SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)- September 10, 1997
PSC Inc.
(Exact name of Registrant as Specified in its Charter)
New York
(State or other jurisdiction of Incorporation)
0-9919 16-0969362
(Commission File Number) (IRS Employer Identification No.)
675 Basket Road, Webster, New York 14580
(Address of Principal Executive Offices)
(716) 265-1600
(Registrant's Telephone Number, including Area Code)
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits
3.1 Certificate of Amendment
of Certificate
of Incorporation of PSC Inc.
filed with the Secretary of
State of the State of New
York on September 5, 1997.
4.1 Preferred Stock Certificate
issued to Hydra
Investissements S.A. on September
10, 1997
4.2 Warrant issued to Hydra
Investissements S.A. on
September 10, 1997
10.1 Stock and Warrant Purchase
Agreement dated September
4, 1997 by and between PSC Inc.
and Hydra nvestissements S.A.
10.2 Registration and Investor Rights
Agreement dated September 10, 1997
by and between PSC Inc. and Hydra
Investissements S.A.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
(a) Date, Title and Amount of Securities Sold; Purchase Price
On September 10, 1997, pursuant to and in accordance with the
terms of the Stock and Warrant Purchase Agreement dated as of September 4, 1997
(the "Agreement") between PSC Inc. (the "Company") and Hydra Investissements S.
A., a Luxembourg corporation (the "Purchaser"), the Company issued and sold in a
private placement (the "Transaction") to the Purchaser (i) 110,000 shares of its
Series A Convertible Preferred Stock, $.01 par value per share (the "Series A
Preferred") and (ii) a warrant to purchase 180,000 common shares of the Company
(the "Warrant") on or before September 10, 2001 at an exercise price of $8.00
per share, for an aggregate purchase price of $11.0 million (the "Purchase
Price").
(b) Identity of Purchaser
All of the capital stock of the Purchaser is owned by Hydra S.p.A.
("Hydra") an Italian corporation and an industrial and real estate holding
corporation. Each of Ms. Lucia Fantini, an Italian citizen, and Dr. Romano
Volta, an Italian citizen, is a fifty percent shareholder of Hydra. Dr. Volta is
also President of the Board of Directors of Hydra. Simultaneously with the
closing of the Transaction and pursuant to the provisions of the Series A
Preferred, Dr. Volta was elected to fill a newly created position on the Board
of Directors of the Company.
(c) Conversion and Exercise of the Securities
The shares of the Series A Preferred are convertible, at any
time and at the option of the holders of the Series A Preferred, into Common
Shares of the Company. The conversion price is $8.00 per Common Share or one
share of Series A Preferred for 12.5 Common Shares, and is subject to adjustment
in certain circumstances. Accordingly, as adjusted to reflect the conversion of
the Series A Preferred, the Purchaser beneficially owns 1,375,000 Common Shares
of the Company.
The Warrant to purchase 180,000 Common Shares of the Company
is exercisable by the Purchaser at any time before 5:00 p.m. New York City time
on September 10, 2001. Accordingly, the Purchaser beneficially owns 180,000
Common Shares of the Company.
Assuming the conversion of the Series A Preferred and the
exercise of the Warrant, the Purchaser beneficially owns an aggregate of
1,555,000 Common Shares of the Company or 12.2% of the as adjusted outstanding
Common Shares of the Company.
(d) Other Agreements
Pursuant to a Registration and Investor Rights Agreement dated
September 10, 1997 between the Company and the Purchaser, the holders of Series
A Preferred were granted certain demand and piggyback registration rights with
respect to any Common Shares that they receive upon conversion of the Series A
Preferred and upon exercise of the Warrant.
(e) Exemption from Registration
The Series A Preferred and the Warrant (collectively, the "Securities")
have not been registered under the Securities Act of 1933, as amended (the
"Act"), in reliance upon Regulation S of the Act ("Regulation S") and based upon
the following facts as represented and warranted by the Purchaser:
(i) The Purchaser, at the time the buy order for the Securities originated,
was outside the United States and was not a U.S. person (and was not purchasing
for the account or benefit of a U. S. person) within the meaning of Regulation
S.
(ii) Neither the Purchaser, nor any affiliate of the
Purchaser, nor any person acting on its or their behalf, had engaged in any (i)
general solicitation or general advertising within the meaning of Rule 502(c)
under the Act or (ii) directed selling efforts within the meaning of Rule 903
under Regulation S and the Purchaser had complied and has represented that it
will comply with the offering restrictions of such Rule 903.
(iii) The Purchaser has agreed and has acknowledged that the Securities have not
been registered under the Act or any other applicable securities law and that
the Securities (including Common Shares issuable upon exercise of the Warrants
and conversion of the Series A Preferred) will not be sold, transferred, or
otherwise disposed of except in accordance with the provisions of Rule 903 or
Rule 904 of the Act, pursuant to registration of the Securities (including the
Common Shares issuable upon exercise of the Warrant and conversion of the Series
A Preferred) under the Act or pursuant to an available exemption from the
registration requirements of the Act.
(iv) The Purchaser has agreed and has acknowledged that until
the expiration of the "40-day restricted period" within the meaning of Rule
903(c)(2) of Regulation S, any offer or sale of the Securities (including the
Common Shares issuable upon exercise of the Warrant and conversion of the Series
A Preferred) will not be made within the United States within the meaning of
Regulation S or to a U. S. person or for the account or benefit of a U.S. person
within the meaning of Rule 902(o) of Regulation S.
(v) As of the date of purchase of the Securities (including
the Common Shares issuable upon exercise of the Warrant and conversion of the
Series A Preferred), the Purchaser had not created and did not have a short
position in the Securities (including the Common Shares issuable upon exercise
of the Warrant and conversion of the Series A Preferred) or a long position in
any offsetting option or derivative security and that for the duration of the
"40-day restricted period" within the meaning of Rule 903(c)(2) of Regulation S,
the Purchaser has agreed that it will not effect any equity swap, short sale or
other hedging transaction in respect of the Securities (including the Common
Shares issuable upon exercise of the Warrants and conversion of the Series A
Preferred).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PSC Inc.
(Registrant)
Date: September 24, 1997 By:/s/ William J. Woodard
------------------ ----------------------
William J. Woodard, Vice President,
Chief Financial Officer and Treasurer
<PAGE>
Exhibit 3.1
CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION OF
PSC INC.
Pursuant to Section 805
of the Business Corporation Law of
the State of New York
We, being the President and Secretary of PSC Inc. (the "Corporation"),
a corporation organized and existing under the Business Corporation Law of the
State of New York (the "NYBCL"), in accordance with the provisions of Section
805 thereof, do hereby certify and set forth:
FIRST: The name of the Corporation is PSC Inc. The name under which the
corporation was formed was Photographic Sciences Corporation.
SECOND: The Certificate of Incorporation of the Corporation was filed by
the Department of State on December 8, 1969.
THIRD: Paragraph 4 of the Certificate of Incorporation, as amended,
amended and restated or otherwise modified heretofore, is hereby further amended
by the addition of a provision stating the number, designation, relative rights,
preferences and limitations of preferred shares of a series as fixed by the
Board of Directors under the authority contained in the Certificate of
Incorporation, to read in its entirety as follows:
"4. (a) Statement of Authorized Stock. The aggregate number of shares which
the Corporation shall have the authority to issue is Fifty Million (50,000,000)
shares of capital stock of the following classes in the following amounts:
(i) Forty Million (40,000,000) shares shall be Common Stock, having a par value
of $.01 per share ("Common Stock");
(ii) One Hundred Ten Thousand (110,000) shares shall be Series A
Convertible Preferred Shares, having a par value of $.01 per share ("Series A
Convertible Preferred Shares"); and
(iii) Nine Million Eight Hundred Ninety Thousand (9,890,000) shares
shall be Preferred Shares, having a par value of $.01 per share (the
"Undesignated Preferred Stock"), which shares of Undesignated Preferred Stock
may be issued from time to time in one or more series, each of which shall have
such distinctive designation or title as shall be fixed by the Board of
Directors prior to the issuance of any shares thereof. Each such series of
Undesignated Preferred Stock shall have such voting powers, full or limited, or
no voting power, and have such preferences and relative participating, optional
or other special rights and such qualifications, limitations or restrictions
thereof, as shall be stated in such resolution or resolutions providing for the
issue of such class or series of Undesignated Preferred Stock as may be adopted
from time to time by the Board of Directors prior to the issuance of any shares
thereof pursuant to the authority hereby expressly vested in it, all in
accordance with the laws of the State of New York.
(b) Statement of Rights and Preferences of Series A Convertible
Preferred Shares. The respective powers, designations, preferences and relative
participating, optional and other special rights, and the qualifications,
limitations and restrictions of, the Series A Convertible Preferred Shares are
as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Convertible Preferred Shares" and the number of shares
constituting such series shall be 110,000 shares. The Series A Convertible
Preferred Shares will be convertible into shares of the Corporation's Common
Stock, as described in Section 5 hereof.
Section 2. Dividends. Dividends shall be declared and set aside for
shares of the Series A Convertible Preferred Shares in the discretion of and
upon resolution of the Corporation's Board of Directors. Cash dividends may be
declared and paid on the Common Stock only if cash dividends are simultaneously
declared and paid with respect to all outstanding shares of Series A Convertible
Preferred Shares in an amount equal to the amount of the dividend that would
have been payable had such share of Series A Convertible Preferred Shares been
converted into Common Stock pursuant to Section 5 hereof immediately prior to
the record date for payment of such dividend.
Section 3. Rights on Liquidation, Dissolution or Winding Up. The Series
A Convertible Preferred Shares shall, with respect to rights on liquidation,
dissolution or winding up, rank prior to the Common Stock and prior or on parity
with any other series of Preferred Shares that may from time to time come into
existence. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, subject to the rights of series
of Preferred Shares that may from time to time come into existence, before any
payment is made to the holders of any stock ranking on liquidation junior to the
Series A Convertible Preferred Shares, the holders of shares of Series A
Convertible Preferred Shares shall be entitled to receive out of the assets of
the Corporation available for distribution to its shareholders the amount of
$100.00 for each share of Series A Convertible Preferred Shares held by them
and, in addition, an amount equal to the declared but unpaid dividends, if any,
on each such share. If, upon the occurrence of such event, the assets of the
Corporation available for distribution to its shareholders are insufficient to
permit the payment to the holders of the Series A Convertible Preferred Shares
of the full amount to which they are entitled, then, subject to the rights of
any series of Preferred Shares that may from time to time come into existence,
the holders of shares of Series A Convertible Preferred Shares and any class of
stock ranking on liquidation on a parity with the Series A Convertible Preferred
Shares shall share ratably in any distribution of assets according to the
respective amounts which would be payable in respect of the shares held by them
upon such distribution if all amounts payable on or with respect to said shares
were paid in full.
In the event of any liquidation, dissolution or winding up of the
Corporation, after payment has been made to the holders of shares of Series A
Convertible Preferred Shares and any class of stock ranking on liquidation on
parity with the Series A Convertible Preferred Shares of the full amounts to
which they are entitled as aforesaid, holders of any class or classes of stock
ranking on liquidation junior to the Series A Convertible Preferred Shares shall
be entitled, to the exclusion of the holders of shares of Series A Convertible
Preferred Shares, and subject to the rights of series of Preferred Shares that
may from time to time come into existence, to share, according to their
respective rights and preferences, in all remaining assets of the Corporation
available for distribution to its shareholders.
Section 4. Voting.
(a) Except as required by law, each holder of Series A Convertible
Preferred Shares shall be entitled to vote on all matters submitted to a vote of
the shareholders of the Corporation and shall be entitled to that number of
votes equal to the number of whole shares of Common Stock into which such
holder's shares of Series A Convertible Preferred Shares could be converted
under Section 5 hereof, at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is established, at
the date such vote is taken or any written consent of shareholders is solicited.
Except as provided by law or by the provisions of paragraphs (b) and (c) below,
or by the provisions establishing any other series of Undesignated Preferred
Stock, holders of Series A Convertible Preferred Shares shall vote together with
the holders of Common Stock as a single class.
(b) Until the earlier of (i) Hydra Investissements S.A. (the
"Investor") holding less than 27,500 shares of Series A Convertible Preferred
Shares or (ii) a Change of Control of the Investor, the holders of Series A
Convertible Preferred Shares shall have the exclusive right, voting separately
as a class, to elect one director (herein referred to as the "Series A
Director"); provided, however, that the Company shall not be required to provide
the Series A Director any information which is reasonably considered by the
Company's Board of Directors (excluding the Series A Director), acting with the
advice of counsel, to be competitively sensitive to any business owned,
controlled or affiliated with the Investor, including without limitation,
Datalogic S.p.A. The Series A Director shall be elected by the affirmative vote
of the holders of record of a majority of the outstanding shares of Series A
Convertible Preferred Shares either at a meeting of shareholders at which
directors are elected, a special meeting of holders of Series A Convertible
Preferred Shares or by written consent without a meeting in accordance with the
NYBCL. The Series A Director so elected shall be appointed to the Compensation
Committee and shall initially serve with directors in the class expiring the
year 2,000, or until his successor is elected and qualified. Any vacancy in the
position of the Series A Director may be filled only by the holders of the
Series A Convertible Preferred Shares. For so long as the Investor holds at
least 27,500 shares of Series A Convertible Preferred Shares, the Series A
Director may, during his term of office, be removed at any time, without or
without cause, by, and only by, the affirmative vote, at a special meeting of
the holders of Series A Convertible Preferred Shares called for such purpose, or
the written consent of the holders of record of a majority of the outstanding
shares of Series A Convertible Preferred Shares. Any vacancy created by such
removal may also be filled at such meeting or by such consent. For purpose of
this Section 4(b) the term "Change of Control" shall mean, as of any date of
determination, if the Volta Family shall cease to possess the power, directly or
indirectly, (i) to elect a majority of the board of directors of the Investor or
(ii) to direct or cause the direction of the management and policies of the
Investor, whether through ownership of stock, by contract or otherwise. For
purpose of this definition, the "Volta Family" shall mean Romano Volta, his
spouse, his heirs and legatees, his descendants and his blood relations to the
third degree.
