------------------------------
OMB Number: 3235-0145
------------------------------
Expires: October 31, 1997
Estimated average burden
hours per response . . . 14.90
------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __ )*
Carver Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
146881-10-7
- --------------------------------------------------------------------------------
(CUSIP Number)
James R. McCullough
c\o Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 12, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 146881-10-7 13D Page 2 of 15 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James R. McCullough (SS# ###-##-####)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(a) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 1,826,364 Shares
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,826,364 Shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,826,364 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.82%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 146881-10-7 13D Page 3 of 15 Pages
------------------------------
OMB Number: 3235-0145
------------------------------
Expires: October 31, 1997
Estimated average burden
hours per response . . . 14.90
------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __ )*
Carver Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
146881-10-7
- --------------------------------------------------------------------------------
(CUSIP Number)
James R. McCullough
c\o Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 12, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 146881-10-7 13D Page 4 of 15 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Raj K. Bhatia (SS# ###-##-####)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(a) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED KINGDOM
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 1,826,364 Shares
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,826,364 Shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,826,364 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.82%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 146881-10-7 13D Page 5 of 15 Pages
------------------------------
OMB Number: 3235-0145
------------------------------
Expires: October 31, 1997
Estimated average burden
hours per response . . . 14.90
------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __ )*
Carver Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
146881-10-7
- --------------------------------------------------------------------------------
(CUSIP Number)
James R. McCullough
c\o Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 12, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 146881-10-7 13D Page 6 of 15 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Renwick Alpha Fund, L.P. (ID# 133804469)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(a) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 586,188 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 941,176 Shares
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 586,188 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
941,176 Shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,526,364 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.93%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 146881-10-7 13D Page 7 of 15 Pages
------------------------------
OMB Number: 3235-0145
------------------------------
Expires: October 31, 1997
Estimated average burden
hours per response . . . 14.90
------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __ )*
Carver Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
146881-10-7
- --------------------------------------------------------------------------------
(CUSIP Number)
James R. McCullough
c\o Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 12, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 146881-10-7 13D Page 8 of 15 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Renwick Special Situations Fund, L.P. (ID# 133840312)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(a) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 941,176 Shares
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
941,176 Shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
941,176 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.33%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 146881-10-7 13D Page 9 of 15 Pages
------------------------------
OMB Number: 3235-0145
------------------------------
Expires: October 31, 1997
Estimated average burden
hours per response . . . 14.90
------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __ )*
Carver Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
146881-10-7
- --------------------------------------------------------------------------------
(CUSIP Number)
James R. McCullough
c\o Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
June 12, 1996
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with this statement |X|. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No. 146881-10-7 13D Page 10 of 15 Pages
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Renxick Capital Management, Inc.. (ID# 133796916)
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
SC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(a) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 300,000 Shares
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0 Shares
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 300,000 Shares
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 Shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
300,000 Shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.52%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 146881-10-7 13D Page 11 of 15 Pages
Item 1. Security and Issuer
This statement relates to shares of Common Stock, $.01 par value (the
"Common Stock") of Carver Corporation (the "Company"). The principal executive
office of the Company is 20121 48th Avenue West, Lynwood, WA 98036.
Item 2. Identity and Background
This statement is filed on behalf of the following persons: (a) Mr. James
R. McCullough; (b) Mr. Raj K. Bhatia; (c) Renwick Alpha Fund, L.P. ("Alpha,
LP"); (d) Renwick Special Situations Fund, L.P. ("SS, LP"); and (e) Renwick
Capital Management, Inc. ("Renwick").
James R. McCullough
The business address of Mr. James R. McCullough is c/o Renwick Capital
Management, Inc., 900 Third Avenue, New York, New York. The occupation of Mr.
McCullough is Co-President and Director of Renwick, a corporation organized
under the laws of the State of Delaware. Renwick provides business and financial
consulting services. Mr. McCullough is one of the two general partners of Alpha,
LP and SS, LP. Mr. McCullough is a director of Company.
Mr. McCullough has not been convicted in any criminal proceeding during the
past five years. During the past five years, Mr. McCullough has not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction the result of which proceeding was a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Raj K. Bhatia
The business address of Mr. Raj K. Bhatia is c/o Renwick Capital
Management, Inc., 900 Third Avenue, New York, New York. The occupation of Mr.
Bhatia is Co-President and Director of Renwick, a corporation organized under
the laws of the State of Delaware. Renwick provides business and financial
consulting services. Mr. Bhatia is one of the two general partners of Alpha, LP
and SS, LP. Mr. Bhatia is a director of Company.
Mr. Bhatia has not been convicted in any criminal proceeding during the
past five years. During the past five years, Mr. Bhatia has not been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction the result of which proceeding was a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
Renwick Alpha Fund, L.P.
Alpha, LP is a Delaware limited partnership whose principal offices and
place of business are located at c/o Renwick Capital Management, Inc., 900 Third
Avenue, New York, New York 10022. The principal business of Alpha, LP. is to act
as a private investment limited partnership and to participate in the active
trading of publicly-traded and privately -negotiated securities. Alpha, LP has
not been convicted in any criminal proceeding during the past five years. During
the past five years, Alpha, LP has not been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction the result of which
proceeding was a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws. Messers. McCullough and
Bhatia are the sole general partners of Alpha, LP.
Renwick Special Situations Fund, L.P.
SS, LP is a Delaware limited partnership whose principal offices and place
of business are located at c/o Renwick Capital Management, Inc., 900 Third
Avenue, New York, New York 10022. The principal business of SS, LP. is to act as
a private investment limited partnership and to make investments in privately
held companies and publicly
<PAGE>
CUSIP No. 146881-10-7 13D Page 12 of 15 Pages
traded companies seeking additional working capital.. SS, LP has not been
convicted in any criminal proceeding during the past five years. During the past
five years, SS, LP has not been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction the result of which proceeding was
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Messers. McCullough and Bhatia are the
sole general partners of SS, LP.
Renwick Capital Management, Inc.
Renwick is a Delaware corporation. The address of the principal office and
of the principal business of Renwick is 900 Third Avenue, New York, New York
10022. The principal business of Renwick is acting as a business and financial
consultant and merchant banker.
Mr. McCullough and Mr. Bhatia are the only executive officers, directors
and controlling persons of Renwick.
Renwick has not been convicted in any criminal proceeding during the past
five years. During the past five years, Renwick has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction the
result of which proceeding was a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On June 12, 1996, Alpha, LP subscribed for and purchased from the Company
470,588 shares of Series A Convertible Preferred Stock, par value $.01 per share
(the "Preferred Stock") for $2.125 per share. The Preferred Stock is convertible
at any time at the option of the holder into one share of Common Stock, subject
to certain potential antidilution adjustments to be triggered by the issuance of
additional shares of Common Stock at less than the lesser of the then current
market price or $2.125. The Preferred Stock is entitled to a dividend of 8% per
annum payable quarterly . In the first year, such dividend may be paid in shares
of Common Stock, at a rate of the greater of $2.125 and the average closing bid
price for the Common Stock for 30 days prior to the dividend date. The Preferred
Stock is entitled to one vote per share on all matters. The source of the funds
invested by Alpha, LP was derived from working capital. In addition, on the same
date, Alpha, LP and SS, LP agreed, under certain conditions to purchase an
additional 941,176 shares of Preferred Stock within 90 days of June 12, 1996
under the same terms and conditions.
In connection with its services rendered in connection with the investment
by Alpha, LP and SS, LP , Renwick was granted five year Common Stock Purchase
Warrants ("Warrants") to acquire 100,000 shares of Common Stock for $1.50 per
share through June 11, 1998, $1.75 through June 11, 1999 , $2.00 for the next
year and $2.125 for the final year. In addition, Renwick will be entitled to
receive an additional 200,000 Warrants upon the purchase of the additional
941,176 shares of Preferred Stock described above.
The following purchases of Common Stock were effected by Alpha, LP on the
open market through a broker-dealer. The source of the funds invested by Alpha,
LP was derived from working capital of Alpha, LP.:
<TABLE>
<CAPTION>
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
Transaction Date Amount Price Per Share Nature of Trade
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
<S> <C> <C> <C>
3/8/96 10,000 $2.25 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
3/11/96 50,000 $2.3125 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
3/11/96 4,500 $2.3125 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
3/12/96 15,000 $2.50 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
3/15/96 4,000 $2.40625 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
3/15/96 1,100 $2.40625 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
3/19/96 12,000 $2.43750 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
6/4/96 3,000 $2.9375 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
6/13/96 5,000 $3.1875 Open Market
- ---------------------------- ---------------------------- -------------------------- -------------------------------------
6/14/96 10,000 $3.1875 Open Market
</TABLE>
<PAGE>
CUSIP No. 146881-10-7 13D Page 13 of 15 Pages
Item 4. Purpose of Transaction
The acquisition of the shares of Common Stock, the shares of Preferred
Stock and the acquisition of the Warrants were made solely for investment
purposes. Depending upon market conditions and other factors, Alpha, LP and SS,
LP may acquire additional securities of the Company, or, alternatively, may
dispose of some or all of the securities of the Company that they beneficially
own.
Except as set forth above, the reporting persons have no plans or proposals
which relate to, or could result in, any of the matters referred to in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
According to the Company's Quarterly Report on Form 10-Q for the period
ended March 31, 1996, the Company has 3,687,330 shares of Common Stock
outstanding, without giving effect to the transactions discussed in Item 3 above
(which includes transactions effected by the reporting persons within the last
60 days):
(a) Mr. McCullough is the beneficial owner of 1,826,364 shares of Common
Stock, or 33.82% of the Company's Common Stock outstanding, calculated in
accordance with Regulation 13d-3(d)(1). Such ownership is indirect.
Of such shares of Common Stock, (i) 114,600 shares of Common Stock are
beneficially owned directly by Alpha, LP, (ii) 470,588 shares of Common Stock
are issuable to Alpha, LP upon the conversion of shares of Preferred Stock that
are owned directly by Alpha, LP, (iii) an aggregate of 941,176 shares of Common
Stock are issuable upon the conversion of shares of Preferred Stock that Alpha,
LP and SS, LP have agreed to acquire under certain conditions prior to September
12, 1996; (iv) 100,000 shares of Common Stock are issuable to Renwick upon the
exercise of the Warrant and (v) 200,000 shares of Common Stock are issuable to
Renwick upon the exercise of additional warrants to be granted by the Company
simultaneously with the issuance of the shares of Preferred Stock referred to in
(iii) above. As a general partner of Alpha, LP and SS, LP, Mr. McCullough has
shared power to vote or direct the vote of, and shared power to dispose of, such
Common Stock owned directly or indirectly by Alpha, LP and SS, LP. Such voting
and dispositive power is shared with Mr. Bhatia, the other general partner. As
an executive officer, director and 50% shareholder of Renwick, Mr. McCullough
has shared power to vote or direct the vote of, and shared power to dispose of,
such Common Stock owned by Renwick. Such voting and dispositive power is shared
with Mr. Bhatia. Mr. McCullough acknowledges the above relationships, but does
not affirm that any of the foregoing persons constitute a group for reporting
purposes under Section 13(d) of the Securities Exchange Act of 1934, as amended.
(b) Mr. Bhatia is the beneficial owner of 1,826,364 shares of Common Stock,
or 33.82% of the Company's Common Stock outstanding, calculated in accordance
with Regulation 13d-3(d)(1). Such ownership is indirect.
