<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Transcisco Industries, Inc.
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(Name of Issuer)
Common Stock, Par Value $0.01 per share
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(Title of Class and Securities)
893 53B101
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(CUSIP Number of Class of Securities)
Brian P. Friedmen
Furman Selz SBIC, L.P.
230 Park Ave.
New York, NY 10169
212-309-8200
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 1, 1995
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(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this Schedule
13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box: ( )
Check the following box if a fee is being paid with this
statement: (X)
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SCHEDULE 13D
Page 2 of 7 Pages
CUSIP No. 89353B101
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(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
FURMAN SELZ SBIC, L.P.
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS
WC
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7) SOLE VOTING POWER
NUMBER OF
SHARES 966,667
BENEFICIALLY -----------------------------------
OWNED BY (8) SHARED VOTING POWER
EACH
REPORTING 0
PERSON -----------------------------------
WITH (9) SOLE DISPOSITIVE POWER
966,667
-----------------------------------
(10) SHARED DISPOSITIVE POWER
0
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
966,667
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES ( )
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
15.77%
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(14) TYPE OF REPORTING PERSON
PN
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2
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ITEM 1. SECURITY AND ISSUER
Common Stock, par value $.01 per share ("Common Stock")
Transcisco Industries, Inc. (the "Company")
601 California Street
San Francisco, CA 94108
ITEM 2. IDENTITY AND BACKGROUND
FURMAN SELZ SBIC, L.P., a Delaware limited partnership
Address: 230 Park Avenue
New York, NY 10169
Principal business: private equity investment fund
Address of principal business: same as above
(d) No such convictions
(e) No such judgements
FURMAN SELZ SBIC INVESTMENTS, INC., a Delaware corporation
Address: 230 Park Avenue
New York, NY 10169
Principal business: General partner of Furman Selz SBIC, L.P.
Address of principal business: same as above
(d) No such convictions
(e) No such judgements
FURMAN SELZ INVESTMENTS, INC., a Delaware corporation
(owns 100% of Furman Selz SBIC Investments, Inc.)
Address: 230 Park Avenue
New York, NY 10169
Principal business: General partner of investment funds
Address of principal business: same as above
(d) No such convictions
(e) No such judgements
Page 3 of 7 pages
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FURMAN SELZ HOLDING CORP., a Delaware corporation
(owns 100% of Furman Selz Investments, Inc.)
Address: 1105 North Market Street, P.O. Box 8985
Wilmington, DE 19899
Principal business: Diversified financial services holding company
Address of principal business: same as above
(d) No such convictions
(e) No such judgements
The directors and executive officers of Furman Selz Holding Corp. are
the following:
<TABLE>
<S> <C> <C>
Directors: Steven D. Blecher
Roy L. Furman
Edmund A. Hajim
Bernard T. Selz
Stuart B. Ross
Officers: Edmund A. Hajim Chairman, CEO
Roy L. Furman President
Bernard T. Selz Vice President
Steven D. Blecher Vice President/
Treasurer/Secretary
Elizabeth Q. Solazzo Assistant Secretary
Thalia M. Cody Assistant Secretary
Robert J. Miller Assistant Treasurer
</TABLE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Furman Selz SBIC, L.P. ("Furman Selz") purchased warrants (the
"Warrants") to purchase up to 966,667 shares of Common Stock from the Company
for cash consideration in the aggregate amount of $29,000. Furman Selz
purchased the Warrants using available funds. Furman Selz did not borrow any
funds to purchase the Warrants. The Warrants are immediately exercisable and
remain exercisable until July 31, 2005. The exercise price is $1.50 per share
of Common Stock.
The Warrants were purchased pursuant to a Note and Warrant Purchase
Agreement (the "Purchase Agreement") dated August 1, 1995, by and among the
Company, Transcisco Rail Services Company, Transcisco Leasing Company,
Transcisco Trading Company (each
Page 4 of 7 pages
<PAGE> 5
wholly-owned subsidiaries of the Company and collectively hereinafter referred
to as the "Subsidiaries"), Furman Selz and James Dowling, (an employee of
Furman Selz Incorporated, a wholly-owned subsidiary of Furman Selz Holding
Corp. and not a member of a "group" as such term is used in Section 13(d)(3) of
the Securities and Exchange Act of 1934, as amended). Pursuant to the Purchase
Agreement, in addition to the Warrants, Furman Selz purchased $2,900,000
aggregate principal amount of the Company's and Subsidiaries' Series A and
Series B Senior Subordinated Notes due 2000 (the "Notes") for cash
consideration of $2,871,000. Also pursuant to the Purchase Agreement, James
Dowling purchased Warrants to purchase up to 33,333 shares of Common Stock and
$100,000 aggregate principal amount of Notes.
ITEM 4. PURPOSE OF TRANSACTION
The purpose of the transaction to purchase the Warrants and Notes by
Furman Selz was for investment purposes.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The Company has informed Furman Selz that as of August 1, 1995,
5,161,446 shares of Common Stock were issued and outstanding.
(a) No person listed in Item 2 above currently owns any Common
Stock. Furman Selz owns immediately exercisable Warrants to
purchase up to 966,667 shares of Common Stock, representing
15.77% of the Common Stock as of such date. Pursuant to Rule
13d-3, Furman Selz is deemed to be the beneficial owner of
966,667 shares of Common Stock.
(b) Furman Selz claims sole power to vote or direct the vote and
sole power to dispose or direct the disposal of the Common
Stock described above.
(c) None.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, AGREEMENTS UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Pursuant to the Purchase Agreement, so long as Furman Selz owns 25% of
any class of securities it purchased pursuant to the Purchase Agreement, Furman
Selz has the right to designate one
Page 5 of 7 pages
<PAGE> 6
member to the Company's Board of Directors. Also pursuant to the Purchase
Agreement, Furman Selz has the option to sell to the Company, and the Company
has the obligation to purchase upon exercise of such option, the Warrants
during a one-month period commencing on August 1, 2000, if for ten of the
twelve months immediately preceding July 31, 2000, the average daily trading
volume of Common Stock is not 8,000 shares. The purchase price for such option
is the fair market value of the Warrants, measured per Warrant as the
difference between the trailing 30-day average price per share of Common Stock
and the exercise price per share of Common Stock under the Warrants.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Purchase Agreement.
2. Conformed Copy of Warrant.
Page 6 of 7 pages
<PAGE> 7
SIGNATURE
After reasonable inquiry and to the best of each person's knowledge
and belief, each of the undersigned certify that the information set forth in
this statement is true, complete and correct.
<TABLE>
<S> <C>
August 11, 1995 FURMAN SELZ SBIC, L.P.
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Date
By: FURMAN SELZ SBIC INVESTMENTS, INC.
(its General Partner)
By: /s/ Brian P. Friedman
--------------------------------
Name: Brian P. Friedman
Title: President
</TABLE>
Page 7 of 7 pages
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EXHIBIT 1
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=================================================================
NOTE AND WARRANT PURCHASE AGREEMENT
Among
TRANSCISCO INDUSTRIES, INC.,
TRANSCISCO RAIL SERVICES COMPANY,
TRANSCISCO LEASING COMPANY, and
TRANSCISCO TRADING COMPANY
and
FURMAN SELZ SBIC, L.P.
and
JAMES DOWLING
Dated as of August 1, 1995
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TABLE OF CONTENTS
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Page
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<S> <C> <C>
I. THE NOTES AND THE WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Purchase and Sale of the Notes and the Warrants . . . . . . . . . 1
SECTION 1.02 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . 2
SECTION 2.01 Organization, Qualifications and Corporate Power . . . . . . . . 2
SECTION 2.02 Authorization of Agreement, Etc . . . . . . . . . . . . . . . . . 4
SECTION 2.03 Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.05 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06 Events Subsequent to March 31, 1995 . . . . . . . . . . . . . . . 6
SECTION 2.07 Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.08 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.09 Use of Real Property . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.11 Loss Carryovers . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.13 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.14 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.15 Offering of the Securities . . . . . . . . . . . . . . . . . . . 10
SECTION 2.16 Other Contracts and Commitments . . . . . . . . . . . . . . . . . 10
SECTION 2.17 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.19 Intellectual Property Rights . . . . . . . . . . . . . . . . . . 12
SECTION 2.20 Uni-Temp Licenses . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.21 SBIC Representations . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.22 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.23 Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.25 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.26 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.27 Investment Company Act . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.28 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.29 Bank Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.30 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . . . . . . . . . . . . 15
</TABLE>
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<TABLE>
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IV. CONDITIONS TO THE OBLIGATION OF THE PURCHASER . . . . . . . . . . . . . . . . . . 16
SECTION 4.01 Conditions to the Obligation of the Purchasers
with Respect to the Closing . . . . . . . . . . . . . . . . . 16
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
VI. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.01 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.02 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.03 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.04 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.06 Law Governing . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.07 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.08 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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<PAGE> 5
INDEX TO EXHIBITS
Description
EXHIBIT A Pro Rata Percentages
EXHIBIT B-1 Form of Series A Senior Subordinated Note
EXHIBIT B-2 Form of Series B Senior Subordinated Note
EXHIBIT C Form of Warrant
EXHIBIT D Form of Registration Rights Agreement
INDEX TO SCHEDULES
Description
2.01(b) Subsidiaries, Etc.
2.04(a) Warrants, Etc.
2.05 Pro Forma Capitalization
2.06 Events Subsequent to March 31, 1995
2.07 Litigation
2.08 Title to Properties
2.12 Environmental Matters
2.18 Employee Benefit Plans
2.28 Compensation Arrangements
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NOTE AND WARRANT PURCHASE AGREEMENT, dated as of August 1,
1995, among TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Company"), TRANSCISCO RAIL SERVICES COMPANY, a California corporation
("TRSC"), TRANSCISCO LEASING COMPANY, a Delaware corporation ("TLC") and
TRANSCISCO TRADING COMPANY, a Delaware corporation ("TTC") (each of TRSC, TLC
and TTC a "Subsidiary" and collectively, the "Subsidiaries") and FURMAN SELZ
SBIC, L.P., a Delaware limited partnership ("Furman Selz") and JAMES DOWLING
("Dowling") and collectively with Furman Selz, the "Purchasers").
WHEREAS the Company and the Subsidiaries wish to issue and
sell to each of the Purchasers on the Closing Date (as hereinafter defined)
their pro rata share (based on the percentages set forth on Exhibit A) ("Pro
Rata") of (i) an aggregate $2,000,000 principal amount of Series A Senior
Subordinated Notes Due 2000 of the Company and the Subsidiaries, substantially
in the form attached hereto as Exhibit B-1 (the "A Notes") and (ii) an
aggregate $1,000,000 principal amount of Series B Senior Subordinated Notes Due
2000 of the Company and the Subsidiaries, substantially in the form attached
hereto as Exhibit B-2 (the "B Notes", and together with the A Notes, the
"Notes"); and
WHEREAS the Company wishes to issue and sell to the Purchasers
on the Closing Date, Pro Rata, of a warrant or warrants to subscribe for up to
1,000,000 shares of Common Stock, par value $.01 per share, of the Company
("Common Stock"), substantially in the form attached hereto as Exhibit C (the
"Warrants"); and
WHEREAS the proceeds of the sale of the Notes and the Warrants
will be used, together with other funds of the Company and the Subsidiaries, to
repay certain obligations of the Company and the Subsidiaries; and
WHEREAS the Purchasers wish to purchase said Notes and
Warrants on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereby agree as follows:
I.
THE NOTES AND THE WARRANTS
SECTION 1.01 Purchase and Sale of the Notes and the
Warrants. (a) Subject to the terms and conditions set forth herein, on the
Closing Date (i) the Company and the Subsidiaries shall issue and sell to the
Purchasers, Pro Rata, and the Purchasers shall purchase from the Company and
the Subsidiaries,
<PAGE> 7
Pro Rata, the A Notes, registered in the names of Purchasers, at a purchase
price equal to 99% of the principal amount thereof; (ii) the Company and the
Subsidiaries shall issue and sell to the Purchasers, Pro Rata, and the
Purchasers shall purchase from the Company and the Subsidiaries, Pro Rata, the
B Notes, registered in the names of Purchasers, at a purchase price equal to
99% of the principal amount thereof; and (iii) the Company shall issue and sell
to the Purchasers, Pro Rata, and the Purchasers shall purchase from the
Company, Pro Rata, the Warrants, having an exercise price (the "Warrant
Exercise Price") of $1.50 per share, registered in the names of Purchasers, at
an aggregate purchase price of $30,000; and (x) the Company and the
Subsidiaries shall issue and deliver to the Purchasers the Notes and (y) the
Company shall issue and deliver the Warrants. The Notes and the Warrants are
herein sometimes collectively referred to as the "Securities".
(b) As payment in full for the Securities being purchased
by it hereunder, and against delivery thereof as aforesaid, each Purchaser
shall deliver to the Company, on behalf of the Company, and to the Subsidiaries
on the Closing Date a certified or official bank check in New York Clearing
House funds, payable to the order of the Company, in the amount of their Pro
Rata share of $3,000,000 or shall transfer such sum to the account of the
Company by wire transfer.
SECTION 1.02 Closing Date. The closing of the sale and
purchase of the Securities shall take place at the offices of Dechert Price &
Rhoads, 477 Madison Avenue, New York, New York 10022, at 10:00am, New York
time, concurrently with the execution hereof (such date and time of closing
being herein called the "Closing Date").
II.
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SUBSIDIARIES
The Company and the Subsidiaries, jointly and severally,
represent and warrant to, and agree with, the Purchasers as follows:
SECTION 2.01 Organization, Qualifications and Corporate
Power. (a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and is duly
licensed or qualified to do business as a foreign corporation, and is in good
standing in each other jurisdiction in which it owns or leases any real
property or in which the nature of business transacted by it
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<PAGE> 8
makes such licensing or qualification necessary and where the failure to be so
licensed or qualified would have a material adverse effect on the business,
operations or financial condition of the Company. The Company has the
corporate power and authority to own and hold its properties and to carry on
its business as currently conducted, to execute, deliver and perform this
Agreement, the Notes, the Warrants and the Registration Rights Agreement
annexed hereto as Exhibit C (the "Registration Rights Agreement") and to issue,
sell and deliver the shares of Common Stock issuable upon exercise of the
Warrants (the "Warrant Shares").
(b) Except as set forth on Schedule 2.01(b) hereof, and
except for the capital stock of the Subsidiaries, the Company does not own of
record or beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation or (ii) any participating interest in any partnership, joint
venture or other non-corporate business enterprise. Except as set forth in
said Schedule 2.01(b), the Company owns, directly or indirectly, all the
outstanding capital stock of each Subsidiary (except for directors' qualifying
shares, if any), free and clear of all liens, charges, pledges, security
interests or other encumbrances. The capital stock of each Subsidiary is duly
authorized and validly issued and outstanding, fully paid and nonassessable.
No Subsidiary has issued or sold any shares of its capital stock or any
securities or obligations convertible into or exchangeable for, or given any
person any right to acquire from such Subsidiary, any shares of its capital
stock, and no such securities or obligations are outstanding. Each Subsidiary
is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation listed in said Schedule 2.01(b)
and is duly licensed or qualified to do business as a foreign corporation and
is in good standing in each other jurisdiction in which it owns or leases any
real property or in which the nature of the business transacted by it makes
such licensing or qualification necessary and where the failure to be so
licensed or qualified would have a material adverse effect on the business,
operations or financial condition of such Subsidiary, and has the corporate
power and authority to own and hold its properties and to carry on its business
as currently conducted. Complete and correct copies of the Articles of
Incorporation and By-Laws of the Company and each Subsidiary as in effect on
the date hereof have been delivered to Purchasers. Other than the capital
stock of the subsidiaries set forth on Schedule 2.01(b), no Subsidiary owns of
record or beneficially, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into capital stock of any other
corporation or (ii) any participating interest
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<PAGE> 9
in any partnership, joint venture or other non-corporate business enterprise.
SECTION 2.02 Authorization of Agreement, Etc. (a) The
execution, delivery and performance by the Company of this Agreement, the
Notes, the Warrants and the Registration Rights Agreement, and the performance
by the Company of its obligations hereunder and thereunder, and the issuance,
sale and delivery of the Warrant Shares upon exercise of the Warrants, have
been duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Articles of Incorporation or By-laws of the Company, or any provision of any
indenture, agreement or other instrument by which the Company or any of the
Subsidiaries or any of their respective properties or assets is bound or
affected, or conflict with, result in a breach of, result in or permit the
termination of or acceleration of rights or obligations under, or constitute
(with due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of the Company or any of the Subsidiaries.
(b) The Warrant Shares have been duly reserved for
issuance upon exercise of the Warrants and, when issued and paid for in
accordance with the terms of the Warrants, will be duly authorized, validly
issued and outstanding, fully paid and nonassessable shares of Common Stock.
Neither the issuance, sale and delivery of the Warrants nor the issuance, sale
and delivery of the Warrant Shares upon exercise thereof are subject to any
preemptive rights of stockholders of the Company or to any right of first
refusal or other similar right in favor of any person.
(c) The execution, delivery and performance by each of
the Subsidiaries of this Agreement and the Notes, and the performance by each
Subsidiary of its obligations hereunder and thereunder, have been duly
authorized by all requisite corporate action and will not violate any provision
of law, any order of any court or other agency of government, the Articles of
Incorporation or By-laws of any Subsidiary, or any provision of any indenture,
agreement or other instrument by which the Subsidiaries or any of their
respective properties or assets is bound or affected, or conflict with, result
in a breach of, result in or permit the termination of or acceleration of
rights or obligations under, or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of any of the
Subsidiaries.
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<PAGE> 10
SECTION 2.03 Validity. (a) This Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms
(subject, as to enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws from time to
time in effect and to general equity principals). The Notes, the Warrants and
the Registration Rights Agreement, when executed and delivered in accordance
with this Agreement, will constitute the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms (subject,
as to enforcement of remedies to applicable bankruptcy, reorganization,
insolvency and similar laws, to moratorium laws from time to time in effect and
to general equity principles).
(b) This Agreement and the Notes have been duly executed
and delivered by the Subsidiaries and constitute the legal, valid and binding
obligation of each Subsidiary, enforceable in accordance with its terms
(subject, as to enforcement of remedies to applicable bankruptcy,
reorganization, insolvency and similar laws, to moratorium laws from time to
time in effect and to general equity principals).
SECTION 2.04 Capital Stock. The authorized capital stock of
the Company consists of (i) 1,000,000 shares of Preferred Stock, par value $.01
per share, of which no shares are issued and outstanding and (ii) 15,000,000
shares of Common Stock, par value $.01 per share, of which 5,466,268 shares
are validly issued and outstanding, fully paid and nonassessable. Of such
shares of Common Stock, 489,976 shares are being held in escrow ("Escrow
Shares") for the benefit of the Company's Class F Claimants (as such term is
defined in the Company's Articles of Incorporation as in effect on the date
hereof). Effective at the Closing hereunder, 304,822 shares of the Escrow
Shares will be returned to the Company and will be held as treasury shares.
Except as contemplated hereby and as set forth in Schedule 2.04(a) hereto, (i)
no subscription, warrant, option, convertible security or other right
(contingent or other) to purchase or acquire any shares of any class of capital
stock of the Company is authorized or outstanding; (ii) there is no commitment
of the Company to issue any shares, warrants, options or other such rights or
to distribute to holders of any class of its capital stock any evidences of
indebtedness or assets and (iii) the Company has no obligation (contingent or
other) to purchase, redeem or otherwise acquire any shares of its capital stock
or any interest therein or to pay any dividend or make any other distribution
in respect thereof. The execution, delivery and performance by the Company of
this Agreement, the Notes, the Warrants and the Registration Rights Agreement,
and the performance by the Company of its obligations hereunder and
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<PAGE> 11
thereunder will not cause the acceleration or vesting of any of the options set
forth in Schedule 2.04(a) or otherwise give rise to any rights or obligations
under any so-called "change-of-control" provisions.
SECTION 2.05 Financial Statements. The Company has furnished
to the Purchasers (i) the audited consolidated balance sheets of the Company
and the Subsidiaries as of March 31, 1995, December 31, 1993 and 1992 and the
related audited consolidated statements of operations, shareholders' equity
(net capital deficiency), and cash flows of the Company and the Subsidiaries
for the fiscal year ended March 31, 1995, the three-month period ended March
31, 1994, and for each of the two years in the period ended December 31, 1993,
certified by the principal financial officer of the Company and (ii) the
unaudited consolidated balance sheet of the Company and the Subsidiaries as of
June 30, 1995 and the related unaudited consolidated statements of operations,
shareholders' equity (net capital deficiency), and cash flows of the Company
and the Subsidiaries for the fiscal quarter then ended. Such financial
statements are complete and correct, have been prepared in accordance with
generally accepted accounting principles, consistently applied, and fairly
present the consolidated financial position of the Company and the Subsidiaries
as of such respective dates, and the consolidated results of their respective
operations and cash flows for the respective periods then ended. Immediately
after giving effect to the transactions contemplated hereby, the Company will
have the capitalization as set forth in Schedule 2.05.
SECTION 2.06 Events Subsequent to March 31, 1995. Since March
31, 1995, the businesses of the Company and the Subsidiaries have been operated
in the ordinary course and there has not been any material adverse change in
the assets, liabilities, income, business, operations or prospects of the
Company or the Subsidiaries. Since March 31, 1995, except as set forth in
Schedule 2.06 hereto or as contemplated hereby, neither the Company nor any of
the Subsidiaries has (i) issued any stock, bonds or other securities, (ii)
borrowed any amount or incurred any liabilities (absolute or contingent),
except current liabilities incurred, and liabilities under contracts entered
into, in the ordinary course of business, (iii) discharged or satisfied any
lien or incurred or paid any obligation or liability (absolute or contingent)
other than current liabilities shown on its balance sheet as of March 31, 1995
referred to in Section 2.05 hereof and current liabilities incurred since that
date in the ordinary course of business, (iv) declared or made any payment or
distribution to stockholders or purchased or redeemed any shares of its capital
stock or other securities or interests, (v) mortgaged, pledged or subjected to
lien any of its assets, tangible or intangible, other than liens of current
real
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property taxes not yet due and payable, (vi) sold, assigned or transferred any
of its tangible assets, except in the ordinary course of business, or cancelled
any debts or claims, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) made any changes in officer compensation, or (ix) entered into any
transaction except in the ordinary course of business.