(c) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of the Series A Convertible Preferred Shares so
as to affect adversely the Series A Convertible Preferred Shares without the
written consent or affirmative vote of the holders of at least 66-2/3% of the
then outstanding aggregate number of shares of such adversely affected Series A
Convertible Preferred Shares, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class.
Section 5. Conversion Rights. The holders of Series A Convertible
Preferred Shares shall have the following rights with respect to the conversion
of Series A Convertible Preferred Shares into shares of Common Stock:
(a) Voluntary Conversion. Any share of Series A Convertible Preferred
Shares may, at the option of the holder, be converted at any time into such
number of validly issued, fully paid and nonassessable shares of Common Stock as
are equal to the product obtained by multiplying (x) the Series A Conversion
Rate (determined under Section 5(b) hereof) by (y) the number of shares of
Series A Convertible Preferred Shares being converted.
(b) Series A Conversion Rate. The conversion rate in effect at any time
(the "Series A Conversion Rate") shall be the quotient obtained by dividing
$100.00 by the Series A Conversion Value, calculated as provided in Section 5(c)
hereof.
(c) Series A Conversion Value. The Series A Conversion Value in effect
from time to time, except as adjusted in accordance with Section 5(d) hereof,
shall be $8.00.
(d) Series A Conversion Value Adjustments. The Series A Conversion
Value shall be subject to adjustment from time to time as follows:
(i) Adjustments to Series A Conversion Value Upon
Extraordinary Common Stock Event. Upon the happening of an
Extraordinary Common Stock Event (as defined below) after the
date of the initial issuance of any Series A Convertible
Preferred Shares, the Series A Conversion Value shall,
simultaneously with the happening of such Extraordinary Common
Stock Event, be adjusted by multiplying the then-effective
Series A Conversion Value by a fraction, the numerator of
which shall be the number of shares of Common Stock
outstanding immediately prior to such Extraordinary Common
Stock Event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained
shall thereafter be the Series A Conversion Value. The Series
A Conversion Value, as so adjusted, shall be readjusted in the
same manner upon the happening of any successive Extraordinary
Common Stock Event or Events.
"Extraordinary Common Stock Event" shall mean (i) the
issue of additional shares of Common Stock or any other Common
Stock Equivalents (as defined below) as dividend or other
distribution on outstanding stock of the Corporation, (ii) a
subdivision of outstanding shares of Common Stock or any other
Common Stock Equivalents into a greater number of shares of
Common Stock, or (iii) a combination of outstanding shares of
Common Stock or any other Common Stock Equivalents into a
lesser number of shares of Common Stock.
"Common Stock Equivalents" shall mean, without double
counting: (i) shares of Common Stock, where one share of
Common Stock shall constitute one Common Stock Equivalent,
(ii) shares of capital stock convertible into Common Stock,
where any one share of capital stock shall constitute a number
of Common Stock Equivalents equal to the number of shares of
Common Stock issuable in respect of such share of capital
stock, (iii) any rights, warrants, options and convertible or
exchangeable securities entitling the holder thereof to
subscribe for or purchase any shares of Common Stock, where
any such rights, warrants, options and convertible or
exchangeable securities shall constitute a number of Common
Stock Equivalents equal to the number of shares of Common
Stock issuable in respect of such rights, warrants, options or
convertible or exchangeable securities, and (iv) any stock
appreciation rights entitling the holders thereof to any
interest in an increase in value, however measured, of shares
of Common Stock, where any such stock appreciation rights
shall constitute a number of Common Stock Equivalents equal to
the Common Stock equivalent, as nearly as it may be
calculated, of such stock appreciation rights.
(ii) Sales of Shares Below Series A Conversion Value.
(A) If the Corporation issues any Additional Stock
(as defined below) without consideration or for a
consideration per share less than the Series A Conversion
Value in effect immediately prior to such issuance, the Series
A Conversion Value in effect immediately prior to such
issuance shall be adjusted to a price equal to the quotient
obtained by dividing the total computed under clause (x) below
by the total computed under clause (y) below as follows:
(x) an amount equal to the sum of (1) the result
obtained by multiplying the number of shares of
Common Stock deemed outstanding immediately prior to
such issuance (which shall include the actual number
of shares outstanding plus all shares issuable upon
the conversion or exercise of all outstanding
convertible securities, rights, warrants and options)
by the Series A Conversion Value then in effect and
(2) the aggregate consideration, if any, received by
the Corporation upon the issuance of such Additional
Stock, divided by
(y) the number of shares of Common Stock of the
Corporation outstanding immediately after such
issuance (including the shares deemed outstanding as
provided above).
(B) No adjustment of the Series A Conversion Value
shall be made in an amount less than one cent per share,
provided that any adjustments which are not required to be
made by reason of this sentence shall be carried forward and
shall be taken into account in any subsequent adjustment made
prior to three years from the date of the event giving rise to
the adjustment being carried forward. Except as provided in
Sections 5(d)(i), 5(d)(ii)(E)(3) and (4), no adjustment of the
Series A Conversion Value shall have the effect of increasing
the Series A Conversion Value above the Series A Conversion
Value in effect immediately prior to such adjustment.
(C) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of
cash paid therefor before deducting any reasonable discounts,
commissions or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(D) If all or part of the consideration paid for, or
payable on exercise, conversion or exchange of, any shares of
Common Stock, rights, options, warrants or convertible or
exchangeable securities is other than cash, the non-cash
consideration will be valued at its fair market value as
determined in good faith by the Company's Board of Directors.
(E) In the case of the issuance of options or
warrants to purchase, or rights to subscribe for, Common
Stock, securities by their terms convertible into or
exchangeable for Common Stock or options or warrants to
purchase, or rights to subscribe for, such convertible or
exchangeable securities (which are not excluded from the
definition of Additional Stock), the following provisions
shall apply:
(1) the aggregate maximum number of shares
of Common Stock deliverable upon exercise of
such options to purchase or rights to
subscribe for Common Stock shall be deemed
to have been issued at the time such options
or rights were issued for a consideration
equal to the consideration received by the
Corporation upon the issuance of such
options or rights plus the purchase price
provided in such options or rights for the
Common Stock covered thereby (the
consideration in each case to be determined
in the manner provided in Sections
5(d)(ii)(C) and (D) above), but no further
adjustment to the Series A Conversion Value
shall be made for the actual issuance of
Common Stock upon the exercise of such
options or rights in accordance with their
terms;
(2) the aggregate maximum number of shares
of Common Stock deliverable upon conversion
of or in exchange for any such convertible
or exchangeable securities or upon the
exercise of options to purchase or rights to
subscribe for such convertible or
exchangeable securities and subsequent
conversion or exchange thereof shall be
deemed to have been issued at the time such
securities were issued or such options or
rights were issued for a consideration equal
to the consideration received by the
Corporation for any such securities and
related options or rights, plus the
additional consideration, if any, to be
received by the Corporation upon the
conversion or exchange of such securities or
the exercise of any related options or
rights (the consideration in each case to be
determined in the manner provided in
Sections 5(d)(ii)(C) and (D) above), but no
further adjustment to the Series A
Conversion Value shall be made for the
actual issuance of Common Stock upon the
conversion or exchange of such securities in
accordance with their terms;
(3) if such options, rights or convertible
or exchangeable securities by their terms
provide, with the passage of time or
otherwise, for any increase or decrease in
the number of shares of Common Stock
issuable, upon the exercise, conversion or
exchange thereof, the Series A Conversion
Value computed upon the original issue
thereof, and any subsequent adjustments
based thereon, shall, upon such increase or
decrease becoming effective, be recomputed
to reflect such increase or decrease with
respect to such options, rights and
securities not already exercised, converted
or exchanged prior to such increase or
decrease becoming effective, but no further
adjustments to the Series A Conversion Value
shall be made for the actual issuance of
Common Stock upon the exercise of any, such
options or rights or the conversion or
exchange of such securities in accordance
with their terms;
(4) upon the expiration of any such options
or rights, the termination of any such
rights to convert or exchange or the
expiration of any options or rights related
to such convertible or exchangeable
securities, the Series A Conversion Value
shall forthwith be readjusted to such Series
A Conversion Value as would have been
obtained had the adjustment which was made
upon the issuance of such options, rights or
securities or options or rights related to
such securities have been made upon the
basis of the issuance of only the number of
shares of Common Stock actually issued upon
the exercise of such options or rights, upon
the conversion or exchange of such
securities or upon the exercise of the
options or rights related to such
securities; and
(5) if any such options or rights shall be
issued in connection with the issue and sale
of other securities of the Corporation,
together comprising one integral transaction
in which no specific consideration is
allocated to such options or rights by the
parties thereto, such options or rights
shall be deemed to have been issued for such
consideration as determined in good faith by
the Board of Directors.
(iii) "Additional Stock" shall mean any shares of
Common Stock, warrants or rights to subscribe for or purchase
Common Stock or securities convertible into or exchangeable or
exercisable for shares of Common Stock issued (or deemed to
have been issued pursuant to Section 5(d)(ii)(E) above) by the
Corporation after the date of initial issuance of any Series A
Convertible Preferred Shares other than:
(A) Common Stock issued pursuant to a
transaction described in Section 5(d)(i);
(B) Common Stock or securities convertible
into or exchangeable or exercisable for shares of
Common Stock issued or issuable (whether directly or
pursuant to stock options, stock awards or warrants)
to employees or directors if such issuance is
approved by the Corporation's Board of Directors;
(C) Common Stock issued upon conversion,
exchange or exercise of any securities convertible
into or exchangeable or exercisable for shares of
Common Stock; and
(D) Shares of Common Stock issuable upon
exercise of the Warrants to purchase Common Stock
issued to Hydra Investissements S.A. on September 8,
1997.
(iv) All calculations under this Section 5(d) shall
be made to the nearest cent or to the nearest 1/10 of a share.
(e) Capital Reorganization or Reclassification. If the Common Stock
issuable upon the conversion of the Series A Convertible Preferred Shares shall
be changed into the same or different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for elsewhere in this Section 5), then and in each such event the holder of each
share of Series A Convertible Preferred Shares shall have the right thereafter
to convert such share into the kind and amount of share of stock and other
securities and property receivable upon such reorganization, reclassification or
other change by holders of the number of shares of Common Stock into which such
share of Series A Convertible Preferred Shares might have been converted
immediately prior to such reorganization, reclassification or change, all
subject to further adjustment as provided herein.
(f) Merger or Consolidation. If at any time or from time to time there
shall be an acquisition of the Corporation by another entity by means of merger,
consolidation or otherwise that results in the exchange of the outstanding
shares of the Corporation for securities or consideration issued or caused to be
issued by the acquiring entity or any of its affiliates, then, as part of such
merger or consolidation, provision shall be made so that the holders of the
Series A Convertible Preferred Shares shall thereafter be entitled to receive
upon conversion of the Series A Convertible Preferred Shares that number of
shares of stock or other securities or property of the acquiring corporation
that results from such merger or consolidation to which such holder would have
been entitled if such holder had converted its shares of Series A Convertible
Preferred Shares immediately prior to such merger or consolidation. In any such
case appropriate adjustment shall be made in the application of the provisions
of this Section 5 with respect to the rights of the holders of the Series A
Convertible Preferred Shares after the merger or consolidation to the end that
the provisions of this Section 5 (including adjustment of the Series A
Conversion Value then in effect and the number of shares issuable upon
conversion of the Series A Convertible Preferred Shares) shall be applicable
after that event in as nearly equivalent a manner as may be practicable.
(g) Notice of Adjustments. In each case of an adjustment or
readjustment of the Series A Conversion Value after the date of the initial
issuance of any Series A Convertible Preferred Shares, the Corporation at its
expense will notify each holder of Series A Convertible Preferred Shares of such
adjustment or readjustment. Such notice shall state in reasonable detail the
facts on which such adjustment or readjustment is based.
(h) Exercise of Conversion Privilege. To exercise its conversion
privilege, a holder of Series A Convertible Preferred Shares shall surrender the
certificate or certificates representing the shares being converted to the
Corporation at its principal office, and shall give written notice to the
Corporation at that office that such holder elects to convert such shares. Such
notice shall also state the name or names (with address or addresses) in which
the certificate or certificates for shares of Common Stock issuable upon such
conversion shall be issued. The certificate or certificates for shares of Series
A Convertible Preferred Shares surrendered for conversion shall be accompanied
by proper assignment thereof to the Corporation or in blank. The date when such
written notice is received by the Corporation, together with the certificate or
certificates representing the shares of Series A Convertible Preferred Shares
being converted, shall be the "Conversion Date." As promptly as practicable
after the Conversion Date, the Corporation shall issue and deliver to the holder
of the shares of Series A Convertible Preferred Shares being converted, or on
its written order, such certificate or certificates as it may request for the
number of whole shares of Common Stock issuable upon the conversion of such
shares of Series A Convertible Preferred Shares in accordance with the
provisions of this Section 5, cash in the amount of all accrued and unpaid
dividends on such shares of Series A Convertible Preferred Shares up to and
including the Conversion Date, and cash, as provided in Section 5(i), in respect
of any fraction of a share of Common Stock issuable upon such conversion. Such
conversion shall be deemed to have been effected immediately prior to the close
of business on the Conversion Date, and at such time the rights of the holder as
holder of the converted shares of Series A Convertible Preferred Shares shall
cease and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares of
Common Stock represented thereby.
(i) Cash in Lieu of Fractional Shares. No fractional shares of Common
Stock or scrip representing fractional shares shall be issued upon the
conversion or shares of Series A Convertible Preferred Shares. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of Series A Convertible Preferred Shares, the Corporation shall pay
to the holder of the shares of Series A Convertible Preferred Shares which were
converted a cash adjustment in respect of such fractional shares in an amount
equal to the same fraction of the market price per share of the Common Stock at
the close of business on the Conversion Date.
