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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 27, 1997
THE CERPLEX GROUP, INC.
(Exact name of registrant as specified in charter)
Delaware 0-23602 33-0411354
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1382 Bell Avenue, Tustin, California 92780
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(Address of principal executive offices) (Zip Code)
(714) 258-5600
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(Registrant's telephone number including area code)
Not applicable
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 27, 1997, The Cerplex Group, Inc., a Delaware corporation
(the "Company"); Cerplex Subsidiary, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company ("Cerplex Sub"); Modcomp Joint Venture,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company
("MJVI"); and Modcomp/Cerplex, L.P., a Delaware limited partnership whose
general and limited partnership interests are wholly-owned by Cerplex Sub and
MJVI ("Modcomp") (the Company, Cerplex Sub, MJVI and Modcomp are hereinafter
collectively referred to as the "Selling Entities") consummated the sale (the
"Disposition") of substantially all of the assets of Modcomp to CSP, Inc., a
Massachusetts corporation ("CSP") and CSPI Sub Inc., a Delaware corporation and
a wholly-owned subsidiary of CSP ("CSP Sub") (CSP and CSP Sub are hereinafter
together referred to as the "Purchasers"). Such assets include, without
limitation, cash, accounts receivable and tangible and intangible assets of
Modcomp.
The Disposition was achieved pursuant to an Asset Purchase Agreement
(the "Purchase Agreement") dated as of August 6, 1997, by and among the Selling
Entities and the Purchasers. The Purchase Agreement provides that the
Disposition is effective as of June 30, 1997. No material relationship exists
between the Purchasers and the Company, the Company's affiliates, directors or
officers, or any associate of any of the Company's directors or officers.
The aggregate purchase price (the "Purchase Price") paid by the
Purchasers to the Company was $8,540,000, of which approximately $8,447,000 was
paid in cash at the closing on August 27, 1997. The net proceeds to the Company
were $8,102,000. The remaining $95,000 of the Purchase Price was withheld from
payment pursuant to an escrow agreement between the parties pending the
determination of certain tax liabilities of Modcomp. The Purchase Price was
determined through negotiations with the Purchasers.
ITEM 5. OTHER EVENTS.
The Company completed an amendment to its senior credit agreement with
its senior lender and an amendment to its note purchase agreements with its
subordinated debt holders effective August 20, 1997. Such amendments reset
certain covenants to cure the Company's defaults under such agreements.
In addition, the amendment to the note purchase agreements provides for
the issuance by the Company of warrants to purchase an aggregate of 500,096
shares of the Company's Common Stock to its subordinated debt holders (the "New
Subdebt Warrants") and an increase in the applicable interest rate from 9.5% to
15%. However, the increased interest may be paid in lieu of cash in the form of
additional subordinated notes carrying the same terms as the existing
subordinated notes. In the event the existing and the new subordinated notes are
repaid in full by August 19, 1998, the increased interest will be eliminated and
the New Subdebt Warrants will be cancelled.
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The sixth amendment to the senior credit agreement also provides for
the issuance by the Company of a warrant to purchase 1,262,188 shares of the
Company's Common Stock to its senior lender, as well as increased interest and a
reduced borrowing base.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Attached is the pro forma financial information with respect to the
sale by the Company of substantially all of the assets of Modcomp.
(c) EXHIBITS.
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2.1 Agreement of Merger dated as of August Incorporated herein by
30, 1993, by and among Cerplex reference to Exhibit 2.1 to the
Incorporated, Diversified Manufacturing Company's Registration
Services, Inc. ("DMS"), EMServe, Inc. Statement on Form S-1 (File
("EMServe"), InCirT Technology No. 33-75004) which was
Incorporated ("InCirT") and Testar, Inc. declared effective by the
("Testar"). Commission on April 8, 1994.
2.2 Agreement and Plan of Merger dated Incorporated herein by
November 12, 1993, between The Cerplex reference to Exhibit 2.2 to the
Group Subsidiary, Inc. and Registrant Company's Registration
(conformed copy to original). Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
2.3 Certificate of Ownership and Merger of Incorporated herein by
Registrant with and into The Cerplex Group reference to Exhibit 2.2 to the
Subsidiary, Inc. dated as of November 12, Company's Registration
1993. Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
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2.4 Asset Purchase Agreement effective Incorporated herein by
December 17, 1993 by and between Certech reference to Exhibit 2.4 to the
Technology, Inc., a wholly-owned Company's Registration
subsidiary of the Registrant ("Certech"), Statement on Form S-1 (File
and Spectradyne, Inc. ("Spectradyne"). No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
2.5 Purchase and Sale Agreement dated as of Incorporated herein by
July 29, 1994, by and among The Cerplex reference to Exhibit 2 to the
Group, Inc., Cerplex Limited, BT Repair Form 8-K filed July 29, 1994.
Services Limited and BT.
2.6 Contract for repair, calibration and Incorporated herein by
warehousing of certain items of BT reference to Exhibit 10 to the
Equipment dated as of July 29, 1994, Form 8-K filed July 29, 1994.
among The Cerplex Group and Cerplex
Limited and BT.
2.7 Formation and Contribution Agreement Incorporated herein by
effective December 1, 1994 by and among reference to Exhibit 2.7 to the
Modcomp/Cerplex L.P., Modular Computer Company's Annual Report on
Systems, Inc., Cerplex Subsidiary, Inc. and Form 10-K for the fiscal year
The Cerplex Group, Inc. ended January 1, 1995.
2.8 Contingent Promissory Note dated Incorporated herein by
December 1, 1994 issued by reference to Exhibit 2.8 to the
Modcomp/Cerplex L.P. to Modular Company's Annual Report on
Computer Systems, Inc. Form 10-K for the fiscal year
ended January 1, 1995.
2.9 Limited Partnership Agreement of Incorporated herein by
Modcomp/Cerplex L.P. effective December reference to Exhibit 2.8 to the
1, 1994. Company's Annual Report on
Form 10-K for the fiscal year
ended January 1, 1995.
2.10 Put/Call Option Agreement effective Incorporated herein by
December 1, 1994 by and among Cerplex reference to Exhibit 2.8 to the
Subsidiary, Inc., The Cerplex Group, Inc., Company's Annual Report on
Modular Computer Systems, Inc. and Form 10-K for the fiscal year
Modcomp Joint Venture Inc. ended January 1, 1995.
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2.11 Stock Purchase Agreement dated as of June Incorporated herein by
29, 1995 by and among The Cerplex Group, reference to Exhibit 2.11 to the
Inc., Tu Nguyen and Phuc Le. Company's Quarterly Report
on Form 10-Q for the quarter
ended October 1, 1995.
2.12 Letter Agreement dated April 5, 1996 by Incorporated herein by
and among Modular Computer Systems, reference to Exhibit 2.12 to the
Inc., Modcomp Joint Venture, Inc., AEG Company's Annual Report on
Aktiengesellschaft, the Company, Cerplex Form 10-K for the fiscal year
Subsidiary, Inc. and Modcomp/Cerplex ended December 31, 1995.
L.P.
2.13 Stock Purchase Agreement dated as of May Incorporated herein by
24, 1996, by and among The Cerplex reference to Exhibit 2.13 to the
Group, Inc., Cerplex Limited, Rank Xerox Company's Current Report on
- The Document Company SA and Rank Form 8-K dated May 24, 1996.
Xerox Limited (conformed copy to
original).
2.14 Contract of Warranty dated as of May 24, Incorporated herein by
1996, by and among The Cerplex Group, reference to Exhibit 2.14 to the
Inc., Cerplex Limited, Rank Xerox - The Company's Current Report on
Document Company SA and Rank Xerox Form 8-K dated May 24, 1996.
Limited (conformed copy to the original).
2.15 Supply and Services Agreement dated as of Incorporated herein by
May 24, 1996, by and among The Cerplex reference to Exhibit 2.15 to the
Group, Inc., Cerplex Limited, Rank Xerox Company's Current Report on
- The Document Company SA and Rank Form 8-K dated May 24, 1996.
Xerox Limited (conformed copy to the
original).
2.16 Stock Purchase Agreement dated March 28, Incorporated herein by
1997 relating to all of the outstanding stock reference to Exhibit 2.13 to the
of Peripheral Computer Support, Inc. Company's Annual Report on
among the Company, PCS Acquisition Co., Form 10-K for the fiscal year
Inc., and Lincolnshire Equity Partners, L.P. ended December 31, 1996.
2.17 Asset Purchase Agreement dated August 6, Incorporated herein by
1997 by and among the Company, Cerplex reference to Exhibit 2.17 to the
Subsidiary, Inc., Modcomp Joint Venture, Company's Quarterly Report
Inc., Modcomp/Cerplex L.P. and CSP Inc. on Form 10-Q for the quarter
ended June 30, 1997.
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4.1 Stock Purchase Agreement dated as of Incorporated herein by
November 19, 1993 by and among the reference to Exhibit 4.1 to the
Registrant, the stockholders of the Company's Registration
Registrant identified in Part A of Schedule I Statement on Form S-1 (File
thereto and the purchasers of shares of the No. 33-75004) which was
Registrant's Series A Preferred Stock declared effective by the
identified in Schedule I thereto (including Commission on April 8, 1994.
the Schedules thereto; Exhibits omitted).
4.2 Registration Rights Agreement dated as of Incorporated herein by
November 19, 1993, by and among the reference to Exhibit 4.2 to the
Registrant, the investors listed on Schedule Company's Registration
A thereto and the security holders of the Statement on Form S-1 (File
Registrant listed on Schedule B thereto, No. 33-75004) which was
together with Amendment No. 1. declared effective by the
Commission on April 8, 1994.
4.3 Co-Sale Agreement dated as of November Incorporated herein by
19, 1993, by and among the Registrant, the reference to Exhibit 4.3 to the
managers listed on Schedule A thereto and Company's Registration
the investors listed on Schedule B thereto. Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
4.4 Warrant Agreement dated as of November Incorporated herein by
19, 1993, by and among the Registrant and reference to Exhibit 4.4 to the
the purchasers listed in Annex 1 thereto. Company's Registration
Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
4.5 Placement Agent Warrant Purchase Incorporated herein by
Agreement dated as of November 19, 1993, reference to Exhibit 4.5 to the
between the Registrant and Donaldson, Company's Registration
Lufkin & Jenrette Securities Corporation. Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
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4.6 Observation Rights Agreement dated as of Incorporated herein by
November 19, 1993, between the Registrant reference to Exhibit 4.6 to the
and certain stock purchasers. Company's Registration
Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
4.7 Observation Rights Agreement dated as of Incorporated herein by
November 19, 1993, between the Registrant reference to Exhibit 4.7 to the
and certain note purchasers. Company's Registration
Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
4.8 Note Purchase Agreement dated as of Incorporated herein by
November 19, 1993, by and among the reference to Exhibit 4.8 to the
Registrant and The Northwestern Mutual Company's Registration
Life Insurance Company, John Hancock Statement on Form S-1 (File
Mutual Life Insurance, Registrant and Bank No. 33-75004) which was
of Scotland London Nominees Limited. declared effective by the
Commission on April 8, 1994.
4.9 Amendment No. 2 to Registration Rights Incorporated herein by
Agreement dated as of April 6, 1994, by reference to Exhibit 4.9 to the
and among the Registrant and certain of its Company's Registration
Securities holders. Statement on Form S-1 (File
No. 33-75004) which was
declared effective by the
Commission on April 8, 1994.
4.10 Amendment to Note Purchase Agreement, Incorporated herein by
dated as of October 27, 1994, by and reference to Exhibit 4.10 to the
among the Company, Northwestern Mutual Company's Annual Report on
Life Insurance Company, John Hancock Form 10-K for the fiscal year
Mutual Life Insurance Company and North ended March 31, 1995.
Atlantic Smaller Companies Trust P.L.C.
(collectively, the "Noteholders").
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4.11 Waiver and Amendment Agreement dated Incorporated herein by
April 15, 1996 by and among Company, reference to Exhibit 4.11 to the
The Northwestern Mutual Life Insurance Company's Annual Report on
Company, John Hancock Mutual Life Form 10-K for the fiscal year
Insurance Company and North Atlantic ended December 31, 1995.
Smaller Companies Investment Trust PLC.
4.12 Warrant Agreement dated as of April 15, Incorporated herein by
1996 by and among Company, The reference to Exhibit 4.12 to the
Northwestern Mutual Life Insurance Company's Annual Report on
Company, John Hancock Mutual Life Form 10-K for the fiscal year
Insurance Company and North Atlantic ended December 31, 1995.
Smaller Companies Investment Trust PLC.
4.13 First Amendment to Warrant Agreement Incorporated herein by
dated April 15, 1996 by and among reference to Exhibit 4.13 to the
Company and each of the holders of Company's Annual Report on
warrants listed on Schedule A thereto, with Form 10-K for the fiscal year
respect to that certain Warrant Agreement ended December 31, 1995.
dated November 19, 1993.
4.14 First Amendment to Observation Rights Incorporated herein by
Agreement dated as of April 15, 1996 reference to Exhibit 4.14 to the
between Company and certain note Company's Annual Report on
purchasers. Form 10-K for the fiscal year
ended December 31, 1995.
4.15 Third Amendment to Registration Rights Incorporated herein by
Agreement dated as of April 15, 1996 by reference to Exhibit 4.15 to the
and among Company, the investors of Company's Annual Report on
Company listed on Schedule A thereto and Form 10-K for the fiscal year
the security holders of Company listed on ended December 31, 1995.
Schedule B thereto.
4.16 Warrant Agreement dated April 15, 1996 by Incorporated herein by
and among Company, Wells Fargo Bank, reference to Exhibit 4.16 to the
National Association, Sumitomo Bank of Company's Annual Report on
California, BHF Bank Aktiengesellschaft Form 10-K for the fiscal year
and Comerica Bank-California. ended December 31, 1995.
4.17 Stock Purchase Agreement dated June 10, Incorporated herein by
1996 by and among the Company and the reference to Exhibit 4.17 to the
investors listed on Schedule A thereto. Company's Quarterly Report
on Form 10-Q filed August 14,
1996.
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4.18 Fourth Amendment to Registration Rights Incorporated herein by
Agreement dated June 10, 1996 by and reference to Exhibit 4.18 to the
among Company, the investors listed on Company's Quarterly Report
Schedule A thereto, the security holders of on Form 10-Q filed August 14,
Company listed on Schedule B thereto, the 1996.
banks listed on Schedule C thereto and each of the parties
listed on Schedule D thereto.
4.19 Certificate of Designation of Preferences of Incorporated herein by
Series B Preferred Stock of The Cerplex reference to Exhibit 3.3 to the
Group, Inc. Company's Quarterly Report
on Form 10-Q filed August 14,
1996.
4.20 Waiver and Amendment Agreement dated Incorporated herein by
October 31, 1996 by and among the reference to Exhibit 4.17 to the
company and the Noteholders. Company's Annual Report on
Form 10-K for the fiscal year
ended December 31, 1996.
4.21 Waiver and Amendment Agreement dated Incorporated herein by
December 9, 1996 by and among the reference to Exhibit 4.18 to the
company and the Noteholders. Company's Annual Report on
Form 10-K for the fiscal year
ended December 31, 1996.
4.22 Side Letter dated March 28, 1997 by and Incorporated herein by
among the Company and the Noteholders. reference to Exhibit 4.19 to the
Company's Annual Report on
Form 10-K for the fiscal year
ended December 31, 1996.
4.23 Amended and Restated Note Purchase Incorporated herein by
Agreement dated April 9, 1997 by and reference to Exhibit 4.20 to the
among the Company and the Noteholders. Company's Annual Report on
Form 10-K for the fiscal year
ended December 31, 1996.
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4.24 Second Amendment to Warrant Agreement Incorporated herein by
dated April 9, 1997, by and among the reference to Exhibit 4.21 to the
Company and each of the holders of Company's Annual Report on
warrants listed on Schedule A thereto, Form 10-K for the fiscal year
which Second Amendment amends the ended December 31, 1996.
Warrant Agreement dated November 19,
1993 as amended by the First Amendment
to Warrant Agreement dated April 15, 1996.
4.25 Second Amendment to Warrant Agreement Incorporated herein by
dated April 9, 1997 by and among the reference to Exhibit 4.22 to the
Company and each of the holders of Company's Annual Report on
warrants listed on Schedule A thereto, Form 10-K for the fiscal year
which Second Amendment amends the ended December 31, 1996.
Warrant Agreement dated April 15, 1996,
as amended by a Waiver and Amendment
Agreement dated October 31, 1996.
4.26 Amended and Restated Warrant Agreement Incorporated herein by
dated April 9, 1997 by and among the reference to Exhibit 4.23 to the
Company; Wells Fargo Bank, National Company's Annual Report on
Association; BHF-Bank Aktiengesellschaft; Form 10-K for the fiscal year
and Citibank, N.A. ended December 31, 1996.
4.27 Fifth Amendment to Registration Rights Incorporated herein by
Agreement dated as of April 9, 1997 by and reference to Exhibit 4.27 to the
among the Company, the investors listed on Company's Quarterly Report
Schedule A thereto, the security holders of on Form 10-Q for the quarter
the Company listed on Schedule B thereto, ended June 30, 1997.
the banks listed on Schedule C thereto, and
the parties listed on Schedule D thereto.
4.28 Waiver Agreement dated as of June 30, Incorporated herein by
1997 among the Company and the reference to Exhibit 4.28 to the
Noteholders. Company's Quarterly Report
on Form 10-Q for the quarter
ended June 30, 1997.
4.29 Side letter dated July 10, 1997 by and Incorporated herein by
among the Company and the Noteholders. reference to Exhibit 4.29 to the
Company's Quarterly Report
on Form 10-Q for the quarter
ended June 30, 1997.
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4.30 Side letter dated August 6, 1997 by and Incorporated herein by
among the Company and the Noteholders. reference to Exhibit 4.30 to the
Company's Quarterly Report
on Form 10-Q for the quarter
ended June 30, 1997.
4.31 Sixth Amendment to Registration Rights Filed herein.
Agreement dated as of August 20, 1997 by
and among the Company, the investors
listed on Schedule A thereto, the security
holders of the Company listed on Schedule
B thereto, the banks listed on Schedule C
thereto, and the parties listed on Schedule D
thereto.
4.32 First Amendment Agreement dated as of Filed herein.
August 20, 1997, by and among the
Company, The Northwestern Mutual Life
Insurance Company, John Hancock Mutual
Life Insurance Company and North Atlantic
Smaller Companies Investment Trust PLC.
4.33 Warrant Agreement dated as of August 20, Filed herein.
1997 by and between the Company, The
Northwestern Mutual Life Insurance
Company, John Hancock Mutual Life
Insurance Company and North Atlantic
Smaller Companies Investment Trust PLC.
4.34 Third Amendment to Warrant Agreement Filed herein.
dated as of August 20, 1997, by and among
the Company and the Noteholders with
respect to that certain Warrant Agreement
dated as of April 15, 1996 by and among
the Company and the Noteholders.
4.35 Third Amendment to Warrant Agreement Filed herein.
dated as of August 20, 1997, by and among
the Company and the Noteholders with
respect to that certain Warrant Agreement
dated as of November 19, 1993 by and
among the Company and the Noteholders.
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4.36 Warrant Agreement dated as of August 20, Filed herein.
1997 by and between the Company and
Citibank, N.A.
4.37 Second Amendment to Observation Rights Filed herein.
Agreement dated August 20, 1997 by and
among the Company, the Northwestern
Mutual Life Insurance Company and John
Hancock Mutual Life Insurance Company.
27.1 Financial Data Schedule. Filed herein.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
THE CERPLEX GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
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ELIMINATION OF PRO FORMA
CONSOLIDATED MODCOMP(1) ADJUSTMENTS(2) PRO FORMA
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 21,788 $ (2,856) $ 2,051 $ 20,983
Accounts receivable, net 17,023 (5,825) -- 11,198
Inventories 8,987 (4,169) -- 4,818
Prepaid expenses and other current assets 5,116 (1,178) -- 3,938
------------------------------------------------------
Total current assets 52,914 (14,028) 2,051 40,937
Net assets of Modcomp -- 8,216 (8,216) --
Property, plant and equipment, net 23,836 (733) -- 23,103
Other long-term assets 1,367 269 -- 1,636
------------------------------------------------------
Total assets $ 78,117 $ (6,276) $ (6,165) $ 65,676
======================================================
LIABILITIES & STOCKHOLDERS' DEFICIENCY
Current liabilities:
Notes payable to banks $ 35,897 $ -- $ (6,051) $ 29,846
Notes payable 4,826 -- -- 4,826
Accounts payable 15,117 (1,316) -- 13,801
Accrued and other current liabilities 28,083 (4,960) -- 23,123
------------------------------------------------------
Total current liabilities 83,923 (6,276) (6,051) 71,596
Long-term debt, less current portion 18,114 -- -- 18,114
Long-term obligations 6,214 -- -- 6,214
Stockholders' deficiency:
Preferred stock 657 -- -- 657
Common stock 34 -- -- 34
Additional paid-in capital 58,646 -- -- 58,646
Accumulated deficiency (88,774) -- (114) (88,888)
Cumulative translation adjustment (697) -- -- (697)
------------------------------------------------------
Total stockholders' deficiency (30,134) -- (114) (30,248)
------------------------------------------------------
Total liabilities and stockholders' deficiency $ 78,117 $ (6,276) $ (6,165) $ 65,676
======================================================
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
<PAGE> 14
THE CERPLEX GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
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ELIMINATION OF PRO FORMA
CONSOLIDATED MODCOMP(3) ADJUSTMENTS(4) PRO FORMA
<S> <C> <C> <C> <C>
Net sales $ 191,493 $ (27,179) $ -- $ 164,314
Cost of sales 165,248 (19,261) -- 145,987
---------------------------------------------------------
Gross profit 26,245 (7,918) -- 18,327
Selling, general and administrative expenses 39,488 (5,922) -- 33,566
Restructuring charge 2,084 -- -- 2,084
---------------------------------------------------------
Operating income (loss) (15,327) (1,996) -- (17,323)
Equity in earnings from joint venture 357 (357) -- --
Gain on sale of InCirT Division 450 -- -- 450
Other expense, net 2,881 (92) -- 2,789
Interest expense, net 8,269 83 (703) 7,649
---------------------------------------------------------
Income (loss) before income taxes (25,670) (2,344) 703 (27,311)
Provision for income taxes 1,718 (204) -- 1,514
---------------------------------------------------------
Net income (loss) $ (27,388) $ (2,140) $ 703 $ (28,825)
=========================================================
Net loss per common share $ (2.04) $ (2.15)
========= =========
Weighted average common and common
equivalent shares outstanding 13,419 13,419
========= =========
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
<PAGE> 15
THE CERPLEX GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
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ELIMINATION OF PRO FORMA
CONSOLIDATED MODCOMP(3) ADJUSTMENTS(4) PRO FORMA
<S> <C> <C> <C> <C>
Net sales $ 85,606 $(15,603) $ -- $ 70,003
Cost of sales 76,076 (10,548) -- 65,528
--------
Gross profit 9,530 (5,055) -- 4,475
Selling, general and administrative expenses 20,121 (4,035) -- 16,086
Restructuring charge 4,307 -- -- 4,307
-----------------------------------------------------
Operating income (loss) (14,898) (1,020) -- (15,918)
Gain on sale of PCS 6,607 -- -- 6,607
Other expense, net 998 (683) -- 315
Interest expense, net 3,956 46 (352) 3,650
-----------------------------------------------------
Income (loss) before income taxes (13,245) (383) 352 (13,276)
Provision for income taxes 1,115 (157) -- 958
-----------------------------------------------------
Net income (loss) $(14,360) $ (226) $ 352 $(14,234)
=====================================================
Net loss per common share $ (0.60) $ (0.60)
======== ========
Weighted average common and common
equivalent shares outstanding 23,742 23,742
======== ========
</TABLE>
See notes to unaudited pro forma consolidated financial statements.
<PAGE> 16
THE CERPLEX GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheet Adjustments:
(1) To eliminate the individual assets and liabilities of Modcomp
/Cerplex, L.P. ("Modcomp") and include the net amount as "Net
assets of Modcomp" in the unaudited pro forma consolidated balance
sheet at June 30, 1997.
(2) To reflect the sale of Modcomp for net proceeds of $8,102,000.
Concurrent with the sale, a portion of the cash proceeds are used
to reduce senior debt obligation.
Statement of Operations Adjustments:
(3) To eliminate the operating results of Modcomp from the unaudited
consolidated statement of operations.
(4) To reflect the decrease in interest expense resulting from the
reduction of senior debt obligations from the sale of Modcomp.
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 10, 1997
THE CERPLEX GROUP, INC.
By: /s/ ROBERT W. HUGHES
-------------------------------------------------
Robert W. Hughes
Senior Vice President and Chief Financial Officer
<PAGE> 18
INDEX TO EXHIBITS
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Sequentially
Numbered
Exhibit Description Page
- ------- ------------ -------------
<S> <C> <C>
4.31 Sixth Amendment to Registration Rights
Agreement dated as of August 20, 1997 by and
among the Company, the investors listed on
Schedule A thereto, the security holders of
the Company listed on Schedule B thereto,
the banks listed on Schedule C thereto, and
the parties listed on Schedule D thereto.
4.32 First Amendment Agreement dated as of August
20, 1997, by and among the Company, The
Northwestern Mutual Life Insurance Company,
John Hancock Mutual Life Insurance Company
and North Atlantic Smaller Companies
Investment Trust PLC.
4.33 Warrant Agreement dated as of August 20,
1997 by and between the Company, The
Northwestern Mutual Life Insurance Company,
John Hancock Mutual Life Insurance Company
and North Atlantic Smaller Companies
Investment Trust PLC.
4.34 Third Amendment to Warrant Agreement dated
as of August 20, 1997, by and among the
Company and the Noteholders with respect to
that certain Warrant Agreement dated as of
April 15, 1996 by and among the Company and
the Noteholders.
4.35 Third Amendment to Warrant Agreement dated
as of August 20, 1997, by and among the
Company and the Noteholders with respect to
that certain Warrant Agreement dated as of
November 19, 1993 by and among the Company
and the Noteholders.
4.36 Warrant Agreement dated as of August 20,
1997 by and between the Company and
Citibank, N.A.
4.37 Second Amendment to Observation Rights
Agreement dated August 20, 1997 by and among
the Company, the Northwestern Mutual Life
Insurance Company and John Hancock Mutual
Life Insurance Company.
27.1 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 4.31
SIXTH AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
THIS SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (this
"Amendment") is made as of the 20th day of August, 1997, by and among The
Cerplex Group, Inc., a Delaware corporation (the "Company"), the investors
listed on Schedule A hereto, each of which is herein referred to as an
"Investor" and collectively as the "Investors," the security holders of the
Company listed on Schedule B hereto, each of which is herein referred to as a
"Stockholder" and collectively as the "Stockholders," the banks listed on
Schedule C hereto, each of which is herein referred to as a "Bank Holder" and
collectively as the "Bank Holders," and the parties listed on Schedule D hereto,
each of which is herein referred to as a "Series B Preferred Holder" and
collectively as the "Series B Preferred Holders."
A. The Company, the Investors, the Stockholders, the Bank Holders, the
Series B Preferred Holders and certain other investors and stockholders are
parties to a Registration Rights Agreement dated November 19, 1993 (as in effect
prior to the effectiveness of this Amendment, the "Existing Registration Rights
Agreement").
B. Pursuant to separate Note Purchase Agreements dated as of November
19, 1993 among The Northwestern Mutual Life Insurance Company, John Hancock
Mutual Life Insurance Company and North Atlantic Smaller Companies Investment
Trust PLC (individually, a "Warrant Investor" and collectively, the "Warrant
Investors") and the Company, and a Warrant Agreement dated as of November 19,
1993 among the Warrant Investors and the Company, the Company issued warrants to
purchase nine hundred twenty thousand (920,000) shares of the Company's Common
Stock (the "1993 Warrants") to the Warrant Investors.
C. Pursuant to a Waiver and Amendment Agreement (the "Warrantholders'
Waiver and Amendment Agreement") dated as of April 15, 1996 among the Warrant
Investors and the Company, and a Warrant Agreement dated as of April 15, 1996
among the Warrant Investors and the Company, the Company issued warrants to
purchase one million (1,000,000) shares of the Company's Common Stock (the "1996
Warrants") to the Warrant Investors.
D. Pursuant to a First Amendment Agreement (the "Sub-Debt Amendment")
dated as of August 20, 1997 among the Warrant Investors and the Company, and a
Warrant Agreement dated as of August 20, 1997 among the Warrant Investors and
the Company, the Company issued warrants to purchase five hundred thousand
(500,000) shares of the Company's Common Stock (the "1997 Warrants") to the
Warrant Investors.
E. As consideration for the Sub-Debt Amendment, the Warrant Investors
have requested that the Existing Registration Rights Agreement be amended, as
more particularly provided herein, to include the 1997 Warrants.
<PAGE> 2
F. Pursuant to a First Amendment to Credit Agreement and Limited Waiver
(the "Bank Amendment and Waiver Agreement") dated as of April 15, 1996 among the
Company, Wells Fargo Bank, National Association, as administrative agent
("Administrative Agent"), and the financial institutions listed as Lenders on
the signature pages thereof (such financial institutions herein collectively
referred to as the "Original Bank Group") and a Warrant Agreement (the "Bank
Warrant Agreement") dated as of April 15, 1996 among the Company and the
Original Bank Group, the Company issued warrants to purchase one hundred
twenty-five thousand (125,000) shares of the Company's Common Stock (the
"Original Bank Warrants") to the Original Bank Group; the number of such
Original Bank Warrants is subject to reduction, as more particularly provided
for in the Bank Warrant Agreement.
G. Pursuant to a Third Amendment to Credit Agreement (the "Bank Third
Amendment") dated as of April 9, 1997 among the Company, Administrative Agent
and the financial institutions listed as Lenders on the signature pages thereof
(such financial institutions herein collectively referred to as the "Amended
Bank Group") and the Amended and Restated Warrant Agreement (the "Amended Bank
Warrant Agreement") dated as of April 9, 1997 among the Company and the Amended
Bank Group, the Company issued warrants to purchase seven hundred fifty thousand
(750,000) shares of the Company's Common Stock (the "Additional Bank Warrants")
to the Amended Bank Group; the number of such Additional Bank Warrants is
subject to reduction, as more particularly provided for in the Amended Bank
Warrant Agreement.
H. Pursuant to a Sixth Amendment to Credit Agreement and Consent (the
"Bank Sixth Amendment") dated as of August 6, 1997 among the Company,
Administrative Agent and the Bank Holders and the Warrant Agreement (the "Second
Warrant Agreement") dated as of August 20, 1997 among the Company and the Bank
Holders, the Company shall issue on or before August 20, 1997 warrants to
purchase one million two hundred thirty-five thousand three hundred and thirteen
(1,235,313) shares of the Company's Common Stock (the "New Bank Warrants," and,
together with the Original Bank Warrants and the Additional Bank Warrants, the
"Bank Warrants") to the Bank Holders; the number of such New Bank Warrants is
subject to increase or decrease, as more particularly provided for in the Second
Warrant Agreement.
I. As consideration for the Bank Sixth Amendment, the Bank Holders have
requested that the Existing Registration Rights Agreement be amended to include
the New Bank Warrants, as more particularly provided herein.
J. The Company, the Investors, the Stockholders, the Bank Holders and
the Series B Preferred Holders agree to amend the Existing Registration Rights
Agreement as set forth herein.
AGREEMENT:
2
<PAGE> 3
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS.
As used in this Amendment, the following terms have the respective
meanings specified below:
"Additional Bank Warrants" -- Recital G.
"Administrative Agent" -- Recital F.
"Amended Bank Warrant Agreement" -- Recital G.
"Amended Bank Group" -- Recital G.
"Amendment" -- the introductory sentence.
"Bank Amendment and Waiver Agreement" -- Recital F.
"Bank Holder" -- the introductory sentence.
"Bank Sixth Amendment" -- Recital H.
"Bank Third Amendment" -- Recital G.
"Bank Warrant Agreement" -- Recital F.
"Bank Warrants" -- Recital H.
"Company" -- the introductory sentence.
"Existing Registration Rights Agreement" -- Recital A.
"Investors" -- the introductory sentence.
"New Bank Warrants" -- Recital H.
"Original Bank Group" -- Recital F.
"Original Bank Warrants" -- Recital F.
"Second Warrant Agreement" -- Recital H.
"Series B Preferred Holder" -- the introductory sentence.
3
<PAGE> 4
"Stockholders" -- the introductory sentence.
"Sub-Debt Amendment" -- Recital D.
"Warrantholders' Waiver and Amendment Agreement" -- Recital C.
"Warrant Investor" -- Recital B.
"1996 Warrants" -- Recital C.
"1997 Warrants" -- Recital D.
SECTION 2. AMENDMENTS.
2.1 Amendments to Section 1.1 of the Existing Registration Rights
Agreement
(a) Section 1.1 of the Existing Registration Rights Agreement is hereby
amended by amending and restating the following definitions, in their entirety,
as set forth below:
(i) The term "Bank Holders" means (a) each of the banks set
forth on Schedule C hereto for so long as they hold any Bank Warrants
issued on April 15, 1996 (the "Original Bank Warrants"), on April 9,
1997 (the "Additional Bank Warrants") or on August 20, 1997 (the "New
Bank Warrants") or any Common Stock issued pursuant to the exercise of
such Bank Warrants and (b) any successors thereto or direct or
successive transferees thereof; it being the intention of the parties
hereto that any successive holder of a Bank Warrant, or the Common
Stock issued upon the exercise of such Bank Warrant, which Bank Warrant
derived from an Original Bank Warrant, an Additional Bank Warrant, or a
New Bank Warrant shall be included in this definition, provided that
any holder of shares of Common Stock issued upon the exercise of any
Original Bank Warrant, any Additional Bank Warrant, any New Bank
Warrant or any Bank Warrant that derived from such Original Bank
Warrant, Additional Bank Warrant, or New Bank Warrant which shares have
been, or derive from shares that have been, publicly sold pursuant to a
registration statement filed under the Act or pursuant to Rule 144
shall, to the extent of its holdings of such shares, be excluded from
this definition. Any decisions to be made by the Bank Holders shall be
made upon a vote or a majority in interest of holders of the aforesaid
Bank Warrants and the aforesaid Common Stock on the basis of the number
of shares of Common Stock issuable pursuant to such Bank Warrants and
the number of shares of such Common Stock then held. Rights of
successors, assigns and transferees of Bank Holders are subject to
compliance with the requirements of Section 1.13.
(ii) The term "Bank Warrants" means those certain warrants
issued by the Company to the Original Bank Group on April 15, 1996
pursuant to that certain
4
<PAGE> 5
Warrant Agreement dated as of April 15, 1996, those certain warrants
issued by the Company to the Amended Bank Group on April 9, 1997
pursuant to that certain Amended and Restated Warrant Agreement dated
as of April 9, 1997, those certain warrants issued by the Company to
each of the banks set forth on Schedule C hereto on August 20, 1997
pursuant to that certain Second Warrant Agreement dated as of August
20, 1997 and all warrants exchanged therefor or otherwise subsequently
issued in respect thereof under said Amended and Restated Warrant
Agreement or Second Warrant Agreement, as the case may be.
(iii) The term "Hancock Group Holders" means (a) John Hancock
Mutual Life Insurance Company for so long as it holds any Warrants
issued on November 19, 1993, on April 15, 1996 or on August 20, 1997
(collectively, the "Original JH Warrants") or any Common Stock issued
pursuant to the exercise of such Warrants and (b) any successors
thereto or direct or successive transferees thereof; it being the
intention of the parties hereto that any successive holder of a
Warrant, or the Common Stock issued upon the exercise of such Warrant,
which Warrant derived from an Original JH Warrant, shall be included in
this definition, provided that any holder of shares of Common Stock
issued upon the exercise of any Original JH Warrant or any Warrant that
derived from such Original JH Warrant which shares have been, or derive
from shares that have been, publicly sold pursuant to a registration
statement filed under the Act or pursuant to Rule 144 shall, to the
extent of its holdings of such shares, be excluded from this
definition. Any decisions to be made by the Hancock Group Holders shall
be made upon a vote of a majority in interest of holders of the
aforesaid Warrants and the aforesaid Common Stock on the basis of the
number of shares of Common Stock issuable pursuant to such Warrants and
the number of shares of such Common Stock then held. Rights under this
Agreement of successors, assigns and transferees of Hancock Group
Holders are subject to compliance with the requirements of Section
1.13.
(iv) The term "Northwestern Group Holders" means (a) The
Northwestern Mutual Life Insurance Company for so long as it holds any
Warrants issued on November 19, 1993, on April 15, 1996 or on August
20, 1997 (collectively, the "Original NW Warrants") or any Common Stock
issued pursuant to the exercise of such Warrants and (b) any successors
thereto or direct or successive transferees thereof; it being the
intention of the parties hereto that any successive holder of a
Warrant, or the Common Stock issued upon the exercise of such Warrant,
which Warrant derived from an Original NW Warrant, shall be included in
this definition, provided that any holder of shares of Common Stock
issued upon the exercise of any Original NW Warrant or any Warrant that
derived from such Original NW Warrant which shares have been, or derive
from shares that have been, publicly sold pursuant to a registration
statement filed under the Act or pursuant to Rule 144 shall, to the
extent of its holdings of such shares, be excluded from this
definition. Any decisions to be made by the Northwestern Group Holders
shall be made upon a vote of a majority in interest of holders of the
aforesaid Warrants and the aforesaid Common Stock on the basis of the
number of shares of Common Stock issuable pursuant to
5
<PAGE> 6
such Warrants and the number of shares of such Common Stock then held.
Rights of successors, assigns and transferees of Northwestern Group
Holders are subject to compliance with the requirements of Section
1.13.
