch NEW YORK BRANCH
787 Seventh Avenue
New York, NY 10019
Donna Kiernan/Chief Financial U.S. Chief Financial Officer
Officer, Banque Paribas, New BANQUE PARIBAS,
York Branch NEW YORK BRANCH
787 Seventh Avenue
New York, NY 10019
M. Steven Alexander/Managing U.S. Managing Director
Director, Banque Paribas, New BANQUE PARIBAS,
York Branch (and Signatory, NEW YORK BRANCH
Grand Cayman Branch) 787 Seventh Avenue
New York, NY 10019
Jeffrey J. Youle/Senior Vice U.S. Senior Vice President
President, Banque Paribas, New BANQUE PARIBAS,
York Branch (and Signatory, NEW YORK BRANCH
Grand Cayman Branch) 787 Seventh Avenue
New York, NY 10019
</TABLE>
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C.
EXECUTIVE OFFICERS AND DIRECTORS OF
COMPAGNIE FINANCIERE DE PARIBAS
Except as otherwise noted, the address of each such person in this Part C
is 5, rue d'Antin, 75002 Paris, France.
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Present Principal occupation or
employment and name and business
Name/Position Citizenship address of employer
<S> <C> <C>
Michel Francois-Poncet/ French President of Supervisory Board
President of Supervisory BANQUE PARIBAS
Board 3, rue d'Antin
75002 Paris, France
President of Supervisory Board
COMPAGNIE FINANCIERE
DE PARIBAS
Francois Morin/ French Vice President of Supervisory
Vice President of Supervisory Board
Board BANQUE PARIBAS
3, rue d'Antin
75002 Paris, France
Vice President of Supervisory
Board
COMPAGNIE FINANCIERE
DE PARIBAS
Evan Baird/Member of United Kingdom President
Supervisory Board SCHLUMBERGER
42, rue Saint-Dominque
75007 Paris, France
Claude Bebear/Member of French President
Supervisory Board AXA
21/23, avenue de Matignon
75008 Paris
Enrico Braggiotti/Member of Italian President
Supervisory Board COMPAGNIE MONEGASQUE
DE BANQUE
23, avenue de la Costa
MC 98000 Monaco
Paul Desmarais/Member of Canadian Power Corporation of Canada
Supervisory Board 751 Victoria Square
Montreal Quebec, Canada
Jean Gandois/Member of French President
Supervisory Board Conscil National du Patroncit
Francais
31, avenue Pierre 1er de Serbie
75784 Paris
<PAGE>
Antoine Jeancourt-Galignani/ French President
Member of Supervisory Board ASSURANCES GENERALE
DE FRANCE
87, rue de Richelieu
75002 Paris
Ambroise Roux/Member of French 8, bis rue Marguerite
Supervisory Board 75017 Paris
Thierry Desmarest/Member of French President
Supervisory Board COMPAGNIE FRANCAISE
DES PETROLES TOTAL
Tour Total
24, Cours Michelet
92080 Puteaux
Andre Levy-Lang/ French President of Board of
President of Board of Management
Management COMPAGNIE FINANCIERE
DE PARIBAS
President of Board of
Management
BANQUE PARIBAS
3, rue d'Antin
Paris, France
Philippe Dulac/ French Member of Board of
Member of Board of Management Management
COMPAGNIE FINANCIERE
DE PARIBAS
Member of Board of
Management
BANQUE PARIBAS
3, rue d'Antin
Paris, France
Christian Manset/ French Member of Board of
Member of Board of Management Management
COMPAGNIE FINANCIERE
DE PARIBAS
Member of Board of
Management
BANQUE PARIBAS
3, rue d'Antin
Paris, France
Colette Neuville/Member of French Representative of the Minority
Supervisory Board Shareholders Association
5, rue Au Lin
98000 Chartres
Dennis Kessler/Member of French Societe Francais des Societes
Supervisory Board d'Assurances
26, Blvd Haussman
75009 Paris
Serge Tehuruk/Member of French Alcatel Alsthon
Supervisory Board 54, rue de la Boetie
75382 Paris
<PAGE>
Francois Henrot/Member of French Chairman of the Board of
Board of Management Directors
Compagnie Bancaire
5, avenue Kleber
75016 Paris
Amaury-Daniel de Seze/ French Member of Board of
Member of Board of Management Management
COMPAGNIE FINANCIERE
DE PARIBAS
Member of Board of
Management
BANQUE PARIBAS
3, rue d'Antin
Paris, France
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
1 Warrant Purchase Agreement, dated as of April 25, 1996, among the Company, PPI and Paribas.
2 Warrant, dated April 25, 1996, exercisable into 666,312 shares of Common Stock, issued to Paribas by the
Company.
3 Warrant, dated April 25, 1996, exercisable into 776,388 shares of Common Stock, issued to PPI by the
Company.
</TABLE>
<PAGE>
EXHIBIT 99.1 TO
SCHEDULE 13D
WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of April 25,
1996, among VERNITRON CORPORATION (with its successors, the "Company"),
Paribas Principal, Inc. ("PPI") and Banque Paribas acting through its Grand
Cayman Branch, as the initial Holder of the Warrants referred to herein.
W I T N E S S E T H :
WHEREAS, the Company, various lending institutions listed on Annex I
thereto (the "Banks") and Banque Paribas, as agent for the Banks, are parties
to a Credit Agreement dated as of April 26, 1996 (as the same shall be
modified and supplemented and in effect from time to time, the "Credit
Agreement");
WHEREAS, in order to induce Banque Paribas to enter into the Credit
Agreement, and as compensation therefor, the Company has authorized the issu-
ance to the Holder of the Warrants which are exercisable, pursuant to the
terms and conditions thereof, for 666,312 shares of Common Stock, $0.01 par
value, of the Company at a purchase price of $.01; and
WHEREAS, PPI may desire to provide additional financing to the
Company and in connection therewith the Company has agreed to sell to PPI a
warrant to purchase, pursuant to terms and conditions thereof, 776,388 shares
of Common Stock, $0.01 par value of the Company at a purchase price of $1.25
per share.
WHEREAS, the Holder desires to subscribe for, and the Company
desires to issue to the Holder, upon the terms and conditions set forth
herein, the Warrant substantially in the form of Exhibit A hereto;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Definitions.
1.01 Definitions. The following terms, as used herein, shall have
the following respective meanings:
"Affiliate" shall have the meaning ascribed to such term in the
Credit Agreement.
"Agreement" shall have the meaning provided in the introductory
paragraph hereof.
"Business Day" shall mean any day other than Saturday, Sunday or any
other day on which commercial banks are required by law or authorized to close
in New York City.
<PAGE>
"CIT Warrant" shall mean the Warrant issued to CIT exercisable into
31,345 shares of Common Stock on the date hereof.
"Commission" means the Securities and Exchange Commission or any
other United States agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock of the Company.
"Credit Agreement" shall have the meaning ascribed to such term in
the first WHEREAS clause of this Agreement.
"DLJ Warrant" shall mean a warrant exercisable into 100,000 shares
of Common Stock expected to be issued to Donaldson, Lufkin & Jenrette ("DLJ")
promptly after the date hereof which warrant and any purchase agreement
pursuant to which such warrant is purchased shall have terms no more favorable
than the terms and provisions of this Agreement and the Warrant and may, at
the request of the Company, constitute a Warrant and DLJ may become a party to
this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exercise Period" shall mean the period of time from April 25, 1996,
until 5:00 P.M., local time in New York City, on April 25, 2006 (or such later
date as specified in Section 4.07).
"Existing Warrants" shall have the meaning provided in the Warrant.
"GAAP" shall mean generally accepted accounting principles as in
effect from time to time.
"Holder" shall mean the holder of any Warrant or Warrant Interest
unless, with respect to any such Warrant Interest, such Warrant Interest is
acquired in a public distribution pursuant to a registration statement under
the Securities Act or pursuant to a transaction exempt from registration under
the Securities Act if securities sold in such transaction may be resold
without subsequent registration under the Securities Act.
"Person" shall mean an individual, a corporation, a company, a
voluntary association, a partnership, a trust, an unincorporated organization
or a government or any agency, instrumentality or political subdivision
thereof.
"Public Sale" means any sale of Common Stock pursuant to a widely-
distributed registered public offering under the Securities Act or any sale of
Common Stock to the public pursuant to Rule 144 effected through a broker or
dealer.
"Registrable Securities" shall mean (i) any Warrant Interests issued
or sold to the Holder or any affiliate of the Holder whether or not at the
time of such determination such interests are then held by the Holder or such
affiliate of the Holder and (ii) any securities issued or issuable with
respect to any such Warrant Interests by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (ii) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act,
(iii) they shall have been otherwise transferred and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force or (iv) they shall have
ceased to be outstanding. Registrable Securities shall not include any
Warrant.
<PAGE>
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 5, including, without limitation,
(i) all registration, filing and NASD fees, (ii) all fees and expenses of
complying with securities or blue sky laws, (iii) all word processing,
duplicating and printing expenses, (iv) messenger and delivery expenses, (v)
the fees and disbursements of counsel for the Company and of its independent
public accountants, including the expenses of any special audits or "cold com-
fort" letters required by or incident to such performance and compliance, (vi)
the reasonable fees and disbursements of one counsel, who may be counsel for
the Company, chosen by the holders of a majority of the Registrable Securities
included in such registration statement, (vii) premiums and other costs of
policies of insurance against liabilities arising out of the public offering
of the Registrable Securities being registered (if the Company elects to
obtain any such insurance), and (viii) any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities, but
excluding underwriting fees, discounts and commissions, transfer taxes, if
any, and accountants retained by the selling securityholders in addition to
those referred to in preceding clause (v).
"Regulation Y" shall mean Regulation Y promulgated by the Board of
Governors of the Federal Reserve System or any successor regulation.
"Requesting Holder" shall mean in respect of any registration
pursuant to Section 5.01 hereof, any holder of Registrable Securities who
gives notice to the Company of its request to include Registrable Securities
in such registration.
"Required Holders" shall mean the holders of more than 50% of the
aggregate Warrant Interests then outstanding.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Tag-Along Acceptance" shall have the meaning set forth in Section
6.01(b).
"Tag-Along Notice" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Notice Period" shall have the meaning set forth in
Section 6.01(b).
"Tag-Along Offer" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Offeree" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Offerer" shall have the meaning set forth in Section
6.01(a).
"Tag-Along Offeree Shares" shall have the meaning set forth in
Section
6.01(c).
"Tag-Along Shares" shall have the meaning set forth in Section
6.01(a).
"Warrant" shall mean a Warrant to purchase the number of Warrant
Interests indicated therein, substantially in the form of Exhibit A, and any
Warrant or Warrants issued upon transfer of, or in substitution therefor and,
in any event, shall consist of the warrants issued to Banque Paribas and PPI,
on the date hereof and the DLJ Warrant.
"Warrant Interest" shall mean the shares of Common Stock issued or
issuable upon exercise of any Warrant. For purposes of this Agreement, a
Warrant Interest shall be "outstanding" from and after the date hereof until
<PAGE>
the redemption or cancellation of such Warrant Interest (or, if the related
Warrant has not been exercised, the expiration, repurchase or cancellation of
such Warrant) by the Company.
"Warrantholder" shall mean the holder of any Warrant.
1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be delivered hereunder shall be prepared, in accordance with GAAP.
Section 2. Terms and Conditions of Issuance of Warrants.
2.01 Issuance of the Warrants. In consideration of the premises
and other good and valuable consideration, the Company hereby agrees to issue
on the date hereof to Banque Paribas, acting through its Grand Cayman Branch,
a Warrant to purchase the number of Warrant Interests set forth on the
signature page. The Company hereby agrees to sell to PPI, for a purchase
price equal to $1,000, a Warrant to purchase the number of Warrant Interests
set forth on the signature page. The number of Warrant Interests set forth on
the signature page are subject to adjustment from time to time as set forth in
the Warrants issued to the Holders; provided, however, that no Holder shall be
entitled to exercise any Warrant to the extent that, as a result of such
exercise, such Holder and its Affiliates, directly or indirectly, would, in
such Holder's sole judgment, own, control or have power to vote a greater
quantity of securities of any kind issued by the Company than such Holder and
its Affiliates shall be permitted to own, control or have power to vote under
any law or under any regulation, rule or other requirement of any government
authority at the time applicable to such Holder and its Affiliates (including,
without limitation, any applicable provision of Regulation Y).
2.02 Opinion of Counsel. On the date hereof, the Holder shall have
received from Elliot N. Konopko, general counsel to the Company, an opinion in
form and substance satisfactory to the Holder.
2.03 On the date hereof, PPI shall have received from the Company
fully executed Small Business Administration Forms 480 and 652 (together with
Small Business Administration Form 1031, the "SBA Forms").
Section 3.A Representations and Warranties of the Company. The
Company represents and warrants to the Holders on the date hereof and on each
date on which a Warrant is exercised as follows; provided, however, it is
understood that the Company shall have no liability to the Holders as a result
of the Holder determining not to exercise the Warrant because the Company in
connection therewith discloses that any of the representations and warranties
set forth below became untrue after the date hereof and are untrue on the date
that such representations are required to be remade and the Company shall have
no liability to the Holder in any event as a result of disclosures by the
Company in connection with the making of such representations and warranties
after the date hereof that any of such representations and warranties is not
true after the date hereof and prior to an exercise of a Warrant of which the
Company had prior notice:
3.01 Incorporation of Representations and Warranties. The
representations and warranties of the Company contained in Sections 7.01
through 7.26, inclusive, of the Credit Agreement are incorporated herein by
reference and made a part hereof as if set forth herein. Such representations
and warranties are true and correct in all material respects on the date
hereof and will be true and correct on each date on which a Warrant is
exercised.
3.02 Authorization. The Company has all necessary power and
authority to execute, deliver and perform its obligations under this Agreement
and the Warrants and to issue and deliver the Warrants and Warrant Interests;
the execution, delivery and performance by the Company of this Agreement and
<PAGE>
the Warrants have been duly authorized by all necessary action; each of this
Agreement and each Warrant has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to creditors' rights and remedies generally and subject, as to
enforceability, to general equitable principles (regardless of whether an
enforcement is sought in a proceeding in law or at equity).
3.03 Valid Issuances. The Warrants, when issued and delivered
pursuant hereto, and the Warrant Interests, when issued and delivered and paid
for pursuant to the Warrants, will be validly issued, and are not subject to
any preemptive rights, rights of first refusal or rights of first offer except
as set forth herein. Except for the registration rights as set forth in this
Agreement, piggyback registration rights granted to the holder of the CIT
Warrant and rights to be granted to holder of the DLJ Warrant which shall be
no more favorable to the holder thereof than the registration rights provided
for herein, the Company is not under any obligation to cause the registration
of any of its presently outstanding securities or any of its securities which
hereafter may be issued.
3.04 No Breach. None of the execution and delivery of this
Agreement and the Warrants, the consummation of the transactions herein or
therein contemplated, including the issuance and delivery of the Warrants and
the Warrant Interests or compliance with the terms and provisions hereof or
thereof will conflict with or result in a breach of, or require any consent
(other than any consent already obtained which remains in full force and
effect and other than requirements for securities registration under
applicable laws) under any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which the Company is a party or by which it is
bound or to which any of its properties or assets is subject, or constitute a
default under any such agreement or instrument or result in the creation or
imposition of any lien upon any of the revenues or assets of the Company
pursuant to the terms of any such agreement or instrument.
3.05 Approvals. No authorizations, approvals or consents of, and
no filings or registrations with, any governmental or regulatory authority or
agency, which have not already been made or obtained, are necessary for the
execution, delivery or performance by the Company of this Agreement or the
Warrants, the consummation of the transactions contemplated herein and therein
or the validity or enforceability hereof or thereof.