(j) Partial Conversion. In the event some but not all of the shares of
Series A Convertible Preferred Shares represented by a certificate or
certificates surrendered by a holder are converted, the Corporation shall
execute and deliver to or on the order of the holder, at the expense of the
Corporation, a new certificate representing the number of shares of Series A
Convertible Preferred Shares which were not converted.
(k) Reservation of Common Stock. The Corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of the
Series A Convertible Preferred Shares, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Convertible Preferred Shares, and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then-outstanding shares of the Series
A Convertible Preferred Shares, the Corporation shall take such corporate action
as may be necessary or increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
Section 6. No Reissuance of Series A Convertible Preferred Shares. No
share or shares of Series A Convertible Preferred Shares acquired by the
Corporation by reason of redemption, purchase, conversion, or otherwise shall be
reissued, and all such shares shall be cancelled, retired and eliminated from
the shares which the Corporation shall be authorized to issue. The Corporation
may from time to time take such appropriate corporate action as may be necessary
to reduce the authorized number of shares of Series A Convertible Preferred
Shares accordingly.
Section 7. Restrictions and Limitations On Issuance of Senior Stock.
The Corporation shall not, so long as there are any shares of Series A
Convertible Preferred Shares outstanding, authorize or issue (or obligate itself
to authorize or issue) any security of the Corporation ranking senior to the
Series A Convertible Preferred Shares, either as to payment of dividends or
distribution of assets (on liquidation or dissolution, redemption of shares, or
otherwise), or any security convertible into any such senior security.
Section 8. No Dilution or Impairment. The Corporation will not, by
amendment of its Restated Certificate of Incorporation, as amended through the
date hereof, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of the
Series A Convertible Preferred Shares set forth herein. Without limiting the
generality of the foregoing, the Corporation (a) will not increase the par value
of any shares of stock receivable on the conversion of the Series A Convertible
Preferred Shares above the amount payable therefor on such conversion, (b) will
take all such action as may be necessary or appropriate in order that the
Corporation may validly and legally issue fully paid and nonassessable shares of
stock on the conversion of all Series A Convertible Preferred Shares from time
to time outstanding, and (c) will not transfer all or substantially all of its
properties and assets to any other person (corporate or otherwise), or
consolidate with or merge into any other person or permit any such person to
consolidate with or merge into the Corporation (if the Corporation is not the
surviving person), unless such other person shall expressly assume in writing,
and will be bound by all the terms of the Series A Convertible Preferred Shares
set forth herein.
Section 9. Notices of Record Date. In the event of: (a) any capital
reorganization of the Corporation, any reclassification or recapitalization of
the capital stock of the Corporation or any merger or consolidation of the
Corporation, or (b) any voluntary or involuntary dissolution, liquidation or
winding up of the Corporation, then and in each such event the Corporation shall
mail or deliver or cause to be mailed or delivered to each holder of Series A
Convertible Preferred Shares a notice specifying (i) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and (ii) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their shares
of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding up. Such
notice shall be mailed or delivered at least 15 days prior to the date specified
in such notice on which such action is to be taken.
FOURTH: The Amendment was authorized pursuant to the authority
conferred upon the Board of Directors of the Corporation by the Restated
Certificate of Incorporation of the Corporation, as the same has been amended,
pursuant to a resolution adopted by the shareholders of the Corporation at a
meeting of the shareholders.
<PAGE>
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 5th day
of September, 1997.
/s/ Robert C. Strandberg
Name: Robert C. Strandberg
Title: President
/s/ Martin S. Weingarten
Name: Martin S. Weingarten
Title: Secretary
<PAGE>
Exhibit 4.1
Number SA 1 110,000 Shares
Incorporated Under the Laws of the State of New York
PSC Inc.
This Certifies that Hydra Investissements S.A. is the registered holder of One
Hundred Ten Thousand Shares transferable only on the books of the Corporation by
the holder hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this 10th day of September A.D. 1997.
/s/ Martin S. Weingarten, Secretary /s/ William J. Woodard, Vice President
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT (i) PURSUANT TO THE PROVISIONS OF
REGULATION S UNDER THAT ACT, (ii) PURSUANT TO A REGISTRATION STATEMENT UNDER
THAT ACT OR (iii) IN A TRANSACTION WHICH IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THAT ACT.
For value received, hereby sell, assign and transfer unto
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint Attorney so transfer the said Shares on the books of the
within named Corporation with full power of
substitution in the premises.
Dated 19
In presence of
<PAGE>
Exhibit 4.2
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE
ON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THEY MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE SECURITIES ACT, IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OR WHICH IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THAT ACT.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON SEPTEMBER 10, 2001
No. 001 180,000 SHARES
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
OF PSC INC.
This certifies that Hydra Investissements S.A., or registered assigns
(the "Warrant Holder"), is entitled to purchase from PSC Inc. (the "Company"), a
New York corporation, at any time before 5:00 P.M., New York City time, on the
Expiration Date described in Section 1.01(c), the number of fully paid and
nonassessable shares of Common Stock, par value of $0.01 per share, of the
Company ("Common Stock") at the Exercise Price described in Section 1.01(b). The
Exercise Price and the number and nature of the Warrant Shares which may be
purchased on exercise of this Warrant are subject to adjustment as provided in
Article III.
ARTICLE I
Definitions
Section I.01. (a) The term "Business Day" means a day other than a
Saturday, Sunday or other day on which banks in the State of New York are
authorized by law to remain closed.
(b) The term "Exercise Price" means $8.00 per Warrant Share,
as that price may be adjusted from time to time as provided in Article III.
(c) The term "Expiration Date" means September 10, 2001.
(d) The "Fair Market Value" of a security on a day will be (i)
if the security is traded on a national securities exchange, or on an automated
quotation system which reports actual sale transactions, the last sale price of
the security on that day reported on the principal securities exchange or
automated quotation system on which the security is traded, and (ii) otherwise,
the fair market value per share of the security on that day as determined by an
expert which is mutually approved by the Company and by holders of a majority of
the outstanding Warrants.
(e) The term "Warrant Holder" means the person or entity named
above or any person or entity in whose name this Warrant is registered on the
books of the Company.
(f) The term "Warrants" means this Warrant and all warrants of
like tenor, if any, together evidencing the right to purchase a total of 180,000
shares of Common Stock.
(g) The term "Warrant Shares" means the shares of Common Stock
deliverable upon exercise of the Warrants.
ARTICLE II
Duration and Exercise of Warrant
Section II.01. This Warrant may be exercised at any time before 5:00
P.M., New York City time, on the Expiration Date. If this Warrant is not
exercised at or before 5:00 P.M., New York City time, on the Expiration Date, it
will become void and neither the Warrant Holder nor any other person will have
any rights under this Warrant.
Section II.02. (a) To exercise this Warrant in whole or in part, the
Warrant Holder must surrender this Warrant, with the Subscription Form on it
duly executed, to the Company at its principal office accompanied by payment of
an amount equal to the Exercise Price, for the Warrant Shares as to which this
Warrant is being exercised. Payment must be made in lawful money of the United
States of America and in cash or by certified or official bank check or by bank
wire transfer in immediately available funds to the order of the Company.
(b) Upon surrender to the Company of this Warrant in
conformity with the foregoing provisions, the Company will issue certificates,
registered in the name of the Warrant Holder or such other names as are
designated by the Warrant Holder, representing the total number of shares of
Common Stock (and other securities, if any) as to which this Warrant is being
exercised, in such denominations as are requested by the Warrant Holder, and the
Company will deliver those certificates to the Warrant Holder.
(c) If the Warrant Holder exercises this Warrant with respect
to fewer than all the Warrant Shares to which it relates, the Company will
execute a new Warrant in the form of this Warrant for the balance of the Warrant
Shares that may be purchased upon exercise of this Warrant and deliver that new
Warrant to the Warrant Holder.
(d) The Company will pay any transfer or similar taxes which
may be payable in respect of the issuance of Warrant Shares or in respect
of the issuance of a new Warrant if this Warrant is exercised as to fewer than
all the Warrant Shares to which it relates. The Company will not, however, be
required to pay any transfer or similar tax which becomes payable because
Warrant Shares or a new Warrant are to be registered in a name other than that
of the Warrant Holder, and the Company will not be required to issue any Warrant
Shares or to issue a new Warrant registered in a name other than that of the
Warrant Holder until the Company receives either evidence that any applicable
transfer or similar taxes have been paid or funds with which to pay those taxes.
ARTICLE III
Adjustment of Shares of Common Stock
Purchasable and of Warrant Price
Section III.01. The Exercise Price and the shares of Common Stock or
other securities issuable on exercise of this Warrant are subject to adjustment
as follows:
(a) If, after the date the Warrants are first issued, the
Company (i) makes a distribution on its Common Stock in shares of its capital
stock or stock equivalents, (ii) subdivides the outstanding Common Stock into a
greater number of shares, or (iii) combines the outstanding Common Stock into a
lesser number of shares, in each such case, the number of shares of Common Stock
included in each Warrant Share will be adjusted so that upon exercise of this
Warrant after the record date or effective date with respect to a specified
number of Warrant Shares, the Warrant Holder will receive the number of shares
of Common Stock which the Warrant Holder would have owned if the Warrant Holder
had exercised this Warrant with respect to that number of Warrant Shares
immediately before the first of those events and retained all the shares and
other securities which the Warrant Holder received as a result of each of those
events.
(b) If, after the Warrants are first issued, there is a
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value or a change as a result of a subdivision or combination to
which Section 3.01(a) applies) or a merger or consolidation of the Company with
any other entity that results in a reclassification, change, conversion,
exchange or cancellation of outstanding shares of Common Stock, or a sale or
transfer of all or substantially all the assets of the Company and distribution
of all or a portion of the proceeds of that sale or transfer, upon any
subsequent exercise of this Warrant as to a specified number of Warrant Shares,
the Warrant Holder will be entitled to receive the kind and amount of
securities, cash and other property which the Warrant Holder would have received
if the Warrant Holder had exercised this Warrant as to that number Warrant
Shares immediately before the first of those events and had retained all the
securities, cash and other assets received as a result of these events.
(c) Upon each adjustment under this Section 3.01 of the number
of Warrant Shares issuable upon exercise of this Warrant, the Exercise Price
will be adjusted so that the total amount the Warrant Holder will be required to
pay to exercise this Warrant in full will be the same after the number of
Warrant Shares issuable on exercise of this Warrant is adjusted as it is before
the number of Warrant Shares issuable on exercise of this Warrant is adjusted.
(d) If any adjustment in the number of shares or type of
securities to be issued upon exercise of this Warrant, or in the Exercise Price,
becomes effective as of a record date for a specified event, and this Warrant is
exercised between that record date and the date the event occurs, the Company
may elect to defer, until the event occurs, issuing to the Warrant Holder the
shares of Common Stock or other securities to which the Warrant Holder is
entitled solely by reason of that event. However, if the Company does that, when
this Warrant is exercised, the Company will deliver to the Warrant Holder a due
bill or other instrument evidencing the Warrant Holder's right to receive the
additional shares or other securities upon occurrence of the event.
Section III.02. Whenever the Warrant Shares or the Exercise Price are
adjusted as provided in this Section, the Company will send to the Warrant
Holder a certificate signed by its principal accounting officer setting forth
the adjusted Warrant Price, the adjusted number of Warrant Shares, the date the
adjustment became effective and the computational support for the adjustment and
containing a brief description of the events which caused the adjustment.
Section III.03. If at any time after the Warrants are first issued:
(a) the Company declares a dividend or other distribution on
its Common Stock, other than a dividend payable in cash out of its undistributed
net income in an amount which, together with all other cash dividends paid
within 12 months before the record date for the dividend, does not exceed ten
percent of the consolidated net income of the Company and its subsidiaries
during the fiscal year prior to the fiscal year during which the dividend is
paid; or
(b) the Company authorizes the granting to the holders of its
Common Stock of rights to subscribe for or purchase any shares of any class or
any other securities; or
(c) there is any reclassification of the Common Stock (other
than a subdivision or combination of the Common Stock), or any consolidation or
merger to which the Company is a party and for which approval of the holders of
the Common Stock is required or a sale or transfer of all or substantially all
the assets of the Company; or
(d) there is a voluntary or involuntary dissolution, liquidation or
winding up of the Company; in each case, the Company will mail to the
Warrant Holder at least 15 days before the applicable record date a notice
stating (i) the record date for the dividend, distribution or rights, or,
if there will not be a record date, the date as of which the holders of
record of Common Stock who will be entitled to the dividend, distribution
or rights will be determined, or (ii) the date on which the
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as
of which it is expected the holders of record of Common Stock who will be
entitled to receive securities or other property with respect to their
Common Stock as a result of the reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up will be determined.
Failure to give any notice or any defect in the notice will not affect the
validity of the action which should have been the subject of the notice.
Section III.04. The form of Warrant need not be changed because of any
change in the Exercise Price or in the number of Warrant Shares which may be
purchased by exercising Warrants and Warrants issued after the change may state
the same Exercise Price and the same number of Warrant Shares as are stated in
Warrants issued before the change. However, the Company may at any time make any
change in the form of Warrant that it deems appropriate to reflect a change in
the Exercise Price or in the Warrant Shares which may be purchased by exercising
Warrants (provided the change in the form of Warrant does not otherwise affect
the substance of the Warrant), and any Warrant issued after the form of Warrant
is changed may be in the changed form.
ARTICLE IV
Other Provisions Relating to
Rights of Warrant Holder
Section IV.01. The Warrant Holder will not, as such, be entitled to
vote, to receive dividends or to have any other of the rights of a shareholder
of the Company, except that after this Warrant is exercised in accordance with
the terms of this Warrant the persons in whose names the Warrant Shares
purchased through exercise of this Warrant are to be issued will be deemed to
become the holders of record of those Warrant Shares for all purposes even if
certificates representing those Warrant Shares are not issued.
Section IV.02. (a) The Company will at all times reserve and keep
available for issuance upon exercise of this Warrant the number of authorized
and unissued shares of Common Stock equal to the maximum number of shares of
Common Stock the Company may be required to issue upon exercise of this Warrant.