(v) The term "Warrants" means the collective reference to (i)
those certain warrants issued by the Company to each of The
Northwestern Mutual Life Insurance Company, John Hancock Mutual Life
Insurance Company and North Atlantic Smaller Companies Trust PLC on
November 19, 1993 pursuant to that certain Warrant Agreement dated as
of November 19, 1993 and all warrants exchanged therefor or otherwise
subsequently issued in respect thereof under said Warrant Agreement;
(ii) those certain warrants issued by the Company to each of The
Northwestern Mutual Life Insurance Company, John Hancock Mutual Life
Insurance Company and North Atlantic Smaller Companies Trust PLC on
April 15, 1996 pursuant to that certain Warrant Agreement dated as of
April 15, 1996 and all warrants exchanged therefor or otherwise
subsequently issued in respect thereof under said Warrant Agreement;
and (iii) those certain warrants issued by the Company to each of The
Northwestern Mutual Life Insurance Company, John Hancock Mutual Life
Insurance Company and North Atlantic Smaller Companies Trust PLC on
August 20, 1997 pursuant to that certain Warrant Agreement dated as of
August 20, 1997 and all warrants exchanged therefor or otherwise
subsequently issued in respect thereof under said Warrant Agreement.
(vi) The term "Warrant Group Holders" means (a) John Hancock
Mutual Life Insurance Company, The Northwestern Mutual Life Insurance
Company and North Atlantic Smaller Companies Trust PLC for so long as
such persons hold any Warrants issued on November 19, 1993, on April
15, 1996, or on August 20, 1997 (collectively, the "Original Warrants")
or any Common Stock issued pursuant to the exercise of such Warrants
and (b) any successors thereto or direct or successive transferees
thereof; it being the intention of the parties hereto that any
successive holder of a Warrant, or the Common Stock issued upon the
exercise of such Warrant, which Warrant derived from an Original
Warrant, shall be included in this definition, provided that any holder
of shares of Common Stock issued upon the exercise of any Original
Warrant (or any Warrant that derived from such Original Warrant) which
shares have been, or derive from shares that have been, publicly sold
pursuant to a registration statement filed under the Act or pursuant to
Rule 144 shall, to the extent of its holdings of such shares, be
excluded from this definition. Any decisions to be made by the Warrant
Group Holders (including, without limitation, the decision to make a
request under Section 1.2(a) and Section 1.12(a)) shall be made upon a
vote of sixty-seven percent (67%) in interest of holders of the
aforesaid Warrants and the aforesaid Common Stock on the basis of the
number of shares of Common Stock issuable pursuant to such Warrants and
the number of shares of such Common Stock then held. Rights under this
Agreement of successors, assigns and transferees of Warrant Group
Holders are subject to compliance with the requirements of Section
1.13.
6
<PAGE> 7
2.2 Amendment of Schedule C to Existing Registration Rights Agreement
Schedule C to the Existing Registration Rights Agreement is hereby
deleted and Schedule C hereto replaced therefor.
SECTION 3. MISCELLANEOUS.
3.1 Governing Law
This Amendment shall be governed by and construed under the laws of the
State of New York as applied to agreements among New York residents entered into
and to be performed entirely within New York.
3.2 Duplicate Originals
Two or more duplicate originals of this Amendment may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Amendment may be executed in one or
more counterparts and shall be effective when at least one counterpart shall
have been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one duplicate
original.
3.3 Effect of this Amendment
Except as specifically provided in this Amendment, no terms or
provisions of the Existing Registration Rights Agreement have been modified or
changed by this Amendment and the terms and provisions of the Existing
Registration Rights Agreement, as amended hereby, shall continue in full force
and effect. This Amendment and the amendments contained herein shall have and be
in effect on and after the date hereof upon the execution and delivery hereof by
(i) each of the Investors, (ii) sixty-seven percent in interest of the
Stockholders, (iii) each of the Bank Holders, (iv) sixty-seven percent in
interest of the Series B Preferred Holders and (v) the Company.
3.4 Section Headings
The titles of the sections hereof appear as a matter of convenience
only, do not constitute a part of this Amendment and shall not affect the
construction hereof.
7
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
THE CERPLEX GROUP, INC.
By
--------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By
--------------------------------
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By
--------------------------------
Name:
Title:
NORTH ATLANTIC SMALLER COMPANIES
INVESTMENT TRUST PLC
By
--------------------------------
Name:
Title:
[Signature page to the SIXTH AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT among THE CERPLEX GROUP, INC. and the Bank Holders, Investors,
Stockholders and Series B Preferred Holders listed therein.]
8
<PAGE> 9
Each of the undersigned Bank Holders agrees to be bound by the terms and
conditions of the Existing Registration Rights Agreement, as amended by this
Sixth Amendment to Registration Rights Agreement
CITIBANK, N.A.
By:
-----------------------------
Name:
Title:
[Signature page to SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
among THE CERPLEX GROUP, INC. and the Bank Holders, Investors, Stockholders and
Series B Preferred Holders listed therein.]
9
<PAGE> 10
Each of the undersigned Stockholders agrees to be bound by the terms and
conditions of the Existing Registration Rights Agreement, as amended by this
Sixth Amendment to Registration Rights Agreement
- -----------------------------------
Name: William A. Klein
Address: 1382 Bell Avenue
Tustin, California 92680
- -----------------------------------
Name: Richard C. Davis
Address: 1382 Bell Avenue
Tustin, California 92680
- -----------------------------------
Name: Myron Kunin
Address: Regis Corporation
7201 Metro Boulevard
Minneapolis, MN 55439
- -----------------------------------
Name: Theodore J. Wisniewski
Address: 1382 Bell Avenue
Tustin, California 92680
[Signature page to SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
among THE CERPLEX GROUP, INC. and the Bank Holders, Investors, Stockholders and
Series B Preferred Holders listed therein.]
10
<PAGE> 11
Each of the undersigned Investors agrees to be bound by the terms and conditions
of the Existing Registration Rights Agreement, as amended by this Sixth
Amendment to Registration Rights Agreement
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation, Managing General Partner
By:
----------------------------------
Robert Finzi, Attorney-in-Fact
DLJ CAPITAL CORPORATION
By:
----------------------------------
Robert Finzi, Attorney-in-Fact
BESSEMER VENTURE PARTNERS III L.P.
By: Deer III & Co., General Partner
By:
----------------------------------
Robert H. Buescher, General Partner
By:
----------------------------------
Robert H. Buescher, Attorney-in-Fact
[Signature page to SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
among THE CERPLEX GROUP, INC. and the Bank Holders, Investors, Stockholders and
Series B Preferred Holders listed therein.]
11
<PAGE> 12
Each of the undersigned Series B Preferred Holders agrees to be bound by the
terms and conditions of the Existing Registration Rights Agreement, as amended
by this Sixth Amendment to Registration Rights Agreement
SCORPION OFFSHORE INVESTMENT FUND
By:
----------------------------------
Name: Ralph J. Long, Jr.
Title: Chief Financial Officer, Standard Pacific Capital LLC,
as Investment Advisor to Scorpion Offshore Investment Fund
THE & TRUST
By:
----------------------------------
Name: Ralph J. Long, Jr.
Title: Chief Financial Officer, Standard Pacific Capital LLC,
as Investment Advisor to The & Trust
CHESTNUT PACIFIC LTD. PARTNERS
By:
----------------------------------
Name: Ralph J. Long, Jr.
Title: Chief Financial Officer, Standard Pacific Capital LLC,
as Investment Advisor to Chestnut Pacific Ltd. Partners
STANDARD GLOBAL EQUITY PARTNERS L.P.
By:
----------------------------------
Name: Ralph J. Long, Jr.
Title: Chief Financial Officer, Standard Pacific Capital LLC,
as General Partner of Standard Global Equity Partners L.P.
[Signature page to SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
among THE CERPLEX GROUP, INC. and the Bank Holders, Investors, Stockholders and
Series B Preferred Holders listed therein.]
12
<PAGE> 13
STANDARD PACIFIC CAPITAL OFFSHORE FUND LTD.
By:
----------------------------------
Name: Ralph J. Long, Jr.
Title: Chief Financial Officer, Standard Pacific Capital LLC,
as Investment Advisor to Standard Pacific Capital Offshore
Fund Ltd.
COMMON FUND EQUITY FUND
By:
----------------------------------
Name: Ralph J. Long, Jr.
Title: Chief Financial Officer, Standard Pacific Capital LLC,
as Investment Advisor to Common Fund Equity Fund
WHITMAN PARTNERS, L.P.
By:
----------------------------------
Name: Douglas F. Whitman
Title: General Partner
[Signature page to SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
among THE CERPLEX GROUP, INC. and the Bank Holders, Investors, Stockholders and
Series B Preferred Holders listed therein.]
13
<PAGE> 14
SCHEDULE A
Schedule of Investors
Warrant Investors
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee. Wisconsin 53202
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
North Atlantic Smaller Companies Trust PLC
c/o J.0. Hambro & Co., Ltd.
10 Park Place
London, England SW1A1LP
Independent Equity Group
Sprout Growth II, L,P.
DLJ Capital Corp.
Deepak Kamra
Bessemer Venture Partners II L.P.
Neill H. Brownstein
Robert H. Buescher
C. Samantha Chen
Rodney A. Cohen
Richard R. Davis
Adam P. Godfrey
Barbara M. Heragan
Robert D. Lindsay
Bradford Mills
Thomas F. Ruhm
Ward W. Woods, Jr.
Leo & Nicole Arnaboldi, JTWROS
Perry H. Braun
Norman H. Brown, Jr.
John G. Danhakl
Hoyt L. Davidson
Thompson Dean
Peter K. Deeks
Ralph L. DeGroff, Jr.
Schedule A-1
<PAGE> 15
Anthony M. DeLuise
David L. Dennis
Thomas S. DePre
Robert E. Diemar
Robert Finzi
Daniel K. Flatley
Mark K, Gormley
Joyce I. Greenberg
Thomas G. Greig, III
James D. Hann & Bonnie J. Hann, JTWROS
Douglas M. Hayes
Stephen J. Ketchum
Richard E. Kroon
Frederick C. Lane
Mark Lanigan
Steven E. Lebow
Brian McLoughlin
Kenneth David Moelis & Julie Lynn Moelis,
Trustees Under The Moelis Family Trust
Joseph Navin, III
Michael R. Nicolais
Peter J. Nolan
Steven G. Puccinelli
Larry E. Reeder
Elan Adiel Schultz
James T. Sington
Jon R. Stone
Steven F. Strandberg
Kenneth A. Tucker
R. Scott Turricchi
Warren Woo
Kirk B. Wortman
Schedule A-2
<PAGE> 16
SCHEDULE B
Schedule of Stockholders
Catherine Bartholomew
Frank Cameron
Tom Cherry
Roberta Claborn
David O. Creasman
Raymond Cruz
Richard C. Davis
Randle Dewees
Edward Diaz
Susan Eaton
Harry Edmiston
Dennis Fandrich
Jon Gill
Jacqueline Gillett
Gary Graff
Nelson Guillory
Peggy Hams
Jerome Jacobson
James Jones
Roberta Kean
Jennifer Klein
Melissa Klein
William A. Klein
Myron Kunin
Pollianna Lewis
Van Nguyen
Richard Ollech
Thomas D. Pipkin
Juanita Pitts
Keith Rathbone
Richard Richardson
Vincent E. Simpson
Grover Smith
Joyce Valdez
Earnest Vernon
Alan Weaver
Theodore J. Wisniewski
Schedule B-1
<PAGE> 17
SCHEDULE C
Schedule of Bank Holders
Citibank, N.A.
Schedule C-1
<PAGE> 18
SCHEDULE D
Schedule of Series B Preferred Holders
Sprout Growth II, L.P.
DLJ Capital Corporation
Scorpion Offshore Investment Fund
The & Trust
Chestnut Pacific Ltd. Partners
Standard Global Equity Partners L.P.
Standard Pacific Capital Offshore Fund Ltd.
Common Fund Equity Fund
Malcolm and Emily Fairbairn
Andrea Martin
Nitin T. Mehta
Peak Investment Limited Partnership
Pleiades Investment Partners
Whitman Partners, L.P.
Schedule D-1
<PAGE> 1
EXHIBIT 4.32
================================================================================
THE CERPLEX GROUP, INC.
-------------------------------------
FIRST AMENDMENT AGREEMENT
-------------------------------------
DATED AS OF AUGUST 20, 1997
$17,250,000
SENIOR SUBORDINATED NOTES DUE NOVEMBER 19, 2001
================================================================================
<PAGE> 2
FIRST AMENDMENT AGREEMENT
FIRST AMENDMENT AGREEMENT (this "AGREEMENT"), dated as of August 20,
1997, by and among THE CERPLEX GROUP, INC., a Delaware corporation (together
with its successors and assigns, the "COMPANY"), THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY, JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY and NORTH ATLANTIC
SMALLER COMPANIES INVESTMENT TRUST PLC (collectively, the "NOTEHOLDERS").
RECITALS:
A. The Company has entered into those certain separate Amended and
Restated Note Purchase Agreements, each dated as of April 9, 1997 (collectively,
as in effect prior to the effectiveness of this Agreement, the "EXISTING NOTE
PURCHASE AGREEMENT" and, as amended by this Agreement, the "AMENDED NOTE
PURCHASE AGREEMENT") with each of the Noteholders.
B. The Existing Note Purchase Agreement amended and restated those
certain separate Note Purchase Agreements, each dated as of November 19, 1993,
with each of the Noteholders, as amended, pursuant to which the Company
originally issued and sold to the Noteholders an aggregate principal amount of
$17,250,000 of the Company's Series A 9.00% Senior Subordinated Notes Due
November 19, 2001 (the "SERIES A NOTES") and an aggregate principal amount of
$5,750,000 of the Company's Series B 9.00% Senior Subordinated Notes Due
November 19, 2001 (the "SERIES B NOTES").
C. Pursuant to the terms of the Existing Note Purchase Agreement, the
Series A Notes were amended and restated (as in effect prior to the
effectiveness of this Agreement, the "EXISTING NOTES" and, as amended and
restated by this Agreement, the "NOTES"). The Company has prepaid the Series B
Notes and the Series B Notes are no longer issued and outstanding.
D. The Noteholders are the current holders of one hundred percent
(100%) of the Existing Notes outstanding as of the Effective Date.
E. The Company has requested that certain of the provisions in the
Existing Note Purchase Agreement and the Existing Notes be amended, as more
particularly provided herein.
F. The Noteholders are agreeable, subject to the terms and conditions
set forth below, to modifying the Existing Note Purchase Agreement and the
Existing Notes as hereinafter set forth, and in connection therewith, each of
the Company and the Noteholders has agreed to amend the Existing Note Purchase
Agreement and the Existing Notes as set forth herein.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1
<PAGE> 3
SECTION 1. DEFINED TERMS.
The terms used herein and not defined herein shall have the meanings
assigned to such terms in the Existing Note Purchase Agreement. As used in this
Agreement, the following terms have the respective meanings specified below:
"AGREEMENT, THIS" -- means this First Amendment Agreement, as it may be
amended from time to time.
"AMENDED FINANCING DOCUMENTS" -- means the collective reference to the
Amended Note Purchase Agreement, the Notes, the Amended Registration Rights
Agreement, the Amended Observation Rights Agreement, the Amended 1993 Warrant
Agreement and the Amended 1996 Warrant Agreement.
"AMENDED NOTE PURCHASE AGREEMENT" -- Recital A.
"AMENDED REGISTRATION RIGHTS AGREEMENT" -- Section 6.4.
"AMENDED OBSERVATION RIGHTS AGREEMENT" -- Section 6.4.
"AMENDED 1996 WARRANT AGREEMENT" -- Section 6.4.
"AMENDED 1993 WARRANT AGREEMENT" -- Section 6.4.
"COMPANY" -- the introductory sentence.
"EFFECTIVE DATE" -- Section 6.
"EXISTING NOTE PURCHASE AGREEMENT" -- Recital A.
"EXISTING NOTES" -- Recital C.
"EXISTING OUTSTANDING PRINCIPAL" -- Section 3.
"INITIAL CAPITALIZED INTEREST AMOUNT" -- Section 3.
"1997 EQUITY AMENDMENTS" -- means the collective reference to the Sixth
Amendment to Registration Rights Agreement, the Second Amendment to Observation
Rights Agreement, the Third Amendment to 1993 Warrant Agreement and the Third
Amendment to 1996 Warrant Agreement.
"1997 FINANCING DOCUMENTS" -- means the collective reference to this
Agreement, the 1997 Warrant Documents and the 1997 Equity Amendments.
"1997 WARRANT DOCUMENTS" -- means the collective reference to the 1997
Warrant Agreement and the 1997 Warrants.
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<PAGE> 4
"1997 WARRANT AGREEMENT" -- Section 6.3.
"1997 WARRANTS" -- Section 6.3.
"1996 WARRANT AGREEMENT" -- means the Warrant Agreement dated as of
April 15, 1996, among the Company and the Noteholders, as amended, and as such
agreement may be further amended, supplemented or restated from time to time.
"1993 WARRANT AGREEMENT" -- means the Warrant Agreement dated as of
November 19, 1993, among the Company and the Noteholders, as amended, and as
such agreement may be further amended, supplemented or restated from time to
time.
"NOTEHOLDERS" -- the introductory sentence.
"NOTES" -- Recital C.
"OBSERVATION RIGHTS AGREEMENT" -- means the Observation Rights
Agreement dated as of November 19, 1993, among the Company, The Northwestern
Mutual Life Insurance Company and John Hancock Mutual Life Insurance Company, as
amended, and as such agreement may be further amended, supplemented or restated
from time to time.
"REGISTRATION RIGHTS AGREEMENT" -- means the Registration Rights
Agreement dated November 19, 1993, among the Company, the Noteholders, and the
investors and security holders of the Company set forth on the signature pages
thereto, as amended, and as such agreement may be further amended, supplemented
or restated from time to time.
"SECOND AMENDMENT TO OBSERVATION RIGHTS AGREEMENT" -- Section 6.4.
"SERIES A NOTES" -- Recital B.
"SERIES B NOTES" -- Recital B.
"SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT" -- Section 6.4.
"SOP" -- means the Company's 1990 Stock Option Plan (as amended from
time to time).
"THIRD AMENDMENT TO 1996 WARRANT AGREEMENT" -- Section 6.4.
"THIRD AMENDMENT TO 1993 WARRANT AGREEMENT" -- Section 6.4.
"TOTAL OUTSTANDING PRINCIPAL" -- Section 3.
SECTION 2. AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENT AND EXISTING
NOTES; AFFIRMATION.
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<PAGE> 5
2.1 AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENT.
The Company and, subject to the satisfaction of the conditions set
forth in Section 6, each of the Noteholders, each hereby consents and agrees to
the amendments to the Existing Note Purchase Agreement set forth in Exhibit A to
this Agreement. Each such amendment is incorporated herein by reference as if
set forth verbatim in this Agreement.
2.2 AMENDMENT AND RESTATEMENT OF EXISTING NOTES.
The Company and, subject to the satisfaction of the conditions set
forth in Section 6, each of the Noteholders, each hereby consents and agrees to
the amendment and restatement of the form of the Existing Notes in its entirety
in the form attached as Attachment 1 to Exhibit A to this Agreement. On the
Effective Date, each of the terms of each outstanding Existing Note shall be
deemed to be amended in accordance with such form, without any further action on
the part of the Company or any holder of any Existing Note. Upon surrender of
any outstanding Existing Note, the Company shall deliver to the registered
holder thereof a new Note in the form attached as Attachment 1 to Exhibit A to
this Agreement, in the principal amount of such Existing Note. Each such new
Note shall be dated and bear interest from the date to which interest shall have
been paid on the related Existing Note or dated the date of the related Existing
Note if no interest shall have been paid thereon.
2.3 AFFIRMATION OF OBLIGATIONS.
The Company hereby acknowledges and affirms all of its obligations
under the terms of the Existing Note Purchase Agreement and the Existing Notes,
as amended hereby.
SECTION 3. ADDITIONAL PRINCIPAL AMOUNT.
On the August 19, 1997 interest payment date in respect of the Existing
Notes, so long as the principal amount of the Existing Notes shall not have
become due and payable at such time and no Default or Event of Default shall
then exist, the Company may satisfy its obligation to pay interest on each
Existing Note by adding an additional principal amount (the "INITIAL CAPITALIZED
INTEREST AMOUNT") to the then outstanding principal amount (the "EXISTING
OUTSTANDING PRINCIPAL") of such Existing Note, which additional principal amount
shall be equal to the aggregate amount of the interest payment in respect of
such Existing Note that is due on such interest payment date in accordance with
the provisions of Section 4.1 of the Existing Note Purchase Agreement (the
Initial Capitalized Interest Amount of each Note, together with the Existing
Outstanding Principal of such Note, is herein referred to as the "TOTAL
OUTSTANDING PRINCIPAL" of such Note). Schedule 3 hereto sets forth the Existing
Outstanding Principal, Initial Capitalized Interest Amount and Total Outstanding
Principal for each Existing Note outstanding on the Effective Date.
SECTION 4. WARRANTIES AND REPRESENTATIONS.
To induce the Noteholders to enter into this Agreement, the Company
warrants and represents to the Noteholders that as of the Effective Date:
4
<PAGE> 6
4.1 CORPORATE ORGANIZATION AND AUTHORITY.
The Company:
(a) is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware;
(b) has all legal and corporate power and authority to own and
operate its Properties and to carry on its business as now conducted
and as presently proposed to be conducted;
(c) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have
such licenses, certificates and permits, either individually or in the
aggregate, would not have, and could not reasonably be expected to
have, a Material Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation in each state except where the failure to be so qualified
or licensed and authorized and in good standing, either individually or
in the aggregate, would not have, and could not reasonably be expected
to have, a Material Adverse Effect.
4.2 COMPLIANCE WITH LAW.
The Company:
(a) is not in violation of any law, ordinance, governmental
rule or regulation to which it is subject; and
(b) has not failed to obtain any license, certificate, permit,
franchise or other governmental authorization necessary to the
ownership of its Property or to the conduct of its business;
which violation or failure to obtain, either individually or in the aggregate,
would have, or could reasonably be expected to have, a Material Adverse Effect.
4.3 LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.
(A) AUTHORIZATION. The execution and delivery by the Company
of the 1997 Financing Documents and the performance by the Company of
its obligations thereunder and under the Amended Financing Documents
are within the corporate powers of the Company and do not conflict
with, result in any breach in any of the provisions of, constitute a
default under, or result in the creation of any Lien upon any Property
of the Company under the provisions of, any agreement, charter
instrument, bylaw or other instrument to which it is a party or by
which it or any of its Property may be bound.
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<PAGE> 7
(B) OBLIGATIONS ARE LEGAL AND ENFORCEABLE. The execution and
delivery by the Company of the 1997 Financing Documents have been duly
authorized by all necessary action on the part of the Company, and the
1997 Financing Documents have been executed and delivered by one or
more duly authorized officers of the Company. The 1997 Financing
Documents and the Amended Financing Documents constitute legal, valid
and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, except that the
enforceability thereof may be:
(i) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or other similar laws
affecting the enforceability of creditors' rights generally;
(ii) subject to the availability of equitable
remedies; and
(iii) with respect to indemnity and contribution,
limited by state or federal laws relating to Securities or by
the public policy underlying such laws.
4.4 PENDING LITIGATION.
Except as set forth in Schedule 4.4, there are no proceedings, actions
or investigations pending or, to the knowledge of the Company, threatened
against or affecting the Company in any court or before any Governmental
Authority or arbitration board or tribunal that, either individually or in the
aggregate, would have or could reasonably be expected to have a Material Adverse
Effect. The Company is not in default with respect to any judgment, order, writ,
injunction or decree of any court, Governmental Authority or arbitration board
or tribunal that, either individually or in the aggregate, would have or could
reasonably be expected to have a Material Adverse Effect.
Except as previously disclosed to the Noteholders, the Company has not
received any notice of termination of any material contract, lease or other
agreement or suffered any material damage, destruction or loss (whether or not
covered by insurance) or had any employee strike, work-stoppage, slowdown or
lock-out or any substantial, non-frivolous threat directed to it of any imminent
strike, work-stoppage, slowdown or lock-out.
4.5 GOVERNMENTAL CONSENT.
Neither the nature of the Company, nor of any of its businesses or
Properties, nor any relationship between the Company and any other Person, nor
any circumstance in connection herewith or in connection with the execution and
delivery of the 1997 Financing Documents is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of the Company as a condition to the
execution and delivery thereof.
6
<PAGE> 8
4.6 NO DEFAULTS.
(A) NO DEFAULTS. After giving effect to this Agreement, no
Defaults or Events of Default shall exist.
(B) NO DEFAULTS IN CONNECTION WITH 1997 FINANCING DOCUMENTS.
No event has occurred and no condition exists that, upon the execution,
delivery and effectiveness of the 1997 Financing Documents, would
constitute a Default or an Event of Default.
(C) CHARTER INSTRUMENT, OTHER AGREEMENTS. The Company is not
in violation in any respect of any term of any charter instrument or
bylaw. Except as set forth in Schedule 4.6, the Company is not in
violation in any material respect of any term in any agreement or other
instrument to which it is a party or by which it or any of its Property
may be bound, which would have, or could reasonably be expected to
have, a Material Adverse Effect.
4.7 CAPITAL STOCK; OWNERSHIP.
As of the Effective Date and after giving effect to the issuance of the
1997 Warrants and the other transactions contemplated to occur simultaneously
therewith:
(a) the authorized capital stock of the Company, the issued
and outstanding capital stock of the Company, and the reservation of
shares of capital stock of the Company are set forth in Part A of
Schedule 4.7;
(b) all outstanding shares of the Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and not
subject to any preemptive rights; all such shares reserved for issuance
upon exercise or conversion of other Securities have been duly
authorized and, upon such exercise or conversion, will be validly
issued and fully paid, nonassessable and not subject to any preemptive
rights; the issuance and sale of all of such shares have been in full
compliance with the registration requirements of all applicable federal
and state securities laws;
(c) other than as set forth in Part A of Schedule 4.7, the
Company does not have outstanding any subscriptions, warrants, options,
rights or convertible Securities with respect to any of its Common
Stock, nor has the Company authorized or entered into any agreements or
commitments to issue any such warrants, options, rights or convertible
Securities, except agreements and commitments related to the warrants,
options, rights and convertible Securities set forth in Part A of
Schedule 4.7; and
(d) except as set forth in Part B of Schedule 4.7, the Company
is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its Common
Stock or Preferred Stock or any warrant, option, right or convertible
Security in respect of its Common Stock or Preferred Stock.
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<PAGE> 9
4.8 PRIVATE OFFERING; COMPLIANCE WITH SECURITIES LAWS.
Neither the Company nor any other Person has offered any of the 1997
Warrants for sale or other issuance to, or solicited offers to buy or acquire
any thereof from, or otherwise approached or negotiated with respect thereto
with, any Person, other than the Noteholders. Except as provided in the Amended
Registration Rights Agreement in connection with shares of Common Stock issuable
upon the exercise of the 1997 Warrants, the Company has not taken, nor will it
take (other than as expressly provided for in the Amended Financing Documents),
any action that would subject the issuance of any of the 1997 Warrants to the
provisions of section 5 of the Securities Act or to the registration or
qualification provisions of any securities or "blue sky" law of any applicable
jurisdiction.
SECTION 5. COVENANTS OF THE COMPANY.
5.1 ADDITIONAL INFORMATION.
To induce the Noteholders to enter into this Agreement, the Company
agrees that in addition to the information required to be delivered by the
Company to the Noteholders pursuant to Section 7.1 of the Amended Note Purchase
Agreement, the Company will provide to each Noteholder such financial monitoring
reports as the Noteholders shall request. Such reports shall be delivered via
telecopy or to the address of each Noteholder, with copies to Hebb & Gitlin.
Upon request by the Noteholders, the Company shall participate in monthly
meetings with the Noteholders, either by conference call or in person (at the
discretion of the Noteholders), to discuss the financial performance of the
Company and such other matters as the Noteholders shall request.
5.2 RESERVE ACCOUNT FOR COUNSEL.
The Company agrees to pay to Hebb & Gitlin, special counsel to the
Noteholders, on or prior to August 22, 1997, a fee reserve in the amount of
$50,000 on account of amounts to be charged by Hebb & Gitlin with respect to its
representation of the Noteholders. Such reserve will be the property of the
Noteholders and Hebb & Gitlin will hold such reserve on behalf of the
Noteholders in its clients' funds account. Hebb & Gitlin expects to bill the
Company without applying its charges against the reserve in order to maintain
the reserve in case it is needed for subsequent billings. However, at the
direction of the Noteholders or if the Company is not in compliance with its
obligation to pay amounts charged by Hebb & Gitlin, Hebb & Gitlin may at any
time apply the reserve against its fees and expenses (whether or not yet billed,
provided that Hebb & Gitlin shall promptly deliver a statement that reconciles
any application of the reserve against actual fees and expenses). Any part of
the reserve so applied will, at the direction of the Noteholders, be promptly
replenished by the Company so that at all times the amount of the reserve will
remain at $50,000. Any portion of the reserve which Hebb & Gitlin does not apply
against its fees and expenses will be applied or paid, subject to the provisions
of Section 10 of the Amended Note Purchase Agreement, either to the reduction of
indebtedness of the Company to the Noteholders or to the Company, as directed by
the Noteholders.
8
<PAGE> 10
SECTION 6. CONDITIONS.
The amendments described in Section 2 shall become effective on the
date (the "EFFECTIVE DATE") upon which all of the following conditions have been
satisfied:
6.1 EXECUTION AND DELIVERY OF THIS AGREEMENT.
The Company and the Noteholders shall have executed and delivered
counterparts of this Agreement.
6.2 AMENDMENT OF SENIOR CREDIT DOCUMENTS.
The Company shall have delivered to each Noteholder copies of the Sixth
Amendment to Credit Agreement and Consent and the warrant agreement entered into
among the Company and the holders of Senior Debt, in form and substance
satisfactory to the Noteholders in their sole discretion, together with a
certification by a Senior Officer of the Company stating that such copies are
true and correct copies.
6.3 WARRANT AGREEMENT; WARRANTS.
The Company and each of the Noteholders shall have executed and
delivered a warrant agreement (as may be amended from time to time, the "1997
WARRANT AGREEMENT"), in form and substance satisfactory to the Noteholders, and
each of the Noteholders shall have received a fully executed counterpart
thereof. The Company shall have issued warrants (the "1997 WARRANTS") in
accordance with the terms of the 1997 Warrant Agreement to each of the
Noteholders in the respective amounts indicated below each Noteholder's name in
Annex 1 thereto.
6.4 AMENDMENTS TO EQUITY DOCUMENTS.
The Company and each of the Noteholders shall have executed and
delivered:
(a) an amendment to the Registration Rights Agreement (the
"SIXTH AMENDMENT TO REGISTRATION RIGHTS AGREEMENT" and, the
Registration Rights Agreement, as amended by the Sixth Amendment to
Registration Rights Agreement, the "AMENDED REGISTRATION RIGHTS
AGREEMENT"),
(b) an amendment to the 1993 Warrant Agreement (the "THIRD
AMENDMENT TO 1993 WARRANT AGREEMENT" and, the 1993 Warrant Agreement,
as amended by the Third Amendment to 1993 Warrant Agreement, the
"AMENDED 1993 WARRANT AGREEMENT"),
(c) an amendment to the 1996 Warrant Agreement (the "THIRD
AMENDMENT TO 1996 WARRANT AGREEMENT" and, the 1996 Warrant Agreement,
as amended by the Third Amendment to 1996 Warrant Agreement, the
"AMENDED 1996 WARRANT AGREEMENT") and
9
<PAGE> 11
(d) an amendment to the Observation Rights Agreement (the
"SECOND AMENDMENT TO OBSERVATION RIGHTS AGREEMENT" and, the Observation
Rights Agreement, as amended by the Second Amendment to Observation
Rights Agreement, the "AMENDED OBSERVATION RIGHTS AGREEMENT"),
and each of the Noteholders shall have received a fully executed counterpart of
each such agreement.
6.5 RESERVATION OF COMMON STOCK.
The shares of Common Stock (as such term is defined in the 1997 Warrant
Agreement) issuable upon exercise of the 1997 Warrants shall have been duly
authorized and reserved for issuance upon such exercise.
6.6 PRIVATE PLACEMENT NUMBER.
There shall have been obtained a private placement number for the 1997
Warrants from the CUSIP Service Bureau of Standard & Poor's (a division of
McGraw Hill, Inc.) and each Noteholder shall have been informed of such private
placement number.
6.7 NO DEFAULT; REPRESENTATIONS AND WARRANTIES TRUE.
After giving effect to Section 2 hereof, no Default or Event of Default
under the Amended Note Purchase Agreement shall exist, the warranties and
representations set forth in Section 4 hereof shall be true and correct on the
Effective Date, and the Noteholders shall have received a certificate, dated as
of the Effective Date and signed by a Senior Officer, certifying to such
matters, and certifying that all of the conditions specified in this Section 6
have been satisfied.
6.8 AUTHORIZATION OF TRANSACTIONS.
The Company shall have authorized, by all necessary corporate action,
its execution, delivery and performance of the 1997 Financing Documents and the
consummation of all transactions contemplated by the 1997 Financing Documents
and evidence of the same shall have been delivered to the Noteholders. The
Noteholders shall have received a certificate, dated as of the Effective Date
and signed by the Secretary or the Assistant Secretary of the Company,
certifying to the resolutions in respect of such authorization and to such other
matters as the Noteholders shall reasonably request.
6.9 OPINIONS OF COUNSEL.
The Noteholders shall have received from each of (a) Brobeck, Phleger &
Harrison, counsel to the Company, and (b) Hebb & Gitlin, a legal opinion
substantially in the form set forth in Exhibit B1 and Exhibit B2, respectively,
and as to such other matters as the Noteholders may reasonably request.
10
<PAGE> 12
6.10 EXPENSES.
The Company shall have paid all costs and expenses to the Noteholders
relating to the 1997 Financing Documents in accordance with Section 7.6
(including, without limitation, any attorney's fees and disbursements).
6.11 PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the 1997 Financing Documents
shall be satisfactory to the Noteholders and their special counsel. The
Noteholders and their special counsel shall have received copies of such
documents and papers as they may reasonably request in connection therewith, in
form and substance satisfactory to them.
SECTION 7. MISCELLANEOUS.
7.1 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND ENFORCED IN
ACCORDANCE WITH, AND GOVERNED BY, INTERNAL NEW YORK LAW.
7.2 DUPLICATE ORIGINALS.
Two or more duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed in one or
more counterparts and shall be effective when at least one counterpart shall
have been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one duplicate
original.
7.3 EFFECT OF THIS AGREEMENT.
Except as specifically provided in this Agreement, no terms or
provisions of the Existing Note Purchase Agreement or the Existing Notes have
been modified or changed by this Agreement and the terms and provisions of the
Existing Note Purchase Agreement and the Existing Notes, as amended hereby,
shall continue in full force and effect. This Agreement and the amendments
contained herein shall have and be in effect on and after the Effective Date.
7.4 WAIVERS AND AMENDMENTS OF THIS AGREEMENT.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, or by any action or inaction, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
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<PAGE> 13
7.5 SECTION HEADINGS.
The titles of the sections hereof appear as a matter of convenience
only, do not constitute a part of this Agreement and shall not affect the
construction hereof.
7.6 COSTS AND EXPENSES.
On the Effective Date, the Company shall pay (a) all costs and expenses
of the Noteholders related hereto and to the other 1997 Financing Documents,
including, but not limited to, the statement for fees and disbursements of the
Noteholders' special counsel presented to the Company on the Effective Date for
matters in connection with the 1997 Financing Documents and (b) all statements
for fees and disbursements of the Noteholders' special counsel delivered to the
Company prior to the Effective Date. The Company will also pay upon receipt of
any statement thereof, each additional statement for fees and disbursements of
the Noteholders' special counsel rendered after the Effective Date in connection
with the 1997 Financing Documents. The obligations of the Company under this
Section 7.6 shall survive the payment or prepayment of the Notes and the
termination of the Amended Note Purchase Agreement.
7.7 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Company hereunder and in the other 1997 Financing Documents or in any
certificate or other instrument delivered pursuant hereto or thereto shall be
considered to have been relied upon by the Noteholders and shall survive the
execution of this Agreement and the other 1997 Financing Documents, regardless
of any investigation made by or on behalf of the Noteholders. All statements in
any such certificate or other instrument shall constitute warranties and
representations of the Company hereunder.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
12
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on their behalf by a duly authorized officer or agent thereof, as the
case may be, as of the date first above written.
THE CERPLEX GROUP, INC.
By
------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By
------------------------------
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By
------------------------------
Name:
Title:
NORTH ATLANTIC SMALLER COMPANIES
INVESTMENT TRUST PLC
By
-------------------------------
Name:
Title:
[Signature page to the FIRST AMENDMENT AGREEMENT among The Cerplex Group, Inc.
and the Noteholders listed therein.]
<PAGE> 15
CONSENT:
The undersigned, the holder of all outstanding Senior Debt, consents to the
terms of this Agreement.
CITIBANK, N.A.
By
-------------------------------
Name:
Title:
[Consent page to the FIRST AMENDMENT AGREEMENT among The Cerplex Group, Inc. and
the Noteholders listed therein.]