SECTION 2.07 Actions Pending. Except as set forth in Schedule
2.07 hereof, there are no (a) actions, suits, customer claims in excess of
$5,000, proceedings or investigations at law or in equity or by or before any
governmental instrumentality or other agency now pending or to the Company's or
any Subsidiaries' knowledge, threatened against or affecting the Company or the
Subsidiaries, or (b) judgments, decrees, injunctions or orders of any court,
governmental department, commission, agency, instrumentality or arbitrator
against or affecting the Company or the Subsidiaries.
SECTION 2.08 Title to Properties. The Company and each
Subsidiary have good and marketable title to all of their respective owned
properties and assets, free and clear of all mortgages, pledges, security
interests, liens, charges and other encumbrances, except for Permitted
Encumbrances (as defined below). As of the Closing and after giving effect to
the transactions contemplated hereby, the Company and each Subsidiary will have
good and marketable title to all their respective properties and assets free
and clear of mortgages, pledges, security interests, liens, charges and other
encumbrances, except under the Bank Debt (as defined in Section 4.01(d)) and
for Permitted Encumbrances. As of the Closing and after giving effect to the
transactions contemplated hereby, the Company and the Subsidiaries will enjoy
peaceful and undisturbed possession under all leases relating to real property
and all other leases (other than immaterial leases which can be replaced on
substantially the same terms) necessary for the operation of their properties
and business; and all such leases are valid and subsisting and in full force
and effect. As used herein, "Permitted Encumbrances" means any mortgages,
pledges, security interests, liens, charges and other encumbrances (i) as
described in Schedule 2.08 hereto, (ii) liens for current taxes, assessments
and other governmental charges not overdue, (iii) mechanic's, materialmen's and
similar liens which may have arisen in the ordinary course of business and
which, in the aggregate, would not be material to the financial condition of
the Company or such Subsidiary, (iv) security interests securing indebtedness
not in default for the purchase price of or lease rental payments on property
purchased or leased under capital lease arrangements in the ordinary course of
business, and (v) minor imperfections of title, if any, not material in amount
and not materially
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detracting from the value or impairing the use of the property subject thereto
or impairing the operations or proposed operations of the Company and its
Subsidiaries, taken as a whole.
SECTION 2.09 Use of Real Property. Neither the Company nor
any Subsidiary has received notice of violation of any applicable zoning or
building regulation, ordinance or other law, order, regulation or requirement
relating to the operations of the Company or any Subsidiary and there is no
such violation. All plants and other buildings that are located on the real
properties reflected in the balance sheet as of March 31, 1995 referred to in
Section 2.05 hereof comply in all material respects with all applicable
ordinances, codes, regulations and requirements, and no law or regulation
presently in effect or condition precludes or materially restricts continuation
of the present use of such properties.
SECTION 2.10 Taxes. The Company and each Subsidiary has filed
or caused to be filed all Federal, state, local and foreign tax returns that
are required to be filed and has paid or caused to be paid all taxes shown as
due on all such returns or on any assessment received by it.
SECTION 2.11 Loss Carryovers. The federal income tax net
operating loss carryovers of the Company as reported on the consolidated
federal income tax returns of the Company for the taxable year ended March 31,
1995 are $30,000,000 for regular minimum tax purposes and $29,000,000 for
alternative minimum tax purposes (the "Loss Carryovers"). The application of
such Loss Carryovers and any additional net operating losses of the Company for
the period beginning April 1, 1995 and ending on the Closing Date are not
subject to limitation under Section 382 of the Internal Revenue Code of 1986,
as amended (the "Code"). The losses and credits of the Company, including the
Loss Carryovers, will not be subject to limitation under either Section 382 or
383 of the Code as a result of the change in ownership of the Company upon
consummation of the transactions contemplated by this Agreement or the issuance
of the Warrant Shares upon exercise of the Warrants. For purposes of the
immediately preceding sentence, the calculation of any change in ownership of
the Company shall take into account any possible changes in ownership of stock
of the Company as a result of (i) transfers of stock by that certain group
consisting of Mark Hungerford, Katy Hungerford, Southern Cross Trust and Ozura
Corporation who together filed a Form 13D with the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934, as amended, or
(ii) the exercise of any options or rights to purchase stock of the Company
currently outstanding or to be issued or granted pursuant to the transactions
contemplated
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hereby, including but not limited to those options and stock purchase rights
set forth on Schedule 2.04(a).
SECTION 2.12 Environmental Matters. The Company and the
Subsidiaries have complied with each and are not in violation of any, federal,
state or local law, regulation, permit, provision or ordinance relating to the
generation, storage, transportation, treatment or disposal of hazardous, toxic
or polluting substances, except where such noncompliance or violation would not
result in any material adverse effect on the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole, or their
properties or assets, taken as a whole. The Company and the Subsidiaries have
obtained and adhered to all necessary permits and other approvals necessary to
store, dispose, and otherwise handle hazardous, toxic and polluting substances,
the failure of which to obtain or adhere to would result in any material
adverse effect on the business, operations or financial condition of the
Company and the Subsidiaries, taken as a whole, or their properties or assets,
taken as a whole. The Company and the Subsidiaries have reported, to the
extent required by federal, state and local law, all past and present sites
where hazardous, toxic or polluting substances, if any, from the Company and
the Subsidiaries have been treated, stored or disposed. Neither the Company
nor any Subsidiary has transported any hazardous, toxic or polluting substances
or arranged for the transportation of such substances to any location which is
the subject of federal, state or local enforcement actions or other
investigations which may lead to claims against the Company or the Subsidiaries
for clean-up costs, remedial work, damages to natural resources or for personal
injury claims, including, but not limited to, claims under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
which claims would result in a material adverse effect on the business,
operations or financial condition of the Company and the Subsidiaries, taken as
a whole, or their properties or assets, taken as a whole.
SECTION 2.13 Governmental Approvals. No registration or
filing with, or consent or approval of, or other action by, any Federal, state
or other governmental agency or instrumentality is or will be necessary for the
valid execution, delivery and performance of this Agreement, the Notes, the
Warrants and the execution and delivery of the Registration Rights Agreement,
or the issuance, sale and delivery of the Warrant Shares.
SECTION 2.14 Use of Proceeds. The Company and the
Subsidiaries will apply the proceeds of the issuance and sale of the
Securities, together with other funds, to finance (i) the repurchase in full of
all debt owed to the Class F Claimants at
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an aggregate repurchase price of less than $9 million, and (ii) the repayment
in full of all debt owed to Congress Financial Corporation (Western) by TRSC
pursuant to a secured line of credit (the "Congress Debt"). After giving
effect to the transactions contemplated hereby, the Company shall have
discharged all its obligations to the Class F Claimants.
SECTION 2.15 Offering of the Securities. Neither the Company,
the Subsidiaries nor any person authorized or employed by the Company or the
Subsidiaries as agent, broker, dealer or otherwise in connection with the
offering or sale of the Securities or any similar security of the Company or
the Subsidiaries has offered the Securities or any such security for sale to,
or solicited any offers to buy the Securities or any similar security of the
Company or the Subsidiaries from, or otherwise approached or negotiated with
respect thereto with, any person or persons other than the Purchasers, and
neither the Company, the Subsidiaries nor any person acting on their behalf has
taken or will take any action (including, without limitation, any offer,
issuance or sale of any security of the Company or the Subsidiaries under
circumstances which might require the integration of such offer, issuance or
sale with the offer, issuance and sale of the Securities under the Securities
Act of 1933, as amended (the "Securities Act") or the rules and regulations of
the Securities and Exchange Commission (the "Commission") thereunder) which
might subject the offering, issuance or sale of the Securities to the
registration provisions of the Securities Act.
SECTION 2.16 Other Contracts and Commitments. Neither the
Company nor any of the Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party that may result
in any material adverse change in the business, operations or financial
condition of the Company and the Subsidiaries, taken as a whole.
SECTION 2.17 Compliance with Law. Neither the Company nor any
of the Subsidiaries is in default under any order of any court, governmental
authority or arbitration board or tribunal to which the Company or such
Subsidiary is or was subject or in violation of any laws, ordinances,
governmental rules or regulations (including, but not limited to, those
relating to environmental, safety, building, product safety or health standards
or employment matters) to which the Company or such Subsidiary is or was
subject, in each case, that would result in any material adverse effect on the
business, operations or financial condition of the Company and the
Subsidiaries, taken as a whole, or their properties or assets, taken as a
whole. The businesses of the Company and the Subsidiaries are being
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conducted in compliance with all applicable laws, ordinances, rules and
regulations applicable to them, the non-compliance with which would have a
material adverse effect on the business, operations or financial condition of
the Company and the Subsidiaries, taken as a whole, or their properties or
assets, taken as a whole. Neither the Company nor any of the Subsidiaries has
failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its properties or to the conduct
of the business of the Company or such Subsidiary, which failure would have a
material adverse effect on the business, operations or financial condition of
the Company and the Subsidiaries, taken as a whole, or their properties or
assets, taken as a whole.
SECTION 2.18 Employee Benefit Plans. (a) The Company (which
term shall include, for purposes of this Section 2.18, each of the
Subsidiaries) has complied and currently is in compliance, both as to form and
operation, with the applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Internal Revenue Codes of
1954 and/or 1986, as amended, respectively (the "Code"), with respect to each
"employee benefit plan" as defined under Section 3(3) of ERISA ("Plan") which
the Company (i) has ever adopted, maintained, established or to which the
Company has ever been required to contribute or to which the Company has ever
contributed or (ii) currently maintains or to which the Company currently
contributes or is required to contribute or (iii) currently participates in or
is required to participate in.
(b) The Company has never maintained, adopted or
established, contributed or been required to contribute to, or otherwise
participated in or been required to participate in, a "multiemployer plan" (as
defined in Section 3(37) of ERISA). No amount is due or owing from the Company
on account of a "multi-employer plan" (as defined in Section 3(37) of ERISA) or
on account of any withdrawal therefrom.
(c) Notwithstanding anything else set forth herein, the
Company has not incurred any liability with respect to a Plan, including,
without limitation, under ERISA (including, without limitation, Title I or
Title IV of ERISA and other than liability for premiums due to the Pension
Benefit Guaranty Corporation), the Code or other applicable law, which has not
been satisfied in full, and no event has occurred, and there exists no
condition or set of circumstances which could result in the imposition of any
liability with respect to a Plan, including, without limitation, under ERISA
(including, without limitation, Title I or Title IV of ERISA), the Code or
other applicable law with respect to the Plan.
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<PAGE> 17
(d) Except as set forth on Schedule 2.18, the Company has
not committed itself, orally or in writing, to (i) provide or cause to be
provided to any person any payments or benefits in addition to, or in lieu of,
those payments or benefits set forth under any Plan, or (ii) continue the
payment of, or accelerate the payment of, benefits under any Plan, except as
expressly set forth thereunder. Complete and correct copies of all written
arrangements described in the preceding sentence as in effect on the date
hereof have been delivered to Purchasers.
(e) Except as set forth on Schedule 2.18, the Company has
not committed itself, orally or in writing, to provide or cause to be provided
any severance or other post-employment benefit, salary continuation,
termination, disability, death, retirement, health or medical benefit, or
similar benefit to any person (including, without limitation, any former or
current employee) except as set forth under any Plan. Complete and correct
copies of all written arrangements described in the preceding sentence as in
effect on the date hereof have been delivered to Purchasers.
SECTION 2.19 Intellectual Property Rights. The Company
and the Subsidiaries own or possess all patents, trademarks, services marks,
trade names, copyrights, licenses, authorizations and other intangible
property, and all rights with respect to the foregoing, necessary for the
conduct of their respective businesses as now conducted, without any known
material conflict with the rights others. The consummation of the transactions
contemplated hereby will not alter or impair in any material respect any of
such rights of the Company or the Subsidiaries, including without limitation,
the rights of the Company and the Subsidiaries under licensing and
sub-licensing agreements of the Uni-Temp heating technology (the "Uni-Temp
Licenses").
SECTION 2.20 Uni-Temp Licenses. The Uni-Temp Licenses are in
full force and effect. Neither the Company nor any of the Subsidiaries is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in the Uni-Temp Licenses, and to
the knowledge of the Company and the Subsidiaries, no other party to the
Uni-Temp Licenses is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained therein. The
execution, delivery and performance by the Company or any of the Subsidiaries
of this Agreement and the performance by the Company or any Subsidiary of its
obligations hereunder will not violate any provision of the Uni-Temp Licenses,
or conflict with, result in a breach of, result in or permit the termination or
acceleration of rights or obligations
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<PAGE> 18
under, or constitute (with due notice or lapse of time or both) a default
under, the Uni-Temp Licenses.
SECTION 2.21 SBIC Representations. (a) Neither the
Company nor any Subsidiary does in any manner or form discriminate, foster
discrimination or permit discrimination against any person belonging to any
minority race or believing in any minority creed or religion.
(b) The Company, together with its Subsidiaries and
affiliates, (i) is not dominant in its field of operation and (ii) does not
have net worth in excess of $18 million and did not have average net income
after Federal income taxes (excluding any carryover losses) for the preceding
two completed fiscal years in excess of $6 million, for purposes of the Small
Business Investment Act of 1958, as amended (the "SBIA") and the regulations of
the Small Business Administration ("SBA") promulgated thereunder.
(c) To the Company's knowledge, none of its stockholders
is a small business investment corporation.
SECTION 2.22 SEC Filings. Since January 1, 1993, the Company
has timely filed all required reports, statements, schedules and registration
statements with the Commission required to be filed by the Company pursuant to
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), all
of which complied in all material respects with all applicable requirements of
the Exchange Act. The Company has delivered to Purchasers (i) its annual
reports on Form 10-K for its fiscal years ended December 31, 1993 and March 31,
1995, (ii) its quarterly report on Form 10-Q for its fiscal quarter ended
December 31, 1994 and (iii) its proxy or information statements relating to
meetings of, or action taken without a meeting by, the stockholders of the
Company held since January 1, 1993 (the items described in clauses (i), (ii)
and (iii) are collectively referred to as "SEC Filings"). The Company has not
made any SEC Filing since the filing of its annual report on Form 10-K for its
fiscal year ending March 31, 1995. As of their respective dates, none of the
SEC Filings, including without limitation, any financial statements or
schedules included therein, at the time filed, contained any untrue statements
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since March 31,
1995, neither the Company nor any Subsidiary has entered into any transaction
that would be required to be disclosed in any SEC Filing pursuant to Item 404
of Regulation S-K promulgated by the Commission pursuant to the Securities Act
if such SEC Filing was made as of the date hereof.
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SECTION 2.23 Burdensome Restrictions. Neither the Company nor
any Subsidiary is obligated under any contract or agreement or subject to any
charter or other corporate restriction which materially adversely affects the
Company's or any Subsidiary's business, properties, assets, prospects or
condition (financial or otherwise).
SECTION 2.24 Insurance. All policies of liability, theft,
fidelity, business interruption, life, fire, product liability, workmen's
compensation, health and other forms of insurance held by the Company and its
Subsidiaries are valid and enforceable policies and are outstanding and duly in
force and all premiums with respect thereto are paid to date. The amounts of
coverage under such policies of insurance for the assets and properties of the
Company and its Subsidiaries are adequate against risks usually insured against
by persons operating similar businesses and operating similar properties.
SECTION 2.25 Brokers. Neither the Company nor the
Subsidiaries nor any of their respective officers, directors, employees or
stockholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement.
SECTION 2.26 Registration Rights. Except as contemplated by
the Registration Rights Agreement, no person has any right to cause the Company
or any Subsidiary to effect the registration under the Securities Act of any
shares of Common Stock or any other securities (including debt securities) of
the Company or any Subsidiary.
SECTION 2.27 Investment Company Act. The Company is not an
"investment company" as that term is defined in, and is not otherwise subject
to regulation under, the Investment Company Act of 1940, as amended.
SECTION 2.28 Compensation Arrangements. Except as set forth
in Schedule 2.28 hereto, (i) neither the Company nor any of the Subsidiaries is
a party to any employment or deferred compensation agreements that require
payments by the Company or any Subsidiary to any individual in excess of
$100,000, or in the aggregate, in excess of $500,000, in each case, in any year
(ii) neither the Company nor any of the Subsidiaries has any bonus, incentive
or profit-sharing plans that would require payments by the Company and its
Subsidiaries to any individual in an amount equal to or exceeding $50,000 in
any one year, and (iii) there are no existing material arrangements or proposed
material transactions between the Company or any of the Subsidiaries and any
officer or director or holder of more than 5% of the capital stock of the
Company or any of the Subsidiaries. Complete and correct copies of all written
arrangements described in the
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preceding sentence as in effect on the date hereof have been delivered to
Purchasers and shall be amended to the satisfaction of Purchasers prior to the
Closing.
SECTION 2.29 Bank Debt. The representations and warranties
made by the Company and the Subsidiaries in the Credit Agreement by and among
Transamerica Business Credit Corporation (the "Bank"), the Company and the
Subsidiaries dated as of July 31, 1995 (the "Credit Agreement") are true and
correct.
SECTION 2.30 Disclosure. Neither this Agreement nor any other
document, certificate, instrument or statement furnished or made to the
Purchasers by or on behalf of the Company or any Subsidiary in connection with
the transactions contemplated hereby contain any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact known
to the Company or any Subsidiary which materially adversely affects the
business, operations, affairs, prospects, condition, properties or assets of
the Company and the Subsidiaries which has not been set forth in this Agreement
or in the other documents, certificates, instruments or written statements
furnished to the Purchasers by or on behalf of the Company and the
Subsidiaries.
III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, Pro Rata, represent and warrant to the
Company and the Subsidiaries that each of them is acquiring the Securities and
will acquire the Warrant Shares for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof. Each Purchaser further represents that it understands
that (i) the Securities have not been, and the Warrant Shares, when issued,
sold and delivered upon exercise of the Warrants, will not be, registered under
the Securities Act by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof, (ii) the Securities and the Warrant Shares must be held indefinitely
unless a subsequent disposition thereof is registered under the Securities Act
or is exempt from such registration and (iii) the Securities and the Warrant
Shares will bear a legend to such effect. Each Purchaser further understands
that the exemption from registration afforded by Rule 144 under the Securities
Act depends on the satisfaction of various conditions and that, if applicable,
Rule 144 affords the basis of sales of the Securities and the Warrant Shares
only in limited amounts under certain
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<PAGE> 21
conditions. Each Purchaser further represents and covenants that it is an
"accredited investor", within the meaning of Rule 501(a) of the Securities Act.
IV.
CONDITIONS TO THE OBLIGATION OF THE PURCHASERS
SECTION 4.01 Conditions to the Obligation of the Purchasers
with Respect to the Closing. The obligation of each Purchaser to purchase and
pay for the Securities being purchased by it on the Closing Date is, at its
option, subject to the satisfaction, on or before such date, of the following
conditions:
(a) Opinion of Counsel. The Purchasers shall have
received from Skadden, Arps, Slate, Meagher & Flom and Greene, Radovsky,
Maloney & Share, counsel for the Company, opinion dated the Closing Date, in
form and substance satisfactory to the Purchasers and their counsel, to the
effect that:
(i) The Company is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has the corporate
power and authority to own and hold its properties and to
carry on its business as currently conducted, to execute,
deliver and perform this Agreement, the Notes, the Warrants
and the Registration Rights Agreement and to issue, sell and
deliver the Warrant Shares.
(ii) Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the
laws of the State of its jurisdiction of incorporation; except
as set forth on Schedule 2.01(b) to this Agreement, the
Company owns, directly or indirectly, all the outstanding
capital stock of each Subsidiary (except for directors'
qualifying shares, if any), free and clear of all liens,
charges, pledges, security interests or other encumbrances;
and the capital stock of each Subsidiary is duly authorized
and validly issued and outstanding, fully paid and
nonassessable.
(iii) The authorized capital stock of the Company
consists of (i) 1,000,000 shares of Preferred Stock, par value
$.01 per share, of which no shares are issued and outstanding
and (ii) 15,000,000 shares of Common Stock, par value $.01 per
share, of which 5,466,268
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<PAGE> 22
shares are validly issued and outstanding, fully paid and
nonassessable. Of such shares, 489,976 shares are Escrow
Shares held for the benefit of the Company's Class F
Claimants.
(iv) The execution, delivery and performance by
the Company of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement have been duly authorized by all
requisite corporate action, and each has been duly executed
and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable in
accordance with its terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency
and similar laws, to moratorium laws from time to time in
effect and to general equity principles), except that such
counsel need express no opinion as to the indemnification
provisions of the Registration Rights Agreement.
(v) The execution, delivery and performance by
the Subsidiaries of this Agreement and the Notes have been
duly authorized by all requisite corporate action, and each
has been duly executed and delivered by the Subsidiaries and
constitutes the legal, valid and binding obligation of the
Subsidiaries, enforceable in accordance with its terms
(subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency and similar laws, to
moratorium laws from time to time in effect and to general
equity principles).
(vi) The execution, delivery and performance by
the Company of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement and the issuance, sale and
delivery of the Warrant Shares will not violate any provision
of law, any order of any court or other agency of government,
the Articles of Incorporation or By-laws of the Company, or,
to the best knowledge of such counsel, after due inquiry, any
provision of any indenture, agreement or other instrument by
which the Company or any of the Subsidiaries or any of their
respective properties or assets is bound or affected, or
conflict with, result in a breach of, result in or permit the
termination of or acceleration of rights or obligations under,
or constitute (with due notice or lapse of time or both) a
default, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or
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<PAGE> 23
any of the Subsidiaries, under any such indenture, agreement
or other instrument.
(vii) The execution, delivery and performance by
the Subsidiaries of this Agreement and the Notes will not
violate any provision of law, any order of any court or other
agency of government, the Articles of Incorporation or By-laws
of the Subsidiaries, or, to the best knowledge of such
counsel, after due inquiry, any provision of any indenture,
agreement or other instrument by which the Subsidiaries or any
of their respective properties or assets is bound or affected,
or conflict with, result in a breach of, result in or permit
the termination of or acceleration of rights or obligations
under, or constitute (with due notice or lapse of time or
both) a default, or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon
any of the properties or assets of the Subsidiaries, under any
such indenture, agreement or other instrument.
(viii) The issuance, sale and delivery of the
Warrant Shares upon exercise of the Warrants have been duly
authorized by all requisite corporate action, and the Warrant
Shares have been duly reserved for issuance upon exercise of
the Warrants and, when issued and paid for in accordance with
the provisions of the Warrants, will be duly authorized,
validly issued and outstanding, fully paid and nonassessable
shares of Common Stock. Neither the issuance, sale and
delivery of the Warrants nor the issuance, sale and delivery
of the Warrant Shares upon exercise thereof are subject to any
preemptive rights of stockholders of the Company or, to the
best knowledge of such counsel, after due inquiry, to any
right of first refusal or other similar right in favor of any
person.