3.06 Capitalization. The capital of the Company on the date hereof
consists of (x) 20,000,000 shares of common stock, $.01 par value, 12,659,957
of which shares are issued and outstanding, and (y) 4,000,000 shares of
preferred stock, $.01 par value, 738,584 of which shares are issued and
outstanding. All of such outstanding shares have been duly and validly
issued, are fully paid and nonassessable and are free of preemptive rights.
Except as set forth on Schedule VII of the Credit Agreement (which shall
include, without limitation, the Warrants), the Company does not have
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
3.07 Offer of Warrants. Neither the Company nor any Person acting
on its behalf has directly or indirectly offered the Warrants or any part
thereof or any similar securities for sale to, or solicited any offer to buy
any of the same from, or otherwise approached or negotiated in respect thereof
with, any Person other than the Holder and Donaldson, Lufkin & Jenrette.
Neither the Company nor any Person acting on its behalf has taken or will take
any action which would subject the issuance and sale of the Warrants to the
provisions of Section 5 of the Securities Act, or to the provisions of any
state securities law requiring registration of securities, notification of the
<PAGE>
issuance or sale thereof or confirmation of the availability of any exemption
from such registration.
3.08 SBIC Information. All information set forth in the SBA Forms
regarding the Company and its affiliates is accurate and complete. Copies of
such forms have been, on or prior to the date hereof (or within the time
period required by Section 4.03 in the case of Form 1031), completed and
executed by the Company and delivered to PPI.
Section 3.B. Representation and Warranties of the Holders. Each
Holder represents and warrants to the Company on the date hereof and on each
date on which a Warrant is exercised as follows:
(a) Such Holder represents that the Warrants or the Warrant
Interests, as the case may be, is being acquired by him for his own
account for investment purposes and not with a view to the distribution
thereof. Each Holder understands that the Warrant and the Warrant
Interests have not been registered under the Securities Act of 1933 as
amended, on the grounds that the offer and sale of the Warrants and
Warrant Interests are exempt from the registration requirements of the
Securities Act of 1933 under Section 4(2) thereof as transaction not
involving any public offering of the Warrants or Warrant Interests.
(b) Each Holder understands that he must bear the economic risk of
his investment in the Warrants and Warrant Interests for an indefinite
period of time because such securities have not been registered under the
Act and, therefore, cannot be sold unless they are subsequently
registered under the Act or an exemption from such registration is
available.
Section 4. Covenants.
4.01 Maintenance of Existence; Corporate Franchises. The Company
will do, and will cause each of its subsidiaries to do or cause to be done,
all things necessary to preserve and keep in full force and effect its
existence and its rights, franchises, licenses and patents useful and neces-
sary for the operation of their respective businesses; provided, however, that
nothing in this Section 4.01 shall prevent the withdrawal by the Company or
any subsidiary of the Company of its qualification as a foreign corporation in
any jurisdiction or the taking of any other action or failure to take any
action by the Company or any subsidiary where such withdrawal, action or
omission could not reasonably be expected to have a material adverse effect on
the performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of the Company and
its subsidiaries taken as a whole.
4.02 Inspection. The Company covenants and agrees that it will
permit, on a reasonable basis, any Holder and its representatives (including
without limitation, examiners from the Small Business Administration) to
inspect the properties of the Company and to examine and make extracts and
copies from the books and records of the Company during normal business hours
(including, without limitation, for purposes of verifying the certifications
and representations made by the Company in the SBA Forms and this Agreement
and in verifying compliance with the covenants contained in this Agreement.
4.03 Information. The Company covenants and agrees that it will
deliver to all of the Holders all the financial statements and other
information required to be delivered under Section 8.01 of the Credit
Agreement (as such agreement is in effect on the date hereof without giving
effect to any amendments, modifications or waivers after the date hereof and
whether or not such agreement is in effect). In addition, the Company
covenants and agrees to provide to the Holders, at least annually, sufficient
financial and other information necessary to allow the Holder to evaluate the
financial condition of the Company for the purpose of valuing the Holder's
interest in the Company, to determine the continued eligibility of the Company
under the Small Business Investment Act of 1958, as amended (the "SBIA") and
<PAGE>
the regulations thereunder, including Title 13, Code of Federal Regulations,
Section 121.802, and to verify the use of the proceeds received by the Company
from the purchase of the Warrant as well as the proceeds from the exercise of
the Warrant. Prior to each date on which the Warrant is exercised, the
Company shall provide such financial statements, plans of operation (including
intended use of financing proceeds), cash flow analyses and projections as PPI
shall reasonably determine is necessary to support its investment decision.
In addition, prior to each exercise of the Warrant, the Company shall certify
to PPI the intended use of the proceeds from such exercise. All such
information shall be certified by the President, Chief Executive Officer,
Treasurer or Chief Financial Officer of the Company. Within 30 days of the
date hereof and within 30 days of the date of each exercise of the Warrant,
the Company shall have provided PPI a completed Small Business Administration
Form 1031. Promptly after the end of each fiscal year of the Company (and in
any event prior to February 28 of each year), the Company shall provide to PPI
a written assessment in form and substance satisfactory to PPI of the economic
impact of the financing assistance provided to the Company by PPI, specifying
the full time equivalent jobs created or retained, and the impact of the
financing on the revenues and profits of the business and on taxes paid by the
business and its employees. Upon the request of PPI the Company will also
provide all information requested by PPI in order for it prepare and file SBA
Form 468 and any other information requested or required by any governmental
agency asserting jurisdiction over PPI.
4.04 Transactions with Affiliates. The Company will not, and will
not permit any of its subsidiaries to, enter into transactions with an
Affiliate (for purposes of this Section, except as specified below, as defined
in the Credit Agreement for purposes of Section 9.07 thereof) of the Company
other than transactions which have been approved by a majority of the
disinterested members of the Board of Directors and which transactions are on
terms and conditions substantially as favorable to the Company or such
subsidiary as would be obtainable in a comparable arm's-length transaction
with a person other than an Affiliate or as otherwise permitted pursuant to
Section 9.07 of the Credit Agreement. Neither the Company nor any Subsidiary
of the Company will repurchase any equity interests of the Company except on a
basis which is pro rata among all the holders of such equity interests
(including, without limitation, in the event any Warrants are outstanding the
holders of Warrants shall have the option to sell their Warrant Interests
pursuant to such repurchase (with the repurchase price per share to be reduced
by the exercise price)). Neither the Company nor any subsidiary shall sell a
material amount of assets to, or purchase a material amount of assets from, an
Affiliate of the Company, it being agreed that a merger or similar transaction
between the Company and an Affiliate shall not constitute a sale or purchase
of a material amount of assets.
4.05 Repurchase of Equity Interests. The Company covenants and
agrees that it will not, without prior written notice to any Holder which is
subject to the provisions of the Bank Holding Company Act of 1956, as amended
(including Regulation Y promulgated thereunder), directly or indirectly,
purchase, redeem, retire or otherwise acquire any partnership interests if, as
a result of such purchase, redemption, retirement or other acquisition, such
Holder, together with its Affiliates, will own, or be deemed to own, Warrant
Interests representing capital equal to 25% or more of the aggregate equity
interests then outstanding (assuming the exercise of all Warrants then held by
such Holder and its Affiliates).
4.06 Regulatory Matters. The Company agrees to cooperate in good
faith with and assist any Holder or any of the Holders' Affiliates as any
Holder may reasonably request in connection with any United States banking
regulatory issues that may arise with respect to the Holder's ownership of the
Warrant or any Warrant Interest.
4.07 Notice of Expiration. The Company covenants and agrees to
give each Holder of a Warrant, as reflected in the books and records of the
Company, prior written notice of the expiration of the Exercise Period of the
respective Warrants. Such notice shall be delivered not less than thirty (30)
<PAGE>
days but not more than sixty (60) days prior to such expiration; provided that
if the Company fails to give such notice, the expiration of such Exercise
Period shall not occur, as to the respective Warrants, until thirty (30) days
after such notice is delivered.
4.08 Credit Agreement Debt. It is recognized and agreed that the
fair market value of the Warrants, when taken together with the terms of the
indebtedness arising under the Credit Agreement ("Credit Agreement Debt"),
will not result in any original issue discount for federal income tax purposes
("OID") with respect to the Credit Agreement Debt and the Company agrees not
to claim any OID with respect to the Credit Agreement Debt.
4.09 Preemptive Rights. In case the Company shall at any time
after the date of this Agreement in any manner issue or sell any shares of its
Common Stock (other than issuances pursuant to the exercise of Existing
Warrants) or rights, options or warrants to subscribe for or purchase, or
other securities exchangeable for or convertible into, shares of Common Stock
(any such rights, options, warrants or other securities being herein called
"Rights"), whether or not such Rights are immediately exercisable or
convertible, other than if made as a distribution or dividend to all holders
of Common Stock, the Company will give to the Holders written notice (an
"Offer Notice") of the Company's decision, describing the type of Common Stock
or Right, the price, and the general terms upon which the Company has decided
to issue such securities. The Holders shall have twenty-one (21) days from
the date on which the Company shall give the written Offer Notice to agree to
purchase such Holder's pro rata share (as described in the next succeeding
sentence) of the Common Stock or Rights proposed to be issued plus its pro
rata share of the shares of Common Stock and Rights which the other Holders
are entitled to purchase pursuant to this Section and are not purchased by
other Holders, of such Common Stock or Rights for the price and upon the terms
specified in the Offer Notice, by giving written notice to the Company and
stating therein the quantity of Common Stock or Rights to be purchased by the
Holder. The Holders shall be entitled to purchase an amount of shares of
Common Stock and Rights equal to the product of (i) the number of shares of
Common Stock and Rights proposed to be issued and sold multiplied by (ii) a
fraction, the numerator of which is the number of shares of Common Stock then
owned by such Holder which were acquired upon exercise of the Warrants plus
the number of shares of Common Stock which such Holder would be entitled to
purchase upon the exercise of any Rights owned by such Holder immediately
prior to the time of determination and the denominator of which is the total
number of shares of Common Stock then issued and outstanding plus the number
of shares of Common Stock which would be issued upon the exercise of any
Rights held by all holders. In the event that the Holder and the other
holders of Warrants or Warrant Interests shall fail or refuse to exercise in
full their preemptive rights within said twenty-one (21) day period, the
Company shall have one hundred twenty (120) days thereafter to sell the
quantity of Common Stock or Rights which the Holder did not agree to purchase
pursuant to this Section, at a price and upon general terms no more favorable
to the purchasers thereof than specified in the Company's Offer Notice to the
Holder. In the event the Company has not sold the Common Stock or Rights
within said period of one hundred twenty (120) days, the Company will not
thereafter issue or sell any Common Stock or Rights without first offering
such securities to the Holder in the manner provided by the foregoing
provisions of this Section. In no event shall any Holder be entitled to any
rights pursuant to this Section 4.09 in the case of the issuance or sale of
shares of Common Stock or Rights (a) for a consideration other than cash, (b)
to providers (other than providers who are Affiliates of the Company) of debt
or preferred stock financing as part of such debt or preferred stock financing
or (c) constituting, or upon the exercise of, Management Options (as defined
in the Warrant).
4.10 Use of Proceeds. The Company agrees that it will use the
proceeds from the sale of the Warrant to PPI and the proceeds from the
exercise of the Warrant for general corporate and working capital purposes and
not for any purpose that would be a violation of Section 107.720 of Title 13
of the Code of Federal Regulations.
<PAGE>
4.11 Business. For a period of one year following the date hereof,
the Company will not and will not permit its subsidiaries to, change its
business activity if such change would render the Company ineligible to
receive financial assistance from a Small Business Investment Company under
the Small Business Act and the regulations thereunder. If the Company
breaches this covenant, then, PPI may demand that the Company and, subject to
the terms of the Credit Agreement, the Company shall immediately purchase all
securities acquired by PPI at a purchase price equal to PPI's original cost.
4.12 Non-Discrimination. The Company will at all times comply with
the nondiscrimination requirements of 13 C.F.R., Parts 112, 113 and 117.
Section 5. Registration Rights.
5.01 Registration under Securities Act.
(a) Registration on Request. (i) Subject to the last sentence of
this clause (i), any time and from time to time after the date hereof, upon
the request of the holders of a majority of the Registrable Securities, the
Company will promptly give written notice of such requested registration to
all registered holders of Registrable Securities, and thereupon the Company,
in accordance with the provisions of Section 5.01(c) hereof, will use its best
efforts to effect the registration under the Securities Act of:
(A) the Registrable Securities which the Company has been so
requested to register for disposition in accordance with the
intended method or methods of disposition stated in such request,
and
(B) all other Registrable Securities which the Company has
been requested to register by the holders thereof by written request
given to the Company within 20 days after the giving of such written
notice by the Company (which request shall specify the intended
method of disposition of such Registrable Securities),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered. The Company shall be required to effect no more than two "long-
form registrations" pursuant to this Section 5.01(a) (i.e., registrations on
Form S-1) but there shall be no limit on "short-form registrations" pursuant
to this Section 5.01(a) (i.e., registrations on Form S-2 or S-3 or other
short-form registrations).
In no event may Holders request a registration pursuant to this
Section unless such Holders request the registration of at least 2% of the
outstanding shares of Common Stock of the Company. The Company shall not be
obligated to take any action to effect any registration requested pursuant to
this Section 5.01(a) during the period starting with the date 30 days prior to
the Company's estimate of the date of filing of, and ending on a date 90 days
after the effective date of, a Company initiated registration, provided that
the Company is using all reasonable efforts to cause such registration
statement to become effective.
(ii) Effective Registration Statement. A registration requested
pursuant to this Section 5.01(a) shall not be deemed to be effected (A) if a
registration statement with respect thereto shall not have become effective
unless the registration statement shall not have become effective because the
Holders requesting such registration requested that such registration be
withdrawn, (B) if, after it has become effective, such registration is
interfered with for any reason by any stop order, injunction or other order or
requirement of the Commission or any other governmental agency or any court,
and the result of such interference is to prevent the holders of Registrable
Securities to be sold thereunder from disposing thereof in accordance with the
intended methods of disposition, or (C) if the conditions to closing specified
in the purchase agreement or underwriting agreement entered into in connection
with any underwritten registration shall not be satisfied or waived with the
<PAGE>
consent of the underwriters of such Registrable Securities that were to have
been sold thereunder, other than as a result of any breach by any such holder
of its obligations thereunder or hereunder.
(iii) Registration Statement Form. Registrations under this
Section 5.01(a) shall be on such appropriate registration form of the
Commission as shall be selected by the Company and as shall permit the
disposition of the Registrable Securities so to be registered in accordance
with the intended method or methods of disposition specified in the request of
the holders of Registrable Securities being registered for such registration.
The Company agrees to include in any such registration statement all
information which the holders of Registrable Securities being registered shall
reasonably request.
(iv) Expenses. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section 5.01(a).
To the extent expenses of the registration are not required to be paid by the
Company, each holder of securities included in the registration will pay those
expenses allocable to the registration of such holder's securities, and any
expenses not so allocable will be borne by all sellers of securities included
in the registration in proportion to the aggregate selling price of the
securities to be so registered.
(v) Selection of Underwriters. If a requested registration
pursuant to this Section 5.01(a) involves an underwritten offering, the
managing underwriter or underwriters shall be selected by a majority of the
holders of Registrable Securities requested to be included in such
registration, such underwriter to be reasonably satisfactory to the Company.