<PAGE> 16
EXHIBIT A
AMENDMENTS TO EXISTING NOTE PURCHASE AGREEMENT
1. AMENDMENT TO SECTION 4.1. Section 4.1 of the Existing Note Purchase
Agreement is hereby amended and restated to read, in its entirety, as follows:
4.1 INTEREST.
(A) INTEREST ON NOTES. Interest shall accrue on the unpaid
principal balance of the Notes on the basis of a 360-day year of twelve
30-day months as follows:
(i) for the period from and including February 19,
1997 through and including August 18, 1997, at the rate of
nine and fifty one-hundredths percent (9.50%) per annum; and
(ii) at all times on and after August 19, 1997, at
the rate of fifteen percent (15%) per annum,
and shall be payable, in arrears, (x) semi-annually on August 19, 1997
and February 19, 1998 and (y) monthly on the nineteenth (19th) day of
each month thereafter commencing March 19, 1998, until the principal
amount of the Notes in respect of which such interest shall have
accrued shall become due and payable, and interest shall accrue on any
overdue principal (including any overdue prepayment of principal) and
Make-Whole Amount, if any, and (to the extent permitted by applicable
law) on any overdue installment of interest, at a rate (the "DEFAULT
RATE") equal to the lesser of
(A) the highest rate allowed by applicable law, and
(B) (1) for the period from and including February
19, 1997 through and including August 18, 1997, the
greater of (x) thirteen and fifty one-hundredths percent
(13.50%) per annum or (y) the Chase Manhattan Prime
Rate, from time to time in effect; and
(2) at all times on and after August 19, 1997,
the greater of (x) seventeen percent (17)% per annum or
(y) the Chase Manhattan Prime Rate, from time to time in
effect.
(B) CAPITALIZED INTEREST AMOUNTS.
(i) On the August 19, 1997 interest payment date in
respect of the Notes, so long as the principal amount of the
Notes shall not have become due and payable at such time and
no Default or Event of Default
Exhibit A-1
<PAGE> 17
shall then exist, the Company may satisfy its obligation to
pay interest on each Note by adding an additional principal
amount (the "INITIAL CAPITALIZED INTEREST AMOUNT") to the then
outstanding principal amount of such Note (such Initial
Capitalized Interest Amount, together with such outstanding
principal amount, herein referred to as the "BASE PRINCIPAL
AMOUNT"), which additional principal amount shall be equal to
the aggregate amount of the interest payment in respect of
such Note that is due on such interest payment date.
(ii) On any interest payment date commencing with the
February 19, 1998 interest payment date, so long as the
principal amount of the Notes shall not have become due and
payable at such time and no Default or Event of Default shall
then exist, the Company may satisfy its obligation to pay
interest on each Note by:
(A) paying, in cash, an amount equal to not
less than the amount of interest which would have
accrued on such Note for the semi-annual or monthly
period, as the case may be, ended on such interest
payment date, calculated in accordance with Section
4.1(a) but at the rate of nine and fifty
one-hundredths percent (9.50%) per annum; and
(B) adding an additional principal amount
(an "ADDITIONAL CAPITALIZED INTEREST AMOUNT") to the
then outstanding principal amount of such Note equal
to the difference between:
(1) the aggregate amount of the
interest payment in respect of such Note
that is due on such interest payment date in
accordance with the provisions of Section
4.1(a); minus
(2) the portion of the amount of
such interest paid in cash pursuant to
Section 4.1(b)(ii)(A).
Interest at the rate specified in Section 4.1(a)(ii) shall begin to
accrue on such Initial Capitalized Interest Amount or Additional
Capitalized Interest Amount, as the case may be, from and including the
interest payment date on which such Initial Capitalized Interest Amount
or Additional Capitalized Interest Amount is added to the principal
amount of the related Note. In the event that a Default or Event of
Default shall have occurred and shall be continuing on any interest
payment date, the Company shall pay the entire amount of interest due
in respect of all Notes on such interest payment date in cash.
(C) EXERCISE OF ELECTION TO ADD ADDITIONAL CAPITALIZED
INTEREST AMOUNTS. In the event that the Company elects to make any
portion of any interest payment in respect of the Notes by adding to
the principal thereof Additional Capitalized Interest Amounts pursuant
to Section 4.2(b)(ii)(B), the Company shall exercise such election by:
Exhibit A-2
<PAGE> 18
(i) giving each holder of a Note for which the
interest payment thereon is to be satisfied in part by the
addition to the principal thereof of an Additional Capitalized
Interest Amount, written notice of such election not less than
three (3) Business Days prior to the relevant interest payment
date;
(ii) setting forth in such notice the Additional
Capitalized Interest Amount in respect of such Note; and
(iii) delivering to such holder on or prior to such
relevant interest payment date the portion of such interest
payment that is to be paid in cash, pursuant to the terms of
the Notes.
Each addition of the Initial Capitalized Interest Amount or an
Additional Capitalized Interest Amount, as the case may be, to the
principal amount of a Note shall be recorded by the holder of such Note
in its manual or data processing records, and/or on Schedule A annexed
to such Note. In the absence of manifest error, such records and
Schedule shall be conclusive as to the outstanding principal amount of
such Note, provided that the failure to make any such record entry with
respect to the Initial Capitalized Interest Amount or any Additional
Capitalized Interest Amount shall not limit or otherwise affect the
obligations of the Company under such Note.
(D) INTEREST ACCRUAL DURING BLOCKAGE PERIODS. At all times
during any postponement of payments on or in respect of the
Subordinated Debt pursuant to Section 10, the unpaid principal balance
of the Notes and any overdue installment of interest shall bear
interest at the Default Rate. Immediately upon the termination of such
postponement, the Company shall
(i) pay, in cash, an amount equal to not less than
the amount of interest that accrued on such Note during such
postponement, calculated in accordance with Section 4.1(a) but
at the rate of nine and fifty one-hundredths percent (9.50%)
per annum; and
(ii) add an additional principal amount to the then
outstanding principal amount of each Note equal to the
difference between:
(A) the aggregate amount of the interest
payment in respect of such Note that is due upon the
termination of such postponement, calculated in
accordance with Section 4.1(a) but at the Default
Rate; minus
(B) the portion of the amount of such
interest paid in cash pursuant to Section 4.1(d)(i).
(E) PREPAYMENT OF BASE PRINCIPAL AMOUNT. The Company may, on
or prior to August 19, 1998, prepay, in cash, the Base Principal Amount
of all outstanding Notes, together with all accrued and unpaid interest
thereon at the
Exhibit A-3
<PAGE> 19
rate of nine and fifty one-hundredths percent (9.50%) per annum and all
other amounts due and payable hereunder and under the Notes, other than
the aggregate amount of all Additional Capitalized Interest Amounts,
and such payment shall be deemed to satisfy all of the Company's
obligations in respect of the Notes (including, without limitation, in
respect of all Additional Capitalized Interest Amounts).
2. AMENDMENT TO SECTION 4.2. Section 4.2 of the Existing Note Purchase
Agreement is hereby amended by adding the following as the final paragraph
thereof:
If the sum of (x) the aggregate principal amount of Revolving
Loans (as such term is defined in the Wells Fargo Credit Agreement)
then outstanding plus (y) the aggregate principal amount of Revolving
Loans then available to the Company pursuant to the Wells Fargo Credit
Agreement, equals:
(i) on August 20, 1997 and August 21, 1997, less than
$4,886,984;
(ii) at any time from August 22, 1997 through August 31, 1997,
inclusive, less than $4,386,984; and
(iii) at any time on and after September 1, 1997, less than
$4,886,984;
(any such event being a "REVOLVING LOAN REDUCTION"), then the Company
shall immediately give notice of such Revolving Loan Reduction to each
holder of Notes. On the date that a Revolving Loan Reduction first
occurs, the Initial Capitalized Interest Amount in respect of each Note
shall be immediately due and payable, with accrued interest thereon at
the Default Rate, for the period of August 19, 1997 to the date of such
Revolving Loan Reduction, as determined in accordance with Section
4.1(a) of this Agreement. The Company shall pay such Initial
Capitalized Interest Amount and interest thereon as aforesaid to each
Noteholder as set forth in Annex 1 to this Agreement and, upon such
payment, the outstanding principal amount of each Note shall be the
outstanding principal amount of such Note prior to the addition of the
Initial Capitalized Interest Amount thereto.
3. AMENDMENT TO SECTION 6.18. Section 6.18 of the Existing Note
Purchase Agreement is hereby amended and restated to read, in its entirety, as
follows:
6.18 MINIMUM PROFITABILITY.
The Company shall not permit Consolidated Net Income
(excluding any gain on the sale of Peripheral Computer Support, Inc.)
for the fiscal quarters of the Company ending on the dates set forth in
the table below to be less than the amounts set forth opposite such
dates.
Exhibit A-4
<PAGE> 20
================================================================================
Fiscal Quarter Ending Consolidated Net Income
- --------------------------------------------------------------------------------
June 30, 1997 $(16,609,000)
- --------------------------------------------------------------------------------
September 30, 1997 $ 1,458,000)
- --------------------------------------------------------------------------------
December 31, 1997 $ (838,000)
- --------------------------------------------------------------------------------
March 31, 1998 $ (391,000)
- --------------------------------------------------------------------------------
June 30, 1998 and thereafter $ 5,000,000
================================================================================
4. AMENDMENT TO SECTION 6.19. Section 6.19 of the Existing Note
Purchase Agreement is hereby amended and restated to read, in its entirety, as
follows:
6.19 MINIMUM RATIO OF ACCOUNTS RECEIVABLE TO LOANS.
The Company shall not permit the ratio of
(a) the sum of
(i) Consolidated Accounts Receivable as of the last day
of the fiscal quarters of the Company set forth in the table
below plus
(ii) Consolidated Inventory as of such day
to
(b) the aggregate amount of all outstanding Wells Fargo
Credit Agreement Debt as of such day
to be less than the applicable ratio set forth in the following table:
================================================================================
Fiscal Quarter Ending Minimum Ratio
- --------------------------------------------------------------------------------
September 30, 1997, December 31, 1997
and March 31, 1998 0.425 to 1.00
- --------------------------------------------------------------------------------
June 30, 1998 and thereafter 0.670 to 1.00
================================================================================
Exhibit A-5
<PAGE> 21
5. AMENDMENT TO SECTION 6.20. Section 6.20 of the Existing Note
Purchase Agreement is hereby amended and restated to read, in its entirety, as
follows:
6.20 CURRENT RATIO.
The Company shall not permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities as of the last day of the
fiscal quarters of the Company set forth in the table below to be less
than the applicable ratio set forth opposite such days.
================================================================================
Fiscal Quarter Ending Minimum Ratio
- --------------------------------------------------------------------------------
June 30, 1997 0.47 to 1.00
- --------------------------------------------------------------------------------
September 30, 1997 0.42 to 1.00
- --------------------------------------------------------------------------------
December 31, 1997 0.44 to 1.00
- --------------------------------------------------------------------------------
March 31, 1998 0.45 to 1.00
- --------------------------------------------------------------------------------
June 30, 1998 and thereafter 1.00 to 1.00
================================================================================
6. AMENDMENT TO SECTION 6.21. Section 6.21 of the Existing Note
Purchase Agreement is hereby amended and restated to read, in its entirety, as
follows:
6.21 MINIMUM CONSOLIDATED TANGIBLE NET WORTH.
The Company shall not permit Consolidated Tangible Net Worth
at any time during any period set forth in the table below to be less
than the applicable amount set forth opposite such period, plus one
hundred percent (100%) of Net Securities Proceeds.
================================================================================
Minimum Consolidated
Period Tangible Net Worth
- --------------------------------------------------------------------------------
June 30, 1997 through September 29, 1997 $(15,714,000)
- --------------------------------------------------------------------------------
September 30, 1997 through December 30, 1997 $(15,365,000)
- --------------------------------------------------------------------------------
December 31, 1997 through March 30, 1998 $(14,642,000)
- --------------------------------------------------------------------------------
March 31, 1998 through May 1, 1998 $(13,842,000)
- --------------------------------------------------------------------------------
May 2, 1998 and thereafter $ 5,000,000
================================================================================
Exhibit A-6
<PAGE> 22
7. AMENDMENT TO SECTION 9.1. Section 9.1 of the Existing Note Purchase
Agreement is hereby amended as follows:
(A) the following defined terms shall be added in their proper
alphabetical order:
ADDITIONAL CAPITALIZED INTEREST AMOUNT -- Section 4.1(b).
BASE PRINCIPAL AMOUNT -- Section 4.1(b).
INITIAL CAPITALIZED INTEREST AMOUNT -- Section 4.1(b).
1997 WARRANT AGREEMENT -- means the Warrant Agreement dated as
of August 20, 1997, among the Company and the Existing Noteholders, as
amended, and as such agreement may be further amended, supplemented or
restated from time to time.
PERMANENT REDUCTIONS -- means the aggregate of repayments,
prepayments and reductions of the Term Loan Facility or the Revolving
Credit Facility, as the case may be, as set forth in subsection 2.4 of
the Wells Fargo Credit Agreement (other than repayments, prepayments
and reductions that do not permanently reduce the Term Loan Facility or
commitments to make loans under the Revolving Credit Facility).
REVOLVING LOAN REDUCTION -- Section 4.2.
(B) clause (a) of the defined term "Senior Debt" shall be amended and
restated in its entirety as follows:
(a) the outstanding principal amount of the Wells Fargo Credit
Agreement Debt, provided that if the aggregate of such principal so
outstanding shall exceed the sum of (i) the Term Loan Facility, in an
aggregate amount not exceeding $31,390,000 minus Permanent Reductions
plus (ii) the Revolving Credit Facility, in an aggregate amount not
exceeding $4,900,000 minus Permanent Reductions, such excess shall not
constitute Senior Debt;
(C) the defined term "Warrant Agreement" shall be amended and restated
in its entirety as follows:
WARRANT AGREEMENT -- means the collective reference to the
1993 Warrant Agreement, the 1996 Warrant Agreement and the 1997 Warrant
Agreement.
(D) the defined term "Wells Fargo Credit Limit" shall be amended and
restated in its entirety as follows:
WELLS FARGO CREDIT LIMIT -- means the sum of (a) the Term Loan
Facility, in an aggregate amount not exceeding $31,390,000 minus
Permanent Reductions plus (b) the Revolving Credit Facility, in an
aggregate amount not exceeding $4,900,000 minus Permanent Reductions.
8. AMENDMENT TO EXHIBIT A. Exhibit A of the Existing Note Purchase
Agreement is hereby amended and restated to read in its entirety as set forth in
Attachment 1 to this Exhibit A.
Exhibit A-7
<PAGE> 1
EXHIBIT 4.33
===============================================================================
THE CERPLEX GROUP, INC.
WARRANT AGREEMENT
DATED AS OF AUGUST 20, 1997
WARRANTS TO PURCHASE
SHARES OF COMMON STOCK
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Form of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Execution of Warrant Certificates; Registration Books etc. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Transfer, Split Up, Combination and Exchange of Warrant Certificates; Lost or Stolen Warrant
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Subsequent Issuance of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Exercise of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Issuance of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Unexercised Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Cancellation and Destruction of Warrant Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Reservation of Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Common Stock to be Duly Authorized and Issued, Fully Paid and Nonassessable. . . . . . . . . . . . . . . . 6
3.4 Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Common Stock Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Financial and Business Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK ISSUABLE PER WARRANT . . . . . . . . . . . . . . 9
4.1 Mechanical Adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3 Special Agreements of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. INTERPRETATION OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Terms Defined. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Directly or Indirectly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Section Headings and Table of Contents and Construction. . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.1 Communications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Reproduction of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.5 Amendment and Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.6 Right of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.7 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
6.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 Duplicate Originals, Execution in Counterpart. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Annex 1 -- Information as to Initial Holders
Exhibit A -- Form of Warrant Certificate
Exhibit B -- Determination of Fair Market Share Price
Exhibit C -- Confidentiality
</TABLE>
ii
<PAGE> 4
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of August 20, 1997 (as may be amended from
time to time, this "AGREEMENT"), among THE CERPLEX GROUP, INC., a Delaware
corporation (together with its successors and assigns, the "COMPANY"), and each
of the Persons identified as an Initial Holder in Annex 1 (individually, an
"INITIAL HOLDER" and, collectively, the "INITIAL HOLDERS").
RECITALS:
A. Certain capitalized terms used in this Agreement have the
meanings assigned to them in Section 5.1 hereof.
B. The Company has entered into those certain separate Amended
and Restated Note Purchase Agreements, each dated as of April 9, 1997 (as
amended and, as may be further amended, modified or restated from time to time,
individually, a "NOTE PURCHASE AGREEMENT" and, collectively, the "NOTE PURCHASE
AGREEMENTS") with each of the Initial Holders. The Note Purchase Agreement
amended and restated those certain separate Note Purchase Agreements, each
dated as of November 19, 1993, with each of the Initial Holders, as amended,
pursuant to which the Company originally issued and sold to the Initial Holders
an aggregate principal amount of $17,250,000 of the Company's Series A 9.00%
Senior Subordinated Notes Due November 19, 2001 (the "SERIES A NOTES") and an
aggregate principal amount of $5,750,000 of the Company's Series B 9.00% Senior
Subordinated Notes Due November 19, 2001 (the "SERIES B NOTES"). Pursuant to
the terms of the Note Purchase Agreement, the Series A Notes were amended and
restated (such notes, together with any notes issued in substitution therefor,
as amended and, as may be further amended, modified or restated from time to
time, the "NOTES"). The Company has prepaid the Series B Notes and the Series
B Notes are no longer issued and outstanding.
C. In consideration of certain amendments set forth in the First
Amendment Agreement, dated as of August 20, 1997, among the Company and the
Initial Holders, the Company has agreed to issue five hundred thousand
ninety-six (500,096) Warrants of the Company to the Initial Holders, and, under
certain circumstances set forth therein, to issue to the holders of the
Warrants Additional Warrants, each Warrant representing the right to purchase,
upon the terms and subject to the conditions set forth in this Agreement, and
subject to adjustment as set forth herein, one (1) share of Common Stock.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties to this Agreement hereby agree as
follows:
1
<PAGE> 5
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
1.1 FORM OF WARRANT CERTIFICATES.
The warrant certificates (individually, a "WARRANT CERTIFICATE" and,
collectively, the "WARRANT CERTIFICATES") evidencing the Warrants, and the
forms of assignment and of election to purchase shares to be attached to such
certificates, shall be substantially in the form set forth in Exhibit A and may
have such letters, numbers or other marks of identification or designation as
may be required to comply with any law or with any rule or regulation of any
governmental authority, stock exchange or self-regulatory organization made
pursuant thereto. Each Warrant Certificate shall be dated as of the date of
issuance thereof by the Company, either upon initial issuance or upon transfer
or exchange, and on its face shall initially entitle the holder thereof to
purchase the number of shares of Common Stock equal to the number of Warrants
represented by such Warrant Certificate at a price per share equal to the
Purchase Price, but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
1.2 EXECUTION OF WARRANT CERTIFICATES; REGISTRATION BOOKS ETC.
(a) EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by its
President, one of its Vice Presidents or any other officer of the
Company authorized by the Board of Directors, which execution shall be
attested by the Secretary or an Assistant Secretary of the Company.
In case any officer of the Company who shall have signed any Warrant
Certificate shall cease to be such officer of the Company before
issuance and delivery by the Company of such Warrant Certificate, such
Warrant Certificate nevertheless may be issued and delivered with the
same force and effect as though the individual who signed such Warrant
Certificate had not ceased to be such officer of the Company, and any
Warrant Certificate may be signed on behalf of the Company by any
individual who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this
Agreement any such individual was not such an officer.
(b) REGISTRATION BOOKS, ETC. The Company will keep or
cause to be kept at its office maintained at the address of the
Company set forth in Section 6.1 hereof, or at such other office of
the Company in the United States of America of which the Company shall
have given notice to each holder of Warrant Certificates, books for
registration and transfer of the Warrant Certificates issued
hereunder. Such books shall show the names and addresses of the
respective holders of the Warrant Certificates, the registration
number and the number of Warrants evidenced on its face by each of the
Warrant Certificates and the date of each of the Warrant Certificates.
Every holder of a Warrant Certificate by accepting the same consents
and agrees with the Company and with every other holder of a Warrant
Certificate that:
(i) the Warrant Certificates are transferable
only on the registry books of the Company if surrendered at
the office of the Company referred to
2
<PAGE> 6
in this Section 1.2(b), duly endorsed or accompanied by an
instrument of transfer (substantially in the form attached to
Exhibit A); and
(ii) the Company may deem and treat the Person in
whose name each Warrant Certificate is registered as the
absolute owner thereof and of the Warrants evidenced thereby
(notwithstanding any notations of ownership or writing on the
Warrant Certificates made by anyone other than the Company)
for all purposes whatsoever, and the Company shall not be
affected by any notice to the contrary.
(c) ACQUISITION FOR INVESTMENT. Each Initial Holder
represents that it is acquiring the Warrants for its own account for
investment and not with a view to any resale or distribution thereof,
within the meaning of the Securities Act, but without prejudice to its
right at all times to sell or otherwise dispose of all or any part of
the Warrants or the shares of Common Stock issuable upon the exercise
of such Warrant under a registration statement filed under the
Securities Act or in a transaction exempt from the registration
requirements of the Securities Act. Each Initial Holder agrees that
each outstanding Warrant Certificate (and each certificate
representing a share or shares of Common Stock issued upon the
exercise of a Warrant) which it owns shall, unless the Securities
represented by such certificate have been registered or have been sold
in accordance with Rule 144 (or any successor regulation thereto)
under the Securities Act, bear an endorsement reading substantially as
follows:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, or
any state securities law. These securities
may not be sold, transferred, pledged or
hypothecated in any transaction unless first
registered under such laws or unless such
transaction is exempt from the registration
requirements of such laws. The securities
represented by this certificate are subject
to certain market holdback provisions set
forth in that certain registration rights
agreement dated November 19, 1993, as
amended, among The Cerplex Group, Inc. and
the other parties thereto.
1.3 TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF WARRANT
CERTIFICATES; LOST OR STOLEN WARRANT CERTIFICATES.
(a) TRANSFER, SPLIT UP, ETC. Any Warrant Certificate,
with or without other Warrant Certificates, may be transferred, split
up, combined or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the registered holder or transferee thereof to
purchase a like number of shares of Common Stock as the Warrant
Certificate or Warrant Certificates surrendered then entitled such
registered holder to
3
<PAGE> 7
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Warrant Certificate shall make such request in
writing delivered to the Company, and shall surrender the Warrant
Certificate or Warrant Certificates to be transferred, split up,
combined or exchanged at the office of the Company referred to in
Section 1.2(b) hereof, whereupon the Company shall deliver promptly
to the Person entitled thereto a Warrant Certificate or Warrant
Certificates, as the case may be, as so requested. Each holder of
Warrants after any such transfer or exchange shall, by its acceptance
of the Warrants and Warrant Certificates being so transferred, be
deemed to have agreed to the terms and provisions of confidentiality
set forth on Exhibit C.
(b) LOSS, THEFT, ETC. Upon receipt of written notice
from the holder of any Warrant Certificate of the loss, theft,
destruction or mutilation of such Warrant Certificate and, in the case
of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, or, in the case of any such mutilation,
upon surrender and cancellation of such Warrant Certificate, the
Company will make and deliver a new Warrant Certificate, of like
tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant
Certificate.
1.4 SUBSEQUENT ISSUANCE OF WARRANT CERTIFICATES.
Subsequent to their original issuance, no Warrant Certificates shall
be issued except:
(a) Warrant Certificates issued upon any transfer,
combination, split up or exchange of Warrants pursuant to Section
1.3(a) hereof;
(b) Warrant Certificates issued in replacement of
mutilated, destroyed, lost or stolen Warrant Certificates pursuant to
Section 1.3(b) hereof; and
(c) Warrant Certificates issued pursuant to Section 2.3
hereof upon the partial exercise of any Warrant Certificate to
evidence the unexercised portion of such Warrant Certificate.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE
2.1 EXERCISE OF WARRANTS.
(a) PURCHASE PRICE PAYMENT UPON EXERCISE. At any time on
or after August 20, 1998 and prior to 5:00 p.m. (Los Angeles,
California time) on the Termination Date, the holder of any Warrant
Certificate may exercise the Warrants evidenced thereby in whole or in
part, by surrender of such Warrant Certificate, with an election to
purchase (a form of which is attached as part of the form of Warrant
Certificate attached as Exhibit A) attached thereto duly executed, to
the Company at its office referred to in Section 1.2(b) hereof,
together with payment of the Purchase Price, payable as set forth
below in this Section 2.1, for each share of Common Stock as to which
the Warrants are exercised. The Purchase Price shall be (i) payable
in cash, by certified or official bank check payable to the order of
the Company or by wire transfer of immediately available funds to the
account of the Company or (ii)
4
<PAGE> 8
satisfied by the delivery of Warrant Certificates to the Company for
cancellation in accordance with the formula set forth in Section
2.1(b).
(b) NET EXERCISE PRICE. In lieu of any holder of a
Warrant Certificate exercising the Warrants (or any portion thereof)
evidenced by such Warrant Certificate for cash, as contemplated by
Section 2.1(a), such holder may, in connection with such exercise,
elect to receive shares of Common Stock equal to the product of (i)
the number of shares of Common Stock issuable upon such exercise of
such Warrant Certificate (or, if only a portion of such Warrant
Certificate is being exercised, issuable upon the exercise of such
portion) multiplied by (ii) a fraction, the numerator of which is the
Market Price per share of Common Stock at the time of such exercise
minus the Purchase Price per share of Common Stock at the time of such
exercise, and the denominator of which is the Market Price per share
of Common Stock at the time of such exercise.
2.2 ISSUANCE OF COMMON STOCK.
Upon timely receipt on or after August 20, 1998 of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied
by payment of the Purchase Price for each of the shares to be purchased in the
manner provided in Section 2.1 hereof and an amount equal to any applicable
transfer tax (if not payable by the Company as provided in Section 3.4 hereof),
the Company shall thereupon promptly cause certificates for the number of whole
shares of Common Stock then being purchased to be delivered to or upon the
order of the registered holder of such Warrant Certificate, registered in such
name or names as may be designated by such holder, and, promptly after such
receipt deliver the cash, if any, to be paid in lieu of fractional shares
pursuant to Section 4.2 hereof to or upon the order of the registered holder of
such Warrant Certificate.
2.3 UNEXERCISED WARRANTS.
In case the registered holder of any Warrant Certificate shall
exercise less than all the Warrants evidenced thereby, a new Warrant
Certificate evidencing Warrants equal in number to the number of Warrants
remaining unexercised shall be issued by the Company to the registered holder
of such Warrant Certificate or to its duly authorized assigns.
2.4 CANCELLATION AND DESTRUCTION OF WARRANT CERTIFICATES.
All Warrant Certificates surrendered to the Company for the purpose of
exercise, exchange, substitution or transfer shall be cancelled by it, and no
Warrant Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall cancel
and retire any other Warrant Certificates purchased or acquired by the Company
otherwise than upon the exercise thereof.
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3. REPRESENTATIONS AND COVENANTS OF THE COMPANY
3.1 REPRESENTATIONS AND WARRANTIES.
(a) CORPORATE AUTHORITY. The Company has the corporate
power and authority to:
(i) authorize, execute, deliver and enter into
this Agreement and the Warrant Certificates;
(ii) issue and sell the Warrants;
(iii) perform its obligations under this Agreement
and the Warrants; and
(iv) authorize, execute, deliver, issue and sell
the shares of the Common Stock issuable upon exercise of the
Warrants.
(b) ENFORCEABILITY OF OBLIGATIONS. This Agreement and
the Warrant Certificates issued on the date hereof have been, and any
Warrants issued after the date hereof will be, duly authorized,
executed and delivered by the Company. This Agreement, the Warrant
Certificates and the Warrants constitute, or upon execution and
delivery will constitute, the legal, valid and binding obligations of
the Company, enforceable in accordance with their respective terms,
except:
(i) as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally; and
(ii) as such enforceability may be subject to the
availability of equitable remedies.
The holders of the Warrants are entitled to the benefits of this
Agreement.
3.2 RESERVATION OF COMMON STOCK.
The Company represents and warrants that it has reserved for issuance
a sufficient number of shares of Common Stock to permit the exercise of all the
Warrants, and all other rights, options or warrants exercisable into Common
Stock. The Company covenants and agrees that it will at all times cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock such number of shares of Common Stock as will be sufficient to permit the
exercise in full of all Warrants outstanding hereunder.
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3.3 COMMON STOCK TO BE DULY AUTHORIZED AND ISSUED, FULLY PAID AND
NONASSESSABLE.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Common Stock delivered upon the
exercise of any Warrants, at the time of delivery of the certificates for such
shares, shall be duly and validly authorized and issued and fully paid and
nonassessable, free of any preemptive rights and free of any pledge, security
interest, lien or other encumbrance.
3.4 TRANSFER TAXES.
The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and charges that may be payable in
respect of
(a) the execution and delivery of this Agreement;
(b) the initial issuance and delivery of each Warrant
Certificate hereunder;
(b) the issuance and delivery of each Warrant Certificate
issued in exchange for any other Warrant Certificate pursuant to
Section 1.3 or Section 2.3 hereof; and
(c) the issuance and delivery of each share of Common
Stock issued upon the exercise of any Warrant.
The Company shall not, however, be required to
(i) pay any transfer tax that may be payable in respect
of the transfer or delivery of Warrant Certificates or the issuance or
delivery of certificates for shares of Common Stock in a name other
than that of the registered holder of the Warrant Certificate
evidencing any Warrant surrendered for exercise (any such tax being
payable by the holder of such Warrant Certificate at the time of
surrender) or
(ii) issue or deliver any such certificates referred to in
the foregoing clause (i) for shares of Common Stock upon the exercise
of any Warrant until any such tax referred to in the foregoing clause
(i) shall have been paid.
3.5 COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for shares of Common Stock
is issued upon the exercise of Warrants shall for all purposes be deemed to
have become the holder of record of the Common Stock represented thereby on,
and such certificate shall be dated, the date upon which the Warrant
Certificate evidencing such Warrants was duly surrendered with an election to
purchase attached thereto duly executed and payment of the aggregate Purchase
Price (and any applicable transfer taxes, if payable by such Person) was made.
Prior to the exercise of the Warrants evidenced thereby, the holder of a
Warrant Certificate shall not be entitled to any rights of a shareholder in the
Company with respect to shares for which the Warrants shall be exercisable,
including, without limitation, any right to vote, to receive
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<PAGE> 11
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein or in any other applicable agreement between the
Company and such holder.
3.6 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Warrants:
(a) QUARTERLY STATEMENTS -- as soon as practicable after
the end of each quarterly fiscal period in each fiscal year of the
Company (other than the last quarterly fiscal period of each such
fiscal year), and in any event within forty-five (45) days thereafter,
duplicate copies of
(i) a consolidated balance sheet of the Company
and the Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash
flows of the Company and the Subsidiaries for such quarter and
(in the case of the second and third quarters) for the portion
of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the immediately preceding fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally (provided that such financial
statements need not contain footnotes), and certified as complete and
correct, subject to changes resulting from year-end adjustments, by a
Senior Financial Officer;
(b) ANNUAL STATEMENTS -- as soon as practicable after the
end of each fiscal year of the Company, and in any event within ninety
(90) days thereafter, duplicate copies of
(i) consolidated and consolidating balance sheets
of the Company and the Subsidiaries, as at the end of such
year, and
(ii) consolidated and consolidating statements of
income, shareholders' equity and cash flows of the Company and
the Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
immediately preceding fiscal year, all in reasonable detail, prepared
in accordance with GAAP, and accompanied by
(A) in the case of such consolidated statements,
a report thereon of independent certified public accountants
of recognized national standing, which report shall express an
opinion in the form of the standard auditor's report under
generally accepted auditing standards which shall state that
such financial statements present fairly, in all material
respects, the financial position
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<PAGE> 12
of the companies being reported upon and their results of
operations and cash flows and have been prepared in conformity
with GAAP, and that the examination of such accountants in
connection with such financial statements has been made in
accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion
in the circumstances,
(B) a statement from such independent certified
public accountants that such consolidating statements were
prepared using the same work papers as were used in the
preparation of such consolidated statements, and
(C) a certification by a Senior Financial Officer
that such consolidated and consolidating statements are
complete and correct;
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, a copy of each financial statement, report (including,
without limitation, each Quarterly Report on Form 10-Q, each Annual
Report on Form 10-K and each Current Report on Form 8-K), notice or
proxy statement sent by the Company or any Subsidiary to shareholders
generally and of each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal
letters), and each amendment thereto, in respect thereof filed by the
Company or any Subsidiary with, or received by, such Person in
connection therewith from, the National Association of Securities
Dealers, any securities exchange or the SEC; and
(d) REQUESTED INFORMATION -- with reasonable promptness,
such other data and information as from time to time may be reasonably
requested, including, without limitation, information required by 17
C.F.R. Section 230.144A, as amended from time to time.
Each of the Initial Holders hereby agrees to the terms of
confidentiality set forth on Exhibit C.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK
ISSUABLE PER WARRANT
4.1 MECHANICAL ADJUSTMENTS.
The number of shares of Common Stock purchasable upon the exercise of
each Warrant, and the Purchase Price, shall be subject to adjustment as
follows:
(a) DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In the
event that the Company shall
(i) pay a dividend in shares of Common Stock or
make a distribution in shares of Common Stock,
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<PAGE> 13
(ii) subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its
outstanding shares of Common Stock into a smaller number of
shares,
then the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision or
combination shall be adjusted to the price determined by multiplying
the Purchase Price in effect immediately prior to such event by the
quotient of:
(A) the total number of shares of Adjusted
Outstanding Common Stock immediately prior to such event;
divided by
(B) the total number of Adjusted Outstanding
Common Stock immediately after such event.
An adjustment made pursuant to this Section 4.1(a) shall become
effective on the effective date of such event.
(b) RIGHTS, OPTIONS, WARRANTS AND CONVERTIBLE OR
EXCHANGEABLE SECURITIES. In the event that the Company shall issue
any rights, options, warrants or convertible or exchangeable
Securities to all holders of its shares of Common Stock, without
charge to such holders, entitling such holders to subscribe for or
purchase shares of Common Stock at a price per share (or having a
conversion or exchange price per share, in the case of a Security
convertible or exchangeable into shares of Common Stock) that is (or
to amend or modify any provision of any thereof such that the
conversion, exchange or exercise price becomes) lower at the record
date in respect of which such rights, warrants, options or Securities
were issued or amended than the Reference Price on such record date,
then the Purchase Price in effect immediately after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by the quotient of:
(i) the sum of
(A) the number of shares of Adjusted
Outstanding Common Stock as of such record date, plus
(B) the quotient of
(I) the Aggregate Consideration
Receivable in respect of such rights,
options, warrants or convertible or
exchangeable Securities, divided by
(II) the Reference Price on such
record date;
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<PAGE> 14
divided by
(ii) the sum of
(A) the number of shares of Adjusted
Outstanding Common Stock as of such record date, plus
(B) the number of additional shares of
Common Stock initially issuable pursuant to such
rights, options or warrants or into which such
convertible or exchangeable Securities are initially
convertible or exchangeable.
Such adjustment shall be made whenever such rights, options, or
warrants or convertible or exchangeable Securities are issued or
amended, and shall become effective on the date of issuance or
amendment of such rights, options, warrants or convertible or
exchangeable Securities.
(c) DISTRIBUTIONS OF PROPERTY. In the event that the
Company shall distribute to holders of shares of Common Stock
(including, without limitation, any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing corporation) shares of stock (other than Common Stock) or
evidences of its indebtedness or assets (excluding (x) cash dividends
paid out of retained earnings after November 19, 1998, (y) Regular
Cash Dividends paid after the date hereof and on or prior to November
19, 1998 and (z) dividends payable solely in additional shares of the
Common Stock) or rights, options or warrants or convertible or
exchangeable Securities (excluding those referred to in Section 4.1(b)
and Section 4.1(d) hereof), then in each case the Purchase Price in
effect immediately after the record date in respect of which such
stock, indebtedness, assets, rights, options, warrants or Securities
were issued shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by the quotient of:
(i) the result of
(A) the Reference Price on such record
date, minus
(B) the quotient of
(I) the then fair value (as
determined in good faith and on a reasonable
basis by the Board of Directors, whose
determination, if so made, shall be
conclusive) of the shares of stock or assets
or evidences of indebtedness so distributed
or of such rights, options or warrants, or of
such convertible or exchangeable Securities,
divided by
(II) the number of shares of
Adjusted Outstanding Common Stock as of the
record date;
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<PAGE> 15
divided by
(ii) the Reference Price on such record date.
Such adjustment shall be made whenever any such distribution is made,
and shall become effective on the date of such distribution.
(d) ISSUANCES OF COMMON STOCK AND OTHER SECURITIES.
(i) In the event that the Company shall issue or
sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock (excluding
Excluded Securities, as defined in Section 4.1(d)(ii) hereof)
at a price per share of Common Stock lower than the Reference
Price in effect on the date (the "ADJUSTMENT DATE") of such
issuance or sale, then the Purchase Price in effect
immediately after the Adjustment Date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such Adjustment Date by the quotient of:
(A) the sum of
(I) the number of shares of
Adjusted Outstanding Common Stock outstanding
immediately prior to such issuance or sale,
plus
(II) the quotient of (1) the
Aggregate Consideration Receivable in respect
of such rights, options, warrants or
convertible or exchangeable Securities,
divided by (2) the Reference Price on the
Adjustment Date;
divided by
(B) the sum of
(I) the number of shares of
Adjusted Outstanding Common Stock outstanding
immediately prior to such issuance or sale,
plus
(II) the number of additional shares
of Common Stock so issued or sold (or
initially issuable pursuant to such rights,
options or warrants or into which such
convertible or exchangeable Securities are
initially convertible or exchangeable).
For purposes of this clause (i), "Adjustment Date"
may, in connection with certain consolidations and
mergers, have the meaning provided for in Section
4.1(e).