(b) The Company will take all steps which are necessary so
that all the shares of Common Stock (or other securities) which the Company may
be required to issue on exercise of this Warrant will, upon issuance, be listed
on each securities exchange and quoted on each automated quotation system on
which the Common Stock is (or those other securities are) listed or quoted.
(c) All shares of Common Stock issued on exercise of this
Warrant will, when they are issued, be validly issued, fully paid, nonassessable
and free of preemptive rights.
Section IV.03. The Company will not be required to issue any fraction
of a share upon exercise of this Warrant. In any case in which the Warrant
Holder would, except for the provisions of this Section 4.03, be entitled to
receive a fraction of a share upon exercise of this Warrant, the Company shall,
upon exercise of this Warrant, issue the maximum number of whole shares it is
required to issue and pay an amount in cash calculated by it to be equal to the
then current Fair Market Value per share of Common Stock multiplied by such
fraction computed to the nearest whole cent.
Section IV.04. The Company will maintain a Warrant Register in which
the name and address of each registered holder of Warrants will be recorded.
Section IV.05. Notices or other communications to the Warrant Holder
shall be in writing and shall be deemed delivered by the Company (i) five
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (ii) two business days after being sent via a
reputable nationwide overnight courier service guaranteeing next day delivery or
(iii) upon confirmation receipt after being sent via facsimile, in each case
addressed to the Warrant Holder at the Warrant Holder's last known address shown
on the Warrant Register maintained by the Company.
Section IV.06. Until this Warrant is properly presented for
registration of transfer, the Company may treat the Warrant Holder as the
absolute owner of this Warrant for all purposes, including for the purpose of
determining the persons entitled to exercise this Warrant, despite any notice to
the contrary.
<PAGE>
ARTICLE V
Transfer of Warrants
Section V.01. At no time will this Warrant be transferred except in a
transaction which is registered under the Securities Act or which is exempt from
the registration requirements of the Securities Act.
Section V.02. Upon surrender of this Warrant to the Company at its
principal office with the Form of Assignment (or another instrument of
assignment) duly executed and accompanied by (i) either evidence that any
transfer tax has been paid, or funds sufficient to pay any transfer tax, and
(ii) evidence reasonably satisfactory to the Company that the proposed
assignment will not violate Section 5.01, the Company will, without charge,
execute and deliver a new Warrant registered in the name of the assignee named
in the Form of Assignment (or other instrument of assignment) and will promptly
cancel this Warrant. This Warrant may be divided or combined with other Warrants
by surrender of this Warrant and any other Warrants with which it is to be
combined at the principal office of the Company together with a written notice,
signed by the Warrant Holder, specifying the names and denominations in which
new Warrants are to be issued.
Section V.03. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of reasonably
satisfactory indemnification, or, in the case of mutilation, upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to the
same number of Warrant Shares as this Warrant and the lost, stolen, destroyed or
mutilated Warrant will become void. Any new Warrant executed and delivered in
accordance with this Section 5.03 will constitute an additional contractual
obligation of the Company, and will be valid and enforceable whether or not the
Warrant which was believed to have been lost, stolen or destroyed is
subsequently presented for exercise.
<PAGE>
ARTICLE VI
Registration Under the Securities Act of 1933
Section VI.01. Unless the resale of Warrant Shares is the subject of a
registration statement which has become effective under the Securities Act the
certificates representing Warrant Shares issued on exercise of this Warrant may
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED, EXCEPT (i) PURSUANT TO THE PROVISIONS OF
REGULATION S UNDER THAT ACT, (ii) PURSUANT TO A REGISTRATION
STATEMENT UNDER THAT ACT OR (iii) IN A TRANSACTION WHICH IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
ARTICLE VII
Other Matters
Section VII.01. The provisions of this Warrant will bind, and inure to
the benefit of, the Company and its successors and assigns.
Section VII.02. (a) Any notice or other communication to the Company
relating to this Warrant will be deemed given (i) on the day when it is
delivered or sent by facsimile transmission (with a confirmation copy sent by
mail), (ii) five business days after being sent by registered or certified mail,
return receipt requested, postage prepaid or (iii) two business days after being
sent via a reputable nationwide overnight courier service guaranteeing next
business day delivery, in each case to the Company at the following address (or
such other address as may be specified by the Company after the date of this
Warrant):
PSC Inc.
675 Basket Road
Webster, New York 14580
Attention: William J. Woodard
Facsimile No.: (716) 265-6409
(b) Any notice or other communication to the Warrant Holder
will be deemed given when and as provided in Section 4.05.
Section VII.03. This Warrant shall be governed by and construed in
accordance with the internal laws of the State of New York (without reference to
the conflicts of law provisions thereof).
Section VII.04. The Article and Section headings in this Warrant are
for convenience only, are not part of this Warrant and are not intended to
affect the meaning or interpretation of any of the terms of this Warrant.
Section VII.05. The invalidity or unenforceability of any provision of
this Warrant shall not affect the validity or enforceability of any other
provision of this Warrant.
IN WITNESS WHEREOF, this Warrant has been executed by the Company on
the 10th day of September, 1997.
PSC INC.
By /s/ William J. Woodard
Vice President and CFO
Name:
Title:
<PAGE>
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
the attached Warrant to __________________________________ to the extent of the
right to purchase _________________ Warrant Shares, and the undersigned appoints
___________________________, with full power of substitution, to transfer that
Warrant, with respect to the right to purchase that number of Warrant Shares, on
the books of PSC Inc.
Dated: ___________, _____
(Signature must conform to the name of the Warrant Holder
specified on the face of the Warrant)
<PAGE>
SUBSCRIPTION FORM
To: PSC Inc.
The undersigned irrevocably elects to purchase ______________ Warrant
Shares by exercising the Warrant to which this form is attached and tenders
payment of the full Exercise Price with respect to those Warrant Shares. The
undersigned requests that the certificates representing the Warrant Shares as to
which the Warrant is being exercised be registered as follows:
Name:
Social Security or Employer Identification Number:
Address:
Deliver to:
Address:
If the Warrant Shares as to which the Warrant is being
exercised are fewer than all the Warrant Shares to which the Warrant relates,
please issue a new Warrant for the balance of the Warrant Shares registered in
the name of the undersigned and deliver it to the undersigned at the following
address:
Address:
Date: Signature
(Signature must conform to the name of the
Warrant Holder specified on the face of
the Warrant)
<PAGE>
Exhibit 10.1
STOCK AND WARRANT PURCHASE AGREEMENT
This Agreement, dated as of September 4, 1997, is entered into by and
among PSC Inc., a New York corporation (the "Company"), and Hydra
Investissements S.A., a Luxembourg corporation (the "Purchaser").
In consideration of the mutual promises and covenants contained in the
Agreement, the parties hereto agree as follows:
1. 1. Authorization and Sale of Securities.
(A) 1.1 Authorization. The Company has or before the Closing (as defined in
Section 2) will have, duly authorized the sale and issuance, pursuant to the
terms of this Agreement, of (i) 110,000 shares of its Series A Convertible
Preferred Stock, $0.01 par value per share (the "Series A Preferred"), having
the rights, restrictions, privileges and preferences set forth in the
Certificate of Amendment of the Restated Certificate of Incorporation attached
hereto as Exhibit A (the "Certificate of Amendment") and (ii) warrants to
purchase 180,000 shares of common stock (the "Common Stock") of the Company (the
"Warrants"), the terms of which are set forth in the Warrant to Purchase Shares
of Common Stock of PSC Inc., attached hereto as Exhibit B (the "Warrant
Agreement"). The Company has, or before the Closing will have, adopted and filed
the Certificate of Amendment with the Secretary of State of the State of New
York.
(B) 1.2 Sale of Securities. Subject to the terms and conditions of this
Agreement, the Company will sell and issue to the Purchaser and the Purchaser
will purchase (i) 110,000 shares of Series A Preferred (the "Shares") [for the
purchase price of $100.00 per share] and (ii) Warrants to purchase 180,000
shares of Common Stock of the Company on or before the fourth anniversary of the
Closing Date (as defined in Section 2) at an exercise price of $8.00 per share
in consideration for an aggregate purchase price of $11.0 million (the "Purchase
Price").
(C) 1.3 Use of Proceeds. The Company will use the net proceeds from the sale of
the Shares to reduce indebtedness under the revolving credit facility of the
Company's credit agreement in the principal amount of approximately $10,000,000
and the balance for general working capital.
1. 2. Closing. The closing (the "Closing") of the sale and purchase of
the Shares and Warrants (collectively, the "Securities") under this Agreement
shall take place at the offices of Rogers & Wells, 200 Park Avenue, New York,
New York at 10:00 a.m. on September 10, 1997, or at such time, date and place as
are mutually agreeable to the Company and the Purchaser. At the Closing (a) the
Company shall deliver to the Purchaser (i) a certificate or certificates
representing the Shares of Series A Preferred, registered in the name of such
Purchaser and (ii) the Warrant Agreement duly executed by the Company and (b)
the Purchaser shall pay to the Company the Purchase Price by wire transfer or
other method acceptable to the Company. The date of the Closing is hereinafter
referred to as the "Closing Date."
2.3. Representations of the Company. The Company hereby represents
and warrants to the Purchaser as follows:
(A) 3.1 Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has all requisite corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it and to enter into and
perform this Agreement and to carry out the transactions contemplated by this
Agreement. The Company is duly qualified to do business as a foreign corporation
in every jurisdiction in which the failure to so qualify would have a material
adverse effect on the operations or financial condition of the Company. The
Company has made available to the Purchaser true and complete copies of its
Certificate of Incorporation and By-Laws, each as amended to date and presently
in effect.
(B) 3.2 Capitalization. The authorized capital stock of the Company (immediately
prior to the Closing) consists of (x) 40,000,000 shares of Common Stock, $0.01
par value per share, of which 11,200,000 shares are issued and outstanding,
38,500 shares are held in treasury and 4,736,000 shares are reserved for
issuance and (y) 10,000,000 shares of Preferred Shares, $0.01 par value per
share, of which 110,000 shares have been designated as Series A Convertible
Preferred Shares ("Series A Preferred"), none of which shares are issued or
outstanding. The rights, privileges and preferences of the Series A Preferred
are as stated in the Certificate of Amendment. All of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable. Except as disclosed in those SEC Documents related
to periods ended on or prior to July 4, 1997, the Company has not authorized,
and does not have outstanding, any (i) subscription, warrant, option,
convertible security or other right (contingent or otherwise) to purchase or
acquire any shares of capital stock of the Company (other than pursuant to the
Company's employee stock option and stock purchase plans), (ii) obligation
(contingent or otherwise) to issue any subscription, warrant, option,
convertible security or other such right or to issue or distribute to holders of
any shares of its capital stock any evidences of indebtedness of assets of the
Company, or (iii) obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof. All of the
issued and outstanding shares of capital stock of the Company have been offered,
issued and sold by the Company in compliance with applicable Federal and state
securities laws.
(C) 3.3 Authorization. The shares of Common Stock issuable upon conversion of
the Shares and upon exercise of the Warrants, have been duly authorized by all
necessary corporate action on the part of the Company and have been reserved and
set aside for such purpose, and when so issued, sold and delivered in accordance
with the terms hereof for the consideration herein, will be duly and validly
issued, fully paid and nonassessable.
(D) 3.4 Authority for Agreements. The execution, delivery and performance by the
Company of this Agreement, the Investor Rights Agreement (as defined in Section
5.5) and the Warrant Agreement (collectively, the "Transaction Documents") and
the consummation by the Company of the transactions contemplated hereby and
thereby, are (i) within the Company's corporate power and authority, (ii) legal,
valid and binding obligations of the Company, (iii) duly authorized by all
necessary Company corporate action and (iv) enforceable against the Company in
accordance with their respective terms subject as to enforcement of remedies to
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting generally the enforcement of creditors' rights and subject to a
court's discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies.
(E) 3.5 Consents and Approvals. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
corporation, person or firm or any public, governmental or judicial authority is
required on the part of the Company in connection with the execution and
delivery of this Agreement, the offer, issuance, sale and delivery of the
Securities, or the other transactions to be consummated at the Closing, as
contemplated by this Agreement, except for filing, if any, required pursuant to
applicable state securities or blue sky laws, which filings will be made within
the required statutory or regulatory periods, the filing of the Certificate of
Amendment with the Secretary of State of the State of New York, which filing
will be made on or prior to the Closing and except for such consent, approval or
filing the failure to so obtain would not have a material adverse effect on the
business, results of operations or financial conditions of the Company or those
which will be obtained prior to Closing. Based on the representations made by
the Purchaser in Section 4 of this Agreement, the offer and sale of the Shares
to the Purchaser will be in compliance with applicable Federal and state
securities laws.
(F) 3.6 Litigation. Except as disclosed in the SEC Documents related to periods
ended on or prior to July 4, 1997, there is no action, suit or proceeding, or
governmental inquiry or investigation, pending, or, to the Company's knowledge,
any threat thereof, against the Company, which questions the validity of any of
the Transaction Documents or the right of the Company to enter into any of them,
or which might result, either individually or in the aggregate, in any material
adverse change in the business, prospects, assets or condition, financial or
otherwise, of the Company, nor is there any litigation pending, or, to the
Company's knowledge, any threat thereof, against the Company by reason of the
proposed activities of the Company contemplated under any of the Transaction
Documents.