(vi) Priority in Requested Registrations. If a requested
registration pursuant to this Section 5.01(a) involves an underwritten
offering, and the managing underwriter shall advise the Company in writing
(with a copy to each Person requesting registration of Registrable Securities)
that, in its opinion, the number of securities requested to be included in
such registration exceeds the number which can be sold in such offering within
a price range acceptable to the holders of a majority of the Registrable
Securities requested to be included therein, the Company will include in such
registration to the extent of the number which the Company is so advised can
be sold in such offering pro rata among the holders of Registrable Securities
requesting inclusion therein in accordance with the number of securities
requested to be included in such registration by each such holder; provided,
that if, as a result of the preceding clause, the number of Registrable
Securities registered and sold on behalf of holders of Registrable Securities
in any registration requested pursuant to this Section 5.01(a) is less than
50% of the Registrable Securities as to which such holders requested
registration pursuant to this Section 5.01(a), then such registration shall be
deemed to be a registration under Section 5.01(b) hereof and not under Section
5.01(a) hereof. If this Section 5.01(a) is applicable in connection with any
such registration, without the written consent of the holders of at least a
majority of the Registrable Securities, no securities other than Registrable
Securities shall be covered by such registration and the Company will not
grant any registration rights inconsistent with the provisions of this Section
5.01(a).
(b) Incidental Registration. (i) Right to Include Registrable
Securities. If the Company at any time proposes to register any of its equity
securities under the Securities Act (other than by a registration on Form S-4
or S-8 or any successor or similar forms, and other than pursuant to Section
5.01(a)), whether or not for sale for its own account, the Company will each
such time give prompt written notice to all holders of Warrants and of
Registrable Securities of its intention to do so and of such holders' rights
under this Section 5.01(b). Upon the written request of any holder of
Registrable Securities made within 20 days after the receipt of any such
notice (which request shall specify the Registrable Securities intended to be
disposed of by such holder and the intended method of disposition thereof),
the Company will, subject to the provisions of paragraph (iii) of this Section
<PAGE>
5.01(b), use its best efforts to effect the registration under the Securities
Act of all Registrable Securities which the Company has been so requested to
register by the holders thereof, to the extent required to permit the
disposition (in accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered; provided, that if, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each Requesting Holder
and, thereupon, (A) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation, to pay the
Registration Expenses, if any, in connection therewith), and (B) in the case
of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities (but will pay Registration Expenses, if any,
as and when the same become due and payable during such delay).
(ii) Expenses. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 5.01(b). To the extent expenses of the registration are not
required to be paid by the Company, each holder of securities included in the
registration will pay those expenses allocable to the registration of such
holder's securities, and any expenses not so allocable will be borne by all
sellers of securities included in the registration in proportion to the
aggregate selling price of the securities to be so registered.
(iii) Priority in Incidental Registrations. If a registration
pursuant to this Section 5.01(b) involves an underwritten offering, and the
managing underwriter shall advise the Company in writing, that, in its
opinion, the number of securities requested and otherwise proposed to be
included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Company, the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering, (A) if the registration is a primary
registration on behalf of the Company, (x) first, the securities requested to
be included in such registration by the Company until such time as the Company
has raised after the date hereof in public offering gross proceeds of $20
million from the sale of common equity, (y) second, the Registrable Securities
and securities of other Persons requested to be included in such registration
pro rata in accordance with their ownership interests (assuming the exercise
of all Warrants) and (B) if the registration is a secondary registration on
behalf of Persons other than the Company, the Registrable Securities and
securities of the other Persons included in such registration pro rata in
accordance with their ownership interests (assuming the exercise of all
Warrants). Notwithstanding anything to the contrary contained in the
foregoing, in the event that a reduction in the number of securities included
in an incidental registration is required to be made in accordance with this
Section 5.01(b)(iii), in no event shall the number of securities to be
included by Steven W. Bershad be reduced (except to allow the Company to
include securities) until such time as Mr. Bershad has sold in a manner after
the date hereof at least 1,137,031 shares of Common Stock of the Company.
(c) Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 5.01(a) and (b)
the Company will as expeditiously as possible:
(i) prepare and as soon thereafter as possible file with the
Commission the requisite registration statement to effect such
registration and thereafter use its best efforts to cause such
registration statement to become effective; provided, that before filing
such registration statement or any amendments thereto, the Company will
furnish to the Requesting Holders copies of all such documents proposed
to be filed;
<PAGE>
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement continuously effective for a period of either (A) not less than
nine months (subject to extension pursuant to the last paragraph of this
Section 5.01(c)) or (B) such shorter period as will terminate when all of
the securities covered by such registration statement have been disposed
of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement (but in any
event not before the expiration of any longer period required under the
Securities Act), and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have
been disposed of in accordance with the intended methods of disposition
by the seller or sellers thereof set forth in such registration
statement;
(iii) furnish to each Requesting Holder such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits, but only one
copy thereof to each such Requesting Holder), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents in
order to facilitate the disposition of the Registrable Securities owned
by such Requesting Holder, as such Requesting Holder may reasonably
request;
(iv) use its best efforts to register or qualify such Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions where
an exemption is not available, as each seller thereof shall reasonably
request, to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and to take any other
action which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the
securities owned by such seller; provided, that the Company shall not for
any such purpose be required to (A) qualify generally to do business as a
foreign corporation in any jurisdiction where it would not otherwise be
required to qualify but for the requirements of this clause (iv), (B)
consent to general service of process in any such jurisdiction or (C)
subject itself to taxation in such jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Securities;
(vi) furnish to each seller of Registrable Securities a signed
counterpart, addressed to such seller (and the underwriters, if any) of:
(A) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), and
(B) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under
the underwriting agreement), signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement,
<PAGE>
covering substantially the same matters with respect to such registration
statement (and the prospectus included, therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities;
(vii) promptly notify each seller of Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under
the Securities Act, upon discovery that, or upon the discovery of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made,
and at the request of any such seller promptly prepare and furnish to
such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made;
(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings
statement covering a period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act, and
will promptly furnish to each seller of Registrable Securities a copy of
any amendment or supplement to such registration statement or prospectus;
(ix) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement; and
(x) use its best efforts (A) to cause all such Registrable
Securities covered by such registration statement to be listed on any
national securities exchange (if such Registrable Securities are not
already so listed), and on any other securities exchange, on which
similar securities issued by the Company are then listed, if the listing
of such Registrable Securities is then permitted under the rules of such
exchange or (B) to secure the designation of all such Registrable
Securities covered by such registration statement as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1 of the
Commission or, failing that, to secure NASDAQ authorization for such
Registrable Securities, in each case if the Registrable Securities so
qualify, in the case of each action referred to in this clause (B) if
requested by a majority of holders covered by such registration statement
or by the managing underwriter.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such securities as
the Company may from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt of
any notice from the Company of the happening of any event of the kind
described in clause (vii) of this Section 5.01(c), such holder will forthwith
discontinue such holder's disposition of Registrable Securities pursuant to
the registration statement relating to such Registrable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by clause (vii) of this Section 5.01(c) and, if so directed by
<PAGE>
the Company, such holder will use its best efforts to deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then
in such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the applicable time period mentioned in
clause (ii) of this Section 5.01(c) during which a Registration Statement is
to remain effective shall be extended by the number of days during the period
from and including the date of the giving of such notice pursuant to clause
(vii) of this Section 5.01(c), to and including the date when each seller of a
Registrable Security covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
clause (vii) of this Section 5.01(c).
(d) Underwritten Offerings. (i) Requested Underwritten Offerings.
If requested by the underwriters for any underwritten offering of Registrable
Securities pursuant to a registration requested under Section 5.01(a), the
Company will enter into an underwriting agreement with such underwriters for
such offering. Such agreement shall be reasonably satisfactory in substance
and form to the Company and the holders of a majority of the Registrable
Securities included in such registration and the underwriters and shall
contain such representations and warranties by the Company and by the selling
shareholders and such other terms as are generally prevailing in agreements of
this type, including, without limitation, indemnities to the effect and to the
extent provided in Section 5.01(f). The holders of Registrable Securities to
be distributed by such underwriters shall be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of such holders and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of such holders of
Registrable Securities.
(ii) Incidental Underwritten Offerings. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 5.01(b) and such securities are to be distributed by
or through one or more underwriters, (i) the managing underwriter or
underwriters shall be selected by the Company, and (ii) the Company will, if
requested by any holder of Registrable Securities as provided in Section
5.01(b), and subject to the provisions of Section 5.01(b)(iii), use its best
efforts to arrange for such underwriters to include all the Registrable
Securities to be offered and sold by such holder among the securities to be
distributed by such underwriters. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the underwriting
agreement between the Company and such underwriters and may, at their option,
require that any or all of the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders and
that any or all of the conditions precedent to the obligations of such under-
writers under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities.
(iii) Holdback Agreements. (I) The Company agrees without the
consent of the managing underwriter not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities during such period of
time (but not to exceed 180 days after any underwritten registration pursuant
to Section 5.01(a) or (b) has become effective) as may be requested by the
underwriters, except as part of such underwritten registration and except
pursuant to registrations on Form S-4 or S-8, or any successor or similar
forms thereto or pursuant to an unregistered offering to employees of the
Company or its Subsidiaries pursuant to an employee benefit plan as defined in
Rule 405 of Regulation C under the Securities Act; provided, that the
provisions of this clause shall not prevent the conversion or exchange of any
securities pursuant to their terms into or for other securities.
<PAGE>
(II) Each Holder agrees not to effect any public sale or
distribution of the issue being registered or a similar security of
the Company, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule
144 under the Securities Act during the 14 days prior to, and during
the 180-day period (or such shorter period as may be agreed to by
the Company) beginning on, the effective date of any registration
statement filed by the Company with respect to the sale of equity
securities (other than a filing pursuant to Form S-8) (except as
part of such registration), if and to the extent requested by the
managing underwriters in the case of an underwritten public
offering.
(e) Preparation, Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters,
if any, and their respective counsel and accountants the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such customary access to its
books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
such holders, and such underwriters' and such holders' respective counsel, to
conduct a reasonable investigation within the meaning of the Securities Act
provided that the Company receives customary confidentiality agreements from
such persons.
(f) Indemnification. (i) Indemnification by the Company. In the
event of any registration of any securities of the Company under the
Securities Act pursuant to this Section 5.01, the Company will, and hereby
does, indemnify and hold harmless, the seller of any Registrable Securities
covered by such registration statement, its directors, officers, agents and
employees, each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls such seller or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller or any such director, officer, agent, employee,
underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon (A) any untrue statement or alleged untrue
statement of any material fact contained (x) in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein or used in connection with the offering of securities covered thereby,
or any amendment or supplement thereto or any document included by reference
therein, or (y) in any application or other document or communication (in this
Section 5.01(f) collectively called an "application") executed by or on behalf
of the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify any securities
covered by such registration statement under the "blue sky" or securities laws
thereof, or (B) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such seller and each such
director, officer, agent, employee, underwriter and controlling person for any
legal or any other expenses incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding; provided,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission, made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement, or in any application, in
reliance upon and in conformity with written information prepared and furn-
<PAGE>
ished to the Company by such seller specifically for use in the preparation
thereof which information contained any untrue statement of any material fact
or omitted to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and provided further,
that the Company shall not be liable to any Person who participates as an
underwriter in any such registration or any other Person who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding
in respect thereof) or expense arises out of such Person's failure to send or
give a copy of the final prospectus, as the same may be then supplemented or
amended (provided it has been made available to such Person in accordance with
the terms hereof), to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of the securities to such Person if such statement or
omission was corrected in such final prospectus. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf
of such seller or any such director, officer, agent, employee, underwriter or
controlling Person and shall survive the transfer of such securities by such
seller. The Company shall not be obligated to pay the fees and expenses of
more than one counsel or firm of counsel for all parties indemnified in
respect of a claim for each jurisdiction in which such counsel is required
unless in the reasonable judgment of any such indemnified party a conflict of
interest may exist between such indemnified party and any other indemnified
party in respect of such claim.
(ii) Indemnification by the Sellers. The Company may require, as a
condition to including any Registrable Securities in any registration
statement filed pursuant to this Section 5.01, that the Company shall have
received an undertaking satisfactory to it from the prospective seller of such
securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in clause (i) of this Section 5.01(f)) the Company, each
director of the Company, each officer of the Company and each other Person, if
any, who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any application, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity
with written information prepared and furnished to the Company by such seller
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement, or such application, which information contained any untrue
statement of any material fact or omitted to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such
securities by such seller. The indemnity provided by each seller of
securities under this Section 5.01(f)(ii) shall be provided severally, and not
jointly or jointly and severally with any other seller or prospective seller
of securities, and shall be limited in amount to the net amount of proceeds
received by such seller from the sale of Registrable Securities pursuant to
such registration statement.
(iii) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
5.01(f), such indemnified party will, if a claim in respect thereof is to be
made against an indemnifying party, give written notice to the latter of the
commencement of such action; provided, that the failure of any indemnified
party to give notice as provided herein shall not relieve the indemnifying
party of its obligations under the preceding subdivisions of this Section
5.01(f), except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
<PAGE>
parties may exist in respect of such claim, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(iv) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 5.01(f) (with
appropriate and reasonable modifications) shall be given by the Company and
each seller of Registrable Securities with respect to any required
registration or other qualification of securities under any federal, state or
provincial law or regulation of any governmental authority, other than the
Securities Act.
(v) Indemnification Payments. The indemnification required by this
Section 5.01(f) shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, subject to refund
if the party receiving such payments is subsequently found not to have been
entitled thereto hereunder.
(vi) Contribution. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by this
Section 5.01(f) is for any reason not available, the parties required to
indemnify by the terms hereof shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company, any seller of Registrable
Securities and one or more of the underwriters, except to the extent that
contribution is not permitted under Section 11(f) of the Securities Act. In
determining the amounts which the respective parties shall contribute, there
shall be considered the relative benefits received by each party from the
offering of the Registrable Securities (taking into account the portion of the
proceeds of the offering realized by each), the parties' relative knowledge
and access to information concerning the matter with respect to which the
claim was asserted, the opportunity to correct and prevent any statement or
omission and any other equitable considerations appropriate under the
circumstances. The Company and each Person selling securities agree with each
other that no seller of Registrable Securities shall be required to contribute
any amount in excess of the amount such seller would have been required to pay
to an indemnified party if the indemnities under clauses (i) and (ii) above of
this Section 5.01(f) were available. The Company and each such seller agree
with each other and the underwriters of the Registrable Securities, if
requested by such underwriters, that it would not be equitable if the amount
of such contribution were determined by pro rata or per capita allocation
(even if the underwriters were treated as one entity for such purpose) or for
the underwriters' portion of such contribution to exceed the percentage that
the underwriting discount bears to the initial public offering price of the
Registrable Securities. For purposes of this clause (vi), each Person, if
any, who controls an underwriter within the meaning of Section 15 of the
Securities Act shall have the same rights to contribution as such underwriter,
and each director and each officer of the Company who signed the registration
statement, and each Person, if any, who controls the Company or a seller of
Registrable Securities within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company or a seller of
Registerable Securities, as the case may be. Notwithstanding the foregoing,
no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contributions from
any person who is not guilty of such fraudulent misrepresentation.
(g) Participation in Underwritten Registrations. No Person may
participate in any underwritten registration hereunder unless such Person
agrees to sell such Person's securities on the basis provided in any
<PAGE>
underwriting arrangements reasonably approved by the Company.
