______________________________________________________________________________
UNITED STATES
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 15, 1996
RENAISSANCE COSMETICS, INC.
(Exact name of registrant as specified in its charter)
33-87280
State of Delaware ________ 06-1396287
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
955 Massachusetts Ave., Cambridge, Massachusetts 02139
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (617) 497-5584
Not applicable
(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On August 15, 1996, the Registrant issued the press release
attached hereto as Exhibit 99 and incorporated herein by reference.
Item 7. EXHIBITS
Exhibit Number DESCRIPTION OF EXHIBIT
(Referenced to Item 601
OF REGULATION S-K)
4.1 Certificate of Designation of Preferences and
Rights of Senior Redeemable Preferred Stock,
Series B, dated as of August 15, 1996.
4.2 Certificate of Designation of Preferences and
Rights of Senior Redeemable Preferred Stock,
Series C, dated as of August 15, 1996.
10.1 Securities Purchase Agreement, dated as of
August 8, 1996, between Registrant and CIBC
Wood Gundy Securities Corp.
10.2 Registration Rights Agreement, dated as of
August 15, 1996, between Registrant and CIBC
Wood Gundy Securities Corp.
10.3 Common Stock Registration Rights Agreement,
dated as of August 15, 1996, between Registrant
and CIBC Wood Gundy Securities Corp.
10.4 Warrant Agreement, dated as of August 15, 1996,
between Registrant and Firstar Trust Company
99 Registrant's Press Release, dated as of
August 15, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: August 15, 1996
RENAISSANCE COSMETICS, INC.
By:
------------------------
Name:
-----------------
Title:
----------------
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EXHIBIT INDEX
Pursuant to Item 601 of Regulation S-K
EXHIBIT NO. DESCRIPTION OF EXHIBIT
4.1 Certificate of Designation of Preferences
and Rights of Senior Redeemable Preferred
Stock, Series B, dated as of August 15,
1996.
4.2 Certificate of Designation of Preferences
and Rights of Senior Redeemable Preferred
Stock, Series C, dated as of August 15,
1996.
10.1 Securities Purchase Agreement, dated as of
August 8, 1996, between Registrant and
CIBC Wood Gundy Securities Corp.
10.2 Registration Rights Agreement, dated
as of August 15, 1996, between Registrant
and CIBC Wood Gundy Securities Corp.
10.3 Common Stock Registration Rights
Agreement, dated as of August 15, 1996,
between Registrant and CIBC Wood Gundy
Securities Corp.
10.4 Warrant Agreement, dated as of August 15,
1996, between Registrant and Firstar Trust
Company.
99 Registrant's Press Release, dated as of
August 15, 1996.
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SENIOR REDEEMABLE PREFERRED STOCK, SERIES B
(PAR VALUE $.01 PER SHARE)
OF
RENAISSANCE COSMETICS, INC.
_______________
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
_______________
RENAISSANCE COSMETICS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that, pursuant to authority conferred
upon the Board of Directors by the Restated Certificate of Incorporation
of the Corporation, and pursuant to the provisions of Section 151 of the
Delaware General Corporation Law, said Board of Directors duly adopted a
resolution on August 14, 1996, which approved the filing of this
Certificate of Designation and which resolution remains in full force and
effect as of the date hereof.
Pursuant to such resolution and the authority conferred upon the
Board of Directors by the Restated Certificate of Incorporation of the
Corporation, there is hereby created a series of preferred stock of the
Corporation, which series shall have the following powers, preferences,
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, in addition to those
set forth in the Restated Certificate of Incorporation of the
Corporation:
1. CERTAIN DEFINITIONS. As used herein, the following terms
shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person.
For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by," and
"under common control
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with"), as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.
"Agent Member" has the meaning specified in Section 16.
"Board of Directors" means the board of directors of the
Corporation or any committee authorized to act therefor.
"Board Resolution" means a copy of a resolution certified pursuant
to an officers' certificate to have been duly adopted by the Board of
Directors of the Corporation or a Subsidiary, as applicable, and to be in
full force and effect, and delivered to the Holder.
"Business Day" means a day that is not a Saturday, a Sunday or a
day on which banking institutions in the State of New York are not
required to be open.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock,
partnership interests or any other participation, right or other interest
in the nature of an equity interest in such Person or any option, warrant
or other security convertible into any of the foregoing.
"Cash Dividend Payment Date" means the earlier to occur of (i) the
first Dividend Payment Date following August 15, 1999, and (ii) the first
Dividend Payment Date following the first anniversary of the redemption
in full of the Notes.
"Change of Control" of the Corporation will be deemed to have
occurred at such time as (i) any Person (including a Person's Affiliates
and associates), other than a Permitted Holder, becomes the beneficial
owner (as defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 50% or more of the total voting
power of the Corporation's Common Stock, (ii) prior to a Public Equity
Offering, the Permitted Holders, collectively shall dispose of more than
50% of the shares of the Corporation's Common Stock owned by the
Permitted Holders in the aggregate as of the date hereof (excluding
dispositions made to another Permitted Holder), (iii) any Person
(including a Person's Affiliates and associates), other than a Permitted
Holder, becomes the beneficial owner of more than 35% of the total voting
power of the Corporation's Common Stock, and the Permitted Holders
together with the officers and employees of the Corporation beneficially
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own, in the aggregate, a lesser percentage of the total voting power of
the Common Stock of the Corporation than such other Person and do not
have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the Board of Directors of the
Corporation, (iv) there shall be consummated any consolidation or merger
of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which the Common Stock of the
Corporation would be converted into cash, securities or other property,
other than a merger or consolidation of the Corporation in which the
holders of the Common Stock of the Corporation outstanding immediately
prior to the consolidation or merger hold, directly or indirectly, at
least a majority of the Common Stock of the surviving corporation
immediately after such consolidation or merger or (v) subsequent to a
Public Equity Offering during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Corporation (together with any new directors whose
election by such Board of Directors or whose nomination for election by
the stockholders of the Corporation has been approved by 66 2/3% of the
directors then still in office who either were directors at the beginning
of such period or whose election or recommendation for election was
previously so approved) cease to constitute a majority of the Board of
Directors of the Corporation.
"Change of Control Offer" has the meaning specified in Section
7(D).
"Change of Control Payment Date" has the meaning specified in
Section 7(D).
"Change of Control Purchase Price" has the meaning specified in
Section 7(D).
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of
directors of such Person or (ii) if such Person is not a corporation,
vote or otherwise participate in the selection of the governing body,
partners, managers or others that will control the management and
policies of such Person.
"Consolidated Net Income" of the Corporation means, for any
period, the consolidated net income (or loss) of such Person and its
consolidated Subsidiaries for such period as determined in accordance
with GAAP consistently applied, adjusted, to the extent included in
calculating such net income (loss), by excluding, without duplication,
(i) all extraordinary gains and losses, net of taxes, (ii) the portion of
net income (or loss) of such Person and
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its consolidated Subsidiaries allocable to minority interests in unconsolidated
Persons to the extent that cash dividends or distributions have not actually
been received by such Person or one of its consolidated Subsidiaries,
(iii) net income (or loss) of any Person combined with such Person or any of
its subsidiaries on a "pooling of interests" basis attributable to any period
prior to the date of combination, (iv) any gain or loss, net of taxes, realized
upon the termination of any employee pension benefit plan, (v) net gains or
losses (less all fees and expenses relating thereto), net of taxes, in
respect of dispositions of assets other than in the ordinary course of
business or (vi) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of
that income is not at the time permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulations
applicable to that Subsidiary or its stockholders.
"Corporation" means Renaissance Cosmetics, Inc., a Delaware
corporation.
"Corporation Common Stock" means the Common Stock, par value $.01
per share, of the Corporation.
"Depositary" has the meaning specified in Section 16.
"Disqualified Capital Stock" means any Capital Stock of the
Corporation or a Subsidiary thereof which, by its terms (or by the terms
of any equity security into which it is convertible or for which it is
exchangeable at the option of the holder), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the latest maturity date of
the Notes or the maturity date of the Series B Preferred Stock, for cash
or securities constituting Indebtedness. Without limitation of the
foregoing, Disqualified Capital Stock shall be deemed to include any
Preferred Stock of a Subsidiary of the Corporation; PROVIDED, HOWEVER,
that Preferred Stock of the Corporation or any Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer
to be made for such Preferred Stock in the event of a Change of Control
of the Corporation or Subsidiary, which provisions have substantially the
same effect as the provisions described in Section 7(C) shall not be
deemed to be Disqualified Capital Stock solely by virtue of any such
provisions.
"Dividend Payment Date" means May 15, August 15, November 15 and
February 15, commencing November 15, 1996, unless
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such day is not a Business Day, in which case the Dividend Payment Date
shall be the immediately succeeding Business Day.
"Dividend Rate" has the meaning specified in Section 3 hereof.
"Dividend Record Date" means a day fifteen (15) days preceding the
Dividend Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Credit Facility" means the Note Purchase Agreement,
dated as of December 21, 1994, among the Corporation, Cosmar Corporation
and Nomura Holding America Inc.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Global Series B Preferred Stock" has the meaning specified in
Section 16 hereof.
"Holder" means a registered holder of shares of Series B Preferred
Stock.
"Liquidation Preference" means $1,000 per share of Series B
Preferred Stock plus, for purposes of Section 8 hereof, whether such
share is issued or accrued, in each case, accrued and unpaid dividends,
whether or not declared, if any, thereon through the date such
Liquidation Preference is paid.
"Net Proceeds" means (a) in the case of any sale of Capital Stock
by the Corporation, the aggregate net proceeds received by the
Corporation, after payment of expenses, commissions and the like incurred
in connection therewith, whether such proceeds are in cash or in property
(valued at the fair market value thereof, as determined in good faith by
the Board of Directors, at the time of receipt) and (b) in the case of
any exchange, exercise, conversion or surrender of outstanding securities
of any kind for or into shares of Capital Stock of the Corporation which
is not Disqualified Capital Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or
surrender (plus any additional amount required to be paid by the holder
to the Corporation upon such exchange, exercise, conversion or surrender,
less any and all payments made to the holders, E.G., on account of
fractional shares
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and less all expenses incurred by the Corporation in connection therewith).
"New Credit Facility" means any agreement or agreements evidencing
indebtedness used to refinance the Existing Credit Facility.
"Notes" means the securities that are issued under the Indenture
and called the 13 3/4% Senior Notes due 2001, Series B, and the 13 3/4%
Senior Notes due 2002.
"Offer Period" has the meaning specified in Section 7(C).
"Parity Stock" shall mean shares of the Corporation's Senior
Redeemable Preferred Stock, Series C, the series into which the Series B
Preferred Stock will exchange in the registered exchange offer or in a
private exchange.
"Permitted Holders" means (i) Kidd Kamm Equity Partners, L.P. or
Thomas V. Bonoma, (ii) the heirs, executors, administrators testamentary,
trustees, legatees or beneficiaries of Kidd Kamm Equity Partners, L.P. or
Thomas V. Bonoma or of any person described in this clause (ii), (iii) a
trust the beneficiaries of which include only persons described in
clauses (i) and (ii) above and their respective spouses and lineal
descendants, (iv) the general partner and each limited partner of Kidd
Kamm Equity Partners, L.P. and (v) any Subsidiary of either Kidd Kamm
Equity Partners, L.P. or Thomas V. Bonoma or both of them jointly.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or other legal entity.
"Physical Series B Preferred Stock" has the meaning specified in
Section 16 hereof.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with
respect to dividends, distributions or liquidation proceeds of such
Person over the holders of other Capital Stock issued by such Person.
"Public Equity Offering" means a public offering by the
Corporation of Corporation Common Stock (however designated and whether
voting or non-voting) and any and all rights, warrants or options to
acquire such Corporation Common Stock.
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"Purchase Date" has the meaning specified in Section 7(C) hereof.
"Redemption Date" when used with respect to any shares of Series B
Preferred Stock means the date fixed for such redemption of such shares of
Series B Preferred Stock pursuant to Section 6 hereof.
"Redemption Notice" has the meaning specified in Section 6(C)
hereof.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or
payment on Capital Stock of the Corporation (other than Parity Stock) or
any Subsidiary of the Corporation or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the
Corporation or any Subsidiary of the Corporation (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or Cumulative Exchangeable Preferred Stock as
dividends on the Cumulative Exchangeable Preferred Stock or in options,
warrants or other rights to purchase Capital Stock (other than
Disqualified Capital Stock), (y) in the case of Subsidiaries of the
Corporation, dividends or distributions payable to the Corporation or to
a Wholly-Owned Subsidiary of the Corporation and (z) dividends payable in
cash on the Corporation's Cumulative Exchangeable Preferred Stock if
dividends on the Series B Preferred Stock shall have been paid in cash
for the most recent quarterly period then ended), and (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital
Stock of the Corporation or any of its Subsidiaries (other than
(x) Parity Stock, (y) Capital Stock owned by the Corporation or a Wholly-
Owned Subsidiary of the Corporation, excluding Disqualified Capital Stock
or (z) Capital Stock held by former employees of the Corporation or any
of its Subsidiaries up to a maximum of $500,000 in aggregate amount
during any consecutive twelve-month period after the date hereof
(increased by the unused portion of such maximum amount from any prior
and non-concurrent consecutive twelve-month period after the date
hereof), not to exceed $2,000,000 in the aggregate).