Of such shares of Common Stock, (i) 114,600 shares of Common Stock are
beneficially owned directly by Alpha, LP, (ii) 470,588 shares of Common Stock
are issuable to Alpha, LP upon the conversion of shares of Preferred Stock that
are owned directly by Alpha, LP, (iii) an aggregate of 941,176 shares of Common
Stock are issuable upon the conversion of shares of Preferred Stock that Alpha,
LP and SS, LP have agreed to acquire under certain conditions prior to September
12, 1996; (iv) 100,000 shares of Common Stock are issuable to Renwick upon the
exercise of the Warrant and (v) 200,000 shares of Common Stock are issuable to
Renwick upon the exercise of additional warrants to be granted by the Company
simultaneously with the issuance of the shares of Preferred Stock referred to in
(iii) above. As a general partner of Alpha, LP and SS, LP, Mr. Bhatia has shared
power to vote or direct the vote of, and shared power to dispose of, such Common
Stock owned directly or indirectly by Alpha, LP and SS, LP. Such voting and
dispositive power is shared with Mr. McCollough, the other general partner. As
an executive officer, director and 50% shareholder of Renwick, Mr. Bhatia has
shared power to vote or direct the vote of, and shared power to dispose of, such
Common Stock owned by Renwick. Such voting and dispositive power is shared with
Mr. McCullough. Mr. Bhatia acknowledges the above relationships, but does not
affirm that any of the foregoing persons constitute a group for reporting
purposes under Section 13(d) of the Securities Exchange Act of 1934, as amended.
<PAGE>
CUSIP No. 146881-10-7 13D Page 14 of 15 Pages
(c) Alpha, LP. is the beneficial owner of 1,526,364 shares of Common Stock,
or 29.93% of the Company's Common Stock outstanding, calculated in accordance
with Regulation 13d-3(d)(1). Such ownership is direct.
Of such shares of Common Stock, (i) 114,600 shares of Common Stock are
beneficially owned directly by Alpha, LP, (ii) 470,588 shares of Common Stock
are issuable to Alpha, LP upon the conversion of shares of Preferred Stock that
are owned directly by Alpha, LP, and (iii) an aggregate of 941,176 shares of
Common Stock are issuable upon the conversion of shares of Preferred Stock that
Alpha, LP and SS, LP have agreed to acquire under certain conditions prior to
September 12, 1996. Alpha, LP expressly disclaims beneficial ownership of any
shares of Common Stock held or owned by Mr. .McCullough, Mr. Bhatia, SS, LP or
Renwick.
(d) SS, LP. is the beneficial owner of 941,176 shares of Common Stock, or
20.33% of the Company's Common Stock outstanding, calculated in accordance with
Regulation 13d-3(d)(1). Such ownership is direct.
All of such shares of Common Stock are issuable upon the conversion of
shares of Preferred Stock that Alpha, LP and SS, LP have agreed to acquire under
certain conditions prior to September 12, 1996. SS, LP expressly disclaims
beneficial ownership of any shares of Common Stock held or owned by Mr.
.McCullough, Mr. Bhatia, Alpha, LP or Renwick.
(e) Renwick is the beneficial owner of 300,000 shares of Common Stock, or
7.52% of the Company's Common Stock outstanding, calculated in accordance with
Regulation 13d-3(d)(1). Such ownership is direct.
Of such shares of Common Stock, 100,000 shares of Common Stock are issuable
to Renwick upon the exercise of the Warrant and (v) 200,000 shares of Common
Stock are issuable to Renwick upon the exercise of additional warrants to be
granted by the Company simultaneously with the issuance of the additional shares
of Preferred Stock referred to above. Renwick expressly disclaims beneficial
ownership of any shares of Common Stock held or owned by Mr. .McCullough, Mr.
Bhatia, Alpha, Lp or SS, LP.
Item 6. Contracts, Arrangements, Understandings, or Relationships with Respect
to Securities of the Issuer
In connection with the investment by Alpha, LP and SS, LP, the Company,
Alpha, LP and SS,LP entered into a Series A Preferred Stock Purchase Agreement,
dated June 12, 1996 (the "Stock Purchase Agreement").
In connection with the investment by Alpha, LP and SS, LP, and under the
Stock Purchase Agreement and pursuant to the Certificate of Designation to the
Company's Articles of Incorporation, the Company agreed to increase the size of
the Board of Directors of the Company to seven persons. The holders of Preferred
Stock are entitled to elect two representatives to the Board of Directors of the
Company. In addition, certain actions by the Company, such as a merger or
liquidation, the sale of substantially all of its assets, payment of dividends,
amendment of the Company's articles of incorporation, the issuance of additional
securities or the incurrence of certain indebtedness, will require the approval
of at least a majority of the shares of Preferred Stock. The holders of
Preferred Stock will have preemptive rights to subscribe for additional shares
of equity stock issued by the Company.
Pursuant to the Registration Rights Agreement, dated June 12, 1996 by and
among the Company, Alpha, LP, SS, LP and Renwick, the Company granted demand and
"piggy-back" registration rights to Alpha, LP, SS, LP and Renwick with respect
to the Common Stock to be acquired upon the conversion of the Preferred Stock
and upon exercise of the Warrants.
<PAGE>
CUSIP No. 146881-10-7 13D Page 15 of 15 Pages
Item 7. Material to Be Filed as Exhibits
The following exhibits are annexed hereto:
(1) Joint Filing Agreement.
(2) Series A Preferred Stock Purchase Agreement dated June 12, 1996 by and
among the Company, Alpha, LP and SS, LP.
(3) Warrant Agreement dated June 12, 1996 between the Company and Renwick
(4) Registration Rights Agreement by and among the Company, Alpha, LP,
SS, LP and Renwick.
Signatures
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
June 24, 1996 /s/ James R. McCullough
- ------------- ------------------------
Date Signature
/s/ Raj K. Bhatia
------------------------
Name
RENWICK ALPHA FUND, L.P.
By: /s/ James R. McCullough
------------------------
General Partner
RENWICK SPECIAL SITUATIONS, L.P..
By: /s/ James R. McCullough
------------------------
General Partner
RENWICK CAPITAL MANAGEMENT, INC.
By: /s/ James R. McCullough
------------------------
Co-President
EXHIBIT 1 - JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
the persons named below agree to the joint filing on behalf of each of them of a
Statement on Schedule 13D (including amendments thereto) with respect to the
common stock of Carver Corporation, and further agree that this Joint Filing
Agreement be included as an Exhibit to such joint filings. In evidence thereof
the undersigned, being duly authorized, hereby execute this Agreement this 24th
day of June, 1996.
June 24, 1996 /s/ James R. McCullough
- ------------- ------------------------
Date Signature
/s/ Raj K. Bhatia
------------------------
Name
RENWICK ALPHA FUND, L.P.
By: /s/ James R. McCullough
------------------------
General Partner
RENWICK SPECIAL SITUATIONS, L.P..
By: /s/ James R. McCullough
------------------------
General Partner
RENWICK CAPITAL MANAGEMENT, INC.
By: /s/ James R. McCullough
------------------------
Chief Executive Officer
CARVER CORPORATION
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Series A Preferred Stock Purchase Agreement, dated as of June 12,
1996, is among Carver Corporation, a Washington corporation (the "Company"), the
investors listed on Exhibit A (the "Investors") and Renwick Capital Management,
Inc. The parties agree as follows:
1. Definitions; Certain Rules of Construction. Certain capitalized terms
are used in this Agreement with the specific meanings defined below in this
Section 1. Except as otherwise explicitly specified to the contrary or unless
the context clearly requires otherwise, (a) the capitalized term "Section"
refers to sections of this Agreement, (c) the capitalized term "Schedule" refers
to schedules to this Agreement, (d) references to a particular Section include
all subsections thereof, (e) the word "including" shall be construed as
"including without limitation", (f) references to a particular statute or
regulation include all rules and regulations thereunder and any successor
statute, regulation or rules, in each case as from time to time in effect, (g)
words in the singular or plural form include the plural and singular form,
respectively, and (h) references to a particular Person include such Person's
successors and assigns to the extent not prohibited by this Agreement.
1.1 "1933 Act" means the Securities Act of 1933, as amended.
1.2 "1934 Act" means the Securities Exchange Act of 1934, as amended.
1.3 "Certificate of Designation" means the "Certificate of Designation of
Series A Cumulative Convertible Preferred Stock setting forth the Powers,
Preferences, Rights, Qualifications, Limitations and Restrictions of Such Series
of Preferred Stock of Carver Corporation," attached as Exhibit B hereto.
1.4 "Articles of Incorporation" means the Articles of Incorporation of the
Company, as amended and in effect from time to time.
1.5 "Closing" is defined in Section 2.4.
1.6 "Common Stock" means the Company's Common Stock, $.01 par value per
share.
1.7 "Company" is defined in the preamble to this Agreement.
1.8 "Initial Closing" is defined in Section 2.4.1
1.9 "Investors" is defined in the preamble to this Agreement.
1.10 "Material Adverse Effect" means a material adverse effect on the
Company's business as presently conducted and as proposed to be conducted,
financial condition, results of operations or ability to perform its obligations
under the Transaction Documents.
<PAGE>
1.11 "Person" means any present or future natural person or any
corporation, association, partnership, limited liability company, limited
partnership, joint venture, joint stock or other company, business trust, trust,
organization, business or government or any governmental agency or political
subdivision thereof.
1.12 "Preferred Shares" means the shares of Common Stock issuable upon
conversion of the Series A Preferred.
1.13 "Preferred Stock" means the Company's Preferred Stock, $.01 par value
per share.
1.14 "Registration Rights Agreement" means the Registration Rights
Agreement dated as of June 12, 1996, as amended and in effect from time to time,
among the Company and the Investors attached as Exhibit C.
1.15 "Related Party" is defined in Section 3.19.
1.16 "Securities" shall mean the Series A Preferred, the Warrants, the
Preferred Shares and the Warrant Shares.
1.17 "Series A Preferred" means the Company's Series A Cumulative
Convertible Preferred Stock, par value, $.01 per share.
1.18 "Shares" means each of the Preferred Shares and the Warrant Shares.
1.19 "Subsequent Closing" is defined in Section 2.4.2.
1.20 "Transaction Documents" means each of (a) this Agreement, (b) the
Registration Rights Agreement, (c) the Certificate of Designation, (d) the
Warrant Agreement, (e) the Investment Banking Agreement in the form of Exhibit F
hereto, (f) any other agreements, instruments, or documents entered into by the
Company or its Subsidiaries pursuant to this Agreement;
1.21 "Warrant Agreement" means the form of Common Stock Warrant Agreement,
dated June 12, 1996 between the Company and Renwick Capital Management, Inc.
("Warrants") to purchase up to 300,000 shares of Common Stock at prices ranging
from $1.50 per share to $2.125 per share.
1.22 "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
2. Authorization, Sale and Purchase of Series A Preferred and Warrants
2.1 Authorization of Series A Preferred and Warrants. The Company has
authorized the issuance and sale of up to 1,411,764 shares of Series A Preferred
and the Warrants. The rights, privileges, and preferences of the Series A
Preferred are as set forth in the Certificate of Designation, a copy of which is
attached hereto as Exhibit B and the Articles of Incorporation.
-2-
<PAGE>
2.2 Sale and Purchase of Series A Preferred. Subject to the terms and
conditions of this Agreement and on the basis of the representations and
warranties set forth herein, the Company agrees to sell to each Investor, and
each Investor severally and not jointly agrees to purchase from the Company, the
number of shares of Series A Preferred to purchase the number of shares of
Common Stock set forth opposite such Investor's name on Exhibit A for a purchase
price of $2.125 per share of Series A Preferred.
2.3 Issuance of Warrants. In consideration of the time and efforts expended
by RCM in connection with the transaction contemplated by this Agreement, the
Company agrees to issue to RCM at each Closing, Warrants to acquire one share of
Common Stock for every $10 invested in Series A Preferred by the Investors.