(h) Limitations, Conditions and Qualifications to Obligations under
Registration Covenants. The obligations of the Company under this Section 5
to file and to use its best efforts to cause the Registerable Securities to be
registered under the Securities Act are subject to the limitation, condition
and qualification that the Company shall be entitled to postpone for a
reasonable period of time (but not exceeding 60 days) the filing of any
registration statement otherwise required to be prepared and filed by it
pursuant to this Section 5 if the Company determines, in its reasonable
judgment, that such registration and offering would interfere with any
financing, acquisition, corporate reorganization or other material transaction
involving the Company or would require premature disclosure thereof and
promptly gives the holders of Registerable Securities requesting registration
thereof pursuant to Section 5 written notice of such determination, containing
a general statement of the reasons for such postponement and an approximation
of the anticipated delay.
5.02 Rule 144. The Company will file the reports required to be
filed by it under the Exchange Act and the rules and regulations adopted by
the Commission thereunder (or, if the Company is not required to file such
reports, will, upon the request of any holder of Registrable Securities, make
publicly available other information) and will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (i) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5.03 Rule 144A. The Company covenants that, except at such times
as the Company is a reporting company under Section 13 or 15(d) of the
Exchange Act, the Company shall, upon the written request of any holder of
Registrable Securities, provide to any such holder and to any prospective
institutional transferee of Registrable Securities designated by such holder,
such financial and other information as is available to the Company or can be
obtained by the Company without material expense and as such holder may
reasonably determine is required to permit a transfer of such Registrable
Securities to comply with the requirements of Rule 144A promulgated under the
Securities Act.
5.04 Other Registration Rights. The Company will not grant to any
Affiliate of the Company the right to request the Company to register any
equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the written
consent of the holders of at least a majority of all Registrable Securities at
the time outstanding unless such registration rights permit the holders of the
Registrable Securities to piggyback on all such registrations on a pro rata
basis (determined by ownership and after giving effect to all cutbacks) with
such Affiliate except as otherwise permitted pursuant to the last sentence of
Section 5.01(b)(iii). The Company represents and warrants to the holders of
Registrable Securities that on the date hereof there are no other
"registration rights" held by any Person except for the Existing Warrants.
Section 6. Other Rights and Obligations.
6.01 Tag Along Rights. (a) In the event that Stephen W. Bershad
or any Affiliate of Stephen W. Bershad (the "Tag-Along Offeror") intends to
sell, transfer or otherwise in any manner dispose of (other than in connection
with the granting of a security interest in such securities) any shares of
Common Stock owned by him (the "Tag-Along Shares"), other than sales which
when aggregated with all other sales by Mr. Bershad after the date hereof,
aggregate less than 1,137,031 shares of Common Stock, the Tag-Along Offeror
shall provide written notice (the "Tag-Along Notice") to the Holder (and any
<PAGE>
assignee of the Holder's rights hereunder who has acquired Common Stock issued
upon exercise of such Holder's Warrant) (the "Tag-Along Offeree") in the
manner set forth in this Section 6.01. The Tag-Along Notice shall identify
the proposed transferee or transferees, the Tag-Along Shares, the Tag-Along
Offeree's rights pursuant to this Section 6.01 (the "Tag-Along Offer"), the
estimated expenses associated with the sale, a description of the price and
all the other terms and conditions of the Tag-Along Offer. The Tag-Along
Offeror shall not be permitted to sell, transfer or otherwise dispose (other
than in connection with the granting of a security interest in such
securities) of any shares of Common Stock owned by him otherwise than as pro-
vided in this Section 6.01. In the event that the consideration payable in a
Tag-Along Offer consists in whole or in part of a consideration which a Tag-
Along Offeree is prohibited by law from receiving or holding, then the Tag-
Along Offeree shall receive in lieu of such consideration cash in an amount
equal to the fair market value of such consideration. In connection with any
such sale, neither the Tag-Along Offeror nor any of its Affiliates shall
receive any benefits of any type not received by the Tag-Along Offeree on a
pro rata basis, including, without limitation, any consulting, non-
competition, investment banking or other fees other than employment
compensation received in the ordinary course of business for employment
services actually provided by such person to the purchaser in any Tag-Along
Offer after consummation thereof. Notwithstanding the foregoing, the Tag-
Along Offeree shall be responsible for its pro rata share of all estimated
expenses associated with the sale. The timing provisions of this Section 6.01
shall not apply to Tag-Along Offers structured as a merger, consolidation or
similar transaction in which all holders of shares of Common Stock are
permitted or required to transfer their interest on the same terms.
(b) The Tag-Along Offeree shall have the right and option,
exercisable as set forth below, to accept the Tag-Along Offer for up to such
number of shares of Common Stock in respect of which the Tag-Along Offer is
made, as is determined in accordance with the provisions of this Section 6.01.
The terms of any sale of such shares of Common Stock by a Tag-Along Offeree
pursuant to the exercise of its option under this Section 6.01 shall be the
same terms as those for the sale of shares of Common Stock by the Tag-Along
Offeror as set forth in the Tag-Along Notice; provided, that the Tag-Along
Offeree shall not be required to give any representations except as to such
Tag-Along Offeree's ownership interests in the Company and its ability to sell
such interests; provided, further, however, the Holder shall be required to
participate in any indemnity obligations of the selling stockholders on
several not joint, pro rata basis so long as the aggregate amount of such
holders indemnity obligation does not exceed the net proceeds received by such
person in connection with such Tag-Along Offer. If the Tag-Along Offeree
desires to exercise such option, it shall provide the Tag-Along Offeror with
irrevocable written notice (the "Tag-Along Acceptance"), specifying, subject
to Section 6.01(c), the number of shares of Common Stock as to which it is
accepting the Tag-Along Offer, within 15 Business Days after the date on which
the Tag-Along Notice is given (the "Tag-Along Notice Period").
(c) The Tag-Along Offeree shall have the right to sell, pursuant to
the Tag-Along Offer, a number of shares of Common Stock (the "Tag Along
Offeree Shares") equal to the lesser of (i) the number specified in its Tag-
Along Acceptance or (ii) the number of shares of Common Stock equal to the
product of (i) the total number of shares of Common Stock constituting the
Tag-Along Shares, and (ii) a fraction, the numerator of which shall be the
total number of shares of Common Stock held by such Tag-Along Offeree and the
denominator of which shall be the total number of the then outstanding shares
of Common Stock held by the Tag-Along Offeror and the Tag-Along Offeree;
provided, however, in the event that after giving effect to the sale by the
Tag-Along Offeror pursuant to such Tag-Along Offer, the Tag-Along Offeror and
its Affiliates shall own less than 50% of the amount of shares of Common Stock
owned by them on the date hereof, then in connection with such sale pursuant
to the Tag-Along Offer, the Tag-Along Offeree shall have the right to sell all
shares of Common Stock owned by such Tag-Along Offeree.
(d) If at the termination of the Tag-Along Notice Period the Tag-
<PAGE>
Along Offeree shall not have accepted the Tag-Along Offer, the Tag-Along
Offeree will be deemed to have waived any and all of its rights under this
Section 6.01 with respect to the sale or other disposition of any shares of
Common Stock pursuant to such Tag-Along Offer as described in the Tag-Along
Notice. The Tag-Along Offeror shall have 120 days in which to sell the Tag-
Along Shares and Tag-Along Offeree Shares not otherwise excluded pursuant to
the previous sentence, at a price not higher than that contained in the Tag-
Along Notice and on terms not materially more favorable to the Tag-Along
Offeror than were contained in the Tag-Along Notice. If, at the end of such
120 day period the Tag-Along Offeror has not completed the sale of all the
Tag-Along Shares, this Section 6.01 shall again apply to offers and sales of
Tag-Along Shares.
(e) Notwithstanding anything contained in this Section 6.01, there
shall be no liability on the part of the Tag-Along Offeror to any person if
the sale of Tag-Along Shares pursuant to this Section 6.01 is not consummated
for whatever reason other than because of the breach by the Tag-Along Offeror
of this Section 6.01. The Tag-Along Offeror shall have full and absolute
discretion to effect or not to effect a sale of shares of Common Stock
pursuant to this Section 6.01.
6.02 Board Observation Rights. All of the Holders, as a group, by
vote of the Required Holders, shall be entitled to have up to two
representatives attend all meetings of the Board of Directors of the Company
at the expense of the Company. The Company agrees to give the Holders (and
any permitted assignee of the Holders' rights hereunder) prior written notice
of all such meetings promptly after the scheduling thereof and in any event no
later than five business days prior to such meeting, or if such meeting is
scheduled less than five business days in advance, on the date on which the
date of the Board meeting is set; provided, however, that to the extent any
Holder is a Person or an Affiliate of any Person providing financing to the
Company, such Holder's representatives may be excluded from that portion of
any Board or committee meeting at which the financing provided by such Person
is discussed.
6.03 Drag-Along Rights. (a) At the option of the Company, if at
any time the Company's Board of Directors approves the sale of the Company to
any person who is not an Affiliate of the Company (whether by merger,
consolidation, sale of all or substantially all of the Company's assets or
sale of all of the outstanding shares of Common Stock in which all of the
stockholders are entitled to participate) (an "Approved Sale"), each Holder
agrees to sell all of such Holder's Warrants plus the shares of Common Stock
which were acquired upon the exercise of the Warrants on the terms and
conditions approved by the Company's Board of Directors and, to the extent the
Warrants have been converted, to vote (or execute a consent with respect to)
such shares in favor of the Approved Sale. Notwithstanding the foregoing, no
Holders shall be required to make any representations and warranties to the
purchaser in any Approved Sale other than with respect to such Holder's title
to its securities. At the request of the Company's Board of Directors the
Holders shall sell all of their Warrants to a designee in furtherance of the
consummation of an Approved Sale, for the amount of consideration payable in
accordance with Section 6.03(b) less the aggregate exercise price thereof;
provided, however, if the Approved Sale is not consummated, then the Holders
will be restored to the position they had been in prior to such sale.
(b) The obligations of each Holder with respect to any Approved
Sale are subject to the satisfaction of the conditions that (a) upon the
consummation of the Approved Sale, each stockholder will receive the same form
and amount of consideration per share of outstanding Common Stock as is given
to each other stockholder, or if any holders are given an option as to the
form and amount of consideration to be received, all holders will be given the
same option, and no stockholder will be entitled to receive any benefits of
any type not received by all of the other stockholders on a pro rata basis;
provided, that (i) no stockholder shall be required to accept any
consideration which it is prohibited by law from receiving and (b) in such
event, such stockholder shall be entitled to receive cash in an amount equal
<PAGE>
to the fair market value of such consideration, and (ii) receipt by the
Company of a written fairness opinion from an investment banking firm of
national prominence which is not an Affiliate of the Company or of any
stockholder and which is selected by the Company's Board of Directors that the
consideration per share of Common Stock to be received by each stockholder is
fair from a financial point of view. In determining the amount of
consideration per share payable to any stockholder in connection with an
Approved Sale, all consulting, noncompetition, investment banking or other
fees payable to such stockholder in connection with such Approved Sale shall
be deemed to be part of the consideration payable to such stockholder who is
an Affiliate in such Approved Sale other than compensation pursuant to
employment arrangements of the type described in Section 6.01(a).
Notwithstanding the foregoing, each stockholder shall be responsible for its
pro rata share of all estimated expenses associated with the sale.
Section 7. Regulatory Sale or Disposition.
7.01 Regulatory Sale or Disposition. Anything herein or in the
Warrants to the contrary notwithstanding, in the event that any Holder or any
of the Holders' Affiliates shall deliver to the Company an opinion of counsel
to such Holder or such Affiliate, as the case may be, to the effect that if
such Holder or such Affiliate, as the case may be, shall continue to hold some
or all of the Warrants or its Warrant Interest or any other securities of the
Company held by it, there is a material risk that such ownership will result
in the violation of any statute, regulation or rule of any governmental
authority (including, without limitation, Regulation Y), such Holder or such
Affiliate, as the case may be, may sell or otherwise dispose of its Warrants
or Warrant Interest, as the case may be, in as prompt and orderly a manner as
is reasonably necessary. The Company shall cooperate with such Holder or such
Affiliate, as the case may be, in disposing of its Warrants or Warrant
Interest, and (without limiting the foregoing) at the request of such Holder
or such Affiliate, as the case may be, the Company shall provide (and
authorize such Holder or such Affiliate, as the case may be, to provide)
financial and other information concerning the Company to any prospective
purchaser of the Warrants or Warrant Interest owned by such Holder or such
Affiliate, as the case may be. The provisions of this Section 7.01 shall
inure solely to the benefit of the Holders and their Affiliates which are
subject to the provisions of the Bank Holding Company Act of 1956, as amended
(including Regulation Y promulgated thereunder). The Company shall not be
required to provide any information under this Agreement unless the recipient
thereof signs a confidentiality agreement reasonably satisfactory to the
Company, which confidentiality agreement shall in any event include an
acknowledgment by the recipient of such information of its obligations under
the United States securities laws relating to insider trading.
Section 8. Miscellaneous.
8.01 Expenses. The Company agrees to pay all reasonable fees and
disbursements of the Holder (including reasonable fees and expenses of
counsel) in connection with the purchase and sale of the Warrants as
contemplated by this Agreement and in connection with any exercise of the
Warrants, or any amendments thereto, and the fees and disbursements of each
Holder (including reasonable fees and expenses of counsel) in connection with
the negotiation, execution and delivery of this Agreement or the Warrants or
any waiver or consent hereunder or thereunder or any amendment hereof or
thereof and in connection with any filings or registrations required to be
made in connection with such Holder's ownership of the Warrants and the
Warrant Interests (including, without limitation, any filings under the
Exchange Act, except as otherwise set forth in the definition of Registration
Expenses. In addition, the Company agrees to pay any and all stamp, transfer
and other similar taxes payable or determined to be payable in connection with
the execution and initial delivery of this Agreement, any Warrants or the
issuance or transfer of the Warrants.
8.02 Notices. All notices and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
<PAGE>
consents under, this Agreement) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied, telegraphed, cabled,
mailed or delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof; or, as to any party,
at such other address as shall be designated by such party in a notice to the
Company given in accordance with this Section 8.02. All such communications
shall be deemed to have been duly given when transmitted by telex or tele-
copier, delivered to the telegraph or cable office or personally delivered or,
in the case of a mailed notice, upon receipt, in each case given or addressed
as aforesaid.
8.03 Exclusion. This Agreement and the Warrants shall be binding
upon, and inure solely to the benefit of the Company and the Holders and their
permitted successors and assigns, and no other Person shall acquire or have
any right under or by virtue of this Agreement or the Warrants. Transferees
of the original Holders of the Warrants on the date hereof shall not be
entitled to the benefits of this Agreement except that (a) Affiliates of
Banque Paribas and PPI and employees of such entities shall be entitled to all
rights under this Agreement so long as the exercise of any such rights shall
be effected by Banque Paribas or PPI, as the case may be, and Banque Paribas
or PPI, as the case may be, shall cause all such Affiliates and employees to
comply with their obligations under this Agreement and (b) a total of four
additional Persons not affiliated with Banque Paribas or PPI at any one time
shall be entitled to be Holders hereunder.
8.04 Specific Performance. The Company acknowledges and agrees
that in the event of any breach of this Agreement or the Warrants by the
Company, the Holders would be irreparably harmed and could not be made whole
by monetary damages. The Company accordingly agrees (i) to waive the defense
in any action for specific performance that a remedy at law would be adequate,
and (ii) that the Holders, in addition to any other remedy to which they may
be entitled at law or in equity, shall be entitled to compel specific perform-
ance of this Agreement or the Warrants in any action instituted in the United
States District Court for the Southern District of New York, or, in the event
such Court would not have jurisdiction for such action, in any court of the
United States or any state thereof having subject matter jurisdiction for such
action.
8.05 No Waivers. No failure or delay by any party in exercising
any right, power or privilege hereunder or under the Warrants except a failure
to exercise the purchase rights under the Warrants within the stated time
period set forth therein shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies provided herein shall be cumulative and not exclusive of any
rights or remedies provided by law.