(G) 3.7 Compliance with Other Instruments. The Company is not in violation or
default of any provision of its Certificate of Incorporation or By-Laws or of
any material instrument, judgment, order, writ, decree or contract to which it
is a party or by which it is bound and has, in all material respects, complied
with all laws, regulations and orders applicable to its present and proposed
business and has all material permits and licenses required thereby and its
NASDAQ National Market listing is in full force and effect. Except as set forth
in the SEC Documents related to periods ended on or prior to July 4, 1997, there
is no term or provision of any material mortgage, indenture, contract, agreement
or instrument to which the Company is a party or by which it is bound, or any
provision of any state or Federal judgment, decree, order, statute, rule or
regulation applicable to or binding upon the Company which materially adversely
affects the business, assets or condition, financial or otherwise, of the
Company. The execution and delivery of the Transaction Documents and any other
document to be delivered in accordance therewith, and the consummation of the
transactions contemplated hereby and thereby will not violate, result in a
breach of, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, the Certificate of
Incorporation or By-Laws of the Company, any agreement or instrument to which
the Company is a party or by which it is bound, including but not limited to any
bank agreements or other agreements evidencing indebtedness to which the Company
is a party, any law, or any order, rule or regulation of any court or
governmental agency or other regulatory organization having jurisdiction over
the Company or any of its Subsidiaries. No consent, approval or waiver is
required to be obtained by the Company in connection with its execution of this
Agreement in order not to be in violation of any agreements to which it is a
party except for such consent, approval or waiver that will be obtained prior to
the Closing.
(H) 3.8 SEC Filings. Since January 1, 1994, the Company has filed with the
Securities and Exchange Commission (the "SEC") correct copies of all forms,
reports, schedules, statements and other documents required to be filed by it
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Securities Act of 1933, as amended (the "Securities Act") (as such documents
have been amended since the time of their filing, collectively, the "SEC
Documents"). The SEC Documents, including without limitation any financial
statements or schedules therein, at the time filed, (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements included therein,
in light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements and the
applicable rules and regulations of the SEC with respect thereto. Except as
publicly disclosed by the Company, the financial statements (including the notes
thereto) included in the SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in such
financial statements or in the notes thereto or, in the case of the unaudited
statements, as permitted by the requirements of Form 10-Q) and fairly present
(subject, in the case of the unaudited statements, to normal recurring audit
adjustments) the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows.
(I) 3.9 Absence of Certain Changes. Except as disclosed by the Company in the
SEC Documents related to periods ended on or prior to July 4, 1997, since July
4, 1997 there have been no events, changes or effects with respect to the
Company and its Subsidiaries having, or which are reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries taken as a whole.
(J) 3.10 Registration and Other Rights. Except as provided for in Sections 1.2,
1.3 and 1.4 of the Investor Rights Agreement and as set forth in the SEC
Documents related to periods ended on or prior to July 4, 1997, the Company has
not granted or agreed to grant any registration rights, including piggyback
rights, to any person or entity. The Company has not issued any equity
securities which entitle the holders thereof to rights, or entered into any
agreements with third parties which would entitle such third parties to rights,
which would be more favorable than the rights granted to the Purchaser hereunder
or the rights, privileges and preferences of the Series A Preferred, including
registration rights.
(K) 3.11 Disclosures. Neither this Agreement nor any Exhibit or Schedule hereto,
nor any certificate furnished to any of the Purchasers pursuant to this
Agreement at Closing, when read together with the SEC Documents related to
periods ended on or prior to July 4, 1997, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
(L) 3.12 No Directed Selling Efforts. Neither the Company, nor any affiliate of
the Company, nor any person acting on its or their behalf, has offered or sold
the Securities by means of any (i) general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act or (ii) directed
selling efforts within the meaning of Rule 903 under Regulation S of the
Securities Act ("Regulation S"), and the Company has complied and will comply
with the offering restriction requirements of such Rule 903.
1.4. Representations and Certain Covenants of the Purchaser. The
Purchaser represents and warrants to the Company as follows:
(A) 4.1 Authority. The execution, delivery and performance by the Purchaser of
this Agreement and the Investor Rights Agreement and the consummation by the
Purchaser of the transactions contemplated hereby and thereby, are (i) within
the Purchaser's power and authority, (ii) legal, valid and binding obligations
of the Purchaser, (iii) duly authorized by all necessary Purchaser corporate
action and (iv) enforceable against the Purchaser in accordance with their
respective terms subject as to enforcement of remedies to applicable bankruptcy,
insolvency, reorganization or similar laws affecting generally the enforcement
of creditors' rights and subject to a court's discretionary authority with
respect to the granting of a decree ordering specific performance or other
equitable remedies.
(B) 4.2 No Directed Selling Efforts. Neither the Purchaser, nor any affiliate of
the Purchaser, nor any person acting on its or their behalf, has engaged in any
(i) general solicitation or general advertising within the meaning of Rule
502(c) under the Securities Act or (ii) directed selling efforts within the
meaning of Rule 903 under Regulation S and the Purchaser has complied and will
comply with the offering restrictions of such Rule 903.
(C) 4.3 Offshore Transactions. The Purchaser, at the time the buy order for the
Securities originated, was outside the United States and was not a U.S. person
(and was not purchasing for the account or benefit of a U.S. person) within the
meaning of Regulation S.
(D) 4.4 Sale or Transfer of Securities. The Purchaser agrees and understands
that the Securities have not been registered under the Securities Act or any
other applicable securities law and the Securities (including the Common Stock
issuable upon exercise of the Warrants and conversion of the Shares) may not be
sold, transferred, or otherwise disposed of except in accordance with the
provisions of Rule 903 or Rule 904 of the Securities Act, pursuant to
registration of the Securities (including the Common Stock issuable upon
exercise of the Warrants and conversion of the Shares) under the Securities Act
or pursuant to an available exemption from the registration requirements of the
Securities Act.
(E) 4.5 No Sales within U.S. or to U.S. Person. The Purchaser agrees and
acknowledges that until the expiration of the "40(C)day restricted period"
within the meaning of Rule 903(c)(2) of Regulation S, any offer or sale of the
Securities (including the Common Stock issuable upon exercise of the Warrants
and conversion of the Shares) shall not be made within the United States within
the meaning of Regulation S of the Securities Act or to a U.S. person or for the
account or benefit of a U.S. person within the meaning of Rule 902(o) of
Regulation S.
(F) 4.6 Hedging Transactions. The Purchaser represents and agrees that as of the
date of purchase of the Securities (including the Common Stock issuable upon
exercise of the Warrants and conversion of the Shares), it has not created and
does not have a short position in the Securities (including the Common Stock
issuable upon exercise of the Warrants and conversion of the Shares) or a long
position in any offsetting option or derivative security and that for the
duration of the "40(C)day restricted period" within the meaning of Rule
903(c)(2) of Regulation S, it will not effect any equity swap, short sale or
other hading transaction in respect of the Securities (including the Common
Stock issuable upon exercise of the Warrants and conversion of the Shares).
(G) 4.7 Reliance by Company. The Purchaser acknowledges that the Company will
rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements and agrees that, if any of the acknowledgements,
representations and agreements are no longer accurate, it shall promptly notify
the Company.
(H) 4.8 Control of the Purchaser. The Purchaser is controlled by the Volta
Family (as defined in Section 4(b) of the Certificate of Amendment).
(I) 4.9 Financing. The Purchaser has the necessary financing to consummate the
transactions contemplated herein.
(J) 4.10 Access to Information. The Purchaser has been furnished access to the
SEC Documents, the pro forma financial statements of the Company for fiscal
years 1994, 1995 and 1996 and has been afforded an opportunity to ask questions
of and receive answers from representatives of the Company concerning matters
deemed relevant by the Purchaser.
1.5. Conditions to the Obligations of the Purchaser. The obligation of the
Purchaser to purchase the Securities at the Closing is subject to the
fulfillment, or the waiver by the Purchaser, of each of the following conditions
on or before the closing:
(A) 5.1 Accuracy of Representations and Warranties. Each representation and
warranty contained Section 3 shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such representation
and warranty had been made on and as of that date.
(B) 5.2 Performance. The Company shall have performed and complied in all
material respects with all agreements and conditions contained in this Agreement
required to be performed or complied with by the Company prior to or at the
Closing.
(C) 5.3 Opinion of Counsel. The Purchaser shall have received an opinion from
Ropes & Gray and Boylan, Brown, Code, Fowler, Vigdor & Wilson LLP, counsel for
the Company, dated the Closing Date addressed to, and satisfactory in form and
substance to, the Purchaser, to the effect that:
(a) (a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of New York
and has corporate power and authority to conduct its business as presently
conducted and to enter into and perform the Transaction Documents and to carry
out the transactions contemplated by the Transaction Documents.
(b) (b) Except for changes contemplated by this Agreement, the
authorized capital stock of the Company is as described in Section 3.2 of this
Agreement and, to such counsel's knowledge, (i) no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company is authorized or
outstanding, (ii) the Company has no obligation (contingent or otherwise) to
issue any subscription, warrant, option, convertible security or other such
right or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, and (iii) the Company
has no obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof. The rights,
preferences and privileges of, and restrictions on, the Series A Preferred are
as stated in the Certificate of Amendment.
(c) (c) The Shares, and the shares of Common Stock issuable
upon conversion of the Shares or upon exercise of the Warrants, have been duly
authorized and reserved for issuance by all necessary corporation action on the
part of the Company; and the Shares, when issued, sold and delivered against
payment therefor in accordance with the provisions of this Agreement, and the
shares of Common Stock issuable upon conversion of the Shares and upon exercise
of the Warrants, when issued upon such conversion or such exercise, will be duly
and validly issued, fully paid and nonassessable.
(d) (d) The execution, delivery and performance by the Company
of the Transaction Documents have been duly authorized by all necessary
corporate action and the Transaction Documents have been duly executed and
delivered by the Company. The Transaction Documents constitute the valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, subject as to enforcement of remedies to applicable
bankruptcy, insolvency, reorganization or similar laws affecting generally the
enforcement of creditors' rights and subject to a court's discretionary
authority with respect to the granting of a decree ordering specific performance
or other equitable remedies. The execution and delivery of the Transaction
Documents and the offer, issue and sale of the Shares hereunder will not
conflict with, or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, the Certificate of Incorporation
or By-Laws of the Company, or any agreement or instrument to which the Company
is a party or by which it is bound, any law or any order, rule or regulation of
any court or governmental agency or other regulatory organization having
jurisdiction over the Company and known to such counsel.
(e) (e) Except as obtained and in effect at the Closing, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration, or filing with, any governmental authority (other than
filings required to be made after the Closing under applicable Federal and state
securities laws) is required on the part of the Company in connection with the
execution and delivery of this Agreement, or the offer, issue, sale and delivery
of the Shares, or the other transactions to be consummated at the Closing
pursuant to this Agreement.
(f) (f) Based on the representations of the Purchaser in
Section 4, the offer, issuance and sale of the Securities pursuant to this
Agreement are exempt from registration under the Securities Act pursuant to
Regulation S under the Securities Act.
(A) 5.4 Certificate of Amendment. On or prior to the Closing, the Certificate of
Amendment shall have been duly authorized and filed with the Secretary of State
of the State of New York.
(B) 5.5 Investor Rights Agreement. The Registration and Investor Rights
Agreement attached hereto as Exhibit C (the "Investor Rights Agreement") shall
have been executed and delivered by the Company and the Purchaser.
(C) 5.6 Warrant Agreement. On or prior to the closing, the Company will execute
and deliver to the Purchaser the Warrant Agreement.
(D) 5.7 NASDAQ and Other Compliance. The Company shall have, in the reasonable
satisfaction of the Purchaser, obtained all waivers and consents, whether from
governmental authorities, third parties or otherwise, necessary to remain in
compliance with its NASDAQ National Market listing and all of its existing bank
agreements and other agreements evidencing indebtedness to which the Company is
a party.
(E) 5.8 Certificates and Documents. The Company shall have delivered to the
Purchaser:
(a) (a) The Certificate of Incorporation of the Company, as
amended and in effect as of the Closing Date (including the Certificate of
Amendment), certified by the Secretary of State of the State of New York;
(b) (b) A certificate, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the Secretary
of State of the State of New York;
(c) (c) By-laws of the Company, certified by its Secretary or Assistant
Secretary as of the Closing Date; and
(d) (d) Resolutions of the Board of Directors of the Company,
authorizing and approving all matters in connection with this Agreement and the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of the Company as of the Closing Date.
(A) 5.9 Compliance Certificate. The Company shall have delivered to the
Purchaser a certificate, executed by an officer of the Company, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1, 5.2 and 5.4 of this Agreement.
(B) 5.10 Board of Directors. The member of the Board of Directors to which the
Purchaser is entitled pursuant to Section 4(b) of the Certificate of Amendment
shall have been elected.
(C) 5.11 Expense Reimbursement. The Company shall have paid the Purchaser
$30,000 to contribute towards the legal expenses of Rogers & Wells.
1. 6. Condition to the Obligations of the Company. The obligations of the
Company under Section 1.2 of this Agreement are subject to fulfillment, or the
waiver, of the following conditions on or before the Closing:
(A) 6.1 Accuracy of Representations and Warranties. The representations and
warranties of the Purchaser contained in Section 4 shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of that date.
(B) 6.2 Compliance with Securities Laws. The Company shall be satisfied that the
offer and sale to the Purchaser shall be qualified or exempt from registration
or qualification under all applicable federal and state securities laws.
(C) 6.3 Investor Rights Agreement. The Investor Rights Agreement shall have been
executed and delivered by the Purchaser.
(D) 6.4 Purchase Price. The Company shall have received the Purchase Price from
the Purchaser.
(E) 6.5 Compliance Certificate. The Purchaser shall have delivered to the
Company a certificate, executed by an officer of the Purchaser, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 6.1 and 6.2 of this Agreement.
(F) 6.6 Lenders' Consents. The Company shall have received from its senior and
subordinated lenders the consent, to the extent required under the Company's
loan agreements with such lenders, to enter into, and perform pursuant to, the
Transaction Documents.
(G) 6.7 Opinion of Counsel. The Company shall have received opinions from Rogers
& Wells, U.S. counsel to the Purchaser, and from Luxembourg counsel of the
Purchaser (as indicated below), dated the Closing Date, addressed to and
satisfactory in form and substance to, the Company, to the effect that:
(a) (a) (Luxembourg counsel).
(A) (i) The Purchaser is a corporation duly incorporated and validly
existing under the laws of the Grand Duchy of Luxembourg and has corporate power
and authority to conduct, enter into and perform the Transaction Documents and
to carry out the transactions contemplated by the Transaction Documents.