"Required Filing Date" has the meaning specified in Section 7(A)
hereof.
"SEC" means the United States Securities and Exchange Commission
as constituted from time to time or any successor performing
substantially the same functions.
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"Securities Act" means the Securities Act of 1933, as amended.
"Series B Preferred Stock" means the Senior Redeemable Preferred
Stock, Series B, par value $.01 per share, of the Corporation.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business or legal
entity, whether now existing or hereafter organized or acquired, (i) in
the case of a corporation, of which more than 50% of the total voting
power of the Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, officers or
trustees thereof is held by such first-named Person or any of its
Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business or legal entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity through
the ownership of voting securities, by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement
purposes.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares or
similiar DE MINIMIS shares required to be held by officers or directors
in accordance with laws of foreign jurisdictions) of which are owned,
directly or indirectly, by the Corporation.
2. DESIGNATION. The series of preferred stock established
hereby shall be designated the "Senior Redeemable Preferred Stock,
Series B" (and shall be referred to herein as the "Series B Preferred
Stock"), and the authorized number of shares of Series B Preferred Stock
shall be 325,000 shares.
3. DIVIDENDS. Holders will be entitled to receive, when, as and
if declared by the Board of Directors, out of funds legally available
therefor, dividends payable, at the option of the Corporation, in either
cash, at a rate per annum (the "Dividend Rate") of 14.0% of the
Liquidation Preference of each share of Series B Preferred Stock, or in
additional shares of Series B Preferred Stock with an aggregate
liquidation preference equal to the amount of such dividends on any
Dividend Payment Date through August 31, 2002, and only in cash
thereafter; PROVIDED, HOWEVER, that in the event that the outstanding
Notes are redeemed in full, dividends shall be paid in cash on the first
Dividend Payment Date
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following the earlier of, one year from the date of
such redemption or on August 31, 2002; also provided that once the
Corporation shall pay dividends in cash (other than in connection with a
redemption or in lieu of fractional shares), it shall no longer have the
option to pay dividends on the Series B Preferred in other than cash. In
addition, if after August 15, 1999 or at any other time it is required to
do so, the Corporation shall not pay dividends in cash, the Dividend Rate
on each share of Series B Preferred Stock will increase by .25% during
each quarter ended on the Dividend Payment Date on which non-cash payment
occurs, unless such non-cash payment has occurred during more than four
quarters, in which case the per annum dividend rate will be increased by
0.5% in each additional quarter in which such non-cash payment occurs, in
each case, in excess of the rate otherwise payable; PROVIDED, HOWEVER,
that at no time will the dividend rate on the Series B Preferred Stock
exceed 17.00% per annum of the Liquidation Preference, including by
reason of increases in Dividend Rates or any penalty resulting from the
exercise of various options by the Corporation referred to herein other
than a failure to comply with the Preferred Stock Registration Rights
Agreement dated as of August , 1996. Dividends will be cumulative and
will accrue from the date of issuance and be payable quarterly in arrears
as provided in the immediately preceding sentence on each Dividend
Payment Date, commencing on November 15, 1996. Dividends, whether or not
earned or declared, will cumulate until declared and paid, when
declaration and payment may be for all or part of the then-accumulated
dividends. Each dividend shall be payable to Holders of record as they
appear on the stock books of the Corporation on each Dividend Record
Date. Accrued and unpaid dividends, if any, shall not bear interest;
PROVIDED, HOWEVER, that accrued and unpaid dividends payable in Series B
Preferred Stock will accumulate dividends to the same extent as issued
shares of Series B Preferred Stock. Dividends shall cease to accrue in
respect of the Series B Preferred Stock on any Redemption Date with
respect to Series B Preferred Stock redeemed on any such date. Nothing
herein contained shall in any way or under any circumstances be construed
or deemed to require the Board of Directors of the Corporation to
declare, or the Corporation to pay or set apart for payment, any
dividends on shares of the Series B Preferred Stock at any time.
Dividends in connection with any optional redemption pursuant to Section
6(A) or Change of Control Offer pursuant to Section 7(C) may be declared
and paid at any time, without reference to any regular Dividend Payment
Date, to holders of record on such date, not less than 10 nor more than
60 days prior to the payment thereof, as may be fixed by the Board of
Directors of the Corporation.
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Notwithstanding anything to the contrary herein, the Corporation
shall not issue fractional shares of Series B Preferred Stock as
dividends on shares of Series B Preferred Stock. If any fraction of a
share of Series B Preferred Stock would otherwise be required to be paid
to the Holders pursuant to this Section 3, the Corporation shall, to the
extent it is permitted to do so under the Indenture and all other
agreements to which it is a party at such time, pay in lieu of such
fractional share an amount in cash for such fractional share at a rate
equal to $1,000 per whole share.
4. RANKING. Upon filing of a Certificate of Elimination with
respect to the Cumulative Exchangeable Preferred Stock, to be filed with
the Secretary of State of the State of Delaware on the date hereof, the
Series B Preferred Stock shall, with respect to dividend rights and
distributions upon the liquidation, winding-up and dissolution of the
Company, rank senior to all classes of Common Stock of the Corporation,
the Cumulative Exchangeable Preferred Stock and to any other class or
series of any class of Capital Stock of the Corporation, other than
Parity Stock, whether now outstanding or issued hereafter. Except for
the Parity Stock, the Corporation shall not create any class or series of
Preferred Stock ranking PARI PASSU with or senior to the Series B
Preferred Stock with respect to dividend rights and distributions on
liquidation, winding-up and dissolution without the approval of Holders
of a majority of the outstanding shares of Series B Preferred Stock and
the outstanding Parity Stock (acting together as a single class and
series).
5. VOTING RIGHTS. Except as required by the General Corporation
Law of the State of Delaware and as provided in Section 4 hereof, the
Holders shall not be entitled to vote on any matter submitted to a vote
of stockholders of the Corporation. Prior to each meeting of
stockholders at which the Board of Directors are to be elected or
pursuant to written consents of stockholders having like legal effect,
Holders shall have the right (acting together with the holders of Parity
Stock, as a single class and series) to nominate three candidates for
directors on the Corporation's Board of Directors (the "Series B
Preferred Stock Nominees"). The Corporation shall include one of the
Series B Preferred Stock Nominees in its nominations for the
Corporation's Board of Directors, and use all reasonable commercial
efforts to cause the election of such Series B Preferred Stock Nominee.
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6. REDEMPTION.
(A) OPTIONAL REDEMPTION. The Series B Preferred Stock may be
redeemed (subject to contractual and other restrictions with respect
thereto and the legal availability of funds therefor) at the option of
the Corporation in whole or, from time to time, in part, in the manner
provided in Section 6(C) hereof at any time on or after September 1, 1999
at the redemption prices set forth below (expressed as percentages of
aggregate Liquidation Preference) plus accrued and unpaid dividends
(whether or not declared) to the Redemption Date if redeemed during the
12 month period beginning on September 1 of the years indicated below:
YEAR PERCENTAGE
1999 108%
2000 106%
2001 104%
2002 102%
and on and after September 1, 2003 at 100% of the aggregate Liquidation
Preference of the Series B Preferred Stock so redeemed, payable in cash
to the Redemption Date. Notwithstanding the foregoing, the Corporation
may redeem (pursuant to one or more redemptions) up to 35% of the
aggregate Liquidation Preference of the Series B Preferred Stock and the
Parity Stock (treated together as a single class and series) at any time
prior to September 1, 1999 at a redemption price equal to 110% of the
Liquidation Preference therefor, plus accrued and unpaid dividends
thereon to the date of redemption, out of the Net Proceeds from one or
more public offerings of common stock or preferred stock of the
Corporation. Any such redemption will be required to occur on or prior
to 120 days after the receipt of such net proceeds.
(B) MANDATORY REDEMPTION. The Corporation shall be obligated to
redeem (subject to the legal availability of funds therefor) all
outstanding shares of Series B Preferred Stock on August 31, 2006 at a
redemption price equal to the Liquidation Preference thereof, payable in
cash, plus accrued and unpaid dividends (whether or not declared), which
shall also be paid in cash (whether or not otherwise payable in cash) to
the Redemption Date.
(C) PROCEDURE FOR REDEMPTION.
(i) In the event of a redemption of less than all of the
outstanding Series B Preferred Stock and Parity Stock (treating both
series as a single class and series), the shares so redeemed
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will be determined by the Corporation PRO RATA according to the number of shares
held by each Holder and each holder of Parity Stock, or by lot, as
determined by the Company except that the Company may redeem such shares
of Series B Preferred Stock and Parity Stock held by any holder of fewer
than 100 shares of either series (or shares held by any Holder who would
hold less than 100 shares as a result of such redemption) as may be
determined by the Company.
(ii) The Corporation shall send a written notice of redemption
(the "Redemption Notice") by first-class mail, postage prepaid, not fewer
than thirty (30) days nor more than sixty (60) days prior to the
applicable Redemption Date to each Holder as of the record date fixed for
such redemption of Series B Preferred Stock at such Holder's address as
the same appears on the stock books of the Corporation; PROVIDED,
HOWEVER, that no failure to give such notice to any Holder or Holders nor
any deficiency therein shall affect the validity of the procedure for the
redemption of any shares of Series B Preferred Stock to be redeemed
except as to the Holder or Holders to whom the Corporation has failed to
give said notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(A) whether all or less than all the outstanding shares of Series
B Preferred Stock are to be redeemed and the total number of shares of
Series B Preferred Stock being redeemed;
(B) the number of shares of Series B Preferred Stock held of
record by that specific Holder that the Corporation intends to redeem;
(C) the applicable Redemption Date;
(D) the manner and place or places at which payment for the
shares called for redemption will, upon presentation and surrender to
the Corporation of the Series B Preferred Stock Certificates evidencing
the shares being redeemed, be made;
(E) whether such redemption is conditioned upon the consummation
of a simultaneous financing or any other condition; and
(F) that dividends on the shares of Series B Preferred Stock
being redeemed shall cease to accrue on the applicable Redemption Date.
(iii) On the applicable Redemption Date, the full applicable
redemption price shall become payable for the shares of
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Series B
Preferred Stock being redeemed on the applicable Redemption Date, subject
to the consummation of a simultaneous financing or satisfaction of any
other condition, if applicable. As a condition of payment of the
applicable redemption price, each Holder of Series B Preferred Stock must
surrender a Series B Preferred Stock Certificate or Certificates
representing the shares of Series B Preferred Stock being redeemed by the
Corporation in the manner and at the place designated in the applicable
Redemption Notice. The full applicable redemption price for such shares
properly tendered for payment shall be paid to the person whose name
appears on such certificate or certificates as the owner thereof, on and
after the applicable Redemption Date when and as certificates for the
shares being redeemed are properly tendered for payment. Each
surrendered Series B Preferred Stock Certificate shall be cancelled and
retired. In the event that less than all of the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(iv) On the applicable Redemption Date, unless the Corporation
defaults in the payment of the applicable redemption price, dividends
will cease to accrue with respect to the shares of Series B Preferred
Stock called for redemption. All rights of Holders of such redeemed
shares will terminate except for the right to receive the applicable
redemption price.
7. COVENANTS.
(A) SEC REPORTS.
So long as any of the Series B Preferred Stock remains
outstanding, whether or not the Corporation is subject to Section 13(a)
or 15(d) of the Exchange Act, the Corporation shall provide to the
holders of the Series B Preferred Stock the annual reports, quarterly
reports and other documents which the Corporation would have been
required to file with the SEC pursuant to such Sections 13(a) and 15(d)
if the Corporation were so subject, such documents to be provided on or
prior to the respective dates (the "Required Filing Dates") by which the
Corporation would have been required so to file such documents if the
Corporation were so subject. The Corporation shall also in any event
within 15 days of each Required Filing Date transmit by mail to all
Holders, as their names and addresses appear on the stock books of the
Corporation, without cost to such Holders copies of the annual reports,
quarterly reports and other documents which the Corporation would have
been required to file with the SEC pursuant to Sections 13(a) and 15(d)
of the Exchange Act if the Corporation were subject to such Sections.
<PAGE>
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(B) LIMITATION ON RESTRICTED PAYMENTS.
The Corporation will not make, and will not permit any of its
Subsidiaries to, directly or indirectly, make, any Restricted Payment;
provided, however, that the Corporation shall be permitted to make
Restricted Payments to the extent that dividends on the Series B
Preferred Stock shall have been paid in cash for the most recent
quarterly period then ended and such Restricted Payments shall not in the
aggregate exceed 50% of Consolidated Net Income from August 31, 1996 (or
if such aggregate Consolidated Net Income shall be a loss, minus 100% of
such loss) to the date of any such Restricted Payment.