8.06 Amendments and Waivers. Any provision of this Agreement or
the Warrants may be amended or waived if, but only if, such amendment or
waiver is in writing and signed by the Company and the Required Holders.
8.07 GOVERNING LAW. THIS AGREEMENT AND THE WARRANTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
8.08 Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatories thereto and hereto were upon the same instrument.
8.09 Company Awareness. The Company acknowledges its awareness
that PPI is a Federal licensee under the Small Business Investment Act of
1958, as amended.
8.10 Termination. This Agreement (other than Sections 3, 4.02,
4.03, 4.13 (but in the case of Sections 4.02, 4.03 and 4.13 only to the extent
any Holder is a "small business investment concern" and such survival is
reasonably required in order for the "SBIC" to comply with applicable law),
<PAGE>
4.05, 4.06, 4.07, 4.11, 4.12, 5, 7.01 and 8.01) shall terminate at such time
as the Holders and their Affiliates and employees own less than 2.5% of the
outstanding shares of the Company (assuming the exercise of all Warrants).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
<PAGE>
VERNITRON CORPORATION
By /s/ Elliot N. Konopko
Title: Vice President
Address for Notices:
645 Madison Avenue
New York, New York 10022
Attention: Elliot Konopko
Telecopy Number: (212) 754-6348
Warrant Interests
776,388 Shares of PARIBAS PRINCIPAL, INC.
Common Stock
By /s/ Jeffrey Youle
Title: Secretary
Address for Notices:
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telecopy Number: (212) 841-2363
666,312 Shares of BANQUE PARIBAS
Common Stock
By /s/ Donald Ercole
Title: Vice President
By /s/ Jeffrey Youle
Title: Vice President
Address for Notices:
787 Seventh Avenue
New York, New York 10019
Attention: Donald Ercole
Telecopy Number: (212) 841-2363
Exhibit A to Warrant
Purchase Agreement
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER SAID ACT OR AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION SHALL HAVE BEEN REGISTERED UNDER SAID ACT OR AN EXEMPTION UNDER
SAID ACT IS AVAILABLE TO PERMIT SUCH WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER TO BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH
<PAGE>
REGISTRATION. THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER ARE SUBJECT TO THE TERMS AND PROVISIONS OF THE WARRANT PURCHASE
AGREEMENT.
Dated: April 25, 1996
WARRANT
To Purchase ________ Shares of Common Stock
VERNITRON CORPORATION
Expiring April 25, 2006
THIS IS TO CERTIFY THAT, for value received, [PARIBAS PRINCIPAL, INC.] [BANQUE
PARIBAS ACTING THROUGH ITS GRAND CAYMAN BRANCH] (the "Original Holder"), and
its permitted designees, successors or assigns (collectively, together with
the Original Holder, the "Holder") is entitled to purchase from VERNITRON
CORPORATION, a Delaware corporation (the "Company"), at any time or from time
to time after 9:00 a.m., New York City time, on the date hereof and prior to
5:00 p.m., New York City time, on April 25, 2006 (the "Expiration Date"), at
the place where a Warrant Agency (as hereinafter defined) is located, at the
Exercise Price (as hereinafter defined), _______ shares of Common Stock, $0.01
par value (the "Common Stock"), of the Company, all subject to adjustment and
upon the terms and conditions as hereinafter provided and as provided in the
Warrant Purchase Agreement, and is entitled also to exercise the other
appurtenant rights, powers and privileges hereinafter described. [If not
exercised in total prior to the Expiration Date, unless the Holder has given
the Company notice to the contrary, this Warrant shall be deemed automatically
exercised on the Expiration Date, and the Company shall promptly give notice
of such automatic exercise to the Holder on or as soon as practicable after
the Expiration Date.]<F1> Such shares of Common Stock purchasable under this
Warrant, less any such shares actually purchased hereunder shall be referred
to as "Shares."
<F1> To be included only in BP warrant.
Certain terms used in this Warrant are defined in Article IV. This
Warrant is one of three Warrants issued by the Company in connection with the
acquisition of Precision Aerotech, Inc. and the other transactions
contemplated hereby. The Warrants are being issued on the date hereof to
Banque Paribas and Paribas Principal, Inc. and are expected to be issued to
Donaldson, Lufkin & Jenrette promptly after the date hereof. In the
aggregate, on the date of issuance of such Warrants, the Warrants will be
exercisable into 1,542,700 shares of Common Stock of the Company.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part with respect to any Shares, the Holder shall deliver to the Company, at
the Warrant Agency, (a) this Warrant, (b) a written notice, in substantially
the form of the Subscription Notice attached hereto, of such Holder's election
to exercise this Warrant, which notice shall specify the number of Shares of
Common Stock to be purchased, the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to
be registered and (c) payment of the Exercise Price with respect to such
Shares or cancellation of this Warrant with respect to a number of Shares. If
the Holder elects to pay the Exercise Price in money, such payment may be
<PAGE>
made, at the election of the Holder, by cash, money order, certified or bank
cashier's check or wire transfer of immediately available funds. If the
Holder elects to pay the Exercise Price by cancelling this Warrant with
respect to Shares, the Exercise Price may be paid by cancelling this Warrant
with respect to that number of Shares whose aggregate Current Market Price
minus the aggregate Exercise Price is equal to the aggregate Exercise Price
with respect to the number of Shares to be received upon exercise of this
Warrant.
The Company shall, as promptly as practicable and in any event
within seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates,
representing the aggregate number of Shares specified in said notice. The
share certificate or certificates so delivered shall be in such denominations
as may be specified in such notice or, if such notice shall not specify denom-
inations, in a denomination equal to the aggregate number of Shares specified
in said notice, and shall be issued in the name of the Holder or such other
name or names as shall be designated in such notice, subject to any
restrictions contained in the Warrant Purchase Agreement. Such certificate or
certificates shall be deemed to have been issued, and such Holder or, subject
to any restrictions contained in the Warrant Purchase Agreement, any other
Person so designated to be named therein shall be deemed for all purposes to
have become a holder of record of such shares, as of the date the
aforementioned notice and the Exercise Price is received by the Company. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the certificate or certificates, deliver to the Holder a
new Warrant evidencing the rights to purchase the remaining shares of Common
Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned
to the Holder. The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and new Warrants, except that, if share certificates or Warrants
shall be registered in a name or names other than the name of the Holder,
funds sufficient to pay all transfer taxes payable as a result of such trans-
fer shall be paid by the Holder at the time of delivering the aforementioned
notice of exercise or promptly upon receipt of a written request of the
Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable, free of all liens, taxes and other charges, and,
if the Common Stock of any class is then listed on any national securities
exchange (as such term is used in the Exchange Act) or quoted on NASDAQ, shall
be duly listed or quoted thereon, as the case may be.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the
Company shall pay to the Holder, in cash, an amount equal to the same fraction
of the Current Market Price per share of outstanding Common Stock on the
Business Day immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
This security has not been registered under the Securities Act of
1933, as amended, and must be held indefinitely unless subsequently
registered under said Act or an exemption from such registration is
available. This security may not be sold, pledged, hypothecated or
otherwise transferred unless such sale, pledge, hypothecation or other
disposition shall have been registered under said act or such disposition
is made in reliance upon an exemption from registration under said act.
<PAGE>
This Warrant and the shares of Common Stock purchasable hereunder are
subject to the terms and provisions of the Warrant Purchase Agreement,
dated as of April 25, 1996, between Vernitron Corporation and the other
parties thereto.
Any certificate issued at any time in exchange or substitution for
any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act covering such Shares) shall also bear such legend unless,
in the opinion of counsel selected by the holder of such certificate and
reasonably acceptable to the Company (who may be an employee of such holder),
the securities represented thereby need no longer be subject to restrictions
on resale under the Securities Act.
1.5 Authorized Shares; Reservation of Shares for Issuance. At all
times while this Warrant is outstanding, the Company shall maintain its
corporate authority to issue, and shall reserve for issuance upon exercise of
this Warrant, such number of shares of Common Stock as shall be sufficient to
perform its obligations under this Warrant (after giving effect to any
adjustments to the number of Shares purchasable upon exercise of this Warrant
pursuant to Article III hereof).
1.6 Notification By The Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock; or
(ii) the Company shall offer for sale, or shall otherwise issue
(except upon exercise of the Existing Warrants), any additional shares of
stock of any class or any other securities convertible into or
exchangeable for shares of stock or any rights or options to subscribe
thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or
substantially all of the assets of the Company, or a consolidation,
merger or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice
to the Holder, at the earliest time legally practicable (and not less than 30
days before any record date or other date set for definitive action) of the
date on which (A) the books of the Company shall close or a record shall be
taken for such dividend, distribution or sale or other issuance or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
stockholders of the Company, as the case may be. Such notice shall also
specify the date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution, sale or other issuance or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case may
be. If the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of stockholders, the notice required by this Section 1.6 shall
so state.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
<PAGE>
2.1 Warrant Agency. The Company shall maintain, at its own
expense, an agency (the "Warrant Agency"), for certain purposes specified
herein and shall cause such Warrant Agency to remain open during normal
business hours on each Business Day in connection with the performance of its
obligations hereunder. The Company shall perform the obligations of the
Warrant Agency provided herein at its address at 645 Madison Avenue, New York,
New York 10022 or such other address as the Company shall specify by notice to
all Warrantholders.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of this Warrant and all
rights hereunder shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the Warrant Agency, together with a written
assignment of this Warrant duly executed by the Holder or its duly authorized
agent or attorney and funds sufficient to pay any transfer taxes payable upon
such transfer. Upon surrender the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment, and this Warrant
shall promptly be canceled. Notwithstanding the foregoing, a Warrant may be
exercised by a new holder without having a new Warrant issued.
2.4 Division or Combination of Warrants. Subject to restrictions
contained in the Warrant Purchase Agreement, this Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 2.3 as to any permitted transfer which may be involved
in the division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
2.5 Loss, Theft, Destruction of Warrant Certificates. Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably satis-
factory to the Company (the Original Holder's or any institutional
Warrantholder's indemnity being satisfactory indemnity in the event of loss,
theft or destruction of any Warrant owned by such institutional holder), or,
in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing
the right to purchase the same aggregate number of shares of Common Stock.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and Common
Stock hereunder.
ARTICLE III
ANTIDILUTION PROVISIONS
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The
number and kind of shares purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment and reset from time to time
upon the happening of certain events, as hereinafter described.
<PAGE>
3.2 Mechanical Adjustments. The number of Shares and the Exercise
Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of this
Agreement (i) declare or pay a dividend in shares of Common Stock or make
a distribution in shares of Common Stock to all holders of its Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification or reorganization of the Common Stock (including any
such reclassification in connection with a consolidation or merger in
which the Company is the continuing entity), this Warrant shall be
adjusted to the number of Shares and amount of any other securities, cash
or other property of the Company which such Holder would have owned or
have been entitled to receive after the happening of any of the events
described above had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event. Any Shares purchasable as a result
of such adjustment shall not be issued prior to the effective date of
such event.
(b) Other than if resulting in adjustment pursuant to Section
3.2(a), in case the Company shall issue rights, options or warrants to
subscribe for or purchase, or other securities exchangeable for or
convertible into, shares of Common Stock (any such rights, options,
warrants or other securities being herein called "Rights") to all holders
of shares of its Common Stock whether or not such Rights are immediately
exercisable or convertible, the Company shall issue such Rights to each
Holder on the same basis as such Holder would have been entitled to
receive such Rights if the Warrants had been exercised immediately prior
to the happening of such event or the record date with respect thereto
and no adjustment in the number and kind of Shares or Exercise Price
shall be made under this Warrant in such circumstance.
(c) Whenever the numbers of Shares are 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 number of
Shares immediately prior to such adjustment, and of which the denominator
shall be the number of Shares immediately thereafter.
(d) No adjustment in the number of Shares shall be required
hereunder unless such adjustment would result in an increase or decrease
of at least one percent (1%) of the Exercise Price; provided, however,
that any adjustments which by reason of this paragraph (d) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the nearest
one-hundredth of a cent or to the nearest one-thousandth of a Share, as
the case may be.
(e) No adjustment shall be made pursuant to this Article III in
respect of the issuance of shares of Common Stock pursuant to the
Existing Warrants. No adjustment need be made for a change in the par
value of the Common Stock.
(f) For the purpose of this subsection 3.2, the term "shares of
Common Stock" shall mean (i) the classes of stock designated as Common
Stock at the date of this Agreement, (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value or (iii) any other capital stock
of the Company which is not by its terms restricted in amount or timing
to the entitlement to dividends. In the event that at any time, as a
result of an adjustment made pursuant to this Section 3.2, the Holders
<PAGE>
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price of such
shares 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 Shares contained in this Article III.
3.3 Voluntary Adjustment by the Company. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company, including such reductions in the
Exercise Price as the Company considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients; provided, however, that no such
adjustment in Exercise Price shall affect the number of Shares.
3.4 Notice of Adjustment. Whenever the number of Shares or the
Exercise Price is required to be adjusted, as herein provided, the Company
promptly shall mail by first class, postage prepaid, to each Holder, notice of
such adjustment or adjustments setting forth the number of Shares and the
Exercise Price 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.
3.5 Dividends and Distributions. Other than if resulting in an
adjustment pursuant to Section 3.2(a) or issuance covered by 3.2(b), in case
the Company shall declare a dividend or make any other distribution upon
Common Stock (other than in shares of Common Stock), the Company shall hold
any property (including cash) paid in respect of such dividend or distribution
that the Holder would have received if the Holder had theretofore exercised
the Warrant for the benefit of the Holder and promptly pay same over to the
Holder.<F1>
<F1> To be included in Banque Paribas warrant only.
3.6 Preservation of Purchase Rights upon Merger, Consolidation,
etc. In case of any consolidation of the Company with or merger of the
Company with or into another Person or in case of any sale, transfer or lease
to another Person of all or substantially all the assets of the Company, the
Company or such successor or purchasing Person, as the case may be, shall
agree (and such merger, consolidation or transfer of assets shall not be
consummated without such agreement) that each Holder thereafter shall have the
right only to receive, and such Warrant shall only represent the right to
receive, upon payment of the Exercise Price in effect immediately prior to
such action, the kind and amount of shares and other securities, cash and
other property which he would have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Company, then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon exercise of this
Warrant immediately after such consolidation, merger, sale or transfer shall
be the kind and amount so receivable per share by a majority of the holders of
Common Stock), and if the successor or purchasing Person is not a corporation,
such person shall provide appropriate tax indemnification with respect to such
shares and other securities and property so that upon exercise of the Warrant,
the Holder would have the same benefits it otherwise would have had if such
successor or purchasing Person were a corporation. Such agreement shall
provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article III and that such
adjustments shall similarly apply to successive consolidations, mergers,
sales, transfers or leases.
3.7 Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Shares, this
<PAGE>
Warrant may continue to express the same price and number and kind of shares
as are stated on the front page hereof.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission or
any other Federal agency then administering the Securities Act and other
Federal securities laws.
"Common Stock" shall have the meaning set forth in the first
paragraph of this Warrant, subject to adjustment pursuant to Article III.
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"Current Market Price" means at any date shall be the average of the
daily closing prices for the 10 consecutive trading days prior to the date as
of which the market price is to be computed on the principal national
securities exchange or in the NASDAQ-National Market System on which the
shares of Common Stock are listed or to which such shares are admitted to
trading, or, if not listed or admitted to trading, the average of the closing
bid and asked prices of the Common Stock in the over-the-counter market as
reported by NASDAQ or any comparable system, or if the Common Stock is not
listed on NASDAQ or a comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Board of Directors
of the Company for that purpose. In the absence of the foregoing, the
appropriate Current Market Price per share shall be the fair market value
thereof as determined by Board of Directors of the Company in good faith.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" means $[.01] [x] per share of Common Stock, subject
to adjustment pursuant to Article III.