(ix) The issuance, sale and delivery of the
Securities to each Purchaser on the Closing Date, under the
circumstances contemplated by this Agreement, are exempt from
the registration requirements of the Securities Act, and the
issuance, sale and delivery of the Warrant Shares upon
exercise of the Warrants will be exempt from such
requirements, provided, in each case, that such Purchaser is
an "accredited investor" within the meaning of Rule 501(a) of
the Securities Act.
(b) Representations and Warranties to Be True and
Correct. The representations and warranties contained in Article
- 18 -
<PAGE> 24
II hereof shall be true and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, and the President of the Company shall have certified to such effect
to the Purchasers in writing.
(c) Performance. The Company and the Subsidiaries shall
have performed and complied with all agreements and conditions contained herein
required to be performed or complied with by it prior to or at the Closing
Date, and the President of the Company shall have certified to such effect to
the Purchasers in writing.
(d) Bank Debt; Use of Proceeds. The Company, the
Subsidiaries and the Bank shall have executed and delivered the Credit
Agreement. The Credit Agreement and all documentation relating thereto shall
have been delivered to Purchasers not later than five (5) business days prior
to the Closing Date and shall be in form and substance satisfactory to
Purchasers. Concurrent herewith, the Company and the Subsidiaries shall have
borrowed $5,500,000 under the Credit Agreement, which funds, together with the
purchase price for the Securities purchased hereunder, shall be used to repay
all of the Company's obligations to the Class F Claimants and the Subsidiaries'
obligations under the Congress Debt.
(e) Class F Claimants. Concurrently herewith, the
Company shall have discharged all its obligations to the Class F Claimants, and
304,822 shares of the Escrow Shares shall be been released from escrow and
returned to the Company as treasury shares.
(f) All Proceedings to Be Satisfactory. All corporate
and other proceedings to be taken by the Company and the Subsidiaries in
connection with the transactions contemplated hereby and all documents incident
thereto shall be satisfactory in form and substance to the Purchasers and their
counsel, Dechert Price & Rhoads, and the Purchasers and said counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(g) Registration Rights Agreement. The Company shall
have executed and delivered the Registration Rights Agreement.
(h) Supporting Documents. On or prior to the Closing
Date, the Purchasers and their counsel shall have received copies of the
following supporting documents:
(i) (A) copies of the Articles of Incorporation
of the Company and each Subsidiary, and all amendments
- 19 -
<PAGE> 25
thereto, certified as of a recent date by the Secretaries of
State of the States of their respective jurisdictions and (B)
a certificate of each said Secretaries dated as of a recent
date as to the due incorporation and good standing of the
Company and the Subsidiaries and listing all documents of the
Company and the Subsidiaries on file with said Secretaries;
(ii) a certificate of the Secretary or an
Assistant Secretary of the Company and each Subsidiary dated
the Closing Date and certifying (A) that attached thereto is a
true and complete copy of the By-laws of the Company or the
Subsidiary, as the case may be, as in effect on the date of
such certification; (B) that attached thereto is a true and
complete copy of resolutions adopted by the Board of Directors
of the Company or the Subsidiary, as the case may be,
authorizing the execution, delivery and performance of this
Agreement, the Notes, the Warrants and the Registration Rights
Agreement, the issuance, sale and delivery of the Securities
and the reservation, issuance and delivery of the Warrant
Shares, as the case may be, and that all such resolutions are
still in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated by
this Agreement, the Notes, the Warrants and the Registration
Rights Agreement, as the case may be; (C) that the Articles of
Incorporation of the Company or the Subsidiary, as the case
may be, have not been amended since the date of the last
amendment referred to in the certificate delivered pursuant to
clause (i)(B) above; and (D) as to the incumbency and specimen
signature of each officer of the Company or the Subsidiary, as
the case may be, executing this Agreement, the Securities and
the Registration Rights Agreement, and any certificate or
instrument furnished pursuant hereto, as the case may be, and
a certification by another officer of the Company or
Subsidiary, as the case may be, as to the incumbency and
signature of the officer signing the certificate referred to
in this paragraph (ii); and
(iii) such additional supporting documents and other
information with respect to the operations and affairs of the
Company and the Subsidiaries as the Purchasers or their
counsel may reasonably request.
All such documents shall be satisfactory in form and substance to the
Purchasers and their counsel.
- 20 -
<PAGE> 26
V.
COVENANTS
The Company, the Subsidiaries and the Purchasers covenant and agree as
follows:
(a) Financial Statements, Reports, Etc. So long as the
Purchasers shall hold of record any Securities or any Warrant Shares issued or
issuable pursuant to the Warrants, in each case acquired by it pursuant to this
Agreement, the Company shall furnish to each Purchaser, or, in the event the
Company is not subject to the reporting requirements of the Securities Exchange
Act of 1934 and any subsequent holder of Securities shall hold 25% or more in
principal amount of the Securities or 25% or more of the Warrant Shares issued
or issuable pursuant to the Warrants, the Company shall furnish to each such
subsequent holder:
(i) within 90 days after the end of each fiscal
year of the Company, a consolidated balance sheet of the
Company and its subsidiaries, as of the end of such fiscal
year, and the related consolidated statements of income,
changes in stockholders' equity and cash flows of the Company
and its subsidiaries for the fiscal year then ended, together
with supporting notes thereto, certified without qualification
as to scope of audit by a firm of independent public
accountants of recognized national standing selected by the
Company and reasonably acceptable to the Purchasers;
(ii) within 45 days after the end of each fiscal
quarter in each fiscal year (other than the last fiscal
quarter in each fiscal year), a consolidated balance sheet of
the Company and its subsidiaries and the related consolidated
statements of income and cash flows of the Company and its
subsidiaries, unaudited but certified by the principal
financial officer of the Company, such balance sheet to be as
of the end of such fiscal quarter and such statements of
income and cash flows to be for such fiscal quarter, for the
corresponding fiscal quarter of the immediately preceding
fiscal year, for the period from the beginning of the fiscal
year to the end of such fiscal quarter and for the period from
the beginning of the immediately preceding year to the end of
the corresponding fiscal quarter in such fiscal year, in each
case subject to normal year-end adjustments;
- 21 -
<PAGE> 27
(iii) within 30 days after the end of each month in
each fiscal year (other than the last month in each fiscal
year), a consolidated balance sheet of the Company and its
subsidiaries and the related consolidated statement of income,
unaudited but certified by the principal financial officer of
the Company, such balance sheets to be as of the end of such
month and such statements of income to be for such month and
for the period from the beginning of the fiscal year to the
end of such month, in each case subject to normal year-end
adjustments;
(iv) within 30 days following the beginning of
each fiscal year of the Company (and with respect to any
revision thereof, promptly after such revision has been
prepared), a proposed operating budget for the Company and the
Subsidiaries, including anticipated monthly income statements
and cash flow statements during such fiscal year and a
projected balance sheet as of the end of such fiscal year,
setting forth in each case the assumptions (which assumptions
and projections shall represent and be based upon the good
faith judgment in respect thereof of the chief executive
officer of the Company) behind the projections contained in
such financial statements, and each monthly statement of
income furnished pursuant to (iii) above shall reflect
variances from such operating budget, as the same may from
time to time be revised;
(v) promptly upon filing, copies of all
registration statements, prospectuses, periodic reports and
other documents filed by the Company with the Commission;
(vi) promptly, from time to time, such other
information regarding the operations, business, affairs and
financial condition of the Company or any subsidiary as the
Purchasers or such other holders may reasonably request (the
term "subsidiary" as used herein being defined to mean any
corporation or other business entity a majority of whose
outstanding voting stock entitled to vote for the election of
directors is at the time owned by the Company and/or one or
more other subsidiaries); and
(vii) within 45 days after the end of each fiscal
quarter in each fiscal year, a certificate signed by the Chief
Executive Officer of the Company and each Subsidiary
certifying that the Company and the
- 22 -
<PAGE> 28
Subsidiaries are in compliance with all covenants contained
herein and in the Notes.
(b) Small Business Administration Forms. The Company
shall execute Forms 480 ("Size Status Declaration") and 652-D ("Assurance of
Compliance") of the SBA and any other documents that may be required by the SBA
or any other governmental agency having jurisdiction over the activities of the
Purchasers, or which Purchasers may reasonably require in connection therewith.
(c) Use of Proceeds. The Company and the Subsidiaries
shall use the proceeds received from the sale of the Securities pursuant to
this Agreement as set forth in Section 2.14. The Company and the Subsidiaries
shall give Purchasers, their agents and representatives, reasonable access
during normal business hours to the books, records, facilities, personnel and
accountants of the Company and the Subsidiaries so that Purchasers may review
the Company's compliance with the provisions of this section.
(d) Board of Directors. So long as Furman Selz owns of
record either (i) 25% in aggregate principal amount of the A Notes issued to
Furman Selz pursuant to this Agreement; (ii) 25% in aggregate principal amount
of the B Notes issued pursuant to this Agreement; or (iii) 25% of the Warrants
issued pursuant to this Agreement (for purposes of this clause (iii) record
ownership of Warrant Shares issued to Furman Selz pursuant to exercise of the
Warrants shall be considered continued ownership of the Warrants) (the amounts
in clauses (i), (ii) and (iii) above are hereinafter referred to as a
"Qualifying Amount"); then Furman Selz shall have the right to designate one
director (the "Designee") to the Company's board of directors (the "Board").
The Company and the Board shall use its best efforts, at any time and from time
to time so long as Furman Selz owns of record a Qualifying Amount of Securities
or Warrant Shares, to cause such Designee to be elected to the Board. The best
efforts of the Board shall include, but not be limited to, (i) increasing by
one the number of directors on the Board, (ii) the appointment at Closing of
such Designee to the Board as a Class I Director in accordance with Section 223
of the Delaware General Corporate Law, (ii) the inclusion of the Designee on
any proxy statement or other materials prepared and delivered to the Company's
stockholders with respect to any election of Class I Directors, such inclusion
to comply with any applicable legal requirements and (iii) the recommendation
to the Company's stockholders that the Designee be elected as a director of the
Board.
(e) Put Right for Warrants. If for ten of the twelve
months immediately preceding July 31, 2000, the Common Stock does not have a
daily average trading volume of at least 8,000 shares,
- 23 -
<PAGE> 29
as reported each day in The Wall Street Journal (or other national business
publication) and any Warrants remain outstanding, then the holders of the
Warrants shall have the option (the "Put Right") commencing on August 1, 2000
and expiring on September 30, 2000 (the "Put Period") to sell to the Company,
and the Company shall have the obligation to purchase any or all outstanding
Warrants at a price equal to the fair market value of the Warrants (as such
term is defined in Section 1(b) of the Warrants). To exercise its Put Right,
such holder shall notify the Company in writing during the Put Period of its
intention to exercise such Put Right. Within ten days following delivery of
such Notice, a closing shall take place whereby such holder shall surrender the
Warrants, and the Company shall pay to the holder in cash the fair market value
of the Warrants pursuant to which the Put Right is exercised and shall issue to
such holder replacement Warrants for the balance, if any, of Warrants to which
such holder has not exercised the Put Right. This Put Right shall be
subordinated to the Senior Debt of the Company (as such term is defined in the
Notes) on the same terms as the Notes.
(f) Upon notice given as provided in the Notes, the
Company may, at its option, prepay the outstanding principal amount of Notes in
whole or in part, in multiples of $100,000, from time to time, at the principal
amount thereof so to be prepaid, together with interest accrued thereon to the
date fixed for such prepayment; provided, however, that any such prepayment
shall first be applied against the principal amount outstanding and interest
accrued thereon of the A Notes, and the balance, if any, shall be applied
against the principal amount outstanding and interest accrued thereon of the B
Notes.
VI.
MISCELLANEOUS
SECTION 6.01 Expenses. The Company and the Subsidiaries will
pay their own expenses in connection with the transactions contemplated hereby,
whether or not such transactions shall be consummated, and the Company shall
pay the out-of-pocket fees, costs and expenses of Furman Selz and its counsel
and accountants in connection with this Agreement, the Notes, the Warrants, the
Registration Rights Agreement and the transactions contemplated hereby and
thereby.
SECTION 6.02 Survival of Agreements. All covenants,
agreements, representations and warranties made herein to each Purchaser shall
survive the execution and delivery of this Agreement and the issuance, sale and
delivery of the Securities
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<PAGE> 30
pursuant hereto until the earlier to occur of (i) the expiration date of the
Warrants and (ii) the date on which no Securities or Warrant Shares are issued
and outstanding and owned of record by such Purchaser, and all statements
contained in any certificate or other instrument delivered by the Company and
any Subsidiary hereunder shall be deemed to constitute representations and
warranties made by the Company and such Subsidiary.
SECTION 6.03 Brokerage. Each party hereto will indemnify and
hold harmless the others against and in respect of any claim for brokerage or
other commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
SECTION 6.04 Parties in Interest. All covenants and
agreements contained in this Agreement by or on behalf of either party hereto
shall bind and inure to the benefit of the respective successors and assigns of
such party hereto, whether so expressed or not.
SECTION 6.05 Notices. All notices, requests, consents and
other communications hereunder shall be in writing and shall be mailed by
first-class registered mail, postage prepaid, or sent by recognized courier
service addressed as follows:
(a) if to the Company or any Subsidiary, at
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
if to Dowling at:
620 Fir Court
Norwood, NJ 07648
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<PAGE> 31
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any subsequent holder of Securities or Warrant
Shares, to such holder at its address appearing on the records of the
Company;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
SECTION 6.06 LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.07 Entire Agreement. This Agreement constitutes the
entire Agreement of the parties with respect to the subject mater hereof and
may not be modified or amended except in writing.
SECTION 6.08 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
- 26 -
<PAGE> 32
IN WITNESS WHEREOF, the Company, the Subsidiaries and the
Purchasers have executed this Agreement as of the day and year first above
written.
<TABLE>
<S> <C>
TRANSCISCO INDUSTRIES, INC.
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
TRANSCISCO LEASING COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
TRANSCISCO TRADING COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
</TABLE>
- 27 -
<PAGE> 33
PURCHASERS:
FURMAN SELZ SBIC, L.P.
By FURMAN SELZ SBIC INVESTMENTS INC.,
General Partner
By:
---------------------------
President
------------------------------
James Dowling
- 28 -
<PAGE> 34
Pro Rata Percentages
<TABLE>
<CAPTION>
Purchaser Percentage
- --------- ----------
<S> <C>
Furman Selz 96 2/3%
Dowling 3 1/3%
</TABLE>
- 29 -
<PAGE> 35
EXHIBIT B-1
SERIES A NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM REGISTRATION IS
AVAILABLE
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
TRANSCISCO INDUSTRIES, INC.
Series A Senior Subordinated Note
Due July 31, 2000
<TABLE>
<S> <C>
Registered New York, New York
$[up to 2,000,000] August ___, 1995
</TABLE>
TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Corporation"), TRANSCISCO RAIL SERVICES COMPANY, a California corporation
("TRSC"), TRANSCISCO LEASING COMPANY, a Delaware corporation ("TLC") and
TRANSCISCO TRADING COMPANY, a Delaware corporation ("TTC") (each of TRSC, TLC
and TTC each a "Subsidiary" and collectively, the "Subsidiaries"), for value
received, hereby jointly and severally promise to pay to the order of [FURMAN
SELZ SBIC, L.P., a Delaware limited partnership or JAMES DOWLING] or registered
assigns, the principal sum of [up to Two Million Dollars ($2,000,000)], on July
31, 2000 and to pay interest as set forth below.
The payment of principal and interest on this Note shall be in
such currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.
1. Notes. This Note is issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of August ___, 1995 (the
"Purchase Agreement"), among the Corporation, the Subsidiaries, Furman Selz
SBIC, L.P. and James Dowling, providing
<PAGE> 36
for, among other things, the issuance of (i) Series A Senior Subordinated Notes
Due 2000 in an aggregate principal amount of $2,000,000, (ii) Series B Senior
Subordinated Notes Due 2000 in an aggregate principal amount of $1,000,000 (the
"B Notes" and, together with this Note, the "Senior Subordinated Notes"), and
(iii) warrants (the "Warrants") to subscribe to up to 1,000,000 shares of the
Common Stock, par value $.01 per share, of the Corporation. This Series A
Senior Subordinated Note Due 2000 and any such Note subsequently issued upon
exchange or transfer thereof are hereinafter collectively called the "Notes".
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 10% from the date hereof
until and including July 31, 1997; and thereafter at an annual rate of 12%.
Accrued but unpaid interest shall be due and payable on the unpaid principal
balance of this Note on each of July 31, 1996, July 31, 1997, and each January
31 and July 31 of each year thereafter, beginning on January 31, 1998.
One-half of the interest due and payable on July 31, 1996 shall be deferred and
shall be payable on July 31, 1998 and one-half of the interest due and payable
on July 31, 1997 shall be deferred and shall be payable on July 31, 1999. Any
interest deferred pursuant to the preceding sentence shall compound and accrue
interest at the applicable rate until paid. All interest hereunder shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
3. Payments of Interest and Principal. All payments of
principal and interest hereunder shall be paid to the holder hereof by wire
transfer in immediately available funds. Wire transfer payments of interest
and principal on this Note is conditioned upon the holder providing to the
Corporation duly authorized instructions for the wire transfer of such amounts
to the holder's designated account. If principal or interest on this Note
becomes due and payable on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day. For purposes of
this Note, "Business Day" means any day other than a Saturday, a Sunday or a
legal holiday under the laws of the State of New York.
4. Transfer or Exchange of Notes. The Corporation shall
keep at its office or agency maintained as provided in subsection (a) of
Section 12 a register in which the Corporation shall provide for the
registration of Notes and for the registration of transfer and exchange of
Notes. The holder of this Note may, at its option, and either in person or by
duly authorized attorney, surrender the same for registration of transfer or
exchange, as a whole or in part, in multiples of $100,000, at the office or
agency of the Corporation maintained as provided in subsection (a) of Section
12, and, without expense
- 2 -
<PAGE> 37
to such holder (except for taxes or governmental charges imposed in connection
therewith), receive from the Corporation and the Subsidiaries in exchange
therefor a Note or Notes in such denomination or denominations as such holder
may request, dated as of the date to which interest has been paid on the Note
or Notes so surrendered for transfer or exchange, for the same aggregate
principal amount as the then unpaid principal amount of the Note or Notes so
surrendered for transfer or exchange, and registered in the name of such person
or persons as may be designated by such holder; provided, however, that this
Note shall not by transferred to any person whose primary line of business is
the manufacture of railroad car components or the leasing of railroad cars or
to any person that is not a United States citizen incorporated or organized
under the laws of the United States or a State thereof. Every Note presented
or surrendered for registration of transfer or exchange shall be duly endorsed,
or shall be accompanied by a written instrument of transfer, satisfactory in
form to the Corporation, duly executed by the holder of such Note or his
attorney, duly authorized in writing. Every Note so made and delivered in
exchange for this Note shall in all other respects be in the same form and have
the same terms as this Note. No transfer or exchange of any Note shall be
valid unless made in the foregoing manner at such office or agency.
5. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss,
theft or destruction, upon receipt of an affidavit of loss from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation and
the Subsidiaries will make and deliver, in lieu of this Note, a new Note of
like tenor and unpaid principal amount and dated as of the date to which
interest has been paid on this Note.
6. Persons Deemed Owners; Holders. The Corporation and
the Subsidiaries may deem and treat the person in whose name any Note is
registered as the owner and holder of such Note for the purpose of receiving
payment of principal of and premium, if any, and interest on such Note and for
all other purposes whatsoever, whether or not such Note shall be overdue. With
respect to any Note at any time outstanding, the term "holder," as used herein,
shall be deemed to mean the person in whose name such Note is registered as
aforesaid at such time.
7. Prepayments. Prepayments on this Note may be made
only in accordance with the provisions of the Purchase Agreement and Sections 8
through 11 hereof.
- 3 -
<PAGE> 38
8. Notice of Prepayment and Other Notices. The
Corporation shall give written notice of prepayment of this Note or any portion
hereof pursuant to Section 7 not less than 30 nor not more than 60 days prior
to the date fixed for such prepayment. Such notice and all other notices to be
given to any holder of this Note shall be given by registered or certified mail
to the person in whose name this Note is registered at its address designated
on the register maintained by the Corporation on the date of mailing such
notice of prepayment or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment as provided pursuant to
Section 7, this Note or such portion shall cease to bear interest on and after
the date fixed for such prepayment unless, upon presentation for the purpose of
prepayment, the Corporation and the Subsidiaries shall fail to pay this Note or
such portion, as the case may be, on such date, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest thereon, shall bear interest on and after the date
fixed for such prepayment and until paid at the rate of 12% per annum.
10. Surrender of Notes; Notation Thereon. Upon any
prepayment of a portion of the principal amount of this Note pursuant to
Section 7, the holder hereof, at its option, may require the Corporation and
the Subsidiaries to execute and deliver at the expense of the Corporation and
the Subsidiaries (other than for transfer taxes, if any), upon surrender of
this Note, a new Note registered in the name of such person or persons as may
be designated by such holder for the principal amount of this Note then
remaining unpaid, dated as of the date to which interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note
to the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.
11. Allocation of Payments. In the case of a prepayment
pursuant to Section 7 of less than all the Notes at the time outstanding, the
aggregate principal amount to be prepaid shall be allocated (in units of $1,000
or integral multiples thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective
aggregate unpaid principal amounts of the Notes (not theretofore called for
prepayment) then held by them, respectively, with adjustment, to the extent
practicable, to equalize for any prior unequal prepayments.
12. Affirmative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
- 4 -
<PAGE> 39
(a) Maintenance of Office. The Corporation will maintain
an office or agency in San Francisco, California (or such other place in the
United States of America as the Corporation may designate in writing to the
registered holder hereof), where the Notes may be presented for registration of
transfer and for exchange as herein provided, where notices and demands to or
upon the Corporation in respect of the Notes may be served and where, at the
option of the holders thereof, the Notes may be presented for payment. Until
the Corporation otherwise notifies the holders of the Notes, said office shall
be the principal office of the Corporation in San Francisco, California.