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<PAGE> 16
(ii) "EXCLUDED SECURITIES" shall mean and include:
(A) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Section 4.1(a), Section 4.1(b), Section
4.1(c) or Section 4.1(e) hereof and with respect to
which an adjustment to the Purchase Price has been
made in accordance with any of such Sections;
(B) shares of Common Stock issuable upon
exercise of the Warrants (including, without
limitation, the Additional Warrants);
(C) shares of Common Stock issuable upon
exercise of rights, options or warrants or conversion
or exchange of convertible or exchangeable Securities
issued or sold under circumstances which caused an
adjustment pursuant to this Section 4.1(d);
(D) rights to acquire shares of Common
Stock ,and shares of Common Stock issuable upon
exercise of such rights, issued to employees of the
Company and it Subsidiaries pursuant to any employee
stock purchase plan maintained by the Company or any
of its Subsidiaries, provided that any such rights
issued pursuant to any such plan and any shares of
Common Stock issuable upon the exercise thereof
which, in the aggregate, exceed, at the time of the
issuance thereof, two percent (2%) of the Fully
Diluted Outstanding Common Stock, determined at such
time, shall not constitute Excluded Securities;
(E) shares of Common Stock and/or
rights, options, warrants or convertible or
exchangeable Securities (and the shares of Common
Stock issuable upon the exercise of such rights,
options, warrants or convertible or exchangeable
Securities), provided that (1) such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities are issued in connection
with one or more private placements of equity
Securities of the Company effected on or prior to
July 15, 1996, (2) the total aggregate consideration
paid in cash in respect of such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities is not more than
$8,000,000, (3) all such shares of Common Stock
together with all shares of Common Stock issuable
upon the exercise of any of such rights, options,
warrants or convertible or exchangeable Securities
shall not, in the aggregate, exceed 12% of Fully
Diluted Outstanding Common Stock, determined as of
April 16, 1996, and (4) the sale of such shares of
Common Stock and/or rights, options, warrants or
convertible or exchangeable Securities is done on an
arm's-length basis and the setting of the exercise,
strike or conversion prices in respect of such
rights, options, warrants or convertible or
exchangeable Securities is done on an arm's-length
basis;
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(F) warrants issued on or prior to the
date hereof to any holder of the senior or
subordinated indebtedness, warrants issued on or
after the date hereof pursuant to provisions
comparable to Section 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to
which such senior or subordinated indebtedness is
issued and shares of Common Stock issuable upon the
exercise of any such Warrants; and
(G) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Sections 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof and with respect to which
additional Warrants have been issued in accordance
with any of such Sections.
(iii) In the case of rights, options, warrants or
convertible or exchangeable Securities, the "price per share
of Common Stock" referred to in Section 4.1(d)(i) hereof shall
be equal to the quotient of
(A) the Aggregate Consideration
Receivable in respect of such rights, options,
warrants or convertible or exchangeable Securities,
divided by
(B) the total number of shares of Common
Stock covered by such rights, options, warrants or
convertible or exchangeable Securities.
(iv) "AGGREGATE CONSIDERATION RECEIVABLE" shall
mean, in the case of a sale of shares of Common Stock, the
aggregate gross amount paid (without deduction for fees and
expenses, underwriting discounts or investment banking fees
associated therewith) in connection therewith and, in the case
of an issuance or sale of rights, options, warrants or
convertible or exchangeable Securities, the sum of
(A) the aggregate gross amount paid for
such rights, options, warrants or convertible or
exchangeable Securities, plus
(B) the aggregate consideration or
premiums stated in such rights, options, warrants or
convertible or exchangeable Securities to be payable
for the shares of Common Stock covered thereby.
(v) In the event that the Company shall issue and
sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock, for a
consideration consisting, in whole or in part, of Property
other than cash, then in determining the "price per share of
Common Stock" referred to in Section 4.1(d)(i) and Section
4.1(d)(iii) hereof and the "Aggregate Consideration
Receivable" referred to in Section 4.1(d)(i), Section
4.1(d)(iii) and Section 4.1(d)(iv) hereof, the Board of
Directors shall determine, in good faith
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<PAGE> 18
and on a reasonable basis, the fair value of such Property,
and such determination, if so made, shall be binding upon all
holders of Warrants.
(e) CONSOLIDATION; MERGER; SALE OF THE COMPANY. In the
event that there shall be:
(i) any consolidation of the Company with, or
merger of the Company with or into, another corporation (other
than a merger in which the Company is the surviving
corporation and that does not result in any reclassification
or change of shares of Common Stock outstanding immediately
prior to such merger);
(ii) any sale or conveyance to another corporation
of the Property of the Company substantially as an entirety;
or
(iii) any reclassification of the Common Stock that
results in the issuance of other Securities of the Company;
then lawful provision shall be made as a part of the terms of such
transaction or otherwise so that the holders of Warrants shall
thereafter have the right to purchase the number and kind of shares of
stock, other Securities, cash, Property and rights receivable upon
such consolidation, merger, sale, conveyance or reclassification by a
holder of such number of shares of Common Stock as the holder of a
Warrant would have had the right to acquire upon the exercise of such
Warrant immediately prior to such consolidation, merger, sale or
conveyance, at the Purchase Price then in effect, provided that
nothing in this clause (e) shall entitle any holder of Warrants to
acquire or have the right to purchase any of the foregoing in
connection with any sale or conveyance referred to in clause (ii)
above if, with respect to such sale or conveyance, no holder of Common
Stock would have the right to acquire or purchase any of the foregoing
and none of the foregoing were in fact distributed to holders of
Common Stock and provided further that nothing in the foregoing
proviso in this clause (e) shall restrict the rights of the holders of
Warrants under Section 4.1(c). To the extent that
(A) the Company shall issue any shares of Common
Stock or rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for
or purchase shares of Common Stock (other than Excluded
Securities) in connection with any consolidation or merger of
the Company and
(B) such issuance of such shares, rights,
options, warrants or convertible or exchangeable Securities
would otherwise cause an adjustment under Section 4.1(d),
the Adjustment Date in respect of such adjustment, notwithstanding the
definition of such term, shall be the business day immediately
preceding the date of the public announcement by the Company of such
merger or consolidation or, if such merger or consolidation shall have
been generally known to the public prior to such announcement date,
the date on which the Required Warrantholders and the Company
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<PAGE> 19
shall mutually agree upon in good faith and in accordance with the
essential intent and principles of this Section 4 of fairly protecting
the exercise rights of the holders of Warrants and, if no such date
can be so mutually agreed upon, the Company shall appoint (at its
expense) a firm of independent certified public accountants of
recognized national standing, which may not be the regular auditors of
the Company and which are reasonably acceptable to the Required
Warrantholders, which shall give their opinion as to the appropriate
date for such adjustment (after giving effect to the aforesaid intent
and principles of this Section 4); upon receipt of such opinion, the
Company will promptly mail a copy of such opinion to the holders of
Warrants and make the adjustments required under this Section 4 as of
the date stipulated therein. For purposes of determining the number
of shares subject to any Warrant with respect to any adjustments made
pursuant to this Section 4.1(e), the Company shall make the
adjustments provided for in Section 4.4 in respect of any issuances of
Employee Options or Director Options that occurred during the period
from the date of the last determination pursuant to such Section to
the date immediately prior to such consolidation, merger, sale or
conveyance.
(f) DE MINIMIS CHANGES IN PURCHASE PRICE. No adjustment
in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided that any adjustments that, at the time of the
calculation thereof, are less than one percent (1%) of the Purchase
Price at such time and by reason of this Section 4.1(f) are not
required to be made at such time shall be carried forward and added to
any subsequent adjustment or adjustments for purposes of determining
whether such subsequent adjustment or adjustments, as so supplemented,
exceed the one percent (1%) amount set forth in this Section 4.1(f)
and, if any such subsequent adjustment, as so supplemented or
otherwise, should exceed such one percent (1%) amount, all adjustments
deferred prior thereto and not previously made shall then be made. In
any case, all such adjustments being carried forward pursuant to this
Section 4.1(f) shall be given effect upon the exercise of any Warrants
by any holder thereof for purposes of determining the Purchase Price
thereof. All calculations shall be made to the nearest ten-thousandth
of a Dollar ($0.0001).
(g) ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO
WARRANTS. Upon each adjustment of the Purchase Price as a result of
the calculations made in this Section 4.1, each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of shares of Common Stock (calculated to the nearest
one-thousandth) obtained by multiplying the number of shares of Common
Stock covered by such Warrant immediately prior to such adjustment by
the quotient of:
(i) the Purchase Price in effect immediately
prior to such adjustment, divided by
(ii) the Purchase Price in effect immediately
after such adjustment.
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<PAGE> 20
All Warrants originally issued by the Company hereunder shall,
subsequent to any adjustment made to the Purchase Price hereunder,
evidence the right to purchase, at the adjusted Purchase Price, the
number of shares of Common Stock determined to be purchasable from
time to time hereunder upon exercise of such Warrants, all subject to
further adjustment as provided herein. Each such adjustment shall be
valid and binding upon the Company and the holders of Warrants
irrespective of whether the Warrant Certificates theretofore and
thereafter issued express the Purchase Price per share of Common Stock
and the number of shares of Common Stock that were expressed upon the
initial Warrant Certificates issued hereunder.
(h) MISCELLANEOUS.
(i) Adjustments shall be made pursuant to this
Section 4.1 successively whenever any of the events referred
to in Section 4.1(a) through Section 4.1(e), inclusive, hereof
shall occur.
(ii) Shares of Common Stock owned by or held for
the account of the Company, including shares acquired by the
Company during any time any Warrants are outstanding, shall
not, for purposes of the adjustments set forth in this Section
4.1, be deemed outstanding.
(i) EXPIRATION OF RIGHTS, OPTIONS, ETC.
(i) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges referred to
above in this Section 4.1 without the exercise thereof, the
Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be
readjusted and shall thereafter be such as such Purchase Price
and such number of shares of Common Stock would have been had
they been originally adjusted (or had the original adjustment
not been required, as the case may be) as if:
(A) the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such rights, options,
warrants or conversion or exchange privileges; and
(B) such shares of Common Stock, if any,
were issued or sold for the consideration actually received by
the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for
the issuance, sale or grant of all of such rights, options,
warrants or conversion or exchange privileges whether or not
exercised;
provided that no such readjustment shall have the effect of increasing
the Purchase Price by an amount in excess of the amount of the
reduction initially made in respect of the issuance, sale, or grant of
such rights, options, warrants or conversion or exchange privileges.
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<PAGE> 21
(ii) In the event that during any calendar quarter
after the date hereof, any Employee Option, Director Option or
portion thereof expires without the exercise thereof and the
issuance of any such Employee Option or Director Option had
resulted in the issuance of Additional Warrants pursuant to
Section 4.4(a) hereof, the number of shares of Common Stock
purchasable upon the exercise of the Additional Warrants shall
be reduced as of the first day of the next succeeding calendar
quarter by the number of shares of Common Stock subject to
such terminated or expired Employee Option, Director Option or
portion thereof.
(j) OTHER SECURITIES. In the event that at any time, as
a result of an adjustment made pursuant to this Section 4.1, each
holder of Warrants shall become entitled to purchase any Securities of
the Company other than shares of Common Stock, the number or amount of
such other Securities so purchasable and the Purchase Price of such
Securities shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 4.1(a) through Section 4.1(e),
inclusive, hereof, and all other relevant provisions of this Section
4.1, and the definitions used in this Section 4.1, that are applicable
to shares of Common Stock shall be applicable to such other
Securities.
(k) NOTICE OF ADJUSTMENT. Whenever the number of shares
of Common Stock issuable upon the exercise of Warrants is adjusted or
the Purchase Price in respect thereof is adjusted, as herein provided,
the Company shall promptly give to each holder of Warrants notice of
such adjustment or adjustments and shall promptly deliver to each
holder of Warrants a certificate of the Company's chief financial
officer setting forth:
(i) the number of shares of Common Stock issuable
upon the exercise of each Warrant and the Purchase Price of
such shares after such adjustment;
(ii) a brief statement of the facts requiring such
adjustment; and
(iii) the computation by which such adjustment was
made.
So long as any Warrant is outstanding and an adjustment in respect of
the number of shares issuable upon the exercise of Warrants or the
Purchase Price in respect thereof shall have occurred in any fiscal
year of the Company, within ninety (90) days of the end of such fiscal
year of the Company, the Company shall deliver to each holder of
Warrants a certificate of independent certified public accountants of
recognized national standing selected by the Company (which may be the
regular auditors of the Company) setting forth
(A) the number of shares of Common Stock issuable
upon the exercise of each Warrant and the Purchase Price of
such shares as of the end of such fiscal year,
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(B) a brief statement of the facts requiring each
such adjustment required to be made in such fiscal year and
(C) the computation by which each such adjustment
was made.
(l) NOTICE OF CERTAIN EVENTS. Whenever the Company shall
authorize any Notice Event, the Company shall, not less than thirty
(30) days prior to the record date with respect to such event, give to
each holder of Warrants, notice of such event setting forth any change
in the number of shares of Common Stock the Company estimates will be
issuable upon the exercise of such holder's Warrants, the estimated
Purchase Price of such shares after any adjustment required to be made
hereunder and a brief statement of the facts requiring such adjustment
and the computation by which the Company expects such adjustment will
be made. "NOTICE EVENT" shall mean any of the following:
(i) any event that would require an adjustment
pursuant to this Section 4.1;
(ii) any distribution of cash or other Property in
respect of Common Stock (including, without limitation, a cash
dividend payable out of retained earnings);
(iii) any consolidation, merger or sale, transfer
or other disposition of all or substantially all of the
Property of the Company, provided that, if as a result of the
circumstances concerning such consolidation, merger, sale,
transfer or other disposition, it shall be impossible for the
Company to give the thirty (30) days' prior notice referred to
above, the Company shall give such notice as far in advance of
the record date in respect of such consolidation, merger,
sale, transfer or other disposition as reasonably feasible
and, in any case, no later than two (2) business days prior to
such record date; and
(iv) the liquidation, dissolution or winding up of
the Company.
The Company shall, not less than thirty (30) days prior to the
issuance of any Preferred Stock, give to each holder of Warrants
notice of such issuance setting forth any change in the number of
shares of Common Stock the Company estimates will be issuable upon the
exercise of such holder's Warrants, the estimated Purchase Price of
such shares after any adjustment required to be made hereunder and a
brief statement of the facts requiring such adjustment and the
computation by which the Company expects such adjustment will be made.
4.2 FRACTIONAL SHARES.
The Company shall not be required to issue fractional shares of Common
Stock upon the exercise of any Warrant. Upon the exercise of any Warrant,
there shall be paid to the holder thereof, in lieu of any fractional share of
Common Stock resulting therefrom, an amount of cash equal to the product of:
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(a) the fractional amount of such share; multiplied by
(b) the Market Price with respect to the Common Stock
determined as of the date of exercise of such Warrant.
4.3 SPECIAL AGREEMENTS OF THE COMPANY.
The Company covenants and agrees that:
(a) The Company shall not, by amendment to the
Certificate of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issuance or sale of
Securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Company, but shall at all times in good
faith assist in the carrying out of all the provisions of this Section
4 and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the holders of the
Warrant Certificates against dilution or other impairment.
(b) Before taking any action that would result in an
adjustment to the then current Purchase Price to a price that would be
below the then current par value of Common Stock issuable upon
exercise of any Warrant, the Company will take or cause to be taken
any and all necessary corporate or other action that may be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon payment of such Purchase
Price as so adjusted.
4.4 ISSUANCE OF ADDITIONAL WARRANTS.
(a) GRANT OF EMPLOYEE OPTIONS AND DIRECTOR OPTIONS. In
the event that, during any calendar quarter after August 20, 1997:
(i) Employee Options (other than Employee Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Employee Options
plus all other Employee Options issued on or prior to the date
of such issuance, other than Terminated Employee Options,
exceeds the then effective Employee Option Threshold; or
(ii) Director Options (other than Director Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Director Options
plus all other Director Options issued on or prior to the date
of such issuance, other than Terminated Director Options,
exceeds the Director Option Threshold;
then the Company shall, as of the first day of the next succeeding
calendar quarter, issue Additional Warrants to the holders of the
Warrants on a pro rata basis covering that number of shares equal to
the product of the Dilution Percentage multiplied by the number of the
Employee Options or Director Options, as the case may be, issued
during such period (or, with respect to the first calendar quarter in
which the number
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of Employee Options or Director Options issued during such quarter
plus the aggregate number of Employee Options and Director Options, as
the case may be, issued on or prior to the date of such issuance other
than Terminated Employee Options or Terminated Director Options, as
the case may be, exceeds the then effective Employee Option Threshold
or the Director Option Threshold, as the case may be, the amount such
excess).
(b) ISSUANCES IN CONNECTION WITH CONVERSION OF SENIOR
DEBT. In the event that, on or after August 20, 1997:
(i) all or any portion of the principal amount of
the Senior Debt is converted into shares of Common Stock, or
Securities convertible into or exchangeable for shares of
Common Stock; and
(ii) the Post-Conversion Market Price per share of
Common Stock following such conversion is less than the
Measurement Price per share of Common Stock prior to such
conversion;
the Company shall issue Additional Warrants to the holders of the
Warrants on a pro rata basis covering that number of shares equal to:
(A) the product of:
(1) the difference between the
Post-Conversion Market Price per share of Common
Stock and the Measurement Price per share of Common
Stock; multiplied by
(2) the total number of shares of Common
Stock issuable upon exercise of the Warrants held by
such holders immediately prior to such issuance;
divided by
(B) the Post-Conversion Market Price per share of
Common Stock;
provided, however, that in no event shall the number of Warrants
issued pursuant to this Section 4.4(b) as a result of any single
issuance of shares of Common Stock, or Securities convertible into or
exchangeable for shares of Common Stock to the holders of the Senior
Debt exceed the product of:
(y) the aggregate number of shares of Common
Stock issued or issuable pursuant to such convertible or
exchangeable Securities to the holders of the Senior Debt
Warrants with respect to such single issuance; multiplied by
(z) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such
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issuance and the denominator of which is the Fully Diluted
Outstanding Common Stock;
and provided further that no Warrants shall be issued pursuant to this
provision in connection with any transaction in which both the holders
of the Senior Debt convert all or any portion of the aggregate
principal amount of the Senior Debt into shares of Common Stock, or
Securities convertible into or exchangeable for shares of Common
Stock, and the holders of the Warrants convert all or a portion of the
aggregate principal amount of indebtedness then outstanding under the
Notes into shares of Common Stock or Securities convertible into or
exchangeable for shares of Common Stock. The Initial Purchase Price
of such Warrants shall be the Post-Conversion Market Price per share.
(c) ISSUANCE OF OTHER SECURITIES TO HOLDERS OF SENIOR
DEBT. In the event that, on or after August 20, 1997, rights, options
or warrants containing the right to subscribe for or purchase shares
of Common Stock are issued to the holders of the Senior Debt Warrants
(other than in a transaction described in Section 4.1(d) hereof), the
Company shall issue Additional Warrants to the holders of the Warrants
on a pro rata basis covering that number of shares equal to the
product of:
(i) the aggregate number of shares of Common
Stock underlying the rights, options or warrants issued to the
holders of the Senior Debt Warrants; multiplied by
(ii) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such issuance and the
denominator of which is the Fully Diluted Outstanding Common
Stock;
and provided further that no Warrants shall be issued pursuant to this
provision in connection with any transaction in which both the holders
of the Senior Debt Warrants and the holders of the Warrants are issued
shares of Common Stock or rights, options or warrants containing the
right to subscribe for or purchase shares of Common Stock pursuant to
a negotiated transaction as opposed to pursuant to this Section
4.4(c). The Initial Purchase Price of such Warrants shall be the per
share exercise price of the rights, options or warrants in respect of
which such Additional Warrants are being issued.
(d) EXCLUDED ISSUANCES OF SECURITIES TO HOLDERS OF SENIOR
DEBT WARRANTS. Notwithstanding the foregoing, no Warrants shall be
issued pursuant to Sections 4.4(a), 4.4(b) or 4.4(c) hereof as result
of any issuance of additional Warrants to the holders of the Senior
Debt Warrants pursuant to provisions comparable to Section 4.4(a),
Section 4.4(b) or Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to which such Senior
Debt Warrants are issued.
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5. INTERPRETATION OF THIS AGREEMENT
5.1 TERMS DEFINED.
ADDITIONAL WARRANTS -- means any additional Warrants issued
pursuant to the terms of Section 4.4 hereof.
ADJUSTED OUTSTANDING COMMON STOCK -- means, at any time, the
number of shares of Common Stock outstanding at such time (excluding
all shares constituting "treasury stock" and all shares held or
beneficially owned by a Subsidiary) together with the number of shares
of additional Common Stock that would be outstanding at such time
assuming:
(a) the conversion immediately prior to such time
of all then outstanding Securities that are convertible into
shares of Common Stock or that are issuable upon exercise of
any warrants, options and other rights, whether or not the
conditions for such conversion or exercise then exist,
provided that no such Securities shall be included in this
clause (a) unless such Securities were issued and outstanding
on the date hereof or are derived through transfers and/or
exchanges from Securities that were issued and outstanding on
the date hereof; and
(b) the exercise immediately prior to such time
of all then outstanding warrants, options and similar rights
to acquire shares of Common Stock (including, without
limitation, the Warrants), whether or not the conditions for
such exercise then exist, provided that no such warrants,
options and similar rights shall be included in this clause
(b) unless they were issued and outstanding on the date hereof
or are derived through transfers and/or exchanges from
Securities that were issued and outstanding on the date
hereof.
ADJUSTMENT DATE -- Section 4.1(d)(i) hereof.
AGGREGATE CONSIDERATION RECEIVABLE -- Section 4.1(d)(iv) hereof.
AGREEMENT -- introductory paragraph hereof.
AFFILIATE -- means, at any time, a Person (other than a Subsidiary):
(a) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, the Company;
(b) that beneficially owns or holds five percent (5%) or
more of any class of the voting capital stock of the Company;
(c) five percent (5%) or more of the voting capital stock
(or in the case of a Person that is not a corporation, five percent
(5%) or more of the equity interest) of which is beneficially owned or
held by the Company or any Subsidiary; or
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<PAGE> 27
(d) that is an officer or director (or a member of the
immediate family of an officer or director) of the Company or any
Subsidiary;
at such time.
As used in this definition,
"control" -- means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
APPRAISER -- means and includes one or more nationally recognized
investment banking firms or appraisers that shall be experienced in evaluating
companies in the same or similar lines of business as the Company and the
Subsidiaries.
AVERAGE CLOSING BID PRICE -- means, with respect to any period and any
class of Common Stock, the per share price of such class determined as follows:
(a) the average daily closing bid prices of such class of
Common Stock on each trading day during such period, as officially
reported on the principal national securities exchange on which such
class of Common Stock is then listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or
admitted to trading on any national securities exchange, the average
of the last reported bid prices for each trading day during such
period of such class of Common Stock.
BOARD OF DIRECTORS -- means, at any time, the board of directors of
the Company or any committee thereof that, in the instance, shall have the
lawful power to exercise the power and authority of such board of directors.
CERTIFICATE OF INCORPORATION -- means the restated certificate of
incorporation of the Company, as may be amended by the Company from time to
time after the Effective Date.
CLOSING BID PRICE - means, with respect to any date and any class of
Common Stock, the per share price determined as follows:
(a) the closing bid prices on such date, as officially
reported on the principal national securities exchange on which such
class of Common Stock is then listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or
admitted to trading on any national securities exchange, the last
reported bid price of such class of Common Stock on such date.
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COMMON STOCK -- means:
(a) on the date hereof, the Company's $0.001 par value
capital stock designated as "Common Stock"; and
(b) on any other date, any capital stock into which such
"Common Stock" shall have been changed or any capital stock resulting
from any reclassification of such "Common Stock", and all other
capital stock of any class or classes (however designated) of the
Company the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions of any shares thereof entitled to preference.
COMPANY -- introductory paragraph hereof.
DILUTION PERCENTAGE -- means the percentage interest in the
fully-diluted equity of the Company represented by all Warrants on August 21,
1997; provided however, that in the event that any of the Warrants are
exercised after the date hereof, the Dilution Percentage shall be reduced by
multiplying the then-effective Dilution Percentage by a fraction, the numerator
of which is the number of Warrants remaining immediately following such
exercise and the denominator of which is the number of Warrants outstanding
immediately prior to such exercise.
DIRECTOR OPTIONS -- means rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or purchase
shares of Common Stock issued to any directors of the Company or any of its
Subsidiaries who were members of the Board of Directors of the Company or any
of its Subsidiaries as of the date hereof; provided, however, that:
(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire shares
of the Common Stock in a bona fide arm's-length transaction for
consideration at least equal to the Reference Price;
(b) any rights, options, warrants or convertible or
exchangeable securities purchased from Persons other than the Company
or its Subsidiaries to acquire shares of Common Stock; and
(c) any shares of the Series B Preferred Stock held by
any employees, officers or directors of the Company or any of its
Subsidiaries on the date hereof;
shall not constitute Director Options.
DIRECTOR OPTION THRESHOLD -- means 1,460,424 shares, as such number
may be adjusted from time to time to reflect any subdivision or combination of
shares of Common Stock.
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EFFECTIVE DATE -- means the date of the first issuance of any Warrants
pursuant to this Agreement.
EMPLOYEE OPTIONS -- means rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or purchase
shares of Common Stock issued to any employees, officers or directors of
Company or any of its Subsidiaries, including, without limitation, Employee
Options issued to Stephen Hopkins as consideration for his services as
President and Chief Executive Officer of the Company; provided, however, that:
(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire shares
of Common Stock in a bona fide arm's-length transaction for
consideration at least equal to the Reference Price;
(b) any rights, options, warrants or convertible or
exchangeable securities acquired from Persons other than the Company
or its Subsidiaries to acquire shares of Common Stock; and
(c) any shares of the Series B Preferred Stock held by
any employees, officers or directors of the Company or any of its
Subsidiaries on the date hereof;
shall not constitute Employee Options.
EMPLOYEE OPTION THRESHOLD -- means 7,302,121 shares, as such number
may be adjusted from time to time to reflect any subdivision or combination of
shares of Common Stock; provided, however, that in the event that Additional
Warrants are issued pursuant to Section 4.4(a) during any calendar quarter
after the date hereof, the Employee Option Threshold shall be increased by the
number of Director Options issued during the immediately preceding calendar
quarter (or, with respect to the first calendar quarter during which the number
of Director Options exceeds the Director Option Threshold, the amount of such
excess).
EXCLUDED SECURITIES -- Section 4.1(d)(ii) hereof.
FAIR MARKET SHARE PRICE -- means, at any time, the sale value of a
single share of Common Stock, as determined by an Appraiser in accordance with
the provisions of Exhibit B attached hereto.
FULLY DILUTED OUTSTANDING COMMON STOCK -- means, at any time, the
number of shares of Common Stock outstanding at such time (excluding all shares
constituting "treasury stock" and all shares held or beneficially owned by a
Subsidiary) together with the number of shares of additional Common Stock that
would be outstanding at such time assuming:
(a) the conversion immediately prior to such time of all
Securities convertible into shares of Common Stock outstanding at such
time or issuable upon exercise of any warrants, options and other
rights outstanding at such time, whether or not the conditions for
such conversion or exercise then exist; and
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(b) the exercise immediately prior to such time of all
then outstanding warrants, options and similar rights to acquire
shares of Common Stock (including, without limitation, the Warrants),
whether or not the conditions for such exercise then exist.
INDEPENDENT INVESTOR -- means a corporation, limited liability or
other company that is neither an Affiliate nor a Subsidiary.
INITIAL HOLDER -- introductory paragraph hereof.
INITIAL PURCHASE PRICE -- means:
(a) with respect to the Warrants issued on the date
hereof, Fifty-Nine Cents ($0.59) per share;
(b) with respect to any Warrants issued pursuant to
Section 4.4(a), the Average Closing Bid Price of a share of Common
Stock during the calendar quarter in respect of which the adjustment
is being made;
(c) with respect to any Warrants issued pursuant to
Section 4.4(b), the Post-Conversion Market Price per share; and
(d) with respect to any Warrants issued pursuant to
Section 4.4(c) hereof, the per share exercise price of the rights,
options or warrants in respect of which the Additional Warrants are
being issued.
MARKET PRICE -- means, with respect to any date and any class of
Common Stock, the per share price of such class equal to the product of (a)
ninety-five percent (95%) times (b) the average of the daily Closing Prices of
Common Stock for fifteen (15) consecutive trading days commencing twenty (20)
trading days before such date, provided that, if the Closing Prices referred to
in clause (b) are not then available for such class of Common Stock in order to
make the determination in said clause (b), "Market Price" shall mean the Fair
Market Share Price.
As used in this definition,
Closing Price -- means, with respect to any date and any class
of Common Stock, the per share price of such class determined as
follows:
(a) the last sale price, regular way, on such
date or, if no such sale takes place on such date, the average
of the closing bid and asked prices on such date, in each case
as officially reported on the principal national securities
exchange on which such class of Common Stock is then listed or
admitted to trading; or
(b) if such class of Common Stock is not then
listed or admitted to trading on any national securities
exchange, but is designated as a national
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market system security by the National Association of
Securities Dealers, the last trading price of such class of
Common Stock on such date, or if there shall have been no
trading on such date or if such class of Common Stock is not
so designated, the average of the reported closing bid and
asked prices on such date as shown by the NASDAQ.
MEASUREMENT PRICE - means, with respect to any date and any class of
Common Stock, the average of the daily Closing Bid Prices of such class of
Common Stock for five (5) consecutive trading days prior to the public
announcement of any conversion of any Senior Debt; provided, however, that the
date on which such public announcement is made shall not be considered a
trading day.
NASDAQ -- means the National Association of Securities Dealers
Automated Quotation System.
NOTE PURCHASE AGREEMENTS -- Recital paragraph B hereof.
NOTES -- Recital paragraph B hereof.
NOTICE EVENT -- Section 4.1(l) hereof.
PERSON -- means an individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
POST-CONVERSION MARKET PRICE - means, with respect to any date and any
class of Common Stock, the average of the daily Closing Bid Prices of such
class of Common Stock for five (5) consecutive trading days after the filing of
a Current Report on Form 8-K with respect to any conversion of any Senior Debt;
provided, however, that the date on which such Current Report on Form 8-K is
filed shall not be considered a trading day.
PREFERRED STOCK -- means the class of capital stock of the Company
designated as "Preferred Stock," having a par value $.001 per share, and
enjoying the rights and preferences set forth in, and subject to the
restrictions of, the Certificate of Incorporation as in effect on November 19,
1993.
PROPERTY -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
PURCHASE PRICE -- means, prior to any adjustment pursuant to Section
4.1 hereof, the Initial Purchase Price and thereafter, the Initial Purchase
Price as adjusted and readjusted from time to time.
REFERENCE PRICE -- means, in respect of any date, the Market Price of
one share of Common Stock as of such date.
REGULAR CASH DIVIDENDS -- means cash dividends paid by the Company out
of its retained earnings, provided that any such cash dividends paid during any
fiscal year of the
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Company shall be deemed to constitute Regular Cash Dividends to the extent, and
only to the extent, that immediately after giving effect to the payment of such
cash dividends the aggregate amount of all cash dividends paid by the Company
out of its retained earnings during such fiscal year does not exceed five
percent (5%) of the product of (a) the Market Price determined as of the record
date in respect of such payment multiplied by (b) the aggregate number of
shares of Common Stock outstanding as of such record date (after assuming that
all then outstanding Warrants had been exercised).
REQUIRED WARRANTHOLDERS -- means, at any time, any holder or holders
(other than the Company, any Subsidiary or any Affiliate) then holding more
than fifty percent (50%) of the Warrants (excluding any Warrants directly or
indirectly held by the Company or any Subsidiary or Affiliate) then
outstanding.
SEC -- means, at any time, the Securities and Exchange Commission or
any other federal agency at such time administering the Securities Act.
SECURITIES ACT -- means the Securities Act of 1933, as amended.
SECURITY -- means "security" as defined in section 2(1) of the
Securities Act.
SENIOR DEBT -- has the meaning set forth in the Note Purchase
Agreement.
SENIOR DEBT WARRANTS -- means all warrants initially issued to the
holders of the Senior Debt and any additional warrants issued pursuant to any
agreement between the Company and the holders of the Senior Debt pursuant to
which such warrants were issued.
SENIOR FINANCIAL OFFICER -- means the chief financial officer, the
principal accounting officer, the controller or the treasurer of the Company.
SERIES A NOTES -- Recital paragraph B hereof.
SERIES B NOTES -- Recital paragraph B hereof.
SERIES B PREFERRED STOCK -- means the Series B Preferred Stock of the
Company as provided for in its certificate of incorporation.
SOP -- means the Company's 1990 Stock Option Plan (as amended from
time to time).
SUBSIDIARY -- means, at any time, any corporation more than fifty
percent (50%) of the total combined voting power of all classes of the voting
capital stock of which shall, at the time as of which any determination is
being made, be owned by the Company either directly or indirectly through any
one or more Subsidiaries.
TERMINATED DIRECTOR OPTIONS -- means any Director Options issued on or
prior to the date hereof that have been exercised or have terminated or expired
prior to the date hereof.
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TERMINATED EMPLOYEE OPTIONS -- means any Employee Options issued on or
prior to the date hereof that have been exercised or have terminated or expired
prior to the date hereof.
TERMINATION DATE -- means the earlier of (a) May 19, 2002 and (b) the
satisfaction of the conditions set forth in Section 4.1(e) of the Note Purchase
Agreements.
WARRANTS -- all Warrants issued under this Agreement and any Warrant
issued after the date hereof, including, without limitation, all Additional
Warrants.
WARRANT CERTIFICATE -- Section 1.1 hereof.
5.2 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person,
or that such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person,
including actions taken by or on behalf of any partnership in which such Person
is a general partner.
5.3 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The
titles of the Sections and the Table of Contents appear as a matter of
convenience only, do not constitute a part hereof and shall not affect
the construction hereof. The words "herein," "hereof," "hereunder"
and "hereto" refer to this Agreement as a whole and not to any
particular Section or other subdivision. Unless otherwise specified,
references to Sections are to Sections of this Agreement, references
to Annexes are to Annexes to this Agreement and references to Exhibits
are to Exhibits to this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall
be construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
5.4 GOVERNING LAW.
THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
6. MISCELLANEOUS
6.1 COMMUNICATIONS.
(a) METHOD; ADDRESS. All communications hereunder or
under the Warrants shall be in writing, shall be hand delivered,
deposited into the United States mail (registered or certified mail),
postage prepaid, or sent by overnight courier of national or
international reputation, and shall be addressed,
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(i) if to the Company,
The Cerplex Group, Inc.
1382 Bell Avenue
Tustin, California 92680
Attention: Chief Executive Officer
Facsimile: (714) 258-0730
(with a copy to:
Brobeck, Phleger & Harrison
4675 MacArthur Court, Suite 1000
Newport Beach, California 92660
Attention: Frederic A. Randall, Jr.,
Esq. Facsimile: (714) 752-7535
provided that the failure to provide
any such copy shall in no way affect
the validity or effectiveness of any
communication to the Company for
purposes of this Agreement)
or at such other address as the Company shall have furnished in
writing to all holders of the Warrants at the time outstanding; and
(ii) if to any of the holders of the Warrants:
(A) if such holders are the Initial
Holders, at their respective addresses set forth on
Annex 1, and further including any parties referred
to on such Annex 1 that are required to receive
notices in addition to such holders of the Warrants;
and
(B) if such holders are not the Initial
Holders, at their respective addresses set forth in
the register for the registration and transfer of
Warrants maintained pursuant to Section 1.2(b)
hereof;
or to any such party at such other address as such party may designate
by notice duly given in accordance with this Section 6.1 to the
Company (which other address shall be entered in such register).
(b) WHEN GIVEN. Any communication so addressed and
deposited in the United States mail, postage prepaid, by registered or
certified mail (in each case, with return receipt requested) shall be
deemed to be received on the third (3rd) succeeding business day after
the day of such deposit (not including the date of such deposit). Any
notice so addressed and otherwise delivered shall be deemed to be
received when actually received at the address of the addressee.
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6.2 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Initial Holder at the closing of the
issuance of Warrants (except the Warrant Certificates themselves) and (c)
financial statements, certificates and other information previously or
hereafter furnished to any Initial Holder or any other holder of Warrants, may
be reproduced by any holder of Warrants by any photographic, photostatic,
microfilm, micro-card, miniature photographic, digital or other similar process
and each holder of Warrants may destroy any original document so reproduced.
The Company agrees and stipulates that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding (whether or not the original is in existence and whether or not such
reproduction was made by such holder of Warrants in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. Nothing in this Section
6.2 shall prohibit the Company or any holder of Warrants from contesting the
accuracy of any such reproduction.
6.3 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Company herein or in any certificate or other instrument delivered by it or
on its behalf hereunder shall be considered to have been relied upon by the
Initial Holders and shall survive the delivery to the Initial Holders of the
Warrants regardless of any investigation made by the Initial Holders or on
their behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Company hereunder.
6.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof
are intended to be for the benefit of all holders, from time to time, of
Warrants, and shall be enforceable by any such holder, whether or not an
express assignment to such holder of rights hereunder shall have been made by
any successor or assign of any Initial Holder.
6.5 AMENDMENT AND WAIVER.
This Agreement may be amended, and the observance of any term of this
Agreement may be waived, with and only with the written consent of the Company
and the Required Warrantholders, provided that no change in, or waiver of
performance under, Section 1, Section 2, Section 4 or this Section 6.5 (or any
definition used in connection with any of such sections) shall be effected
without the written consent of all holders of Warrants.