"Existing Warrants" shall mean the Warrants other than this Warrant,
the warrant issued to CIT entitling CIT to purchase 31,345 Shares of Common
Stock on the date hereof and the Management Options.
"Expiration Date" shall have the meaning set forth in the first
paragraph of this Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant.
"Management Options" shall mean the options to acquire up to 193,000
shares of Common Stock issued pursuant to the Company's Long Term Stock
Incentive Plan and any other options granted to employees of the Company or
any of its Subsidiaries having an exercise price equal to the Current Market
Price.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Original Holder" shall have the meaning set forth in the first
<PAGE>
paragraph of this Warrant.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Rights" shall have the meaning set forth in Section 3.2(b).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Shares" shall have the meaning set forth in the first paragraph of
this Warrant.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, one or more Subsidiaries thereof or
such Person and one or more Subsidiaries thereof, directly or indirectly, at
the date of determination thereof, has at least majority ownership interest
or, if such other Person is a partnership, a majority ownership interest in
the general partner thereof.
"Warrant shall mean this Warrant as this Warrant may be amended,
modified or supplemented from time to time.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrantholder" means a holder of any Warrant issued by the Company
on the date hereof and such holder's permitted designees, successors and
permitted assigns.
"Warrant Purchase Agreement" means the Warrant Purchase Agreement,
dated as of April 25, 1996, between the Company, Paribas Principal, Inc. and
Banque Paribas acting through its Grand Cayman Branch, as amended, modified or
supplemented and, at the request of the Company, the holder of the Warrant
granted after the date hereof shall be entitled to become a party thereto.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or other communication to be given shall
be in writing and may be personally served, telexed or sent by United States
mail and shall be deemed to have been given when delivered in person, upon
receipt of telex or four Business Days after deposit in the United States
mail, registered or certified, with postage prepaid and properly addressed.
In the case of the Original Holder, such notices and communications shall be
addressed to its address set forth below, unless the Original Holder shall
notify the Company that notices and communications should be sent to a
different address (or telex number), in which case such notices and
communications shall be sent to the address (or telex number) specified by the
Holder. In the case of other Holders, such notices and communications shall
be addressed to such address as such other Holder shall specify to the
Company. In the case of the Company, such notices and communications shall be
addressed as follows (until notice of a change is given as provided herein):
Vernitron Corporation
645 Madison Avenue
New York, New York 10022
Telecopy: (212) 754-6348
Attention: General Counsel
<PAGE>
If to the Original Holder:
[Paribas Principal, Inc.]
[Banque Paribas]
787 Seventh Avenue
New York, New York 10019
Telecopy: (212) 841-2363
Attention: [Donald Ercole]
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: John M. Reiss, Esq.
5.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof
(except for a failure to exercise this Warrant prior to the Expiration Date),
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the holders of Warrants
substantially identical to this Warrant, voting as a single class, entitling
such holders to purchase a majority of the Common Stock subject to purchase
upon exercise of such Warrants at the time outstanding (exclusive of Warrants
then owned by the Company or any Subsidiary or affiliate thereof); provided,
however, that no such amendment, modification or waiver shall, without the
written consent of the holders of all Warrants at the time outstanding, (a)
change the number of Shares, the Exercise Price or provisions for payment
thereof or (b) amend, modify or waive the provisions of this Section or
Article III.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the holders of all Warrants and Common Stock
issued upon exercise thereof, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the
Company shall give prompt notice thereof to all holders of Warrants and, if
appropriate, notation thereof shall be made on all Warrants thereafter sur-
rendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
5.3 Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE LAWS OF DELAWARE SHALL BE MANDATORILY APPLICABLE HERETO.
5.4 Survival of Agreements; Representations and Warranties,
etc. All warranties, representations and covenants made by the Company herein
or in any other agreement or in any certificate or other instrument delivered
by or on behalf of it in connection with the Warrants (other than the Credit
Documents) shall be considered to have been relied upon by the Holder and
shall survive the issuance and delivery of the Warrants, regardless of any in-
vestigation made by the Holder, and shall continue in full force and effect so
long as this Warrant is outstanding. All statements in any such other
agreement or in any certificate or other instrument shall constitute
representations and warranties hereunder.
5.5 Covenants To Bind Successors and Assigns. All covenants,
stipulations, promises and agreements in this Warrant contained by or on
<PAGE>
behalf of the Company shall bind its successors and permitted assigns, whether
so expressed or not.
5.6 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
5.7 Construction. The definitions in this Warrant shall apply
equally to both the singular and the plural forms of the terms defined.
Wherever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The Section headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
5.8 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company until such time as this
Warrant shall have been exercised.
IN WITNESS WHEREOF, VERNITRON CORPORATION has caused this Warrant to
be executed in its corporate name by one of its officers thereunto duly
authorized, attested by its Secretary or an Assistant Secretary, all as of the
day and year first above written.
VERNITRON CORPORATION
By_______________________
Title:
Attest:
_____________________
Secretary
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
To VERNITRON CORPORATION
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
_____________ shares of Common Stock as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of cash, money
order, certified or bank cashier's check or wire transfer or by cancellation
of the Warrant with respect to shares of Common Stock subject to the Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name and names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of
a share paid in cash.
<PAGE>
Dated: ____________, ____
____________________________
NOTE: The above signature should correspond exactly with
the name on the face of the attached Warrant or with
the name of the assignee appearing in the assignment
form below.
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ___________________________ hereby sells,
assigns and transfers unto _________________ the attached Warrant, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________________ attorney to transfer said
Warrant on the books of VERNITRON CORPORATION, a Delaware corporation, with
full power of substitution in the premises.
__________________________________
NOTE: The above signature should correspond exactly with
the name on the face of the attached Warrant.
Dated: __________, ____
<PAGE>
EXHIBIT 99.2 TO
SCHEDULE 13D
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER SAID ACT OR AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION SHALL HAVE BEEN REGISTERED UNDER SAID ACT OR AN EXEMPTION UNDER
SAID ACT IS AVAILABLE TO PERMIT SUCH WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER TO BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH
REGISTRATION. THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER ARE SUBJECT TO THE TERMS AND PROVISIONS OF THE WARRANT PURCHASE
AGREEMENT.
Dated: April 25, 1996
WARRANT
To Purchase 666,312 Shares of Common Stock
VERNITRON CORPORATION
Expiring April 25, 2006
THIS IS TO CERTIFY THAT, for value received, BANQUE PARIBAS ACTING THROUGH ITS
GRAND CAYMAN BRANCH (the "Original Holder"), and its permitted designees,
successors or assigns (collectively, together with the Original Holder, the
"Holder") is entitled to purchase from VERNITRON CORPORATION, a Delaware
corporation (the "Company"), at any time or from time to time after 9:00 a.m.,
New York City time, on the date hereof and prior to 5:00 p.m., New York City
time, on April 25, 2006 (the "Expiration Date"), at the place where a Warrant
Agency (as hereinafter defined) is located, at the Exercise Price (as
hereinafter defined), 666,312 shares of Common Stock, $0.01 par value (the
"Common Stock"), of the Company, all subject to adjustment and upon the terms
and conditions as hereinafter provided and as provided in the Warrant Purchase
Agreement, and is entitled also to exercise the other appurtenant rights,
powers and privileges hereinafter described. If not exercised in total prior
to the Expiration Date, unless the Holder has given the Company notice to the
contrary, this Warrant shall be deemed automatically exercised on the
Expiration Date, and the Company shall promptly give notice of such automatic
exercise to the Holder on or as soon as practicable after the Expiration Date.
Such shares of Common Stock purchasable under this Warrant, less any such
shares actually purchased hereunder shall be referred to as "Shares."
Certain terms used in this Warrant are defined in Article IV. This
Warrant is one of three Warrants issued by the Company in connection with the
acquisition of Precision Aerotech, Inc. and the other transactions
contemplated hereby. The Warrants are being issued on the date hereof to
Banque Paribas and Paribas Principal, Inc. and are expected to be issued to
Donaldson, Lufkin & Jenrette promptly after the date hereof. In the
<PAGE>
aggregate, on the date of issuance of such Warrants, the Warrants will be
exercisable into 1,542,700 shares of Common Stock of the Company.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part with respect to any Shares, the Holder shall deliver to the Company, at
the Warrant Agency, (a) this Warrant, (b) a written notice, in substantially
the form of the Subscription Notice attached hereto, of such Holder's election
to exercise this Warrant, which notice shall specify the number of Shares of
Common Stock to be purchased, the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to
be registered and (c) payment of the Exercise Price with respect to such
Shares or cancellation of this Warrant with respect to a number of Shares. If
the Holder elects to pay the Exercise Price in money, such payment may be
made, at the election of the Holder, by cash, money order, certified or bank
cashier's check or wire transfer of immediately available funds. If the
Holder elects to pay the Exercise Price by cancelling this Warrant with
respect to Shares, the Exercise Price may be paid by cancelling this Warrant
with respect to that number of Shares whose aggregate Current Market Price
minus the aggregate Exercise Price is equal to the aggregate Exercise Price
with respect to the number of Shares to be received upon exercise of this
Warrant.
The Company shall, as promptly as practicable and in any event
within seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates,
representing the aggregate number of Shares specified in said notice. The
share certificate or certificates so delivered shall be in such denominations
as may be specified in such notice or, if such notice shall not specify denom-
inations, in a denomination equal to the aggregate number of Shares specified
in said notice, and shall be issued in the name of the Holder or such other
name or names as shall be designated in such notice, subject to any
restrictions contained in the Warrant Purchase Agreement. Such certificate or
certificates shall be deemed to have been issued, and such Holder or, subject
to any restrictions contained in the Warrant Purchase Agreement, any other
Person so designated to be named therein shall be deemed for all purposes to
have become a holder of record of such shares, as of the date the
aforementioned notice and the Exercise Price is received by the Company. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the certificate or certificates, deliver to the Holder a
new Warrant evidencing the rights to purchase the remaining shares of Common
Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned
to the Holder. The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and new Warrants, except that, if share certificates or Warrants
shall be registered in a name or names other than the name of the Holder,
funds sufficient to pay all transfer taxes payable as a result of such trans-
fer shall be paid by the Holder at the time of delivering the aforementioned
notice of exercise or promptly upon receipt of a written request of the
Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable, free of all liens, taxes and other charges, and,
if the Common Stock of any class is then listed on any national securities
exchange (as such term is used in the Exchange Act) or quoted on NASDAQ, shall
be duly listed or quoted thereon, as the case may be.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
<PAGE>
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the
Company shall pay to the Holder, in cash, an amount equal to the same fraction
of the Current Market Price per share of outstanding Common Stock on the
Business Day immediately prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
This security has not been registered under the Securities Act of
1933, as amended, and must be held indefinitely unless subsequently
registered under said Act or an exemption from such registration is
available. This security may not be sold, pledged, hypothecated or
otherwise transferred unless such sale, pledge, hypothecation or other
disposition shall have been registered under said act or such disposition
is made in reliance upon an exemption from registration under said act.
This Warrant and the shares of Common Stock purchasable hereunder are
subject to the terms and provisions of the Warrant Purchase Agreement,
dated as of April 25, 1996, between Vernitron Corporation and the other
parties thereto.
Any certificate issued at any time in exchange or substitution for
any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act covering such Shares) shall also bear such legend unless,
in the opinion of counsel selected by the holder of such certificate and
reasonably acceptable to the Company (who may be an employee of such holder),
the securities represented thereby need no longer be subject to restrictions
on resale under the Securities Act.
1.5 Authorized Shares; Reservation of Shares for Issuance. At all
times while this Warrant is outstanding, the Company shall maintain its
corporate authority to issue, and shall reserve for issuance upon exercise of
this Warrant, such number of shares of Common Stock as shall be sufficient to
perform its obligations under this Warrant (after giving effect to any
adjustments to the number of Shares purchasable upon exercise of this Warrant
pursuant to Article III hereof).
1.6 Notification By The Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock; or
(ii) the Company shall offer for sale, or shall otherwise issue
(except upon exercise of the Existing Warrants), any additional shares of
stock of any class or any other securities convertible into or
exchangeable for shares of stock or any rights or options to subscribe
thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or
substantially all of the assets of the Company, or a consolidation,
merger or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice
to the Holder, at the earliest time legally practicable (and not less than 30
days before any record date or other date set for definitive action) of the
date on which (A) the books of the Company shall close or a record shall be
taken for such dividend, distribution or sale or other issuance or (B) such
<PAGE>
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
stockholders of the Company, as the case may be. Such notice shall also
specify the date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution, sale or other issuance or shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case may
be. If the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of stockholders, the notice required by this Section 1.6 shall
so state.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1 Warrant Agency. The Company shall maintain, at its own
expense, an agency (the "Warrant Agency"), for certain purposes specified
herein and shall cause such Warrant Agency to remain open during normal
business hours on each Business Day in connection with the performance of its
obligations hereunder. The Company shall perform the obligations of the
Warrant Agency provided herein at its address at 645 Madison Avenue, New York,
New York 10022 or such other address as the Company shall specify by notice to
all Warrantholders.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of this Warrant and all
rights hereunder shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the Warrant Agency, together with a written
assignment of this Warrant duly executed by the Holder or its duly authorized
agent or attorney and funds sufficient to pay any transfer taxes payable upon
such transfer. Upon surrender the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment, and this Warrant
shall promptly be canceled. Notwithstanding the foregoing, a Warrant may be
exercised by a new holder without having a new Warrant issued.
2.4 Division or Combination of Warrants. Subject to restrictions
contained in the Warrant Purchase Agreement, this Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 2.3 as to any permitted transfer which may be involved
in the division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
2.5 Loss, Theft, Destruction of Warrant Certificates. Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably satis-
factory to the Company (the Original Holder's or any institutional
Warrantholder's indemnity being satisfactory indemnity in the event of loss,
theft or destruction of any Warrant owned by such institutional holder), or,
<PAGE>
in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing
the right to purchase the same aggregate number of shares of Common Stock.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and Common
Stock hereunder.
ARTICLE III
ANTIDILUTION PROVISIONS
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The
number and kind of shares purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment and reset from time to time
upon the happening of certain events, as hereinafter described.
3.2 Mechanical Adjustments. The number of Shares and the Exercise
Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of this
Agreement (i) declare or pay a dividend in shares of Common Stock or make
a distribution in shares of Common Stock to all holders of its Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification or reorganization of the Common Stock (including any
such reclassification in connection with a consolidation or merger in
which the Company is the continuing entity), this Warrant shall be
adjusted to the number of Shares and amount of any other securities, cash
or other property of the Company which such Holder would have owned or
have been entitled to receive after the happening of any of the events
described above had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event. Any Shares purchasable as a result
of such adjustment shall not be issued prior to the effective date of
such event.
(b) Other than if resulting in an adjustment pursuant to Section
3.2(a), in case the Company shall issue rights, options or warrants to
subscribe for or purchase, or other securities exchangeable for or
convertible into, shares of Common Stock (any such rights, options,
warrants or other securities being herein called "Rights") to all holders
of shares of its Common Stock whether or not such Rights are immediately
exercisable or convertible, the Company shall issue such Rights to each
Holder on the same basis as such Holder would have been entitled to
receive such Rights if the Warrants had been exercised immediately prior
to the happening of such event or the record date with respect thereto
and no adjustment in the number and kind of Shares or Exercise Price
shall be made under this Warrant in such circumstance.
(c) Whenever the numbers of Shares are 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 number of
Shares immediately prior to such adjustment, and of which the denominator
shall be the number of Shares immediately thereafter.