(B) (ii) The execution and delivery of the Stock and Warrant Purchase
Agreement and the Registration and Investor Rights Agreement will not conflict
with, or result in any breach of any of the terms, conditions, or provisions of,
or constitute a default under, the Certificate of Incorporation or By-Laws of
the Purchaser, or any agreement or instrument to which the Purchaser is a party
or by which it is bound, any law or any order, rule or regulation of any court
or governmental agency or other regulatory organization having jurisdiction over
the Purchaser and known to such counsel.
(C) (iii) Except as obtained and in effect at the Closing, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration, or filing with, any governmental authority is required
on the part of the Purchaser in connection with the execution and delivery of
this Agreement, or the offer, issue, sale and delivery of the Shares, or the
other transactions to be consummated at the Closing pursuant to this Agreement.
(a) (b) (Rogers & Wells). Assuming the due authorization,
execution and delivery by the Purchaser under the laws of the Grand Duchy of
Luxembourg, the Stock and Warrant Purchase Agreement and the Registration and
Investor Rights Agreement constitute the valid and binding obligations of the
Purchaser, enforceable in accordance with their respective terms, subject as to
enforcement of remedies to applicable bankruptcy, insolvency, reorganization or
similar laws affecting generally the enforcement of creditors' rights and
subject to a court's discretionary authority with respect to the granting of a
decree ordering specific performance or other equitable remedies.
1.7. Covenants.
(A) 7.1 Covenants of the Company.
(a) (a) So long as the Purchaser or any other holder shall
hold at least 27,500 shares of Series A Preferred, the Purchaser or such other
holder, or any authorized representative thereof shall be permitted by the
Company to visit and inspect the properties of the Company, including its
corporate and financial records, and to discuss its business and finances with
officers of the Company, during normal business hours following reasonable
notice as often as may be reasonably requested and to reasonably request
information from the Company; provided, however, that the Company shall not be
required to provide any information which is reasonably considered by the
Company's Board of Directors (excluding for purposes hereof the director and
observer representing the Purchaser), acting with the advice of counsel, to be
competitively sensitive to any business owned or controlled by, or affiliated
with the Purchaser, including without limitation, Datalogic S.p.A.
(b) (b) So long as there is any Series A Preferred
outstanding, the Company shall deliver to all holders thereof:
(i) (i) within 90 days after the end of each fiscal year of the Company, an
audited balance sheet of the Company as at the end of such year and audited
statements of income and of cash flows of the Company for such year, certified
by certified public accountants of established national reputation selected by
the Company, and prepared in accordance with generally accepted accounting
principles;
(ii) (ii) within 45 days after the end of each fiscal quarter (except the
fourth quarter) of the Company, an unaudited balance sheet of the Company as at
the end of such quarter, and unaudited statements of income and of cash flows of
the Company for such fiscal quarter and for the current fiscal year to the end
of such fiscal quarter;
(iii) (iii) with reasonable promptness, copies of all of the Company's
filings with the SEC and such other notices, information and data with respect
to the Company as the Company generally makes available to the holders of its
Common Stock; and
(iv) (iv) with reasonable promptness, all publicly available financial and
news information produced by the Company.
(a) The foregoing financial statements shall be prepared on a
consolidated basis if the Company then has any subsidiaries. The financial
statements delivered pursuant to clause (ii) of paragraph (b) shall be
accompanied by a certificate of the chief financial officer of the Company
stating that such statements have been prepared in accordance with generally
accepted accounting principles consistently applied (except as noted) and fairly
present the financial condition and results of operations of the Company at the
date thereof and for the periods covered thereby subject, in the case of the
unaudited interim financials, to the absence of notes thereto and normal
year-end adjustments.
(b) (c) So long as there is any Series A Preferred
outstanding, the Company shall deliver to all members of the Board of Directors
and all observers:
(i) (i) all management letters of accountants;
(ii) (ii) prior to the end of each fiscal year, an
annual budget for the next succeeding fiscal year;
(iii)(iii) notification of all defaults under
material agreements;
(iv)(iv) notification of material litigation; and
(v) (v) copies of all of the Company's filings with
the SEC, if any.
(a) (d) So long as there is any Series A Preferred
outstanding, the Company will not issue any securities to, or enter into any
agreements with, third parties other than the Purchaser which would entitle such
third parties to rights which would be more favorable than the rights granted to
the Purchaser hereunder or the rights, privileges and preferences of the Series
A Preferred.
(A) 7.2 Standstill. Until the earlier of (x) January 1, 1999 and (y) the
occurrence of a Change of Control Event (as defined in the Investor Rights
Agreement), the Purchaser hereby agrees that it will not, and will not permit
any of its Affiliates (as defined in Rule 12b(C)2 under the Exchange Act) to,
directly or indirectly in conjunction with or through any Associate (as defined
in 12b(C)2 under the Exchange Act) or any other person without the prior written
consent of the Company's Board of Directors specifically expressed in a
resolution adopted by a majority of its directors:
(a) (a) Acquire, directly or indirectly, by purchase or
otherwise, any securities of the Company entitled to vote generally for the
election of directors ("Voting Securities") or any securities convertible into
or carrying any right to acquire Voting Securities ("Contingent Voting
Securities"), except as provided in Section 2.3 of the Investor Rights
Agreement;
(b) (b) Solicit proxies with respect to Voting Securities or
Contingent Voting Securities under any circumstances, or become a "participant"
in any "election contest" relating to the election of directors of the Company
(as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange
Act);
(c) (c) Initiate, propose or otherwise solicit stockholders
for the approval of one or more stockholder proposals at any time, or induce or
attempt to induce any other person to initiate any stockholder proposal;
(d) (d) Deposit any Voting Securities in a voting trust or
subject any Voting Securities to a voting agreement or other agreement or
arrangement with respect to the voting of such Voting Securities (other than as
contemplated by the terms of the Series A Preferred);
(e) (e) Form, join or in any way participate in any "group"
within the meaning of Section 13(d)(3) of the Exchange Act with respect to any
Voting Securities or Contingent Voting Securities; or
(f) (f) Take any action to acquire control of the Company.
(A) 7.3 No Solicit. Until the earlier of Closing or the termination of this
Agreement, the Company agrees not to, without the Purchaser's consent, directly
or indirectly, initiate, solicit or accept any offer or inquiry from any other
person or entity to engage in or reach an agreement with respect to any
transaction similar to or the same as the one discussed herein or any merger,
consolidation or combination in which the Company is a party or, in which the
Company sells all or substantially all of its assets.
(B) 7.4 Director. The Company agrees to cause the member of the Board of
Directors to which the Purchaser is entitled pursuant to Section 4(b) of the
Certificate of Amendment to be elected, at the meeting of shareholders held in
1998 for such purpose, to the class of directors which expires in the year 2001.
1.8. Transfer of Shares.
(A) 8.1 Requirements for Transfer.
(a) (a) The Securities, including the Common Stock issuable
upon exercise of the Warrants and conversion of the Shares, shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) if requested by the Company, the Company first shall
have been furnished with an opinion of legal counsel, reasonably satisfactory to
the Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Securities Act.
(b) (b) Notwithstanding the foregoing, no registration or
opinion of counsel shall be required for a transfer made in accordance with Rule
144 or 144A under the Securities Act.
(A) 8.2 Legend. It is understood that the certificates representing the
Securities, including the Common Stock issuable upon exercise of the Warrants
and conversion of the Shares, shall bear a legend substantially in the following
form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT (i) PURSUANT TO THE PROVISIONS OF
REGULATION S UNDER THAT ACT, (ii) PURSUANT TO A REGISTRATION
STATEMENT UNDER THAT ACT OR (iii) IN A TRANSACTION WHICH IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
(a) The foregoing legend shall be removed from the
certificates representing any Securities, including the Common Stock issuable
upon exercise of the Warrants and conversion of the Shares, at the request of
the holder thereof, at such time as they become eligible for resale pursuant to
Section 4(1) of, or Rule 144 or Rule 144A under, the Securities Act.
(A)9. Miscellaneous.
(B) 9.1 Indemnification by the Company.
(a) (a) The Company will indemnify, hold harmless and
exonerate the Purchaser, any person who controls the Purchaser (within the
meaning of Section 15 of the Securities Act), and any of their officers,
directors, employees and agents (each, an "indemnified party") from and against
any and all claims, actions, suits, losses, damages, liabilities and expenses
(or actions in respect thereof), including, without limitation, reasonable
attorneys' fees and disbursements ("Losses"), incurred by any of the indemnified
parties as a result of or relating to (i) any breach by the Company of its
representations and warranties hereunder or (ii) any failure by the Company to
comply with any of its covenants hereunder.
(b) (b) Each indemnified party shall give notice to the
Company promptly after such indemnified party receives actual knowledge of any
Losses. The indemnified party shall permit the Company (at its expense) to
assume any claim or litigation resulting therefrom; provided that counsel for
the Company, who shall conduct the defense of such claim or litigation, shall be
reasonably acceptable to the indemnified party, and the indemnified party may
participate in such defense at its own expense; and provided, further, that the
failure by any indemnified party to give notice as provided in this paragraph
(b) shall not relieve the Company of its obligations under this Section 9.1,
except to the extent the Company is materially prejudiced by such failure.
(c) (c) Notwithstanding the foregoing provisions, the amount
for which the Company shall be liable under this Section 9.1 shall be limited to
a maximum aggregate amount of $11,000,000. No amounts of indemnity shall be
payable as a result of any claim arising under this Section 9.1 unless and until
the indemnified parties have suffered, incurred, sustained or become subject to
losses in excess of $10,000 in the aggregate, in which event the indemnified
party shall be entitled to indemnity for the full amount of such Losses.
(A) 9.2 Successors and Assigns. The Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns. This Agreement, and the rights and obligations of the Purchaser
hereunder, may not be assigned by the Purchaser.
(B) 9.3 Confidentiality. The Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary or secret information
which the Purchaser may obtain from the Company pursuant to financial
statements, reports and other materials submitted by the Company to the
Purchaser pursuant to this Agreement or otherwise unless such information is
known, or until such information becomes known, to the public without breach of
the provisions of this Section; provided, however, that the Purchaser may
disclose such information (i) to its attorneys, accountants, consultants, and
other professionals to the extent necessary to obtain their services in
connection with its investment in the Company so long as they agree to be bound
by the provisions of this Section, (ii) with the prior written consent of the
Company which consent shall not be unreasonably withheld, to any prospective
purchaser of any Shares from the Purchaser as long as such prospective purchaser
agrees to be bound by the provisions of this Section or (iii) to the
shareholders of the Purchaser and any company controlled by the shareholders of
the Purchaser in accordance with the terms of this Section and to the fullest
extent such parties are bound by existing confidentiality agreements with the
Company.
(C) 9.4 Survival of Representations and Warranties. All agreements,
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the closing of the transactions contemplated
hereby and shall continue until their applicable statute of limitations.
(D) 9.5 Termination. This Agreement may only be terminated by mutual agreement
of the parties.
(E) 9.6 Notices. All notices, requests, consents, and other communications under
this Agreement shall be in writing and shall be deemed delivered (i) five
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) two business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery or (iii) upon confirmation receipt after being sent via facsimile, in
each case to the intended recipient as set forth below:
If to the Company: PSC Inc.
675 Basket Road
Webster, New York 14580
Fax No: (716) 265-6409
Attn: William J. Woodard
If to a Purchaser: Hydra Investissements S.A.
c/o Hydra S.p.A.
Via Massimo d'Azeglio 57
40123 Bologna, Italy
Fax No: 39-51 580 632
(A) Any party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail or
electronic mail), but such notice, request, consent or other communication shall
not be deemed to have been duly given unless and until it is actually received
by the party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(B) 9.7 Brokers. Other than the fee to Lehman Brothers Inc. which is an
obligation of the Company, each of the Company and the Purchaser (i) represents
and warrants to the other that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement, and (ii) will indemnify
and save the other parties harmless from and against any and all claims,
liabilities or obligations with respect to brokerage or finders' fees or
commissions, or consulting fees in connection with the transactions contemplated
by this Agreement asserted by any person on the basis of any statement or
representation alleged to have been made by such indemnifying party.
(C) 9.8 Entire Agreement. This Agreement (including its Exhibits and Schedules)
and the agreements contemplated hereby constitute the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings relating to such subject
matter.
(D) 9.9 Amendments and Waivers. Except as otherwise expressly set forth in this
Agreement, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the holders of at least a majority of the shares of Common Stock
issued or issuable upon conversion of the Shares sold hereby. Any amendment or
waiver effected in accordance with this Section 9.9 shall be binding upon each
holder of any Shares (including shares of Common Stock into which such Shares
have been converted), each future holder of all such securities and the Company.
No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
(E) 9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same document.
(F) 9.11 Section Headings. The section headings in this Agreement are for
convenience only, are not part of this Agreement and are not intended to affect
the meaning or interpretation of any of the terms of this Agreement of the
parties and in no way alter, modify, amend, limit, or restrict the contractual
obligations of the parties.
(G) 9.12 Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(H) 9.13 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without reference to
the conflicts of law provisions thereof).
(I) 9.14 Consent to Jurisdiction. The Purchase (for the sole purpose of the
enforcement of Sections 1 and 2 of this Agreement in the event of
non-performance by the Purchaser thereunder) and the Company:
(a) (1) Irrevocably submits to the exclusive jurisdiction of
the state courts of New York, to the exclusive jurisdiction of
the United States District Court for the Southern District of
New York District and to the exclusive jurisdiction of the
United States District Court for the Western District of New
York, for the purpose of any suit, action or other proceeding
arising out of or based upon this Agreement or any other
Transaction Document, or the subject matter hereof or thereof.
(b) (2) Waives to the extent not prohibited by applicable law
that cannot be waived, and agrees not to assert, by way of
motion, as a defense or otherwise, in any such proceeding
brought in any of the above-named courts, any claim that it is
not subject personally to the jurisdiction of such court, that
its property is exempt or immune from attachment or execution,
that such proceeding is brought in an inconvenient forum, that
the venue of such proceeding is improper, or that this
Agreement, or any other Transaction Document, or the subject
matter hereof or thereof, may not be enforced in or by such
court.