(b) Payment of Taxes. The Corporation will promptly pay
and discharge or cause to be paid and discharged, before the same shall become
in default, all lawful taxes and assessments imposed upon the Corporation or
any subsidiary or upon the income and profits of the Corporation or any
subsidiary, or upon any property, real, personal or mixed, belonging to the
Corporation or any subsidiary, or upon any part thereof by the United States or
any State thereof, as well as all lawful claims for labor, materials and
supplies which, if unpaid, would become a lien or charge upon such property or
any part thereof; provided, however, that the Corporation shall not be required
to pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as both (x) the Corporation has set
aside adequate reserves for such tax, assessment, charge, levy or claim and
(y)(i) the Corporation shall be contesting the validity thereof in good faith
by appropriate proceedings or (ii) the Corporation shall, in its good faith
judgment, deem the validity thereof to be questionable and the party to whom
such tax, assessment, charge, levy or claim is allegedly owed shall not have
made written demand for the payment thereof.
(c) Corporate Existence. The Corporation will do or
cause to be done all things necessary and lawful to preserve and keep in full
force and effect its corporate existence, rights and franchises and the
corporate existence, rights and franchises of its subsidiaries under the laws
of the United States or any State thereof or the District of Columbia;
provided, however, that nothing in this subsection (c) shall prevent (i) a
consolidation or merger of, or a sale, transfer or disposition of all or any
substantial part of the property and assets of, the Corporation not prohibited
by the provisions of Section 13, or (ii) the abandonment or termination of any
rights or franchises of the Corporation, if such consolidation, merger, sale,
transfer, disposition, abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of the Corporation
and not disadvantageous to the holder of this Note.
- 5 -
<PAGE> 40
(d) Maintenance of Property. The Corporation will, and
the Corporation will cause its subsidiaries to, at all times maintain and keep,
or cause to be maintained and kept, in good repair, working order and condition
all significant properties of the Corporation and its subsidiaries used in the
conduct of the business of the Corporation and its subsidiaries, and will, and
will cause its subsidiaries to, from time to time make or cause to be made all
needful and proper repairs, renewals, replacements, betterments and
improvements thereto, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times; provided, however,
that nothing in this subsection (d) shall require (i) the making of any repair
or renewal or (ii) the continuance of the operation and maintenance of any
property or (iii) the retention of any assets (the sale or other disposition of
which would not be prohibited by Section 13), if such action (or inaction) is,
in the good faith business judgment of the Corporation, in the best interests
of the Corporation.
(e) Insurance. The Corporation will, and the Corporation
will cause its subsidiaries to (i) keep adequately insured, by financially
sound and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business similarly situated
against loss or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable insurers,
such other insurance (including, without limitation, liability insurance) in
such amounts as are available at reasonable expense and to the extent believed
necessary in the good faith business judgment of the Corporation.
(f) Keeping of Books. The Corporation will at all times
keep proper books of record and account in which proper entries will be made of
its transactions in accordance with generally accepted accounting principles
consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation nor any of its subsidiaries will enter into any transaction or
series of transactions with any director, officer, stockholder, employee or
affiliate of the Corporation or its subsidiaries (other than (i) a transaction
or series of transactions that involves, individually, less than $25,000,
provided that the aggregate of all such transactions or series of transactions
involves less than $500,000 and (ii) transactions by and among any of the
Company and/or any Subsidiary), except on terms and conditions that, in the
reasonable judgment of the Board of Directors of the Corporation (as evidenced
by the approval of not less than 66 2/3% of the then-existing Directors), are
no less favorable to the Corporation or its direct or indirect subsidiaries, as
the case may be, than the
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<PAGE> 41
terms and conditions which the Corporation or such subsidiary, as the case may
be, could obtain in a transaction with an unaffiliated person on an arm's
length basis.
(h) Notice of Default. If any one or more events which
constitute, or which with notice or lapse of time or both would constitute, an
Event of Default under Section 15 shall occur, or if the holder of any Note
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Note, specifying the
nature of such event or of such demand or action, as the case may be.
13. Negative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Consolidation, Merger and Sale. The Corporation will
not consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its property to, any other corporation, unless
(i) the Corporation shall have obtained the written
consent of the holders of more than 66 2/3% in principal amount of the
Notes then outstanding;
(ii) the Corporation or such other corporation shall not
otherwise be in default in the performance or observance of any
covenant, agreement or condition of the Notes; and
(iii) the holder of this Note shall have received, in
connection therewith, an opinion of counsel for the Corporation (or
other counsel reasonably satisfactory to the holder) in form and
substance satisfactory to the holder, to the effect that any such
consolidation, merger, sale or conveyance and any such assumption
complies with the provisions of this paragraph (a).
Following the consummation of such merger, sale, conveyance or
other disposition, the Corporation will, upon the written request of the holder
of any Note, provide such holder with a copy of the agreement or agreements
pursuant to which such consolidation, merger, sale, conveyance or other
disposition was effected as promptly as possible.
(b) Restricted Payments. The Corporation shall not and
shall cause each of its subsidiaries not to (i) declare or
- 7 -
<PAGE> 42
pay any dividend on, or authorize or make any distribution in respect of,
shares of any class of its or their stock (except dividends or distributions
payable in shares of its stock and except for dividends paid by direct or
indirect wholly-owned subsidiaries), or (ii) authorize or make any purchase,
redemption or acquisition for value of, any shares of any class of its their
stock.
(c) Restrictions on Senior Subordinated Debt. The
Corporation shall not incur, and shall cause its subsidiaries not to incur,
directly or indirectly, any Debt (as defined below) which is senior in right of
payment to the Senior Subordinated Notes and is subordinate or junior in any
respect in right of payment to any other Debt. As used herein, "Debt" of a
person means at any date, without duplication, whether or not contingent, (i)
all obligations for borrowed money of such person, (ii) all obligations of such
person evidenced by bonds, debentures, notes, letters of credit or similar
instruments, (iii) all obligations of such person to pay the deferred purchase
price of property or services, except accounts payable and other liabilities
arising in the ordinary course of business, (iv) all reimbursement obligations
of such person, (v) all obligations of such person as lessee under capital
leases, (vi) all debt of others secured by a lien on any asset of such person
and (vii) any Debt of others guaranteed by such person.
(d) Disposition of Assets Not in the Ordinary Course. In
the event the Corporation or any subsidiary sells, transfers, assigns or
otherwise disposes of any asset not in the ordinary course of business, the
Corporation shall, or cause such subsidiary to, (i) use the proceeds of such
disposition to repay any Debt which is senior in right of payment to the Notes,
(ii) reinvest such proceeds in the Corporation or any wholly-owned subsidiary
of the Corporation, or (iii) prepay the Senior Subordinated Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Corporation shall not, and shall not permit any subsidiary
of the Corporation to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction which by its terms
expressly restricts the ability of any such subsidiary to (i) pay dividends or
make any other distributions on such subsidiary's capital stock or pay any Debt
owed to the corporation or any subsidiary of the Corporation, (ii) make any
loans or advances to the Corporation or any subsidiary of the Corporation or
(iii) transfer any of its property or assets to the Corporation or any
subsidiary of the Corporation, except for any restrictions existing under
agreements in effect at the time of, or entered into concurrently with, the
issuance of this Note, including the restrictions
- 8 -
<PAGE> 43
contained in the Credit Agreement (as defined below), to the extent that such
restrictions are set forth in such agreement as in effect on the date of the
issuance of this Note. As used herein, "Credit Agreement" means that certain
Credit Agreement between Transamerica Business Credit Corporation (the "Bank"),
the Corporation and the Subsidiaries dated August ___, 1995.
14. Modification by Holders; Waiver. The Corporation and
the Subsidiaries may, with the written consent of the holders of not less than
66 2/3% in principal amount of the Notes then outstanding, modify the terms and
provisions of the Notes or the rights of the holders of the Notes or the
obligations of the Corporation and the Subsidiaries thereunder, and the
observance by the Corporation and the Subsidiaries of any term or provision of
the Notes may be waived with the written consent of the holders of not less
than 66 2/3% in principal amount of the Notes then outstanding; provided,
however, that no such modification or waiver shall:
(a) change the maturity of any Note or reduce the
principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or reduce the amount or change the time of
payment of premium payable on any prepayment thereof without the
consent of the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
(c) reduce the applicable aforesaid percentages of Notes,
the consent of the holders of which is required for any such
modification.
Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation and the Subsidiaries, whether or not such
Note shall have been marked to indicate such modification or waiver, but any
Note issued thereafter shall bear a notation referring to any such modification
or waiver. Promptly after obtaining the written consent of the holders as
herein provided, the Corporation shall transmit a copy of such modification or
waiver to all the holders of the Notes at the time outstanding.
15. Events of Default; Acceleration. If any one or more
of the following events, herein called Events of Default, shall occur, for any
reason whatsoever, and whether such occurrence shall, on the part of the
Corporation or any Subsidiary, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with
- 9 -
<PAGE> 44
any judgment, decree or order of a court of competent jurisdiction or any
order, rule or regulation of any administrative or other governmental authority
and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal
of any Note or the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise and such default shall
continue for a period of five days; or
(b) default shall be made in the payment of any
installment of interest on any Note according to its terms when and as
the same shall become due and payable and such default shall continue
for a period of ten days; or
(c) default or breach shall be or shall have been made in
the due observance or performance of any representation, covenant,
condition or agreement on the part of the Corporation or the
Subsidiaries to be observed or performed pursuant to the Purchase
Agreement or the terms hereof and such default shall continue for 15
days after written notice thereof, specifying such default and
requesting that the same be remedied, shall have been given to the
Corporation by the holder or holders of at least 25% of the principal
amount of the Notes then outstanding (the Corporation to give
forthwith to all other holders of Notes at the time outstanding
written notice of the receipt of such notice specifying the default
referred to therein); or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Corporation or
any subsidiary in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation or any
subsidiary or for any substantial part of any of their respective
property, or ordering the winding-up or liquidation of any of their
affairs and the continuance of any such decree or order unstayed and
in effect for a period of 30 consecutive days; or
(e) the commencement by the Corporation or any subsidiary
of a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar laws, or the consent by
the Corporation or any
- 10 -
<PAGE> 45
subsidiary to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Corporation or any subsidiary or for any
substantial part of any of their respective property, or the making by
the Corporation or any subsidiary of any assignment for the benefit of
creditors, or the failure of the Corporation or any subsidiary
generally to pay its debts as such debts become due, or the taking of
corporate action by the Corporation or any subsidiary in furtherance
of or which might reasonably be expected to result in any of the
foregoing; or
(f) (i) failure to make any payment in respect of any
Debt of the Corporation or its subsidiaries having an aggregate
principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $50,000 when due (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto; or
(ii) failure by the Corporation or its subsidiaries to perform or
observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating
to any such Debt referred to in clause (i) above, and such failure
continues after the applicable grace or notice period, if any,
specified in the document relating thereto if the effect of such
failure, event or condition is to cause, or to permit the holder or
holders of such Debt or beneficiary or beneficiaries of such Debt (or
a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause such Debt to be declared to be due and
payable prior to its stated maturity; or
(g) final judgment for the payment of money in excess
$50,000 shall be rendered against the Corporation or any subsidiary
and the same shall remain undischarged for a period of 30 days during
which execution shall not be effectively stayed;
(h) a Change of Control (as defined below) shall have
occurred;
then, the holder or holders of at least 25% in aggregate principal amount of
the Notes at the time outstanding may, at its or their option, by written
notice to the Corporation and the Subsidiaries, declare all the Notes to be,
and all the Notes shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without presentment, demand,
- 11 -
<PAGE> 46
protest or further notice of any kind, all of which are expressly waived to the
extent permitted by law; provided, however, that upon the occurrence of any of
the events specified in subsections (d) or (e) of this Section 15, all the
Notes shall thereupon be and become, forthwith due and payable together with
interest accrued thereon without any action required by the holders thereof
whatsoever. As used herein, "Change of Control" means (i) the Corporation
merges or consolidates with another corporation (other than the consolidation
or merger of a wholly-owned subsidiary with or into the Corporation or with or
into any other wholly-owned subsidiary, and other than a merger involving the
Corporation in which the holders of at least 51% of the outstanding Common
Stock, on a fully-diluted basis, immediately prior to such merger hold at least
51% of the outstanding capital stock of the surviving corporation in any such
merger or consolidation, on a fully-diluted basis, immediately after the
merger); (ii) any "person" or "group" (as such terms are used in Section 13(d)
of the Exchange Act and the regulations promulgated hereunder) is or becomes a
beneficial owner, directly or indirectly, of securities of the Corporation
having a majority of the total number of votes that may be cast for the
election of directors of the Corporation; (iii) the Corporation and its
subsidiaries on a consolidated basis sells all or substantially all of their
consolidated assets; (iv) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of the Corporation before the
Transaction cease to constitute a majority of the Board of Directors of the
Corporation or any successor to the Corporation; or (v) any director is elected
to the Corporation's Board of Directors without being nominated thereto by a
majority of the Corporation's Independent Directors (as such term is defined in
the Corporation's By-Laws as in effect on the date hereof).
At any time after any declaration of acceleration has been
made as provided in this Section 15 (except as provided under subsections (d)
or (e) thereunder), the holders of at least 66 2/3% in principal amount of the
Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, if (i) the Corporation and the Subsidiaries
have paid all overdue installments of interest on the Notes and all principal
(and premium, if any) that has become due otherwise than by such declaration of
acceleration; and (ii) all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph; provided, however, that no such rescission shall
extend to or affect any subsequent
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<PAGE> 47
default or Event of Default or impair any right consequent thereon.
WITHOUT LIMITING THE FOREGOING, THE CORPORATION AND THE
SUBSIDIARIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS NOTE OR THE NOTES AND AGREES THAT ANY SUCH
PROCEEDING MAY, IF THE HOLDER SO ELECTS, BE BROUGHT AND ENFORCED IN THE SUPREME
COURT OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND THE CORPORATION AND THE SUBSIDIARIES HEREBY
WAIVE ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH PROCEEDING COMMENCED
IN SUCH COURT. THE CORPORATION AND THE SUBSIDIARIES FURTHER AGREE THAT ANY
PROCESS REQUIRED TO BE SERVED ON THEM FOR PURPOSES OF ANY SUCH PROCEEDING MAY
BE SERVED ON THEM, WITH THE SAME EFFECT AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED MAIL ADDRESSED TO THEM AT THE OFFICE OR AGENCY
SET FORTH IN SECTION 22 FOR PURPOSES OF NOTICES HEREUNDER.
16. Suits for Enforcement. In case any one or more of
the Events of Default specified in Section 15 of this Note shall happen and be
continuing, the holder of this Note may proceed to protect and enforce its
rights by suit in equity, action at law and/or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Note or in aid of the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the holder of this Note.
In case of any default under any Note, the Corporation and the
Subsidiaries, jointly and severally, will pay to the holder thereof such
amounts as shall be sufficient to cover the costs and expenses of such holder
due to said default, including, without limitation, collection costs and
reasonable attorneys' fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein conferred upon
the holder of this Note is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
18. Remedies Not Waived. No course of dealing between
the Corporation, the Subsidiaries and the holders of this Note or any delay on
the part of the holder hereof in exercising any rights hereunder shall operate
as a waiver of any right of any holder of this Note.
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<PAGE> 48
19. Subordination. (a) The obligation of the Corporation
and the Subsidiaries to pay the principal of and interest on this Note, shall
be subordinate and junior in right of payment to the extent set forth in the
following paragraphs (i), (ii) and (iii) to all Senior Debt. As used herein,
"Senior Debt" means the principal of, premium, if any, and interest (including
post-petition interest at the contract rate in any bankruptcy, insolvency or
similar proceeding with respect to the Corporation) on, and other amounts
payable on or in connection with indebtedness for money borrowed by the
Corporation or the Subsidiaries, whether or not outstanding on the date of this
Note, from, of capital lease obligations payable to any bank or other financial
institution regularly engaged in the business of making loans or extending
credit; provided, that Senior Debt shall not include any such indebtedness or
capital lease obligations which (a) is guaranteed by any other entity or person
(other than a subsidiary of the Corporation); (b) is convertible into equity of
the Corporation or any subsidiary or which was purchased from the Corporation
or any subsidiary by such bank or financial institution along with capital
stock, warrants or other rights to receive an equity interest, profit
participation or similar rights in the Corporation or such subsidiary; or (c)
provides in any documentation evidencing such indebtedness or capital lease
obligation that such indebtedness or capital lease obligation is not superior
in right of payment to the Senior Subordinated Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or any
receivership proceedings in connection therewith, relative to the
Corporation or its creditors or its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up
of the Corporation, whether or not involving insolvency or bankruptcy
proceedings, then all Senior Debt shall first be paid in full, before
any payment on account of principal or interest is made upon this
Note.
(ii) In any of the proceedings referred to in paragraph
(i) above, any payment or distribution of any kind or character,
whether in cash, property, stock or obligations which may be payable
or deliverable in respect of this Note shall be paid or delivered
directly to the holders of Senior Debt for application in payment
thereof, unless and until all Senior Debt shall have been paid in
full.
(iii) In the event (A) the Corporation shall default under
any Senior Debt obligation and the effect of such default is to
accelerate the maturity of such obligation, (B) the Corporation shall
default under any Senior Debt
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<PAGE> 49
obligation and as a result thereof the holder thereof shall cause such
obligation to become due prior to the stated maturity thereof, (C) the
Corporation shall not pay a Senior Debt obligation at maturity or (D)
the Corporation shall not make any payment of principal or interest
under any document evidencing Senior Debt when due, then upon the
occurrence of (x) receipt by the holder of this Note of written notice
from the holder of such Senior Debt or (y) if such event of default
specified in clauses (A) through (D) above results from the
acceleration of the Senior Subordinated Notes, the date of such
acceleration, no such payment may be made by the Corporation upon or
in respect of the Notes for a period (the "Payment Blockage Period")
commencing on the earlier of the date of receipt of such notice or the
date of such acceleration and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated earlier by written notice
to the holder hereof from the holder of such Senior Debt commencing
the Payment Blockage Period). Notwithstanding anything herein to the
contrary, in no event shall a Payment Blockage Period extend beyond
179 days from the date the payment on the Notes was due. Not more
than one Payment Blockage Period with respect to this Note may be
commenced during any period of 360 consecutive days. For all purposes
of this Section 19(a)(iii), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage
Period with respect to Senior Debt initiating such Payment Blockage
Period shall be, or be made, the basis for the commencement of a
second Payment Blockage Period by the holder of such Senior Debt
whether or not within a period of 360 consecutive days unless such
event of default shall have been cured or waived for a period of not
less than 30 consecutive days.
(b) Subject to the payment in full of all Senior Debt as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of any kind or
character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Debt, until the principal of,
and interest on, the Senior Subordinated Notes shall be paid in full, and, as
between the Corporation, its creditors other than the holders of Senior Debt,
and the holders of this Note, no such payment or distribution made to the
holders of Senior Debt by virtue of this Section 19 which otherwise would have
been made to the holder of this Note shall be deemed a payment by the
Corporation on account of the Senior Debt, it being understood that the
provisions of this Section 19 are and are intended solely for the purposes of
defining the relative rights of the holder of this Note, on the one hand, and
the holders of the Senior Debt, on the other hand. Subject to the rights, if
any,
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<PAGE> 50
under this Section 19 of holders of Senior Debt to receive cash, property,
stock or obligations otherwise payable or deliverable to the holder of this
Note, nothing herein shall either impair, as between the Corporation and the
holder of this Note, the obligation of the Corporation, which is unconditional
and absolute, to pay to the holder hereof the principal hereof and interest
hereon in accordance with its terms and the provisions of this Note or prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder. The failure to make a
payment on account of principal or interest on the Notes by reason of any
provision of this Section 19 shall not be construed as preventing the
occurrence of an Event of Default under Section 15.
(c) Notwithstanding any provision contained herein to the
contrary, the indebtedness evidenced by this Note shall not (i) be subordinated
to claims of any trade creditors of the Corporation or (ii) be subordinated in
right of payment to the payment of any existing or future Debt of the
Corporation which is not Senior Debt; but rather shall rank equally with all
existing and future unsecured Debt of the Corporation except for such Debt as
may be subordinate thereto and as may be required by bankruptcy or other laws
affecting the rights of creditors generally.
20. Covenants Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Note contained by or
on behalf of the Corporation and the Subsidiaries shall bind their respective
successors and assigns, whether so expressed or not.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
22. Headings. The headings of the Sections and
subsections of this Note are inserted for convenience only and do not
constitute a part of this Note.
23. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid,
(a) if to the Corporation or the Subsidiaries, at:
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
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<PAGE> 51
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to the holder of this Note, to its address set
forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes.
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<PAGE> 52
IN WITNESS WHEREOF, each of the undersigned has caused this
Note to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By
--------------------------
President
[Corporate Seal]
Attest:
- --------------------------------
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- --------------------------------
Secretary
TRANSCISCO LEASING COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- --------------------------------
Secretary
TRANSCISCO TRADING COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- --------------------------------
Secretary
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<PAGE> 53
EXHIBIT B-2
SERIES B NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THAT ACT OR, IN THE OPINION OF COUNSEL, AN EXEMPTION FROM REGISTRATION IS
AVAILABLE
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
TRANSCISCO INDUSTRIES, INC.
Series B Senior Subordinated Note
Due July 31, 2000
<TABLE>
<S> <C>
Registered New York, New York
$[up to 1,000,000] August ___, 1995
</TABLE>
TRANSCISCO INDUSTRIES, INC., a Delaware corporation (the
"Corporation"), TRANSCISCO RAIL SERVICES COMPANY, a California corporation
("TRSC"), TRANSCISCO LEASING COMPANY, a Delaware corporation ("TLC") and
TRANSCISCO TRADING COMPANY, a Delaware corporation ("TTC") (each of TRSC, TLC
and TTC each a "Subsidiary" and collectively, the "Subsidiaries"), for value
received, hereby jointly and severally promise to pay to the order of [FURMAN
SELZ SBIC, L.P., a Delaware limited partnership or JAMES DOWLING] or registered
assigns, the principal sum of [up to One Million Dollars ($1,000,000)], on July
31, 2000 and to pay interest as set forth below.
The payment of principal and interest on this Note shall be in
such currency of the United States of America as at the time of payment shall
be legal tender for payment of public and private debts.