2.4 The Closings. The purchase and sale of the Series A Preferred and
Warrants will take place at up to three closings (each a "Closing") at the
offices of Renwick Capital Management, Inc., 900 Third Avenue, New York, New
York or at such other place as the parties shall mutually agree. At each
Closing, the Company will deliver to each Investor a certificate or
certificates, registered in each Investor's name, representing the number of
shares of Series A Preferred and Warrants to be acquired by such Investor
pursuant to this Agreement at such Closing, against payment of the purchase
price thereof in lawful money of the United States of America by wire transfer
or check payable to the Company.
2.4.1 Initial Closing. The Initial Closing (the "Initial Closing") shall
take place at 12:00 noon (New York time) on June 12, 1996 or at such other time
or on such other date as the parties shall mutually agree. Subject to the terms
and conditions of this Agreement, and on the basis of the representations and
warranties set forth herein, at the Initial Closing each Investor shall purchase
the number of Series A Preferred set forth opposite such Investor's name on
Exhibit A.
2.4.2 Subsequent Closings. Each subsequent Closing (each a "Subsequent
Closing") shall take place at such time and on such date as the Investors shall
designate, but in any event not more than 90 days after the Initial Closing.
3. Representations and Warranties of the Company. In order to induce the
Investors to enter into this Agreement and to purchase the Series A Preferred
hereunder, the Company hereby represents and warrants to each Investor that:
3.1 Organization and Corporate Power. The Company and each subsidiary of
the Company ("Subsidiaries") is a corporation (a) duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and (b) qualified to do business as a foreign corporation in each
jurisdiction in which such qualification is required and in which the failure to
so qualify would have a Material Adverse Effect on such Person other than as set
forth on Schedule 3.1. The Company and each Subsidiary have all required
corporate power and authority (i) to own its property, (ii) to carry on its
business as presently conducted or proposed to be conducted and (iii) to carry
out the transactions contemplated hereby. The Company has furnished to the
counsel for the Investors correct and complete copies of the charter and by-laws
of the Company as amended and in effect on the date hereof.
-3-
<PAGE>
3.2 Authorization. Each of the Transaction Documents has been duly executed
and delivered by the Company and is the legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms. The
execution, delivery and performance of each of the Transaction Documents have
been duly authorized by all necessary corporate action of the Company.
3.3 Capitalization. After the filing of the Certificate of Designation with
the Washington Secretary of State and immediately prior to the Initial Closing,
the entire authorized capital stock of the Company will consist of (i) 2,000,000
shares of Preferred Stock, of which 1,411,767 shares will be designated Series A
Preferred and of which no shares will be issued and outstanding, and (ii)
20,000,000 shares of Common Stock, of which 3,687,330 shares will be issued and
outstanding. The Company holds no shares of Series A Preferred and no shares of
Common Stock in its treasury. When issued in accordance with the terms of this
Agreement, the Series A Preferred will be duly authorized, validly issued and
outstanding, fully paid and nonassessable. When issued, the Warrants will be a
valid and binding obligation of the Company, enforceable in accordance with
their terms. When issued, upon the conversion of the Series A Preferred, or upon
the exercise of the Warrants, the Preferred Shares and the Warrant Shares,
respectively, will be duly issued, fully paid and non-assessable. Other than as
set forth on Schedule 3.3 and except for the securities, there are no
outstanding warrants, options or other rights to purchase or acquire from the
Company or exchangeable for or convertible into, any shares of Preferred Stock
or Common Stock. There are no preemptive rights with respect to the issuance or
sale by the Company of the Shares which have not been waived. Except as provided
in the Registration Rights Agreement or as imposed by applicable securities
laws, there are no restrictions on the transfer or voting of any shares of
Series A Preferred or Common Stock. Other than as set forth in the Registration
Rights Agreement, there are no existing rights with respect to registration
under the 1933 Act of any of the Company's securities. The Company has not
violated the 1933 Act or any state blue sky or securities laws in connection
with the issuance of any of its securities.
3.4 Noncontravention. Neither the execution and the delivery of the
Transaction Documents, nor the consummation of the transactions contemplated
hereby, will (i) violate any statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company or any Subsidiary is subject
or any provision of the charter or bylaws of any of the Company or any
Subsidiary nor (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Company or any Subsidiary is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any security interest
upon any of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or security interest would not have a Material Adverse Effect on the ability of
the parties to consummate the transactions contemplated by the Transaction
Documents. The Company need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order for the parties to consummate the transactions contemplated by
the Transaction Documents, which has not been given, made or obtained, except
where the failure to give notice, to file, or to obtain any authorization,
consent,
-4-
<PAGE>
or approval would not have a Material Adverse Effect on the ability of the
parties to consummate the transactions contemplated by this Agreement.
3.5 Financial Statements. Attached hereto as Exhibit G are the following
financial statements (collectively the "Financial Statements"): (i) audited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended December 31, 1993,
December 31, 1994 and December 31, 1995 for the Company; and (ii) unaudited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for the
three months ended March 31, 1996, (the "Most Recent Fiscal Month End") for the
Company and its Subsidiaries. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly the financial
condition of the Company and its Subsidiaries as of such dates and the results
of operations of the Company and its Subsidiaries for such periods; provided,
however, that the Most Recent Financial Statements are subject to normal
year-end adjustments and lack footnotes and other presentation items.
3.6 Absence of Certain Developments. Except as disclosed in Schedule 3.6,
there has not been since the date of the Most Recent Financial Statements, any
(a) change in the condition, financial or otherwise, of the Company or any
Subsidiary or in the assets, liabilities, properties, or business of the Company
or any Subsidiary or in the prospects of the Company or any Subsidiary, which
has had or will have Material Adverse Effect, (b) declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company, (c) loss, destruction or damage to any property of the Company
or any Subsidiary whether or not insured, which loss will have a Material
Adverse Effect, (d) labor trouble involving, or any material change in, any of
their respective personnel or the terms and conditions of employment, (e) waiver
by the Company or any Subsidiary of any valuable right, (f) loan or extension of
credit by the Company or any Subsidiary to any of their respective officers or
employees or (g) acquisition or disposition of any material assets (or any
contract or arrangement therefor) or any other material transaction by the
Company or any Subsidiary otherwise than for fair value in the ordinary course
of business.
3.7 Legal Compliance. Except as disclosed in Schedule 3.7, to the Company's
knowledge, each of the Company and the Subsidiaries has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local and foreign governments (and all agencies thereof), except where the
failure to comply would not have a Material Adverse Effect.
3.8 Title to Properties. Except as disclosed in Schedule 3.8, other than
(a) any lien in respect of current taxes not yet due and payable and (b)
possible minor liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of the Company and which have arisen in the ordinary course of
business and shall be removed within a reasonable period, the Company has good
and marketable title to all properties and assets necessary to its business as
presently conducted and as proposed to be conducted and to all of its properties
and assets, free and clear of all mortgages,
-5-
<PAGE>
security interests, liens, restrictions or encumbrances. All machinery and
equipment included in such properties which is necessary to the business of each
of the Company and its Subsidiaries is in good condition and repair except for
reasonable wear and tear, and all leases of real or personal property to which
each of the Company and its Subsidiaries is a party are fully effective and
afford the party thereto peaceful and undisturbed possession of the subject
matter of the lease. To the best knowledge of the Company, neither it nor any
Subsidiary is in material violation of any zoning, building or safety ordinance,
regulation or requirement or other law or regulation applicable to the operation
of owned or leased properties that is likely to impede the normal operation of
the business of the Company or any Subsidiary and the Company has not received
any written notice of violation with which it has not complied.
3.9 Tax Matters. Except as set forth in Schedule 3.9, there are no federal,
state, county or local taxes due and payable by the Company or any of its
Subsidiaries, which have not been paid. There have been no examinations or
audits of any tax returns or reports by any applicable federal, state or local
governmental agency. The Company has duly filed all federal, state, county and
local tax returns required to have been filed by it and there are in effect no
waivers of applicable statutes of limitations with respect to taxes for any
year.
3.10 Contracts and Commitments. Except for the contracts described in
Schedule 3.10, copies of which have been made available to the counsel for the
Investors, neither the Company nor any Subsidiary is a party to (a) any
contract, obligation or commitment (other than the negotiations and preparation
of the Transaction Documents) which involves by its terms a commitment in excess
of $100,000 or (b) any agreements with any officer, director or affiliate of the
Company, including employment contracts (including contracts with any common law
employee, agent or independent contractor), management agreements, stock
redemption or purchase agreements, financing agreements, distribution right
agreements, royalty agreements, licenses under which the Company is licensee or
licensor, leases of real property or pension, profit-sharing, retirement or
stock option plans.
3.11 No Defaults. Except as disclosed on Schedule 3.11 and except for those
which will not have a Material Adverse Effect, the Company is not in default (a)
under its Articles of Incorporation or by-laws or any note, indenture, mortgage,
lease, agreement, contract, purchase order or other instrument, document or
agreement to which it is a party or by which it or any of its property is bound
or affected or (b) with respect to any order, writ, injunction or decree of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign. To
the best knowledge of the Company, there does not exist any condition, event or
act which after notice, lapse or time, or both, could constitute a default by
the Company under any of the foregoing except for those which will not have a
Material Adverse Effect. To the best knowledge of the Company, no third party is
in default under any agreement, contract or other instrument, document or
agreement to which the Company is a party or by which any of them or any of
their property is affected, which default would have a Material Adverse Effect.
3.12 The Company possesses sufficient right and authority to use all
know-how, proprietary information, copyrights, trademarks, patent rights and
other proprietary and intellectual properties necessary to the conduct of its
business as presently conducted and as
-6-
<PAGE>
proposed to be conducted ("Intellectual Properties") without infringing the
rights of others. The Company has taken reasonable and appropriate steps and
precautions to protect and preserve the confidentiality of all trade secrets and
confidential information of the Company or others entrusted to it including,
without limitation, entering into appropriate confidentiality and nondisclosure
agreements with all those employees and other parties with access to or
knowledge of confidential or proprietary information relating to or included in
the Intellectual Properties. The Company's operations do not infringe any
copyright, trademark, service mark, trade name, patent, patent right or any
other right of any person, whether registered or unregistered, nor do they
involve the misappropriation of any trade secret of any person, except for such
infringements or misappropriation as will not have a Material Adverse Effect.
The Company has not received notice from any person alleging that such
infringement or misappropriation has occurred or is continuing.
3.13 No Governmental Consent or Approval Required. Based in part on the
representations made by the Investors in Section 4, other than (a) federal or
state securities law filings which have been made or which will be made in a
timely manner and (b) the filing of the Certificate of Designation (which, as of
the Initial Closing, will have been filed), no authorization, consent, approval
or other order of, declaration to, or filing with, any governmental agency or
body is required for or in connection with the valid and lawful authorization,
execution and delivery by the Company of any of the Transaction Documents or the
authorization, issuance, sale and delivery of the Securities.
3.14 Litigation. Except as disclosed on Schedule 3.14, there is not any
action, suit, proceeding or investigation pending or, to the best knowledge of
the Company, threatened against the Company or any of its Subsidiaries which
questions the validity of any of the Transaction Documents or the right of the
Company to enter into them or to consummate the transactions contemplated hereby
or thereby, or which would have either individually or in the aggregate, a
Material Adverse Effect or any change in the current equity ownership of the
Company or any of its Subsidiaries, nor is the Company aware that there is any
basis for the foregoing. The foregoing includes, without limitation, actions
pending, or to the best knowledge of the Company and its Subsidiaries,
threatened, involving the prior employment of any of the employees of the
Company or any of its Subsidiaries, their use in connection with the business of
the Company or any of its Subsidiaries of any information, creations or
techniques allegedly proprietary to any of their former employers or other
Persons or entities, or their obligations under any agreements with prior
employers or other Persons or entities. Neither the Company nor any of its
Subsidiaries nor, to the best of the Company's knowledge, any of their
respective officers or directors is a party to, or subject to the provisions of,
any order, writ, injunction, judgment or decree of any court or governmental
agency or instrumentality which would have a Material Adverse Effect. Except as
disclosed on Schedule 3.14, there is no action, suit or proceeding by the
Company or any of its Subsidiaries presently pending or which the Company or any
of its Subsidiaries presently intends to initiate.