The Purchaser (for the sole purpose of the enforcement of Sections 1 and 2 of
this Agreement in the event of non-performance by the Purchaser thereunder) and
the Company, consents to service of process in any such proceeding in any manner
at the time permitted by the laws of the State of New York and agrees that
service of process by registered or certified mail, return receipt requested, at
its address specified in or pursuant to Section 9.6 is reasonably calculated to
give actual notice.
(A) 9.15 Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto on the date first above written.
COMPANY:
PSC INC.
By:/s/ Robert C. Strandberg
Name: Robert C. Strandberg
Title: CEO, President
PURCHASER:
HYDRA INVESTISSEMENTS S.A..
By:/s/ Serge Thill /s/ Toby Herkrath
Name: Serge Thill T. Herkrath
Title: Administrateur Administrateur
<PAGE>
Exhibit 10.2
REGISTRATION AND INVESTOR RIGHTS AGREEMENT
PSC INC.
September 10, 1997
TABLE OF CONTENTS
Page
1.0 REGISTRATION RIGHTS................................................. 1
1.1 Definitions............................... ................ 1
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1.2 Demand Registration.................... ................... 2
-------------------
1.3 Piggyback Registration..................................... 3
----------------------
1.4 Obligations of the Company.............. .................. 4
--------------------------
1.5 Obligations of the Investor................................ 5
---------------------------
1.6 Expenses of Registrations.................................. 5
-------------------------
1.7 Underwriting Requirements.................................. 5
-------------------------
1.8 Withdrawal Rights And Reallocation....... ................ 6
1.9 Indemnification................................. .......... 6
1.10 Reports Under the Exchange Act............................. 8
------------------------------
1.11 Assignment of Registration Rights.......................... 9
---------------------------------
1.12 "Market Stand-Off" Agreement............................... 9
---------------------------
1.13 Most Favored Status........................................ 9
-------------------
2.0 COVENANTS OF THE COMPANY............................................ 10
------------------------
2.1 Financial Statements and Other Information................. 10
------------------------------------------
2.2 Additional Information Rights.............................. 11
-----------------------------
2.3 Right of First Refusal..................................... 11
----------------------
2.4 Appointment of Observer to the Board of Directors.......... 12
-------------------------------------------------
3.1 Governing Law.............................................. 13
-------------
3.2 Successors and Assigns..................................... 13
----------------------
3.3 Entire Agreement........................................... 13
----------------
3.4 Severability............................................... 13
------------
3.5 Amendment and Waiver....................................... 13
--------------------
3.6 Delays or Omissions........................................ 13
-------------------
3.7 Notices, etc............................................... 13
-------------
3.8 Titles and Subtitles....................................... 14
--------------------
3.9 Counterparts........................................ ...... 14
------------
<PAGE>
REGISTRATION AND INVESTOR RIGHTS AGREEMENT
This Registration and Investor Rights Agreement is entered into as of
September 10, 1997, by and between PSC Inc., a New York corporation (the
"Company") and Hydra Investissements S.A., a Luxembourg corporation (the
"Investor").
WHEREAS, the Investor is purchasing from the Company, and the Company
is selling to the Investor, shares of the Company's Series A Convertible
Preferred Stock (the "Series A Preferred") and Warrants (the "Warrants") to
purchase shares of the Company's Common Stock (the "Common Stock") pursuant to
the terms and conditions set forth in that certain Stock and Warrant Purchase
Agreement dated as of the date hereof (the "Stock and Warrant Purchase
Agreement"); and
WHEREAS, in order to induce the Investor to invest funds in the Company
pursuant to the Stock and Warrant Purchase Agreement, the Company hereby agrees
to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises, covenants, and
conditions set forth herein, the parties agree as follows:
. The parties covenant and agree as follows:ION RIGHTS
. For purposes of this Section 1.0:Definitions
(a) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement or document.
(b) The term "Registrable Securities" means (i) the Common
Stock issued or issuable upon conversion of the Series A Preferred; (ii) the
Common Stock issued or issuable upon exercise of the Warrants; and (iii) any
Common Stock issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
Common Stock, the Series A Preferred or the Warrants each until the date of
registration or the date such Common Stock is distributed to the public pursuant
to Rule 144 of the Securities Act.
(c) The number of shares of "Registrable Securities then
outstanding" shall be equal to the sum of (i) the number of shares of Common
Stock outstanding that are Registrable Securities and (ii) the number of shares
of Common Stock issuable pursuant to then exercisable or convertible securities
that are exercisable or convertible into Registrable Securities.
(d) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any transferee or assignee thereof in
accordance with Section 1.11 hereof.
(e) The term "Form S-3" means such form under the Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Securities and Exchange Commission
("SEC") that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(f) The term "Change of Control Event" shall mean the earlier
to occur of: (i) an announcement by any person of an acquisition of the
Company's securities or other transaction which will require the filing with the
SEC of a Schedule 13D under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to beneficial ownership of the Company (other than
by a financial entity or other similar institutional investor holding securities
of the Company for investment purposes that is eligible to file a Schedule 13G
under the Exchange Act with respect to such acquisition in accordance with Rule
13d-1(b)(1) of the Exchange Act) in which Item 4 thereof will indicate a plan or
proposal under subsections (a)-(j) thereof with respect to either (x) the
acquisition of 30% of the Company's voting securities (other than securities
issued in a public offering made by the Company), (y) a change of one-third of
the incumbent Board of Directors without prior approval of the incumbent members
of the Board of Directors or (z) the merger or consolidation of the Company with
another entity where the shareholders of the Company would not, immediately
after the merger or consolidation, own at least 50% of the voting securities of
the entity issuing the cash or securities in the merger or consolidation, or the
sale of substantially all of the assets of the Company; (ii) the determination
of the Board of Directors of the Company to enter into negotiations concerning a
plan of merger or other business combination for which the director representing
the Holders of Series A Preferred has voted against (it being understood that a
director has the ability to call for a vote on a matter presented); (iii) the
average closing price per share of the Common Stock being $6.25 or lower for a
consecutive 10 trading-day period; (iv) any entity acquiring more than 14.9% of
the Company's outstanding Common Stock or other securities of the Company
convertible into or exercisable or otherwise exchangeable for 14.9% of the
Company's Common Stock or (v) the Common Stock not being listed or quoted, as
applicable, on the NASDAQ National Market, the American Stock Exchange or the
New York Stock Exchange.
1.2 Demand Registration.2 Demand Registration
(a) At any time after the date hereof, the Investor may
request, in writing, that the Company effect a registration on Form S-3 with
respect to any Registrable Securities held by it having an aggregate offering
price of at least $1,000,000 (based on the then current market price or fair
value), upon which request the Company shall file as soon as practicable, and in
any event shall use its best efforts to cause to be declared effective within
ninety (90) days of the receipt of such request, the registration under the
Securities Act of all Registrable Securities that the Investor requests to be
registered.
(b) If, at any time after the date hereof, (i) a Schedule 13D
under the Exchange Act is filed with the SEC with respect to the beneficial
ownership of more than 10% of the voting power of the Company (other than by a
financial entity or other similar institutional investor holding securities of
the Company for investment purposes) or (ii) a Change of Control Event occurs
(other than a Change of Control Event under clause (v) of such definition), any
Holder of Series A Preferred may request, in writing, that the Company effect a
registration on Form S-3 with respect to any Registrable Securities held by it,
upon which request the Company shall file as soon as practicable, and in any
event shall use its best efforts to cause to be declared effective within one
hundred twenty (120) days of the receipt of such request, the registration under
the Securities Act of all Registrable Securities that the Investor requests to
be registered; provided that, this provision shall no longer apply in the event
that (x) the Investor holds less than 10,000 shares of Series A Preferred or (y)
a Change of Control (as defined in Section 4(b) of the Certificate of Amendment)
occurs.
(c) If the Investor initiating the registration intends to
distribute the Registrable Securities by means of an underwriting, it shall so
advise the Company in its request. The underwriter or underwriters will be
selected by the Investor and shall be reasonably acceptable to the Company. If
the underwriter or underwriters has not limited the number of shares to be
underwritten in the registration requested by the Investor, then the Company may
include securities for its own account or the account of others in such
registration if the underwriter or underwriters so agree and if the number of
shares of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited, and, in the
reasonable belief of such underwriters, if the per share sales price for the
shares of Common Stock will not thereby be materially and adversely affected.
All Holders proposing to distribute their securities through such underwriting
shall (together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting.
(d) The Company shall not be required to effect more than two
(2) registrations pursuant to paragraph (a) above in any fiscal year of the
Company or more than one (1) registration pursuant to paragraph (b) above
(counting for purposes of this paragraph only registrations that have been
declared or ordered effective and pursuant to which Registrable Securities held
by Investor have been sold and registrations that have been withdrawn by the
Investor as to which the Investor has not elected to bear the expenses of such
registration).
(e) Notwithstanding the foregoing, if the Company shall
furnish to the Investor a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and that it is therefore essential
to defer the filing of such registration statement, the Company shall have the
right to defer taking action with respect to such filing for a period of not
more than 90 days after receipt of the request of the Investor; provided,
however, that the Company may defer its obligations for this reason only once in
any twelve-month period.
If (but without any obligation to do so) the Company proposes to register any
of its Common Stock or other securities under the Securities Act in connection
with a public offering of such securities, the Company shall, at such time,
promptly give the Investor written notice of such registration. Upon the written
request of the Investor given within twenty (20) days after the Investor's
receipt of such notice, the Company shall, subject to the provisions of Section
1.7, use its best efforts to cause to be registered under the Securities Act all
of the Registrable Securities that the Investor has requested to be registered;
provided, however, that nothing herein shall prevent the Company from, at any
time, abandoning or delaying such registration.
Whenever required pursuant to this Section 1 to effect the registration of any
Registrable Securities, the Company shall perform the following obligations as
expeditiously as reasonably possible:
(a) The Company shall prepare and file with the SEC a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective and, upon
the request of the Investor, to keep such registration statement effective, in
the case of a registration statement filed pursuant to Section 1.2(b) above, for
up to one hundred twenty (120) days, and in the case of a registration statement
filed pursuant to Section 1.2(a) above, for up to ninety (90) days.
(b) The Company shall prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during the period of
its effectiveness.
(c) The Company shall furnish to the Investor such numbers of
copies of the prospectus, including a prospectus subject to completion, in
conformity with the requirements of the Securities Act, and such other documents
as it may reasonably request in order to facilitate the disposition of
Registrable Securities owned by it.
(d) The Company shall use its best efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Investor, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions, unless the Company is already qualified to do business or subject
to service in such states or jurisdictions or subject itself to taxation in any
jurisdiction where the Company is not already subject to taxation;
(e) In the event of any underwritten public offering, the
Company shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(f) The Company shall notify each Holder of Registrable
Securities covered by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing and shall prepare an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities or 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.
(g) The Company shall notify the Holders of the Registrable
Securities promptly when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed.
(h) The Company shall advise the Holders of the Registrable
Securities, promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the Commission suspending the effectiveness of
such registration statement, or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such stop order should be issued.
(i) Notwithstanding the foregoing, the Company shall have no
obligation with respect to any registration requested pursuant to subsection
1.2(a) if the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the anticipated
aggregate offering price required to trigger the Company's obligation to
initiate such registration as specified in subsection 1.2(a).
It shall be a condition precedent to the obligations of the Company to take
any action pursuant to this Section 1 with respect to the Registrable Securities
of the Investor that the Investor furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended method
of disposition of such securities as shall be required to effect the
registration of Investors's Registrable Securities.
The Company shall bear and pay, in addition to its own expenses, all
expenses incurred by the Holders in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.2 and 1.3 (which right may be assigned as provided in
Section 1.11), including (without limitation) all registration, filing, and
qualification fees, reasonable fees and disbursements of counsel to the Holders
and printers' and accounting fees relating or apportionable thereto, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
1.7 Underwriting Requirements.7 Underwriting Requirements
(a) In connection with any offering involving an underwriting
of shares of the Company's capital stock, the Company shall not be required
under Section 1.3 to include any of the Investor's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in good faith as provided below will not, due to
marketing factors, jeopardize the success of the offering by the Company.
(b) If the total amount of securities, including Registrable
Securities, requested by stockholders pursuant to Section 1.3 to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters determine and advise the Company in writing that, in their
good faith opinion, the distribution of all or a portion of the Registrable
Securities requested to be included in the Registration Statement concurrently
with the securities being registered by the Company would materially adversely
affect the distribution of such securities, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the Holders and any other selling
stockholder entitled to request registration (collectively, the "Selling
Stockholders") requesting inclusion in such registration according to the total
amount of securities entitled to be included therein owned by each such Selling
Stockholder on a pro rata basis), it being understood and agreed that in an
offering initiated by the Company, securities of the Selling Stockholders must
be excluded, to the extent required by the underwriters, from the offering prior
to the exclusion of any securities of the Company therefrom.
If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriters. If the Holder's shares are withdrawn from registration, or if the
number of shares of Registrable Securities was previously reduced due to
marketing factors, the Company shall offer to all persons retaining the right to
include securities in the registration the right to include additional
securities in the registration, with such shares being allocated on a pro rata
basis among the Holders of Registrable Securities.
In the event any Registrable Securities are included in a registration
statement under this Section 1: (a) To the extent permitted by law, the Company
will indemnify and hold harmless the Investor, the officers, directors and
shareholders of the Investor, any underwriter (as defined in the Securities Act)
for the Investor and each person, if any, who controls the Investor or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations (each of
which is referred to herein as a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any prospectus subject to
completion or final prospectus contained therein or any amendments or
supplements thereto;
(ii) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein not
misleading; or
(iii) any Violation or alleged Violation by the Company of the Securities
Act, the Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
laws, and the Company will reimburse each such Holder, officer, director or
general partner, underwriter or controlling person for any legal or other
expenses reasonably incurred by them, on an as-incurred basis, in connection
with investigating or defending any such loss, claim, damage, liability, or
action.