The provisions of this Section 7(B) shall not prohibit (i) the
payment of any dividends, exchanges, repurchases and redemption of Series
B Preferred Stock or Parity Stock in accordance with the terms hereof,
(ii) the retirement of any shares of Capital Stock of the Corporation by
conversion into, or by or in exchange for, shares of Capital Stock (other
than Disqualified Capital Stock), or out of, the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Corporation) of other shares of Capital Stock of the Corporation (other
than Disqualified Capital Stock), (iii) the retirement of any shares of
Disqualified Capital Stock by conversion into, or by exchange for, shares
of Disqualified Capital Stock, or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Corporation) of other shares of Disqualified Capital Stock, (iv) the
payment of management and advisory fees to Kidd Kamm Equity Partners,
L.P. or its Affiliates in an amount that, when taken together with all
such previous amounts paid since April 15, 1994, does not exceed an
average annual amount of $675,000 or (v) the payment of any Restricted
Payment within 60 days of declaration thereof if such payment was
permitted when declared.
(C) CHANGE OF CONTROL.
(a) Within 20 days of the occurrence of a Change of Control, the
Corporation shall notify the holders of Series B Preferred Stock in
writing of such occurrence and shall to the extent permitted under the
Notes, the Existing Credit Facility, the New Credit Facility and all
other long-term indebtedness of the Company or its Subsidiaries then
outstanding, and provided that the obligation to do so does not result in
the Series B Preferred Stock constituting disqualified stock under any
such indebtedness and to the extent that the Company otherwise has
legally available funds, make an offer to purchase (the "Change of
Control Offer") the outstanding shares of Series B Preferred Stock at a
purchase price equal to 101% of the Liquidation Preference plus any
accrued and
<PAGE>
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unpaid dividends thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set
forth in this Section 7(C).
(b) Within 20 days of the occurrence of a Change of Control, the
Corporation also shall (i) cause a notice of the Change of Control Offer
to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class
mail, postage prepaid, to each holder of the Series B Preferred Stock, at
the address appearing in the register maintained by the Corporation, in
the case of the Series B Preferred Stock, a notice stating:
(A) that the Change of Control Offer is being made pursuant to
this Section 7(C) and Series B Preferred Stock tendered will be
accepted for payment, and otherwise subject to the terms and conditions
set forth herein;
(B) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 business days from
the date such notice is mailed (the "Change of Control Payment Date"));
(C) that any share of Series B Preferred Stock not tendered will
continue to accrue interest or dividends, as the case may be;
(D) that, unless the Corporation defaults in the payment of the
Change of Control Purchase Price, any Series B Preferred Stock accepted
for payment pursuant to the Change of Control Offer shall cease to
accrue dividends on and after the Change of Control Payment Date;
(E) that holders accepting the offer to have their Series B
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender the Series B Preferred Stock, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Series B Preferred Stock completed, to the paying agent or the
Corporation at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control Payment
Date;
(F) that holders will be entitled to withdraw their acceptance if
the paying agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile
<PAGE>
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transmission or letter setting forth the
name of the holder, the number of shares of Series B Preferred Stock
delivered for purchase, and a statement that such holder is withdrawing
his election to have such Series B Preferred Stock purchased;
(G) that holders whose Series B Preferred Stock is being
purchased only in part will be issued new Series B Preferred Stock
equal in Liquidation Preference to the unpurchased portion of the
Series B Preferred Stock surrendered, provided that each share of
Series B Preferred Stock purchased and each share of Series B Preferred
Stock issued shall be in Liquidation Preference in denominations of
$1,000 and integral multiples thereof;
(H) any other procedures that a holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance; and
(I) the name and address of the paying agent.
On the Change of Control Payment Date, the Corporation shall, to
the extent it has legally available funds therefore and to the extent
otherwise lawful, (i) accept for payment, shares of Series B Preferred
Stock or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deposit with the paying agent money sufficient to pay the
purchase price of all shares of Series B Preferred Stock or portions
thereof so tendered and (iii) deliver or cause to be delivered to the
Corporation shares of Series B Preferred Stock so accepted together with
an officers' certificate stating the shares of Series B Preferred Stock
or portions thereof tendered to the Corporation. The paying agent shall
promptly mail to each holder of Series B Preferred Stock so accepted
payment in an amount equal to the purchase price for such shares of
Series B Preferred Stock, and the Corporation shall execute and issue,
and mail to such Holder, shares of Series B Preferred Stock equal in
Liquidation Preference to any unpurchased portion of the Series B
Preferred Stock surrendered; PROVIDED that each such share of Series B
Preferred Stock shall be issued with a Liquidation Preference of $1,000
and in integral multiples thereof.
To the extent the Corporation shall not make (or be prohibited
from making whether by contract or applicable law) a Change of Control
Offer and consummate or be prohibited from consummating such Change of
Control Offer on the Change of Control Payment Date, the Dividend Rate
shall be increased to 17.00% per annum per share of Series B Preferred
Stock.
<PAGE>
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(D) ADDITIONAL COVENANT. The Corporation will not elect to
exercise its option to exchange, either in whole or in part, its
Cumulative Exchangeable Preferred Stock for Notes without the prior
consent of the holders of a majority in aggregate Liquidation Preference
of the Series B Preferred Stock and Parity Stock, taken together as a
single class and series.
8. PAYMENT ON LIQUIDATION.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, Holders of Series B Preferred Stock and
holders of Parity Stock (treated as a single class and series) will be
entitled to receive an amount in cash equal to the Liquidation
Preference, before any distribution is made on any Common Stock or other
Preferred Stock of the Corporation. After payment of the full amount of
the Liquidation Preferences to which they are entitled, Holders of Series
B Preferred Stock will not be entitled to any further participation in
any distribution of assets of the Corporation.
(B) For the purposes of this Section 8, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with one or more corporations shall be deemed a voluntary
or involuntary liquidation, dissolution or winding-up of the Corporation,
unless such sale, conveyance, exchange or transfer shall be in connection
with a dissolution or winding-up of the business of the Corporation.
9. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be
required by the General Corporation Law of the State of Delaware, shares
of the Series B Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than
those specifically set forth in this Certificate of Designation (as such
Certificate may be amended from time to time) and in the Corporation's
Restated Certificate of Incorporation, as amended. No shares of Series B
Preferred Stock shall have any preemptive or subscription rights
whatsoever as to any securities of the Corporation.
10. REISSUANCE OF PREFERRED STOCK. Shares of Series B Preferred
Stock that have been issued and reacquired by the Corporation in any
manner, including shares purchased or redeemed, shall (upon compliance
with any applicable provisions of the General Corporation Law of the
State of Delaware) have the status of authorized and unissued shares of
preferred stock undesignated
<PAGE>
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as to series and may be redesignated and
reissued as part of any series of preferred stock, except that any
issuance or reissuance of shares of Series B Preferred Stock must be in
compliance with this Certificate.
11. BUSINESS DAY. If any payment or redemption shall be required
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
12. HEADINGS OF SUBDIVISIONS. The headings of the various
subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
13. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Series B Preferred Stock set forth in this Certificate
of Designation (as may be amended from time to time) is invalid, unlawful
or incapable of being enforced by reason of any rule or law or public
policy, all other rights, preferences and limitations set forth in this
Certificate of Designation (as so amended) which can be given effect
without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no
right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
14. NOTICE. All notices and other communications provided for or
permitted to be given to the Corporation hereunder shall be made by hand
delivery, next day air courier or certified first-class mail to the
Corporation at its principal executive offices (currently located at 955
Massachusetts Avenue, Cambridge, Massachusetts 02139).
15. AMENDMENTS. This Certificate of Designation may be amended
without notice to or the consent of any Holder to cure any ambiguity,
defect or inconsistency provided that such amendment does not adversely
affect the rights of any Holder. Any provisions of this Certificate of
Designation may be amended by the Corporation with the written consent of
holders representing a majority of the outstanding shares of Series B
Preferred Stock and the Parity Stock, treated as a single series and
class provided that such amendment shall be made concurrently with the
certificate of designation relating to the Parity Stock.
16. BOOK-ENTRY PROVISIONS FOR SERIES B PREFERRED STOCK.
(a) Series B Preferred Stock registered in global form ("Global
<PAGE>
-19-
Series B Preferred Stock") will (i) be registered in the name of The Depository
Trust Company (the "Depositary") or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and
(iii) bear customary legends as required by the Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights hereunder with respect to any Global Series B
Preferred Stock held on their behalf by the Depositary or its custodian,
or under the Global Series B Preferred Stock, and the Depositary may be
treated by the Corporation and any agent of the Corporation as the
absolute owner of the Global Series B Preferred Stock for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Corporation or any agent of the Corporation from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members,
the operation of customary practices governing the exercise of the rights
of a holder of any Series B Preferred Stock.
(b) Transfers of Global Series B Preferred Stock shall be limited
to transfer in whole, but not in part, to the Depositary, its successors
or their respective nominees. Interests of beneficial owners in the
Global Series B Preferred Stock may be transferred or exchanged for
physical Series B Preferred Stock (the "Physical Series B Preferred
Stock") in accordance with the rules and procedures of the Depositary.
In addition, Physical Series B Preferred Stock shall be transferred to
all beneficial owners in exchange for their beneficial interests in
Global Series B Preferred Stock if the Depositary notifies the
Corporation that it is unwilling or unable to continue as Depositary for
any Global Series B Preferred Stock and a successor depositary is not
appointed by the Corporation within 90 days of such notice.
(c) In connection with any transfer or exchange of a portion of
the beneficial interest in any Global Series B Preferred Stock to
beneficial owners pursuant to paragraph (b), the Corporation shall (if
one or more Physical Series B Preferred Stock Certificates are to be
issued) reflect on its books and records the date and a decrease in the
amount of shares of the Global Series B Preferred Stock in an amount
equal to the amount of shares of the beneficial interest in the Global
Series B Preferred Stock to be transferred, and the Corporation shall
execute one or more Physical Series B Preferred Stock Certificates of
like tenor and amount.
(d) In connection with the transfer of Global Series B Preferred
Stock as an entirety to beneficial owners pursuant to paragraph (b), the
Global Series B Preferred Stock shall be deemed
<PAGE>
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to be surrendered to the
Corporation for cancellation, and the Corporation shall execute and
deliver to each beneficial owner identified by the Depositary in writing
in exchange for its beneficial interest in the Global Series B Preferred
Stock an equal aggregate amount of shares of Physical Series B Preferred
Stock of authorized denominations.
(e) Any Physical Series B Preferred Stock delivered in exchange
for an interest in Global Series B Preferred Stock pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided herein, bear an
appropriate legend, if required.
(f) The Holder of any Global Series B Preferred Stock may grant
proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action
which a Holder is entitled to take hereunder.
(g) Notwithstanding anything to the contrary herein, all
transfers of interests in Global Series B Preferred Stock must be made to
a "qualified institutional buyer" as such term is defined in Rule 144A
promulgated under the Securities Act.
The Corporation will, so long as any shares of Series B Preferred
Stock are outstanding, maintain an office or agency where such shares may
be presented for registration or transfer and where such shares may be
presented for conversion and redemption.
<PAGE>
- 21-
IN WITNESS WHEREOF, Renaissance Cosmetics, Inc. has caused this
Certificate of Designation of Preferences and Rights of its Series B
Preferred Stock to be signed and attested by its duly authorized
officers, this 15th day of August, 1996.
RENAISSANCE COSMETICS, INC.
By: /s/ John R. Jackson
------------------------
Name: John R. Jackson
--------------------
Title: Vice President
-------------------
ATTEST:
By: /s/ Thomas Kaung
-----------------
Name: Thomas Kaung
-------------
Title: Group Vice President
---------------------
CERTIFICATE OF DESIGNATION OF
PREFERENCES AND RIGHTS OF
SENIOR REDEEMABLE PREFERRED STOCK, SERIES C
(PAR VALUE $.01 PER SHARE)
OF
RENAISSANCE COSMETICS, INC.
_______________
Pursuant to Section 151 of the
General Corporation Law of the
State of Delaware
_______________
RENAISSANCE COSMETICS, INC., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that, pursuant to authority conferred
upon the Board of Directors by the Restated Certificate of Incorporation
of the Corporation, and pursuant to the provisions of Section 151 of the
Delaware General Corporation Law, said Board of Directors duly adopted a
resolution on August 14, 1996, which approved the filing of this
Certificate of Designation and which resolution remains in full force and
effect as of the date hereof.
Pursuant to such resolution and the authority conferred upon the
Board of Directors by the Restated Certificate of Incorporation of the
Corporation, there is hereby created a series of preferred stock of the
Corporation, which series shall have the following powers, preferences,
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, in addition to those
set forth in the Restated Certificate of Incorporation of the
Corporation:
1. CERTAIN DEFINITIONS. As used herein, the following terms
shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Affiliate" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person.
For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by," and
"under common control
<PAGE>
-2-
with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise.
"Agent Member" has the meaning specified in Section 16.
"Board of Directors" means the board of directors of the
Corporation or any committee authorized to act therefor.
"Board Resolution" means a copy of a resolution certified pursuant
to an officers' certificate to have been duly adopted by the Board of
Directors of the Corporation or a Subsidiary, as applicable, and to be in
full force and effect, and delivered to the Holder.