6.6 RIGHT OF ACTION.
All rights of action in respect of the Warrants are vested in the
respective registered holders of the Warrant Certificates or, in lieu thereof,
the beneficial owner thereof (to the extent such beneficial owner is a party to
this Agreement or disclosed to the Company in
32
<PAGE> 36
writing), and any registered holder or beneficial owner (to the extent such
beneficial owner is a party to this Agreement or disclosed to the Company in
writing) of any Warrant Certificate, without the consent of the holder of any
other Warrant Certificate, may, in its own behalf and for its own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, its right to exercise
the Warrants evidenced by such Warrant Certificate in the manner provided in
such Warrant Certificate and in this Agreement.
6.7 EXPENSES.
The Company will promptly (and in any event within thirty (30) days of
receiving any statement or invoice therefor) pay all fees, expenses and costs
relating hereto, including, but not limited to:
(a) the cost of reproducing this Agreement and the
Warrants;
(b) the fees and disbursements of the special counsel to
the Initial Holders;
(c) the cost of delivering to the home office or
custodian bank of each Initial Holder, insured to such party's
satisfaction, the Warrant Certificates acquired by such party on the
Effective Date; and
(d) all fees, expenses, costs and disbursements
(including, without limitation, the reasonable fees and the
disbursements of the attorneys, accountants and other expert, legal
and financial advisers of each holder of Warrant Certificates)
relating to (i) the consideration, evaluation, analysis, assessment,
negotiation, preparation and/or execution of any amendments, waivers
or consents pursuant to the provisions hereof, whether in the ordinary
course of performance hereof or in connection with any controversy or
potential controversy hereunder or resulting from any work-out,
restructuring or other similar proceedings relating to such
performance and whether or not any such amendments, waivers or
consents are executed or otherwise consummated and/or (ii) the
enforcement of the rights of such holder hereunder.
6.8 FILINGS.
The Company shall, at its own expense, promptly execute and deliver,
or cause to be executed and delivered, to any holder of Warrants all
applications, certificates, instruments, registration statements, and all other
documents and papers that such holder of Warrants may reasonably request in
connection with the obtaining of any consent, approval, registration,
qualification, or authorization of any federal, state or local government (or
any agency or commission thereof) necessary or appropriate in connection with,
or for the effective exercise of, any Warrants then held by such holder.
33
<PAGE> 37
6.9 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
6.10 TERM.
All unexercised Warrants will be void and not exercisable after 5:00
p.m. (Los Angeles, California time) on the Termination Date and the Warrant
Certificates in respect thereof shall after such time be deemed cancelled for
all purposes of this Agreement. Shares of Common Stock issuable upon the
exercise of a Warrant shall be issued after the Termination Date if such
Warrant is exercised, as provided in Section 2.1, on or prior to 5:00 p.m. (Los
Angeles, California time) on the Termination Date.
6.11 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one
duplicate original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; NEXT PAGE IS SIGNATURE PAGE.]
34
<PAGE> 38
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by one of its duly authorized
officers or representatives.
THE CERPLEX GROUP, INC.
By___________________________________
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By___________________________________
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By___________________________________
Name:
Title:
NORTH ATLANTIC SMALLER COMPANIES
INVESTMENT TRUST PLC
By___________________________________
Name:
Title:
[Signature page to the WARRANT AGREEMENT among THE CERPLEX GROUP, INC. and
the Initial Holders listed in Annex 1]
<PAGE> 39
ANNEX 1
INFORMATION AS TO INITIAL HOLDERS
<TABLE>
<CAPTION>
=======================================================================================
INITIAL HOLDER NAME THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
- ---------------------------------------------------------------------------------------
<S> <C>
Name in which to register Warrant The Northwestern Mutual Life Insurance Company
Certificate(s)
- ---------------------------------------------------------------------------------------
Warrant Certificate registration WR-1; 239,176 Warrants
number;
Number of Warrants (PPN for the Warrants: 15678@ 13 1)
- ---------------------------------------------------------------------------------------
Address for notices The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attention: Securities Department
=======================================================================================
</TABLE>
Annex 1-1
<PAGE> 40
<TABLE>
<CAPTION>
============================================================================================
INITIAL HOLDER NAME JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
<S> <C>
- --------------------------------------------------------------------------------------------
Name in which to register Warrant John Hancock Mutual Life Insurance Company
Certificate(s)
- --------------------------------------------------------------------------------------------
Warrant Certificate registration WR-2; 86,972 Warrants
number; WR-3; 152,204 Warrants
Number of Warrants
(PPN for the Warrants: 15678@ 13 1)
- --------------------------------------------------------------------------------------------
Address for notices John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Bond and Corporate Finance Department T-57
Fax No.: (617) 572-1606
============================================================================================
</TABLE>
Annex 1-2
<PAGE> 41
<TABLE>
<CAPTION>
=======================================================================================
INITIAL HOLDER NAME NORTH ATLANTIC SMALLER COMPANIES TRUST PLC
<S> <C>
- ---------------------------------------------------------------------------------------
Name in which to register Warrant Bank of Scotland London Nominees Ltd.
Certificate(s)
- ---------------------------------------------------------------------------------------
Warrant Certificate registration WR-4; 21,744 Warrants
number;
Number of Warrants (PPN for the Warrants: 15678@ 13 1)
- ---------------------------------------------------------------------------------------
Address for notices North Atlantic Smaller Companies Trust PLC
c/o J.O. Hambro & Co., Ltd.
10 Park Place
London, England SW1A1LP
Attention: Mr. Christopher Mills
Facsimile: 011-44-171-233-1503
=======================================================================================
</TABLE>
Annex 1-3
<PAGE> 42
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN ANY
TRANSACTION UNLESS FIRST REGISTERED UNDER SUCH LAWS OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
[THE HOLDER OF THIS WARRANT CERTIFICATE IS A [[NORTHWESTERN GROUP
HOLDER]][[HANCOCK GROUP HOLDER]] FOR PURPOSES OF THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED NOVEMBER 19, 1993, AS AMENDED, AMONG THE CERPLEX GROUP,
INC. AND THE OTHER PARTIES THERETO.]
WARRANT CERTIFICATE
THE CERPLEX GROUP, INC.
No. WR-______ ____________ Warrants
Date: ____________ PPN: 15678@ 13 1
This WARRANT CERTIFICATE certifies that ________________________, or
registered assigns, is the registered holder of ________________________
(____________) Warrants. Each Warrant entitles the owner thereof to purchase,
at any time on or after August 20, 1998 and prior to 5:00 p.m. (Los Angeles,
California time) on the Termination Date (as such term is defined in the
Warrant Agreement referred to below), one fully paid and nonassessable share of
Common Stock (as such term is defined in the Warrant Agreement referred to
below) of THE CERPLEX GROUP, INC., a Delaware corporation (the "COMPANY"), at
the Initial Purchase Price of ___________________ per share of Common Stock
(the "PURCHASE PRICE") upon (i) presentation and surrender of this Warrant
Certificate with a form of election to purchase duly executed and (ii)
satisfaction of the Purchase Price in the manner set forth in the Warrant
Agreement. The number of shares of Common Stock that may be purchased upon
exercise of each Warrant, and the Purchase Price, are the number and the
Purchase Price as of the date hereof and are subject to adjustment under
certain circumstances as provided in the Warrant Agreement referred to below.
The Warrants are issued pursuant to the Warrant Agreement, dated as of
August 20, 1997 (as amended from time to time, the "WARRANT AGREEMENT"), among
the Company and certain initial holders named therein, and are subject to all
of the terms, provisions and conditions thereof, which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof and to which
Warrant Agreement reference is hereby made for a full description of the
rights, obligations, duties and immunities of the Company and the holders
Exhibit A-1
<PAGE> 43
of the Warrant Certificates. Capitalized terms used, but not defined, herein
have the meanings assigned to them in the Warrant Agreement.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time. If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to
receive, upon surrender hereof, another Warrant Certificate or Warrant
Certificates for the number of Warrants not exercised. This Warrant
Certificate, with or without other Warrant Certificates, upon surrender at the
office of the Company referred to in Section 1.2(b) of the Warrant Agreement,
may be exchanged for another Warrant Certificate or Warrant Certificates of
like tenor evidencing Warrants entitling the holder to purchase a like
aggregate number of shares of Common Stock as the Warrants evidenced by the
Warrant Certificate or Warrant Certificates surrendered shall have entitled
such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of
this Warrant Certificate shall be entitled to any right to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock or
of any other Securities of the Company that may at any time be issued upon the
exercise hereof, nor shall anything contained in the Warrant Agreement or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a holder of a share of Common Stock in the Company or any right to
vote upon any matter submitted to holders of shares of Common Stock at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
Securities, change of par value, consolidation, merger, conveyance, or
otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, or to receive dividends or subscription rights, or otherwise,
until the Warrant or Warrants evidenced by this Warrant Certificate shall have
been exercised as provided in the Warrant Agreement.
[Other than with respect to the original issuance of the Warrants
pursuant to the Warrant Agreement, if the Warrant Certificate of the immediate
transferor of the holder of this Warrant Certificate bore the second paragraph
of the legend set forth above, this Warrant Certificate shall also bear such
second paragraph.]
Exhibit A-2
<PAGE> 44
THIS WARRANT CERTIFICATE AND THE WARRANT AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
WITNESS the signature of a proper officer of the Company as of the
date first above written.
THE CERPLEX GROUP, INC..
By__________________________________
Name:
Title:
ATTEST:
_______________________________
[Assistant] Secretary
Exhibit A-3
<PAGE> 45
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, _______________________________________ hereby
sells, assigns and transfers unto
____________________________________________________________________________
(Please print name and address of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
_____________________________________________________________________________
attorney in fact, to transfer the accompanying Warrant Certificate on the books
of the Company, with full power of substitution.
Dated: ____________________, ________.
________________________________
By _____________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or
any change whatsoever.
Exhibit A-4
<PAGE> 46
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO EXERCISE ANY WARRANTS REPRESENTED BY THE WARRANT
CERTIFICATE)
To THE CERPLEX GROUP, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________ Warrants represented by the accompanying Warrant
Certificate to purchase the shares of Common Stock issuable upon the exercise
of such Warrants and requests that certificates for such shares be issued in
the name of:
_______________________________________________________________________________
(Please print name and address.)
___________________________________________________________
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
______________________________________________________________________________
(Please print name and address.)
___________________________________________________________
(Please insert social security or other identifying number.)
Dated: __________________, ______.
________________________________
By______________________________
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of the accompanying Warrant Certificate or
any prior assignment thereof in every particular, without alteration or
enlargement or any change whatsoever.
Exhibit A-5
<PAGE> 47
EXHIBIT B
DETERMINATION OF FAIR MARKET SHARE PRICE.
(a) Within two (2) days of the happening of any event
requiring a determination of the Fair Market Share Price, the Company
shall give written notice thereof to each holder of Warrants (which
notice shall contain a description of such event).
(b) Within ten (10) days of the happening of each event
requiring a determination of the Fair Market Share Price, each of the
Required Warrantholders (as a group) and the Company shall designate
an Appraiser for purposes of determining the Fair Market Share Price
and shall notify the other party or parties of such designation
(provided that, if the Company and such holders so agree, they may
jointly designate a single Appraiser, in which event the determination
of the Fair Market Share Price of the single Appraiser so jointly
designated shall be binding upon both the Company and the holders of
Warrants for the purposes of the determination of the Fair Market
Share Price hereunder). Each Appraiser will take such evidence, make
such investigations and examine such documents as it shall in its
discretion determine to be necessary and advisable to make a
determination with respect to the Fair Market Share Price. A detailed
report from each Appraiser setting forth such Appraiser's
determination with respect to the Fair Market Share Price shall be
delivered to the Company and to each of the holders of Warrants as
soon as possible following such determination and, in any event, not
later than thirty (30) days following the happening of the event
requiring determination of the Fair Market Share Price.
(c) If either:
(i) the Company or such holders shall fail,
neglect or refuse to designate an Appraiser within the time
period set forth in clause (b) above; or
(ii) either of the two Appraisers so designated
shall fail to deliver its detailed report within the time
period set forth in said clause (b);
then, in each such case, the determination of the Fair Market Share
Price of the single Appraiser actually designated or the single
Appraiser actually delivering its detailed report, as the case may be,
shall be binding upon both the Company and the holders of Warrants for
the purposes of the determination of the Fair Market Share Price
hereunder.
(d) If the determinations of the Fair Market Share Price
by both such Appraisers do not differ by more than fifteen percent
(15%) of the lower of the two determinations, then the Fair Market
Share Price shall be the arithmetic average of those two
determinations.
Exhibit B-1
<PAGE> 48
(e) If the determinations of the Fair Market Share Price
by both such Appraisers differ by more than fifteen percent (15%) of
the lower of the two determinations, then the parties shall promptly
direct the two Appraisers to consult with one another for the purpose
of jointly designating a third Appraiser, which designation shall be
made not later than ten (10) days following the delivery of the
determinations pursuant to clause (b) above. The third Appraiser
shall review the first two appraisals and shall make an independent
determination with respect to the Fair Market Share Price.
(i) In the event that the third Appraiser's
determination is equal to or greater than the greater
determination made by the first two Appraisers, the Fair
Market Share Price shall equal the higher of the
determinations of the first two Appraisers.
(ii) In the event that the third Appraiser's
determination is equal to or less than the lesser
determination made by the first two Appraisers, the Fair
Market Share Price shall equal the lesser of the
determinations of the first two Appraisers.
(iii) In the event that the third Appraiser's
determination is between those of the first two Appraisers,
the Fair Market Share Price shall equal the arithmetic average
of the determinations of all three Appraisers.
A detailed report from the third Appraiser setting forth such
Appraiser's determination with respect to the Fair Market Share Price
shall be delivered to the Company and to each of the holders of
Warrants as soon as possible following such determination and, in any
event, not later than thirty (30) days following the earlier of (A)
the delivery of the reports referred to in clause (b) above, and (B)
the first date upon which such reports are due to be delivered
pursuant to clause (b) above.
(f) The Company agrees to cooperate with each Appraiser
to the full extent necessary to permit determination of the Fair
Market Share Price.
(g) All fees and expenses incurred in connection with the
foregoing determination of the Fair Market Share Price (including any
and all fees and expenses of each Appraiser) shall be borne by the
Company. Any determination made in accordance with this definition
shall be effective for a period of ninety (90) days immediately
following such determination, unless there has been a material
development in the business of the Company and the Subsidiaries, in
which case there shall be a redetermination in accordance with the
provisions of this Exhibit.
Exhibit B-2
<PAGE> 49
EXHIBIT C
CONFIDENTIALITY
With respect to all data and information that has been or in the
future is furnished to or obtained by any holder of Warrant Certificates in
connection with this Agreement (excluding, in any case, any such data and
information that was or is available to the public or was not or is not treated
as confidential by any one or more of the Company, the Subsidiaries or the
Affiliates), such holder will hold such data and information in confidence in
accordance with the customary practices and standards of confidentiality
generally employed by such holder in respect of similar data and information
obtained in connection with other comparable investment transactions of such
holder. Notwithstanding the foregoing, any such holder may disclose any data
and information furnished to or obtained by it in connection with this
Agreement:
(a) the disclosure of which is, in such holder's sole
good faith business and/or legal judgment, reasonably required in
connection with regulatory requirements (including, without
limitation, the requirements of the National Association of Insurance
Commissioners but excluding, in any case, delivery of periodic
financial statements and information to the National Association of
Insurance Commissioners, the Securities Valuation Office thereof or
any other agency thereof in connection with the rating, evaluation or
other regulatory treatment of the Warrants or the Notes) or other
legal requirements related to such holder's affairs, including,
without limitation, the disclosure of such data and information in
connection with or in response to (i) compliance with any law,
ordinance or governmental order, regulation, rule, policy, subpoena,
investigation or request, or (ii) any order, decree, judgment,
subpoena, notice of discovery or similar ruling, or pleading issued,
filed, served or purported on its face to be issued, filed or served
(A) by or under authority of any court, tribunal, arbitration board or
any governmental agency, commission, authority, board or similar
entity or (B) in connection with any proceeding (including, without
limitation, any proceeding to enforce the obligations of the Company
under this Agreement), cause or matter pending (or on its face
purported to be pending) before any court, tribunal, arbitration board
or any governmental agency, commission, authority, board or similar
entity;
(b) to any one or more of the employees, officers,
directors, agents, attorneys, accountants, professional consultants or
trustees of such holder (or of any subsidiary or affiliate of such
holder) who would have access to such data and information in the
normal course of the performance of such Person's duties for such
holder (or for such subsidiary or affiliate);
(c) to Moody's Investors Service, Inc., Standard & Poor's
Corporation or any other nationally recognized financial rating
service that is reviewing the credit rating of any holder of Warrant
Certificates or is rating or reviewing the rating of the Warrants or
the Common Stock issuable upon the exercise thereof; and
Exhibit C-1
<PAGE> 50
(d) to any prospective purchaser, securities broker or
dealer or investment banker in connection with the resale or proposed
resale, in accordance with the terms hereof, of all or any portion of
the Warrants or Common Stock issuable upon the exercise thereof by
such holder.
In connection with any disclosure by any holder of Warrant Certificates under
clause (a) above, such holder will use reasonable efforts to notify the Company
of any such pending disclosure, provided that (x) such holder shall in no case
be liable to the Company for its failure to effect such notification, (y) the
failure to effect such notification shall not affect the ability of such holder
to make the disclosures contemplated under said clause (a) and (z) this
sentence shall not apply to the delivery of periodic financial statements and
information to the National Association of Insurance Commissioners, the
Securities Valuation Office thereof or any other agency thereof in connection
with the rating, evaluation or other regulatory treatment of the Warrants or
the Notes. In connection with any disclosure by any holder of Warrant
Certificates under clause (d) above, such holder will use reasonable efforts to
cause any prospective purchaser, securities broker or dealer or investment
banker referred to in said clause (d) to enter into a written confidentiality
agreement with the Company containing terms of confidentiality substantially
similar to the terms of confidentiality set forth in this Exhibit prior to
effecting such disclosure, provided that (yy) such holder shall in no case be
liable to the Company if such prospective purchaser, securities broker or
dealer or investment banker shall for any reason not enter into any such
confidentiality agreement with the Company and (zz) the failure of such
prospective purchaser, securities broker or dealer or investment banker to
enter into any such confidentiality agreement with the Company shall not affect
the ability of such holder to make the disclosures contemplated under said
clause (d). No holder of Warrant Certificates will be liable for the breach of
the provisions of this Exhibit or of any provision in any aforesaid
confidentiality agreement by any other holder of Warrant Certificates or by any
Person to which any confidential data or information shall be delivered in
accordance with the provisions of this Exhibit C.
Exhibit C-2
<PAGE> 1
EXHIBIT 4.34
THIRD AMENDMENT TO WARRANT AGREEMENT
THIS THIRD AMENDMENT TO WARRANT AGREEMENT (this "Amendment") is made
as of the 20th day of August, 1997, by and among The Cerplex Group, Inc., a
Delaware corporation (the "COMPANY") and each of the holders of warrants listed
on Schedule A hereto, each of which is herein referred to as a "HOLDER" and
collectively as the "HOLDERS".
RECITALS:
A. The Company and the Holders entered into a Warrant Agreement
dated as of April 15, 1996, as amended by a Waiver and Amendment Agreement
dated as of October 31, 1996 and a Second Amendment to Warrant Agreement dated
as of April 9, 1997 (as in effect prior to the effectiveness of this Amendment,
the "EXISTING WARRANT AGREEMENT").
B. The Holders are the holders of all of the Warrants (as such
term is defined in the Existing Warrant Agreement) outstanding as of the date
hereof.
C. The Company has requested that the Existing Warrant Agreement
be amended, as more particularly provided herein, and the Holders have agreed
to amend the Existing Warrant Agreement as set forth herein.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS.
As used in this Amendment, the following terms have the respective
meanings specified below:
"AMENDMENT, THIS" -- means this Third Amendment to Warrant Agreement.
"COMPANY" -- the introductory sentence.
"EXISTING WARRANT AGREEMENT" -- Recital A.
"HOLDERS" -- the introductory sentence.
SECTION 2. AMENDMENTS TO EXISTING WARRANT AGREEMENT.
2.1 AMENDMENT TO SECTION 3.1(B). Section 3.1(b) of the Existing
Warrant Agreement is hereby amended and restated in its entirety to read as
follows:
"(b) ENFORCEABILITY OF OBLIGATIONS. This
Agreement and the Warrant Certificates issued on the date hereof have
been, and any Warrants issued after the date hereof will be, duly
authorized, executed and delivered by the Company. This Agreement,
the Warrant Certificates and the Warrants constitute, or upon
execution
<PAGE> 2
and delivery will constitute, the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms,
except:
"(i) as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally; and
"(ii) as such enforceability may be subject to the
availability of equitable remedies.
"The holders of the Warrants are entitled to the benefits of this Agreement."
2.2 AMENDMENT TO SECTION 4.1(D)(I). The introductory paragraph to
Section 4.1(d)(i) of the Existing Warrant Agreement is hereby amended and
restated in its entirety to read as follows:
"(d) ISSUANCES OF COMMON STOCK AND OTHER
SECURITIES.
"(i) In the event that the Company shall issue or
sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock (excluding
Excluded Securities, as defined in Section 4.1(d)(ii) hereof)
at a price per share of Common Stock lower than the Reference
Price in effect on the date (the "ADJUSTMENT DATE") of such
issuance or sale, then the Purchase Price in effect
immediately after the Adjustment Date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such Adjustment Date by the quotient of:"
The remainder of Section 4.1(d)(i) of the Existing Warrant Agreement shall
remain in effect without amendment.
2.3 AMENDMENT TO SECTION 4.1(D)(II). Section 4.1(d)(ii) of the
Existing Warrant Agreement is hereby amended and restated in its entirety to
read as follows:
"(ii) "EXCLUDED SECURITIES" shall mean and include:
"(A) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Section 4.1(a), Section 4.1(b), Section
4.1(c) or Section 4.1(e) hereof and with respect to
which an adjustment to the Purchase Price has been
made in accordance with any of such Sections;
"(B) shares of Common Stock issuable upon
exercise of the Warrants (including, without
limitation, the Additional Warrants);
"(C) shares of Common Stock issuable upon
exercise of rights, options or warrants or conversion
or exchange of convertible or
2
<PAGE> 3
exchangeable Securities issued or sold under
circumstances which caused an adjustment pursuant to
this Section 4.1(d);
"(D) rights to acquire shares of Common
Stock, and shares of Common Stock issuable upon
exercise of such rights, issued to employees of the
Company and it Subsidiaries pursuant to any employee
stock purchase plan maintained by the Company or any
of its Subsidiaries, provided that any such rights
issued pursuant to any such plan and any shares of
Common Stock issuable upon the exercise thereof
which, in the aggregate, exceed, at the time of the
issuance thereof, two percent (2%) of the Fully
Diluted Outstanding Common Stock, determined at such
time, shall not constitute Excluded Securities;
"(E) shares of Common Stock and/or
rights, options, warrants or convertible or
exchangeable Securities (and the shares of Common
Stock issuable upon the exercise of such rights,
options, warrants or convertible or exchangeable
Securities), provided that (1) such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities are issued in connection
with one or more private placements of equity
Securities of the Company effected on or prior to
July 15, 1996, (2) the total aggregate consideration
paid in cash in respect of such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities is not more than
$8,000,000, (3) all such shares of Common Stock
together with all shares of Common Stock issuable
upon the exercise of any of such rights, options,
warrants or convertible or exchangeable Securities
shall not, in the aggregate, exceed 12% of Fully
Diluted Outstanding Common Stock, determined as of
April 16, 1996, and (4) the sale of such shares of
Common Stock and/or rights, options, warrants or
convertible or exchangeable Securities is done on an
arm's-length basis and the setting of the exercise,
strike or conversion prices in respect of such
rights, options, warrants or convertible or
exchangeable Securities is done on an arm's-length
basis;
"(F) warrants issued on or prior to
August 20, 1997, to any holder of the senior or
subordinated indebtedness, warrants issued on or
after the date hereof pursuant to provisions
comparable to Section 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to
which such senior or subordinated indebtedness is
issued and shares of Common Stock issuable upon the
exercise of any such Warrants; and
"(G) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Sections 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof and with respect to which
additional Warrants have been issued in accordance
with any of such Sections."
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<PAGE> 4
2.4 AMENDMENT TO SECTION 4.1(E). Section 4.1(e) of the Existing
Warrant Agreement is hereby amended by adding the following sentence at the end
of such section"
"For purposes of determining the number of shares subject to any
Warrant with respect to any adjustments made pursuant to this Section
4.1(e), the Company shall make the adjustments provided for in Section
4.4 in respect of any issuances of Employee Options or Director
Options that occurred during the period from the date of the last
determination pursuant to such Section to the date immediately prior
to such consolidation, merger, sale or conveyance."
2.5 AMENDMENT TO SECTION 4.1(I). Section 4.1(i) of the Existing
Warrant Agreement is hereby amended and restated in its entirety to read as
follows:
"(i) EXPIRATION OF RIGHTS, OPTIONS, ETC.
"(i) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges referred to
above in this Section 4.1 without the exercise thereof, the
Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be
readjusted and shall thereafter be such as such Purchase Price
and such number of shares of Common Stock would have been had
they been originally adjusted (or had the original adjustment
not been required, as the case may be) as if:
"(A) the only shares of Common Stock so
issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such
rights, options, warrants or conversion or exchange
privileges; and
"(B) such shares of Common Stock, if any,
were issued or sold for the consideration actually
received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by
the Company for the issuance, sale or grant of all of
such rights, options, warrants or conversion or
exchange privileges whether or not exercised;
"provided that no such readjustment shall have the effect of
increasing the Purchase Price by an amount in excess of the
amount of the reduction initially made in respect of the
issuance, sale, or grant of such rights, options, warrants or
conversion or exchange privileges.
"(ii) In the event that during any calendar quarter
after August 20, 1997, any Employee Option, Director Option or
portion thereof expires without the exercise thereof and the
issuance of any such Employee Option or Director Option had
resulted in the issuance of Additional Warrants pursuant to
Section 4.4(a) hereof, the number of shares of Common Stock
purchasable upon the exercise of the Additional Warrants shall
be reduced as of the first day of the next succeeding calendar
quarter by the number of shares of Common Stock
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<PAGE> 5
subject to such terminated or expired Employee Option,
Director Option or portion thereof."
2.6 AMENDMENT TO SECTION 4. Section 4 of the Existing Warrant
Agreement is hereby amended by adding a new Section 4.4 at the end thereof,
such Section 4.4 to read in its entirety as follows:
"4.4 ISSUANCE OF ADDITIONAL WARRANTS.
"(a) GRANT OF EMPLOYEE OPTIONS AND DIRECTOR OPTIONS. In
the event that, during any calendar quarter after August 20, 1997:
"(i) Employee Options (other than Employee Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Employee Options
plus all other Employee Options issued on or prior to the date
of such issuance, other than Terminated Employee Options,
exceeds the then effective Employee Option Threshold; or
"(ii) Director Options (other than Director Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Director Options
plus all other Director Options issued on or prior to the date
of such issuance, other than Terminated Director Options,
exceeds the Director Option Threshold;
"then the Company shall, as of the first day of the next succeeding
calendar quarter, issue Additional Warrants to the holders of the
Warrants on a pro rata basis covering that number of shares equal to
the product of the Dilution Percentage multiplied by the number of the
Employee Options or Director Options, as the case may be, issued
during such period (or, with respect to the first calendar quarter in
which the number of Employee Options or Director Options issued during
such quarter plus the aggregate number of Employee Options and
Director Options, as the case may be, issued on or prior to the date
of such issuance other than Terminated Employee Options or Terminated
Director Options, as the case may be, exceeds the then effective
Employee Option Threshold or the Director Option Threshold, as the
case may be, the amount such excess).
"(b) ISSUANCES IN CONNECTION WITH CONVERSION OF SENIOR
DEBT. In the event that, on or after August 20, 1997:
"(i) all or any portion of the principal amount of
the Senior Debt is converted into shares of Common Stock, or
Securities convertible into or exchangeable for shares of
Common Stock; and
"(ii) the Post-Conversion Market Price per share of
Common Stock following such conversion is less than the
Measurement Price per share of Common Stock prior to such
conversion;
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<PAGE> 6
"the Company shall issue Additional Warrants to the holders of
the Warrants on a pro rata basis covering that number of
shares equal to:
"(A) the product of:
"(1) the difference between the
Post-Conversion Market Price per share of Common
Stock and the Measurement Price per share of Common
Stock; multiplied by
"(2) the total number of shares of Common
Stock issuable upon exercise of the Warrants held by
such holders immediately prior to such issuance;
"divided by
"(B) the Post-Conversion Market Price per share of
Common Stock;
"provided, however, that in no event shall the number of Warrants
issued pursuant to this Section 4.4(b) as a result of any single
issuance of shares of Common Stock, or Securities convertible into or
exchangeable for shares of Common Stock to the holders of the Senior
Debt exceed the product of:
"(y) the aggregate number of shares of Common
Stock issued or issuable pursuant to such convertible or
exchangeable Securities to the holders of the Senior Debt
Warrants with respect to such single issuance; multiplied by
"(z) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such issuance and the
denominator of which is the Fully Diluted Outstanding Common
Stock;
"and provided further that no Warrants shall be issued pursuant to
this provision in connection with any transaction in which both the
holders of the Senior Debt convert all or any portion of the aggregate
principal amount of the Senior Debt into shares of Common Stock, or
Securities convertible into or exchangeable for shares of Common
Stock, and the holders of the Warrants convert all or a portion of the
aggregate principal amount of indebtedness then outstanding under the
Notes into shares of Common Stock or Securities convertible into or
exchangeable for shares of Common Stock. The Initial Purchase Price
of such Warrants shall be the Post-Conversion Market Price per share.
"(c) ISSUANCE OF OTHER SECURITIES TO HOLDERS OF SENIOR
DEBT. In the event that, on or after August 20, 1997, rights, options
or warrants containing the right to subscribe for or purchase shares
of Common Stock are issued to the holders of the Senior Debt Warrants
(other than in a transaction described in Section 4.1(d) hereof), the
Company shall issue Additional Warrants to the holders of the Warrants
on a pro rata basis covering that number of shares equal to the
product of:
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<PAGE> 7
"(i) the aggregate number of shares of Common
Stock underlying the rights, options or warrants issued to the
holders of the Senior Debt Warrants; multiplied by
"(ii) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such issuance are exercisable
and the denominator of which is the Fully Diluted Outstanding
Common Stock;
"and provided further that no Warrants shall be issued pursuant to
this provision in connection with any transaction in which both the
holders of the Senior Debt Warrants and the holders of the Warrants
are issued shares of Common Stock or rights, options or warrants
containing the right to subscribe for or purchase shares of Common
Stock pursuant to a negotiated transaction as opposed to pursuant to
this Section 4.4(c). The Initial Purchase Price of such Warrants
shall be the per share exercise price of the rights, options or
warrants in respect of which such Additional Warrants are being
issued.
"(d) EXCLUDED ISSUANCES OF SECURITIES TO HOLDERS OF SENIOR
DEBT WARRANTS. Notwithstanding the foregoing, no Warrants shall be
issued pursuant to Sections 4.4(a), 4.4(b) or 4.4(c) hereof as result
of any issuance of additional Warrants to the holders of the Senior
Debt Warrants pursuant to provisions comparable to Section 4.4(a),
Section 4.4(b) or Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to which such Senior
Debt Warrants are issued."
2.7 ADDITIONS TO SECTION 5.1. The following additional defined
terms shall be added to Section 5.1 of the Existing Warrant Agreement, each in
its appropriate alphabetical position:
"ADDITIONAL WARRANTS -- means any additional Warrants issued
pursuant to the terms of Section 4.4 hereof."
"AVERAGE CLOSING BID PRICE -- means, with respect to any
period and any class of Common Stock, the per share price of such
class determined as follows:
"(a) the average daily closing bid prices of such
class of Common Stock on each trading day during such period,
as officially reported on the principal national securities
exchange on which such class of Common Stock is then listed or
admitted to trading; or
"(b) if such class of Common Stock is not then
listed or admitted to trading on any national securities
exchange, the average of the last reported bid prices for each
trading day during such period of such class of Common Stock."
"CLOSING BID PRICE - means, with respect to any date and any
class of Common Stock, the per share price determined as follows:
7
<PAGE> 8
"(a) the closing bid prices on such date, as
officially reported on the principal national securities
exchange on which such class of Common Stock is then listed or
admitted to trading; or
"(b) if such class of Common Stock is not then
listed or admitted to trading on any national securities
exchange, the last reported bid price of such class of Common
Stock on such date."
"DILUTION PERCENTAGE -- means the percentage interest in the
fully-diluted equity of the Company represented by all Warrants on
August 21, 1997; provided however, that in the event that any of the
Warrants are exercised after August 20, 1997, the Dilution Percentage
shall be reduced by multiplying the then-effective Dilution Percentage
by a fraction, the numerator of which is the number of Warrants
remaining immediately following such exercise and the denominator of
which is the number of Warrants outstanding immediately prior to such
exercise."
"DIRECTOR OPTIONS -- means rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock issued to any
directors of the Company or any of its Subsidiaries who were members
of the Board of Directors of the Company or any of its Subsidiaries as
of August 20, 1997; provided, however, that:
"(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire
shares of the Common Stock in a bona fide arm's-length
transaction for consideration at least equal to the Reference
Price;
"(b) any rights, options, warrants or convertible
or exchangeable securities purchased from Persons other than
the Company or its Subsidiaries to acquire shares of Common
Stock; and
"(c) any shares of the Series B Preferred Stock
held by any employees, officers or directors of the Company or
any of its Subsidiaries on the August 20, 1997;
"shall not constitute Director Options."
"DIRECTOR OPTION THRESHOLD -- means 1,460,424 shares, as such
number may be adjusted from time to time to reflect any subdivision or
combination of shares of Common Stock."
"EMPLOYEE OPTIONS -- means rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock issued to any
employees, officers or directors of Company or any of its
Subsidiaries, including, without limitation, Employee Options issued
to Stephen Hopkins as consideration for his services as President and
Chief Executive Officer of the Company; provided, however, that:
8
<PAGE> 9
"(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire
shares of Common Stock in a bona fide arm's-length transaction
for consideration at least equal to the Reference Price;
"(b) any rights, options, warrants or convertible
or exchangeable securities acquired from Persons other than
the Company or its Subsidiaries to acquire shares of Common
Stock; and
"(c) any shares of the Series B Preferred Stock
held by any employees, officers or directors of the Company or
any of its Subsidiaries on August 20, 1997;
"shall not constitute Employee Options."
"EMPLOYEE OPTION THRESHOLD -- means 7,302,121 shares, as such
number may be adjusted from time to time to reflect any subdivision or
combination of shares of Common Stock; provided, however, that in the
event that Additional Warrants are issued pursuant to Section 4.4(a)
during any calendar quarter after August 20, 1997, the Employee Option
Threshold shall be increased by the number of Director Options issued
during the immediately preceding calendar quarter (or, with respect to
the first calendar quarter during which the number of Director Options
exceeds the Director Option Threshold, the amount of such excess)."
"MEASUREMENT PRICE - means, with respect to any date and any
class of Common Stock, the average of the daily Closing Bid Prices of
such class of Common Stock for five (5) consecutive trading days prior
to the public announcement of any conversion of any Senior Debt;
provided, however, that the date on which such public announcement is
made shall not be considered a trading day."
"POST-CONVERSION MARKET PRICE - means, with respect to any
date and any class of Common Stock, the average of the daily Closing
Bid Prices of such class of Common Stock for five (5) consecutive
trading days after the filing of a Current Report on Form 8-K with
respect to any conversion of any Senior Debt; provided, however, that
the date on which such Current Report on Form 8-K is filed shall not
be considered a trading day."
"SENIOR DEBT -- has the meaning provided in the Note Purchase
Agreement."
"SENIOR DEBT WARRANTS -- means all warrants initially issued
to the holders of the Senior Debt and any additional warrants issued
pursuant to any agreement between the Company and the holders of the
Senior Debt pursuant to which such warrants were issued."
"SERIES B PREFERRED STOCK -- means the Series B Preferred
Stock of the Company as provided for in its certificate of
incorporation."
9
<PAGE> 10
"TERMINATED DIRECTOR OPTIONS -- means any Director Options
issued on or prior to the August 20, 1997 that have been exercised or
have terminated or expired prior to the August 20, 1997."
"TERMINATED EMPLOYEE OPTIONS -- means any Employee Options
issued on or prior to the August 20, 1997 that have been exercised or
have terminated or expired prior to the August 20, 1997."
2.8 AMENDMENTS TO SECTION 5.1. Each of the following definitions
shall amend and restate in its entirety to corresponding definition contained
in the Existing Warrant Agreement.
"INITIAL PURCHASE PRICE -- means:
"(a) with respect to the Warrants issued on the
date hereof, Fifty-Nine Cents ($0.59) per share;
"(b) with respect to any Warrants issued pursuant
to Section 4.4(a), the Average Closing Bid Price of a share of
Common Stock during the calendar quarter in respect of which
the adjustment is being made;
"(c) with respect to any Warrants issued pursuant
to Section 4.4(b), the Post-Conversion Market Price per share;
and
"(d) with respect to any Warrants issued pursuant
to Section 4.4(c) hereof, the per share exercise price of the
rights, options or warrants in respect of which the Additional
Warrants are being issued."
"WARRANTS -- all Warrants issued under this Agreement,
including, without limitation, all Additional Warrants."