3.15 Securities Laws. The Common Stock is registered under Section 12(g) of
the 1934 Act and the Company is currently in compliance with, and, except as set
forth in Schedule 3.15, at all times for the last five (5) years has been, in
compliance with the periodic reporting
-7-
<PAGE>
requirements and the rules and regulations of the 1934 Act and The Nasdaq
National Market except for such failures to comply as will not have a Material
Adverse Effect.
3.16 Business. Each of the Company and its Subsidiaries has all franchises,
permits, licenses and other rights and privileges necessary to permit it to own
its property and to conduct its present business. Neither the Company nor any of
its Subsidiaries is in violation of any law, regulation, authorization or order
of any public authority relevant to the ownership of its properties or the
carrying on of its present business which in the aggregate would have a Material
Adverse Effect.
3.17 Brokerage. There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of the Company or
any of its Subsidiaries, and the Company agrees to pay any such brokerage
commissions, finder's fees or similar compensation and to indemnify and hold the
Investors harmless against any damages incurred as a result of any such claim.
3.19 Books and Records. The minute books of each of the Company and its
Subsidiaries contain complete and accurate records of all meetings and other
corporate actions of its stockholders, its Board of Directors and all
committees, if any, appointed by its Board of Directors. The stock ledger of
each of the Company and its Subsidiaries is complete and reflects all issuances,
transfers, repurchases and cancellations of shares of capital stock of the
Company or such Subsidiary, as the case may be. The books of account, ledgers,
order books, records and documents of each of the Company and its Subsidiaries
accurately and completely reflect all material information relating to its
business, the nature, acquisition, maintenance, location and collection of their
respective assets and the nature of all transactions giving rise to its
obligations and accounts receivable.
3.20 Material Facts. This Agreement, the Exhibits, the Schedules and each
other agreement, document, certificate or written statement furnished, or to be
furnished, to the Investors through each Subsequent Closing by or on behalf of
the Company or any of its Subsidiaries in connection with the transactions
contemplated hereby inclusive of the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and the Company's Quarterly Report on Form 10-Q
for the three months ended March 31, 1996 do not, or will not, contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained herein or therein in light of the circumstances
in which they were made not misleading.
4. Representations, Warranties and Certain Other Agreements of the
Investors and RCM.
4.1 Representations and Warranties of the Investors. Each Investor
severally and not jointly hereby represents and warrants that:
4.1.1. Authorization. Such Investor has full power and authority to
execute, deliver and perform this Agreement and the Registration Rights
Agreement and to acquire the Series A Preferred and Preferred Shares. Each of
this Agreement and the Registration Rights Agreement
-8-
<PAGE>
constitutes the legal, valid and binding obligation of such Investor,
enforceable against such Investor in accordance with its terms.
4.1.2. Purchase Entirely for Own Account. The Series A Preferred and
Preferred Shares to be acquired by such Investor will be acquired for investment
for such Investor's own account, not as a nominee or agent and not with a view
to the distribution of any part thereof. Such Investor has no present intention
of selling, granting any participation in, or otherwise distributing the Series
A Preferred and Preferred Shares acquired by such Investor. Such Investor does
not have any contract, undertaking, agreement or arrangement with any Person to
sell or transfer, or grant any participation to such Person or to any third
Person, with respect to any of the Series A Preferred and Preferred Shares to be
acquired by such Investor.
4.1.3. Restricted Securities. Such Investor understands that the Series A
Preferred and Preferred Shares to be acquired by such Investor have not been
registered under the 1933 Act or the laws of any state and may not be sold or
transferred, or otherwise disposed of, without registration under the 1933 Act
and applicable state securities laws, or an exemption therefrom, and that in the
absence of an effective registration statement covering the Series A Preferred
and Preferred Shares to be acquired by such Investor must be held indefinitely.
In the absence of an effective registration statement covering the Securities to
be acquired by such Investor, such Investor will sell or transfer, or otherwise
dispose of, the Securities to be acquired by such Investor only in a manner
consistent with its representations and agreements set forth herein and the
terms and conditions set forth in the Registration Rights Agreement.
4.1.4 Formation. Such Investor represents that it was not organized for the
purpose of making an investment in the Company.
4.1.5 Financial Condition. Such Investor's financial condition is such that
it is able to bear the risk of holding the Series A Preferred and Preferred
Shares to be acquired by such Investor for an indefinite period of time and can
bear the loss of its entire investment in the Securities to be acquired by such
Investor. Investor has substantial experience in evaluating and investing in
private placement transactions of securities and companies similar to the
Company so that it is capable of evaluating the merits and risks of its
investment in the Company. Renwick Alpha Fund, L.P. is an "accredited investor",
as that term is defined in Rule 501 promulgated under the 1933 Act. Renwick
Special Situations, L.P. does not, and as of the date of each Closing in which
it participates will not, have more than 30 equity owners who are not
"accredited investors."
4.1.6 Receipt of Information. Such Investor has been furnished access to
the business records of the Company and its Subsidiaries and such additional
information and documents as such Investor has requested and has been afforded
an opportunity to ask questions of, and receive answers from, representatives of
the Company and its Subsidiaries concerning the terms and conditions of this
Agreement, the purchase of the Securities, the business, operations, market
potential, capitalization, financial condition and prospects of the Company and
its Subsidiaries, and all other matters deemed relevant to such Investor. Such
Investor confirms that it has been furnished (i) the Company's Annual Report on
Form 10-K with respect to the Company's fiscal year ending December 31, 1995,
(ii) the Company's Quarterly Report on Form 10-Q with respect
-9-
<PAGE>
to the Company's fiscal quarter ending March 31, 1996, (iii) the proxy statement
with respect to the Company's 1996 annual shareholders' meeting, (iv) a Current
Report of the Company on Form 8-K dated May 1, 1996, and (v) a description of
the Securities and the use of proceeds from the sale thereof.
4.1.7 Brokerage. There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
such Investor, and such Investor agrees to indemnify and hold the Company and
its Subsidiaries and other Investors harmless against any damages incurred as a
result of any such claims.
4.2 Representations and Warranties of RCM. RCM represents and warrants
that:
4.2.1. Authorization. RCM has full power and authority to execute, deliver
and perform this Agreement, the Warrant Agreement and the Registration Rights
Agreement and to acquire Warrants and Warrant Shares. Each of this Agreement,
the Warrant and the Registration Rights Agreement constitutes the legal, valid
and binding obligation of such Investor, enforceable against RCM in accordance
with its terms.
4.2.2. Purchase Entirely for Own Account. The Warrants and Warrant Shares
to be acquired by RCM will be acquired for investment for RCM's own account, not
as a nominee or agent and not with a view to the distribution of any part
thereof. RCM has no present intention of selling, granting any participation in,
or otherwise distributing the Warrants and Warrant Shares acquired by RCM other
than to certain officers, employees or consultants to RCM. RCM does not have any
contract, undertaking, agreement or arrangement with any Person to sell or
transfer, or grant any participation to such Person or to any third Person, with
respect to any of the Warrants and Warrant Shares to be acquired by RCM other
than with respect to such limited number of officers or consultants of RCM.
4.2.3. Restricted Securities. RCM understands that the Warrants and Warrant
Shares to be acquired by RCM may not be sold or transferred, or otherwise
disposed of, without registration under the 1933 Act and applicable state
securities laws, or an exemption therefrom, and that in the absence of an
effective registration statement covering the Warrants and Warrant Shares to be
acquired by RCM must be held indefinitely. In the absence of an effective
registration statement covering the Warrants and Warrant Shares to be acquired
by RCM, RCM will sell or transfer, or otherwise dispose of, the Warrants and
Warrant Shares to be acquired by RCM only in a manner consistent with its
representations and agreements set forth herein and the terms and conditions set
forth in the Registration Rights Agreement.
4.2.4 Formation. RCM represents that it was not organized for the purpose
of making an investment in the Company.
4.2.5 Financial Condition. RCM's financial condition is such that it is
able to bear the risk of holding the Warrants and Warrant Shares to be acquired
by RCM for an indefinite period of time and can bear the loss of its entire
investment in the Warrants and Warrant Shares to be acquired by RCM. RCM has
substantial experience in evaluating and investing in private placement
transactions of securities and companies similar to the Company so that it is
capable
-10-
<PAGE>
of evaluating the merits and risks of its investment in the Company. RCM is an
"accredited investor", as that term is defined in Rule 501 promulgated under the
1933 Act.
4.2.6 Receipt of Information. RCM has been furnished access to the business
records of the Company and its Subsidiaries and such additional information and
documents as RCM has requested and has been afforded an opportunity to ask
questions of, and receive answers from, representatives of the Company and its
Subsidiaries concerning the terms and conditions of this Agreement, the purchase
of the Warrants and Warrant Shares, the business, operations, market potential,
capitalization, financial condition and prospects of the Company and its
Subsidiaries, and all other matters deemed relevant to RCM.
4.2.7 Brokerage. There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
RCM, and RCM agrees to indemnify and hold the Company and its Subsidiaries and
other Investors harmless against any damages incurred as a result of any such
claims.
4.3 Further Limitations on Disposition. Each Investor and RCM further agree
not to make any disposition of all or any portion of the Securities unless and
until:
(a) there is in effect a registration statement under the 1933 Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement and all applicable state
securities laws; or
(b) (i) such Investor or RCM shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the proposed disposition and (ii) such
Investor or RCM shall have furnished the Company with an opinion of counsel
reasonably satisfactory to the Company, that such disposition will not
require registration of such shares under the 1933 Act and that all
requisite action has been or will, on a timely basis, be taken under any
applicable state securities laws in connection with such disposition
Notwithstanding the provisions of clauses (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by any Investor or RCM(i) pursuant to Rule 144(k) promulgated under the 1933
Act, (ii) pursuant to Rule 144A promulgated under the 1933 Act or (iii) a
transfer by an Investor or RCM to a partner, Subsidiary, shareholder, officer,
employee or affiliate of such Investor, if, in the case of clauses (ii) and
(iii) above, the transferee agrees in writing to be subject to the terms hereof
to the same extent as if such transferee were an original Investor hereunder.
4.4 Legends. It is understood that the certificates evidencing the
Securities may bear substantially the following legends:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND SUCH
SECURITIES MAY NOT BE
-11-
<PAGE>
OFFERED FOR RESALE, SOLD, ASSIGNED OR OTHERWISE HYPOTHECATED FOR VALUE
(INCLUDING BY ANY PLEDGEE) UNLESS (A) THE SECURITIES ARE REGISTERED UNDER
THE SECURITIES ACT AND THE SECURITIES LAWS OF ALL APPLICABLE STATES OF THE
UNITED STATES, OR (B) THE SECURITIES ARE OFFERED AND SOLD IN COMPLIANCE
WITH AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND, AT THE OPTION OF
THE COMPANY, THE HOLDER PROVIDES AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY TO SUCH EFFECT.
(b) Any legend required by the Registration Rights Agreement or the
laws of any applicable jurisdiction.
5. Conditions to the Investors' Obligations at Each Closing. The
obligations of the Investors under Section 2 to purchase the Series A Preferred
to be acquired by the Investors at any Closing are subject to the fulfillment at
or prior to such Closing of each of the following conditions (unless waived by
the Investors in accordance with Section 11.5):
5.1 Representations and Warranties. The representations and warranties of
the Company contained in Section 3 shall be true and correct on and as of the
date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
5.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before such Closing.
5.3 Compliance Certificate. The Company shall deliver to the Investors at
such Closing a certificate signed by the chief executive officer or general
counsel of the Company certifying that the conditions specified in Sections 5.1,
5.2, 5.5, 5.6 and 5.8 have been fulfilled.