"Business Day" means a day that is not a Saturday, a Sunday or a
day on which banking institutions in the State of New York are not
required to be open.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock,
partnership interests or any other participation, right or other interest
in the nature of an equity interest in such Person or any option, warrant
or other security convertible into any of the foregoing.
"Cash Dividend Payment Date" means the earlier to occur of (i) the
first Dividend Payment Date following August 15, 1999, and (ii) the first
Dividend Payment Date following the first anniversary of the redemption
in full of the Notes.
"Change of Control" of the Corporation will be deemed to have
occurred at such time as (i) any Person (including a Person's Affiliates
and associates), other than a Permitted Holder, becomes the beneficial
owner (as defined under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of 50% or more of the total voting
power of the Corporation's Common Stock, (ii) prior to a Public Equity
Offering, the Permitted Holders, collectively shall dispose of more than
50% of the shares of the Corporation's Common Stock owned by the
Permitted Holders in the aggregate as of the date hereof (excluding
dispositions made to another Permitted Holder), (iii) any Person
(including a Person's Affiliates and associates), other than a Permitted
Holder, becomes the beneficial owner of more than 35% of the total voting
power of the Corporation's Common Stock, and the Permitted Holders
together with the officers and employees of the Corporation beneficially
<PAGE>
-3-
own, in the aggregate, a lesser percentage of the total voting power of
the Common Stock of the Corporation than such other Person and do not
have the right or ability by voting power, contract or otherwise to elect
or designate for election a majority of the Board of Directors of the
Corporation, (iv) there shall be consummated any consolidation or merger
of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which the Common Stock of the
Corporation would be converted into cash, securities or other property,
other than a merger or consolidation of the Corporation in which the
holders of the Common Stock of the Corporation outstanding immediately
prior to the consolidation or merger hold, directly or indirectly, at
least a majority of the Common Stock of the surviving corporation
immediately after such consolidation or merger or (v) subsequent to a
Public Equity Offering during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Corporation (together with any new directors whose
election by such Board of Directors or whose nomination for election by
the stockholders of the Corporation has been approved by 66 2/3% of the
directors then still in office who either were directors at the beginning
of such period or whose election or recommendation for election was
previously so approved) cease to constitute a majority of the Board of
Directors of the Corporation.
"Change of Control Offer" has the meaning specified in Section
7(D).
"Change of Control Payment Date" has the meaning specified in
Section 7(D).
"Change of Control Purchase Price" has the meaning specified in
Section 7(D).
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of
directors of such Person or (ii) if such Person is not a corporation,
vote or otherwise participate in the selection of the governing body,
partners, managers or others that will control the management and
policies of such Person.
"Consolidated Net Income" of the Corporation means, for any
period, the consolidated net income (or loss) of such Person and its
consolidated Subsidiaries for such period as determined in accordance
with GAAP consistently applied, adjusted, to the extent included in
calculating such net income (loss), by excluding, without duplication,
(i) all extraordinary gains and losses, net of taxes, (ii) the portion of
net income (or loss) of such Person and
<PAGE>
-4-
its consolidated Subsidiaries
allocable to minority interests in unconsolidated Persons to the extent
that cash dividends or distributions have not actually been received by
such Person or one of its consolidated Subsidiaries, (iii) net income (or
loss) of any Person combined with such Person or any of its subsidiaries
on a "pooling of interests" basis attributable to any period prior to the
date of combination, (iv) any gain or loss, net of taxes, realized upon
the termination of any employee pension benefit plan, (v) net gains or
losses (less all fees and expenses relating thereto), net of taxes, in
respect of dispositions of assets other than in the ordinary course of
business or (vi) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of
that income is not at the time permitted, directly or indirectly, by
operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulations
applicable to that Subsidiary or its stockholders.
"Corporation" means Renaissance Cosmetics, Inc., a Delaware
corporation.
"Corporation Common Stock" means the Common Stock, par value $.01
per share, of the Corporation.
"Depositary" has the meaning specified in Section 16.
"Disqualified Capital Stock" means any Capital Stock of the
Corporation or a Subsidiary thereof which, by its terms (or by the terms
of any equity security into which it is convertible or for which it is
exchangeable at the option of the holder), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the latest maturity date of
the Notes or the maturity date of the Series C Preferred Stock, for cash
or securities constituting Indebtedness. Without limitation of the
foregoing, Disqualified Capital Stock shall be deemed to include any
Preferred Stock of a Subsidiary of the Corporation; PROVIDED, HOWEVER,
that Preferred Stock of the Corporation or any Subsidiary thereof that is
issued with the benefit of provisions requiring a change of control offer
to be made for such Preferred Stock in the event of a Change of Control
of the Corporation or Subsidiary, which provisions have substantially the
same effect as the provisions described in Section 7(C) shall not be
deemed to be Disqualified Capital Stock solely by virtue of any such
provisions.
"Dividend Payment Date" means May 15, August 15, November 15 and
February 15, commencing on the first Dividend
<PAGE>
-5-
Payment Date after the
issuance of the Series C Preferred Stock, unless such day is not a
Business Day, in which case the Dividend Payment Date shall be the
immediately succeeding Business Day.
"Dividend Rate" has the meaning specified in Section 3 hereof.
"Dividend Record Date" means a day fifteen (15) days preceding the
Dividend Payment Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Credit Facility" means the Note Purchase Agreement,
dated as of December 21, 1994, among the Corporation, Cosmar Corporation
and Nomura Holding America Inc.
"GAAP" means generally accepted accounting principles consistently
applied as in effect in the United States from time to time.
"Global Series C Preferred Stock" has the meaning specified in
Section 16 hereof.
"Holder" means a registered holder of shares of Series C Preferred
Stock.
"Liquidation Preference" means $1,000 per share of Series C
Preferred Stock plus, for purposes of Section 8 hereof, whether such
share is issued or accrued, in each case, accrued and unpaid dividends,
whether or not declared, if any, thereon through the date such
Liquidation Preference is paid.
"Net Proceeds" means (a) in the case of any sale of Capital Stock
by the Corporation, the aggregate net proceeds received by the
Corporation, after payment of expenses, commissions and the like incurred
in connection therewith, whether such proceeds are in cash or in property
(valued at the fair market value thereof, as determined in good faith by
the Board of Directors, at the time of receipt) and (b) in the case of
any exchange, exercise, conversion or surrender of outstanding securities
of any kind for or into shares of Capital Stock of the Corporation which
is not Disqualified Capital Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or
surrender (plus any additional amount required to be paid by the holder
to the Corporation upon such exchange, exercise, conversion or surrender,
less any and all payments made to the holders, E.G., on account of
fractional shares
<PAGE>
-6-
and less all expenses incurred by the Corporation in
connection therewith).
"New Credit Facility" means any agreement or agreements evidencing
indebtedness used to refinance the Existing Credit Facility.
"Notes" means the securities that are issued under the Indenture
and called the 13 3/4% Senior Notes due 2001, Series B, and the 13 3/4%
Senior Notes due 2002.
"Offer Period" has the meaning specified in Section 7(C).
"Permitted Holders" means (i) Kidd Kamm Equity Partners, L.P. or
Thomas V. Bonoma, (ii) the heirs, executors, administrators testamentary,
trustees, legatees or beneficiaries of Kidd Kamm Equity Partners, L.P. or
Thomas V. Bonoma or of any person described in this clause (ii), (iii) a
trust the beneficiaries of which include only persons described in
clauses (i) and (ii) above and their respective spouses and lineal
descendants, (iv) the general partner and each limited partner of Kidd
Kamm Equity Partners, L.P. and (v) any Subsidiary of either Kidd Kamm
Equity Partners, L.P. or Thomas V. Bonoma or both of them jointly.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or other legal entity.
"Physical Series C Preferred Stock" has the meaning specified in
Section 16 hereof.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with
respect to dividends, distributions or liquidation proceeds of such
Person over the holders of other Capital Stock issued by such Person.
"Public Equity Offering" means a public offering by the
Corporation of Corporation Common Stock (however designated and whether
voting or non-voting) and any and all rights, warrants or options to
acquire such Corporation Common Stock.
"Purchase Date" has the meaning specified in Section 7(C) hereof.
"Redemption Date" when used with respect to any shares of Series C
Preferred Stock means the date fixed for such redemption
<PAGE>
-7-
of such shares of Series C Preferred Stock pursuant to Section 6 hereof.
"Redemption Notice" has the meaning specified in Section 6(C)
hereof.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or
payment on Capital Stock of the Corporation (other than Parity Stock) or
any Subsidiary of the Corporation or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the
Corporation or any Subsidiary of the Corporation (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or Cumulative Exchangeable Preferred Stock as
dividends on the Cumulative Exchangeable Preferred Stock or in options,
warrants or other rights to purchase Capital Stock (other than
Disqualified Capital Stock), (y) in the case of Subsidiaries of the
Corporation, dividends or distributions payable to the Corporation or to
a Wholly-Owned Subsidiary of the Corporation and (z) dividends payable in
cash on the Corporation's Cumulative Exchangeable Preferred Stock if
dividends on the Series B and Series C Preferred Stock (treated together
as a single class and series) shall have been paid in cash for the most
recent quarterly period then ended), and (ii) the purchase, redemption or
other acquisition or retirement for value of any Capital Stock of the
Corporation or any of its Subsidiaries (other than (x) Series B Preferred
Stock, (y) Capital Stock owned by the Corporation or a Wholly-Owned
Subsidiary of the Corporation, excluding Disqualified Capital Stock or
(z) Capital Stock held by former employees of the Corporation or any of
its Subsidiaries up to a maximum of $500,000 in aggregate amount during
any consecutive twelve-month period after the date hereof (increased by
the unused portion of such maximum amount from any prior and non-
concurrent consecutive twelve-month period after the date hereof), not to
exceed $2,000,000 in the aggregate).
"Required Filing Date" has the meaning specified in Section 7(A)
hereof.
"SEC" means the United States Securities and Exchange Commission
as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Series B Preferred Stock" means the Senior Redeemable Preferred
Stock, Series B, par value $.01 per share, the series
<PAGE>
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which, in the registered exchange offer or in a private exchange, was permitted
to be exchanged into the Series C Preferred Stock.
"Series C Preferred Stock" means the Senior Redeemable Preferred
Stock, Series C, par value $.01 per share, of the Corporation.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business or legal
entity, whether now existing or hereafter organized or acquired, (i) in
the case of a corporation, of which more than 50% of the total voting
power of the Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, officers or
trustees thereof is held by such first-named Person or any of its
Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business or legal entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity through
the ownership of voting securities, by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement
purposes.
"Wholly-Owned Subsidiary" means any Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares or
similiar DE MINIMIS shares required to be held by officers or directors
in accordance with laws of foreign jurisdictions) of which are owned,
directly or indirectly, by the Corporation.
2. DESIGNATION. The series of preferred stock established
hereby shall be designated the "Senior Redeemable Preferred Stock,
Series C" (and shall be referred to herein as the "Series C Preferred
Stock"), and the authorized number of shares of Series C Preferred Stock
shall be 325,000 shares.
3. DIVIDENDS. Holders will be entitled to receive, when, as and
if declared by the Board of Directors, out of funds legally available
therefor, dividends payable, at the option of the Corporation, in either
cash, at a rate per annum (the "Dividend Rate") of 14.0% of the
Liquidation Preference of each share of Series C Preferred Stock, or in
additional shares of Series C Preferred Stock with an aggregate
liquidation preference equal to the amount of such dividends on any
Dividend Payment Date through August 31, 2002, and only in cash
thereafter; PROVIDED, HOWEVER, that in the event that the outstanding
Notes are redeemed in full, dividends shall be paid in cash on the first
Dividend Payment Date
<PAGE>
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following the earlier of, one year from the date of
such redemption or on August 31, 2002; also provided that once the
Corporation shall pay dividends in cash (other than in connection with a
redemption or in lieu of fractional shares), it shall no longer have the
option to pay dividends on the Series C Preferred in other than cash. In
addition, if after August 15, 1999 or at any other time it is required to
do so, the Corporation shall not pay dividends in cash, the Dividend Rate
on each share of Series C Preferred Stock will increase by .25% during
each quarter ended on the Dividend Payment Date on which non-cash payment
occurs, unless such non-cash payment has occurred during more than four
quarters, in which case the per annum dividend rate will be increased by
0.5% in each additional quarter in which such non-cash payment occurs, in
each case, in excess of the rate otherwise payable; PROVIDED, HOWEVER,
that at no time will the dividend rate on the Series C Preferred Stock
exceed 17.00% per annum of the Liquidation Preference, including by
reason of increases in Dividend Rates or any penalty resulting from the
exercise of various options by the Corporation referred to herein.
Dividends will be cumulative and will accrue from the date of issuance
and be payable quarterly in arrears as provided in the immediately
preceding sentence on each Dividend Payment Date, commencing on the first
Dividend Payment Date after the issuance of the Series C Preferred Stock.