Notwithstanding the foregoing, the indemnity provisions contained in
this Section 1.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the written consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation that results from reliance upon written information
furnished expressly for use in connection with such registration by any such
Holder, officer, director, general partner, underwriter or controlling person,
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon any such untrue statement or omission or alleged untrue statement or
omission based upon information made in any Preliminary Prospectus if a copy of
the Prospectus (as amended or supplemented) was not sent or given by or on
behalf of the Holder to the person asserting any such loss, claim, damage or
liability or obtaining such judgment at or prior to the written confirmation of
the sale of the Registrable Securities as required by the Securities Act, and
the Prospectus (as so amended or supplemented) would have corrected such untrue
statement or omission; provided, however, that the Company shall have furnished
copies of such Prospectus (as so amended or supplemented) to the Holder in
compliance with Section 1.4(c) hereof.
(b) To the extent permitted by law, the Investor shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any Holder selling securities in such registration statement or any of its
directors, officers or general partners or each person, if any, who controls
such Holder, against any losses, claims, damages, or liabilities (joint or
several) to which the Company (or any director, officer, controlling person), or
underwriter (or controlling person), or Holder (or director, officer, general
partner or controlling person thereof) may become subject, under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or action in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation results from reliance upon written information
furnished by the Investor expressly for use in connection with such
registration.
The Investor will reimburse any legal or other expenses reasonably
incurred, on an as-incurred basis, by the Company (or any director, officer,
controlling person), underwriter (or controlling person) or Holder (or any
director, officer, general partner, or controlling person thereof) in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 1.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
written consent of the Investor, which consent shall not be unreasonably
withheld.
Notwithstanding the foregoing, the liability of the Investor under this
Section 1.9(b) shall be limited to an amount equal to the price of the shares
sold by the Investor, unless such liability arises out of or is based on willful
misconduct of the Investor.
(c) Within a reasonable time after receipt by an indemnified
party of notice of the commencement of any action (including any governmental
action) under this Section 1.9, such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this Section
1.9, deliver to the indemnifying party a written notice of the commencement
thereof. Such indemnifying party shall have the right to assume the defense of
such action and, subject to the consent of the indemnified party, which consent
shall not be unreasonably withheld, the indemnifying party shall have the right
to enter into settlement of such action, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense of such action with counsel mutually satisfactory to the
parties; provided, however, that the indemnified party shall cooperate with the
indemnifying party, and that if representation of an indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding, such indemnified party
shall have the right to retain its own counsel, with the reasonable fees and
reasonable expenses to be paid by the indemnifying party.
The failure of an indemnified party to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if such failure is prejudicial to the indemnifying party, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 1.9 to the extent such party is prejudiced. However, the omission of the
indemnified party to deliver such written notice to the indemnifying party will
not relieve such indemnifying party of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage, liability, or action referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
. With a view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the SEC
that may at any time permit the Investor to sell securities of the Company to
the public without registration or pursuant to a registration on Form S-3, the
Company agrees:
(a) to make and keep public information available, as those
terms are defined under SEC Rule 144, at all times after ninety (90) days after
the effective date of the first registration statement filed by the Company for
the offering of its securities to the general public;
(b) to file with the SEC all reports and other documents
required of the Company under the Securities Act and the Exchange Act in a
timely manner; and
(c) to furnish to the Investor, so long as the Investor owns
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the Company's most recent annual or quarterly report and (iii) such other
information as may be reasonably requested by the Investor in order to avail
itself of any rule or regulation of the SEC that permits the selling of any such
securities without registration or pursuant to such Form S-3.
. The rights to cause the Company to register Registrable Securities granted
under Sections 1.2(a) and 1.3 may be freely assigned by the Investor; to a
holder of Registrable Securities of not less than 200,000 shares of Common Stock
provided that the transferee or assignee provides written notice of such
assignment to the Company and agrees to be bound by the applicable terms and
provisions of this Agreement.
. 1.12 "Market Stand-Off" Agreement.12 "Market Stand-Off" Agreement
The Investor hereby agrees that it shall not, to the extent specified
by an underwriter of Common Stock (or other securities) of the Company, sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of the Company (other
than securities already registered) during a reasonable and customary period of
time not to exceed one hundred and eighty (180) days, as agreed to by the
Company and the underwriters, following the effective date of any registration
statement of the Company filed under the Securities Act.
In order to enforce the foregoing covenant, the Company may impose stop
transfer instructions with respect to the securities of the Investor (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such one hundred and eighty (180) day period.
1.13 Most Favored Status..13 Most Favored Status.
The Company hereby agrees that it will not issue any securities to, or
enter into any agreements with, or grant any rights to, any third parties other
than the Investor which would entitle such third parties to rights which would
be more favorable than the rights granted to the Investor hereunder or the
rights, privileges and preferences of the Series A Preferred, unless the Company
shall simultaneously grant or offer identical rights to the Holders of the
Series A Preferred.
2.0 COVENANTS OF THE COMPANY.0 COVENANTS OF THE COMPANY
2.1 Financial Statements and Other Information.1 Financial Statements and
Other Information
(a) So long as there is any Series A Preferred outstanding,
the Company shall deliver to all Holders thereof:
(i) within 90 days after the end of each fiscal year of the
Company, an audited balance sheet of the Company as at the end of
such year and audited statements of income and of cash flows of
the Company for such year, certified by certified public
accountants of established national reputation selected by the
Company, and prepared in accordance with generally accepted
accounting principles; (ii) within 45 days after the end of each
fiscal quarter (except the fourth quarter) of the Company, an
unaudited balance sheet of the Company as at the end of such
quarter, and unaudited statements of income and of cash flows of
the Company for such fiscal quarter and for the current fiscal
year to the end of such fiscal quarter;
(iii) with reasonable promptness, copies of all of the
Company's filings with the SEC and such other notices,
information and data with respect to the Company as the Company
generally makes available to the holders of its Common Stock; and
(iv) with reasonable promptness, all publicly available financial
and news information produced by the Company.
(b)The foregoing financial statements shall be prepared on a
consolidated basis if the Company then has any subsidiaries. The
financial statements delivered pursuant to clause (ii) of
paragraph (a) shall be accompanied by a certificate of the chief
financial officer of the Company stating that such statements
have been prepared in accordance with generally accepted
accounting principles consistently applied (except as noted) and
fairly present the financial condition and results of operations
of the Company at the date thereof and for the periods covered
thereby subject, in the case of interim financials, to the
absence of notes thereto and normal year-end adjustments.
(c)So long as there is any Series A Preferred outstanding,
the Company shall deliver to all members of the Board of
Directors and all observers:
(i) all management letters of accountants;
(ii) prior to the end of each fiscal year, an annual
budget for the next succeeding fiscal year;
(iii) notification of all defaults under material
agreements;
(iv) notice of material litigation; and
(v) copies of all of the Company's filings with the SEC.
. So long as the Investor or any other Holder shall hold at least 27,500 shares
of Series A Preferred, the Investor or such other Holder, or any authorized
representative thereof shall be permitted by the Company to visit and inspect
the properties of the Company, including its corporate and financial records,
and to discuss its business and finances with officers of the Company, during
normal business hours following reasonable notice as often as may be reasonably
requested and to request information from the Company provided, however, that
the Company shall not be required to provide any information which is reasonably
considered by the Company's Board of Directors (excluding for purposes hereof
the director and observer representing the Investor), acting with the advice of
counsel, to be competitively sensitive to any business owned or controlled by,
or affiliated with the Purchaser, including without limitation, Datalogic S.p.A.
. The Company hereby grants to the Holders of Series A Preferred, so long as at
least 27,500 shares of Series A Preferred are outstanding, the right to purchase
a pro rata share of New Securities (as defined in this Section 2.3) which the
Company may, from time to time after the date hereof, propose to sell and issue.
A Holder's pro rata share, for purposes of this right, is the (x) lower of (i)
the ratio of the number of shares of Common Stock issued to the Investor on the
Closing Date pursuant to the Stock and Warrant Purchase Agreement (the "Original
Securities"), assuming the conversion of the shares of Series A Preferred and
the exercise in full of the Warrants and (ii) the ratio of the number of shares
of Common Stock owned by the Holder represented by the Original Securities
immediately prior to the issuance of New Securities, assuming the conversion of
the shares of Series A Preferred, and the exercise in full of the Warrants, (y)
to the total number of shares of Common Stock outstanding immediately prior to
the issuance of New Securities, assuming the conversion of all outstanding
shares of Series A Preferred and the exercise in full of all outstanding
Warrants and all other outstanding rights, options and warrants to acquire
Common Stock of the Company. This right of first refusal shall be subject to the
following provisions:
(a) "New Securities" shall mean any capital stock (including
Common Stock and/or Preferred Shares) of the Company whether now authorized or
not, and rights, options or warrants to purchase such capital stock, and
securities of any type whatsoever that are, or may become, convertible into
capital stock; provided that the term "New Securities" does not include (i) the
Series A Preferred to be acquired pursuant to the Stock Purchase Agreement and
any shares issuable upon conversion of the Series A Preferred; (ii) securities
issued upon exercise of the Warrants; (iii) securities issued in amounts less
than $500,000 in any single transaction where the equivalent purchase price per
share of Common Stock is not less than the then applicable conversion price per
share of the Series A Preferred, provided that the aggregate amount of all such
transactions described in subsection (iii) shall not exceed $1,500,000; and (iv)
securities issued to employees, officers or directors of the Company pursuant to
any stock option, stock purchase or stock bonus plan, agreement or other
arrangement approved by the Board of Directors.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give the Holders written notice of its intention,
describing the type of New Securities, and their price and the general terms
upon which the Company proposes to issue the same. The Investor shall have
twenty (20) days after any such notice is effective to agree to purchase its pro
rata share of such New Securities for the price and upon the terms specified in
the notice by giving written notice to the Company and stating therein the
quantity of New Securities to be purchased.
(c) In the event the Investor fails to exercise fully the
right of first refusal within said twenty (20) day period, the Company shall
have one hundred twenty (120) days thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered thereby shall be closed,
if at all, within ninety (90) days from the date of said agreement) to sell the
New Securities respecting which the Investor's right of first refusal option set
forth in this Section 2.3 was not exercised, at a price and upon terms no more
favorable to the purchasers thereof than specified in the Company's notice to
Holders pursuant to Section 2.3(b). In the event the Company has not sold within
said 120-day period or entered into an agreement to sell the New Securities
within said 120-day period (or sold and issued New Securities in accordance with
the foregoing within ninety (90) days from the date of said agreement), the
Company shall not thereafter issue or sell any New Securities, without first
again offering such securities to the Holders in the manner provided in Section
2.3(b) above.
2.4 Appointment of Observer to the Board of Directors.4 Appointment of
Observer to the Board of . Until the earlier of (i) the Investor holding less
than 27,500 shares of Series A Preferred or (ii) a Change of Control (as defined
in Section 4(b) of the Certificate of Amendment) of the Investor, the Holders of
Series A Preferred shall have the right to elect a representative to act as
observer to the Company's Board of Directors, without the right to vote but with
the right to attend and participate in all meetings of the Board of Directors
and to receive all information furnished to the Company's directors, provided,
however, that the Company shall not be required to provide to the observer any
information which is reasonably considered by the Company's Board of Directors
(excluding the director and observer representing the Investor appointed
pursuant to this Section 2.4), acting with the advice of counsel, to be
competitively sensitive to any business owned, controlled or affiliated with the
Investor, including, without limitation, Datalogic S.p.A.
3.0 MISCELLANEOUS.
. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York (without reference to the conflicts of
law provisions thereof).
. Except as otherwise expressly provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto (including transferees of
any shares of Common Stock sold under their respective stock purchase agreements
or any Common Stock issued upon conversion of the Series A Preferred or exercise
of the Warrants).
. This Agreement and the agreements entered into in connection herewith
constitute the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
. The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
. Any term of this Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only with the written consent of the
Company and the Investor. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon the Investor and the Company. No waivers of
or exceptions to any term, condition or provision of this Agreement, in any one
or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, condition or provision.
. No delay or omission to exercise any right, power or remedy accruing to the
Investor or any permitted transferee upon any breach, default or noncompliance
of the Company under this Agreement shall impair any such right, power, or
remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of any similar breach, default or
noncompliance thereafter occurring. It is further agreed that any waiver,
permit, consent, or approval of any kind or character on the Investor's part of
any breach, default or noncompliance under this Agreement or any waiver on the
Investor's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing, and that all remedies, either under this Agreement, by law, or
otherwise afforded to the Investor, shall be cumulative and not alternative.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given to the party to be so notified in writing and shall be
deemed effective upon personal delivery, upon delivery by confirmed facsimile or
electronic transmission (with duplicate original sent by United States mail), or
five business days after being sent by registered or certified mail, return
receipt requested, postage prepaid or two business days after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case addressed to the party to be notified at the address
indicated for such party herein (or, if to the Company, at the address of its
principal executive offices), or at such other address as such party may
designate by ten (10) days' advance written notice to the other party.
. The titles of the paragraphs and subparagraphs of this Agreement are for
convenience only, are not part of this Agreement and are not intended to affect
the meaning or interpretation of any of the terms of this Agreement.
. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration and
Investor Rights Agreement as of the date first above written.
COMPANY:
PSC INC.
By: /s/William J. Woodard
Name: Willilam J. Woodard
Title: Vice President & CFO
Address: 675 Basket Road
Webster, New York 14580
Fax No: (716) 265-6409
Attn: William J. Woodard
INVESTOR:
HYDRA INVESTISSEMENTS S.A.
By: /s/ Serge Thill /s/ Toby Herkrath
Name: Serge Thill Toby Herkrath
Title: Director Director
Address: c/o Hydra S.p.A.
Via Massimo d'Azeglio 57
40123 Bologna, Italy
Fax No: 39-51 580 632