5.4 Certificate of Designation. The Company shall have filed with the
Washington Secretary of State a certificate of designation to the Articles of
Incorporation of the Company in the form of Exhibit B.
5.5 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities to the Investors pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of such Closing other than those which
are not required to be obtained before such Closing.
5.6 Proceedings and Documents. All corporate and other proceedings in
connection with the transaction contemplated at such Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and to the special counsel for the Investors, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
-12-
<PAGE>
5.7 Opinion of Company Counsel. The Investors shall have received from
Heller, Ehrman, White & McAuliffe, counsel for the Company, an opinion dated as
of the date of such Closing in substantially the form of Exhibit H.
5.8 Secretary's Certificate. The Company shall have delivered to the
Investors a certificate dated as of the date of such Closing and signed by the
secretary of the Company certifying: (a) that attached thereto is a true and
complete copy of the by-laws of the Company as in effect on the date of such
certification; (b) that attached thereto is a true and complete copy of all
resolutions adopted by the Board of Directors of the Company authorizing the
execution, delivery and performance of each of the Transaction Documents the
issuance, sale and delivery of the Shares, and that all such resolutions are in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by the Transaction Documents; (c) that attached
thereto is a true and complete copy of the Articles of Incorporation, as amended
and in effect on the date of such certification, and (d) as to the incumbency
and specimen signature of certain officers of the Company.
5.9 Registration Rights Agreement. The Company shall have executed and
delivered to the Investors the Registration Rights Agreement.
5.10 Investment Banking Agreement. The Company shall have executed and
delivered an Investment Banking Agreement substantially in the form as attached
as Exhibit F.
5.11 Warrant. The Company shall have issued a Warrant Certificate in the
form included as Exhibit E hereto to purchase such number of shares of Common
Stock as shall equal one share of Common Stock for every $10 invested by the
Investors in Series A Preferred at the Closing.
6. Conditions of the Company's Obligations at Each Closing. The obligations
of the Company under Section 2 to sell Securities at any Closing are subject
only to the fulfillment at or prior to such Closing of each of the following
conditions (unless waived by the Company).
6.1 Representations and Warranties. The representations and warranties of
the Investors and RCM contained in Section 4 shall be true and correct as of the
date of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing.
6.2 Payment of Purchase Price. The Investors shall have delivered payment
of the aggregate purchase price of the Securities to be acquired at such Closing
as set forth in Section 2.2.
6.3 Qualifications. All authorizations, approvals, or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities to the Investors pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of such Closing other than those which
are not required to be obtained before such Closing.
-13-
<PAGE>
6.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at such Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Company and to counsel for the Company, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
6.5 Registration Rights Agreement. The Investors shall have executed and
delivered to the Company the Registration Rights Agreement.
6.6 Investment Representations. The individual equity owners of Renwick
Special Situations, L.P. who elect to participate in the purchase by that fund
of Series A Preferred shall have provided written investment representations to
the Company consistent with those set forth in Section 4.1 and otherwise in form
acceptable to the Company.
7. Affirmative Covenants of the Company and its Subsidiaries.
7.1 Financial and Other Information.
7.1.1. Annual Financial Statements. The Company will deliver to each
Investor holding at least 250,000 shares of Series A Preferred or Preferred
Shares:
(a) within 90 days after the end of each fiscal year, a copy of the
audited consolidated and consolidating balance sheets of the Company and
its Subsidiaries as at the end of such fiscal year and the audited
consolidated and consolidating statements or income and of cash flows of
the Company and its Subsidiaries for such fiscal year, all in reasonable
detail, prepared in accordance with generally accepted accounting
principles, consistently applied, and certified in an audit report by
independent public accountants of national standing selected by the Board
of Directors of the Company which may include Moss Adams; and
(b) copies of all financial statements and reports which the Company
or any of its Subsidiaries shall send to its stockholders generally or file
with the Securities and Exchange Commission or any stock exchange on which
any securities of the Company or any of its Subsidiaries may be listed.
7.1.2. Quarterly Financial Statements. The Company will deliver to each
Investor, within 45 days after the end of each of the first three quarters of
each fiscal year, (a) a copy of the unaudited consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at the end of such fiscal
quarter and the unaudited consolidated and consolidating statements of income
and of cash flows of the Company and its Subsidiaries for such fiscal quarter
and for the portion of the fiscal year ending on the last day of such fiscal
quarter, each of the foregoing balance sheets and statements (i) to set forth in
the comparative form the corresponding figures for the same period of the prior
fiscal year, (ii) to be in reasonable detail, (iii) to be prepared in accordance
with generally accepted accounting principles, consistently applied, except that
such financial statements may be subject to normal year-end audit adjustments
and may not contain all footnotes required under generally accepted accounting
principles, and (iv) to be certified,
-14-
<PAGE>
subject to normal year-end audit adjustments, by the principal financial officer
of the Company as true and accurate in all material respects as of the date
thereof.
7.1.3. Other Information. The Company will also furnish to each Investor
with reasonable promptness such other information and data with respect to the
Company or any of its Subsidiaries as such Investor may from time to time
reasonably request.
7.1.4 Directors and Officers Insurance. The Company shall maintain
insurance reasonably acceptable in form to the Investors covering liability of
directors and officers of the Company which shall include the nominees of the
Investors as beneficiaries for as long as the Investors have the right to
nominate directors to the Board of the Company.
7.2 Confidentiality. Each Investor covenants and agrees that such Investor
and any Person controlled by such Investor receiving information under Section
7.1 shall maintain the confidentiality of all financial, confidential and
proprietary information of the Company and any of its Subsidiaries acquired by
such Person in receiving such information and exercising any rights.
Notwithstanding the preceding sentence, each Investor or Person controlled by
such Investor may (a) disclose such information when required by a subpoena or
other process, provided that such Investor or Person first gives the Company
advance notice of such disclosure as soon as practicable; (b) disclose such
information to the extent necessary to enforce this Agreement and the
transactions contemplated hereby; (c) disclose such information to its
attorneys, accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, provided that the requirements of this Section 7.2 shall in turn be
binding on any such attorney, accountant, consultant or other professional; and
(d) disclose such information as may be required by any prospective purchaser of
any Securities from such Investor. Each Investor may also disclose such
information to any Subsidiary, affiliate, partner or shareholder who shall first
agree in writing to be bound by the provisions of this Section 7.2.
7.3 Change in Nature of Business. Neither the Company nor any of its
Subsidiaries shall make any material change in the nature of its business as
carried on at the date hereof or as contemplated in written materials delivered
to the Investors prior to the date hereof.
7.4 Payment of Expenses. The Company shall pay at each Closing all
reasonable expenses of the Investors (including all out-of-pocket expenses and
the reasonable fees and disbursements of special counsel for the Investors) not
to exceed an aggregate of $50,000, incurred through the date of such Closing in
connection with the discussion, evaluation, negotiation and documentation of the
transactions contemplated by the Transaction Documents and all amendments,
waivers, consents and other operations thereunder.
7.5 Termination of Covenants. The covenants set forth in this Section 7
shall terminate and be of no further force or effect on the earlier of (i) the
fifth anniversary of the initial Closing hereunder or (ii) such time as no
Investor continues to own shares of Series A Preferred Stock or Warrants
convertible into or exercisable for an aggregate of 50,000 shares of Common
Stock.
-15-
<PAGE>
8. Notices. Any notice required to be given pursuant to this Agreement
shall be given in writing. Any notice, consent, approval, demand and other
communication in connection with this Agreement shall be deemed to be given if
given in writing (including facsimile, telecopy or similar transmission)
addressed as provided below (or to the addressee at such other address as the
addressee shall have specified by notice actually received by the addressor),
and if either (a) actually delivered in fully legible form to such address
(evidenced in the case of a telecopy by receipt of a telecopy transmission
confirmation) or (b) in the case of a letter, five days shall have elapsed after
the same shall have been deposited in the United States mails (i) with
first-class postage prepaid and registered or certified, with return receipt
requested, or (ii) with express delivery postage prepaid, with receipt required
for delivery.
If to the Company, to it at 20121-48th Avenue West, Lynnwood, Washington
98036.
If to any Investor, or RCM, to it at its address set forth on Exhibit A,
with a copy to Crummy, Del Deo, Dolan, Griffinger & Vecchione, a Professional
Corporation, One Riverfront Plaza, Newark, New Jersey 07102-5497, Telecopy:
(201) 596-0545 to the attention of Jeffrey A. Baumel, Esq.
9. Survival of Covenants; Assignability of Rights. All covenants,
agreements, representations and warranties of the Company made in this Agreement
(including the Exhibits and Schedules), the other Transaction Documents and any
other written information delivered or furnished to any Investor in connection
herewith or therewith:
(a) shall be deemed material and to have been relied upon by such
Investor; and
(b) except as provided otherwise in this Agreement:
(i) shall survive the delivery of the Shares;
(ii) shall bind each of the Company and its successors and
assigns (whether so expressed or not); and
(iii) shall inure to the benefit of each of the Investors and
their respective successors and assigns and each transferee of any
Shares (whether so expressed or not), but only if such transferee is
(A) an affiliate, partner or stockholder of such Investor or
transferee or an account managed or advised by the manager or advisor
of such Investor or transferee or (B) a transferee or assignee of at
least 50,000 Shares, as adjusted for any stock split, stock dividend
or other recapitalization, provided in any event that the Company is
given written notice at the time of or within a reasonable time after
said transfer, stating the name and address of said transferee or
assignee and provided, further, that the transferee or assignee agrees
in writing to abide by and assume each and every duty and obligation
of an Investor pursuant to this Agreement.
10. Parties in Interest. All covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any of
the parties hereto shall bind and
-16-
<PAGE>
inure to the benefit of the respective successors and permitted assigns of the
parties hereto (whether so expressed or not).
11. Course of Dealing; Amendments, Waivers and Consents. No course of
dealing between any Investor, on one hand, and the Company, on the other hand,
shall operate as a waiver of any Investor's rights under this Agreement or any
other Transaction Document. The Company acknowledges that if any Investor,
without being required to do so by this Agreement or any other Transaction
Document, gives any notice of information to, or obtains any consent from, the
Company, the Investors shall not by implication have amended, waived or modified
any provision of this Agreement or any other Transaction Document, or created
any duty to give any such notice or information or to obtain such consent on any
future occasion. No delay or omission on the part of any Investor in exercising
any right under this Agreement or any other Transaction Document shall operate
as a waiver of such right or any other right hereunder or thereunder. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right or
remedy on any future occasion. No amendment, waiver or consent with respect to
this Agreement shall be binding unless it is in writing and signed by each of
the Company and the holders of a majority of the aggregate shares of Series A
Preferred and or the Shares into which such Series A Preferred have been
converted. Any amendment or waiver effected in accordance with this Section 11
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding (including securities into which such
securities are convertible or exercisable), each future holder of any of such
securities and the Company.
12. General. All Exhibits and Schedules are hereby incorporated by
reference and made a part of this Agreement. If any provision of this Agreement
shall be found by any court of competent jurisdiction to be invalid or
unenforceable, the parties hereby waive such provision to the extent that it is
found to be invalid or unenforceable. Such provision shall, to the maximum
extent allowable by law, be modified by such court so that it becomes
enforceable, and, as modified, shall be enforced as any other provision hereof,
all the other provisions hereof continuing in full force and effect. The
headings contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation hereof. This Agreement and
the other Transaction Documents constitute the entire understanding of the
parties with respect to the subject matter hereof and supersede any and all
prior understandings and agreements, whether written or oral, with respect to
such subject matter. This Agreement may be executed in counterparts, which
together shall constitute one and the same instrument. This Agreement shall be
governed by and construed in accordance with the laws (other than the conflict
of laws rules) of the State of New York.