2.9 AMENDMENT TO FORM OF WARRANT. For the avoidance of doubt, any
Warrant Certificates issued evidencing Additional Warrants issued pursuant to
Section 4.4 shall bear the actual Initial Purchase Price thereof in the first
paragraph of such Warrant Certificate in lieu of the price reflected in the
form of Warrant contained in Exhibit A to the Existing Warrant Agreement.
SECTION 3. MISCELLANEOUS.
3.1 GOVERNING LAW.
This Amendment shall be governed by, and construed and enforced in
accordance with, internal New York law.
3.2 DUPLICATE ORIGINALS.
Two or more duplicate originals of this Amendment may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same
10
<PAGE> 11
instrument. This Amendment may be executed in one or more counterparts and
shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which, collectively, show
execution by each party hereto shall constitute one duplicate original.
3.3 EFFECT OF THIS AMENDMENT.
Except as specifically provided in this Amendment, no terms or
provisions of the Existing Warrant Agreement have been modified or changed by
this Amendment and the terms and provisions of the Existing Warrant Agreement,
as amended hereby, shall continue in full force and effect. This Amendment and
the amendments contained herein shall have and be in effect on and after the
date hereof.
3.4 SECTION HEADINGS.
The titles of the sections hereof appear as a matter of convenience
only, do not constitute a part of this Amendment and shall not affect the
construction hereof.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed on their behalf by a duly authorized officer or agent thereof, as
the case may be, as of the date first above written.
THE CERPLEX GROUP, INC.
By_______________________________
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By_______________________________
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By_______________________________
Name:
Title:
NORTH ATLANTIC SMALLER COMPANIES
INVESTMENT TRUST PLC
By_______________________________
Name:
Title:
<PAGE> 13
SCHEDULE A
Schedule of Holders
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
North Atlantic Smaller Companies Trust PLC
c/o J.O. Hambro & Co., Ltd.
10 Park Place
London, England SW1A1LP
Schedule A-1
<PAGE> 1
EXHIBIT 4.35
THIRD AMENDMENT TO WARRANT AGREEMENT
THIS THIRD AMENDMENT TO WARRANT AGREEMENT (this "Amendment") is made
as of the 20th day of August, 1997, by and among The Cerplex Group, Inc., a
Delaware corporation (the "COMPANY") and each of the holders of warrants listed
on Schedule A hereto, each of which is herein referred to as a "HOLDER" and
collectively as the "HOLDERS".
RECITALS:
A. The Company and the Holders entered into a Warrant Agreement
dated as of November 19, 1993, as amended by a First Amendment to Warrant
Agreement dated as of April 15, 1996 and a Second Amendment to Warrant
Agreement dated as of April 9, 1997 (as in effect prior to the effectiveness of
this Amendment, the "EXISTING WARRANT AGREEMENT").
B. The Holders are the holders of all of the Warrants (as such
term is defined in the Existing Warrant Agreement) outstanding as of the date
hereof.
C. The Company has requested that the Existing Warrant Agreement
be amended, as more particularly provided herein, and the Holders have agreed
to amend the Existing Warrant Agreement as set forth herein.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS.
As used in this Amendment, the following terms have the respective
meanings specified below:
"AMENDMENT, THIS" -- means this Third Amendment to Warrant Agreement.
"COMPANY" -- the introductory sentence.
"EXISTING WARRANT AGREEMENT" -- Recital A.
"HOLDERS" -- the introductory sentence.
SECTION 2. AMENDMENTS TO EXISTING WARRANT AGREEMENT.
2.1 AMENDMENT TO SECTION 3.1(B). Section 3.1(b) of the Existing
Warrant Agreement is hereby amended and restated in its entirety to read as
follows:
"(b) ENFORCEABILITY OF OBLIGATIONS. This
Agreement and the Warrant Certificates issued on the date hereof have
been, and any Warrants issued after the date hereof will be, duly
authorized, executed and delivered by the Company. This Agreement,
the Warrant Certificates and the Warrants constitute, or upon
execution
<PAGE> 2
and delivery will constitute, the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms,
except:
"(i) as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally; and
"(ii) as such enforceability may be subject to the
availability of equitable remedies.
"The holders of the Warrants are entitled to the benefits of this Agreement."
2.2 AMENDMENT TO SECTION 4.1(d)(I). The introductory paragraph to
Section 4.1(d)(i) of the Existing Warrant Agreement is hereby amended and
restated in its entirety to read as follows:
"(d) ISSUANCES OF COMMON STOCK AND OTHER
SECURITIES.
"(i) In the event that the Company shall issue or
sell shares of Common Stock, or rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock (excluding
Excluded Securities, as defined in Section 4.1(d)(ii) hereof)
at a price per share of Common Stock lower than the Reference
Price in effect on the date (the "ADJUSTMENT DATE") of such
issuance or sale, then the Purchase Price in effect
immediately after the Adjustment Date shall be determined by
multiplying the Purchase Price in effect immediately prior to
such Adjustment Date by the quotient of:"
The remainder of Section 4.1(d)(i) of the Existing Warrant Agreement shall
remain in effect without amendment.
2.3 AMENDMENT TO SECTION 4.1(d)(II). Section 4.1(d)(ii) of the
Existing Warrant Agreement is hereby amended and restated in its entirety to
read as follows:
"(ii) "EXCLUDED SECURITIES" shall mean and include:
"(A) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Section 4.1(a), Section 4.1(b), Section
4.1(c) or Section 4.1(e) hereof and with respect to
which an adjustment to the Purchase Price has been
made in accordance with any of such Sections;
"(B) shares of Common Stock issuable upon
exercise of the Warrants (including, without
limitation, the Additional Warrants);
"(C) shares of Common Stock issuable upon
exercise of rights, options or warrants or conversion
or exchange of convertible or
2
<PAGE> 3
exchangeable Securities issued or sold under
circumstances which caused an adjustment pursuant
to this Section 4.1(d);
"(D) rights to acquire shares of Common
Stock, and shares of Common Stock issuable upon
exercise of such rights, issued to employees of the
Company and it Subsidiaries pursuant to any employee
stock purchase plan maintained by the Company or any
of its Subsidiaries, provided that any such rights
issued pursuant to any such plan and any shares of
Common Stock issuable upon the exercise thereof
which, in the aggregate, exceed, at the time of the
issuance thereof, two percent (2%) of the Fully
Diluted Outstanding Common Stock, determined at such
time, shall not constitute Excluded Securities;
"(E) shares of Common Stock and/or
rights, options, warrants or convertible or
exchangeable Securities (and the shares of Common
Stock issuable upon the exercise of such rights,
options, warrants or convertible or exchangeable
Securities), provided that (1) such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities are issued in connection
with one or more private placements of equity
Securities of the Company effected on or prior to
July 15, 1996, (2) the total aggregate consideration
paid in cash in respect of such shares of Common
Stock and/or rights, options, warrants or convertible
or exchangeable Securities is not more than
$8,000,000, (3) all such shares of Common Stock
together with all shares of Common Stock issuable
upon the exercise of any of such rights, options,
warrants or convertible or exchangeable Securities
shall not, in the aggregate, exceed 12% of Fully
Diluted Outstanding Common Stock, determined as of
April 16, 1996, and (4) the sale of such shares of
Common Stock and/or rights, options, warrants or
convertible or exchangeable Securities is done on an
arm's-length basis and the setting of the exercise,
strike or conversion prices in respect of such
rights, options, warrants or convertible or
exchangeable Securities is done on an arm's-length
basis;
"(F) warrants issued on or prior to
August 20, 1997, to any holder of the senior or
subordinated indebtedness, warrants issued on or
after the date hereof pursuant to provisions
comparable to Section 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to
which such senior or subordinated indebtedness is
issued and shares of Common Stock issuable upon the
exercise of any such Warrants; and
"(G) shares of Common Stock, rights,
options, warrants or convertible or exchangeable
Securities issued in any of the transactions
described in Sections 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof and with respect to which
additional Warrants have been issued in accordance
with any of such Sections."
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<PAGE> 4
2.4 AMENDMENT TO SECTION 4.1(e). Section 4.1(e) of the Existing
Warrant Agreement is hereby amended by adding the following sentence at the end
of such section"
"For purposes of determining the number of shares subject to any
Warrant with respect to any adjustments made pursuant to this Section
4.1(e), the Company shall make the adjustments provided for in Section
4.4 in respect of any issuances of Employee Options or Director
Options that occurred during the period from the date of the last
determination pursuant to such Section to the date immediately prior
to such consolidation, merger, sale or conveyance."
2.5 AMENDMENT TO SECTION 4.1(i). Section 4.1(i) of the Existing
Warrant Agreement is hereby amended and restated in its entirety to read as
follows:
"(i) EXPIRATION OF RIGHTS, OPTIONS, ETC.
"(i) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges referred to
above in this Section 4.1 without the exercise thereof, the
Purchase Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be
readjusted and shall thereafter be such as such Purchase Price
and such number of shares of Common Stock would have been had
they been originally adjusted (or had the original adjustment
not been required, as the case may be) as if:
"(A) the only shares of Common Stock so
issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such
rights, options, warrants or conversion or exchange
privileges; and
"(B) such shares of Common Stock, if any,
were issued or sold for the consideration actually
received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by
the Company for the issuance, sale or grant of all of
such rights, options, warrants or conversion or
exchange privileges whether or not exercised;
"provided that no such readjustment shall have the effect of
increasing the Purchase Price by an amount in excess of the
amount of the reduction initially made in respect of the
issuance, sale, or grant of such rights, options, warrants or
conversion or exchange privileges.
"(ii) In the event that during any calendar quarter
after August 20, 1997, any Employee Option, Director Option or
portion thereof expires without the exercise thereof and the
issuance of any such Employee Option or Director Option had
resulted in the issuance of Additional Warrants pursuant to
Section 4.4(a) hereof, the number of shares of Common Stock
purchasable upon the exercise of the Additional Warrants shall
be reduced as of the first day of the next succeeding calendar
quarter by the number of shares of Common Stock
4
<PAGE> 5
subject to such terminated or expired Employee Option,
Director Option or portion thereof."
2.6 AMENDMENT TO SECTION 4. Section 4 of the Existing Warrant
Agreement is hereby amended by adding a new Section 4.4 at the end thereof,
such Section 4.4 to read in its entirety as follows:
"4.4 ISSUANCE OF ADDITIONAL WARRANTS.
"(a) GRANT OF EMPLOYEE OPTIONS AND DIRECTOR OPTIONS. In
the event that, during any calendar quarter after August 20, 1997:
"(i) Employee Options (other than Employee Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Employee Options
plus all other Employee Options issued on or prior to the date
of such issuance, other than Terminated Employee Options,
exceeds the then effective Employee Option Threshold; or
"(ii) Director Options (other than Director Options
issued in a transaction described in Section 4.1(d) hereof)
are issued and the aggregate number of such Director Options
plus all other Director Options issued on or prior to the date
of such issuance, other than Terminated Director Options,
exceeds the Director Option Threshold;
"then the Company shall, as of the first day of the next succeeding
calendar quarter, issue Additional Warrants to the holders of the
Warrants on a pro rata basis covering that number of shares equal to
the product of the Dilution Percentage multiplied by the number of the
Employee Options or Director Options, as the case may be, issued
during such period (or, with respect to the first calendar quarter in
which the number of Employee Options or Director Options issued during
such quarter plus the aggregate number of Employee Options and
Director Options, as the case may be, issued on or prior to the date
of such issuance other than Terminated Employee Options or Terminated
Director Options, as the case may be, exceeds the then effective
Employee Option Threshold or the Director Option Threshold, as the
case may be, the amount such excess).
"(b) ISSUANCES IN CONNECTION WITH CONVERSION OF SENIOR
DEBT. In the event that, on or after August 20, 1997:
"(i) all or any portion of the principal amount of
the Senior Debt is converted into shares of Common Stock, or
Securities convertible into or exchangeable for shares of
Common Stock; and
"(ii) the Post-Conversion Market Price per share of
Common Stock following such conversion is less than the
Measurement Price per share of Common Stock prior to such
conversion;
5
<PAGE> 6
"the Company shall issue Additional Warrants to the holders of
the Warrants on a pro rata basis covering that number of
shares equal to:
"(A) the product of:
"(1) the difference between the
Post-Conversion Market Price per share of Common
Stock and the Measurement Price per share of Common
Stock; multiplied by
"(2) the total number of shares of Common
Stock issuable upon exercise of the Warrants held by
such holders immediately prior to such issuance;
"divided by
"(B) the Post-Conversion Market Price per share of
Common Stock;
"provided, however, that in no event shall the number of Warrants
issued pursuant to this Section 4.4(b) as a result of any single
issuance of shares of Common Stock, or Securities convertible into or
exchangeable for shares of Common Stock to the holders of the Senior
Debt exceed the product of:
"(y) the aggregate number of shares of Common
Stock issued or issuable pursuant to such convertible or
exchangeable Securities to the holders of the Senior Debt
Warrants with respect to such single issuance; multiplied by
"(z) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such issuance and the
denominator of which is the Fully Diluted Outstanding Common
Stock;
"and provided further that no Warrants shall be issued pursuant to
this provision in connection with any transaction in which both the
holders of the Senior Debt convert all or any portion of the aggregate
principal amount of the Senior Debt into shares of Common Stock, or
Securities convertible into or exchangeable for shares of Common
Stock, and the holders of the Warrants convert all or a portion of the
aggregate principal amount of indebtedness then outstanding under the
Notes into shares of Common Stock or Securities convertible into or
exchangeable for shares of Common Stock. The Initial Purchase Price
of such Warrants shall be the Post-Conversion Market Price per share.
"(c) ISSUANCE OF OTHER SECURITIES TO HOLDERS OF SENIOR
DEBT. In the event that, on or after August 20, 1997, rights, options
or warrants containing the right to subscribe for or purchase shares
of Common Stock are issued to the holders of the Senior Debt Warrants
(other than in a transaction described in Section 4.1(d) hereof), the
Company shall issue Additional Warrants to the holders of the Warrants
on a pro rata basis covering that number of shares equal to the
product of:
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<PAGE> 7
"(i) the aggregate number of shares of Common
Stock underlying the rights, options or warrants issued to the
holders of the Senior Debt Warrants; multiplied by
"(ii) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants
outstanding immediately prior to such issuance are exercisable
and the denominator of which is the Fully Diluted Outstanding
Common Stock;
"and provided further that no Warrants shall be issued pursuant to
this provision in connection with any transaction in which both the
holders of the Senior Debt Warrants and the holders of the Warrants
are issued shares of Common Stock or rights, options or warrants
containing the right to subscribe for or purchase shares of Common
Stock pursuant to a negotiated transaction as opposed to pursuant to
this Section 4.4(c). The Initial Purchase Price of such Warrants
shall be the per share exercise price of the rights, options or
warrants in respect of which such Additional Warrants are being
issued.
"(d) EXCLUDED ISSUANCES OF SECURITIES TO HOLDERS OF SENIOR
DEBT WARRANTS. Notwithstanding the foregoing, no Warrants shall be
issued pursuant to Sections 4.4(a), 4.4(b) or 4.4(c) hereof as result
of any issuance of additional Warrants to the holders of the Senior
Debt Warrants pursuant to provisions comparable to Section 4.4(a),
Section 4.4(b) or Section 4.4(c) hereof contained in any agreement
between the Company and such holders pursuant to which such Senior
Debt Warrants are issued."
2.7 ADDITIONS TO SECTION 5.1. The following additional defined
terms shall be added to Section 5.1 of the Existing Warrant Agreement, each in
its appropriate alphabetical position:
"ADDITIONAL WARRANTS -- means any additional Warrants issued
pursuant to the terms of Section 4.4 hereof."
"AVERAGE CLOSING BID PRICE -- means, with respect to any
period and any class of Common Stock, the per share price of such
class determined as follows:
"(a) the average daily closing bid prices of such
class of Common Stock on each trading day during such period,
as officially reported on the principal national securities
exchange on which such class of Common Stock is then listed or
admitted to trading; or
"(b) if such class of Common Stock is not then
listed or admitted to trading on any national securities
exchange, the average of the last reported bid prices for each
trading day during such period of such class of Common Stock."
7
<PAGE> 8
"CLOSING BID PRICE - means, with respect to any date and any
class of Common Stock, the per share price determined as follows:
"(a) the closing bid prices on such date, as
officially reported on the principal national securities
exchange on which such class of Common Stock is then listed or
admitted to trading; or
"(b) if such class of Common Stock is not then
listed or admitted to trading on any national securities
exchange, the last reported bid price of such class of Common
Stock on such date."
"DILUTION PERCENTAGE -- means the percentage interest in the
fully-diluted equity of the Company represented by all Warrants on
August 21, 1997; provided however, that in the event that any of the
Warrants are exercised after August 20, 1997, the Dilution Percentage
shall be reduced by multiplying the then-effective Dilution Percentage
by a fraction, the numerator of which is the number of Warrants
remaining immediately following such exercise and the denominator of
which is the number of Warrants outstanding immediately prior to such
exercise."
"DIRECTOR OPTIONS -- means rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock issued to any
directors of the Company or any of its Subsidiaries who were members
of the Board of Directors of the Company or any of its Subsidiaries as
of August 20, 1997; provided, however, that:
"(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire
shares of the Common Stock in a bona fide arm's-length
transaction for consideration at least equal to the Reference
Price;
"(b) any rights, options, warrants or convertible
or exchangeable securities purchased from Persons other than
the Company or its Subsidiaries to acquire shares of Common
Stock; and
"(c) any shares of the Series B Preferred Stock
held by any employees, officers or directors of the Company or
any of its Subsidiaries on the August 20, 1997;
"shall not constitute Director Options."
"DIRECTOR OPTION THRESHOLD -- means 1,460,424 shares, as such
number may be adjusted from time to time to reflect any subdivision or
combination of shares of Common Stock."
"EMPLOYEE OPTIONS -- means rights, options, warrants or
convertible or exchangeable Securities containing the right to
subscribe for or purchase shares of Common Stock issued to any
employees, officers or directors of Company or any of
8
<PAGE> 9
its Subsidiaries, including, without limitation, Employee Options
issued to Stephen Hopkins as consideration for his services as
President and Chief Executive Officer of the Company; provided,
however, that:
"(a) rights, warrants, options or convertible or
exchangeable Securities purchased from the Company to acquire
shares of Common Stock in a bona fide arm's-length transaction
for consideration at least equal to the Reference Price;
"(b) any rights, options, warrants or convertible
or exchangeable securities acquired from Persons other than
the Company or its Subsidiaries to acquire shares of Common
Stock; and
"(c) any shares of the Series B Preferred Stock
held by any employees, officers or directors of the Company or
any of its Subsidiaries on August 20, 1997;
"shall not constitute Employee Options."
"EMPLOYEE OPTION THRESHOLD -- means 7,302,121 shares, as such
number may be adjusted from time to time to reflect any subdivision or
combination of shares of Common Stock; provided, however, that in the
event that Additional Warrants are issued pursuant to Section 4.4(a)
during any calendar quarter after August 20, 1997, the Employee Option
Threshold shall be increased by the number of Director Options issued
during the immediately preceding calendar quarter (or, with respect to
the first calendar quarter during which the number of Director Options
exceeds the Director Option Threshold, the amount of such excess)."
"MEASUREMENT PRICE - means, with respect to any date and any
class of Common Stock, the average of the daily Closing Bid Prices of
such class of Common Stock for five (5) consecutive trading days prior
to the public announcement of any conversion of any Senior Debt;
provided, however, that the date on which such public announcement is
made shall not be considered a trading day."
"POST-CONVERSION MARKET PRICE - means, with respect to any
date and any class of Common Stock, the average of the daily Closing
Bid Prices of such class of Common Stock for five (5) consecutive
trading days after the filing of a Current Report on Form 8-K with
respect to any conversion of any Senior Debt; provided, however, that
the date on which such Current Report on Form 8-K is filed shall not
be considered a trading day."
"SENIOR DEBT -- has the meaning provided in the Note Purchase
Agreement."
"SENIOR DEBT WARRANTS -- means all warrants initially issued
to the holders of the Senior Debt and any additional warrants issued
pursuant to any agreement between the Company and the holders of the
Senior Debt pursuant to which such warrants were issued."
9
<PAGE> 10
"SERIES B PREFERRED STOCK -- means the Series B Preferred
Stock of the Company as provided for in its certificate of
incorporation."
"TERMINATED DIRECTOR OPTIONS -- means any Director Options
issued on or prior to the August 20, 1997 that have been exercised or
have terminated or expired prior to the August 20, 1997."
"TERMINATED EMPLOYEE OPTIONS -- means any Employee Options
issued on or prior to the August 20, 1997 that have been exercised or
have terminated or expired prior to the August 20, 1997."
2.8 AMENDMENTS TO SECTION 5.1. Each of the following definitions
shall amend and restate in its entirety to corresponding definition contained
in the Existing Warrant Agreement.
"INITIAL PURCHASE PRICE -- means:
"(a) with respect to the Warrants issued on the
date hereof, Fifty-Nine Cents ($0.59) per share;
"(b) with respect to any Warrants issued pursuant
to Section 4.4(a), the Average Closing Bid Price of a share of
Common Stock during the calendar quarter in respect of which
the adjustment is being made;
"(c) with respect to any Warrants issued pursuant
to Section 4.4(b), the Post-Conversion Market Price per share;
and
"(d) with respect to any Warrants issued pursuant
to Section 4.4(c) hereof, the per share exercise price of the
rights, options or warrants in respect of which the Additional
Warrants are being issued."
"WARRANTS -- all Warrants issued under this Agreement,
including, without limitation, all Additional Warrants."
2.9 AMENDMENT TO FORM OF WARRANT. For the avoidance of doubt, any
Warrant Certificates issued evidencing Additional Warrants issued pursuant to
Section 4.4 shall bear the actual Initial Purchase Price thereof in the first
paragraph of such Warrant Certificate in lieu of the price reflected in the
form of Warrant contained in Exhibit A to the Existing Warrant Agreement.
SECTION 3. MISCELLANEOUS.
3.1 GOVERNING LAW.
This Amendment shall be governed by, and construed and enforced in
accordance with, internal New York law.
10
<PAGE> 11
3.2 DUPLICATE ORIGINALS.
Two or more duplicate originals of this Amendment may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Amendment may be executed in one
or more counterparts and shall be effective when at least one counterpart shall
have been executed by each party hereto, and each set of counterparts which,
collectively, show execution by each party hereto shall constitute one
duplicate original.
3.3 EFFECT OF THIS AMENDMENT.
Except as specifically provided in this Amendment, no terms or
provisions of the Existing Warrant Agreement have been modified or changed by
this Amendment and the terms and provisions of the Existing Warrant Agreement,
as amended hereby, shall continue in full force and effect. This Amendment and
the amendments contained herein shall have and be in effect on and after the
date hereof.
3.4 SECTION HEADINGS.
The titles of the sections hereof appear as a matter of convenience
only, do not constitute a part of this Amendment and shall not affect the
construction hereof.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed on their behalf by a duly authorized officer or agent thereof, as
the case may be, as of the date first above written.
THE CERPLEX GROUP, INC.
By________________________________
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By________________________________
Name:
Title:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By________________________________
Name:
Title:
NORTH ATLANTIC SMALLER COMPANIES
INVESTMENT TRUST PLC
By________________________________
Name:
Title:
<PAGE> 13
SCHEDULE A
Schedule of Holders
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
North Atlantic Smaller Companies Trust PLC
c/o J.O. Hambro & Co., Ltd.
10 Park Place
London, England SW1A1LP
13
<PAGE> 1
EXHIBIT 4.36
EXECUTION COPY
THE CERPLEX GROUP, INC.
---------------------
WARRANT AGREEMENT
---------------------
DATED AS OF AUGUST 20, 1997
WARRANTS TO PURCHASE
SHARES OF COMMON STOCK
<PAGE> 2
TABLE OF CONTENTS
(Not a Part of the Agreement)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
1. FORM, EXECUTION AND TRANSFER OF WARRANT
CERTIFICATES................................................................................ 2
1.1 Form of Warrant Certificates.................................................... 2
1.2 Execution of Warrant Certificates; Registration Books etc....................... 2
1.3 Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Lost or Stolen Warrant Certificates............................... 4
1.4 Subsequent Issuance of Warrant Certificates..................................... 4
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE............................................ 5
2.1 Exercise of Warrants............................................................ 5
2.2 Issuance of Common Stock........................................................ 5
2.3 Unexercised Warrants............................................................ 6
2.4 Cancellation and Destruction of Warrant Certificates............................ 6
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY................................................ 6
3.1 Representations and Warranties.................................................. 6
3.2 Reservation of Common Stock..................................................... 7
3.3 Common Stock to be Duly Authorized and Issued, Fully Paid and
Nonassessable................................................................... 7
3.4 Transfer Taxes.................................................................. 7
3.5 Common Stock Record Date........................................................ 8
3.6 Financial and Business Information.............................................. 8
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES
OF COMMON STOCK ISSUABLE PER WARRANT........................................................ 10
4.1 Mechanical Adjustments.......................................................... 10
4.2 Fractional Shares............................................................... 21
4.3 Special Agreements of the Company............................................... 21
4.4 Issuance of Additional Warrants................................................. 22
5. INTERPRETATION OF THIS AGREEMENT............................................................ 23
5.1 Terms Defined................................................................... 23
5.2 Directly or Indirectly.......................................................... 30
5.3 Section Headings and Table of Contents and Construction......................... 30
5.4 Governing Law................................................................... 30
6. MISCELLANEOUS............................................................................... 31
6.1 Communications.................................................................. 31
6.2 Reproduction of Documents....................................................... 32
6.3 Survival........................................................................ 33
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
6.4 Successors and Assigns.......................................................... 33
6.5 Amendment and Waiver............................................................ 33
6.6 Right of Action................................................................. 33
6.7 Expenses........................................................................ 34
6.8 Filings......................................................................... 34
6.9 Entire Agreement................................................................ 34
6.10 Term............................................................................ 35
6.11 Duplicate Originals, Execution in Counterpart................................... 35
</TABLE>
Annex 1 -- Information as to Holders
Exhibit A -- Form of Warrant Certificate
Exhibit B -- Determination of Fair Market Share Price
Exhibit C -- Confidentiality
ii
<PAGE> 4
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of August 20, 1997 (as may be amended from
time to time, this "AGREEMENT"), among THE CERPLEX GROUP, INC., a Delaware
corporation (together with its successors and assigns, the "COMPANY"), and each
of the Persons identified as a Holder in Annex 1 individually, a "HOLDER" and,
collectively, the "HOLDERS").
RECITALS:
A. Certain capitalized terms used in this Agreement have the meanings
assigned to them in Section 5.1 hereof.
B. Holders, the Company and Wells Fargo Bank, National Association, as
administrative agent, have entered into a Credit Agreement dated as of October
12, 1994 (as amended to the date hereof, the "CREDIT AGREEMENT").
C. In accordance with the First Amendment to Credit Agreement and
Limited Waiver (the "FIRST AMENDMENT"), dated as of April 15, 1996 and entered
into by and among the Company, the financial institutions listed on the
signature pages thereof ("LENDERS") and Wells Fargo Bank, National Association,
as administrative agent for the Lenders ("ADMINISTRATIVE AGENT"), and in
consideration of certain waivers and amendments set forth in the First
Amendment, the Company issued in the aggregate one hundred twenty-five thousand
(125,000) warrants (individually, an "ORIGINAL WARRANT" and, collectively, the
"ORIGINAL WARRANTS") of the Company to the Lenders, each Original Warrant
representing the right to purchase, upon the terms and subject to the conditions
set forth in that certain Warrant Agreement dated as of April 15, 1996 between
the Company and the Lenders (the "ORIGINAL WARRANT AGREEMENT"), and subject to
adjustment as set forth herein, one (1) share of Common Stock.
D. In accordance with the Third Amendment to Credit Agreement (the
"THIRD AMENDMENT"), dated as of April 9, 1997 and entered into by and among the
Company, Lenders and Administrative Agent, and in consideration of certain
amendments set forth in the Third Amendment, the Company issued in the aggregate
an additional seven hundred fifty thousand (750,000) warrants (individually, an
"ADDITIONAL WARRANT" and, collectively, the "ADDITIONAL WARRANTS") of the
Company to the Lenders, each Additional Warrant representing the right to
purchase, upon the terms and subject to the conditions set forth in the Original
Warrant Agreement, as amended and restated by that certain Amended and Restated
Warrant Agreement dated as of April 9, 1997 (the "AMENDED AND RESTATED
AGREEMENT"), and subject to adjustment as set forth herein, one (1) share of
Common Stock.
E. In accordance with the Sixth Amendment to Credit Agreement and
Consent (the "SIXTH AMENDMENT"), dated as of August 6, 1997 and entered into by
and
1
<PAGE> 5
among the Company, Lenders and Administrative Agent, and in consideration of
certain amendments set forth in the Sixth Amendment, the Company has agreed to
issue in the aggregate an additional one million two hundred sixty-two thousand
one hundred eighty- eight (1,262,188) warrants (individually, a "WARRANT" and,
collectively, the "WARRANTS") of the Company to Lenders and, under certain
circumstances set forth in the Sixth Amendment, to issue to Lenders additional
Warrants, each Warrant representing the right to purchase, upon the terms and
subject to the conditions set forth in the Amended and Restated Agreement, as
amended and restated hereby, and subject to adjustment as set forth herein, one
(1) share of Common Stock.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties to this Agreement hereby agree as follows:
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
1.1 FORM OF WARRANT CERTIFICATES.
The warrant certificates (individually, a "WARRANT CERTIFICATE" and,
collectively, the "WARRANT CERTIFICATES") evidencing the Warrants, and the forms
of assignment and of election to purchase shares to be attached to such
certificates, shall be substantially in the form set forth in Exhibit A and may
have such letters, numbers or other marks of identification or designation as
may be required to comply with any law or with any rule or regulation of any
governmental authority, stock exchange or self-regulatory organization made
pursuant thereto. Each Warrant Certificate shall be dated as of the date of
issuance thereof by the Company, either upon initial issuance or upon transfer
or exchange, and on its face shall initially entitle the holder thereof to
purchase the number of shares of Common Stock equal to the number of Warrants
represented by such Warrant Certificate at a price per share equal to the
Purchase Price, but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
1.2 EXECUTION OF WARRANT CERTIFICATES; REGISTRATION BOOKS ETC.
(a) EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be executed on behalf of the Company by its President, one of its
Vice Presidents or any other officer of the Company authorized by the
Board of Directors, which execution shall be attested by the Secretary or
an Assistant Secretary of the Company. In case any officer of the Company
who shall have signed any Warrant Certificate shall cease to be such
officer of the Company before issuance and delivery by the Company of such
Warrant Certificate, such Warrant Certificate nevertheless may be issued
and delivered with the same force and effect as though the individual who
signed such Warrant Certificate had not ceased to be such officer of the
Company, and any Warrant Certificate may be signed on behalf of the
Company by any individual who, at the actual date of the execution of such
2
<PAGE> 6
Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this
Agreement any such individual was not such an officer.
(b) REGISTRATION BOOKS, ETC. The Company will keep or cause to be
kept at its office maintained at the address of the Company set forth in
Section 6.1 hereof, or at such other office of the Company in the United
States of America of which the Company shall have given notice to each
holder of Warrant Certificates, books for registration and transfer of the
Warrant Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Warrant Certificates, the
registration number and the number of Warrants evidenced on its face by
each of the Warrant Certificates and the date of each of the Warrant
Certificates. Every holder of a Warrant Certificate by accepting the same
consents and agrees with the Company and with every other holder of a
Warrant Certificate that:
(i) the Warrant Certificates are transferable only on the
registry books of the Company if surrendered at the office of the
Company referred to in this Section 1.2(b), duly endorsed or
accompanied by an instrument of transfer (substantially in the form
attached to Exhibit A); and
(ii) the Company may deem and treat the Person in whose name
each Warrant Certificate is registered as the absolute owner thereof
and of the Warrants evidenced thereby (notwithstanding any notations
of ownership or writing on the Warrant Certificates made by anyone
other than the Company) for all purposes whatsoever, and the Company
shall not be affected by any notice to the contrary.
(c) ACQUISITION FOR INVESTMENT. Each Holder represents that it is
acquiring the Warrants for its own account for investment and not with a
view to any resale or distribution thereof, within the meaning of the
Securities Act, but without prejudice to its right at all times to sell or
otherwise dispose of all or any part of the Warrants or the shares of
Common Stock issuable upon the exercise of such Warrant under a
registration statement filed under the Securities Act or in a transaction
exempt from the registration requirements of the Securities Act. Each
Holder agrees that each outstanding Warrant Certificate (and each
certificate representing a share or shares of Common Stock issued upon the
exercise of a Warrant) which it owns shall, unless the Securities
represented by such certificate have been registered or have been sold in
accordance with Rule 144 (or any successor regulation thereto) under the
Securities Act, bear an endorsement reading substantially as follows:
The securities represented by this
certificate have not been registered under
the Securities Act of 1933, as amended, or
any state securities
3
<PAGE> 7
law. These securities may not be sold,
transferred, pledged or hypothecated in any
transaction unless first registered under
such laws or unless such transaction is
exempt from the registration requirements of
such laws. The securities represented by
this certificate are subject to certain
market holdback provisions set forth in that
certain registration rights agreement dated
November 19, 1993, as amended, among The
Cerplex Group, Inc. and the other parties
thereto.
1.3 TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF WARRANT
CERTIFICATES; LOST OR STOLEN WARRANT CERTIFICATES.
(a) TRANSFER, SPLIT UP, ETC. Any Warrant Certificate, with or
without other Warrant Certificates, may be transferred, split up, combined
or exchanged for another Warrant Certificate or Warrant Certificates,
entitling the registered holder or transferee thereof to purchase a like
number of shares of Common Stock as the Warrant Certificate or Warrant
Certificates surrendered then entitled such registered holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange
any Warrant Certificate shall make such request in writing delivered to
the Company, and shall surrender the Warrant Certificate or Warrant
Certificates to be transferred, split up, combined or exchanged at the
office of the Company referred to in Section 1.2(b) hereof, whereupon the
Company shall deliver promptly to the Person entitled thereto a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested.
Each holder of Warrants after any such transfer or exchange shall, by its
acceptance of the Warrants and Warrant Certificates being so transferred,
be deemed to have agreed to the terms and provisions of confidentiality
set forth on Exhibit C.
(b) LOSS, THEFT, ETC. Upon receipt of written notice from the holder
of any Warrant Certificate of the loss, theft, destruction or mutilation
of such Warrant Certificate and, in the case of any such loss, theft or
destruction, upon receipt of such holder's unsecured indemnity agreement,
or, in the case of any such mutilation, upon surrender and cancellation of
such Warrant Certificate, the Company will make and deliver a new Warrant
Certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant Certificate.
1.4 SUBSEQUENT ISSUANCE OF WARRANT CERTIFICATES.
Subsequent to their original issuance, no Warrant Certificates shall be
issued except:
4
<PAGE> 8
(a) Warrant Certificates issued upon any transfer, combination,
split up or exchange of Warrants pursuant to Section 1.3(a) hereof;
(b) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 1.3(b)
hereof; and
(c) Warrant Certificates issued pursuant to Section 2.3 hereof
upon the partial exercise of any Warrant Certificate to evidence the
unexercised portion of such Warrant Certificate.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE
2.1 EXERCISE OF WARRANTS.
(a) PURCHASE PRICE PAYMENT UPON EXERCISE. At any time on or after
the Effective Date and prior to 5:00 p.m. (Los Angeles, California time)
on the Termination Date, the holder of any Warrant Certificate may
exercise the Warrants evidenced thereby in whole or in part, by surrender
of such Warrant Certificate, with an election to purchase (a form of which
is attached as part of the form of Warrant Certificate attached as Exhibit
A) attached thereto duly executed, to the Company at its office referred
to in Section 1.2(b) hereof, together with payment of the Purchase Price,
payable as set forth below in this Section 2.1, for each share of Common
Stock as to which the Warrants are exercised. The Purchase Price shall be
(i) payable in cash, by certified or official bank check payable to the
order of the Company or by wire transfer of immediately available funds to
the account of the Company or (ii) satisfied by the delivery of Warrant
Certificates to the Company for cancellation in accordance with the
formula set forth in Section 2.1(b) hereof.
(b) NET EXERCISE PRICE. In lieu of any holder of a Warrant
Certificate exercising the Warrants (or any portion thereof) evidenced by
such Warrant Certificate for cash, as contemplated by Section 2.1(a)
hereof, such holder may, in connection with such exercise, elect to
receive shares of Common Stock equal to the product of (i) the number of
shares of Common Stock issuable upon such exercise of such Warrant
Certificate (or, if only a portion of such Warrant Certificate is being
exercised, issuable upon the exercise of such portion) multiplied by (ii)
a fraction, the numerator of which is the Market Price per share of Common
Stock at the time of such exercise minus the Purchase Price per share of
Common Stock at the time of such exercise, and the denominator of which is
the Market Price per share of Common Stock at the time of such exercise.
2.2 ISSUANCE OF COMMON STOCK.
Upon timely receipt on or after the Effective Date of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied by
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payment of the Purchase Price for each of the shares to be purchased in the
manner provided in Section 2.1 hereof and an amount equal to any applicable
transfer tax (if not payable by the Company as provided in Section 3.4 hereof),
the Company shall thereupon promptly cause certificates for the number of whole
shares of Common Stock then being purchased to be delivered to or upon the order
of the registered holder of such Warrant Certificate, registered in such name or
names as may be designated by such holder, and, promptly after such receipt
deliver the cash, if any, to be paid in lieu of fractional shares pursuant to
Section 4.2 hereof to or upon the order of the registered holder of such Warrant
Certificate.
2.3 UNEXERCISED WARRANTS.
In case the registered holder of any Warrant Certificate shall exercise
less than all the Warrants evidenced thereby, a new Warrant Certificate
evidencing Warrants equal in number to the number of Warrants remaining
unexercised shall be issued by the Company to the registered holder of such
Warrant Certificate or to its duly authorized assigns.