(d) No adjustment in the number of Shares shall be required
hereunder unless such adjustment would result in an increase or decrease
of at least one percent (1%) of the Exercise Price; provided, however,
<PAGE>
that any adjustments which by reason of this paragraph (d) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the nearest
one-hundredth of a cent or to the nearest one-thousandth of a Share, as
the case may be.
(e) No adjustment shall be made pursuant to this Article III in
respect of the issuance of shares of Common Stock pursuant to the
Existing Warrants. No adjustment need be made for a change in the par
value of the Common Stock.
(f) For the purpose of this subsection 3.2, the term "shares of
Common Stock" shall mean (i) the classes of stock designated as Common
Stock at the date of this Agreement, (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value or (iii) any other capital stock
of the Company which is not by its terms restricted in amount or timing
to the entitlement to dividends. In the event that at any time, as a
result of an adjustment made pursuant to this Section 3.2, the Holders
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price of such
shares 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 Shares contained in this Article III.
3.3 Voluntary Adjustment by the Company. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company, including such reductions in the
Exercise Price as the Company considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients; provided, however, that no such
adjustment in Exercise Price shall affect the number of Shares.
3.4 Notice of Adjustment. Whenever the number of Shares or the
Exercise Price is required to be adjusted, as herein provided, the Company
promptly shall mail by first class, postage prepaid, to each Holder, notice of
such adjustment or adjustments setting forth the number of Shares and the
Exercise Price 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.
3.5 Dividends and Distributions. Other than if resulting in an
adjustment pursuant to Section 3.2(a) or issuance covered by 3.2(b), in case
the Company shall declare a dividend or make any other distribution upon
Common Stock (other than in shares of Common Stock), the Company shall hold
any property (including cash) paid in respect of such dividend or distribution
that the Holder would have received if the Holder had theretofore exercised
the Warrant for the benefit of the Holder and promptly pay same over to the
Holder.
3.6 Preservation of Purchase Rights upon Merger, Consolidation,
etc. In case of any consolidation of the Company with or merger of the
Company with or into another Person or in case of any sale, transfer or lease
to another Person of all or substantially all the assets of the Company, the
Company or such successor or purchasing Person, as the case may be, shall
agree (and such merger, consolidation or transfer of assets shall not be
consummated without such agreement) that each Holder thereafter shall have the
right only to receive, and such Warrant shall only represent the right to
receive, upon payment of the Exercise Price in effect immediately prior to
such action, the kind and amount of shares and other securities, cash and
other property which he would have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action (provided that if the
<PAGE>
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Company, then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon exercise of this
Warrant immediately after such consolidation, merger, sale or transfer shall
be the kind and amount so receivable per share by a majority of the holders of
Common Stock), and if the successor or purchasing Person is not a corporation,
such person shall provide appropriate tax indemnification with respect to such
shares and other securities and property so that upon exercise of the Warrant,
the Holder would have the same benefits it otherwise would have had if such
successor or purchasing Person were a corporation. Such agreement shall
provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article III and that such
adjustments shall similarly apply to successive consolidations, mergers,
sales, transfers or leases.
3.7 Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Shares, this
Warrant may continue to express the same price and number and kind of shares
as are stated on the front page hereof.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission or
any other Federal agency then administering the Securities Act and other
Federal securities laws.
"Common Stock" shall have the meaning set forth in the first
paragraph of this Warrant, subject to adjustment pursuant to Article III.
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"Current Market Price" shall mean at any date the average of the
daily closing prices for the 10 consecutive trading days prior to the date as
of which the market price is to be computed on the principal national
securities exchange or in the NASDAQ-National Market System on which the
shares of Common Stock are listed or to which such shares are admitted to
trading, or, if not listed or admitted to trading, the average of the closing
bid and asked prices of the Common Stock in the over-the-counter market as
reported by NASDAQ or any comparable system, or if the Common Stock is not
listed on NASDAQ or a comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Board of Directors
of the Company for that purpose. In the absence of the foregoing, the
appropriate Current Market Price per share shall be the fair market value
thereof as determined by Board of Directors of the Company in good faith.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" means $.01 per share of Common Stock, subject to
adjustment pursuant to Article III.
"Existing Warrants" shall mean the Warrants other than this Warrant,
the warrant issued to CIT entitling CIT to purchase 31,345 Shares of Common
<PAGE>
Stock on the date hereof and the Management Options.
"Expiration Date" shall have the meaning set forth in the first
paragraph of this Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant.
"Management Options" shall mean the options to acquire up to 193,000
shares of Common Stock issued pursuant to the Company's Long Term Stock
Incentive Plan and any other options granted to employees of the Company or
any of its Subsidiaries having an exercise price equal to or in excess of the
Current Market Price.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.
"Original Holder" shall have the meaning set forth in the first
paragraph of this Warrant.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Rights" shall have the meaning set forth in Section 3.2(b).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Shares" shall have the meaning set forth in the first paragraph of
this Warrant.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, one or more Subsidiaries thereof or
such Person and one or more Subsidiaries thereof, directly or indirectly, at
the date of determination thereof, has at least majority ownership interest
or, if such other Person is a partnership, a majority ownership interest in
the general partner thereof.
"Warrant shall mean this Warrant as this Warrant may be amended,
modified or supplemented from time to time.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrantholder" means a holder of any Warrant issued by the Company
on the date hereof and such holder's permitted designees, successors and
permitted assigns.
"Warrant Purchase Agreement" means the Warrant Purchase Agreement,
dated as of April 25, 1996, among the Company, Paribas Principal, Inc. and
Banque Paribas acting through its Grand Cayman Branch, as amended, modified or
supplemented and, at the request of the Company, the holder of the Warrant
granted after the date hereof shall be entitled to become a party thereto.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or other communication to be given shall
be in writing and may be personally served, telexed or sent by United States
<PAGE>
mail and shall be deemed to have been given when delivered in person, upon
receipt of telex or four Business Days after deposit in the United States
mail, registered or certified, with postage prepaid and properly addressed.
In the case of the Original Holder, such notices and communications shall be
addressed to its address set forth below, unless the Original Holder shall
notify the Company that notices and communications should be sent to a
different address (or telex number), in which case such notices and
communications shall be sent to the address (or telex number) specified by the
Holder. In the case of other Holders, such notices and communications shall
be addressed to such address as such other Holder shall specify to the
Company. In the case of the Company, such notices and communications shall be
addressed as follows (until notice of a change is given as provided herein):
Vernitron Corporation
645 Madison Avenue
New York, New York 10022
Telecopy: (212) 754-6348
Attention: General Counsel
If to the Original Holder:
Banque Paribas
787 Seventh Avenue
New York, New York 10019
Telecopy: (212) 841-2363
Attention: Donald Ercole
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: John M. Reiss, Esq.
5.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof
(except for a failure to exercise this Warrant prior to the Expiration Date),
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the holders of Warrants
substantially identical to this Warrant, voting as a single class, entitling
such holders to purchase a majority of the Common Stock subject to purchase
upon exercise of such Warrants at the time outstanding (exclusive of Warrants
then owned by the Company or any Subsidiary or affiliate thereof); provided,
however, that no such amendment, modification or waiver shall, without the
written consent of the holders of all Warrants at the time outstanding, (a)
change the number of Shares, the Exercise Price or provisions for payment
thereof or (b) amend, modify or waive the provisions of this Section or
Article III.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the holders of all Warrants and Common Stock
issued upon exercise thereof, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the
Company shall give prompt notice thereof to all holders of Warrants and, if
appropriate, notation thereof shall be made on all Warrants thereafter sur-
rendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
<PAGE>
5.3 Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE LAWS OF DELAWARE SHALL BE MANDATORILY APPLICABLE HERETO.
5.4 Survival of Agreements; Representations and Warranties,
etc. All warranties, representations and covenants made by the Company herein
or in any other agreement or in any certificate or other instrument delivered
by or on behalf of it in connection with the Warrants (other than the Credit
Documents) shall be considered to have been relied upon by the Holder and
shall survive the issuance and delivery of the Warrants, regardless of any in-
vestigation made by the Holder, and shall continue in full force and effect so
long as this Warrant is outstanding. All statements in any such other
agreement or in any certificate or other instrument shall constitute
representations and warranties hereunder.
5.5 Covenants To Bind Successors and Assigns. All covenants,
stipulations, promises and agreements in this Warrant contained by or on
behalf of the Company shall bind its successors and permitted assigns, whether
so expressed or not.
5.6 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
5.7 Construction. The definitions in this Warrant shall apply
equally to both the singular and the plural forms of the terms defined.
Wherever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The Section headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
5.8 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company until such time as this
Warrant shall have been exercised.
IN WITNESS WHEREOF, VERNITRON CORPORATION has caused this Warrant to
be executed in its corporate name by one of its officers thereunto duly
authorized, attested by its Secretary or an Assistant Secretary, all as of the
day and year first above written.
VERNITRON CORPORATION
By /s/ Raymond F. Kunzmann
Title: Vice President
Attest:
/s/ Elliot N. Konopko
Secretary
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
<PAGE>
To VERNITRON CORPORATION
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
___________ shares of Common Stock as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of cash, money
order, certified or bank cashier's check or wire transfer or by cancellation
of the Warrant with respect to shares of Common Stock subject to the Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name and names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of
a share paid in cash.
Dated: ____________, ____
____________________________
NOTE: The above signature should correspond exactly with
the name on the face of the attached Warrant or with
the name of the assignee appearing in the assignment
form below.
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ___________________________ hereby sells,
assigns and transfers unto _________________ the attached Warrant, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________________ attorney to transfer said
Warrant on the books of VERNITRON CORPORATION, a Delaware corporation, with
full power of substitution in the premises.
__________________________________
NOTE: The above signature should correspond exactly with
the name on the face of the attached Warrant.
Dated: __________, ____
<PAGE>
EXHIBIT 99.3 TO
SCHEDULE 13D
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MUST BE HELD
INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER SAID ACT OR AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND THE SHARES OF COMMON
STOCK PURCHASABLE HEREUNDER MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED UNLESS SUCH SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION SHALL HAVE BEEN REGISTERED UNDER SAID ACT OR AN EXEMPTION UNDER
SAID ACT IS AVAILABLE TO PERMIT SUCH WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER TO BE LEGALLY SOLD OR OTHERWISE TRANSFERRED WITHOUT SUCH
REGISTRATION. THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER ARE SUBJECT TO THE TERMS AND PROVISIONS OF THE WARRANT PURCHASE
AGREEMENT.
Dated: April 25, 1996
WARRANT
To Purchase 776,388 Shares of Common Stock
VERNITRON CORPORATION
Expiring April 25, 2006
THIS IS TO CERTIFY THAT, for value received, PARIBAS PRINCIPAL, INC. (the
"Original Holder"), and its permitted designees, successors or assigns
(collectively, together with the Original Holder, the "Holder") is entitled to
purchase from VERNITRON CORPORATION, a Delaware corporation (the "Company"),
at any time or from time to time after 9:00 a.m., New York City time, on the
date hereof and prior to 5:00 p.m., New York City time, on April 25, 2006 (the
"Expiration Date"), at the place where a Warrant Agency (as hereinafter
defined) is located, at the Exercise Price (as hereinafter defined), 776,388
shares of Common Stock, $0.01 par value (the "Common Stock"), of the Company,
all subject to adjustment and upon the terms and conditions as hereinafter
provided and as provided in the Warrant Purchase Agreement, and is entitled
also to exercise the other appurtenant rights, powers and privileges
hereinafter described. Such shares of Common Stock purchasable under this
Warrant, less any such shares actually purchased hereunder shall be referred
to as "Shares."
Certain terms used in this Warrant are defined in Article IV. This
Warrant is one of three Warrants issued by the Company in connection with the
acquisition of Precision Aerotech, Inc. and the other transactions
contemplated hereby. The Warrants are being issued on the date hereof to
Banque Paribas and Paribas Principal, Inc. and are expected to be issued to
Donaldson, Lufkin & Jenrette promptly after the date hereof. In the
aggregate, on the date of issuance of such Warrants, the Warrants will be
exercisable into 1,542,700 shares of Common Stock of the Company.
ARTICLE I
<PAGE>
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or in
part with respect to any Shares, the Holder shall deliver to the Company, at
the Warrant Agency, (a) this Warrant, (b) a written notice, in substantially
the form of the Subscription Notice attached hereto, of such Holder's election
to exercise this Warrant, which notice shall specify the number of Shares of
Common Stock to be purchased, the denominations of the share certificate or
certificates desired and the name or names in which such certificates are to
be registered and (c) payment of the Exercise Price with respect to such
Shares or cancellation of this Warrant with respect to a number of Shares. If
the Holder elects to pay the Exercise Price in money, such payment may be
made, at the election of the Holder, by cash, money order, certified or bank
cashier's check or wire transfer of immediately available funds. If the
Holder elects to pay the Exercise Price by cancelling this Warrant with
respect to Shares, the Exercise Price may be paid by cancelling this Warrant
with respect to that number of Shares whose aggregate Current Market Price
minus the aggregate Exercise Price is equal to the aggregate Exercise Price
with respect to the number of Shares to be received upon exercise of this
Warrant.
The Company shall, as promptly as practicable and in any event
within seven days thereafter, execute and deliver or cause to be executed and
delivered, in accordance with such notice, a certificate or certificates,
representing the aggregate number of Shares specified in said notice. The
share certificate or certificates so delivered shall be in such denominations
as may be specified in such notice or, if such notice shall not specify denom-
inations, in a denomination equal to the aggregate number of Shares specified
in said notice, and shall be issued in the name of the Holder or such other
name or names as shall be designated in such notice, subject to any
restrictions contained in the Warrant Purchase Agreement. Such certificate or
certificates shall be deemed to have been issued, and such Holder or, subject
to any restrictions contained in the Warrant Purchase Agreement, any other
Person so designated to be named therein shall be deemed for all purposes to
have become a holder of record of such shares, as of the date the
aforementioned notice and the Exercise Price is received by the Company. If
this Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of the certificate or certificates, deliver to the Holder a
new Warrant evidencing the rights to purchase the remaining shares of Common
Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant which shall then be returned
to the Holder. The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and new Warrants, except that, if share certificates or Warrants
shall be registered in a name or names other than the name of the Holder,
funds sufficient to pay all transfer taxes payable as a result of such trans-
fer shall be paid by the Holder at the time of delivering the aforementioned
notice of exercise or promptly upon receipt of a written request of the
Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable, free of all liens, taxes and other charges, and,
if the Common Stock of any class is then listed on any national securities
exchange (as such term is used in the Exchange Act) or quoted on NASDAQ, shall
be duly listed or quoted thereon, as the case may be.
1.3 No Fractional Shares To Be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon any exercise of this Warrant, in lieu of such fractional share the
Company shall pay to the Holder, in cash, an amount equal to the same fraction
of the Current Market Price per share of outstanding Common Stock on the
Business Day immediately prior to the date of such exercise.
<PAGE>
1.4 Share Legend. Each certificate for shares of Common Stock
issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following
legend:
This security has not been registered under the Securities Act of
1933, as amended, and must be held indefinitely unless subsequently
registered under said Act or an exemption from such registration is
available. This security may not be sold, pledged, hypothecated or
otherwise transferred unless such sale, pledge, hypothecation or other
disposition shall have been registered under said act or such disposition
is made in reliance upon an exemption from registration under said act.
This Warrant and the shares of Common Stock purchasable hereunder are
subject to the terms and provisions of the Warrant Purchase Agreement,
dated as of April 25, 1996, between Vernitron Corporation and the other
parties thereto.