-17-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Stock Purchase
Agreement to be executed by a duly authorized officer as an agreement under seal
as of the date first above written.
COMPANY
CARVER CORPORATION
[Corporate Seal] By: /s/_________________________________
Title:
Attest:
/s/___________________________________
Title:
INVESTORS
RENWICK SPECIAL SITUATIONS, L.P.
By: /s/_________________________________
Title:
RENWICK ALPHA FUND, L.P.
By: /s/_________________________________
Title:
RCM
RENWICK CAPITAL MANAGEMENT, INC.
By: /s/_________________________________
Title:
-18-
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of June 12, 1996 (the "Closing Date") between
CARVER CORPORATION, a Washington corporation (the "Company"), and RENWICK
CAPITAL MANAGEMENT, INC. (hereinafter referred to as the "Holder").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Holder, warrants (the
"Warrants") to purchase up to 100,000 shares (the "Shares") of Common Stock of
the Company, par value $.01 per share (the "Common Stock") at prices ranging
from $1.50 to $2.125 per share pursuant to and in connection with the Series A
Preferred Stock Purchase Agreement dated June 12, 1996 by and among the Company,
the investors on Schedule A thereof and Renwick Capital Management, Inc.; and
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holder is hereby granted the right to purchase, at any time
from the Closing Date until 5:00 P.M., New York time, on the fifth anniversary
of the Closing Date (the "Warrant Exercise Term"), up to 100,000 fully-paid and
non-assessable Shares at an initial exercise price (subject to adjustment as
provided in Article 6 hereof) ("Exercise Price") as follows:
a. $1.50 per share if the Warrants are exercised at any time between
the Closing Date and 5:00 P.M., New York time, on the second anniversary of
the Closing Date;
b. $1.75 per share if the Warrants are exercised on or between the day
after the second anniversary of the Closing Date and 5:00 P.M., New York
time, on the third anniversary of the Closing Date;
c. $2.00 per share if the Warrants are exercised on or between the day
after the third anniversary of the Closing Date and 5:00 P.M., New York
time, on the fourth anniversary of the Closing Date; and
d. $2.125 per share if the Warrants are exercised on or between the
day after the fourth anniversary of the Closing Date and 5:00 P.M., New
York time, on the fifth anniversary of the Closing Date.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered pursuant to this Agreement shall be in the form set
forth in Exhibit A attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions and other variations as required or
permitted by this Agreement.
<PAGE>
3. Exercise of Warrant. The Warrants are exercisable at the prices set
forth in Section 1 hereof, payable in cash by certified or official bank check
in New York Clearing House Funds payable to the order of the Company, or by wire
transfer of immediately available funds to an account designated by the Company,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's principal offices (currently located at 20121
48th Avenue West, Lynnwood, Washington 98036), the registered holder of a
Warrant Certificate shall be entitled to receive a certificate or certificates
for the Shares so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder hereof, in whole or in
part (but not as to fractional Shares) in increments of at least 50,000 shares
(or, if the number of shares available for purchase is less than 50,000, such
lesser amount). In the case of the purchase of less than all the Shares
purchasable under any Warrant Certificate, the Company shall cancel said Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the Shares purchasable
thereunder.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares purchased shall be made forthwith (and in any event within three business
days thereafter) without charge to the Holder thereof including, without
limitation, any tax which may be payable in respect of the issuance thereof, and
such certificates shall (subject to the provisions of Article 5 hereof) be
issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future President or Vice President of the Company attested to by
the manual or facsimile signature of the present or any future Secretary or
Assistant Secretary of the Company. Warrant Certificates shall be dated the date
of execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
Upon exercise, in part or in whole, of the Warrants, certificates
representing the Shares shall bear a legend substantially similar to the
following:
2
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND SUCH SECURITIES MAY NOT
BE OFFERED FOR RESALE, SOLD, ASSIGNED OR OTHERWISE HYPOTHECATED FOR VALUE
(INCLUDING BY ANY PLEDGEE) UNLESS (A) THE SECURITIES ARE REGISTERED UNDER THE
SECURITIES ACT AND THE SECURITIES LAWS OF ALL APPLICABLE STATES OF THE UNITED
STATES, OR (B) THE SECURITIES ARE OFFERED AND SOLD IN COMPLIANCE WITH AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND, AT THE OPTION OF THE COMPANY,
THE HOLDER PROVIDES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY TO SUCH
EFFECT.
5. Restriction on Transfer of Warrants.
By acceptance of a Warrant Certificate each Holder represents and agrees
that such Holder is acquiring the Warrants evidenced thereby, and that upon
exercise thereof it will acquire the Shares, not with a view to any sale,
distribution or transfer thereof in violation of the Securities Act of 1933, as
amended (the "Act") and acknowledges and agrees that the Warrants and the Shares
may not be sold, transferred or otherwise disposed of without registration under
the Act or any applicable exemption from the registration requirements of the
Act. Holder further acknowledges that the Shares will not be issued pursuant to
the exercise of a Warrant unless the exercise of the Warrant and the issuance
and delivery of such Shares shall comply with all relevant provisions of law,
including without limitation, the Act, and other federal and state securities
laws and regulations and the requirements of any stock exchange on which the
Shares may then be listed, as established to the reasonable satisfaction of
Company. The shares are subject to a Registration Rights Agreement of even date
herewith between the Company and the Holder.
6. Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise price of
each Warrant shall be as set forth in Section 1 hereof. The adjusted exercise
price shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Article 7 hereof.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. Anti-Dilution Provisions. The Exercise Price in effect at any time and
the number and kind of securities purchasable upon the exercise of this Warrant
shall be subject to adjustment from time to time upon the happening of certain
events as follows:
a. In case the Company shall (i) declare a dividend or make a distribution
on its outstanding shares of Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common Stock into a greater
number of shares, or (iii)
3
<PAGE>
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur.
b. In case the Company shall fix a record date for the issuance of rights
or warrants to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock (or securities convertible into Common Stock)
at a price (the "Subscription Price") (or having a conversion price per share)
less than the lesser of the current market price of the Common Stock (as defined
in Subsection (h) below) on the record date mentioned below, or the Exercise
Price on such record date (the lesser of such two being the "Adjustment Trigger
Price") the Exercise Price shall be adjusted so that the same shall equal the
price determined by multiplying the Exercise Price in effect immediately prior
to the date of such issuance by a fraction, the numerator of which shall be the
sum of the number of shares of Common Stock outstanding on the record date
mentioned below and the number of additional shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at the Adjustment Trigger Price and the denominator of
which shall be the sum of the number of shares of Common Stock outstanding on
such record date and the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible securities so offered
are convertible). Such adjustment shall be made successively whenever such
rights or warrants are issued and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
rights or warrants; and to the extent that shares of Common Stock are not
delivered or securities convertible into Common Stock are not delivered) after
the expiration of such rights or warrants the Exercise Price shall be readjusted
to the Exercise Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible
into Common Stock) actually delivered.
c. In case the Company shall hereafter distribute to the holders of its
Common Stock evidences of its indebtedness or assets (excluding cash dividends
or distributions and dividends or distributions referred to in Subsection (b)
above) or subscription rights or warrants (excluding those referred to in
Subsection (6) above), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the
total number of shares of Common Stock outstanding multiplied by the current
market price per share of Common Stock (as defined in Subsection (h) below),
less the fair market value (as determined by the Company's Board of Directors)
of said assets or evidences of indebtedness so distributed or of such rights or
warrants, and the denominator of which shall be the total number of shares of
Common Stock outstanding multiplied by such current market price per share of
Common Stock.
4
<PAGE>
Such adjustment shall be made successively whenever such a record date is fixed.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
d. In case the Company shall issue shares of its Common Stock [excluding
shares issued (i) in any of the transactions described in Subsection (a) above,
(ii) any Permitted Issuance (as defined in Subsection (m) below), (iii) to
shareholders of any corporation which merges into the Company in proportion to
their stock holdings of such corporation immediately prior to such merger, upon
such merger, or issued in a bona fide public offering pursuant to a firm
commitment underwriting, but only if no adjustment is required pursuant to any
other specific subsection of this Section (7) (without regard to Subsection (i)
below) with respect to the transaction giving rise to such rights] for a
consideration per share (the "Offering Price") less than the Adjustment Trigger
Price the Exercise Price shall be adjusted immediately thereafter so that it
shall equal the price determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received or to be received [determined as
provided in Subsection (g) below] for the issuance of such additional shares
would purchase at the Adjustment Trigger Price and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made successively
whenever such an issuance is made.
e. In case the Company shall issue any securities convertible into or
exchangeable for its Common Stock [excluding securities issued in transactions
described in Subsections (b) and (c) above] for a consideration per share of
Common Stock (the "Conversion Price") initially deliverable upon conversion or
exchange of such securities [determined as provided in Subsection (g) below]
less than the Adjustment Trigger Price, the Exercise Price shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such securities
and the number of shares of Common Stock which the aggregate consideration
received or to be received [determined as provided in Subsection (g) below] for
such securities would purchase at the Adjustment Trigger Price and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to such issuance and the maximum number of shares
of Common Stock of the Company deliverable upon conversion of or in exchange for
such securities at the initial conversion or exchange price or rate. Such
adjustment shall be made successively whenever such an issuance is made.
f. Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to Subsections (a), (b), (c), (d) and (e) above, the number of
Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Shares initially issuable upon exercise of
this Warrant by the Exercise Price in effect
5
<PAGE>
on the date of such adjustment and dividing the product so obtained by the
Exercise Price, as adjusted, such quotient to be rounded up to the next whole
number.
g. For purposes of any computation respecting consideration received
pursuant to Subsections (b), (c), (d) and (e) above the following shall apply:
(i) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no case
shall any deduction be made for any commissions, discounts or other expenses
incurred by the Company for any underwriting of the issue or otherwise in
connection therewith.
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Company (irrespective of the accounting
treatment thereof), whose determination shall be conclusive; and
(iii) in the case of the issuance of securities convertible into or
exchangeable for shares of Common Stock, the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if any,
to be received by the Company upon the conversion or exchange thereof [the
consideration in each case to be determined in the same manner as provided in
clauses (i) and (ii) of this Subsection (g)].
(h) For the purpose of any computation under Subsections (b), (c), (d) and
(e) above, the current market price per share of Common Stock at any date shall
be deemed to be the average of the daily closing prices for 30 consecutive
business days before such date The closing price for each day shall be the last
reported sale price regular way or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices regular way,
in either case on the principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or admitted to trading
on any such exchange, the average of the highest reported bid and lowest
reported asked prices as reported by NASDAQ, or other similar organization if
NASDAQ is no longer reporting such information, or if not so available, the fair
market price as determined by the Board of Directors, whose determination shall
be conclusive.
(i) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least ten cents ($0.10)
in such price; provided, however, that any adjustments which by reason of this
Subsection (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment required to be made hereunder. All
calculations under this Section 7 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything in this Section 7
to the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the Exercise Price, in addition to those
required by this Section 7, as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in
6
<PAGE>
shares of Common Stock, or any subdivision, reclassification or combination of
Common Stock, hereafter made by the Company shall not result in any Federal
Income tax liability to the holders of Common Stock or securities convertible
into Common Stock (including Warrants).
(j) Whenever the Exercise Price is adjusted, as herein provided, the
Company shall promptly, but no later than 10 days after any request for such an
adjustment by the Holder, cause a notice setting forth the adjusted Exercise
Price and adjusted number of Shares issuable upon exercise of each Warrant, and,
if requested, information describing the transactions giving rise to such
adjustments, to be mailed to the Holders at their last addresses appearing in
the Warrant register, and shall cause a certified copy thereof to be mailed to
its transfer agent, if any. The Company may retain a firm of independent
certified public accountants selected by the Board of Directors (who may be the
regular accountants employed by the Company) to make any computation required by
this Section (7), and a certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment.