2.4 CANCELLATION AND DESTRUCTION OF WARRANT CERTIFICATES.
All Warrant Certificates surrendered to the Company for the purpose of
exercise, exchange, substitution or transfer shall be cancelled by it, and no
Warrant Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall cancel
and retire any other Warrant Certificates purchased or acquired by the Company
otherwise than upon the exercise thereof.
3. REPRESENTATIONS AND COVENANTS OF THE COMPANY
3.1 REPRESENTATIONS AND WARRANTIES.
(a) CORPORATE AUTHORITY. The Company has the corporate power and
authority to:
(i) authorize, execute, deliver and enter into this
Agreement and the Warrant Certificates;
(ii) issue and sell the Warrants;
(iii) perform its obligations under this Agreement and the
Warrants;
(iv) authorize, execute, deliver, issue and sell the shares
of the Common Stock issuable upon exercise of the Warrants.
(b) ENFORCEABILITY OF OBLIGATIONS. This Agreement and the Warrant
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Certificates issued on the date hereof have been, and any Warrants issued after
the date hereof will be, duly authorized, executed and delivered by the Company.
This Agreement, the Warrant Certificates and the Warrants constitute, or upon
execution and delivery will constitute, the legal, valid and binding obligations
of the Company, enforceable in accordance with their respective terms, except:
(c) as such enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforceability of
creditors' rights generally; and
(d) as such enforceability may be subject to the availability of
equitable remedies.
The holders of the Warrants are entitled to the benefits of this
Agreement.
3.2 RESERVATION OF COMMON STOCK.
The Company represents and warrants that it has reserved for issuance a
sufficient number of shares of Common Stock to permit the exercise of all the
Warrants, and all other rights, options or warrants exercisable into Common
Stock. The Company covenants and agrees that it will at all times cause to be
reserved and kept available out of its authorized and unissued shares of Common
Stock such number of shares of Common Stock as will be sufficient to permit the
exercise in full of all Warrants outstanding hereunder.
3.3 COMMON STOCK TO BE DULY AUTHORIZED AND ISSUED, FULLY PAID AND
NONASSESSABLE.
The Company covenants and agrees that it will take all such action as may
be necessary to ensure that all shares of Common Stock delivered upon the
exercise of any Warrants, at the time of delivery of the certificates for such
shares, shall be duly and validly authorized and issued and fully paid and
nonassessable, free of any preemptive rights and free of any pledge, security
interest, lien or other encumbrance.
3.4 TRANSFER TAXES.
The Company covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges that may be payable in
respect of
(a) the execution and delivery of this Agreement;
(b) the initial issuance and delivery of each Warrant Certificate
hereunder;
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(c) the issuance and delivery of each Warrant Certificate issued
in exchange for any other Warrant Certificate pursuant to Section 1.3 or
Section 2.3 hereof; and
(d) the issuance and delivery of each share of Common Stock issued
upon the exercise of any Warrant.
The Company shall not, however, be required to
(i) pay any transfer tax that may be payable in respect of
the transfer or delivery of Warrant Certificates or the issuance or
delivery of certificates for shares of Common Stock in a name other
than that of the registered holder of the Warrant Certificate
evidencing any Warrant surrendered for exercise (any such tax being
payable by the holder of such Warrant Certificate at the time of
surrender) or
(ii) issue or deliver any such certificates referred to in
the foregoing clause (i) for shares of Common Stock upon the
exercise of any Warrant until any such tax referred to in the
foregoing clause (i) shall have been paid.
3.5 COMMON STOCK RECORD DATE.
Each Person in whose name any certificate for shares of Common Stock is
issued upon the exercise of Warrants shall for all purposes be deemed to have
become the holder of record of the Common Stock represented thereby on, and such
certificate shall be dated, the date upon which the Warrant Certificate
evidencing such Warrants was duly surrendered with an election to purchase
attached thereto duly executed and payment of the aggregate Purchase Price (and
any applicable transfer taxes, if payable by such Person) was made. Prior to the
exercise of the Warrants evidenced thereby, the holder of a Warrant Certificate
shall not be entitled to any rights of a shareholder in the Company with respect
to shares for which the Warrants shall be exercisable, including, without
limitation, any right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein or in any other
applicable agreement between the Company and such holder.
3.6 FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Warrants:
(a) QUARTERLY STATEMENTS -- as soon as practicable after the end
of each quarterly fiscal period in each fiscal year of the Company (other
than the last quarterly fiscal period of each such fiscal year), and in
any event within forty-five (45) days thereafter, duplicate copies of
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<PAGE> 12
(i) a consolidated balance sheet of the Company and the
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash flows of the
Company and the Subsidiaries for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the immediately preceding fiscal year, all in reasonable detail,
prepared in accordance with GAAP applicable to quarterly financial statements
generally (provided that such financial statements need not contain footnotes),
and certified as complete and correct, subject to changes resulting from
year-end adjustments, by a Senior Financial Officer;
(b) ANNUAL STATEMENTS -- as soon as practicable after the end of
each fiscal year of the Company, and in any event within ninety (90) days
thereafter, duplicate copies of
(i) consolidated and consolidating balance sheets of the
Company and the Subsidiaries, as at the end of such year, and
(ii) consolidated and consolidating statements of income,
shareholders' equity and cash flows of the Company and the
Subsidiaries for such year,
setting forth in each case in comparative form the figures for the
immediately preceding fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by
(A) in the case of such consolidated statements, a
report thereon of independent certified public accountants of
recognized national standing, which report shall express an
opinion in the form of the standard auditor's report under
generally accepted auditing standards which shall state that
such financial statements present fairly, in all material
respects, the financial position of the companies being
reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such
financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances,
(B) a statement from such independent certified public
accountants that such consolidating statements were prepared
using the same work papers as were used in the preparation of
such consolidated statements, and
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<PAGE> 13
(C) a certification by a Senior Financial Officer that
such consolidated and consolidating statements are complete
and correct;
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, a copy of each financial statement, report (including, without
limitation, each Quarterly Report on Form 10-Q, each Annual Report on Form
10-K and each Current Report on Form 8-K), notice or proxy statement sent
by the Company or any Subsidiary to shareholders generally and of each
regular or periodic report and any registration statement, prospectus or
written communication (other than transmittal letters), and each amendment
thereto, in respect thereof filed by the Company or any Subsidiary with,
or received by, such Person in connection therewith from, the National
Association of Securities Dealers, any securities exchange or the SEC; and
(d) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information as from time to time may be reasonably
requested, including, without limitation, information required by 17
C.F.R. Section230.144A, as amended from time to time.
Each of the Holders hereby agrees to the terms of confidentiality set
forth on Exhibit C.
4. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK ISSUABLE
PER WARRANT
4.1 MECHANICAL ADJUSTMENTS.
The number of shares of Common Stock purchasable upon the exercise of each
Warrant, and the Purchase Price, shall be subject to adjustment as follows:
(a) DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In the event that
the Company shall
(i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares of Common
Stock into a smaller number of shares,
then the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision or combination shall
be adjusted to the price determined by multiplying the Purchase Price in
effect immediately prior to such event by the quotient of:
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<PAGE> 14
(A) the total number of shares of Adjusted Outstanding
Common Stock immediately prior to such event;
divided by
(B) the total number of Adjusted Outstanding Common
Stock immediately after such event.
An adjustment made pursuant to this Section 4.1(a) shall become
effective on the effective date of such event.
(b) RIGHTS, OPTIONS, WARRANTS AND CONVERTIBLE OR EXCHANGEABLE
SECURITIES. In the event that the Company shall issue any rights, options,
warrants or convertible or exchangeable Securities to all holders of its
shares of Common Stock, without charge to such holders, entitling such
holders to subscribe for or purchase shares of Common Stock at a price per
share (or having a conversion or exchange price per share, in the case of
a Security convertible or exchangeable into shares of Common Stock) that
is (or to amend or modify any provision of any thereof such that the
conversion, exchange or exercise price becomes) lower at the record date
in respect of which such rights, warrants, options or Securities were
issued or amended than the Reference Price on such record date, then the
Purchase Price in effect immediately after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior
to such record date by the quotient of:
(i) the sum of
(A) the number of shares of Adjusted Outstanding
Common Stock as of such record date, plus
(B) the quotient of
(ii) the Aggregate Consideration Receivable in
respect of such rights, options, warrants or convertible
or exchangeable Securities, divided by
(ii) the Reference Price on such record date;
divided by
(ii) the sum of
(A) the number of shares of Adjusted Outstanding
Common Stock as of such record date, plus
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<PAGE> 15
(B) the number of additional shares of Common Stock
initially issuable pursuant to such rights, options or
warrants or into which such convertible or exchangeable
Securities are initially convertible or exchangeable.
Such adjustment shall be made whenever such rights, options, or warrants
or convertible or exchangeable Securities are issued or amended, and shall
become effective on the date of issuance or amendment of such rights,
options, warrants or convertible or exchangeable Securities.
(c) DISTRIBUTIONS OF PROPERTY. In the event that the Company shall
distribute to holders of shares of Common Stock (including, without
limitation, any such distribution made in connection with a consolidation
or merger in which the Company is the continuing corporation) shares of
stock (other than Common Stock) or evidences of its indebtedness or assets
(excluding (x) cash dividends paid out of retained earnings after November
19, 1998, (y) Regular Cash Dividends paid after the date hereof and on or
prior to November 19, 1998 and (z) dividends payable solely in additional
shares of the Common Stock) or rights, options or warrants or convertible
or exchangeable Securities (excluding those referred to in Section 4.1(b)
and Section 4.1(d) hereof), then in each case the Purchase Price in effect
immediately after the record date in respect of which such stock,
indebtedness, assets, rights, options, warrants or Securities were issued
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by the quotient of:
(i) the result of
(A) the Reference Price on such record date, minus
(B) the quotient of
(i) the then fair value (as determined in good
faith and on a reasonable basis by the Board of
Directors, whose determination, if so made, shall be
conclusive) of the shares of stock or assets or
evidences of indebtedness so distributed or of such
rights, options or warrants, or of such convertible or
exchangeable Securities, divided by
(ii) the number of shares of Adjusted Outstanding
Common Stock as of the record date;
divided by
(ii) the Reference Price on such record date.
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Such adjustment shall be made whenever any such distribution is made, and
shall become effective on the date of such distribution.
(d) ISSUANCES OF COMMON STOCK AND OTHER SECURITIES.
(i) In the event that the Company shall issue or sell shares
of Common Stock, or rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or
purchase shares of Common Stock (excluding Excluded Securities, as
defined in Section 4.1 (d)(ii) hereof) at a price per share of
Common Stock lower than the Reference Price in effect on the date
(the "ADJUSTMENT DATE") of such issuance or sale, then the Purchase
Price in effect immediately after the Adjustment Date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such Adjustment Date by the quotient of:
(A) the sum of
(i) the number of shares of Adjusted Outstanding
Common Stock outstanding immediately prior to such
issuance or sale, plus
(ii) the quotient of (1) the Aggregate
Consideration Receivable in respect of such rights,
options, warrants or convertible or exchangeable
Securities, divided by (2) the Reference Price on the
Adjustment Date;
divided by
(B) the sum of
(i) the number of shares of Adjusted Outstanding
Common Stock outstanding immediately prior to such
issuance or sale, plus
(ii) the number of additional shares of Common
Stock so issued or sold (or initially issuable pursuant
to such rights, options or warrants or into which such
convertible or exchangeable Securities are initially
convertible or exchangeable).
For purposes of this clause (i), "ADJUSTMENT DATE" may, in connection with
certain consolidations and mergers, have the meaning provided for in
Section 4.1(e) hereof.
(ii) "EXCLUDED SECURITIES" shall mean and include:
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<PAGE> 17
(A) shares of Common Stock, rights, options, warrants
or convertible or exchangeable Securities issued in any of the
transactions described in Section 4.1(a), Section 4.1(b),
Section 4.1(c) or Section 4.1(e) hereof and with respect to
which an adjustment to the Purchase Price has been made in
accordance with any of such Sections;
(B) shares of Common Stock issuable upon exercise of
the Warrants, the Original Warrants or the Additional
Warrants;
(C) shares of Common Stock issuable upon exercise of
rights, options or warrants or conversion or exchange of
convertible or exchangeable Securities issued or sold under
circumstances which caused an adjustment pursuant to this
Section 4.1(d);
(D) rights to acquire shares of Common Stock, and
shares of Common Stock issuable upon exercise of such rights,
issued to employees of Company and its Subsidiaries, pursuant
to any employee stock purchase plan maintained by the Company
or any of its Subsidiaries, provided that any such rights
issued pursuant to any such plan and any shares of Common
Stock issuable upon the exercise thereof which, in the
aggregate, exceed, at the time of the issuance thereof, two
percent (2%) of the Fully Diluted Outstanding Common Stock,
determined at such time, shall not constitute Excluded
Securities;
(E) shares of Common Stock and/or rights, options,
warrants or convertible or exchangeable Securities (and the
shares of Common Stock issuable upon the exercise of such
rights, options, warrants or convertible or exchangeable
Securities), provided that (1) such shares of Common Stock
and/or rights, options, warrants or convertible or
exchangeable Securities are issued in connection with one or
more private placements of equity Securities of the Company
effected on or prior to July 15, 1996, (2) the total aggregate
consideration paid in cash in respect of such shares of Common
Stock and/or rights, options, warrants or convertible or
exchangeable Securities is not more than $8,000,000, (3) all
such shares of Common Stock together with all shares of Common
Stock issuable upon the exercise of any of such rights,
options, warrants or convertible or exchangeable Securities
shall not, in the aggregate, exceed 12% of Fully Diluted
Outstanding Common Stock, determined as of April 16, 1996, and
(4) the sale of such shares of Common Stock and/or rights,
options, warrants or convertible or exchangeable Securities is
done on an arm's-length basis and the setting of the exercise,
strike or conversion prices in respect of such
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<PAGE> 18
rights, options, warrants or convertible or exchangeable
Securities is done on an arm's-length basis;
(F) warrants issued on or prior to August 20, 1997 to
any holder of the Company's Subordinated Notes, Subordinated
Debt Warrants issued on or after the date hereof pursuant to
provisions comparable to Section 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof contained in any agreement between the
Company and such holders pursuant to which Subordinated Debt
Warrants are issued and shares of Common Stock issuable upon
the exercise of any Subordinated Debt Warrants; and
(G) shares of Common Stock, rights, options, warrants
or convertible or exchangeable Securities issued in any of the
transactions described in Sections 4.4(a), Section 4.4(b) or
Section 4.4(c) hereof and with respect to which additional
Warrants have been issued in accordance with any of such
Sections.
(iii) In the case of rights, options, warrants or convertible
or exchangeable Securities, the "price per share of Common Stock"
referred to in Section 4.1(d)(i) hereof shall be equal to the
quotient of
(A) the Aggregate Consideration Receivable in respect
of such rights, options, warrants or convertible or
exchangeable Securities, divided by
(B) the total number of shares of Common Stock covered
by such rights, options, warrants or convertible or
exchangeable Securities.
(iv) "AGGREGATE CONSIDERATION RECEIVABLE" shall mean, in the
case of a sale of shares of Common Stock, the aggregate gross amount
paid (without deduction for fees and expenses, underwriting
discounts or investment banking fees associated therewith) in
connection therewith and, in the case of an issuance or sale of
rights, options, warrants or convertible or exchangeable Securities,
the sum of
(A) the aggregate gross amount paid for such rights,
options, warrants or convertible or exchangeable Securities,
plus
(B) the aggregate consideration or premiums stated in
such rights, options, warrants or convertible or exchangeable
Securities to be payable for the shares of Common Stock
covered thereby.
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(v) In the event that the Company shall issue and sell
shares of Common Stock, or rights, options, warrants or convertible
or exchangeable Securities containing the right to subscribe for or
purchase shares of Common Stock, for a consideration consisting, in
whole or in part, of Property other than cash, then in determining
the "price per share of Common Stock" referred to in Section
4.1(d)(i) and Section 4.1(d)(iii) hereof and the "Aggregate
Consideration Receivable" referred to in Section 4.1(d)(i), Section
4.1(d)(iii) and Section 4.1(d)(iv) hereof, the Board of Directors
shall determine, in good faith and on a reasonable basis, the fair
value of such Property, and such determination, if so made, shall be
binding upon all holders of Warrants.
(e) CONSOLIDATION; MERGER; SALE OF THE COMPANY. In the event that
there shall be:
(i) any consolidation of the Company with, or merger of the
Company with or into, another corporation (other than a merger in
which the Company is the surviving corporation and that does not
result in any reclassification or change of shares of Common Stock
outstanding immediately prior to such merger);
(ii) any sale or conveyance to another corporation of the
Property of the Company substantially as an entirety; or
(iii) any reclassification of the Common Stock that results in
the issuance of other Securities of the Company;
then lawful provision shall be made as a part of the terms of such
transaction or otherwise so that the holders of Warrants shall thereafter
have the right to purchase the number and kind of shares of stock, other
Securities, cash, Property and rights receivable upon such consolidation,
merger, sale, conveyance or reclassification by a holder of such number of
shares of Common Stock as the holder of a Warrant would have had the right
to acquire upon the exercise of such Warrant immediately prior to such
consolidation, merger, sale or conveyance, at the Purchase Price then in
effect, provided that nothing in this clause (e) shall entitle any holder
of Warrants to acquire or have the right to purchase any of the foregoing
in connection with any sale or conveyance referred to in clause (ii) above
if, with respect to such sale or conveyance, no holder of Common Stock
would have the right to acquire or purchase any of the foregoing and none
of the foregoing were in fact distributed to holders of Common Stock and
provided further that nothing in the foregoing proviso in this clause (e)
shall restrict the rights of the holders of Warrants under Section 4.1(c)
hereof. To the extent that
(A) the Company shall issue any shares of Common Stock
or rights, options, warrants or convertible or exchangeable
Securities
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containing the right to subscribe for or purchase shares of
Common Stock (other than Excluded Securities) in connection
with any consolidation or merger of the Company and
(B) such issuance of such shares, rights, options,
warrants or convertible or exchangeable Securities would
otherwise cause an adjustment under Section 4.1(d) hereof,
the Adjustment Date in respect of such adjustment, notwithstanding
the definition of such term, shall be the business day immediately
preceding the date of the public announcement by the Company of such
merger or consolidation or, if such merger or consolidation shall
have been generally known to the public prior to such announcement
date, the date on which the Required Warrantholders and the Company
shall mutually agree upon in good faith and in accordance with the
essential intent and principles of this Section 4 of fairly
protecting the exercise rights of the holders of Warrants and, if no
such date can be so mutually agreed upon, the Company shall appoint
(at its expense) a firm of independent certified public accountants
of recognized national standing, which may not be the regular
auditors of the Company and which are reasonably acceptable to the
Required Warrantholders, which shall give their opinion as to the
appropriate date for such adjustment (after giving effect to the
aforesaid intent and principles of this Section 4); upon receipt of
such opinion, the Company will promptly mail a copy of such opinion
to the holders of Warrants and make the adjustments required under
this Section 4 as of the date stipulated therein. For purposes of
determining the number of shares subject to any Warrant with respect
to any adjustments made pursuant to this Section 4.1(e), the Company
shall make the adjustment provided for in Section 4.1(j) and 4.4(a)
hereof in respect of any Series B Preferred Stock conversions or
issuances of Employee Options or Director Options that occurred
during the period from the date of the last determination pursuant
to such Sections to the date immediately prior to such
consolidation, merger, sale or conveyance.
(f) DE MINIMIS CHANGES IN PURCHASE PRICE. No adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided that any adjustments that, at the time of the calculation
thereof, are less than one percent (1%) of the Purchase Price at such time
and by reason of this Section 4.1(f) are not required to be made at such
time shall be carried forward and added to any subsequent adjustment or
adjustments for purposes of determining whether such subsequent adjustment
or adjustments, as so supplemented, exceed the one percent (1%) amount set
forth in this Section 4.1(f) and, if any such subsequent adjustment, as so
supplemented or otherwise, should exceed such one percent (1%) amount, all
adjustments deferred prior thereto and not previously made shall then be
made. In any case, all such adjustments being carried forward pursuant to
this Section 4.1(f) shall be given effect upon the exercise of any
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Warrants by any holder thereof for purposes of determining the Purchase
Price thereof. All calculations shall be made to the nearest
ten-thousandth of a Dollar ($0.0001).
(g) ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO WARRANTS.
Upon each adjustment of the Purchase Price as a result of the calculations
made in this Section 4.1, each Warrant outstanding immediately prior to
the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of shares of Common
Stock (calculated to the nearest one thousandth) obtained by multiplying
the number of shares of Common Stock covered by such Warrant immediately
prior to such adjustment by the quotient of:
(i) the Purchase Price in effect immediately prior to such
adjustment,
divided by
(ii) the Purchase Price in effect immediately after such
adjustment.
All Warrants originally issued by the Company hereunder shall, subsequent
to any adjustment made to the Purchase Price hereunder, evidence the right
to purchase, at the adjusted Purchase Price, the number of shares of
Common Stock determined to be purchasable from time to time hereunder upon
exercise of such Warrants, all subject to further adjustment as provided
herein. Each such adjustment shall be valid and binding upon the Company
and the holders of Warrants irrespective of whether the Warrant
Certificates theretofore and thereafter issued express the Purchase Price
per share of Common Stock and the number of shares of Common Stock that
were expressed upon the initial Warrant Certificates issued hereunder.
(h) MISCELLANEOUS.
(i) Adjustments shall be made pursuant to this Section 4.1
successively whenever any of the events referred to in Section
4.1(a) through Section 4.1(e), inclusive, hereof shall occur.
(ii) Shares of Common Stock owned by or held for the account
of the Company, including shares acquired by the Company during any
time any Warrants are outstanding, shall not, for purposes of the
adjustments set forth in this Section 4.1, be deemed outstanding.
(i) EXPIRATION OF RIGHTS, OPTIONS, ETC.
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(i) Upon the expiration of any rights, options, warrants or
conversion or exchange privileges referred to above in this Section
4.1 without the exercise thereof, the Purchase Price and the number
of shares of Common Stock purchasable upon the exercise of each
Warrant shall be readjusted and shall thereafter be such as such
Purchase Price and such number of shares of Common Stock would have
been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) as if:
(A) the only shares of Common Stock so issued were the
shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion
or exchange privileges; and
(B) such shares of Common Stock, if any, were issued
or sold for the consideration actually received by the Company
upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or
grant of all of such rights, options, warrants or conversion
or exchange privileges whether or not exercised;
provided that no such readjustment shall have the effect of increasing the
Purchase Price by an amount in excess of the amount of the reduction
initially made in respect of the issuance, sale, or grant of such rights,
options, warrants or conversion or exchange privileges.
(ii) In the event that, during any calendar quarter after the
date hereof, any Employee Option, Director Option or portion thereof
expires without the exercise thereof and the issuance of any such
Employee Option or Director Option had resulted in the issuance of
additional Warrants pursuant to Section 4.4(a) hereof, the number of
shares of Common Stock purchasable upon the exercise of the Warrants
shall be reduced as of the first day of the next succeeding calendar
quarter by the number of shares of Common Stock subject to such
terminated or expired Employee Option, Director Option or portion
thereof.
(j) CONVERSION OF SERIES B PREFERRED STOCK. In the event that any
share of the Series B Preferred Stock of the Company outstanding on the
date hereof is converted into shares of Common Stock following the date
hereof at a conversion ratio that is greater than or less than 2500 shares
of Common Stock for each share of Series B Preferred Stock, then the
number of shares of Common Stock purchasable upon the exercise of the
Warrants shall be increased or decreased, as the case may be, by the
Dilution Percentage multiplied by the difference between the number of
shares of Common Stock into which such share of Series B Preferred Stock
of the Company was converted and 2500. Such increase or
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decrease shall be determined in the aggregate with respect to all
conversions during the period commencing on the date hereof and ending on
December 31, 1997 and each six-month period commencing on each January 1
and July 1 thereafter and shall be effective as of January 1, 1998 or the
first day of the six-month period next succeeding the period in respect of
which the determination is made, as the case may be.
(k) OTHER SECURITIES. In the event that at any time, as a result
of an adjustment made pursuant to this Section 4.1, each holder of
Warrants shall become entitled to purchase any Securities of the Company
other than shares of Common Stock, the number or amount of such other
Securities so purchasable and the Purchase Price of such Securities shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions contained in Section
4.1(a) through Section 4.1(e), inclusive, hereof, and all other relevant
provisions of this Section 4. 1, and the definitions used in this Section
4. 1, that are applicable to shares of Common Stock shall be applicable to
such other Securities.
(l) NOTICE OF ADJUSTMENT. Whenever the number of shares of Common
Stock issuable upon the exercise of Warrants is adjusted or the Purchase
Price in respect thereof is adjusted, as herein provided, the Company
shall promptly give to each holder of Warrants notice of such adjustment
or adjustments and shall promptly deliver to each holder of Warrants a
certificate of the Company's chief financial officer setting forth:
(i) the number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price of such shares after
such adjustment;
(ii) a brief statement of the facts requiring such
adjustment; and
(iii) the computation by which such adjustment was made.
So long as any Warrant is outstanding and an adjustment in respect of the
number of shares issuable upon the exercise of Warrants or the Purchase
Price in respect thereof shall have occurred in any fiscal year of the
Company, within ninety (90) days of the end of such fiscal year of the
Company, the Company shall deliver to each holder of Warrants a
certificate of independent certified public accountants of recognized
national standing selected by the Company (which may be the regular
auditors of the Company) setting forth
(A) the number of shares of Common Stock issuable upon
the exercise of each Warrant and the Purchase Price of such
shares as of the end of such fiscal year,
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(B) a brief statement of the facts requiring each such
adjustment required to be made in such fiscal year and
(C) the computation by which each such adjustment was
made.
(m) NOTICE OF CERTAIN EVENTS. Whenever the Company shall authorize
any Notice Event, the Company shall, not less than thirty (30) days prior
to the record date with respect to such event, give to each holder of
Warrants, notice of such event setting forth any change in the number of
shares of Common Stock the Company estimates will be issuable upon the
exercise of such holder's Warrants, the estimated Purchase Price of such
shares after any adjustment required to be made hereunder and a brief
statement of the facts requiring such adjustment and the computation by
which the Company expects such adjustment will be made. "NOTICE EVENT"
shall mean any of the following:
(i) any event that would require an adjustment pursuant to
this Section 4.1;
(ii) any distribution of cash or other Property in respect of
Common Stock (including, without limitation, a cash dividend payable
out of retained earnings);
(iii) any consolidation, merger or sale, transfer or other
disposition of all or substantially all of the Property of the
Company, provided that, if as a result of the circumstances
concerning such consolidation, merger, sale, transfer or other
disposition, it shall be impossible for the Company to give the
thirty (30) days' prior notice referred to above, the Company shall
give such notice as far in advance of the record date in respect of
such consolidation, merger, sale, transfer or other disposition as
reasonably feasible and, in any case, no later than two (2) business
days prior to such record date; and
(iv) the liquidation, dissolution or winding up of the
Company.
The Company shall, not less than thirty (30) days prior to the issuance of
any Preferred Stock, give to each holder of Warrants notice of such
issuance setting forth any change in the number of shares of Common Stock
the Company estimates will be issuable upon the exercise of such holder's
Warrants, the estimated Purchase Price of such shares after any adjustment
required to be made hereunder and a brief statement of the facts requiring
such adjustment and the computation by which the Company expects such
adjustment will be made.
4.2 FRACTIONAL SHARES.
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The Company shall not be required to issue fractional shares of Common
Stock upon the exercise of any Warrant. Upon the exercise of any Warrant, there
shall be paid to the holder thereof, in lieu of any fractional share of Common
Stock resulting therefrom, an amount of cash equal to the product of:
(a) the fractional amount of such share; multiplied by
(b) the Market Price with respect to the Common Stock determined
as of the date of exercise of such Warrant.
4.3 SPECIAL AGREEMENTS OF THE COMPANY.
The Company covenants and agrees that:
(a) The Company shall not, by amendment to the Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of Securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but shall at all times in good faith assist in the carrying
out of all the provisions of this Section 4 and in the taking of all such
actions as may be necessary or appropriate in order to protect the rights
of the holders of the Warrant Certificates against dilution or other
impairment.
(b) Before taking any action that would result in an adjustment to
the then current Purchase Price to a price that would be below the then
current par value of Common Stock issuable upon exercise of any Warrant,
the Company will take or cause to be taken any and all necessary corporate
or other action that may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common
Stock upon payment of such Purchase Price as so adjusted.
4.4 ISSUANCE OF ADDITIONAL WARRANTS.
(a) GRANT OF EMPLOYEE OPTIONS AND DIRECTOR OPTIONS. In the event
that, during any calendar quarter after the date hereof,
(i) Employee Options (other than Employee Options issued in
a transaction described in Section 4.1(d) hereof) are issued and the
aggregate number of such Employee Options plus all other Employee
Options issued on or prior to the date of such issuance, other than
Terminated Employee Options, exceeds the then effective Employee
Option Threshold, or
(ii) Director Options (other than Director Options issued in
a transaction described in Section 4.1(d) hereof) are issued and the
aggregate
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number of such Director Options plus all other Director Options
issued on or prior to the date of such issuance, other than
Terminated Director Options, exceeds the Director Option Threshold,
the Company shall, as of the first day of the next succeeding calendar
quarter, issue additional Warrants to the holders of the Warrants on a pro
rata basis covering that number of shares equal to the product of the
Dilution Percentage multiplied by the number of the Employee Options or
Director Options, as the case may be, issued during such period (or, with
respect to the first calendar quarter in which the number of Employee
Options or Director Options issued during such quarter plus the aggregate
number of Employee Options and Director Options, as the case may be,
issued on or prior to the date of such issuance (other than Terminated
Employee Options or Terminated Director Options, as the case may be,
exceeds the then effective Employee Option Threshold or the Director
Option Threshold, as the case may be) the amount of such excess).
(b) ISSUANCES IN CONNECTION WITH CONVERSION OF SUBORDINATED NOTES.
In the event that, on or after the date hereof, (i) all or any portion of
the aggregate principal amount of the Subordinated Notes is converted into
shares of Common Stock, or Securities convertible into or exchangeable for
shares of Common Stock and (ii) the Post-Conversion Market Price per share
of Common Stock following such conversion is less than the Measurement
Price per share of Common Stock prior to such conversion, the Company
shall issue additional Warrants to the holders of the Warrants on a pro
rata basis covering that number of shares equal to (A) the product of (1)
the difference between the Post-Conversion Market Price per share of
Common Stock and the Measurement Price per share of Common Stock
multiplied by (2) the total number of shares of Common Stock issuable upon
exercise of the Warrants held by such holders immediately prior to such
issuance divided by (B) the Post-Conversion Market Price per share of
Common Stock; provided, however, that in no event shall the number of
Warrants issued pursuant to this Section 4.4(b) as a result of any single
issuance of shares of Common Stock, or Securities convertible into or
exchangeable for shares of Common Stock to the holders of the Subordinated
Debt Warrants exceed the product of (y) the aggregate number of shares of
Common Stock issued or issuable pursuant to such convertible or
exchangeable Securities to the holders of the Subordinated Debt Warrants
with respect to such single issuance multiplied by (z) a fraction, the
numerator of which is the number of shares of Common Stock underlying the
Warrants outstanding immediately prior to such issuance and the
denominator of which is the Fully Diluted Outstanding Common Stock and
provided further, that no Warrants shall be issued pursuant to this
provision in connection with any transaction in which both the holders of
the Subordinated Notes convert all or any portion of the aggregate
principal amount of the Subordinated Notes into shares of Common Stock, or
Securities convertible into or exchangeable for shares of Common Stock,
and the holders of the Warrants convert all or a portion of the aggregate
principal amount of indebtedness then
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outstanding under the Credit Agreement into shares of Common Stock or
Securities convertible into or exchangeable for shares of Common Stock.
The Initial Purchase Price of such Warrants shall be the Post-Conversion
Market Price per share.
(c) ISSUANCES OF OTHER SECURITIES TO HOLDERS OF SUBORDINATED DEBT
WARRANTS. In the event that, on or after the date hereof, rights, options
or warrants containing the right to subscribe for or purchase shares of
Common Stock are issued to the holders of the Subordinated Debt Warrants
(other than in a transaction described in Section 4.1(d) hereof), the
Company shall issue additional Warrants to the holders of the Warrants on
a pro rata basis covering that number of shares equal to the product of
(i) the aggregate number of shares of Common Stock underlying the rights,
options or warrants issued to the holders of the Subordinated Debt
Warrants multiplied by (ii) a fraction, the numerator of which is the
number of shares of Common Stock underlying the Warrants outstanding
immediately prior to such issuance and the denominator of which is the
Fully Diluted Outstanding Common Stock and provided further, that no
Warrants shall be issued pursuant to this provision in connection with any
transaction in which both the holders of the Subordinated Debt Warrants
and the holders of the Warrants are issued shares of Common Stock or
rights, options or warrants containing the right to subscribe for or
purchase shares of Common Stock pursuant to a negotiated transaction as
opposed to pursuant to this Section 4.4(c). The Initial Purchase Price of
such Warrants shall be the per share exercise price of the rights, options
or warrants in respect of which such additional Warrants are being issued.
(d) EXCLUDED ISSUANCES OF SECURITIES TO HOLDERS OF SUBORDINATED
DEBT WARRANTS. Notwithstanding the foregoing, no Warrants shall be issued
pursuant to Sections 4.4(a), 4.4(b) or 4.4(c) hereof as result of any
issuance of additional Subordinated Debt Warrants pursuant to provisions
comparable to Section 4.4(a), Section 4.4(b) or Section 4.4(c) hereof
contained in any agreement between the Company and such holders pursuant
to which Subordinated Debt Warrants are issued.
5. INTERPRETATION OF THIS AGREEMENT
5.1 TERMS DEFINED.
ADDITIONAL WARRANTS -- Recital D hereof.
ADJUSTED OUTSTANDING COMMON STOCK -- means, at any time, the number
of shares of Common Stock outstanding at such time (excluding all shares
constituting "treasury stock" and all shares held or beneficially owned by
a Subsidiary) together with the number of shares of additional Common
Stock that would be outstanding at such time assuming:
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(a) the conversion immediately prior to such time of all then
Outstanding Securities that are convertible into shares of Common Stock or
that are issuable upon exercise of any warrants, options and other rights,
whether or not the conditions for such conversion or exercise then exist,
provided that no such Securities shall be included in this clause (a)
unless such Securities were issued and outstanding on the date hereof or
are derived through transfers and/or exchanges from Securities that were
issued and outstanding on the date hereof; and
(b) the exercise immediately prior to such time of all then
outstanding warrants, options and similar rights to acquire shares of
Common Stock (including, without limitation, the Warrants), whether or not
the conditions for such exercise then exist, provided that no such
warrants, options and similar rights shall be included in this clause (b)
unless they were issued and outstanding on the date hereof or are derived
through transfers and/or exchanges from Securities that were issued and
outstanding on the date hereof.
ADJUSTMENT DATE -- Section 4.1(d)(i) hereof.
AGGREGATE CONSIDERATION RECEIVABLE -- Section 4.1 (d)(iv) hereof.
AGREEMENT -- introductory paragraph hereof.
APPRAISER -- means and includes one or more nationally recognized
investment banking firms or appraisers that shall be experienced in evaluating
companies in the same or similar lines of business as the Company and the
Subsidiaries.
AVERAGE CLOSING BID PRICE -- means, with respect to any period and any
class of Common Stock, the per share price of such class determined as follows:
(a) the average daily closing bid prices of such class of Common
Stock on each trading day during such period, as officially reported on
the principal national securities exchange on which such class of Common
Stock is then listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or admitted
to trading on any national securities exchange, the average of the last
reported bid prices for each trading day during such period of such class
of Common Stock.
BOARD OF DIRECTORS -- means, at any time, the board of directors of the
Company or any committee thereof that, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.
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CERTIFICATE OF INCORPORATION -- means the restated certificate of
incorporation of the Company, as may be amended by the Company from time to time
after the Effective Date.
COMMON STOCK - means:
(a) on the date hereof, the Company's $0.001 par value capital
stock designated as "Common Stock"; and
(b) on any other date, any capital stock into which such "Common
Stock shall have been changed or any capital stock resulting from any
reclassification of such "Common Stock", and all other capital stock of
any class or classes (however designated) of the Company the holders of
which have the right, without limitation as to amount, either to all or to
a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions of any shares thereof
entitled to preference.
COMPANY -- introductory paragraph hereof.
DILUTION PERCENTAGE -- means 5.1%; provided, however, that in the event
that any of the Warrants are exercised after the date hereof, the Dilution
Percentage shall be reduced by multiplying the then effective Dilution
Percentage by a fraction, the numerator of which is the number of Warrants
remaining immediately following such exercise and the denominator of which is
the number of Warrants outstanding immediately prior to such exercise.
DIRECTOR OPTIONS -- means rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or purchase shares
of Common Stock issued to any directors of the Company or any of its
Subsidiaries who were members of the Board of Directors of the Company or any of
its Subsidiaries as of the date hereof; provided, however, that (a) rights,
options, warrants or convertible or exchangeable Securities purchased from the
Company to acquire shares of Common Stock in a bona fide arm's-length
transaction for consideration at least equal to the Reference Price, (b) rights,
options, warrants or convertible or exchangeable Securities purchased from
Persons other than the Company or its Subsidiaries to acquire shares of Common
Stock and (c) any shares of the Series B Preferred Stock held by any director of
the Company or any of its Subsidiaries on the date hereof shall not constitute
Director Options.