Any certificate issued at any time in exchange or substitution for
any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Securities Act covering such Shares) shall also bear such legend unless,
in the opinion of counsel selected by the holder of such certificate and
reasonably acceptable to the Company (who may be an employee of such holder),
the securities represented thereby need no longer be subject to restrictions
on resale under the Securities Act.
1.5 Authorized Shares; Reservation of Shares for Issuance. At all
times while this Warrant is outstanding, the Company shall maintain its
corporate authority to issue, and shall reserve for issuance upon exercise of
this Warrant, such number of shares of Common Stock as shall be sufficient to
perform its obligations under this Warrant (after giving effect to any
adjustments to the number of Shares purchasable upon exercise of this Warrant
pursuant to Article III hereof).
1.6 Notification By The Company. In case at any time:
(i) the Company shall declare any dividend or make any distribution
upon its Common Stock; or
(ii) the Company shall offer for sale, or shall otherwise issue
(except upon exercise of the Existing Warrants), any additional shares of
stock of any class or any other securities convertible into or
exchangeable for shares of stock or any rights or options to subscribe
thereto; or
(iii) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or
substantially all of the assets of the Company, or a consolidation,
merger or business combination of the Company with another Person; or
(iv) actions or proceedings shall be authorized or commenced for a
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
then, in any one or more of such cases, the Company shall give written notice
to the Holder, at the earliest time legally practicable (and not less than 30
days before any record date or other date set for definitive action) of the
date on which (A) the books of the Company shall close or a record shall be
taken for such dividend, distribution or sale or other issuance or (B) such
reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
stockholders of the Company, as the case may be. Such notice shall also
specify the date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution, sale or other issuance or shall be
entitled to exchange their Common Stock for securities or other property
<PAGE>
deliverable upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case may
be. If the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of stockholders, the notice required by this Section 1.6 shall
so state.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE AND
REPLACEMENT OF WARRANTS
2.1 Warrant Agency. The Company shall maintain, at its own
expense, an agency (the "Warrant Agency"), for certain purposes specified
herein and shall cause such Warrant Agency to remain open during normal
business hours on each Business Day in connection with the performance of its
obligations hereunder. The Company shall perform the obligations of the
Warrant Agency provided herein at its address at 645 Madison Avenue, New York,
New York 10022 or such other address as the Company shall specify by notice to
all Warrantholders.
2.2 Ownership of Warrant. The Company may deem and treat the
Person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any
Person other than the Company) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant for
registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the
Warrant Agency books for the registration of transfers of this Warrant and all
rights hereunder shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the Warrant Agency, together with a written
assignment of this Warrant duly executed by the Holder or its duly authorized
agent or attorney and funds sufficient to pay any transfer taxes payable upon
such transfer. Upon surrender the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment, and this Warrant
shall promptly be canceled. Notwithstanding the foregoing, a Warrant may be
exercised by a new holder without having a new Warrant issued.
2.4 Division or Combination of Warrants. Subject to restrictions
contained in the Warrant Purchase Agreement, this Warrant may be divided or
combined with other Warrants upon surrender hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations in which
the new Warrant or Warrants are to be issued, signed by the holders hereof and
thereof or their respective duly authorized agents or attorneys. Subject to
compliance with Section 2.3 as to any permitted transfer which may be involved
in the division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
2.5 Loss, Theft, Destruction of Warrant Certificates. Upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably satis-
factory to the Company (the Original Holder's or any institutional
Warrantholder's indemnity being satisfactory indemnity in the event of loss,
theft or destruction of any Warrant owned by such institutional holder), or,
in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing
the right to purchase the same aggregate number of shares of Common Stock.
2.6 Expenses of Delivery of Warrants. The Company shall pay all
<PAGE>
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of Warrants and Common
Stock hereunder.
ARTICLE III
ANTIDILUTION PROVISIONS
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The
number and kind of shares purchasable upon the exercise of this Warrant and
the Exercise Price shall be subject to adjustment and reset from time to time
upon the happening of certain events, as hereinafter described.
3.2 Mechanical Adjustments. The number of Shares and the Exercise
Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the date of this
Agreement (i) declare or pay a dividend in shares of Common Stock or make
a distribution in shares of Common Stock to all holders of its Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) issue any shares of its capital stock in a
reclassification or reorganization of the Common Stock (including any
such reclassification in connection with a consolidation or merger in
which the Company is the continuing entity), this Warrant shall be
adjusted to the number of Shares and amount of any other securities, cash
or other property of the Company which such Holder would have owned or
have been entitled to receive after the happening of any of the events
described above had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event. Any Shares purchasable as a result
of such adjustment shall not be issued prior to the effective date of
such event.
(b) Other than if resulting in an adjustment pursuant to Section
3.2(a), in case the Company shall issue rights, options or warrants to
subscribe for or purchase, or other securities exchangeable for or
convertible into, shares of Common Stock (any such rights, options,
warrants or other securities being herein called "Rights") to all holders
of shares of its Common Stock whether or not such Rights are immediately
exercisable or convertible, the Company shall issue such Rights to each
Holder on the same basis as such Holder would have been entitled to
receive such Rights if the Warrants had been exercised immediately prior
to the happening of such event or the record date with respect thereto
and no adjustment in the number and kind of Shares or Exercise Price
shall be made under this Warrant in such circumstance.
(c) Whenever the numbers of Shares are 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 number of
Shares immediately prior to such adjustment, and of which the denominator
shall be the number of Shares immediately thereafter.
(d) No adjustment in the number of Shares shall be required
hereunder unless such adjustment would result in an increase or decrease
of at least one percent (1%) of the Exercise Price; provided, however,
that any adjustments which by reason of this paragraph (d) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the nearest
one-hundredth of a cent or to the nearest one-thousandth of a Share, as
the case may be.
<PAGE>
(e) No adjustment shall be made pursuant to this Article III in
respect of the issuance of shares of Common Stock pursuant to the
Existing Warrants. No adjustment need be made for a change in the par
value of the Common Stock.
(f) For the purpose of this subsection 3.2, the term "shares of
Common Stock" shall mean (i) the classes of stock designated as Common
Stock at the date of this Agreement, (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value or (iii) any other capital stock
of the Company which is not by its terms restricted in amount or timing
to the entitlement to dividends. In the event that at any time, as a
result of an adjustment made pursuant to this Section 3.2, the Holders
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price of such
shares 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 Shares contained in this Article III.
3.3 Voluntary Adjustment by the Company. The Company may at its
option, at any time during the term of this Warrant, reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company, including such reductions in the
Exercise Price as the Company considers to be advisable in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients; provided, however, that no such
adjustment in Exercise Price shall affect the number of Shares.
3.4 Notice of Adjustment. Whenever the number of Shares or the
Exercise Price is required to be adjusted, as herein provided, the Company
promptly shall mail by first class, postage prepaid, to each Holder, notice of
such adjustment or adjustments setting forth the number of Shares and the
Exercise Price 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.
3.5 Preservation of Purchase Rights upon Merger, Consolidation,
etc. In case of any consolidation of the Company with or merger of the
Company with or into another Person or in case of any sale, transfer or lease
to another Person of all or substantially all the assets of the Company, the
Company or such successor or purchasing Person, as the case may be, shall
agree (and such merger, consolidation or transfer of assets shall not be
consummated without such agreement) that each Holder thereafter shall have the
right only to receive, and such Warrant shall only represent the right to
receive, upon payment of the Exercise Price in effect immediately prior to
such action, the kind and amount of shares and other securities, cash and
other property which he would have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had this
Warrant been exercised immediately prior to such action (provided that if the
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer is not the same for each share of
Common Stock of the Company, then for the purpose of this Section the kind and
amount of securities, cash and other property receivable upon exercise of this
Warrant immediately after such consolidation, merger, sale or transfer shall
be the kind and amount so receivable per share by a majority of the holders of
Common Stock), and if the successor or purchasing Person is not a corporation,
such person shall provide appropriate tax indemnification with respect to such
shares and other securities and property so that upon exercise of the Warrant,
the Holder would have the same benefits it otherwise would have had if such
successor or purchasing Person were a corporation. Such agreement shall
provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article III and that such
adjustments shall similarly apply to successive consolidations, mergers,
sales, transfers or leases.
<PAGE>
3.6 Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Shares, this
Warrant may continue to express the same price and number and kind of shares
as are stated on the front page hereof.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law or executive order to close.
"Commission" shall mean the Securities and Exchange Commission or
any other Federal agency then administering the Securities Act and other
Federal securities laws.
"Common Stock" shall have the meaning set forth in the first
paragraph of this Warrant, subject to adjustment pursuant to Article III.
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"Current Market Price" shall mean at any date the average of the
daily closing prices for the 10 consecutive trading days prior to the date as
of which the market price is to be computed on the principal national
securities exchange or in the NASDAQ-National Market System on which the
shares of Common Stock are listed or to which such shares are admitted to
trading, or, if not listed or admitted to trading, the average of the closing
bid and asked prices of the Common Stock in the over-the-counter market as
reported by NASDAQ or any comparable system, or if the Common Stock is not
listed on NASDAQ or a comparable system, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Board of Directors
of the Company for that purpose. In the absence of the foregoing, the
appropriate Current Market Price per share shall be the fair market value
thereof as determined by Board of Directors of the Company in good faith.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Exercise Price" means $1.25 per share of Common Stock, subject to
adjustment pursuant to Article III.
"Existing Warrants" shall mean the Warrants other than this Warrant,
the warrant issued to CIT entitling CIT to purchase 31,345 Shares of Common
Stock on the date hereof and the Management Options.
"Expiration Date" shall have the meaning set forth in the first
paragraph of this Agreement.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant.
"Management Options" shall mean the options to acquire up to 193,000
shares of Common Stock issued pursuant to the Company's Long Term Stock
Incentive Plan and any other options granted to employees of the Company or
any of its Subsidiaries having an exercise price equal to or in excess of the
Current Market Price.
"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.
<PAGE>
"Original Holder" shall have the meaning set forth in the first
paragraph of this Warrant.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"Rights" shall have the meaning set forth in Section 3.2(b).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder.
"Shares" shall have the meaning set forth in the first paragraph of
this Warrant.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof or (ii) any other Person (other
than a corporation) in which such Person, one or more Subsidiaries thereof or
such Person and one or more Subsidiaries thereof, directly or indirectly, at
the date of determination thereof, has at least majority ownership interest
or, if such other Person is a partnership, a majority ownership interest in
the general partner thereof.
"Warrant shall mean this Warrant as this Warrant may be amended,
modified or supplemented from time to time.
"Warrant Agency" shall have the meaning set forth in Section 2.1.
"Warrantholder" means a holder of any Warrant issued by the Company
on the date hereof and such holder's permitted designees, successors and
permitted assigns.
"Warrant Purchase Agreement" means the Warrant Purchase Agreement,
dated as of April 25, 1996, among the Company, Paribas Principal, Inc. and
Banque Paribas acting through its Grand Cayman Branch, as amended, modified or
supplemented and, at the request of the Company, the holder of the Warrant
granted after the date hereof shall be entitled to become a party thereto.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or other communication to be given shall
be in writing and may be personally served, telexed or sent by United States
mail and shall be deemed to have been given when delivered in person, upon
receipt of telex or four Business Days after deposit in the United States
mail, registered or certified, with postage prepaid and properly addressed.
In the case of the Original Holder, such notices and communications shall be
addressed to its address set forth below, unless the Original Holder shall
notify the Company that notices and communications should be sent to a
different address (or telex number), in which case such notices and
communications shall be sent to the address (or telex number) specified by the
Holder. In the case of other Holders, such notices and communications shall
be addressed to such address as such other Holder shall specify to the
Company. In the case of the Company, such notices and communications shall be
addressed as follows (until notice of a change is given as provided herein):
Vernitron Corporation
645 Madison Avenue
New York, New York 10022
Telecopy: (212) 754-6348
<PAGE>
Attention: General Counsel
If to the Original Holder:
Paribas Principal, Inc.
787 Seventh Avenue
New York, New York 10019
Telecopy: (212) 841-2363
Attention: Donald Ercole
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: John M. Reiss, Esq.
5.2 Waivers; Amendments. No failure or delay of the Holder in
exercising any power or right hereunder shall operate as a waiver thereof
(except for a failure to exercise this Warrant prior to the Expiration Date),
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the holders of Warrants
substantially identical to this Warrant, voting as a single class, entitling
such holders to purchase a majority of the Common Stock subject to purchase
upon exercise of such Warrants at the time outstanding (exclusive of Warrants
then owned by the Company or any Subsidiary or affiliate thereof); provided,
however, that no such amendment, modification or waiver shall, without the
written consent of the holders of all Warrants at the time outstanding, (a)
change the number of Shares, the Exercise Price or provisions for payment
thereof or (b) amend, modify or waive the provisions of this Section or
Article III.
Any such amendment, modification or waiver effected pursuant to this
Section shall be binding upon the holders of all Warrants and Common Stock
issued upon exercise thereof, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the
Company shall give prompt notice thereof to all holders of Warrants and, if
appropriate, notation thereof shall be made on all Warrants thereafter sur-
rendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
5.3 Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT THE LAWS OF DELAWARE SHALL BE MANDATORILY APPLICABLE HERETO.
5.4 Survival of Agreements; Representations and Warranties,
etc. All warranties, representations and covenants made by the Company herein
or in any other agreement or in any certificate or other instrument delivered
by or on behalf of it in connection with the Warrants (other than the Credit
Documents) shall be considered to have been relied upon by the Holder and
shall survive the issuance and delivery of the Warrants, regardless of any in-
vestigation made by the Holder, and shall continue in full force and effect so
long as this Warrant is outstanding. All statements in any such other
agreement or in any certificate or other instrument shall constitute
representations and warranties hereunder.
5.5 Covenants To Bind Successors and Assigns. All covenants,
<PAGE>
stipulations, promises and agreements in this Warrant contained by or on
behalf of the Company shall bind its successors and permitted assigns, whether
so expressed or not.
5.6 Severability. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
5.7 Construction. The definitions in this Warrant shall apply
equally to both the singular and the plural forms of the terms defined.
Wherever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The Section headings used herein are
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
5.8 No Rights as Stockholder. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company until such time as this
Warrant shall have been exercised.
IN WITNESS WHEREOF, VERNITRON CORPORATION has caused this Warrant to
be executed in its corporate name by one of its officers thereunto duly
authorized, attested by its Secretary or an Assistant Secretary, all as of the
day and year first above written.
VERNITRON CORPORATION
By /s/ Raymond F. Kunzmann
Title: Vice President
Attest:
/s/ Elliot N. Konopko
Secretary
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
To VERNITRON CORPORATION
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Warrant for, and to purchase thereunder,
__________ shares of Common Stock as provided for therein, and tenders
herewith payment of the Exercise Price in full in the form of cash, money
order, certified or bank cashier's check or wire transfer or by cancellation
of the Warrant with respect to shares of Common Stock subject to the Warrant.
Please issue a certificate or certificates for such shares of Common
Stock in the following name and names and denominations:
If said number of shares shall not be all the shares issuable upon
exercise of the attached Warrant, a new Warrant is to be issued in the name of
the undersigned for the balance remaining of such shares less any fraction of
<PAGE>
a share paid in cash.
Dated: ____________, ____
____________________________
NOTE: The above signature should correspond exactly with
the name on the face of the attached Warrant or with
the name of the assignee appearing in the assignment
form below.
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ___________________________ hereby sells,
assigns and transfers unto _________________ the attached Warrant, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________________ attorney to transfer said
Warrant on the books of VERNITRON CORPORATION, a Delaware corporation, with
full power of substitution in the premises.
__________________________________
NOTE: The above signature should correspond exactly with
the name on the face of the attached Warrant.
Dated: __________, ____