(k) In the event that at any time, as a result of an adjustment made
pursuant to Subsection (a) above, the Holder of this Warrant thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Subsections (a) to (i), inclusive above.
(l) Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon exercise of this Warrant, Warrants therefore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrants initially issuable pursuant to this
Agreement.
(m) "Permitted Issuance" shall mean (i) shares issued in connection with an
underwritten public offering, (ii) shares issued pursuant to the Company's
employee benefit plans in existence on the Closing Date or as subsequently
adopted with the approval of the shareholders of the Company in the manner
required by any shareholders of the Company in the manner required by any
applicable law, (iii) shares of Common Stock in an amount not greater than ten
percent of the Company's then outstanding shares of Common Stock issued to
strategic partners, (iv) Common Stock issued as a stock dividend to holders of
Common Stock or Series A Cumulative Convertible Preferred Stock or upon any
subdivision or combination of such shares, (v) shares issued upon conversion of
Series A Cumulative Convertible Preferred Stock or as payment of dividends
thereon, (vi) securities issued in connection with the merger or consolidation
of the Company or any subsidiary with any other operating entity, or the
exchange of securities for stock of another operating entity; (vii) the issuance
of securities in connection with the purchase of all or substantially all of the
assets of another operating business entity or a division of another operating
business entity; (viii) the offering or issuance of securities in connection
with the purchase of any tangible or intangible assets for use in the Company's
business, including, without limitation, patents, trade secrets and leasehold
interests, the lease of equipment by the Company, the provision of lease
financing to the Company or the purchase of
7
<PAGE>
capital equipment by the Company; or (ix) shares of Common Stock issued upon
exercise of the Warrants.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of securities in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of Shares upon the exercise of the Warrants, nor shall it be required
to issue scrip or pay cash in lieu of fractional interests, it being the intent
of the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of Shares.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all Shares
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any shareholder. As
long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of the
Warrants to be listed on or quoted by NASDAQ.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
8
<PAGE>
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company (other than under circumstances covered by Subsection 7(a) above); or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor (other than under circumstances covered by
Subsection 7(a) above); or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; or
(d) reclassification or change of the outstanding shares of Common
Stock (other than a change in par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), consolidation of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or a sale or
conveyance to another corporation of the property of the Company as an entirety
is proposed; or
(e) the Company or an affiliate of the Company shall propose to issue
any rights to subscribe for shares of Common Stock or any other securities of
the Company or of such affiliate to all the shareholders of the Company; then,
in any one or more of said events, the Company shall give written notice to the
Holder or Holders of such event at least fifteen (15) days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the shareholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken in connection
with the declaration or payment of any such dividend or distribution, or the
issuance of any convertible or exchangeable securities or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
12. Notices.
Any notice required to be given pursuant to this Agreement shall be given
in writing. Any notice, consent, approval, demand and other communication in
connection with this Agreement shall be deemed to be given if given in writing
(including facsimile, telecopy or similar transmission) addressed as provided
below (or to the addressee at such other address as
9
<PAGE>
the addressee shall have specified by notice actually received by the
addressor), and if either (a) actually delivered in fully legible form to such
address (evidenced in the case of a telecopy by receipt of a telecopy
transmission confirmation) or (b) in the case of a letter, five days shall have
elapsed after the same shall have been deposited in the United States mails (i)
with first-class postage prepaid and registered or certified, with return
receipt requested, or (ii) with express delivery postage prepaid, with receipt
required for delivery.
If to the Company, to it at 20121-48th Avenue West, Lynnwood, Washington
98036.
If to any Investor, to it at 900 Third Avenue, 27th Floor, New York, New
York 10022, with a copy to Crummy, Del Deo, Dolan, Griffinger & Vecchione, a
Professional Corporation, One Riverfront Plaza, Newark, New Jersey 07102-5497,
Telecopy: (201) 596-0545 to the attention of Jeffrey A. Baumel, Esq.
13. Course of Dealing; Amendments, Waivers and Consents.
No course of dealing between any Holder, on one hand, and the Company, on
the other hand, shall operate as a waiver of any Holder's rights under this
Agreement or any other Transaction Document. The Company acknowledges that if
any Holder, without being required to do so by this Agreement or any other
Transaction Document, gives any notice of information to, or obtains any consent
from, the Company, the Holder shall not by implication have amended, waived or
modified any provision of this Agreement or any other Transaction Document, or
created any duty to give any such notice or information or to obtain such
consent on any future occasion. No delay or omission on the part of any Investor
in exercising any right under this Agreement or any other Transaction Document
shall operate as a waiver of such right or any other right hereunder or
thereunder. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion. No amendment, waiver or
consent with respect to this Agreement shall be binding unless it is in writing
and signed by each of the Company and the Holder.. Any amendment or waiver
effected in accordance with this Section 11 shall be binding upon each Holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible or exercisable), each
future holder of any of such securities and the Company.
14. Survival of Covenants; Assignability of Rights.
The Warrants may not be sold, assigned, or transferred except in compliance
with Section 5 above. All covenants, agreements, representations and warranties
of the Company made in this Agreement and any other written information
delivered or furnished to any Investor in connection herewith or therewith:
(a) shall inure to the benefit of each of the Holder and its respective
successors and assigns and each permitted transferee of any Warrants (whether so
expressed or not), but only if such transferee is (A) an affiliate, partner or
stockholder of Holder or transferee or (B) a transferee or assignee of Warrants
to purchase at least 50,000 Shares, as adjusted for any stock
10
<PAGE>
split, stock dividend or other recapitalization, provided in any event that the
Company is given written notice at the time of or within a reasonable time after
said transfer, stating the name and address of said transferee or assignee and
provided, further, that the transferee or assignee agrees in writing to abide by
and assume each and every duty and obligation of an Investor pursuant to this
Agreement.
15. Termination.
This Agreement shall terminate on the earlier of the fifth anniversary of
the Closing Date or the date on which all Warrants have been exercised in full.
16. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Washington and for
all purposes shall be construed in accordance with the laws of said State
without regard to the conflicts of laws provisions thereof.
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Holder and any other permitted
registered holder or holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for the
sole and exclusive benefit of the Company and the Holder and any other permitted
holder or holders of the Warrant Certificates.
19. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed, as of the day and year first above written.
[SEAL] CARVER CORPORATION
By:/s/ ________________________________
Name:
Title:
Attest:
- -----------------------
RENWICK CAPITAL MANAGEMENT INC.
By:/s/ ________________________________
Name:
Title:
12
<PAGE>
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH LAWS, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144
UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY,
STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH LAW IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, June __, 2001
No. W _______
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________________________ or
registered assigns, is the registered holder of _______ Warrants to purchase, at
any time from __, 1996 until 5:00 P.M. New York City time on June __, 2001
("Expiration Date"), up to ___________ fully-paid and non-assessable share(s) of
common stock, $.01 par value ("Common Stock"), of Carver Corporation, a
Washington corporation (the "Company"), at the exercise prices, subject to
adjustment in certain events (the "Exercise Price"), as set forth in Section 1
of that certain Warrant Agreement dated June ___, 1996 between the Company and
Renwick Capital Management, Inc. (the "Warrant Agreement"), upon surrender of
this Warrant Certificate and payment of the Exercise Price at an office or
agency of the Company, but subject to the conditions set forth herein and in the
Warrant Agreement . Payment of the Exercise Price may be made in cash, by
certified or official bank check in New York Clearing House funds payable to the
order of the Company, any combination of cash or check, or by wire transfer of
immediately available funds.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is
<PAGE>
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to in a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
No holder of this Warrant Certificate shall be entitled to vote or receive
dividends or be deemed the holder of Common Stock or any other securities of the
Company which may at any time be issuable on the exercise hereof for any
purpose, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, to give or
withhold consent to any corporate action, or to receive dividends or
subscription rights or otherwise, until the Warrant evidenced by this Warrant
Certificate shall have been exercised and the Common Stock issuable upon the
exercise thereof shall have become deliverable as provided in the Warrant
Agreement.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: June __, 1996 CARVER CORPORATION
[SEAL] By:__________________________
Name:
Title:
Attest:
- ----------------------
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Shares of Common
Stock and herewith tenders in payment for such securities, cash, certified or
official bank check payable in New York Clearing House Funds to the order of
Carver Corporation, any combination of cash or certified or official bank check
in New York Clearing House funds, or by wire transfer of immediately available
funds in the amount of $ , all in accordance with the terms hereof. The
undersigned requests that a certificate for such securities be registered in the
name of ____________, whose address is , and that such Certificate be delivered
to ______________, whose address is _____________.
Dated: Signature:_________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
--------------------------------
--------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________________________
hereby sells, assigns and transfers unto
_________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature:_____________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate)
- -------------------------------
- -------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of the 12th day of June, 1996, between each of the
Investors listed on Schedule A hereto (a "Holder" or the "Holders") and Carver
Corporation, a Washington corporation, having its principal place of business at
20121 48th Avenue West, Lynnwood, Washington 98036 (the "Company").
WHEREAS, simultaneously with the execution and delivery of this Agreement,
the Holders are purchasing from the Company an aggregate of up to 1,411,764
shares of Series A Cumulative Convertible Preferred Stock of the Company, $.01
par value ( the "Preferred Stock") or receiving warrants (the "Warrants") to
purchase up to 300,000 shares (the "Warrant Shares") of common stock, $.01 par
value, of the Company ("Common Stock") upon the terms set forth in the Series A
Preferred Stock Purchase Agreement by and between the Company and the Holders
dated June 12, 1996 (the "Purchase Contract"); and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the shares of Common Stock to be issued
to the Holders upon the (i) conversion of the Preferred Stock and (ii) issuance
of the shares of Common Stock underlying the Warrants;
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registration Rights.
(a) Registration Under the Securities Act of 1933. None of the
Warrants, the Warrant Shares, the Preferred Stock or the Common Stock to be
issued upon conversion of the shares of Preferred Stock (the "Conversion
Shares") have been registered for purposes of public distribution under the
Securities Act of 1933, as amended (the "Act").
(b) Registrable Securities. As used herein, the term "Registrable
Security" means the Warrant Shares, the Conversion Shares and any shares of
Common Stock issued upon any stock split or stock dividend in respect of such
Registrable Securities; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Act and disposed of pursuant thereto, (ii) registration under the Act
is no longer required for subsequent public distribution of such security, (iii)
it has ceased to be outstanding or (iv) it is no longer beneficially owned by a
Holder or a permitted transferee of the rights of a Holder pursuant to Section 9
of this Agreement. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition
<PAGE>
of "Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Section 1.
(c) Piggyback Registration. (i) If, at any time during the ten years
following the date of this Agreement, the Company proposes to prepare and file
one or more registration statements under the Act to register any shares of
Common Stock on a registration form that may be used for registration of
Registrable Shares (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form) (for purposes of this
Section 1, collectively, the "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least twenty
(20) days prior to the filing of each such Registration Statement, to each
Holder. Upon the written request of any Holder (a "Requesting Holder"), made
within twenty (20) days after receipt of the Notice, that the Company include
any of the Requesting Holder's Registrable Securities in the proposed
Registration Statement, the Company shall use its reasonable best efforts to
effect the registration under the Act of the Registrable Securities which it has
been so requested to register ("Piggyback Registration"), at the Company's sole
cost and expense and at no cost or expense to the Requesting Holder provided,
however, that if, in the written opinion of the Company's managing underwriter,
if any, for such offering, the inclusion of all or a portion of the Registrable
Securities requested to be registered, when added to the securities being
registered by the Company or the selling shareholder(s), will exceed the maximum
amount of the Company's securities which can be marketed (i) at a price
reasonably related to their then current market value, or (ii) without otherwise
materially adversely affecting the entire offering, then the Company may exclude
from such offering all or a portion of the Registrable Securities which it has
been requested to register.