Dividends, whether or not earned or declared, will cumulate until
declared and paid, when declaration and payment may be for all or part of
the then-accumulated dividends. Each dividend shall be payable to
Holders of record as they appear on the stock books of the Corporation on
each Dividend Record Date. Accrued and unpaid dividends, if any, shall
not bear interest; PROVIDED, HOWEVER, that accrued and unpaid dividends
payable in Series C Preferred Stock will accumulate dividends to the same
extent as issued shares of Series C Preferred Stock. Dividends shall
cease to accrue in respect of the Series C Preferred Stock on any
Redemption Date with respect to Series C Preferred Stock redeemed on any
such date. Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors of
the Corporation to declare, or the Corporation to pay or set apart for
payment, any dividends on shares of the Series C Preferred Stock at any
time. Dividends in connection with any optional redemption pursuant to
Section 6(A) or Change of Control Offer pursuant to Section 7(C) may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, not less than 10 nor
more than 60 days prior to the payment thereof, as may be fixed by the
Board of Directors of the Corporation.
Notwithstanding anything to the contrary herein, the Corporation
shall not issue fractional shares of Series C Preferred
<PAGE>
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Stock as dividends on shares of Series C Preferred Stock. If any fraction of a
share of Series C Preferred Stock would otherwise be required to be paid
to the Holders pursuant to this Section 3, the Corporation shall, to the
extent it is permitted to do so under the Indenture and all other
agreements to which it is a party at such time, pay in lieu of such
fractional share an amount in cash for such fractional share at a rate
equal to $1,000 per whole share.
4. RANKING. Upon filing of a Certificate of Elimination with
respect to the Cumulative Exchangeable Preferred Stock, to be filed with
the Secretary of State of the State of Delaware on the date hereof, the
Series C Preferred Stock shall, with respect to dividend rights and
distributions upon the liquidation, winding-up and dissolution of the
Company, rank senior to all classes of Common Stock of the Corporation,
the Cumulative Exchangeable Preferred Stock and to any other class or
series of any class of Capital Stock of the Corporation, other than the
Series B Preferred Stock, whether now outstanding or issued hereafter.
Other than the Series B Preferred Stock, the Corporation shall not create
any class or series of Preferred Stock ranking PARI PASSU with or senior
to the Series C Preferred Stock with respect to dividend rights and
distributions on liquidation, winding-up and dissolution without the
approval of Holders of a majority of the outstanding shares of Series B
Preferred Stock and Series C Preferred Stock (acting together as a single
class).
5. VOTING RIGHTS. Except as required by the General Corporation
Law of the State of Delaware and as provided in Section 4 hereof, the
Holders shall not be entitled to vote on any matter submitted to a vote
of stockholders of the Corporation. Prior to each meeting of
stockholders at which the Board of Directors are to be elected or
pursuant to written consents of stockholders having like legal effect,
Holders shall have the right (acting together with the holders of
Series B Preferred Stock, acting as a single class and series) to
nominate three candidates for directors on the Corporation's Board of
Directors (the "Series C Preferred Stock Nominees"). The Corporation
shall include one of the Series C Preferred Stock Nominees in its
nominations for the Corporation's Board of Directors, and use all
reasonable commercial efforts to cause the election of such Series C
Preferred Stock Nominee.
6. REDEMPTION.
(A) OPTIONAL REDEMPTION. The Series C Preferred Stock may be
redeemed (subject to contractual and other restrictions with respect
thereto and the legal availability of funds therefor) at the option of
the Corporation in whole or, from time to time, in part, in the manner
provided in Section 6(C) hereof at any time on
<PAGE>
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or after September 1, 1999
at the redemption prices set forth below (expressed as percentages of
aggregate Liquidation Preference) plus accrued and unpaid dividends
(whether or not declared) to the Redemption Date if redeemed during the
12 month period beginning on September 1 of the years indicated below:
YEAR PERCENTAGE
1999 108%
2000 106%
2001 104%
2002 102%
and on and after September 1, 2003 at 100% of the aggregate Liquidation
Preference of the Series C Preferred Stock so redeemed, payable in cash
to the Redemption Date. Notwithstanding the foregoing, the Corporation
may redeem (pursuant to one or more redemptions) up to 35% of the
aggregate Liquidation Preference of the Series B Preferred Stock and the
Series C Preferred Stock (treated together as a single class and series)
at any time prior to September 1, 1999 at a redemption price equal to
110% of the Liquidation Preference therefor, plus accrued and unpaid
dividends thereon to the date of redemption, out of the Net Proceeds from
one or more public offerings of common stock or preferred stock of the
Corporation. Any such redemption will be required to occur on or prior
to 120 days after the receipt of such net proceeds.
(B) MANDATORY REDEMPTION. The Corporation shall be obligated to
redeem (subject to the legal availability of funds therefor) all
outstanding shares of Series C Preferred Stock on August 31, 2006 at a
redemption price equal to the Liquidation Preference thereof, payable in
cash, plus accrued and unpaid dividends (whether or not declared), which
shall also be paid in cash (whether or not otherwise payable in cash) to
the Redemption Date.
(C) PROCEDURE FOR REDEMPTION.
(i) In the event of a redemption of less than all of the
outstanding Series B Preferred Stock and Series C Preferred Stock
(treating both series as a single class and series), the shares so
redeemed will be determined by the Corporation PRO RATA according to the
number of shares held by each holder of Series B Preferred Stock and each
holder of Series C Preferred Stock, or by lot, as determined by the
Company except that the Company may redeem such shares of Series B
Preferred Stock or Series C Preferred Stock held by any holder of fewer
than 100 shares (or shares held by any
<PAGE>
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holder who would hold less than 100 shares as a result of such redemption)
as may be determined by the Company.
(ii) The Corporation shall send a written notice of redemption
(the "Redemption Notice") by first-class mail, postage prepaid, not fewer
than thirty (30) days nor more than sixty (60) days prior to the
applicable Redemption Date to each Holder as of the record date fixed for
such redemption of Series C Preferred Stock at such Holder's address as
the same appears on the stock books of the Corporation; PROVIDED,
HOWEVER, that no failure to give such notice to any Holder or Holders nor
any deficiency therein shall affect the validity of the procedure for the
redemption of any shares of Series C Preferred Stock to be redeemed
except as to the Holder or Holders to whom the Corporation has failed to
give said notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(A) whether all or less than all the outstanding shares of
Series C Preferred Stock are to be redeemed and the total number of
shares of Series C Preferred Stock being redeemed;
(B) the number of shares of Series C Preferred Stock held of
record by that specific Holder that the Corporation intends to redeem;
(C) the applicable Redemption Date;
(D) the manner and place or places at which payment for the
shares called for redemption will, upon presentation and surrender to
the Corporation of the Series C Preferred Stock Certificates evidencing
the shares being redeemed, be made;
(E) whether such redemption is conditioned upon the consummation
of a simultaneous financing or any other condition; and
(F) that dividends on the shares of Series B Preferred Stock
being redeemed shall cease to accrue on the applicable Redemption Date.
(iii) On the applicable Redemption Date, the full applicable
redemption price shall become payable for the shares of Series C
Preferred Stock being redeemed on the applicable Redemption Date, subject
to the consummation of a simultaneous financing or satisfaction of any
other condition, if applicable. As a condition of payment of the
applicable redemption price, each Holder of Series C Preferred Stock must
surrender a Series C Preferred Stock Certificate or Certificates
representing the shares
<PAGE>
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of Series C Preferred Stock being redeemed by the
Corporation in the manner and at the place designated in the applicable
Redemption Notice. The full applicable redemption price for such shares
properly tendered for payment shall be paid to the person whose name
appears on such certificate or certificates as the owner thereof, on and
after the applicable Redemption Date when and as certificates for the
shares being redeemed are properly tendered for payment. Each
surrendered Series C Preferred Stock Certificate shall be cancelled and
retired. In the event that less than all of the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(iv) On the applicable Redemption Date, unless the Corporation
defaults in the payment of the applicable redemption price, dividends
will cease to accrue with respect to the shares of Series C Preferred
Stock called for redemption. All rights of Holders of such redeemed
shares will terminate except for the right to receive the applicable
redemption price.
7. COVENANTS.
(A) SEC REPORTS.
So long as any of the Series C Preferred Stock remains
outstanding, whether or not the Corporation is subject to Section 13(a)
or 15(d) of the Exchange Act, the Corporation shall provide to the
holders of the Series C Preferred Stock the annual reports, quarterly
reports and other documents which the Corporation would have been
required to file with the SEC pursuant to such Sections 13(a) and 15(d)
if the Corporation were so subject, such documents to be provided on or
prior to the respective dates (the "Required Filing Dates") by which the
Corporation would have been required so to file such documents if the
Corporation were so subject. The Corporation shall also in any event
within 15 days of each Required Filing Date transmit by mail to all
Holders, as their names and addresses appear on the stock books of the
Corporation, without cost to such Holders copies of the annual reports,
quarterly reports and other documents which the Corporation would have
been required to file with the SEC pursuant to Sections 13(a) and 15(d)
of the Exchange Act if the Corporation were subject to such Sections.
(B) LIMITATION ON RESTRICTED PAYMENTS.
The Corporation will not make, and will not permit any of its
Subsidiaries to, directly or indirectly, make, any Restricted Payment;
provided, however, that the Corporation shall be permitted to make
Restricted Payments to the extent that dividends on the
<PAGE>
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Series C Preferred Stock shall have been paid in cash for the most recent
quarterly period then ended and such Restricted Payments shall not in the
aggregate exceed 50% of Consolidated Net Income from August 31, 1996 (or
if such aggregate Consolidated Net Income shall be a loss, minus 100% of
such loss) to the date of any such Restricted Payment.
The provisions of this Section 7(B) shall not prohibit (i) the
payment of any dividends, exchanges, repurchases and redemption of
Series B Preferred Stock and Series C Preferred Stock in accordance with
the terms hereof, (ii) the retirement of any shares of Capital Stock of
the Corporation by conversion into, or by or in exchange for, shares of
Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary
of the Corporation) of other shares of Capital Stock of the Corporation
(other than Disqualified Capital Stock), (iii) the retirement of any
shares of Disqualified Capital Stock by conversion into, or by exchange
for, shares of Disqualified Capital Stock, or out of the Net Proceeds of
the substantially concurrent sale (other than to a Subsidiary of the
Corporation) of other shares of Disqualified Capital Stock, (iv) the
payment of management and advisory fees to Kidd Kamm Equity Partners,
L.P. or its Affiliates in an amount that, when taken together with all
such previous amounts paid since April 15, 1994, does not exceed an
average annual amount of $675,000 or (v) the payment of any Restricted
Payment within 60 days of declaration thereof if such payment was
permitted when declared.
(C) CHANGE OF CONTROL.
(a) Within 20 days of the occurrence of a Change of Control, the
Corporation shall notify the holders of Series C Preferred Stock in
writing of such occurrence and shall to the extent permitted under the
Notes, the Existing Credit Facility, the New Credit Facility and all
other long-term indebtedness of the Company or its Subsidiaries then
outstanding, and provided that the obligation to do so does not result in
the Series C Preferred Stock constituting disqualified stock under any
such indebtedness and to the extent that the Company otherwise has
legally available funds, make an offer to purchase (the "Change of
Control Offer") the outstanding shares of Series C Preferred Stock at a
purchase price equal to 101% of the Liquidation Preference plus any
accrued and unpaid dividends thereon to the Change of Control Payment
Date (such applicable purchase price being hereinafter referred to as the
"Change of Control Purchase Price") in accordance with the procedures set
forth in this Section 7(C).
<PAGE>
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(b) Within 20 days of the occurrence of a Change of Control, the
Corporation also shall (i) cause a notice of the Change of Control Offer
to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class
mail, postage prepaid, to each holder of the Series C Preferred Stock, at
the address appearing in the register maintained by the Corporation, in
the case of the Series C Preferred Stock, a notice stating:
(A) that the Change of Control Offer is being made pursuant to
this Section 7(C) and Series C Preferred Stock tendered will be
accepted for payment, and otherwise subject to the terms and conditions
set forth herein;
(B) the Change of Control Purchase Price and the purchase date
(which shall be a Business Day no earlier than 20 business days from
the date such notice is mailed (the "Change of Control Payment Date"));
(C) that any share of Series C Preferred Stock not tendered will
continue to accrue interest or dividends, as the case may be;
(D) that, unless the Corporation defaults in the payment of the
Change of Control Purchase Price, any Series C Preferred Stock accepted
for payment pursuant to the Change of Control Offer shall cease to
accrue dividends on and after the Change of Control Payment Date;
(E) that holders accepting the offer to have their Series C
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender the Series C Preferred Stock, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the
Series C Preferred Stock completed, to the paying agent or the
Corporation at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control Payment
Date;
(F) that holders will be entitled to withdraw their acceptance if
the paying agent receives, not later than the close of business on the
third Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the
name of the holder, the number of shares of Series C Preferred Stock
delivered for purchase, and a statement that such holder is withdrawing
his election to have such Series C Preferred Stock purchased;
<PAGE>
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(G) that holders whose Series C Preferred Stock is being
purchased only in part will be issued new Series C Preferred Stock
equal in Liquidation Preference to the unpurchased portion of the
Series C Preferred Stock surrendered, provided that each share of
Series C Preferred Stock purchased and each share of Series C Preferred
Stock issued shall be in Liquidation Preference in denominations of
$1,000 and integral multiples thereof;
(H) any other procedures that a holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance; and
(I) the name and address of the paying agent.