1. Notes. This Note is issued pursuant to a certain
Note and Warrant Purchase Agreement, dated as of August ___, 1995 (the
"Purchase Agreement"), among the Corporation, the Subsidiaries, Furman Selz
SBIC, L.P. and James Dowling, providing
<PAGE> 54
for, among other things, the issuance of (i) Series A Senior Subordinated Notes
Due 2000 in an aggregate principal amount of $2,000,000, (ii) Series B Senior
Subordinated Notes Due 2000 in an aggregate principal amount of $1,000,000 (the
"B Notes" and, together with this Note, the "Senior Subordinated Notes"), and
(iii) warrants (the "Warrants") to subscribe to up to 1,000,000 shares of the
Common Stock, par value $.01 per share, of the Corporation. This Series B
Senior Subordinated Note Due 2000 and any such Note subsequently issued upon
exchange or transfer thereof are hereinafter collectively called the "Notes".
2. Interest. Interest shall accrue on the unpaid
principal balance of this Note at an annual rate of 14%. Accrued but unpaid
interest shall be due and payable on the unpaid principal balance of this Note
on each of July 31, 1996, July 31, 1997, and each January 31 and July 31 of
each year thereafter, beginning on January 31, 1998. One-half of the interest
due and payable on July 31, 1996 shall be deferred and shall be payable on July
31, 1998 and one-half of the interest due and payable on July 31, 1997 shall be
deferred and shall be payable on July 31, 1999. Any interest deferred pursuant
to the preceding sentence shall compound and accrue interest at the applicable
rate until paid. All interest hereunder shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
3. Payments of Interest and Principal. All payments of
principal and interest hereunder shall be paid to the holder hereof by wire
transfer in immediately available funds. Wire transfer payments of interest
and principal on this Note is conditioned upon the holder providing to the
Corporation duly authorized instructions for the wire transfer of such amounts
to the holder's designated account. If principal or interest on this Note
becomes due and payable on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day. For purposes of
this Note, "Business Day" means any day other than a Saturday, a Sunday or a
legal holiday under the laws of the State of New York.
4. Transfer or Exchange of Notes. The Corporation shall
keep at its office or agency maintained as provided in subsection (a) of
Section 12 a register in which the Corporation shall provide for the
registration of Notes and for the registration of transfer and exchange of
Notes. The holder of this Note may, at its option, and either in person or by
duly authorized attorney, surrender the same for registration of transfer or
exchange, as a whole or in part, in multiples of $100,000, at the office or
agency of the Corporation maintained as provided in subsection (a) of Section
12, and, without expense to such holder (except for taxes or governmental
charges imposed in connection therewith), receive from the Corporation and the
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Subsidiaries in exchange therefor a Note or Notes in such denomination or
denominations as such holder may request, dated as of the date to which
interest has been paid on the Note or Notes so surrendered for transfer or
exchange, for the same aggregate principal amount as the then unpaid principal
amount of the Note or Notes so surrendered for transfer or exchange, and
registered in the name of such person or persons as may be designated by such
holder; provided, however, that this Note shall not by transferred to any
person whose primary line of business is the manufacture of railroad car
components or the leasing of railroad cars or to any person that is not
incorporated or organized under the laws of the United States or a State
thereof. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or shall be accompanied by a written
instrument of transfer, satisfactory in form to the Corporation, duly executed
by the holder of such Note or his attorney, duly authorized in writing. Every
Note so made and delivered in exchange for this Note shall in all other
respects be in the same form and have the same terms as this Note. No transfer
or exchange of any Note shall be valid unless made in the foregoing manner at
such office or agency.
5. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt of evidence satisfactory to the Corporation of the loss, theft,
destruction or mutilation of this Note, and, in the case of any such loss,
theft or destruction, upon receipt of an affidavit of loss from the holder
hereof reasonably satisfactory to the Corporation, or, in the case of any such
mutilation, upon surrender and cancellation of this Note, the Corporation and
the Subsidiaries will make and deliver, in lieu of this Note, a new Note of
like tenor and unpaid principal amount and dated as of the date to which
interest has been paid on this Note.
6. Persons Deemed Owners; Holders. The Corporation and
the Subsidiaries may deem and treat the person in whose name any Note is
registered as the owner and holder of such Note for the purpose of receiving
payment of principal of and premium, if any, and interest on such Note and for
all other purposes whatsoever, whether or not such Note shall be overdue. With
respect to any Note at any time outstanding, the term "holder," as used herein,
shall be deemed to mean the person in whose name such Note is registered as
aforesaid at such time.
7. Prepayments. Prepayments on this Note may be made
only in accordance with the provisions of the Purchase Agreement and Sections 8
through 11 hereof.
8. Notice of Prepayment and Other Notices. The
Corporation shall give written notice of prepayment of this Note or any portion
hereof pursuant to Section 7 not less than 30 nor
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not more than 60 days prior to the date fixed for such prepayment. Such notice
and all other notices to be given to any holder of this Note shall be given by
registered or certified mail to the person in whose name this Note is
registered at its address designated on the register maintained by the
Corporation on the date of mailing such notice of prepayment or other notice.
9. Interest After Date Fixed for Prepayment. If this
Note or a portion hereof is called for prepayment as provided pursuant to
Section 7, this Note or such portion shall cease to bear interest on and after
the date fixed for such prepayment unless, upon presentation for the purpose of
prepayment, the Corporation and the Subsidiaries shall fail to pay this Note or
such portion, as the case may be, on such date, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest thereon, shall bear interest on and after the date
fixed for such prepayment and until paid at the rate of 14% per annum.
10. Surrender of Notes; Notation Thereon. Upon any
prepayment of a portion of the principal amount of this Note pursuant to
Section 7, the holder hereof, at its option, may require the Corporation and
the Subsidiaries to execute and deliver at the expense of the Corporation and
the Subsidiaries (other than for transfer taxes, if any), upon surrender of
this Note, a new Note registered in the name of such person or persons as may
be designated by such holder for the principal amount of this Note then
remaining unpaid, dated as of the date to which interest has been paid on the
principal amount of this Note then remaining unpaid, or may present this Note
to the Corporation for notation hereon of the payment of the portion of the
principal amount of this Note so prepaid.
11. Allocation of Payments. In the case of a prepayment
pursuant to Section 7 of less than all the Notes at the time outstanding, the
aggregate principal amount to be prepaid shall be allocated (in units of $1,000
or integral multiples thereof) among the holders of all the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective
aggregate unpaid principal amounts of the Notes (not theretofore called for
prepayment) then held by them, respectively, with adjustment, to the extent
practicable, to equalize for any prior unequal prepayments.
12. Affirmative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Maintenance of Office. The Corporation will maintain
an office or agency in San Francisco, California (or
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such other place in the United States of America as the Corporation may
designate in writing to the registered holder hereof), where the Notes may be
presented for registration of transfer and for exchange as herein provided,
where notices and demands to or upon the Corporation in respect of the Notes
may be served and where, at the option of the holders thereof, the Notes may be
presented for payment. Until the Corporation otherwise notifies the holders of
the Notes, said office shall be the principal office of the Corporation in San
Francisco, California.
(b) Payment of Taxes. The Corporation will promptly pay
and discharge or cause to be paid and discharged, before the same shall become
in default, all lawful taxes and assessments imposed upon the Corporation or
any subsidiary or upon the income and profits of the Corporation or any
subsidiary, or upon any property, real, personal or mixed, belonging to the
Corporation or any subsidiary, or upon any part thereof by the United States or
any State thereof, as well as all lawful claims for labor, materials and
supplies which, if unpaid, would become a lien or charge upon such property or
any part thereof; provided, however, that the Corporation shall not be required
to pay and discharge or to cause to be paid and discharged any such tax,
assessment, charge, levy or claim so long as both (x) the Corporation has set
aside adequate reserves for such tax, assessment, charge, levy or claim and
(y)(i) the Corporation shall be contesting the validity thereof in good faith
by appropriate proceedings or (ii) the Corporation shall, in its good faith
judgment, deem the validity thereof to be questionable and the party to whom
such tax, assessment, charge, levy or claim is allegedly owed shall not have
made written demand for the payment thereof.
(c) Corporate Existence. The Corporation will do or
cause to be done all things necessary and lawful to preserve and keep in full
force and effect its corporate existence, rights and franchises and the
corporate existence, rights and franchises of its subsidiaries under the laws
of the United States or any State thereof or the District of Columbia;
provided, however, that nothing in this subsection (c) shall prevent (i) a
consolidation or merger of, or a sale, transfer or disposition of all or any
substantial part of the property and assets of, the Corporation not prohibited
by the provisions of Section 13, or (ii) the abandonment or termination of any
rights or franchises of the Corporation, if such consolidation, merger, sale,
transfer, disposition, abandonment or termination is, in the good faith
business judgment of the Corporation, in the best interests of the Corporation
and not disadvantageous to the holder of this Note.
(d) Maintenance of Property. The Corporation will, and
the Corporation will cause its subsidiaries to, at all times
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maintain and keep, or cause to be maintained and kept, in good repair, working
order and condition all significant properties of the Corporation and its
subsidiaries used in the conduct of the business of the Corporation and its
subsidiaries, and will, and will cause its subsidiaries to, from time to time
make or cause to be made all needful and proper repairs, renewals,
replacements, betterments and improvements thereto, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this subsection (d) shall
require (i) the making of any repair or renewal or (ii) the continuance of the
operation and maintenance of any property or (iii) the retention of any assets
(the sale or other disposition of which would not be prohibited by Section 13),
if such action (or inaction) is, in the good faith business judgment of the
Corporation, in the best interests of the Corporation.
(e) Insurance. The Corporation will, and the Corporation
will cause its subsidiaries to (i) keep adequately insured, by financially
sound and reputable insurers, all property of a character usually insured by
corporations engaged in the same or a similar business similarly situated
against loss or damage of the kinds customarily insured against by such
corporations and (ii) carry, with financially sound and reputable insurers,
such other insurance (including, without limitation, liability insurance) in
such amounts as are available at reasonable expense and to the extent believed
necessary in the good faith business judgment of the Corporation.
(f) Keeping of Books. The Corporation will at all times
keep proper books of record and account in which proper entries will be made of
its transactions in accordance with generally accepted accounting principles
consistently applied.
(g) Transactions with Affiliates. Neither the
Corporation nor any of its subsidiaries will enter into any transaction or
series of transactions with any director, officer, stockholder, employee or
affiliate of the Corporation or its subsidiaries (other than (i) a transaction
or series of transactions that involves, individually, less than $25,000,
provided that the aggregate of all such transactions or series of transactions
involves less than $500,000 and (ii) transactions by and among any of the
Company and/or any Subsidiary), except on terms and conditions that, in the
reasonable judgment of the Board of Directors of the Corporation (as evidenced
by the approval of not less than 66 2/3% of the then-existing Directors), are
no less favorable to the Corporation or its direct or indirect subsidiaries, as
the case may be, than the terms and conditions which the Corporation or such
subsidiary, as
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the case may be, could obtain in a transaction with an unaffiliated person on
an arm's length basis.
(h) Notice of Default. If any one or more events which
constitute, or which with notice or lapse of time or both would constitute, an
Event of Default under Section 15 shall occur, or if the holder of any Note
shall demand payment or take any other action permitted upon the occurrence of
any such Event of Default, the Corporation shall immediately after it becomes
aware that any such event would with or without notice or lapse of time or both
constitute such an Event or that such demand has been made or that any such
action has been taken, give notice to the holder of this Note, specifying the
nature of such event or of such demand or action, as the case may be.
13. Negative Covenants. The Corporation and the
Subsidiaries, jointly and severally, covenant and agree that, so long as any
Note shall be outstanding:
(a) Consolidation, Merger and Sale. The Corporation will
not consolidate or merge with or into, or sell or otherwise dispose of all or
substantially all of its property to, any other corporation, unless
(i) the Corporation shall have obtained the written
consent of the holders of more than 66 2/3% in principal amount of the
Notes then outstanding;
(ii) the Corporation or such other corporation shall not
otherwise be in default in the performance or observance of any
covenant, agreement or condition of the Notes; and
(iii) the holder of this Note shall have received, in
connection therewith, an opinion of counsel for the Corporation (or
other counsel reasonably satisfactory to the holder) in form and
substance satisfactory to the holder, to the effect that any such
consolidation, merger, sale or conveyance and any such assumption
complies with the provisions of this paragraph (a).
Following the consummation of such merger, sale, conveyance or
other disposition, the Corporation will, upon the written request of the holder
of any Note, provide such holder with a copy of the agreement or agreements
pursuant to which such consolidation, merger, sale, conveyance or other
disposition was effected as promptly as possible.
(b) Restricted Payments. The Corporation shall not and
shall cause each of its subsidiaries not to (i) declare or pay any dividend on,
or authorize or make any distribution in
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respect of, shares of any class of its or their stock (except dividends or
distributions payable in shares of its stock and except for dividends paid by
direct or indirect wholly-owned subsidiaries), or (ii) authorize or make any
purchase, redemption or acquisition for value of, any shares of any class of
its their stock.
(c) Restrictions on Senior Subordinated Debt. The
Corporation shall not incur, and shall cause its subsidiaries not to incur,
directly or indirectly, any Debt (as defined below) which is senior in right of
payment to the Senior Subordinated Notes and is subordinate or junior in any
respect in right of payment to any other Debt. As used herein, "Debt" of a
person means at any date, without duplication, whether or not contingent, (i)
all obligations for borrowed money of such person, (ii) all obligations of such
person evidenced by bonds, debentures, notes, letters of credit or similar
instruments, (iii) all obligations of such person to pay the deferred purchase
price of property or services, except accounts payable and other liabilities
arising in the ordinary course of business, (iv) all reimbursement obligations
of such person, (v) all obligations of such person as lessee under capital
leases, (vi) all debt of others secured by a lien on any asset of such person
and (vii) any Debt of others guaranteed by such person.
(d) Disposition of Assets Not in the Ordinary Course. In
the event the Corporation or any subsidiary sells, transfers, assigns or
otherwise disposes of any asset not in the ordinary course of business, the
Corporation shall, or cause such subsidiary to, (i) use the proceeds of such
disposition to repay any Debt which is senior in right of payment to the Notes,
(ii) reinvest such proceeds in the Corporation or any wholly-owned subsidiary
of the Corporation, or (iii) prepay the Senior Subordinated Notes.
(e) Limitation on Payment Restrictions Affecting
Subsidiaries. The Corporation shall not, and shall not permit any subsidiary
of the Corporation to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction which by its terms
expressly restricts the ability of any such subsidiary to (i) pay dividends or
make any other distributions on such subsidiary's capital stock or pay any Debt
owed to the corporation or any subsidiary of the Corporation, (ii) make any
loans or advances to the Corporation or any subsidiary of the Corporation or
(iii) transfer any of its property or assets to the Corporation or any
subsidiary of the Corporation, except for any restrictions existing under
agreements in effect at the time of, or entered into concurrently with, the
issuance of this Note, including the restrictions contained in the Credit
Agreement (as defined below), to the
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extent that such restrictions are set forth in such agreement as in effect on
the date of the issuance of this Note. As used herein, "Credit Agreement"
means that certain Credit Agreement between Transamerica Business Credit
Corporation (the "Bank"), the Corporation and the Subsidiaries dated August
___, 1995.
14. Modification by Holders; Waiver. The Corporation and
the Subsidiaries may, with the written consent of the holders of not less than
66 2/3% in principal amount of the Notes then outstanding, modify the terms and
provisions of the Notes or the rights of the holders of the Notes or the
obligations of the Corporation and the Subsidiaries thereunder, and the
observance by the Corporation and the Subsidiaries of any term or provision of
the Notes may be waived with the written consent of the holders of not less
than 66 2/3% in principal amount of the Notes then outstanding; provided,
however, that no such modification or waiver shall:
(a) change the maturity of any Note or reduce the
principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or reduce the amount or change the time of
payment of premium payable on any prepayment thereof without the
consent of the holder of each Note so affected; or
(b) give any Note any preference over any other Note; or
(c) reduce the applicable aforesaid percentages of Notes,
the consent of the holders of which is required for any such
modification.
Any such modification or waiver shall apply equally to all the
holders of the Notes and shall be binding upon them, upon each future holder of
any Note and upon the Corporation and the Subsidiaries, whether or not such
Note shall have been marked to indicate such modification or waiver, but any
Note issued thereafter shall bear a notation referring to any such modification
or waiver. Promptly after obtaining the written consent of the holders as
herein provided, the Corporation shall transmit a copy of such modification or
waiver to all the holders of the Notes at the time outstanding.
15. Events of Default; Acceleration. If any one or more
of the following events, herein called Events of Default, shall occur, for any
reason whatsoever, and whether such occurrence shall, on the part of the
Corporation or any Subsidiary, be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of a court of competent
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jurisdiction or any order, rule or regulation of any administrative or other
governmental authority and such Event of Default shall be continuing:
(a) default shall be made in the payment of the principal
of any Note or the premium thereon, if any, when and as the same shall
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise and such default shall
continue for a period of five days; or
(b) default shall be made in the payment of any
installment of interest on any Note according to its terms when and as
the same shall become due and payable and such default shall continue
for a period of ten days; or
(c) default or breach shall be or shall have been made in
the due observance or performance of any representation, covenant,
condition or agreement on the part of the Corporation or the
Subsidiaries to be observed or performed pursuant to the Purchase
Agreement or the terms hereof and such default shall continue for 15
days after written notice thereof, specifying such default and
requesting that the same be remedied, shall have been given to the
Corporation by the holder or holders of at least 25% of the principal
amount of the Notes then outstanding (the Corporation to give
forthwith to all other holders of Notes at the time outstanding
written notice of the receipt of such notice specifying the default
referred to therein); or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Corporation or
any subsidiary in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Corporation or any
subsidiary or for any substantial part of any of their respective
property, or ordering the winding-up or liquidation of any of their
affairs and the continuance of any such decree or order unstayed and
in effect for a period of 30 consecutive days; or
(e) the commencement by the Corporation or any subsidiary
of a voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable federal or
state bankruptcy, insolvency or other similar laws, or the consent by
the Corporation or any subsidiary to the appointment of or taking
possession by a
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receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of the Corporation or any subsidiary or for
any substantial part of any of their respective property, or the
making by the Corporation or any subsidiary of any assignment for the
benefit of creditors, or the failure of the Corporation or any
subsidiary generally to pay its debts as such debts become due, or the
taking of corporate action by the Corporation or any subsidiary in
furtherance of or which might reasonably be expected to result in any
of the foregoing; or
(f) (i) failure to make any payment in respect of any
Debt of the Corporation or its subsidiaries having an aggregate
principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than $50,000 when due (whether
by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the document relating thereto; or
(ii) failure by the Corporation or its subsidiaries to perform or
observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating
to any such Debt referred to in clause (i) above, and such failure
continues after the applicable grace or notice period, if any,
specified in the document relating thereto if the effect of such
failure, event or condition is to cause, or to permit the holder or
holders of such Debt or beneficiary or beneficiaries of such Debt (or
a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause such Debt to be declared to be due and
payable prior to its stated maturity; or
(g) final judgment for the payment of money in excess
$50,000 shall be rendered against the Corporation or any subsidiary
and the same shall remain undischarged for a period of 30 days during
which execution shall not be effectively stayed;
(h) a Change of Control (as defined below) shall have
occurred;
then, the holder or holders of at least 25% in aggregate principal amount of
the Notes at the time outstanding may, at its or their option, by written
notice to the Corporation and the Subsidiaries, declare all the Notes to be,
and all the Notes shall thereupon be and become, forthwith due and payable
together with interest accrued thereon without presentment, demand, protest or
further notice of any kind, all of which are expressly
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waived to the extent permitted by law; provided, however, that upon the
occurrence of any of the events specified in subsections (d) or (e) of this
Section 15, all the Notes shall thereupon be and become, forthwith due and
payable together with interest accrued thereon without any action required by
the holders thereof whatsoever. As used herein, "Change of Control" means (i)
the Corporation merges or consolidates with another corporation (other than the
consolidation or merger of a wholly-owned subsidiary with or into the
Corporation or with or into any other wholly-owned subsidiary, and other than a
merger involving the Corporation in which the holders of at least 51% of the
outstanding Common Stock, on a fully-diluted basis, immediately prior to such
merger hold at least 51% of the outstanding capital stock of the surviving
corporation in any such merger or consolidation, on a fully-diluted basis,
immediately after the merger); (ii) any "person" or "group" (as such terms are
used in Section 13(d) of the Exchange Act and the regulations promulgated
hereunder) is or becomes a beneficial owner, directly or indirectly, of
securities of the Corporation having a majority of the total number of votes
that may be cast for the election of directors of the Corporation; (iii) the
Corporation and its subsidiaries on a consolidated basis sells all or
substantially all of their consolidated assets; (iv) as the result of, or in
connection with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions (a "Transaction"), the persons who were directors of the
Corporation before the Transaction cease to constitute a majority of the Board
of Directors of the Corporation or any successor to the Corporation; or (v) any
director is elected to the Corporation's Board of Directors without being
nominated thereto by a majority of the Corporation's Independent Directors (as
such term is defined in the Corporation's By-Laws as in effect on the date
hereof).
At any time after any declaration of acceleration has been
made as provided in this Section 15 (except as provided under subsections (d)
or (e) thereunder), the holders of at least 66 2/3% in principal amount of the
Notes then outstanding may, by notice to the Corporation, rescind such
declaration and its consequences, if (i) the Corporation and the Subsidiaries
have paid all overdue installments of interest on the Notes and all principal
(and premium, if any) that has become due otherwise than by such declaration of
acceleration; and (ii) all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason of
acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph; provided, however, that no such rescission shall
extend to or affect any subsequent
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default or Event of Default or impair any right consequent thereon.
WITHOUT LIMITING THE FOREGOING, THE CORPORATION AND THE
SUBSIDIARIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS NOTE OR THE NOTES AND AGREES THAT ANY SUCH
PROCEEDING MAY, IF THE HOLDER SO ELECTS, BE BROUGHT AND ENFORCED IN THE SUPREME
COURT OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND THE CORPORATION AND THE SUBSIDIARIES HEREBY
WAIVE ANY OBJECTION TO JURISDICTION OR VENUE IN ANY SUCH PROCEEDING COMMENCED
IN SUCH COURT. THE CORPORATION AND THE SUBSIDIARIES FURTHER AGREE THAT ANY
PROCESS REQUIRED TO BE SERVED ON THEM FOR PURPOSES OF ANY SUCH PROCEEDING MAY
BE SERVED ON THEM, WITH THE SAME EFFECT AS PERSONAL SERVICE ON THEM WITHIN THE
STATE OF DELAWARE, BY REGISTERED MAIL ADDRESSED TO THEM AT THE OFFICE OR AGENCY
SET FORTH IN SECTION 22 FOR PURPOSES OF NOTICES HEREUNDER.