(ii) If securities are proposed to be offered for sale pursuant to
such Registration Statement by other security holders of the Company and the
total number of securities to be offered by the Requesting Holder and such other
selling security holders is required to be reduced pursuant to a request from
the managing underwriter (which request shall be made only for the reasons and
in the manner set forth above) the aggregate number of Registrable Securities to
be offered by the Requesting Holder pursuant to such Registration Statement
shall equal the number which bears the same ratio to the maximum number of
securities that the underwriter believes may be included for all the selling
security holders (including the Requesting Holder) as the original number of
Registrable Securities proposed to be sold by the Requesting Holder bears to the
total original number of securities proposed to be offered by the Requesting
Holder and the other selling security holders.
(iv) Notwithstanding the provisions of this Section 1(c), the Company
shall have the right at any time after it shall have given written notice
pursuant to this Section 1(c) (irrespective of whether any written request for
inclusion of such securities shall have already been made) to elect not to file
any such proposed Registration Statement, or to withdraw the same after the
filing but prior to the effective date thereof.
(d) Demand Registration. At any time during a period of five years
from the date of this Agreement, Holders owning more than 50% of the aggregate
Registrable
-2-
<PAGE>
Securities then outstanding shall have the right (which right is in addition to
the piggyback registration rights provided for under Section 1(c) hereof),
exercisable by written notice to the Company (the "Demand Registration
Request"), to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission") no more than on two occasions, according to the
expense - sharing arrangements described at Section 2(b) below, a Registration
Statement and such other documents, including a prospectus, as may be necessary
(in the opinion of both counsel for the Company and counsel for such Holders),
in order to comply with the provisions of the Act, so as to permit a public
offering and sale of the Registrable Securities by the Holder provided, however,
that the Company shall not be required to effect a Registration pursuant to this
Section 1(d) unless at least 500,000 shares of the Registrable Securities are
proposed to be sold in such registration (as adjusted for any stock split, stock
dividend or similar change in the Common Stock). The Company shall not be
required to maintain the effectiveness of any such registration for greater than
six months. The form on which such registration shall be filed shall be
determined by the Company from among the forms then available to it under the
Act for such registration.
(e) In addition to the rights set forth in Section 1(c) above, at any
time prior to the tenth anniversary of the date of this Agreement, one or more
Holders holding at least 50% of the Registrable Securities then outstanding
("Initiating Holders") may make written demand for registration of Registrable
Shares under the Securities Act on Form S-3 (an "S-3 Demand Notice") on an
unlimited number of occasions, provided that the Registrable Shares requested to
be registered in any such Form S-3 registration statement have an aggregate fair
market value at the date of delivery to the Company of the S-3 Demand Notice of
at least $250,000 and provided, further, that the Company is then eligible to
use Form S-3 for registration and public sale of the Registrable Securities.
(f) Notwithstanding the foregoing, the Company may delay filing a
registration statement and may withhold efforts to cause the registration
statement to become or remain effective, if the Company determines in good faith
that such registration might (i) interfere with or affect the negotiation or
completion of any transaction that is being contemplated by the Company at the
time the right to delay is exercised, or (ii) involve initial or continuing
disclosure obligations that might not be in the best interest of the Company's
shareholders. Notwithstanding the foregoing, the Company shall not be entitled
to exercise its right to defer filing or effectiveness of or to update a
registration pursuant to a Demand Registration Request for more than one hundred
eighty (180) consecutive days.
2. Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 1(d) hereof, the
Company shall use its best efforts to file the Registration Statement as
expeditiously as possible, but in any event no later than forty-five (45) days
following receipt of any demand therefor, shall use its best efforts to have any
such Registration Statement declared effective at the earliest
-3-
<PAGE>
possible time, and shall furnish each holder of Registrable Securities such
number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs, fees and expenses in connection
with all Registration Statements filed pursuant to Sections 1(c), 1(d) and 1(e)
hereof including, without limitation, the Company's legal and accounting fees,
printing expenses, and blue sky fees and expenses; provided, however, that the
expenses paid by the Company in connection with the exercise of rights to
registration pursuant to Section 1(e) above shall be limited to those usual and
customary expenses associated with a non-underwritten offering. However, each
Holder shall be solely responsible for the fees of any counsel retained by him
or her in connection with such registration and any transfer taxes or
underwriting discounts or commissions applicable to the Registrable Securities
sold by him or her pursuant to Section 1(c) hereof.
(c) The Company shall indemnify and hold harmless each Holder and each
underwriter, within the meaning of the Act, who may purchase from or sell for
the Holder, any Registrable Securities, from and against any and all losses,
claims, damages and liabilities caused by any untrue statement of a material
fact contained in the Registration Statement, any other registration statement
filed by the Company under the Act, any post-effective amendment to such
registration statements, or any prospectus included therein required to be filed
or furnished by reason of this Agreement or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or alleged untrue statement or omission or alleged omission based upon
information furnished or required to be furnished in writing to the Company by a
Holder or underwriter expressly for use therein; which indemnification shall
include each person, if any, who controls any such underwriter within the
meaning of the Act and each officer, director, employee and agent of such
underwriter. The Holder and any such underwriter and other person, shall be
obligated to indemnify the Company, its directors, each officer signing the
Registration Statement and each person, if any, who controls the Company within
the meaning of the Act, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any registration
statement or any prospectus required to be filed or furnished by reason of this
Agreement or caused by any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or alleged untrue statement or omission based upon information
furnished in writing to the Company by the Holder or underwriter or other person
expressly for use therein.
(d) If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by
-4-
<PAGE>
the indemnified party and the indemnifying party, but also the relative fault of
the indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.
(e) Nothing contained in this Agreement shall be construed as
requiring the Holder to exercise the Warrants or convert the Preferred Stock
prior to the initial filing of any registration statement or the effectiveness
thereof.
(f) If the Company shall fail to comply with the provisions of this
Agreement, the Company shall, in addition to any other equitable or other relief
available to the holders of Registrable Securities, be liable for any or all
incidental, special and consequential damages sustained by the holders of
Registrable Securities, requesting registration of their Registrable Securities.
(g) Except as set forth in Section 2(j), the Company shall not permit
the inclusion of any securities other than the Registrable Securities to be
included in any Registration Statement filed pursuant to Section 1(d) hereof, or
permit any other registration statement to be or remain effective during the
effectiveness of a Registration Statement filed pursuant to Section 1(d) hereof,
without the prior written consent of the Holders of a majority of the
Registrable Securities held by Holders who initiated the Demand Registration
Request, which consent shall not be unreasonably withheld.
(h) The Company shall deliver promptly to the Holder of Registrable
Securities participating in the offering in which the Holder's shares are being
registered pursuant to Section 1(c) or 1(d) hereof and requesting the
correspondence and memoranda described in this Section 2(i) and to the managing
underwriter, if any, copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission or its staff with respect to the Registration Statement and
permit the older and underwriters to do such investigation, upon reasonable
advance notice, with respect to information contained in or omitted from the
Registration Statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent and at such
reasonable times and as often as the Holder of Registrable Securities or
underwriter shall reasonably request.
(i) Upon the written request therefor by the Holder, the Company shall
include in the Registration Statement covering any of the Registrable Securities
any other shares of Common Stock held by the Holder as of the date of filing of
such Registration Statement, provided that such Holder pays the incremental
costs associated with registration of such additional shares.
3. Additional Terms. The following provisions shall be applicable to any
Registration Statement filed pursuant to Section 1 of this Agreement:
-5-
<PAGE>
(a) The Company will use its reasonable best efforts to cause the
Registration Statement to become effective as promptly as possible and, if any
stop order shall be issued by the Commission in connection therewith, to use its
reasonable efforts to obtain the removal of such order. Following the effective
date of the Registration Statement, the Company shall, upon the request of the
Holder, forthwith supply such reasonable number of copies of the Registration
Statement, preliminary prospectus and prospectus meeting the requirements of the
Act, and other documents necessary or incidental to a public offering, as shall
be reasonably requested by the Holder to permit the Holder to make a public
distribution of his or her Registrable Securities. The Company will use its
reasonable efforts to qualify the Registrable Securities for sale in such states
as the Holder of Registrable Securities shall reasonably request, provided that
no such qualification will be required in any jurisdiction where, solely as a
result thereof, the Company would be subject to service of general process or to
taxation or qualification as a foreign corporation doing business in such
jurisdiction. The obligations of the Company hereunder with respect to the
Holder's Registrable Securities are expressly conditioned on the Holder's
furnishing to the Company such appropriate information concerning the Holder,
the Holder's Registrable Securities and the terms of the Holder's offering of
such Registrable Securities as the Company may reasonably request.
(b) Neither the filing of a Registration Statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by the
Holder shall impose upon the Holder any obligation to sell his or her
Registrable Securities.
(c) The Holder, upon receipt of notice from the Company that an event
has occurred which requires a post-effective amendment to the Registration
Statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of his or her Registrable Securities until the Holder
receives a copy of a supplemented or amended prospectus from the Company, which
the Company shall provide as soon as practicable after such notice.
(d) If the Company fails to keep the Registration Statement
continuously effective, for the time period required by Section 1(d) hereof,
then the Company shall, promptly upon the request of the Holders of more than
50% of the then-unsold Registrable Securities, update the Registration Statement
or file a new registration statement covering the Registrable Securities
remaining unsold, subject to the terms and provisions hereof.
4. Amendment or Waiver. The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived, with an agreement or consent in writing, executed in one or more
counterparts, signed by the Company and by Holders holding not less than a
majority of the Registrable Securities outstanding and held by Holders as of the
date of such amendment or waiver. Any amendment or waiver effected in accordance
with this paragraph shall be binding on the Company and all Holders.
-6-
<PAGE>
5. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
6. Execution in Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
7. Notices. All notices, requests, demands or other communications required
by or otherwise given with respect to this Agreement shall be in writing and
shall be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), four days after being mailed by United States
first-class mail, postage prepaid and return receipt requested, or when
delivered by facsimile (if a confirming copy is sent by mail as aforesaid), in
each case to the applicable addresses set forth below:
If to the Holder, to his or her address set forth on the signature page of
this Agreement.
If to the Company, to the address set forth on the first page of this
Agreement.
9. Binding Effect; Benefits. A Holder may assign his or her rights
hereunder to a transferee or assignee of at least 50,000 Registrable Securities,
as adjusted by any stock split, stock dividend or similar change in the Common
Stock, provided in any event that the Company is given written notice at the
time of or within a reasonable time after said transfer, stating the name and
address of said transferee or assignee and provided, further, that the
transferee or assignee agrees in writing to abide by and assume each and every
duty and obligation of a Holder pursuant to this Agreement. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Nothing herein contained, express or implied, is intended to confer upon any
person other than the parties hereto and their respective heirs, legal
representatives, successors and such permitted assigns, any rights or remedies
under or by reason of this Agreement.
10. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
11. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
12. Governing Law. This Agreement shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State.
-7-
<PAGE>
IN WITNESS WHEREOF, this Registration Rights Agreement has been executed
and delivered by the parties hereto as of the date first above written.
CARVER CORPORATION
By: /s/____________________________
Name:
Title:
INVESTORS:
RENWICK SPECIAL SITUATIONS, L.P.
By: /s/____________________________
Name:
Title:
RENWICK ALPHA FUND, L.P.
By: /s/____________________________
Name:
Title:
RENWICK CAPITAL
MANAGEMENT, INC.
By: /s/____________________________
Name:
Title:
-8-
<PAGE>
SCHEDULE A
Renwick Special Situations, L.P.
900 Third Avenue - 27th Floor
New York, New York 10022
Renwick Alpha Fund, L.P.
900 Third Avenue - 27th Floor
New York, New York 10022
Renwick Capital Management, Inc.
900 Third Avenue - 27th Floor
New York, New York 10022
-9-