DIRECTOR OPTION THRESHOLD -- means 1,460,424 shares, as such number may be
adjusted from time to time to reflect any subdivision or combination of shares
of Common Stock.
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EFFECTIVE DATE -- means the date of the first issuance of any Warrants
pursuant to this Agreement.
EMPLOYEE OPTIONS -- means rights, options, warrants or convertible or
exchangeable Securities containing the right to subscribe for or purchase shares
of Common Stock issued to any employees, officers or directors of Company or any
of its Subsidiaries, including, without limitation, Employee Options issued to
Stephen Hopkins as consideration for his services as President and Chief
Executive Officer of the Company; provided, however, that (a) rights, options,
warrants or convertible or exchangeable Securities purchased from the Company to
acquire shares of Common Stock in a bona fide arm's-length transaction for
consideration at least equal to the Reference Price, (b) rights, options,
warrants or convertible or exchangeable Securities purchased from Persons other
than the Company or its Subsidiaries to acquire shares of Common Stock and (c)
any shares of the Series B Preferred Stock held by any employees, officers or
directors of the Company or any of its Subsidiaries on the date hereof shall not
constitute Employee Options.
EMPLOYEE OPTION THRESHOLD -- means 7,302,121 shares, as such number may be
adjusted from time to time to reflect any subdivision or combination of shares
of Common Stock; provided, however, that in the event that additional Warrants
are issued pursuant to Section 4.4(a) hereof during any calendar quarter after
the date hereof, the Employee Option Threshold shall be increased by the number
of Director Options issued during the immediately preceding calendar quarter
(or, with respect to the first calendar quarter during which the number of
Director Options exceeds the Director Option Threshold, the amount of such
excess).
EXCLUDED SECURITIES -- Section 4.1(d)(ii) hereof.
FAIR MARKET SHARE PRICE - means, at any time, the sale value of a single
share of Common Stock, as determined by an Appraiser in accordance with the
provisions of Exhibit B attached hereto.
FULLY DILUTED OUTSTANDING COMMON STOCK -- means, at any time, the number
of shares of Common Stock outstanding at such time (excluding all shares
constituting "treasury stock" and all shares held or beneficially owned by a
Subsidiary) together with the number of shares of additional Common Stock that
would be outstanding at such time assuming:
(a) the conversion immediately prior to such time of all
Securities convertible into shares of Common Stock outstanding at such
time or issuable upon exercise of any warrants, options and other rights
outstanding at such time, whether or not the conditions for such
conversion or exercise then exist; and
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(b) the exercise immediately prior to such time of all then
outstanding warrants, options and similar rights to acquire shares of
Common Stock (including, without limitation, the Warrants), whether or not
the conditions for such exercise then exist.
HOLDER - introductory paragraph hereof.
INITIAL PURCHASE PRICE -- means (a) with respect to the Warrants issued on
the date hereof, Fifty-Nine Cents ($0.59) per share, (b) with respect to any
Warrants issued pursuant to Section 4.4(a) hereof, the Average Closing Bid Price
of a share of Common Stock during the calendar quarter in respect of which the
adjustment is being made, (c) with respect to any Warrants issued pursuant to
Section 4.4(b) hereof, the Post-Conversion Market Price per share and (d) with
respect to any Warrants issued pursuant to Section 4.4(c) hereof, the per share
exercise price of the rights, options or warrants in respect of which the
additional Warrants are being issued.
MARKET PRICE -- means, with respect to any date and any class of Common
Stock, the per share price of such class equal to the product of (a) ninety-five
percent (95%) times (b) the average of the daily Closing Prices of Common Stock
for fifteen (15) consecutive trading days commencing twenty (20) trading days
before-such date, provided that, if the Closing Prices referred to in clause (b)
are not then available for such class of Common Stock in order to make the
determination in said clause (b), "MARKET PRICE" shall mean the Fair Market
Share Price.
As used in this definition,
Closing Price -- means, with respect to any date and any class of
Common Stock, the per share price of such class determined as follows:
(a) the last sale price, regular way, on such date or, if no such
sale takes place on such date, the average of the closing bid and asked
prices on such date, in each case as officially reported on the principal
national securities exchange on which such class of Common Stock is then
listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or admitted
to trading on any national securities exchange, the last trading price of
such class of Common Stock on such date, or if there shall have been no
trading on such date or if such class of Common Stock is not so
designated, the average of the reported closing bid and asked prices on
such date.
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MEASUREMENT PRICE -- means, with respect to any date and any class of
Common Stock, the average of the daily Closing Bid Prices of such class of
Common Stock for the five (5) consecutive trading days prior to the public
announcement of any conversion of the Subordinated Notes; provided, however,
that the date on which such public announcement is made shall not be considered
a trading day.
As used in this definition,
Closing Bid Price -- means, with respect to any date and any class
of Common Stock, the per share price determined as follows:
(a) the closing bid prices on such date, as officially reported on
the principal national securities exchange on which such class of Common
Stock is then listed or admitted to trading; or
(b) if such class of Common Stock is not then listed or admitted
to trading on any national securities exchange, the last reported bid
price of such class of Common Stock on such date.
NOTICE EVENT -- Section 4.1(1) hereof.
ORIGINAL WARRANTS -- Recital C hereof.
PERSON -- means an individual, partnership, corporation, limited liability
or other company or partnership, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
POST CONVERSION MARKET PRICE -- means, with respect to any date, the
average of the daily Closing Bid Prices of the Common Stock for the five (5)
consecutive trading days after the filing of a Current Report on Form 8-K with
respect to any conversion of the Subordinated Notes; provided, however, that the
date on which such Current Report on Form 8-K is filed shall not be considered a
trading day.
As used in this definition,
Closing Bid Price -- means, with respect to any date, the per share
price determined as follows:
(a) the closing bid prices on such date, as officially reported on
the principal national securities exchange on which the Common Stock is
then listed or admitted to trading; or
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(b) if the Common Stock is not then listed or admitted to trading
on any national securities exchange, but is designated as a national
market system security by the National Association of Securities Dealers,
the last reported bid price of the Common Stock on such date.
PREFERRED STOCK -- means the class of capital stock of the Company
designated as "Preferred Stock," having a par value $.001 per share, and
enjoying the rights and preferences set forth in, and subject to the
restrictions of, the Certificate of Incorporation as in effect on November 19,
1993.
PROPERTY -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
PURCHASE PRICE -- means, prior to any adjustment pursuant to Section 4.1
hereof, the Initial Purchase Price and thereafter, the Initial Purchase Price as
adjusted and readjusted from time to time.
REFERENCE PRICE -- means, in respect of any date, the Market Price of one
share of Common Stock as of such date.
REGULAR CASH DIVIDENDS -- means cash dividends paid by the Company out of
its retained earnings, provided that any such cash dividends paid during any
fiscal year of the Company shall be deemed to constitute Regular Cash Dividends
to the extent, and only to the extent, that immediately after giving effect to
the payment of such cash dividends the aggregate amount of all cash dividends
paid by the Company out of its retained earnings during such fiscal year does
not exceed five percent (5%) of the product of (a) the Market Price determined
as of the record date in respect of such payment multiplied by (b) the aggregate
number of shares of Common Stock outstanding as of such record date (after
assuming that all then outstanding Warrants had been exercised).
REQUIRED WARRANTHOLDERS -- means, at any time, any holder or holders
(other than the Company, any Subsidiary or any Affiliate) then holding more than
fifty percent (50%) of the Warrants (excluding any Warrants directly or
indirectly held by the Company or any Subsidiary or Affiliate) then outstanding.
SEC -- means, at any time, the Securities and Exchange Commission or any
other federal agency at such time administering the Securities Act.
SECURITIES ACT -- means the Securities Act of 1933, as amended.
SECURITY -- means "security" as defined in section 2(1) of the Securities
Act.
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SENIOR FINANCIAL OFFICER -- means the chief financial officer, the
principal accounting officer, the controller or the treasurer of the Company.
SERIES B PREFERRED STOCK -- means the Series B Preferred Stock of the
Company as provided for in its certificate of incorporation.
SUBORDINATED DEBT WARRANTS -- means the warrants initially issued to the
holders of the Subordinated Notes and any additional warrants issued pursuant to
any agreement between the Company and the holders of the Subordinated Notes
pursuant to which such warrants were issued.
SUBORDINATED NOTES -- means the Series A 9.00% Senior Subordinated Notes
Due November 19, 2001.
SUBSIDIARY -- means, at any time, any corporation more than fifty percent
(50%) of the total combined voting power of all classes of the voting capital
stock of which shall, at the time as of which any determination is being made,
be owned by the Company either directly or indirectly through any one or more
Subsidiaries.
TERMINATED DIRECTOR OPTIONS -- any Director Options issued on or prior to
the date hereof that have been exercised or have terminated or expired prior to
the date hereof.
TERMINATED EMPLOYEE OPTIONS -- any Employee Options issued on or prior to
the date hereof that have been exercised or have terminated or expired prior to
the date hereof.
TERMINATION DATE -- means May 19, 2002.
WARRANTS -- Recital E hereof and any Warrants issued after the date
hereof, including, without limitation, pursuant to Section 4.4 hereof.
WARRANT CERTIFICATE -- Section 1.1 hereof.
5.2 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person, or
that such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
5.3 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of the
Sections and the Table of Contents appear as a matter of convenience only,
do
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not constitute a part hereof and shall not affect the construction hereof.
The words "herein," "hereof," "hereunder" and "hereto" refer to this
Agreement as a whole and not to any particular Section or other
subdivision. Unless otherwise specified, references to Sections are to
Sections of this Agreement, references to Annexes are to Annexes to this
Agreement and references to Exhibits are to Exhibits to this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance with
any one covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with one or more other covenants.
5.4 GOVERNING LAW.
THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
6. MISCELLANEOUS
6.1 COMMUNICATIONS.
(a) METHOD; ADDRESS. All communications hereunder or under the
Warrants shall be in writing, shall be hand delivered, deposited into the
United States mail (registered or certified mail), postage prepaid, or
sent by overnight courier of national or international reputation, and
shall be addressed,
(i) if to the Company,
The Cerplex Group, Inc.
1382 Bell Avenue
Tustin, California 92680
Attention: Chief Executive Officer
Facsimile: (714) 258-0730
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(with a copy to:
Brobeck, Phleger & Harrison LLP
4675 MacArthur Court, Suite 1000
Newport Beach, California 92660
Attention: Frederic A. Randall, Jr., Esq.
Facsimile: (714) 752-7535
provided that the failure to provide any such copy shall
in no way affect the validity or effectiveness of any
communication to the Company for purposes of this
Agreement)
or at such other address as the Company shall have furnished in writing to
all holders of the Warrants at the time outstanding; and
(ii) if to any of the holders of the Warrants:
(A) if such holders are the Holders, at their
respective addresses set forth on Annex 1, and further
including any parties referred to on such Annex 1 that are
required to receive notices in addition to such holders of the
Warrants; and
(B) if such holders are not the Holders, at their
respective addresses set forth in the register for the
registration and transfer of Warrants maintained pursuant to
Section 1.2(b) hereof;
or to any such party at such other address as such party may designate by
notice duly given in accordance with this Section 6.1 to the Company
(which other address shall be entered in such register).
(b) WHEN GIVEN. Any communication so addressed and deposited in
the United States mail, postage prepaid, by registered or certified mail
(in each case, with return receipt requested) shall be deemed to be
received on the third (3rd) succeeding business day after the day of such
deposit (not including the date of such deposit). Any notice so addressed
and otherwise delivered shall be deemed to be received when actually
received at the address of the addressee.
6.2 REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Holder at the closing of the issuance
of Warrants (except the Warrant Certificates themselves) and (c) financial
statements, certificates and other information previously or hereafter furnished
to any Holder or any other holder of Warrants, may be reproduced by any holder
of Warrants by any photographic, photostatic, microfilm,
33
<PAGE> 37
micro-card, miniature photographic, digital or other similar process and each
holder of Warrants may destroy any original document so reproduced. The Company
agrees and stipulates that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by such holder of Warrants in the regular course of business) and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. Nothing in this Section 6.2 shall prohibit
the Company or any holder of Warrants from contesting the accuracy of any such
reproduction.
6.3 SURVIVAL.
All warranties, representations, certifications and covenants made by the
Company herein or in any certificate or other instrument delivered by it or on
its behalf hereunder shall be considered to have been relied upon by the Holders
and shall survive the delivery to the Holders of the Warrants regardless of any
investigation made by the Holders or on their behalf. All statements in any such
certificate or other instrument shall constitute warranties and representations
by the Company hereunder.
6.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof are
intended to be for the benefit of all holders, from time to time, of Warrants,
and shall be enforceable by any such holder, whether or not an express
assignment to such holder of rights hereunder shall have been made by any
successor or assign of any Holder.
6.5 AMENDMENT AND WAIVER.
This Agreement may be amended, and the observance of any term of this
Agreement may be waived, with and only with the written consent of the Company
and the Required Warrantholders, provided that no change in, or waiver of
performance under, Section 1, Section 2, Section 4 or this Section 6.5 (or any
definition used in connection with any of such sections) shall be effected
without the written consent of all holders of Warrants.
6.6 RIGHT OF ACTION.
All rights of action in respect of the Warrants are vested in the
respective registered holders of the Warrant Certificates or, in lieu thereof,
the beneficial owner thereof (to the extent such beneficial owner is a party to
this Agreement or disclosed to the Company in writing), and any registered
holder or beneficial owner (to the extent such beneficial owner is a party to
this Agreement or disclosed to the Company in writing) of any Warrant
Certificate, without the consent of the holder of any other Warrant Certificate,
may, in its own behalf and for its own benefit, enforce, and may
34
<PAGE> 38
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, its right to exercise the Warrants
evidenced by such Warrant Certificate in the manner provided in such Warrant
Certificate and in this Agreement.
6.7 EXPENSES.
The Company will promptly (and in any event within thirty (30) days of
receiving any statement or invoice therefor) pay all fees, expenses and costs
relating hereto, including, but not limited to:
(a) the cost of reproducing this Agreement and the Warrants;
(b) the fees and disbursements of the special counsel to the
Holders;
(c) the cost of delivering to the home office or custodian bank of
each Holder, insured to such party's satisfaction, the Warrant
Certificates acquired by such party on the Effective Date; and
(d) all fees, expenses, costs and disbursements (including,
without limitation, the reasonable fees and the disbursements of the
attorneys, accountants and other expert, legal and financial advisers of
each holder of Warrant Certificates) relating to (i) the consideration,
evaluation, analysis, assessment, negotiation, preparation and/or
execution of any amendments, waivers or consents pursuant to the
provisions hereof, whether in the ordinary course of performance hereof or
in connection with any controversy or potential controversy hereunder or
resulting from any work-out, restructuring or other similar proceedings
relating to such performance and whether or not any such amendments,
waivers or consents are executed or otherwise consummated and/or (ii) the
enforcement of the rights of such holder hereunder.
6.8 FILINGS.
The Company shall, at its own expense, promptly execute and deliver, or
cause to be executed and delivered, to any holder of Warrants all applications,
certificates, instruments, registration statements, and all other documents and
papers that such holder of Warrants may reasonably request in connection with
the obtaining of any consent, approval, registration, qualification, or
authorization of any federal, state or local government (or any agency or
commission thereof) necessary or appropriate in connection with, or for the
effective exercise of, any Warrants then held by such holder.
6.9 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
35
<PAGE> 39
6.10 TERM.
All unexercised Warrants will be void and not exercisable after 5:00 p.m.
(Los Angeles, California time) on the Termination Date and the Warrant
Certificates in respect thereof shall after such time be deemed cancelled for
all purposes of this Agreement. Shares of Common Stock issuable upon the
exercise of a Warrant shall be issued after the Termination Date if such Warrant
is exercised, as provided in Section 2.1 hereof, on or prior to 5:00 p.m. (Los
Angeles, California time) on the Termination Date.
6.11 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two or more duplicate originals hereof may be signed by the parties, each
of which shall be an original but all of which together shall constitute one and
the same instrument. This Agreement may be executed in one or more counterparts
and shall be effective when at least one counterpart shall have been executed by
each party hereto, and each set of counterparts which, collectively, show
execution by each party hereto shall constitute one duplicate original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; NEXT PAGE IS SIGNATURE PAGE.]
36
<PAGE> 40
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered by one of its duly authorized officers or
representatives.
THE CERPLEX GROUP, INC.
By___________________________________
Name:
Title:
CITIBANK, N.A.
By___________________________________
Name:
Title:
S-1
<PAGE> 41
ANNEX 1
INFORMATION AS TO HOLDERS
<TABLE>
<CAPTION>
=========================================================
HOLDER NAME CITIBANK, N.A.
- ---------------------------------------------------------
<S> <C>
Name in which to register Citibank, N.A.
Note(s)
- ---------------------------------------------------------
Warrant Certificate WR-[10];
registration number;
Number of Warrants Warrants
- ---------------------------------------------------------
Address for notices Citibank, N.A.
Attention:
Facsimile:
=========================================================
</TABLE>
Annex 1-1
<PAGE> 42
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN ANY
TRANSACTION UNLESS FIRST REGISTERED UNDER SUCH LAWS OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS.
THE HOLDER OF THIS WARRANT CERTIFICATE IS A BANK FOR PURPOSES OF THAT CERTAIN
REGISTRATION RIGHTS AGREEMENT, DATED NOVEMBER 19, 1993, AS AMENDED, AMONG THE
CERPLEX GROUP, INC. AND THE OTHER PARTIES THERETO.
WARRANT CERTIFICATE
THE CERPLEX GROUP, INC.
No. WR-________ ___________ Warrants
Date: _____________ PPN: ___________________
This WARRANT CERTIFICATE certifies that ______________________, or
registered assigns; is the registered holder of ____________________
(___________) Warrants. Each Warrant entitles the owner thereof to purchase, at
any time on or after the Effective Date (as such term is defined in the Warrant
Agreement referred to below) and prior to 5:00 p.m. (Los Angeles, California
time) on the Termination Date (as such term is defined in the Warrant Agreement
referred to below), one fully paid and nonassessable share of Common Stock (as
such term is defined in the Warrant Agreement referred to below) of THE CERPLEX
GROUP, INC., a Delaware corporation (the "COMPANY"), at the Initial Purchase
Price of __________ ($_____) per share of Common Stock (the "PURCHASE PRICE")
upon (i) presentation and surrender of this Warrant Certificate with a form of
election to purchase duly executed and (ii) satisfaction of the Purchase Price
in the manner set forth in the Warrant Agreement. The number of shares of Common
Stock that may be purchased upon exercise of each Warrant, and the Purchase
Price, are the number and the Purchase Price as of the date hereof and are
subject to adjustment under certain circumstances as provided in the Warrant
Agreement referred to below.
The Warrants are issued pursuant to the Warrant Agreement, dated as of
April 15, 1996, as amended and restated as of April 9, 1997 and as further
amended and restated as of August 20, 1997 (as further amended from time to
time, the "WARRANT
Exhibit A-1
<PAGE> 43
AGREEMENT"), among the Company and certain initial holders named therein, and
are subject to all of the terms, provisions and conditions thereof, which
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, obligations, duties and immunities of the Company and
the holders of the Warrant Certificates. Capitalized terms used, but not
defined, herein have the meanings assigned to then, in the Warrant Agreement.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time. If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Warrant Certificate or Warrant Certificates for
the number of Warrants not exercised. This Warrant Certificate, with or without
other Warrant Certificates, upon surrender at the office of the Company referred
to in Section 1.2(b) of the Warrant Agreement, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor evidencing Warrants
entitling the holder to purchase a like aggregate number of shares of Common
Stock as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered shall have entitled such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of this
Warrant Certificate shall be entitled to any right to vote or receive dividends
or be deemed for any purpose the holder of shares of Common Stock or of any
other Securities of the Company that may at any time be issued upon the exercise
hereof, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
holder of a share of Common Stock in the Company or any right to vote upon any
matter submitted to holders of shares of Common Stock at any meeting thereof, or
to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of Securities, change of
par value, consolidation, merger, conveyance, or otherwise) or, except as
provided in the Warrant Agreement, to receive notice of meetings, or to receive
dividends or subscription rights, or otherwise, until the Warrant or Warrants
evidenced by this Warrant Certificate shall have been exercised as provided in
the Warrant Agreement.
Other than with respect to the original issuance of the Warrants pursuant
to the Warrant Agreement, if the Warrant Certificate of the immediate transferor
of the holder of this Warrant Certificate bore the second paragraph of the
legend set forth above, this Warrant Certificate shall also bear such second
paragraph.
THIS WARRANT CERTIFICATE AND THE WARRANT AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
Exhibit A-2
<PAGE> 44
WITNESS the signature of a proper officer of the Company as of the date
first above written.
THE CERPLEX GROUP, INC.,
By ____________________________
Name:
Title:
ATTEST:
- ----------------------------
[Assistant] Secretary
Exhibit A-3
<PAGE> 45
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF
SUCH HOLDER DESIRES TO TRANSFER THE WARRANT CERTIFICATE)
FOR VALUE RECEIVED, ___________________________________ hereby sells,
assigns and transfers unto
- ---------------------------------------------------------------------
(Please print name and address of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
- ----------------------------------------------------------------------
attorney in fact, to transfer the accompanying Warrant Certificate on the books
of the Company, with full power of substitution.
Dated: _______________, _______.
--------------------------------
By _____________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
Exhibit A-4
<PAGE> 46
[FORM OF ELECTION TO PURCHASE]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
HOLDER DESIRES TO EXERCISE ANY WARRANTS REPRESENTED BY THE WARRANT CERTIFICATE)
To THE CERPLEX GROUP, INC.:
The undersigned hereby irrevocably elects to exercise ___________________
Warrants represented by the accompanying Warrant Certificate to purchase the
shares of Common Stock issuable upon the exercise of such Warrants and requests
that certificates for such shares be issued in the name of:
- ------------------------------------------------------------------------
(Please print name and address.)
- ------------------------------------------------------------------------
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
- ------------------------------------------------------------------------
(Please print name and address.)
- ------------------------------------------------------------------------
(Please insert social security or other identifying number.)
Dated: ________________, ____.
-----------------------------
By __________________________
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the face of the accompanying Warrant Certificate or any
prior
Exhibit A-5
<PAGE> 47
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
Exhibit A-6
<PAGE> 48
EXHIBIT B
DETERMINATION OF FAIR MARKET SHARE PRICE.
(a) Within two (2) days of the happening of any event requiring a
determination of the Fair Market Share Price, the Company shall give written
notice thereof to each holder of Warrants (which notice shall contain a
description of such event).
(b) Within ten (10) days of the happening of each event requiring a
determination of the Fair Market Share Price, each of the Required
Warrantholders (as a group) and the Company shall designate an Appraiser for
purposes of determining the Fair Market Share Price and shall notify the other
party or parties of such designation (provided that, if the Company and such
holders so agree, they may jointly designate a single Appraiser, in which event
the determination of the Fair Market Share Price of the single Appraiser so
jointly designated shall be binding upon both the Company and the holders of
Warrants for the purposes of the determination of the Fair Market Share Price
hereunder). Each Appraiser will take such evidence, make such investigations and
examine such documents as it shall in its discretion determine to be necessary
and advisable to make a determination with respect to the Fair Market Share
Price. A detailed report from each Appraiser setting forth such Appraiser's
determination with respect to the Fair Market Share Price shall be delivered to
the Company and to each of the holders of Warrants as soon as possible following
such determination and, in any event, not later than thirty (30) days following
the happening of the event requiring determination of the Fair Market Share
Price.
(c) If either:
(i) the Company or such holders shall fail, neglect or refuse to
designate an Appraiser within the time period set forth in clause (b)
above; or
(ii) either of the two Appraisers so designated shall fail to
deliver its detailed report within the time period set forth in said
clause (b);
then, in each such case, the determination of the Fair Market Share Price of the
single Appraiser actually designated or the single Appraiser actually delivering
its detailed report, as the case may be, shall be binding upon both the Company
and the holders of Warrants for the purposes of the determination of the Fair
Market Share Price hereunder.
(d) If the determinations of the Fair Market Share Price by both such
Appraisers do not differ by more than fifteen percent (15%) of the lower of the
two determinations, then the Fair Market Share Price shall be the arithmetic
average of those two determinations.
Exhibit B-1
<PAGE> 49
(e) If the determinations of the Fair Market Share Price by both such
Appraisers differ by more than fifteen percent (15%) of the lower of the two
determinations, then the parties shall promptly direct the two Appraisers to
consult with one another for the purpose of jointly designating a third
Appraiser, which designation shall be made not later than ten (10) days
following the delivery of the determinations pursuant to clause (b) above. The
third Appraiser shall review the first two appraisals and shall make an
independent determination with respect to the Fair Market Share Price.
(i) In the event that the third Appraiser's determination is equal
to or greater than the greater determination made by the first two
Appraisers, the Fair Market Share Price shall equal the higher of the
determinations of the first two Appraisers.
(ii) In the event that the third Appraiser's determination is equal
to or less than the lesser determination made by the first two Appraisers,
the Fair Market Share Price shall equal the lesser of the determinations
of the first two Appraisers.
(iii) In the event that the third Appraiser's determination is
between those of the first two Appraisers, the Fair Market Share Price
shall equal the arithmetic average of the determinations of all three
Appraisers.
A detailed report from the third Appraiser setting forth such Appraiser's
determination with respect to the Fair Market Share Price shall be delivered to
the Company and to each of the holders of Warrants as soon as possible following
such determination and, in any event, not later than thirty (30) days following
the earlier of (A) the delivery of the reports referred to in clause (b) above,
and (B) the first date upon which such reports are due to be delivered pursuant
to clause (b) above.
(f) The Company agrees to cooperate with each Appraiser to the full
extent necessary to permit determination of the Fair Market Share Price.
(g) All fees and expenses incurred in connection with the foregoing
determination of the Fair Market Share Price (including any and all fees and
expenses of each Appraiser) shall be borne by the Company. Any determination
made in accordance with this definition shall be effective for a period of
ninety (90) days immediately following such determination, unless there has been
a material development in the business of the Company and the Subsidiaries, in
which case there shall be a redetermination in accordance with the provisions of
this Exhibit.
Exhibit B-2
<PAGE> 50
EXHIBIT C
CONFIDENTIALITY
With respect to all data and information that has been or in the future is
furnished to or obtained by any holder of Warrant Certificates in connection
with this Agreement (excluding, in any case, any such data and information that
was or is available to the public or was not or is not treated as confidential
by any one or more of the Company, the , Subsidiaries or the Affiliates), such
holder will hold such data and information in confidence in accordance with the
customary practices and standards of confidentiality generally employed by such
holder in respect of similar data and information obtained in connection with
other comparable investment transactions of such holder. Notwithstanding the
foregoing, any such holder may disclose any data and information furnished to or
obtained by it in connection with this Agreement:
(a) the disclosure of which is, in such holder's sole good faith
business and/or legal judgment, reasonably required in connection with
regulatory requirements (including, without limitation, the requirements
of the National Association of Insurance Commissioners but excluding, in
any case, delivery of periodic financial statements and information to the
National Association of Insurance Commissioners, the Securities Valuation
Office thereof or any other agency thereof in connection with the rating,
evaluation or other regulatory treatment of the Warrants or the Notes) or
other legal requirements related to such holder's affairs, including,
without limitation, the disclosure of such data and information in
connection with or in response to (i) compliance with any law, ordinance
or governmental order, regulation, rule, policy, subpoena, investigation
or request, or (ii) any order, decree, judgment, subpoena, notice of
discovery or similar ruling, or pleading issued, filed, served or
purported on its face to be issued, filed or served (A) by or under
authority of any court, tribunal, arbitration board or any governmental
agency, commission, authority, board or similar entity or (B) in
connection with any proceeding (including, without limitation, any
proceeding to enforce the obligations of the Company under this
Agreement), cause or matter pending (or on its face purported to be
pending) before any court, tribunal, arbitration board or any governmental
agency, commission, authority, board or similar entity;
(b) to any one or more of the employees, officers, directors,
agents, attorneys, accountants, professional consultants or trustees of
such holder (or of any subsidiary or affiliate of such holder) who would
have access to such data and information in the normal course of the
performance of such Person's duties for such holder (or for such
subsidiary or affiliate);
(c) to Moody's Investors Service, Inc., Standard & Poor's
Corporation or any other nationally recognized financial rating service
that is reviewing the credit rating of any holder of Warrant Certificates
or is rating or reviewing the
Exhibit C-1
<PAGE> 51
rating of the Warrants or the Common Stock issuable upon the exercise
thereof; and
(d) to any prospective purchaser, securities broker or dealer or
investment banker in connection with the resale or proposed resale, in
accordance with the terms hereof, of all or any portion of the Warrants or
Common Stock issuable upon the exercise thereof by such holder.
In connection with any disclosure by any holder of Warrant Certificates under
clause (a) above, such holder will use reasonable efforts to notify the Company
of any such pending disclosure, provided that (x) such holder shall in no case
be liable to the Company for its failure to effect such notification, (y) the
failure to effect such notification shall not affect the ability of such holder
to make the disclosures contemplated under said clause (a) and (z) this sentence
shall not apply to the delivery of periodic financial statements and information
to the National Association of Insurance Commissioners, the Securities Valuation
Office thereof or any other agency thereof in connection with the rating,
evaluation or other regulatory treatment of the Warrants or the Notes. In
connection with any disclosure by any holder of Warrant Certificates under
clause (d) above, such holder will use reasonable efforts to cause any
prospective purchaser, securities broker or dealer or investment banker referred
to in said clause (d) to enter into a written confidentiality agreement with the
Company containing terms of confidentiality substantially similar to the terms
of confidentiality set forth in this Exhibit prior to effecting such disclosure,
provided that (yy) such holder shall in no case be liable to the Company if such
prospective purchaser, securities broker or dealer or investment banker shall
for any reason not enter into any such confidentiality agreement with the
Company and (zz) the failure of such prospective purchaser, securities broker or
dealer or investment banker to enter into any such confidentiality agreement
with the Company shall not affect the ability of such holder to make the
disclosures contemplated under said clause (d). No holder of Warrant
Certificates will be liable for the breach of the provisions of this Exhibit or
of any provision in any aforesaid confidentiality agreement by any other holder
of Warrant Certificates or by any Person to which any confidential data or
information shall be delivered in accordance with the provisions of this Exhibit
C.
Exhibit C-2
<PAGE> 1
EXHIBIT 4.37
SECOND AMENDMENT TO
OBSERVATION RIGHTS AGREEMENT
Dated as of August 20, 1997
The Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Re: The Cerplex Group, Inc. --
Senior Subordinated Notes due November 19, 2001 and
Warrants to Purchase Common Stock
Ladies and Gentlemen:
THE CERPLEX GROUP, INC., a Delaware corporation (together with its
successors and assigns, the "Company"), hereby agrees with each of
(A) The Northwestern Mutual Life Insurance Company
(together with its successors, subsidiaries and affiliates,
"Northwestern"), and
(B) John Hancock Mutual Life Insurance Company (together
with its successors, subsidiaries and affiliates, "John Hancock")
(Northwestern and John Hancock are herein referred to, collectively, as the
"Qualified Observers") as follows:
1. RECITALS. The Company and the Qualified Observers entered
into an Observation Rights Agreement dated as of November 19, 1993 (as amended
by a First Amendment to Observation Rights Agreement dated as of April 15, 1996
and as in effect prior to the effectiveness of this Amendment, the "Existing
Observation Rights Agreement"). Pursuant to a First Amendment Agreement dated
as of August 20, 1997 among the Company, the Qualified Observers and certain
other persons, and a Warrant Agreement dated as of August 20, 1997 among the
Company, the Qualified Observers and certain other persons, the Company is
issuing five hundred thousand (500,000) warrants (the "1997 Warrants") to
purchase common stock of the Company to the Qualified Observers and certain
other persons. The Qualified Observers have requested, as additional
consideration for their entering into the aforesaid First Amendment Agreement,
that the Existing Observation Rights Agreement be amended, as more particularly
provided herein, to include the 1997 Warrants being issued to the Qualified
Observers, and the Company has agreed to amend the Existing Observation Rights
Agreement as set forth herein.
<PAGE> 2
2. AMENDMENTS TO EXISTING OBSERVATION RIGHTS AGREEMENT. Section
1 of the Existing Observation Rights Agreement is hereby amended and restated
in its entirety, as set forth below:
1. BACKGROUND.
(a) The Company entered into separate
Note Purchase Agreements, each dated as of November
19, 1993, with certain purchasers named in Annex 1
thereto, providing for the issuance by the Company
and the purchase by the Purchasers of (1) an
aggregate principal amount of $17,250,000 of the
Company's Series A 9.00% Senior Subordinated Notes
due November 19, 2001 (the "Series A Notes") and (2)
an aggregate principal amount of $5,750,000 of the
Company's Series B 9.00% Senior Subordinated Notes
due November 19, 2001 (the "Series B Notes"). The
Note Purchase Agreements dated as of November 19,
1993 have been amended and restated pursuant to the
terms of separate Amended and Restated Note Purchase
Agreements, each dated as of April 9, 1997 (as may be
amended or restated from time to time, the "Note
Purchase Agreements"), with certain purchasers named
on Annex 1 thereto (collectively, the "Purchasers")
(including, without limitation, Northwestern and John
Hancock), pursuant to which the Series A Notes were
amended and restated (such notes, together with any
notes issued in substitution therefor, and as may be
further amended or restated from time to time, are
referred to as the "Notes").
(b) Concurrently with, and in
consideration of, the purchase of the Series B Notes
by the Purchasers, the Company issued to the
Purchasers, pursuant to a Warrant Agreement, dated as
of November 19, 1993 (as may be amended from time to
time, the "1993 Warrant Agreement") among the Company
and the Purchasers, its Warrants (as such term is
defined in the 1993 Warrant Agreement) to purchase
Common Stock, $0.001 par value per share, of the
Company, as represented by certain Warrant
Certificates (as such term is defined in the 1993
Warrant Agreement).
(c) In consideration of the Purchasers
entering into a Waiver and Amendment Agreement dated
as of April 15, 1996 among the Company and the
Purchasers, the Company issued to the Purchasers,
pursuant to a Warrant Agreement, dated as of April
15, 1996 (as may be amended from time to time, the
"1996 Warrant Agreement") among the Company and the
Purchasers, its Warrants (as such term is defined in
the 1996 Warrant Agreement) to purchase Common Stock,
$0.001 par value per share, of the Company, as
represented by certain Warrant Certificates (as such
term is defined in the 1996 Warrant Agreement).
2
<PAGE> 3
(d) In consideration of the Purchasers
entering into a First Amendment Agreement dated as of
August 20, 1997 among the Company and the Purchasers,
the Company issued to the Purchasers, pursuant to a
Warrant Agreement, dated as of August 20, 1997 (as
may be amended from time to time, the "1997 Warrant
Agreement") among the Company and the Purchasers, its
Warrants (as such term is defined in the 1997 Warrant
Agreement) to purchase Common Stock, $0.001 par value
per share, of the Company, as represented by certain
Warrant Certificates (as such term is defined in the
1997 Warrant Agreement).
(e) As used herein, the terms "Warrants"
and "Warrant Certificates" shall include all Warrants
and Warrant Certificates, respectively, issued
pursuant to the 1993 Warrant Agreement, the 1996
Warrant Agreement and the 1997 Warrant Agreement to
the Qualified Observers. Other capitalized terms
used herein without definition shall have the
respective meanings ascribed to them in the Note
Purchase Agreements.
3. MISCELLANEOUS.
(a) GOVERNING LAW. This Amendment shall be governed by
and construed and enforced in accordance with, internal New York law.
(b) DUPLICATE ORIGINALS. Two or more duplicate originals
of this Amendment may be signed by the parties, each of which shall be
an original but all of which together shall constitute one and the
same instrument. This Amendment may be executed in one or more
counterparts and shall be effective when at least one counterpart
shall have been executed by each party hereto, and each set of
counterparts which, collectively, show execution by each party hereto
shall constitute one duplicate original.
(c) EFFECT OF THIS AMENDMENT. Except as specifically
provided in this Amendment, no terms or provisions of the Existing
Observation Rights Agreement have been modified or changed by this
Amendment and the terms and provisions of the Existing Observation
Rights Agreement, as amended hereby, shall continue in full force and
effect. This Amendment and the amendments contained herein shall have
and be in effect on and after the date hereof.
(d) SECTION HEADINGS. The titles of the sections hereof
appear as a matter of convenience only, do not constitute a part of
this Amendment and shall not affect the construction hereof.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
3
<PAGE> 4
IN WITNESS WHEREOF, each of the undersigned has executed this
Amendment as of the date first written above.
Very truly yours,
THE CERPLEX GROUP, INC.
By:________________________________
Name:
Title:
The foregoing Amendment is hereby
accepted as of the date hereof.
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By:________________________________
Name:
Title:
4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 21,788
<SECURITIES> 0
<RECEIVABLES> 18,874
<ALLOWANCES> 1,807
<INVENTORY> 8,987
<CURRENT-ASSETS> 52,914
<PP&E> 40,035
<DEPRECIATION> 16,199
<TOTAL-ASSETS> 78,117
<CURRENT-LIABILITIES> 83,923
<BONDS> 0
0
657
<COMMON> 34
<OTHER-SE> 30,825
<TOTAL-LIABILITY-AND-EQUITY> 78,117
<SALES> 85,606
<TOTAL-REVENUES> 85,608
<CGS> 76,076
<TOTAL-COSTS> 96,197
<OTHER-EXPENSES> 998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,956
<INCOME-PRETAX> (13,245)
<INCOME-TAX> 1,115
<INCOME-CONTINUING> (14,360)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,360)
<EPS-PRIMARY> (0.60)
<EPS-DILUTED> 0
</TABLE>