16. Suits for Enforcement. In case any one or more of
the Events of Default specified in Section 15 of this Note shall happen and be
continuing, the holder of this Note may proceed to protect and enforce its
rights by suit in equity, action at law and/or by other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Note or in aid of the exercise of any power granted in this Note, or may
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of the holder of this Note.
In case of any default under any Note, the Corporation and the
Subsidiaries, jointly and severally, will pay to the holder thereof such
amounts as shall be sufficient to cover the costs and expenses of such holder
due to said default, including, without limitation, collection costs and
reasonable attorneys' fees, to the extent actually incurred.
17. Remedies Cumulative. No remedy herein conferred upon
the holder of this Note is intended to be exclusive of any other remedy and
each and every such remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise.
18. Remedies Not Waived. No course of dealing between
the Corporation, the Subsidiaries and the holders of this Note or any delay on
the part of the holder hereof in exercising any rights hereunder shall operate
as a waiver of any right of any holder of this Note.
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19. Subordination. (a) The obligation of the Corporation
and the Subsidiaries to pay the principal of and interest on this Note, shall
be subordinate and junior in right of payment to the extent set forth in the
following paragraphs (i), (ii) and (iii) to all Senior Debt. As used herein,
"Senior Debt" means the principal of, premium, if any, and interest (including
post-petition interest at the contract rate in any bankruptcy, insolvency or
similar proceeding with respect to the Corporation) on, and other amounts
payable on or in connection with indebtedness for money borrowed by the
Corporation or the Subsidiaries, whether or not outstanding on the date of this
Note, from, of capital lease obligations payable to any bank or other financial
institution regularly engaged in the business of making loans or extending
credit; provided, that Senior Debt shall not include any such indebtedness or
capital lease obligations which (a) is guaranteed by any other entity or person
(other than a subsidiary of the Corporation); (b) is convertible into equity of
the Corporation or any subsidiary or which was purchased from the Corporation
or any subsidiary by such bank or financial institution along with capital
stock, warrants or other rights to receive an equity interest, profit
participation or similar rights in the Corporation or such subsidiary; or (c)
provides in any documentation evidencing such indebtedness or capital lease
obligation that such indebtedness or capital lease obligation is not superior
in right of payment to the Senior Subordinated Notes.
(i) In the event of any insolvency, bankruptcy,
liquidation, reorganization or other similar proceedings, or any
receivership proceedings in connection therewith, relative to the
Corporation or its creditors or its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up
of the Corporation, whether or not involving insolvency or bankruptcy
proceedings, then all Senior Debt shall first be paid in full, before
any payment on account of principal or interest is made upon this
Note.
(ii) In any of the proceedings referred to in paragraph
(i) above, any payment or distribution of any kind or character,
whether in cash, property, stock or obligations which may be payable
or deliverable in respect of this Note shall be paid or delivered
directly to the holders of Senior Debt for application in payment
thereof, unless and until all Senior Debt shall have been paid in
full.
(iii) In the event (A) the Corporation shall default under
any Senior Debt obligation and the effect of such default is to
accelerate the maturity of such obligation, (B) the Corporation shall
default under any Senior Debt
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<PAGE> 67
obligation and as a result thereof the holder thereof shall cause such
obligation to become due prior to the stated maturity thereof, (C) the
Corporation shall not pay a Senior Debt obligation at maturity or (D)
the Corporation shall not make any payment of principal or interest
under any document evidencing Senior Debt when due, then upon the
occurrence of (x) receipt by the holder of this Note of written notice
from the holder of such Senior Debt or (y) if such event of default
specified in clauses (A) through (D) above results from the
acceleration of the Senior Subordinated Notes, the date of such
acceleration, no such payment may be made by the Corporation upon or
in respect of the Notes for a period (the "Payment Blockage Period")
commencing on the earlier of the date of receipt of such notice or the
date of such acceleration and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated earlier by written notice
to the holder hereof from the holder of such Senior Debt commencing
the Payment Blockage Period). Notwithstanding anything herein to the
contrary, in no event shall a Payment Blockage Period extend beyond
179 days from the date the payment on the Notes was due. Not more
than one Payment Blockage Period with respect to this Note may be
commenced during any period of 360 consecutive days. For all purposes
of this Section 19(a)(iii), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage
Period with respect to Senior Debt initiating such Payment Blockage
Period shall be, or be made, the basis for the commencement of a
second Payment Blockage Period by the holder of such Senior Debt
whether or not within a period of 360 consecutive days unless such
event of default shall have been cured or waived for a period of not
less than 30 consecutive days.
(b) Subject to the payment in full of all Senior Debt as
aforesaid, the holder of this Note shall be subrogated to the rights of the
holders of Senior Debt to receive payments or distributions of any kind or
character, whether in cash, property, stock or obligations, which may be
payable or deliverable to the holders of Senior Debt, until the principal of,
and interest on, the Senior Subordinated Notes shall be paid in full, and, as
between the Corporation, its creditors other than the holders of Senior Debt,
and the holders of this Note, no such payment or distribution made to the
holders of Senior Debt by virtue of this Section 19 which otherwise would have
been made to the holder of this Note shall be deemed a payment by the
Corporation on account of the Senior Debt, it being understood that the
provisions of this Section 19 are and are intended solely for the purposes of
defining the relative rights of the holder of this Note, on the one hand, and
the holders of the Senior Debt, on the other hand. Subject to the rights, if
any,
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<PAGE> 68
under this Section 19 of holders of Senior Debt to receive cash, property,
stock or obligations otherwise payable or deliverable to the holder of this
Note, nothing herein shall either impair, as between the Corporation and the
holder of this Note, the obligation of the Corporation, which is unconditional
and absolute, to pay to the holder hereof the principal hereof and interest
hereon in accordance with its terms and the provisions of this Note or prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law or hereunder upon default hereunder. The failure to make a
payment on account of principal or interest on the Notes by reason of any
provision of this Section 19 shall not be construed as preventing the
occurrence of an Event of Default under Section 15.
(c) Notwithstanding any provision contained herein to the
contrary, the indebtedness evidenced by this Note shall not (i) be subordinated
to claims of any trade creditors of the Corporation or (ii) be subordinated in
right of payment to the payment of any existing or future Debt of the
Corporation which is not Senior Debt; but rather shall rank equally with all
existing and future unsecured Debt of the Corporation except for such Debt as
may be subordinate thereto and as may be required by bankruptcy or other laws
affecting the rights of creditors generally.
20. Covenants Bind Successors and Assigns. All the
covenants, stipulations, promises and agreements in this Note contained by or
on behalf of the Corporation and the Subsidiaries shall bind their respective
successors and assigns, whether so expressed or not.
21. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
22. Headings. The headings of the Sections and
subsections of this Note are inserted for convenience only and do not
constitute a part of this Note.
23. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first class
registered mail, postage prepaid,
(a) if to the Corporation or the Subsidiaries, at:
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
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<PAGE> 69
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to the holder of this Note, to its address set
forth in the register maintained by the Corporation for the
registration of transfer and exchange of Notes.
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<PAGE> 70
IN WITNESS WHEREOF, each of the undersigned has caused this
Note to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
TRANSCISCO RAIL SERVICES COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
TRANSCISCO LEASING COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
TRANSCISCO TRADING COMPANY
By
--------------------------
President
[Corporate Seal]
Attest:
- ---------------------------------
Secretary
- 18 -
<PAGE> 71
EXHIBIT C
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
WARRANT
TRANSCISCO INDUSTRIES, INC.
Stock Subscription Warrant
<TABLE>
<S> <C>
Warrant to Subscribe August ___, 1995
for [up to 1,000,000 shares]
</TABLE>
Void After July 31, 2005
THIS CERTIFIES that, for value received, [FURMAN SELZ SBIC,
L.P., a Delaware limited partnership or James Dowling ("Dowling")], or its
registered assigns, is entitled to subscribe for and purchase from TRANSCISCO
INDUSTRIES, INC., a Delaware corporation (hereinafter called the
"Corporation"), at the price of $1.50 per share (such price as from time to
time adjusted as hereinafter provided being hereinafter called the "Warrant
Price"), at any time prior to July 31, 2005, up to [1,000,000] (subject to
adjustment as hereinafter provided) fully paid and nonassessable shares of
Common Stock, par value $.01 per share, of the Corporation (hereinafter called
the "Common Stock"), subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. This Warrant was issued pursuant to a
certain Note and Warrant Purchase Agreement, dated as of August ___, 1995 (the
"Purchase Agreement"), among the Corporation, certain subsidiaries of the
Corporation, Furman Selz SBIC, L.P. ("FS") and James Dowling ("Dowling"), and
the rights and benefits contained therein shall inure to the benefit of all
subsequent holders of this Warrant. The Warrants issued pursuant to the
Purchase Agreement and any warrant or warrants subsequently issued upon
exchange or transfer thereof are hereinafter collectively called the
"Warrants".
<PAGE> 72
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by this
Warrant may be exercised by the holder hereof, in whole at any time or from
time to time in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) at the office of the Corporation
as it may designate by notice in writing to the holder hereof at the address of
such holder appearing on the books of the Corporation, and as further provided
below in this Section l:
(i) Cash Exercise. By payment to the Corporation of the
Warrant Price in cash or by certified or official bank check, for each
share being purchased;
(ii) Surrender of Notes. By surrender to the Corporation
for cancellation of A Notes or B Notes (as each such term is defined
in the Purchase Agreement), or of any portion of an A Note or a B
Note, for which credit shall be given toward the Warrant Price for
each share being acquired on a dollar-for-dollar basis with reference
to the principal amount cancelled;
(iii) Net Issue Exercise. By an election to receive shares
the aggregate fair market value of which as of the date of exercise is
equal to the fair market value of this Warrant (or the portion thereof
being cancelled) on such date, in which event the Corporation, upon
receipt of notice of such election, shall issue to the holder hereof a
number of shares of the Corporation's Common Stock equal to (A) the
number of shares of Common Stock acquirable upon exercise of all or
any portion of this Warrant being cancelled, as at such date,
multiplied by (B) the balance remaining after deducting (x) the
Warrant Price, as in effect on such date, from (y) the fair market
value of one share of the Corporation's Common Stock as at such date
and dividing the result by (C) the fair market value of one share of
the Corporation's Common Stock as at such date; or
(iv) Combined Payment Method. By satisfaction of the
Warrant Price for each share being acquired in any combination of two
or more of the methods described in clauses (i), (ii) and (iii) above.
(b) Definition of Fair Market Value. For the purposes of
this Section 1, "fair market value" shall mean, as to any security, as follows:
if that security is listed or admitted to trading on one or more national
securities exchanges, the average of the last reported sales prices per share
regular way or, in case no such reported sales takes place on any such day, the
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<PAGE> 73
average of the last reported bid and asked prices per share regular way, in
either case on the principal national securities exchange on which that
security is listed or admitted to trading, for the 30 trading days immediately
preceding the date upon which the fair market value is determined (the
"Determination Date"); if that security is not listed or admitted to trading on
a national securities exchange but is quoted by the NASDAQ Stock Market
("NASDAQ"), the average of the last reported sales prices per share regular way
or, in case no reported sale takes place on any such day or the last reported
sales prices are not then quoted by NASDAQ, the average for each such day of
the last reported bid and asked prices per share, for the 30 trading days
immediately preceding the Determination Date as furnished by the National
Quotation Bureau Incorporated or any similar successor organization; and if
that security is not listed or admitted to trading on a national securities
exchange or quoted by NASDAQ or any other nationally recognized quotation
service, the "fair market value" shall be the fair value thereof determined
jointly by the Corporation and the registered holders of Warrants outstanding
representing a majority of the shares of Common Stock issuable upon exercise of
the Warrants; provided, however, that if such parties are unable to reach
agreement within 60 days after such determination becomes necessary, the "fair
market value" shall equal the fair market value of all outstanding shares of
Common Stock of the Corporation divided by the number of shares of Common Stock
outstanding, such fair market value to be determined in good faith by an
independent investment banking firm selected jointly by the Corporation and the
registered holders of Warrants outstanding representing a majority of the
shares of Common Stock issuable upon exercise of the Warrants or, if that
selection cannot be made within 15 days, by an independent investment banking
firm selected by the American Arbitration Association in accordance with its
rules. The fees and expenses of any such investment banking firm shall be
shared and paid equally by the Corporation and the holder(s) of such Warrants
who have required valuation. Anything in this paragraph (b) to the contrary
notwithstanding, the fair market value of this Warrant or any portion thereof
as of any Determination Date shall be equal to (i) the fair market value of the
shares of Common Stock issuable upon exercise of this Warrant (or such portion
thereof), (determined in accordance with the foregoing provisions of this
paragraph (b)); minus (ii) the aggregate Warrant Exercise Price of the Warrant
(or such portion thereof).
(c) Delivery of Certificates, Etc. In the event of any
exercise of the rights represented by this Warrant, a certificate or
certificates for the shares of Common Stock so purchased, registered in the
name of the holder, shall be delivered to the holder hereof within a reasonable
time, not exceeding ten days, after the rights represented by this Warrant
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<PAGE> 74
shall have been so exercised; and, unless this Warrant has expired, a new
Warrant representing the number of shares (except a remaining fractional
share), if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within such time. The
person in whose name any certificate for shares of Common Stock is issued upon
exercise of this Warrant shall for all purposes be deemed to have become the
holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
except that, if the date of such surrender and payment is a date on which the
stock transfer books of the Corporation are closed, such person shall be deemed
to have become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.
Section 2. Adjustment of Number of Shares. Upon each
adjustment of the Warrant Price as provided in Section 3, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Price resulting from such adjustment.
Section 3. Adjustment of Price Upon Issuance of Common Stock.
If and whenever the Corporation shall issue or sell any shares of its Common
Stock for a consideration per share less than the fair market value for such
shares at the time of such issue or sale, then, forthwith upon such issue or
sale the Warrant Price shall be adjusted (calculated to the nearest $.01)
determined by multiplying the Warrant Price by a fraction, the numerator of
which is the amount equal to the sum of (a) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the
fair market value for one share of Common Stock, and (b) the consideration, if
any, received by the Corporation upon such issue or sale, and the denominator
of which is the amount equal to the total number of shares of Common Stock
outstanding immediately after such issue or sale multiplied by the fair market
value of one share of Common Stock. No adjustments of the Warrant Price,
however, shall be made in an amount less than $.01 per share, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $.01 per share or more.
- 4 -
<PAGE> 75
For purposes of this Section 3, the following paragraphs (a)
to (o), inclusive, shall also be applicable:
(a) Issuance of Rights or Options. In case at any time
the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options", and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities (determined by dividing (i)
the total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case
of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options) shall be less than the fair market
value of a share of Common Stock at the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have
been issued for such price per share as of the date of granting of
such Options and thereafter shall be deemed to be outstanding. Except
as otherwise provided in paragraph (c), no adjustment of the Warrant
Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(b) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable,
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<PAGE> 76
and the price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (i) the total amount
received or receivable by the Corporation as consideration for the
issue or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange of all such Convertible
Securities) shall be less than the fair market value of a share of
Common Stock at the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange
of all such Convertible Securities shall be deemed to have been issued
for such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (i) except as otherwise provided in
paragraph (c) below, no adjustment of the Warrant Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities, and (ii) if any such issue or sale of
such Convertible Securities is made upon exercise of any Option to
purchase any such Convertible Securities for which adjustments of the
Warrant Price have been or are to be made pursuant to other provisions
of this Section 3, no further adjustment of the Warrant Price shall be
made by reason of such issue or sale.
(c) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in paragraph (a), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraph (a) or
(b), or the rate at which any Convertible Securities referred to in
paragraph (a) or (b) are convertible into or exchangeable for Common
Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution), the Warrant Price in
effect at the time of such event shall forthwith be readjusted to the
Warrant Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold; and
on the expiration of any such Option or the termination of any such
right to convert or exchange such Convertible Securities, the Warrant
Price then in effect hereunder shall forthwith be increased to the
Warrant Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or
termination, never been issued,
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<PAGE> 77
and the Common Stock issuable thereunder shall no longer be deemed to
be outstanding.
If the purchase price provided for in any such Option referred to in
paragraph (a) or the rate at which any Convertible Securities referred
to in paragraph (a) or (b) are convertible into or exchangeable for
Common Stock, shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any
such Option or upon conversion or exchange of any such Convertible
Security, the Warrant Price then in effect hereunder shall forthwith
be adjusted to such respective amount as would have been obtained had
such Option or Convertible Security never been issued as to such
Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as a result
of such adjustment the Warrant Price then in effect hereunder is
thereby reduced.
(d) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any stock of
the Corporation payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration.
(e) Consideration for Stock. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration
as determined by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. The amount of consideration deemed to be received by the
Corporation pursuant to the foregoing provisions of this paragraph (e)
upon any issuance and/or sale, pursuant to an established compensation
plan of the Corporation, to directors, officers or employees of the
Corporation in connection with their employment of shares of Common
Stock, Options or Convertible Securities, shall be
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<PAGE> 78
increased by the amount of any tax benefit realized by the Corporation
as a result of such issuance and/or sale, the amount of such tax
benefit being the amount by which the Federal and/or State income or
other tax liability of the Corporation shall be reduced by reason of
any deduction or credit in respect of such issuance and/or sale. In
case any Options shall be issued in connection with the issue and sale
of other securities of the Corporation, together comprising one
integral transaction in which no specific consideration is allocated
to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration. In case any shares of
Common Stock, Options or Convertible Securities shall be issued in
connection with any merger or consolidation in which the Corporation
is the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as determined by the Board of
Directors of the Corporation of such portion of the assets and
business of the non-surviving corporation as such Board shall
determine to be attributable to such Common Stock, Options or
Convertible Securities, as the case may be. In the event of any
consolidation or merger of the Corporation in which the Corporation is
not the surviving corporation or in the event of any sale of all or
substantially all of the assets of the Corporation for stock or other
securities of any corporation, the Corporation shall be deemed to have
issued a number of shares of its Common Stock for stock or securities
of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for a consideration
equal to the fair market value on the date of such transaction of such
stock or securities of the other corporation, and if any such
calculation results in adjustment of the Warrant Price, the
determination of the number of shares of Common Stock receivable under
this Warrant immediately prior to such merger, consolidation or sale,
for purposes of paragraph (i), shall be made after giving effect to
such adjustment of the Warrant Price.
(f) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
- 8 -
<PAGE> 79
(g) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the disposition of
any such shares shall be considered an issue or sale of Common Stock
for the purposes of this Section 3.
(h) Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in
effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common
Stock of the Corporation shall be combined into a smaller number of
shares, the Warrant Price in effect immediately prior to such
combination shall be proportionately increased.
(i) Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of
the capital stock of the Corporation or any consolidation or merger of
the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be
effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provisions shall be made whereby each holder of the Warrants shall
thereafter have the right to receive upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common
Stock of the Corporation immediately theretofore receivable upon the
exercise of such Warrant or Warrants, such shares of stock, securities
or assets (including cash) as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization, reclassification, consolidation,
merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Warrant Price) shall
thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of such exercise rights (including an immediate adjustment,
by reason of such reorganization or reclassification, of the Warrant
Price to the value for the Common stock reflected by the terms of such
reorganization or reclassification if the value so
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<PAGE> 80
reflected is less than the Warrant Price in effect immediately prior
to such reorganization or reclassification). In the event of a merger
or consolidation of the Corporation as a result of which a greater or
lesser number of shares of common stock of the surviving corporation
are issuable to holders of Common Stock of the Corporation outstanding
immediately prior to such merger or consolidation, the Warrant Price
in effect immediately prior to such merger or consolidation shall be
adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock of the
Corporation. The Corporation will not effect any such consolidation,
merger or any sale of all or substantially all of its assets of
properties, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets
shall assume by written instrument executed and mailed or delivered to
each holder of the Warrants at the last address of such holder
appearing on the books of the Corporation, the obligation to deliver
to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled
to receive.
(j) Notice of Adjustment. Upon any adjustment of the
Warrant Price, then and in each such case, the Corporation shall give
written notice thereof, by first class mail, postage prepaid,
addressed to each holder of the Warrants at the address of such holder
as shown on the books of the Corporation, which notice shall state the
Warrant Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based.
(k) Certain Events. If any event occurs as to which in
the opinion of the Board of Directors of the Corporation the other
provisions of this Section 3 are not strictly applicable or if
strictly applicable would not fairly protect the exercise rights of
this Warrant, in accordance with the essential intent and principles
of such provisions to protect against dilution, then such Board of
Directors shall in good faith make an adjustment in the application of
such provisions, in accordance with such essential intent and
principles, so as to protect such exercise rights as aforesaid.
(l) Stock to Be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock or
its treasury shares, solely for the purpose
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<PAGE> 81
of issue upon the exercise of this Warrant as herein provided, such
number of shares of Common Stock as shall then be issuable upon the
exercise of this Warrant. The Corporation covenants that all shares
of Common Stock which shall be so issued shall be duly and validly
issued and fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and, without limiting
the generality of the foregoing, the Corporation covenants that it
will from time to time take all such action as may be requisite to
assure that the par value per share of the Common Stock is at all
times equal to or less than the effective Warrant Price. The
Corporation will take all such action as may be necessary to assure
that all such shares of Common Stock may be so issued without
violation of any applicable law or regulation, or of any requirements
of any national securities exchange upon which the Common Stock of the
Corporation may be listed. The Corporation will not take any action
which results in any adjustment of the Warrant Price if the total
number of shares of Common Stock issued and issuable after such action
upon exercise of this Warrant would exceed the total number of shares
of Common Stock then authorized by the Corporation's Articles of
Incorporation. The Corporation has not granted and will not grant any
right of first refusal with respect to shares issuable upon exercise
of this Warrant, and there are no preemptive rights associated with
such shares.
(m) Issue Tax. The issuance of certificates for shares
of Common Stock upon exercise of the Warrants shall be made without
charge to the holders of such Warrants for any issuance tax in respect
thereof provided that the Corporation 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 certificate in a name other than that of
any holder of the Warrants.
(n) Closing of Books. The Corporation will at no time
close its transfer books against the transfer of the shares of Common
Stock issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant.