On the Change of Control Payment Date, the Corporation shall, to
the extent it has legally available funds therefore and to the extent
otherwise lawful, (i) accept for payment, shares of Series C Preferred
Stock or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deposit with the paying agent money sufficient to pay the
purchase price of all shares of Series C Preferred Stock or portions
thereof so tendered and (iii) deliver or cause to be delivered to the
Corporation shares of Series C Preferred Stock so accepted together with
an officers' certificate stating the shares of Series C Preferred Stock
or portions thereof tendered to the Corporation. The paying agent shall
promptly mail to each holder of Series C Preferred Stock so accepted
payment in an amount equal to the purchase price for such shares of
Series C Preferred Stock, and the Corporation shall execute and issue,
and mail to such Holder, shares of Series C Preferred Stock equal in
Liquidation Preference to any unpurchased portion of the Series C
Preferred Stock surrendered; PROVIDED that each such share of Series C
Preferred Stock shall be issued with a Liquidation Preference of $1,000
and in integral multiples thereof.
To the extent the Corporation shall not make (or be prohibited
from making whether by contract or applicable law) a Change of Control
Offer and consummate or be prohibited from consummating such Change of
Control Offer on the Change of Control Payment Date, the Dividend Rate
shall be increased to 17.00% per annum per share of Series C Preferred
Stock.
(D) ADDITIONAL COVENANT. The Corporation will not elect to
exercise its option to exchange, either in whole or in part, its
Cumulative Exchangeable Preferred Stock for Notes without the prior
consent of the holders of a majority in aggregate Liquidation Preference
of the Series B Preferred Stock and the Series C Preferred Stock, taken
together as a single class and series.
<PAGE>
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8. PAYMENT ON LIQUIDATION.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Corporation, holders of Series B Preferred Stock and
Series C Preferred Stock (treated as a single class and series) will be
entitled to receive an amount in cash equal to the Liquidation
Preference, before any distribution is made on any Common Stock or other
Preferred Stock of the Corporation. After payment of the full amount of
the Liquidation Preferences to which they are entitled, Holders of Series
C Preferred Stock will not be entitled to any further participation in
any distribution of assets of the Corporation.
(B) For the purposes of this Section 8, neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all the
property or assets of the Corporation nor the consolidation or merger of
the Corporation with one or more corporations shall be deemed a voluntary
or involuntary liquidation, dissolution or winding-up of the Corporation,
unless such sale, conveyance, exchange or transfer shall be in connection
with a dissolution or winding-up of the business of the Corporation.
9. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be
required by the General Corporation Law of the State of Delaware, shares
of the Series C Preferred Stock shall not have any preferences or
relative, participating, optional or other special rights, other than
those specifically set forth in this Certificate of Designation (as such
Certificate may be amended from time to time) and in the Corporation's
Restated Certificate of Incorporation, as amended. No shares of Series C
Preferred Stock shall have any preemptive or subscription rights
whatsoever as to any securities of the Corporation.
10. REISSUANCE OF PREFERRED STOCK. Shares of Series C Preferred
Stock that have been issued and reacquired by the Corporation in any
manner, including shares purchased or redeemed, shall (upon compliance
with any applicable provisions of the General Corporation Law of the
State of Delaware) have the status of authorized and unissued shares of
preferred stock undesignated as to series and may be redesignated and
reissued as part of any series of preferred stock, except that any
issuance or reissuance of shares of Series C Preferred Stock must be in
compliance with this Certificate.
11. BUSINESS DAY. If any payment or redemption shall be required
by the terms hereof to be made on a day that is not a
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Business Day, such payment, redemption or exchange shall be made on
the immediately succeeding Business Day.
12. HEADINGS OF SUBDIVISIONS. The headings of the various
subdivisions hereof are for convenience of reference only and shall not
affect the interpretation of any of the provisions hereof.
13. SEVERABILITY OF PROVISIONS. If any right, preference or
limitation of the Series C Preferred Stock set forth in this Certificate
of Designation (as may be amended from time to time) is invalid, unlawful
or incapable of being enforced by reason of any rule or law or public
policy, all other rights, preferences and limitations set forth in this
Certificate of Designation (as so amended) which can be given effect
without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no
right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
14. NOTICE. All notices and other communications provided for or
permitted to be given to the Corporation hereunder shall be made by hand
delivery, next day air courier or certified first-class mail to the
Corporation at its principal executive offices (currently located at 955
Massachusetts Avenue, Cambridge, Massachusetts 02139).
15. AMENDMENTS. This Certificate of Designation may be amended
without notice to or the consent of any Holder to cure any ambiguity,
defect or inconsistency provided that such amendment does not adversely
affect the rights of any Holder. Any provisions of this Certificate of
Designation may be amended by the Corporation with the written consent of
holders representing a majority of the outstanding shares of Series B
Preferred Stock and Series C Preferred Stock, treated as a single series
and class provided that such amendment shall be made concurrently with
the certificate of designation relating to the Series B Preferred Stock.
16. BOOK-ENTRY PROVISIONS FOR SERIES C PREFERRED STOCK. (a)
Series C Preferred Stock registered in global form ("Global Series C
Preferred Stock") will (i) be registered in the name of The Depository
Trust Company (the "Depositary") or the nominee of such Depositary,
(ii) be delivered to the Trustee as custodian for such Depositary and
(iii) bear customary legends as required by the Depositary.
<PAGE>
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Members of, or participants in, the Depositary ("Agent Members")
shall have no rights hereunder with respect to any Global Series C
Preferred Stock held on their behalf by the Depositary or its custodian,
or under the Global Series C Preferred Stock, and the Depositary may be
treated by the Corporation and any agent of the Corporation as the
absolute owner of the Global Series C Preferred Stock for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Corporation or any agent of the Corporation from giving effect to any
written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and its Agent Members,
the operation of customary practices governing the exercise of the rights
of a holder of any Series C Preferred Stock.
(b) Transfers of Global Series C Preferred Stock shall be limited
to transfer in whole, but not in part, to the Depositary, its successors
or their respective nominees. Interests of beneficial owners in the
Global Series C Preferred Stock may be transferred or exchanged for
physical Series C Preferred Stock (the "Physical Series C Preferred
Stock") in accordance with the rules and procedures of the Depositary.
In addition, Physical Series C Preferred Stock shall be transferred to
all beneficial owners in exchange for their beneficial interests in
Global Series C Preferred Stock if the Depositary notifies the
Corporation that it is unwilling or unable to continue as Depositary for
any Global Series C Preferred Stock and a successor depositary is not
appointed by the Corporation within 90 days of such notice.
(c) In connection with any transfer or exchange of a portion of
the beneficial interest in any Global Series C Preferred Stock to
beneficial owners pursuant to paragraph (b), the Corporation shall (if
one or more Physical Series C Preferred Stock Certificates are to be
issued) reflect on its books and records the date and a decrease in the
amount of shares of the Global Series C Preferred Stock in an amount
equal to the amount of shares of the beneficial interest in the Global
Series C Preferred Stock to be transferred, and the Corporation shall
execute one or more Physical Series C Preferred Stock Certificates of
like tenor and amount.
(d) In connection with the transfer of Global Series C Preferred
Stock as an entirety to beneficial owners pursuant to paragraph (b), the
Global Series C Preferred Stock shall be deemed to be surrendered to the
Corporation for cancellation, and the Corporation shall execute and
deliver to each beneficial owner identified by the Depositary in writing
in exchange for its beneficial interest in the Global Series C Preferred
Stock an equal aggregate amount of shares of Physical Series C Preferred
Stock of authorized denominations.
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(e) Any Physical Series C Preferred Stock delivered in exchange
for an interest in Global Series C Preferred Stock pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided herein, bear an
appropriate legend, if required.
(f) The Holder of any Global Series C Preferred Stock may grant
proxies and otherwise authorize any person, including Agent Members and
persons that may hold interests through Agent Members, to take any action
which a Holder is entitled to take hereunder.
(g) Notwithstanding anything to the contrary herein, all
transfers of interests in Global Series C Preferred Stock must be made to
a "qualified institutional buyer" as such term is defined in Rule 144A
promulgated under the Securities Act.
The Corporation will, so long as any shares of Series C Preferred
Stock are outstanding, maintain an office or agency where such shares may
be presented for registration or transfer and where such shares may be
presented for conversion and redemption.
<PAGE>
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IN WITNESS WHEREOF, Renaissance Cosmetics, Inc. has caused this
Certificate of Designation of Preferences and Rights of its Series C
Preferred Stock to be signed and attested by its duly authorized
officers, this 15th day of August, 1996.
RENAISSANCE COSMETICS, INC.
By:
Name:
Title:
ATTEST:
By:
Name:
Title:
SECURITIES PURCHASE AGREEMENT
between
RENAISSANCE COSMETICS, INC.
and
THE INITIAL PURCHASER NAMED HEREIN
_________________________________
Dated as of August 8, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
Section 1.1. Definitions 1
Section 1.2. Accounting Terms; Financial Statements 6
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES
Section 2.1. Issue of Securities 6
Section 2.2. Purchase and Sale of Securities 7
Section 2.3. Rights of Holders of Securities 9
Section 2.4. Offering by the Initial Purchaser 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the
Company 9
Section 3.2. Representations and Warranties of the
Initial Purchaser 18
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchaser 21
Section 4.2. Conditions Precedent to Obligations of the
Company 24
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company 25
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes 28
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ARTICLE VII Page
INDEMNITY
Section 7.1. Indemnity 29
Section 7.2. Contribution 32
Section 7.3. Registration Rights Agreements 33
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions 33
Section 8.2. Termination 34
Section 8.3 No Waiver; Modifications in Writing 35
Section 8.4. Role of Special Counsel 35
Section 8.5. Information Supplied by the Initial
Purchaser 36
Section 8.6. Communications 36
Section 8.7. Determinations 36
Section 8.8. Execution in Counterparts 36
Section 8.9. Successors 36
Section 8.10. Governing Law 37
Section 8.11. Severability of Provisions 37
Section 8.12. Headings 37
Signature Page 38
Schedule 3.1(d) Subsidiaries
Exhibit 1 Certificate of Designation
Exhibit 2 Indenture (as amended to date)
Exhibit 3 Form of Warrant Agreement
Exhibit 4 Form of Preferred Stock Registration Rights Agreement
Exhibit 5 Form of Common Stock Registration Rights Agreement
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SECURITIES PURCHASE AGREEMENT, dated as of August 8, 1996 (this
"Agreement"), between Renaissance Cosmetics, Inc., a Delaware corporation
(the "Company") and CIBC Wood Gundy Securities Corp. (the "Initial
Purchaser").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"ACCREDITED INVESTOR" has the meaning provided therefor in
section 3.2 of this Agreement.
"ACT" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder.
"AFFILIATE" of any specified Person means any other Person which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise.
"AGREEMENT" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"BASIC DOCUMENTS" means, collectively, the Certificate of
Designation, the Preferred Stock, the Warrant Agreement, the Preferred
Stock Registration Rights Agreement, the Common Stock Registration Rights
Agreement and the Stockholders Agreement.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the City of
New York are authorized or obligated by law to close.
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"CERTIFICATE OF DESIGNATION" means the Certificate of Designation
duly adopted by the Board of Directors of the Company setting forth the
rights, preferences and priorities of the Preferred Stock and filed with,
and accepted for filing, so as to be effective, by the Secretary of State
of the State of Delaware prior to the Closing hereunder and which is in the
form of Exhibit 1 hereto.
"CLOSING" has the meaning provided therefor in Section 2.2 of
this Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Act.
"COMMON STOCK" means the Common Stock of the Company, par value
$.01 per share.
"COMMON STOCK REGISTRATION RIGHTS AGREEMENT" means the Common
Stock Registration Rights Agreement substantially in the form of Exhibit 6
hereto.
"COMPANY" has the meaning provided therefor in the introductory
paragraph of this Agreement.
"DEFAULT" means any event, act or condition which, with notice or
lapse of time or both, would constitute an Event of Default.
"DISQUALIFIED CAPITAL STOCK" has the meaning provided therefor in
the Certificate of Designation.
"ERISA" has the meaning provided therefor in Section 3.1 of this
Agreement.
"EVENT OF DEFAULT" means any event defined as an Event of Default
in the Indenture.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"INDEMNIFIED PARTIES" has the meaning provided therefor in
Section 7.1(b) of this Agreement.
"INDEMNIFYING PARTIES" has the meaning provided therefor in
Section 7.1(b) of this Agreement.
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"INITIAL PURCHASER" means CIBC Wood Gundy Securities Corp.
"INDENTURE" means the indenture under which the Notes were
issued, attached as Exhibit 2 hereto.
"LIEN" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement,
encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with
respect to such property or assets (including without limitation, any
capitalized lease obligation, conditional sales, or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"MATERIAL ADVERSE EFFECT" means, with respect to the Company and
its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole; PROVIDED that, with respect to the Company
and the Material Subsidiaries, "Material Adverse Effect" shall also mean a
material adverse effect on the ability of the Company to perform its
obligations under this Agreement or the Basic Documents.
"MATERIAL SUBSIDIARIES" means Cosmar Corporation, a Delaware
corporation, and Dana Perfumes Corp., a Delaware corporation.
"MEMORANDUM" has the meaning provided therefor in Section 2.1 of
this Agreement.
"NOMURA FACILITY" means the Note Purchase Agreement, dated as of
December 21, 1994, among the Company, Cosmar Corporation and Nomura Holding
America Inc., as purchaser, relating to the $40,000,000 variable rate
Senior Secured Revolving Notes due 1996 and the $30,000,000 variable rate
Senior Secured Term Notes due 1996, as such agreement may be amended,
modified or supplemented from time to time.
"NOMURA WAIVER" means the Waiver to Note Purchase Agreement, to
be dated as of August 8, 1996, by Nomura Holding America Inc. with respect
to the waiver of provisions of the Existing Credit Facility in order to
permit the Offering and certain of the contemplated use of proceeds
therefrom.
"NOTES" means the 13-3/4% Senior Notes Due 2001, Series B and the
13-3/4% Senior Notes due 2002 of the Company issued under the Indenture.
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"NOTES WAIVER" means any waiver required under the Indenture in
connection with the Pending Acquisitions.
"OFFERING MATERIALS" has the meaning provided therefor in Section
7.1 of this Agreement.
"OLD WARRANT AGREEMENT" means the Warrant Agreement dated as of
August 18, 1994, between the Company and American Bank, National
Association, as Warrant Agent.
"PARITY STOCK" means the Senior Redeemable Preferred Stock,
Series C, of the Company, $.01 par value into which the Preferred Stock may
be exchanged pursuant to the Exchange Offer or the Private Exchange (each
as defined in the Preferred Stock Registration Rights Agreement).
"PENDING ACQUISITIONS" means the acquisition (or attempted
acquisition) by the Company, directly and indirectly, of (i) The MEM
Company, (ii) Great American Cosmetics, Inc., and (iii) any other business
or part of a business that is in the line of business conducted by the
Company on the date hereof and any related line of business.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or other legal entity.
"PORTAL" means the Private Offerings, Resales and Trading through
Automated Linkages Market.
"PREEMPTIVE RIGHT OPINION" shall mean a letter from Houlihan
Lokey Howard & Zukin that indicates a "Current Market Price" (as defined in
the Old Warrant Agreement) of no greater than $96.23 per share of Common
Stock.
"PREFERRED STOCK" means the Senior Redeemable Preferred Stock,
Series B, of the Company, $.01 par value.
"PREFERRED STOCK REGISTRATION RIGHTS AGREEMENT" means the
Registration Rights Agreement relating to the Preferred Stock,
substantially in the form of Exhibit 4 hereto.
"PRIVATE EXCHANGE PREFERRED STOCK" has the meaning provided
therefor in Section 2.1 of this Agreement.
"PROCEEDING" has the meaning provided therefor in Section 7.1(b)
of this Agreement.
<PAGE>
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"PURCHASE OPTION" has the meaning provided therefor in Section
2.1.
"QIB" has the meaning provided therefor in Section 3.2 of this
Agreement.
"SECURITIES" has the meaning provided therefor in Section 2.1 of
this Agreement.
"STATE" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"STATE COMMISSION" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated
August 18, 1994 between the Company and each of the individuals or entities
which are parties thereto.
"SUBSIDIARIES" means of any specified Person, any corporation,
partnership, joint venture, association or other business entity, whether
now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the
capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, officers or trustees
thereof is held by such first-named Person or any of its Subsidiaries; or
(ii) in the case of a partnership, joint venture, association or other
business entity, with respect to which such first-named Person or any of
its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with generally accepted accounting principles such entity is
consolidated with the first-named Person for financial statement purposes.
"TAXES" has the meaning provided therefor in Section 3.1(t) of
this Agreement.
"TIME OF PURCHASE" has the meaning provided therefor in Section
2.2 of this Agreement.
"WARRANT AGREEMENT" means the Warrant Agreement under which the
Warrants will be issued substantially in the form of Exhibit 3 hereto.
"WARRANT SHARES" has the meaning provided therefor in Section 2.1
of this agreement.
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"WARRANTS" means the Warrants to purchase Common Stock of the
Company, the terms and provisions of which are governed by the Warrant
Agreement.
Section 1.2 ACCOUNTING TERMS; FINANCIAL STATEMENTS. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with sound accounting
practice. The term "sound accounting practice" shall mean such accounting
practice as, in the opinion of the independent accountants regularly
retained by the Company, conforms at the time to generally accepted
accounting principles in the United States applied on a consistent basis
except for changes with which such accountants concur. All determinations
to which accounting principles apply shall be made in accordance with sound
accounting practice.
ARTICLE II
ISSUE OF SECURITIES; PURCHASE AND SALE OF
SECURITIES; RIGHTS OF HOLDERS OF SECURITIES
Section 2.1 ISSUE OF SECURITIES. The Company has authorized the
original issuance of $80,000,000 aggregate liquidation value of the
Preferred Stock together with Warrants to purchase shares of Common Stock
constituting approximately 15% of the Company's fully diluted Common Stock
as of the Time of Purchase (the "Firm Units"). In addition, the Company
hereby grants an option to the Initial Purchaser to purchase up to an
additional $20,000,000 aggregate Liquidation Value of the Preferred Stock
together with Warrants to purchase shares of Common Stock constituting 4%
of the Company's fully diluted Common Stock as of the date of their
issuance (the "OPTION UNITS" and together with the Firm Units, the
"Securities") (the "PURCHASE OPTION"). The Purchase Option will expire
thirty (30) days after the date hereof and may be exercised in whole or in
part only for the purpose of covering over-allotments which may be made in
connection with the offering of the Firm Units upon notice by the Initial
Purchaser to the Company setting forth the aggregate principal amount of
Option Units as to which the Initial Purchaser is then exercising the
Purchase Option and the time and date of payment and delivery for such
Option Units. Such time and date of delivery, if any (any such date, a
"Date of Delivery", shall be determined by the Initial Purchaser, but shall
not be later than ten (10) and not earlier than five (5) full business days
after any exercise of said Purchase Option. The shares of Common Stock
issuable upon exercise of the Warrants are referred to herein as the
"Warrant Shares".
The Preferred Stock will have the rights and preferences set
forth in the Certificate of Designation. The aggregate
<PAGE>
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liquidation value
of the Preferred Stock will increase to the extent accrued dividends
thereon are not paid in cash through the issuance of additional shares of
Preferred Stock. The Preferred Stock, the Warrants and the Warrant Shares
are referred to herein collectively as the Securities. For purposes of the
Code and the related Treasury Regulations, the Initial Purchaser of the
Preferred Stock agrees with the Company that if the date of issuance were
to occur on the date hereof and the issue price were to be $1,000 for each
investment unit consisting of one share of Preferred Stock and 2.693
Warrants, the issue price would be allocated to the Preferred Stock to the
extent of $740 and to the Warrants to the extent of $260 per $1,000
aggregate liquidation value of the Preferred Stock and that this is a
reasonable basis for such allocation provided that the parties acknowledge
and agree that for purposes of the Code in determining the issue price and
date of issuance of investment units, sales to any bond house, broker or
similar person or organization acting in the capacity of an underwriter or
wholesaler are ignored and accordingly the actual determination of the
issue price and date of issuance of the Preferred Stock and the Warrants
shall be determined by the Company based on the relative fair market values
of the Preferred Stock and the Warrants on the date of issuance to a person
(other than the Initial Purchaser) that is not a bond house, broker or
similar person or organization acting in the capacity of an underwriter or
wholesaler.
The Securities will be offered and sold to the Initial Purchaser
without being registered under the Act, in reliance on exemptions
therefrom, including the exemptions provided by Rule 144A and Regulation S
of the Act.
In connection with the sale of the Securities, the Company has
prepared an offering memorandum dated August 7, 1996 (such offering
memorandum, together with any documents incorporated by reference therein,
being hereinafter referred to as the "Memorandum") setting forth or
including a description of the terms of the Preferred Stock and Warrants,
the terms of the Offering, a description of the Company, the Pending
Acquisitions and any other material developments relating to the Company
occurring after the date of the most recent financial statements included
therein.
Section 2.2. PURCHASE AND SALE OF SECURITIES. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees
that it will sell to the Initial Purchaser, and the Initial Purchaser
agrees that it will purchase from the Company at the Time of Purchase
$80,000,000 aggregate liquidation value of Preferred Stock and Warrants to
acquire approximately 15% of the fully diluted common equity of the Company
<PAGE>
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at the Time of Purchase at a price equal to 96.5% of the aggregate
liquidation value of the Preferred Stock.
The Securities shall have the terms set forth herein, in the
Certificate of Designation and the Warrant Agreement respectively. The
Warrant Shares shall be governed by the terms and provisions of the Warrant
Agreement.
The purchase, sale and delivery of the Firm Units will take place
at a closing (the "Closing") at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019,
at 10:00 A.M., New York time, on August , 1996, or such later date and
time, if any, as the Initial Purchaser and the Company shall agree. The
time at which the Closing is concluded is herein called the "Time of
Purchase." In addition, upon any exercise of the Purchase Option, the
Initial Purchaser agrees to purchase from the Company the number of Option
Units specified in any written notice of exercise delivered to the Company.
In the event that any or all of the Option Units are purchased by the
Initial Purchaser, payment of the purchase price for, and delivery of
certificates for, such Option Units shall be made at the above-mentioned
offices of Paul, Weiss, Rifkind, Wharton & Garrison, or at such other place
as shall be agreed upon by the Initial Purchaser and the Company on the
Date of Delivery specified in the notice from the Initial Purchaser to the
Company.
Delivery of the Securities to be purchased by the Initial
Purchaser pursuant to this Agreement shall be made at the Closing and the
Additional Closing, as the case may be, by the Company (i) delivering
global certificates representing the Securities to The Depository Trust
Company ("DTC") or its agent and (ii) causing the DTC participant account
designated by the Initial Purchaser to be credited with the Securities
purchased by such Initial Purchaser against payment therefor in immediately
available same day funds through the facilities of DTC for the account of
the Company. The Company agrees that in connection with the placement of
the Securities, the Initial Purchaser may, in its discretion, deduct from
the purchase price of the Securities to be remitted to the Company at the
Closing the amount of the reasonable fees and expenses (documented in
reasonable detail) of Cahill Gordon & Reindel, special counsel to the
Initial Purchaser.
The Company will bear all expenses of shipping the Securities
(including, without limitation, insurance expenses) from New York City to
such other places within the United States of America or Canada as the
Initial Purchaser shall specify. Any tax on the issuance of the Securities
will be paid by the Company at the Time of Purchase pursuant to
Section 8.7.
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Section 2.3. RIGHTS OF HOLDERS OF SECURITIES. The holders of the
Securities shall have such rights with respect to the registration thereof
under the Act as are set forth in the Preferred Stock Registration Rights
Agreement and the Common Stock Registration Rights Agreement.
Section 2.4. OFFERING BY THE INITIAL PURCHASER. The Initial
Purchaser proposes to make an offering of the Securities at the price and
upon the terms set forth in the Memorandum, as soon as practicable after
this Agreement is entered into and as in the judgment of the Initial
Purchaser is advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the Initial Purchaser as follows:
(a) The Memorandum as of its date and at the Time of Purchase,
will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
except that the representations and warranties set forth in this
Section 3.1(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the
Initial Purchaser furnished to the Company in writing by the Initial
Purchaser expressly for use in the Memorandum or any amendment or
supplement thereto or relating to the manner of sale of the securities
by the Initial Purchaser.
(b) The audited consolidated financial statements of the Company
and its Subsidiaries, together with related notes and schedules
thereto, included in the Memorandum fairly present in all material
respects the financial condition of the Company and its Subsidiaries
as of the dates indicated and the results of operations and cash flows
for the periods therein specified in conformity with generally
accepted accounting principles consistently applied throughout the
periods involved (except as otherwise stated therein); and any pro
forma financial statements and the related notes thereto included in
the Memorandum have been prepared using reasonable assumptions and in
accordance with the applicable requirements of the Act and include all
adjustments necessary to present fairly in all material respects the
pro forma financial information included in the Memorandum as at the
respective dates and for the respective periods indicated. Deloitte &
<PAGE>
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Touche LLP and Windes & McClaughry, which are reporting upon the
audited financial statements and schedules included in the Memorandum,
are independent public auditors as required by the Act and the rules
and regulations thereunder.
(c) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
Each of the Company's Subsidiaries is a corporation duly incorporated
or organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation. Each of the Company and its
Subsidiaries is duly qualified and in good standing as a foreign
corporation, and is authorized to do business, in each jurisdiction in
which the ownership or leasing of any property or the nature of its
business makes such qualification necessary and in which the failure
so to qualify would have a Material Adverse Effect.