(o) Definition of Common Stock. As used herein the term
"Common Stock" shall mean and include the Common Stock, par value $.01
per share, of the Corporation as authorized on the date hereof and
also any capital stock of any class of the Corporation hereinafter
authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or
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involuntary liquidation, dissolution or winding up of the Corporation;
provided, however, that the shares purchasable pursuant to this
Warrant shall include only shares designated as Common Stock, par
value $.01 per share, of the Corporation on the date hereof or shares
of any class or classes resulting from any reclassification or
reclassifications thereof which are not limited to any such fixed sum
or percentage and are not subject to redemption by the Corporation
and, in case at any time there shall be more than one such resulting
class, the shares of each class then so issuable shall be
substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
Section 4. Notices of Record Dates. In the event of
(i) any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution (other than cash dividends out of earned surplus), or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(ii) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the
Corporation or any transfer of all or substantially all the assets of
the Corporation to or consolidation or merger of the Corporation with
or into any other corporation, or
(iii) any voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation,
then and in each such event the Corporation will give notice to the holder of
this Warrant specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right and stating the amount
and character of such dividend, distribution or right, and (ii) the date on
which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock will be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be given at least 20
days and not more than 90 days prior
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to the date therein specified, and such notice shall state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
or to a favorable vote of stockholders, if either is required.
Section 5. Registration Rights. The rights of the holder
hereof with respect to the registration under the Securities Act of 1933, as
amended, of the shares of Common Stock issuable upon the exercise of this
Warrant are set forth in the Registration Rights Agreement, dated as of August
___, 1995, between the Corporation, FS and Dowling.
Section 6. No Stockholder Rights or Liabilities. This
Warrant shall not entitle the holder hereof to any voting rights or other
rights as a stockholder of the Corporation. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the Warrant Price
or as a stockholder of the Corporation, whether such liability is asserted by
the Corporation or by creditors of the Corporation.
Section 7. Investment Representation and Legend. The holder,
by acceptance of the Warrant, represents and warrants to the Corporation that
it is acquiring the Warrant and the shares of Common Stock (or other
securities) issuable upon the exercise hereof for investment purposes only and
not with a view towards the resale or other distribution thereof and agrees
that the Corporation may affix upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the
representation of the holder that it has been acquired for investment
purposes and not with a view towards the resale or other distribution
thereof. Neither this Warrant nor the shares issuable upon the
exercise of this Warrant have been registered under the Securities Act
of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that the Corporation
may affix the following legend to certificates for shares of Common Stock
issued upon exercise of this Warrant:
"The securities represented by this certificate have been
issued in reliance upon the representation of the holder that they
have been acquired for investment and not with a view toward the
resale or other distribution thereof, and have not been registered
under the Securities Act of 1933, as amended. Neither the securities
evidenced hereby, nor any interest therein, may be offered, sold,
transferred,
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<PAGE> 84
encumbered or otherwise disposed of unless either (i) there is an
effective registration statement under said Act relating thereto or
(ii) the Corporation has received an opinion of counsel, reasonably
satisfactory in form and substance to the Corporation, stating that
such registration is not required."
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on
such terms as to indemnity or otherwise as it may in its discretion reasonably
impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an
original contractual obligation of the Corporation, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.
Section 9. Notices. All notices, requests and other
communications required or permitted to be given or delivered hereunder shall
be in writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed, if to the holder to such holder
at the address shown on such holder's Warrant or Warrant Shares or at such
other address as shall have been furnished to the Corporation by notice from
such holder. All notices, requests and other communications required or
permitted to be given or delivered hereunder shall be in writing, and shall be
delivered, or shall be sent by certified or registered mail, postage prepaid
and addressed to the Corporation at such address as shall have been furnished
to the holder by notice from the Corporation.
IN WITNESS WHEREOF, Transcisco Industries, Inc. has executed
this Warrant on and as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By
----------------------------
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<PAGE> 85
SUBSCRIPTION AGREEMENT
To:
Dated:
The undersigned, pursuant to the provisions set forth in the
within Warrant, hereby agrees to subscribe for and purchase __________ shares
of Common Stock covered by such Warrant, and makes payment herewith in full
therefor (at the price per share provided by such Warrant [in cash] [by
surrender of A Notes or B Notes (as each such term is defined in the Note and
Warrant Purchase Agreement, dated as of August ___, 1995 between the
Corporation, Furman Selz SBIC, L.P. and James Dowling] [as provided in Section
1(a)(iii) of such Warrant].
Signature
------------------------
----------------------------------
Address
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<PAGE> 86
EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, (the "Agreement") dated as of
August ___, 1995, by and between TRANSCISCO INDUSTRIES, INC., a Delaware
corporation (the "Company") and FURMAN SELZ SBIC, L.P., a Delaware limited
partnership ("Furman Selz"), and JAMES DOWLING ("Dowling" and collectively with
Furman Selz, the "Purchasers").
WHEREAS, the parties hereto have entered into a Note and
Warrant Purchase Agreement dated as of even date herewith; and
WHEREAS, pursuant to such agreement, Purchasers have agreed to
acquire Warrants (as defined below) from the Company; and
WHEREAS, it is a condition precedent to the Purchasers'
obligations under such agreement that the parties hereto enter into this
Agreement; and
WHEREAS the Company wishes to grant registration rights for
shares of the Company's stock acquirable by the Purchasers pursuant to the
exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereby agree as follows:
1. Definitions
As used herein, the following terms have the following
respective meanings:
"Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
"Covered Shares" means the Registrable Securities of the
Selling Holders included in a registration statement pursuant to the terms
hereof.
"Demand Registration" has the meaning given to that term in
Section 2 hereof.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended.
"Holders" means, collectively, the holders of Registrable
Securities granted registration rights pursuant to this Agreement. A person
shall be deemed to be a Holder whenever
<PAGE> 87
person owns Registrable Securities or has the right to acquire Registrable
Securities, whether or not such acquisition has actually been effected and
disregarding any legal restrictions upon the exercise of such right.
"Indemnified Party" has the meaning given to that term in
Section 6 hereof.
"Indemnifying Party" has the meaning given to that term in
Section 6 hereof.
"Majority Selling Holders" means the Selling Holders holding a
majority of the Covered Shares.
"Purchase Agreement" means the Note and Warrant Purchase
Agreement, dated as of August ___, 1995 among the Company, the Purchasers,
Transcisco Rail Services Company, Transcisco Leasing Company and Transcisco
Trading Company.
"Registrable Securities" means the Warrant Shares and any
Common Stock issued or issuable with respect to the Warrant Shares by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. Any
Registrable Security will cease to be a Registrable Security when (i) a
registration statement covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant to such effective
registration statement, (ii) it is sold under circumstances in which all of the
applicable conditions of Rule 144 are met, or (iii) it has been otherwise
transferred, the Company has delivered a new certificate or other evidence of
ownership for it not bearing any restrictive legend citing the absence of
registration thereof and it may be resold without subsequent registration under
the Securities Act.
"Registration Expenses" has the meaning given to that term in
Section 12 hereof.
"Requesting Holder" has the meaning given to that term in
Section 2 hereof.
"SEC" means the U.S Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement in accordance with the terms
hereof.
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<PAGE> 88
"Warrants" mean those Warrants issued by the Company pursuant
to the Purchase Agreement.
"Warrant Shares" mean shares of Common Stock issued or
issuable upon exercise of the Warrants.
All capitalized terms used herein that are not otherwise
defined herein shall have the meanings ascribed thereto in the Purchase
Agreement.
2. Demand Registration.
(a) Subject to the provisions hereof, at any time on or after
the date hereof, the Holder or Holders of a majority (by number of shares of
Warrant Shares) of the Registrable Securities (the "Requesting Holders") may
make a written request to the Company for registration with the SEC under and
in accordance with the provisions of the Securities Act of all or part of such
Requesting Holders' Registrable Securities (a "Demand Registration"); provided,
that (x) the Company need not effect the Demand Registration unless the sale of
Registrable Securities held by the Requesting Holders pursuant to the Demand
Registration will result in receipt by such Requesting Holders of at least
$1,000,000 in aggregate net proceeds, and (y) the Company may defer the Demand
Registration for a single period not to exceed 180 days, if the Board of
Directors of the Company determines in the exercise of its reasonable judgment
that due to a pending or contemplated acquisition, disposition or public
offering it would be inadvisable to effect the Demand Registration at such
time. Within 10 days after receipt of the request for a Demand Registration,
the Company will serve written notice (the "Notice") of such registration
request to all Holders of Registrable Securities. Subject to Section 2(d)
below, the Company will include in any Demand Registration all Registrable
Securities of the Holders for which the Company has received written requests
for inclusion therein from such Holder within 15 business days after the
receipt by the applicable Holder of the Notice. All requests for the sale of
Registrable Securities in any Demand Registration made pursuant to this Section
2(a) will specify the aggregate number of the Registrable Securities to be
registered.
(b) Unless the Demand Registration is effected by an offering
on a continuous or delayed basis under Rule 415 or any successor rule under the
Securities Act, a Demand Registration shall be effected pursuant to a firm
commitment underwritten registration and offering, the managing underwriter of
which shall be a nationally-recognized investment banking firm named by the
Majority Selling Holders and reasonably acceptable to the
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<PAGE> 89
Company. The Company agrees that the firm of Furman Selz Inc. is acceptable to
the Company.
(c) The Holders shall be entitled to no more than one Demand
Registration, and the expenses (including the reasonable fees and expenses of
one counsel for the Holders in accordance with Section 12) thereof shall be
borne by the Company and Holders as set forth in Section 12. A Demand
Registration will not be counted as a Demand Registration hereunder until such
Demand Registration has been declared effective (and Section (a)(3) of Rule
430A under the Securities Act shall have been complied with, if applicable) and
maintained continuously effective for a period (i) in the case of an
underwritten offering, of at least six months or such shorter period until all
Registrable Securities included therein have been sold in accordance with such
Demand Registration or (ii) in the case of an offering on a continuous or
delayed basis, such period until all Registrable Securities included therein
have been sold in accordance with such Demand Registration; provided, however,
if a Demand Registration is withdrawn prior to effectiveness thereof at the
request of the holders of a majority of the Registrable Securities included
therein due to reasons other than material adverse changes in the Company's
condition, financial or otherwise, since the written request for the Demand
Registration was delivered to the Company, the Demand Registration will be
counted hereunder unless such Holders agree to pay the expenses incurred by the
Company in connection therewith.
(d) If the managing underwriter of a Demand Registration
advises the Company in writing (with a copy to the Requesting Holders and each
other Holder requesting inclusion of Registrable Securities therein) that, in
its opinion, the number of Registrable Securities requested to be included in
the Demand Registration exceeds the number which can be sold in such offering,
then the Company will include in such registration only the number of
Registrable Securities recommended by the managing underwriter, selected in the
following order of priority: (i) first, the Registrable Securities that the
Requesting Holders have requested to be included in such registration (pro rata
according to the Registrable Securities proposed to be included in the
registration by such Requesting Holders); (ii) second, Registrable Securities
that other Holders have requested to be included in such registration (pro rata
according to the Registrable Securities proposed to be included in the
registration by such other Holders); and (iii) third, securities held by all
other parties.
3. Piggy-Back Registration
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<PAGE> 90
(a) Subject to the provisions of this Section 3, if the
Company at any time proposes to register any of its equity securities (as
defined in the Exchange Act) under the Securities Act, whether or not for sale
for its own account (other than pursuant to Section 2 hereof), and the
registration form to be used may be used for the registration of Registrable
Securities, the Company each such time will give written notice of such
proposed filing to the Holders as soon as practicable (but in no event less
than ten days before the anticipated filing date), and such notice shall offer
the Holder the opportunity to include such number of Registrable Securities in
the registration as the Holder may request.
(b) The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit the Registrable Securities requested to be included in the registration
statement for such offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding the foregoing, if
the managing underwriter of such registration advises the Company in writing
(with a copy to the Requesting Holders and each other Holder requesting
inclusion of Registrable Securities therein) that, in its opinion, the number
of Registrable Securities requested to be included in the registration exceeds
the number which can be sold in such offering, then the Company will include in
such registration only the number of Registrable Securities recommended by the
managing underwriter, selected in the following order of priority: (i) first,
the securities that the Company intends to be included in such registration;
(ii) second, Registrable Securities that Holders have requested to be included
in such registration (pro rata according to the Registrable Securities proposed
to be included in the registration by such Holders); and (iii) third,
securities held by all other parties.
4. Holdback Agreements
(a) Restrictions on Public Sale by Holder of Registrable
Securities. Each Holder agrees not to effect any public sale or distribution
of Common Stock, including a sale pursuant to Rule 144, during the 10 days
prior to, and during the 90-day period beginning on, the effective date of any
registration statement filed pursuant hereto (except as part of such
registration), if and to the extent requested by the Company in the case of a
non-underwritten public offering or if and to the extent requested by the
managing underwriter or underwriters in the case of an underwritten public
offering.
(b) Restrictions on Public Sale by the Company and Others.
The Company agrees (i) not to effect any public sale or
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<PAGE> 91
distribution of any Common Stock (other than pursuant to a registration
statement on Form S-8 or any successor form), during the 14 days before, and
during the 90-day period beginning on, the effective date of any registration
statement filed hereunder (except as part of such registration statement); and
(ii) that any agreement entered into after the date of this Agreement pursuant
to which the Company issues or agrees to issue any privately placed securities
shall contain a provision under which the holders of such securities agree not
to effect any public sale or distribution of any such securities during the
periods described in (i) above, in each case including a sale pursuant to Rule
144; provided, however, that the provisions of this paragraph (b) shall not
prevent the conversion or exchange of any securities pursuant to their terms
into or for other securities.
5. Registration Procedures.
Whenever the Holders have requested that any Registrable
Securities be registered pursuant to Section 2 or Section 3 hereof, the Company
will use its best efforts to effect the registration of such Registrable
Securities in accordance with the intended method of disposition thereof as
promptly as practicable, and in connection with any such request, the Company
will as expeditiously as possible (provided that nothing contained herein
prohibits the Company from abandoning a registration in which Holders have
requested to participate pursuant to Section 3 hereof):
(a) prepare and file with the SEC a registration statement
(but in any event within 90 days after the end of the period within which
requests may be given to the Company) on any form for which the Company then
qualifies or which counsel for the Company deems appropriate and which form is
available for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of distribution thereof, and
use its best efforts to cause such filed registration statement to become
effective; provided that (i) before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish
to one counsel selected by the Majority Selling Holders copies of all such
documents proposed to be filed, which documents will be subject to the review
of such counsel, and (ii) that after the filing of the registration statement,
the Company will promptly notify each Selling Holder of any stop order issued
or, to the knowledge of the Company, threatened by the SEC and take all
reasonable actions required to prevent the entry of such stop order or to
remove it if entered;
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(b) prepare and file with the SEC such amendments and
supplements to the registration statement and the prospectus used in connection
therewith as may be necessary to keep the registration statement effective for
a period which will terminate when all Covered Shares have been sold (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable, and not longer than nine
months after the effective date of such registration statement) and comply with
the provisions of the Securities Act with respect to the disposition of all
Covered Shares during such period in accordance with the intended methods of
disposition by the Selling Holders thereof set forth in the registration
statement;
(c) furnish to each Selling Holder, before filing the
registration statement, if requested, copies of the registration statement as
proposed to be filed, and thereafter furnish to such Selling Holder such number
of copies of the registration statement, each amendment and supplement thereto
(in each case including all exhibits thereto), the prospectus included in the
registration statement (including each preliminary prospectus) and such other
document as such Selling Holder may reasonably request in order to facilitate
the disposition of the Covered Shares owned by such Selling Holder;
(d) use its best efforts to register or qualify the Covered
Shares under such other securities or blue sky laws of such jurisdictions in
the United States as any Selling Holder reasonably (in light of such Selling
Holder's intended plan of distribution) requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition in such jurisdictions of its
Covered Shares; provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause the Covered Shares to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable Selling Holders to consummate the disposition of the Covered Shares
owned by such Selling Holders;
(f) notify each Selling Holder, at any time when a prospectus
relating to Covered Shares is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus
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<PAGE> 93
so that, as thereafter delivered to the purchasers of such Covered Shares, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to each Selling
Holder any such supplement or amendment;
(g) enter into customary agreements (including an
underwriting agreement in customary form if the distribution of the Covered
Shares is otherwise to be made in an underwritten offering) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Covered Shares;
(h) make available for inspection by any Selling Holder, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
Selling Holder or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as are reasonably necessary to enable them to
exercise due diligence, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Inspectors
in connection with the registration statement. Each Selling Holder further
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential;
(i) in the event an offering of Registrable Securities is
pursuant to an underwritten offering, use its best efforts to obtain a comfort
letter or comfort letters from the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
comfort letters as the managing underwriter reasonably requests;
(j) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
its security holders, as soon as reasonably practicable, an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and covering a
period of twelve months, beginning within three months after the effective date
of the registration statement;
(k) use its best efforts to cause all Covered Shares to be
listed on each securities exchange on which similar securities issued by the
Company are then listed; and
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<PAGE> 94
(l) provide a transfer agent and registrar for all of the
Covered Shares not later than the effective date of such registration
statement.
In any underwritten public offering contemplated by Section 2 or Section 3, the
Holders shall be entitled to sell their Warrants to the underwriters for
exercise and sale of the Warrant Shares issued upon the exercise thereof.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless each Selling Holder, its officers, directors,
employees and agents, and each Person, if any, who controls any Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation) arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the Covered
Shares, in any amendment or supplement thereto, in any preliminary prospectus,
or arising out of or based upon any omission or any 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, liabilities or expenses arise out of, or are based upon, any such
untrue statement or omission or allegation thereof based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for use therein.
(b) Indemnification by the Selling Holders. Each Selling
Holder agrees to indemnify and hold harmless the Company, its directors and
officers and each party, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to each Selling
Holder, but only with respect to information furnished in writing by such
Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus.
(c) Conduct of Indemnification Proceedings. If any action or
proceeding (including any governmental investigation) is brought or asserted
against any party entitled to indemnification under clauses (a) or (b) above
(an "Indemnified Party") in respect of which indemnity may be sought from any
party who has agreed to provide such indemnification (an
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<PAGE> 95
"Indemnifying Party"), the Indemnifying Party will assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and will assume the payment of all expenses. Such Indemnified Party
will have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
will be at the expense of such Indemnified Party unless (i) the Indemnifying
Party has agreed to pay such fees and expenses or (ii) the named parties to any
such action or proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and such Indemnified Party has
been advised by counsel that there is a conflict of interest on the part of
counsel employed by the Indemnifying Party to represent such Indemnified Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party will not have the right to assume
the defense of such action or proceeding on behalf of such Indemnified Party;
it being understood, however, that the Indemnifying Party will not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for all such Indemnified Parties). The Indemnifying
Party will not be liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its written consent,
or if there is a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party will indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment.
7. Contribution
If for any reason the indemnification provided for in the
preceding Sections 6(a) and 6(b) is unavailable to an Indemnified Party as
contemplated by those sections, then the Indemnifying Party will 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 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,
provided that no Selling Holder will be required to contribute in an amount
greater than the difference between the net proceeds received by such Selling
Holder with respect to the sale of any Registrable Securities and
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<PAGE> 96
all amounts already contributed by such Selling Holder with respect to such
claims.
8. Participation in Underwritten Registrations
No Holder may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell it's securities on the basis
provided in any underwriting arrangements approved by the parties entitled
hereunder to approve such arrangements; and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and this Agreement. Notwithstanding the previous sentence, no
Holder shall be required to make any representations or warranties to, or make
any agreements with the Company or any underwriter other than representations,
warranties or agreements regarding such Holder or such Holder's intended method
of distribution.
9. Rule 144
The Company covenants that it will file any reports required
to be filed by it under the Securities Act and the Exchange Act so as to enable
Holders to sell Warrant Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as
to whether it has complied with such requirements.
10. Information
The Company may require each Selling Holder to promptly
furnish in writing to the Company such information regarding the distribution
of the Registrable Securities as it may from time to time reasonably request
and such other information as may be legally required or reasonably requested
in connection with such registration.
11. Amended or Supplemented Prospectus
Each Selling Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
5(f) hereof, such Selling Holder will forthwith discontinue disposition of any
Covered Shares pursuant to the registration statement covering such Covered
Shares until such Selling Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5(f) hereof, and, if so directed by
the Company, each Selling Holder will deliver to the Company all copies, other
than permanent file copies then
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<PAGE> 97
in such Selling Holder's possession, all prospectuses covering such Covered
Shares at the time of receipt of such notice, and shall not effect any
transaction with respect to any Covered Shares except pursuant to the
supplemented or amended prospectus. In the event the Company gives such
notice, the Company will extend the period during which such registration
statement will be maintained effective (including the period referred to in
Section 5(f) hereof) by the number of days during the period from and including
the date of the giving of notice pursuant to Section 5(f) hereof to the date
when the Company makes available to each Selling Holder a prospectus
supplemented or amended to conform with the requirements of Section 5(f)
hereof.
12. Registration Expenses
In connection with any registration statement filed pursuant
to Section 2 or Section 3 hereof, the Company will pay all registration
expenses (the "Registration Expenses"), including but not limited to: (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws, subject to the provisions of Section 5(d),
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Covered Shares), (iii) printing expenses, (iv)
internal expenses of the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), (v) the fees and expenses incurred in connection with the listing of
the Covered Shares, (vi) fees and disbursements of counsel for the Company and
customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any comfort letters or costs
associated with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 5(i) hereof),
(vii) the fees and expenses of any special experts retained by the Company in
connection with such registration, and (viii) reasonable fees and expenses of
one law firm (designated by the Majority Selling Holders and reasonably
acceptable to the Company) acting as counsel for the Selling Holders in
connection with the registration hereunder; provided, however, the Company will
not have any obligation to pay any underwriting fees, discounts or commissions
attributable to the sale of Covered Shares (which will be the obligation of the
Selling Holders) or, except as otherwise provided in clause (viii) above, any
out-of-pocket expenses of the Selling Holders (or any agents who manage their
accounts) or fees and disbursements of any counsel for any underwriter in any
underwritten offering.
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<PAGE> 98
13. Registration Rights.
The Company agrees that it will not enter into any agreement
or arrangements which would grant any party a right to participate in any
registration that is superior to or in contravention of the rights to
participate set forth in this Agreement.
14. Parties in Interest.
(a) This Agreement is for the benefit of any Holder
irrespective of whether such Holder is a signatory to this Agreement.
(b) All covenants and agreements contained in this
Agreement by or on behalf of either party hereto shall bind and inure to the
benefit of the respective successors and assigns of such party hereto, whether
so expressed or not, including subsequent Holders of Registrable Securities.
15. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be mailed by first-class registered mail, postage
prepaid, or sent by recognized courier service addressed as follows:
(a) if to the Company, at
601 California Street
San Francisco, CA 94108
Attention: Steven L. Pease
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Park Avenue
New York, NY 10022
Attention: Theodore J. Kozloff
(b) if to Furman Selz at:
230 Park Avenue
New York, NY 10169
Attention: Brian P. Friedman
if to Dowling at:
620 Fir Court
Norwood, NJ 07648
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<PAGE> 99
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
(c) if to any Holder, to such Holder at its address
appearing on the records of the Company;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
16. LAW GOVERNING.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
17. Entire Agreement.
This Agreement constitutes the entire Agreement of the parties with
respect to the subject mater hereof and may not be modified or amended except
in writing.
18. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together constitute one and
the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
----------------------------
By:
FURMAN SELZ SBIC, L.P.
By: FURMAN SELZ INVESTMENTS INC.,
its General Partner
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<PAGE> 100
-------------------------
By:
------------------------------
James Dowling
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<PAGE> 1
EXHIBIT 2
<PAGE> 2
CONFORMED COPY
THIS WARRANT HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF THE HOLDER
THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARDS
THE RESALE OR OTHER DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
THIS DOCUMENT AND THE INDEBTEDNESS OR OTHER OBLIGATION DESCRIBED HEREIN OR
EVIDENCED HEREBY IS SUBORDINATED, IN THE MANNER AND TO THE EXTENT SET FORTH IN
A SUBORDINATION AGREEMENT (THE "SUBORDINATION AGREEMENT"), DATED AS OF AUGUST
___, 1995, TO CERTAIN INDEBTEDNESS (INCLUDING INTEREST) AT ANY TIME OWED BY THE
BORROWER OR OBLIGOR UNDER THIS DOCUMENT TO TRANSAMERICA BUSINESS CREDIT
CORPORATION AND ITS SUCCESSORS AND ASSIGNS, AND EACH HOLDER OF THIS DOCUMENT,
BY ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE SUBORDINATION AGREEMENT.
WARRANT
TRANSCISCO INDUSTRIES, INC.
Stock Subscription Warrant
Warrant to Subscribe August 1, 1995
for 966,667 shares
Void After July 31, 2005
THIS CERTIFIES that, for value received, FURMAN SELZ SBIC,
L.P., a Delaware limited partnership, or its registered assigns, is entitled to
subscribe for and purchase from TRANSCISCO INDUSTRIES, INC., a Delaware
corporation (hereinafter called the "Corporation"), at the price of $1.50 per
share (such price as from time to time adjusted as hereinafter provided being
hereinafter called the "Warrant Price"), at any time prior to July 31, 2005, up
to 966,667 (subject to adjustment as hereinafter provided) fully paid and
nonassessable shares of Common Stock, par value $.01 per share, of the
Corporation (hereinafter called the "Common Stock"), subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. This
Warrant was issued pursuant to a certain Note and Warrant Purchase Agreement,
dated as of August 1, 1995 (the "Purchase Agreement"), among the Corporation,
certain subsidiaries of the Corporation, Furman Selz SBIC, L.P. ("FS") and
James Dowling ("Dowling"), and the rights and benefits contained therein shall
inure to the benefit of all subsequent holders of this Warrant. The Warrants
issued pursuant to the Purchase Agreement and any warrant or warrants
subsequently
<PAGE> 3
issued upon exchange or transfer thereof are hereinafter collectively called
the "Warrants".
Section 1. Exercise of Warrant.
(a) Method of Exercise. The rights represented by this
Warrant may be exercised by the holder hereof, in whole at any time or from
time to time in part, but not as to a fractional share of Common Stock, by the
surrender of this Warrant (properly endorsed) at the office of the Corporation
as it may designate by notice in writing to the holder hereof at the address of
such holder appearing on the books of the Corporation, and as further provided
below in this Section l:
(i) Cash Exercise. By payment to the Corporation of the
Warrant Price in cash or by certified or official bank check, for each
share being purchased;
(ii) Surrender of Notes. By surrender to the Corporation
for cancellation of A Notes or B Notes (as each such term is defined
in the Purchase Agreement), or of any portion of an A Note or a B
Note, for which credit shall be given toward the Warrant Price for
each share being acquired on a dollar-for-dollar basis with reference
to the principal amount cancelled;
(iii) Net Issue Exercise. By an election to receive shares
the aggregate fair market value of which as of the date of exercise is
equal to the fair market value of this Warrant (or the portion thereof
being cancelled) on such date, in which event the Corporation, upon
receipt of notice of such election, shall issue to the holder hereof a
number of shares of the Corporation's Common Stock equal to (A) the
number of shares of Common Stock acquirable upon exercise of all or
any portion of this Warrant being cancelled, as at such date,
multiplied by (B) the balance remaining after deducting (x) the
Warrant Price, as in effect on such date, from (y) the fair market
value of one share of the Corporation's Common Stock as at such date
and dividing the result by (C) the fair market value of one share of
the Corporation's Common Stock as at such date; or
(iv) Combined Payment Method. By satisfaction of the
Warrant Price for each share being acquired in any combination of two
or more of the methods described in clauses (i), (ii) and (iii) above.
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<PAGE> 4
(b) Definition of Fair Market Value. For the purposes of
this Section 1, "fair market value" shall mean, as to any security, as follows:
if that security is listed or admitted to trading on one or more national
securities exchanges, the average of the last reported sales prices per share
regular way or, in case no such reported sales takes place on any such day, the
average of the last reported bid and asked prices per share regular way, in
either case on the principal national securities exchange on which that
security is listed or admitted to trading, for the 30 trading days immediately
preceding the date upon which the fair market value is determined (the
"Determination Date"); if that security is not listed or admitted to trading on
a national securities exchange but is quoted by the NASDAQ Stock Market
("NASDAQ"), the average of the last reported sales prices per share regular way
or, in case no reported sale takes place on any such day or the last reported
sales prices are not then quoted by NASDAQ, the average for each such day of
the last reported bid and asked prices per share, for the 30 trading days
immediately preceding the Determination Date as furnished by the National
Quotation Bureau Incorporated or any similar successor organization; and if
that security is not listed or admitted to trading on a national securities
exchange or quoted by NASDAQ or any other nationally recognized quotation
service, the "fair market value" shall be the fair value thereof determined
jointly by the Corporation and the registered holders of Warrants outstanding
representing a majority of the shares of Common Stock issuable upon exercise of
the Warrants; provided, however, that if such parties are unable to reach
agreement within 60 days after such determination becomes necessary, the "fair
market value" shall equal the fair market value of all outstanding shares of
Common Stock of the Corporation divided by the number of shares of Common Stock
outstanding, such fair market value to be determined in good faith by an
independent investment banking firm selected jointly by the Corporation and the
registered holders of Warrants outstanding representing a majority of the
shares of Common Stock issuable upon exercise of the Warrants or, if that
selection cannot be made within 15 days, by an independent investment banking
firm selected by the American Arbitration Association in accordance with its
rules. The fees and expenses of any such investment banking firm shall be
shared and paid equally by the Corporation and the holder(s) of such Warrants
who have required valuation. Anything in this paragraph (b) to the contrary
notwithstanding, the fair market value of this Warrant or any portion thereof
as of any Determination Date shall be equal to (i) the fair market value of the
shares of Common Stock issuable upon exercise of this Warrant (or such portion
thereof), (determined in accordance with the foregoing
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<PAGE> 5
provisions of this paragraph (b)); minus (ii) the aggregate Warrant Exercise
Price of the Warrant (or such portion thereof).
(c) Delivery of Certificates, Etc. In the event of any
exercise of the rights represented by this Warrant, a certificate or
certificates for the shares of Common Stock so purchased, registered in the
name of the holder, shall be delivered to the holder hereof within a reasonable
time, not exceeding ten days, after the rights represented by this Warrant
shall have been so exercised; and, unless this Warrant has expired, a new
Warrant representing the number of shares (except a remaining fractional
share), if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the holder hereof within such time. The
person in whose name any certificate for shares of Common Stock is issued upon
exercise of this Warrant shall for all purposes be deemed to have become the
holder of record of such shares on the date on which the Warrant was
surrendered and payment of the Warrant Price and any applicable taxes was made,
except that, if the date of such surrender and payment is a date on which the
stock transfer books of the Corporation are closed, such person shall be deemed
to have become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.
Section 2. Adjustment of Number of Shares. Upon each
adjustment of the Warrant Price as provided in Section 3, the holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Price resulting from such adjustment.
Section 3. Adjustment of Price Upon Issuance of Common Stock.
If and whenever the Corporation shall issue or sell any shares of its Common
Stock for a consideration per share less than the fair market value for such
shares at the time of such issue or sale, then, forthwith upon such issue or
sale the Warrant Price shall be adjusted (calculated to the nearest $.01)
determined by multiplying the Warrant Price by a fraction, the numerator of
which is the amount equal to the sum of (a) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the
fair market value for one share of Common Stock, and (b) the consideration, if
any,
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<PAGE> 6
received by the Corporation upon such issue or sale, and the denominator of
which is the amount equal to the total number of shares of Common Stock
outstanding immediately after such issue or sale multiplied by the fair market
value of one share of Common Stock. No adjustments of the Warrant Price,
however, shall be made in an amount less than $.01 per share, but any such
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to $.01 per share or more.
For purposes of this Section 3, the following paragraphs (a)
to (o), inclusive, shall also be applicable:
(a) Issuance of Rights or Options. In case at any time
the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock
(such rights or options being herein called "Options", and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities (determined by dividing (i)
the total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case
of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options) shall be less than the fair market
value of a share of Common Stock at the time of the granting of such
Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such Options shall be deemed to have
been issued for such price
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<PAGE> 7
per share as of the date of granting of such Options and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
paragraph (c), no adjustment of the Warrant Price shall be made upon
the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities.
(b) Issuance of Convertible Securities. In case the
Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange of all such Convertible Securities) shall be
less than the fair market value of a share of Common Stock at the time
of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (i) except as otherwise provided in
paragraph (c) below, no adjustment of the Warrant Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities, and (ii) if any such issue or sale of
such Convertible Securities is made upon exercise of any Option to
purchase any such Convertible Securities for which adjustments of the
Warrant Price have been or are to be made pursuant to other provisions
of this Section 3, no further adjustment of the Warrant Price shall be
made by reason of such issue or sale.
(c) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase
price provided for in any Option referred to in paragraph (a), the
additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in paragraph (a) or
(b), or the rate at which any Convertible Securities referred to in
paragraph (a) or (b) are convertible into or exchangeable for Common
- 6 -
<PAGE> 8
Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution), the Warrant Price in
effect at the time of such event shall forthwith be readjusted to the
Warrant Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold; and
on the expiration of any such Option or the termination of any such
right to convert or exchange such Convertible Securities, the Warrant
Price then in effect hereunder shall forthwith be increased to the
Warrant Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding.
If the purchase price provided for in any such Option referred to in
paragraph (a) or the rate at which any Convertible Securities referred
to in paragraph (a) or (b) are convertible into or exchangeable for
Common Stock, shall be reduced at any time under or by reason of
provisions with respect thereto designed to protect against dilution,
then in case of the delivery of Common Stock upon the exercise of any
such Option or upon conversion or exchange of any such Convertible
Security, the Warrant Price then in effect hereunder shall forthwith
be adjusted to such respective amount as would have been obtained had
such Option or Convertible Security never been issued as to such
Common Stock and had adjustments been made upon the issuance of the
shares of Common Stock delivered as aforesaid, but only if as a result
of such adjustment the Warrant Price then in effect hereunder is
thereby reduced.
(d) Stock Dividends. In case the Corporation shall
declare a dividend or make any other distribution upon any stock of
the Corporation payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration.
(e) Consideration for Stock. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor
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<PAGE> 9
shall be deemed to be the amount received by the Corporation therefor,
without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other
than cash received by the Corporation shall be deemed to be the fair
value of such consideration as determined by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. The amount of consideration
deemed to be received by the Corporation pursuant to the foregoing
provisions of this paragraph (e) upon any issuance and/or sale,
pursuant to an established compensation plan of the Corporation, to
directors, officers or employees of the Corporation in connection with
their employment of shares of Common Stock, Options or Convertible
Securities, shall be increased by the amount of any tax benefit
realized by the Corporation as a result of such issuance and/or sale,
the amount of such tax benefit being the amount by which the Federal
and/or State income or other tax liability of the Corporation shall be
reduced by reason of any deduction or credit in respect of such
issuance and/or sale. In case any Options shall be issued in
connection with the issue and sale of other securities of the
Corporation, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued without
consideration. In case any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger
or consolidation in which the Corporation is the surviving
corporation, the amount of consideration therefor shall be deemed to
be the fair value as determined by the Board of Directors of the
Corporation of such portion of the assets and business of the
non-surviving corporation as such Board shall determine to be
attributable to such Common Stock, Options or Convertible Securities,
as the case may be. In the event of any consolidation or merger of
the Corporation in which the Corporation is not the surviving
corporation or in the event of any sale of all or substantially all of
the assets of the Corporation for stock or other securities of any
corporation, the Corporation shall be deemed to have issued a number
of shares of its Common Stock for stock or securities of the other
corporation computed on the basis of
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<PAGE> 10
the actual exchange ratio on which the transaction was predicated and
for a consideration equal to the fair market value on the date of such
transaction of such stock or securities of the other corporation, and
if any such calculation results in adjustment of the Warrant Price,
the determination of the number of shares of Common Stock receivable
under this Warrant immediately prior to such merger, consolidation or
sale, for purposes of paragraph (i), shall be made after giving effect
to such adjustment of the Warrant Price.
(f) Record Date. In case the Corporation shall take a
record of the holders of its Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities, or (ii) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
(g) Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Corporation, and the disposition of
any such shares shall be considered an issue or sale of Common Stock
for the purposes of this Section 3.
(h) Subdivision or Combination of Stock. In case the
Corporation shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Warrant Price in
effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common
Stock of the Corporation shall be combined into a smaller number of
shares, the Warrant Price in effect immediately prior to such
combination shall be proportionately increased.
(i) Reorganization, Reclassification, Consolidation,
Merger or Sale. If any capital reorganization or reclassification of
the capital stock of the Corporation or any consolidation or merger of
the Corporation with another corporation, or the sale of all or
substantially all of its assets to another corporation shall be
effected in such a way that holders of Common Stock shall be entitled
to
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<PAGE> 11
receive stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate
provisions shall be made whereby each holder of the Warrants shall
thereafter have the right to receive upon the basis and upon the terms
and conditions specified herein and in lieu of the shares of Common
Stock of the Corporation immediately theretofore receivable upon the
exercise of such Warrant or Warrants, such shares of stock, securities
or assets (including cash) as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization, reclassification, consolidation,
merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of
such holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Warrant Price) shall
thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities or assets thereafter deliverable upon the
exercise of such exercise rights (including an immediate adjustment,
by reason of such reorganization or reclassification, of the Warrant
Price to the value for the Common stock reflected by the terms of such
reorganization or reclassification if the value so reflected is less
than the Warrant Price in effect immediately prior to such
reorganization or reclassification). In the event of a merger or
consolidation of the Corporation as a result of which a greater or
lesser number of shares of common stock of the surviving corporation
are issuable to holders of Common Stock of the Corporation outstanding
immediately prior to such merger or consolidation, the Warrant Price
in effect immediately prior to such merger or consolidation shall be
adjusted in the same manner as though there were a subdivision or
combination of the outstanding shares of Common Stock of the
Corporation. The Corporation will not effect any such consolidation,
merger or any sale of all or substantially all of its assets of
properties, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets
shall assume by written instrument executed and mailed or delivered to
each holder of the Warrants at the last address of such holder
appearing on the books of the Corporation, the obligation to deliver
to such holder such
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<PAGE> 12
shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to receive.
(j) Notice of Adjustment. Upon any adjustment of the
Warrant Price, then and in each such case, the Corporation shall give
written notice thereof, by first class mail, postage prepaid,
addressed to each holder of the Warrants at the address of such holder
as shown on the books of the Corporation, which notice shall state the
Warrant Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based.
(k) Certain Events. If any event occurs as to which in
the opinion of the Board of Directors of the Corporation the other
provisions of this Section 3 are not strictly applicable or if
strictly applicable would not fairly protect the exercise rights of
this Warrant, in accordance with the essential intent and principles
of such provisions to protect against dilution, then such Board of
Directors shall in good faith make an adjustment in the application of
such provisions, in accordance with such essential intent and
principles, so as to protect such exercise rights as aforesaid.
(l) Stock to Be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock or
its treasury shares, solely for the purpose of issue upon the exercise
of this Warrant as herein provided, such number of shares of Common
Stock as shall then be issuable upon the exercise of this Warrant.
The Corporation covenants that all shares of Common Stock which shall
be so issued shall be duly and validly issued and fully paid and
nonassessable and free from all taxes, liens and charges with respect
to the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time
take all such action as may be requisite to assure that the par value
per share of the Common Stock is at all times equal to or less than
the effective Warrant Price. The Corporation will take all such
action as may be necessary to assure that all such shares of Common
Stock may be so issued without violation of any applicable law or
regulation, or of any requirements of any national securities exchange
upon which the Common Stock of the Corporation may be listed. The
Corporation will not take any action which results in any adjustment
of the
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<PAGE> 13
Warrant Price if the total number of shares of Common Stock issued and
issuable after such action upon exercise of this Warrant would exceed
the total number of shares of Common Stock then authorized by the
Corporation's Articles of Incorporation. The Corporation has not
granted and will not grant any right of first refusal with respect to
shares issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
(m) Issue Tax. The issuance of certificates for shares
of Common Stock upon exercise of the Warrants shall be made without
charge to the holders of such Warrants for any issuance tax in respect
thereof provided that the Corporation 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 certificate in a name other than that of
any holder of the Warrants.
(n) Closing of Books. The Corporation will at no time
close its transfer books against the transfer of the shares of Common
Stock issued or issuable upon the exercise of this Warrant in any
manner which interferes with the timely exercise of this Warrant.
(o) Definition of Common Stock. As used herein the term
"Common Stock" shall mean and include the Common Stock, par value $.01
per share, of the Corporation as authorized on the date hereof and
also any capital stock of any class of the Corporation hereinafter
authorized which shall not be limited to a fixed sum or percentage in
respect of the rights of the holders thereof to participate in
dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
provided, however, that the shares purchasable pursuant to this
Warrant shall include only shares designated as Common Stock, par
value $.01 per share, of the Corporation on the date hereof or shares
of any class or classes resulting from any reclassification or
reclassifications thereof which are not limited to any such fixed sum
or percentage and are not subject to redemption by the Corporation
and, in case at any time there shall be more than one such resulting
class, the shares of each class then so issuable shall be
substantially in the proportion which the total number of shares of
such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
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<PAGE> 14
Section 4. Notices of Record Dates. In the event of
(i) any taking by the Corporation of a record of the
holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other
distribution (other than cash dividends out of earned surplus), or any
right to subscribe for, purchase or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive
any other right, or
(ii) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the
Corporation or any transfer of all or substantially all the assets of
the Corporation to or consolidation or merger of the Corporation with
or into any other corporation, or
(iii) any voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation,
then and in each such event the Corporation will give notice to the holder of
this Warrant specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right and stating the amount
and character of such dividend, distribution or right, and (ii) the date on
which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of
Common Stock will be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up. Such notice shall be given at least 20
days and not more than 90 days prior to the date therein specified, and such
notice shall state that the action in question or the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended (the "Securities Act") or to a favorable vote of stockholders, if
either is required.
Section 5. Registration Rights. The rights of the holder
hereof with respect to the registration under the Securities Act of 1933, as
amended, of the shares of Common Stock issuable upon the exercise of this
Warrant are set forth in the Registration Rights Agreement, dated as of August
1, 1995, between the Corporation, FS and Dowling.
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<PAGE> 15
Section 6. No Stockholder Rights or Liabilities. This
Warrant shall not entitle the holder hereof to any voting rights or other
rights as a stockholder of the Corporation. No provision hereof, in the
absence of affirmative action by the holder hereof to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the Warrant Price
or as a stockholder of the Corporation, whether such liability is asserted by
the Corporation or by creditors of the Corporation.
Section 7. Investment Representation and Legend. The holder,
by acceptance of the Warrant, represents and warrants to the Corporation that
it is acquiring the Warrant and the shares of Common Stock (or other
securities) issuable upon the exercise hereof for investment purposes only and
not with a view towards the resale or other distribution thereof and agrees
that the Corporation may affix upon this Warrant the following legend:
"This Warrant has been issued in reliance upon the
representation of the holder that it has been acquired for investment
purposes and not with a view towards the resale or other distribution
thereof. Neither this Warrant nor the shares issuable upon the
exercise of this Warrant have been registered under the Securities Act
of 1933, as amended."
The holder, by acceptance of this Warrant, further agrees that the Corporation
may affix the following legend to certificates for shares of Common Stock
issued upon exercise of this Warrant:
"The securities represented by this certificate have been
issued in reliance upon the representation of the holder that they
have been acquired for investment and not with a view toward the
resale or other distribution thereof, and have not been registered
under the Securities Act of 1933, as amended. Neither the securities
evidenced hereby, nor any interest therein, may be offered, sold,
transferred, encumbered or otherwise disposed of unless either (i)
there is an effective registration statement under said Act relating
thereto or (ii) the Corporation has received an opinion of counsel,
reasonably satisfactory in form and substance to the Corporation,
stating that such registration is not required."
Section 8. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Corporation may, on
such terms as to indemnity or
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<PAGE> 16
otherwise as it may in its discretion reasonably impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed. Any such new Warrant shall constitute an original
contractual obligation of the Corporation, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.
Section 9. Notices. All notices, requests and other
communications required or permitted to be given or delivered hereunder shall
be in writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed, if to the holder to such holder
at the address shown on such holder's Warrant or Warrant Shares or at such
other address as shall have been furnished to the Corporation by notice from
such holder. All notices, requests and other communications required or
permitted to be given or delivered hereunder shall be in writing, and shall be
delivered, or shall be sent by certified or registered mail, postage prepaid
and addressed to the Corporation at such address as shall have been furnished
to the holder by notice from the Corporation.
IN WITNESS WHEREOF, Transcisco Industries, Inc. has executed
this Warrant on and as of the day and year first above written.
TRANSCISCO INDUSTRIES, INC.
By /S/
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