(d) All of the issued and outstanding shares of capital stock of
the Company and its Subsidiaries are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or
similar rights. As of the date hereof, the Company has no material
Subsidiaries other than the Material Subsidiaries and those
Subsidiaries listed on Schedule 3.1(d) hereto. All of the capital
stock of the Material Subsidiaries is owned directly or indirectly by
the Company, free and clear of any Liens other than Liens created
under the Indenture or securing the Nomura Facility. Except as
described in the Memorandum, there are no outstanding subscriptions,
options, warrants, rights, convertible securities or other binding
agreements or commitments of any character obligating the Company or
its Subsidiaries to issue any securities. Except as described in the
Memorandum or under the Old Warrant Agreement, no Person other than
the Initial Purchaser has any rights to the registration of capital
stock or other securities of the Company, under the Act or otherwise.
Except for the Stockholders Agreement, the Company's Restated
Certificate of Incorporation or as disclosed in the Memorandum, there
is no agreement, understanding or arrangement among the Company or its
Subsidiaries and its or their respective stockholders or any other
person relating to the ownership or disposition of any capital stock
in the Company or any of its Subsidiaries, the election of directors
of the Company or any of its Subsidiaries or the governance of the
Company's or any such Subsidiary's affairs; and no such agreements,
arrangements or understandings will be breached or violated as a
result of the execution and delivery of, or the consummation of the
transactions contemplated by, this Agreement or the Basic
<PAGE>
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Documents.
The Company has reserved for issuance Warrant Shares sufficient in
number to meet the exercise obligations of the Warrants under the
Warrant Agreement and, upon exercise of the Warrants, the Warrant
Shares will be fully paid, nonassessable and free of preemptive rights
(other than preemptive rights under the Old Warrant Agreement) and
will not be subject to any restrictions on the transfer thereof except
for such restrictions set forth herein, in the Stockholders Agreement
and under the Act.
(e) The Certificate of Designation has been duly authorized by
the Company, its board of directors and all required stockholder
action, has been filed with the Secretary of State of the State of
Delaware and constitutes a valid and legally binding obligation of the
Company, enforceable against it in accordance with its terms except
that the enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
generally and general principles of equity and the discretion of the
court before which any proceeding therefor may be brought. The
Restated Certificate of Incorporation of the Company, by virtue of the
Certificate of Designation, sets forth the rights, preferences and
priorities of the Preferred Stock. The Preferred Stock has been duly
and validly authorized and, upon payment by the Initial Purchaser in
accordance with this Agreement, will be fully paid and non-assessable
and free of preemptive rights. Other than the Parity Stock, upon
filing with the Secretary of State of the State of Delaware of a
Certificate of Elimination with respect to the Senior Exchangeable
Redeemable Preferred Stock, Series A, and the redemption of such
preferred stock with the proceeds from the Offering, there will be no
issued and outstanding capital stock of the Company which ranks senior
to or pari passu with the Preferred Stock with respect to dividends or
in the event of a liquidation of the Company which will not be
redeemed with the proceeds from the issuance of the Preferred Stock.
(f) The form and terms of the Warrant Agreement have been duly
authorized by the Company and, upon execution and delivery by the
Company and (assuming the due authorization, execution and delivery by
the Warrant Agent (as defined in the Warrant Agreement)), will
constitute a valid and legally binding agreement of the Company
enforceable against it in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
<PAGE>
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generally and (ii) general equitable principles, whether asserted in
an action at law or in equity, and that such enforceability may be
subject to the discretion of the court before which any proceedings
therefor may be brought.
(g) Each of this Agreement and the Preferred Stock Registration
Rights Agreement has been duly authorized by the Company and, when
executed and delivered by the Company (assuming the due authorization,
execution and delivery by the Initial Purchaser), will constitute a
valid and legally binding agreement of the Company, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights and remedies generally, (ii) general
equitable principles, whether asserted in an action at law or in
equity, and that such enforceability may be subject to the discretion
of the court before which any proceedings therefor may be brought and
(iii) rights to indemnity or contribution may be limited by federal or
state securities laws or the public policy underlying such laws.
(h) The Common Stock Registration Rights Agreement has been duly
authorized by the Company and, when executed and delivered by the
Company (assuming the due authorization, execution and delivery by the
Initial Purchaser, to the extent a party thereto), will constitute
valid and legally binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, except
as such enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws now
or hereafter in effect relating to creditors' rights and remedies
generally and (ii) general equitable principles, whether asserted in
an action at law or in equity, and that such enforceability may be
subject to the discretion of the court before which any proceedings
therefor may be brought.
(i) The Company has all requisite corporate power and authority
to (i) execute, deliver and perform its obligations under this
Agreement and each of the Basic Documents, (ii) execute, deliver and
perform its obligations under all other agreements and instruments
required to be executed and delivered by the Company pursuant to this
Agreement and each of the Basic Documents and (iii) issue the
Securities pursuant hereto in the manner and for the purpose
contemplated by this Agreement. The execution and delivery by the
Company of this Agreement and each of the Basic Documents and the
consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by the Company.
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(j) Subsequent to the date as of which information is given in
the Memorandum and immediately prior to the Time of Purchase there has
not been (i) any event or condition that has had or that would
reasonably be expected to have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole, (ii) except for the
Pending Acquisitions, any transaction entered into by the Company or
any Subsidiary, other than in the ordinary course of business, that is
material to the Company and its Subsidiaries, taken as a whole, or
(iii) any dividend or distribution of any kind declared, paid or made
by the Company on its Common Stock that has not been approved by the
Initial Purchaser in writing.
(k) There is no action, suit, investigation or proceeding,
governmental or otherwise, pending or, to the best knowledge of the
Company, threatened to which the Company or any of its Subsidiaries is
or would be a party or of which the properties of the Company or its
Subsidiaries are or may be subject, that (i) seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities by the Company or any of the other
transactions contemplated hereby, (ii) questions the legality or
validity of any such transactions or seeks to recover damages or
obtain other relief in connection with any such transactions or
(iii) except as disclosed in the Memorandum, could reasonably be
expected to have a Material Adverse Effect.
(l) The execution, delivery and performance by the Company of
this Agreement and the Basic Documents, and the issuance and sale by
the Company of the Securities, and the execution, delivery and
performance by the Company of all other agreements and instruments
required to be executed and delivered by the Company pursuant hereto
or thereto and compliance by the Company with the terms and provisions
hereof and thereof, do not and will not (i) violate any provision of
any law, rule or regulation (including, without limitation, Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System),
order, writ, judgment, decree, determination or award presently in
effect or in effect at the Time of Purchase, having applicability to
the Company or any of its Subsidiaries, (ii) conflict with or result
in a breach of or constitute a default under the certificate of
incorporation or by-laws of the Company or any of the Subsidiaries,
or, as of the Time of Purchase, assuming the Nomura Waiver and the
Notes Waiver are obtained, any indenture or loan or credit agreement,
or any other agreement or instrument (other than the Old Warrant
Agreement), to which the Company or any of its Subsidiaries is party
or by which
<PAGE>
-14-
the Company or any of the Subsidiaries or any of their
respective properties may be bound or affected, or (iii) except as
contemplated by this Agreement and the Basic Documents, result in, or
require the creation or imposition of, any Lien upon or with respect
to any of the properties now owned or hereafter acquired by the
Company or any of the Subsidiaries, except, in the case of (i), (ii)
or (iii), where such violation, conflict, default or creation or
imposition of any Lien would not (individually or in the aggregate)
have a Material Adverse Effect.
(m) Immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, neither the Company nor
any of its Subsidiaries (i) will be in violation of its respective
certificate of incorporation or by-laws, (ii) assuming the Nomura
Waiver and Notes Waiver are obtained, will be in default (nor will an
event occur which with notice or passage of time or both would
constitute such a default) under or in violation of any indenture or
loan or credit agreement or any other material agreement or instrument
(other than the Old Warrant Agreement) to which it is a party or by
which it or any of its properties may be bound or affected, (iii) will
be in violation of any order of any court, arbitrator or governmental
body or subject to or party to any order of any court or governmental
authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of
trade, unfair competition or similar matters or (iv) will have
violated or be in violation of any such statute, rule or regulation of
any governmental authority, which default or violation in the case of
clause (i), (ii), (iii) or (iv) (individually or in the aggregate)
could reasonably be expected to (x) affect the legality, validity or
enforceability of this Agreement or any of the Basic Documents or (y)
have a Material Adverse Effect.
(n) Assuming the accuracy of the Initial Purchaser's
representations and warranties set forth in Section 3.2 and the
representations and warranties of each subsequent transferee that is a
QIB or an "Accredited Investor" (as set forth in a certificate
required to be delivered by each such subsequent transferee) and the
due performance by the Initial Purchaser of the covenants and
agreements set forth in Sections 3.2 and 3.3, no authorization,
consent, approval, license, qualification or formal exemption from,
nor any filing, declaration or registration with, any court,
governmental agency or regulatory authority or any securities exchange
is required in connection with the execution, delivery or performance
by the Company or any of its
<PAGE>
-15-
Subsidiaries (to the extent they are a
party thereto) of this Agreement or any of the Basic Documents, except
(i) as may be required under state securities or "blue sky" laws or
the laws of any foreign jurisdiction in connection with the offer and
sale of the Securities or (ii) as would not (individually or in the
aggregate) have a Material Adverse Effect. All such authorizations,
consents, approvals, licenses, qualifications, exemptions, filings,
declarations and registrations which are required to have been
obtained or made as of the Time of Purchase have been obtained or
made, as the case may be, and are in full force and effect and not the
subject of any pending or, to the knowledge of the Company, threatened
attack by appeal or direct proceeding or otherwise.
(o) The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, and the Company will not
be immediately after the Time of Purchase an "investment company"
within the meaning of such Investment Company Act.
(p) The execution and delivery of this Agreement, the other
Basic Documents and the sale of the Securities pursuant to this
Agreement will not involve any non-exempt prohibited transaction
within the meaning of Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Code on the part of the Company or any of its Subsidiaries. The
preceding representation is made in reliance upon, and subject to the
continuing accuracy of, the representation made in Section 3.2(b) as
to the Initial Purchaser. The Company does not and, at and as of the
Time of Purchase, the Company does not reasonably expect to have any
liability for any prohibited transaction or funding deficiency or any
complete or partial withdrawal liability with respect to any pension,
profit sharing or other plan which is subject to ERISA and which is
required to be funded, to which the Company makes or ever has made a
contribution and in which any employee of the Company is or has ever
been a participant. With respect to such plans, the Company is and,
at and as of the Time of Purchase, the Company will be in compliance
in all material respects with all applicable provisions of ERISA.
(q) The Company and each of its Subsidiaries have good and valid
title to, or valid and enforceable leasehold interests in, all
properties and assets identified in the Memorandum as owned by each of
them which are material to the business of the Company and its
Subsidiaries, taken as a whole, free and clear of all Liens, except
(i) such Liens as are described in the Memorandum or (ii) Liens
created in the
<PAGE>
-16-
ordinary course of business which are Permitted Liens
(as defined in the Indenture). All of the leases material to the
business of the Company and the Subsidiaries, taken as a whole, and
under which the Company or any Subsidiary holds properties described
in the Exchange Act Filings, are valid and binding as leased by them,
with such exceptions as are not material and do not materially
interfere with the use made and proposed to be made of such properties
by the Company and its Subsidiaries.
(r) All tax returns required to be filed by the Company or any
of its Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been so filed and all taxes, assessments, fees and
other charges including, without limitation, withholding taxes,
penalties, and interest ("Taxes") due or claimed to be due have been
paid, other than those Taxes being contested in good faith and those
Taxes for which adequate reserves or accruals have been established in
accordance with generally accepted accounting principles, except where
the failure to file such returns or to pay such Taxes is not
reasonably likely to have, singly or in the aggregate, a Material
Adverse Effect. Except as disclosed in writing to the Initial
Purchaser, the Company knows of no actual or proposed additional tax
assessments for any fiscal period against the Company or any of its
Subsidiaries that, individually or in the aggregate, would have a
Material Adverse Effect.
(s) The Company and its Subsidiaries are the owners or licensees
of all trade names, unregistered trademarks and service marks, brand
names, patents, registered and unregistered copyrights, registered
trademarks and service marks, and all applications for any of the
foregoing, and all permits, grants and licenses or other rights with
respect thereto, the absence of which would not have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has
been charged with any material infringement of any intangible property
of the character described above or been notified or advised of any
material claim of any other Person relating to any of the intangible
property which infringements or claims (individually or in the
aggregate) could reasonably be expected to have a Material Adverse
Effect.
(t) Except as set forth in the Memorandum, the Company and its
Subsidiaries comply in all material respects with all laws, rules and
regulations applicable to the Company and each such Subsidiary, and
the Company and its Subsidiaries own or possess and are operating in
compliance in all material
<PAGE>
-17-
respects with the terms, provisions,
conditions, restrictions and limitations contained in all licenses,
franchises, approvals, certificates and permits from all Federal,
state, territorial, foreign and local governmental and regulatory
authorities which are necessary to own or lease their respective
properties and assets and to the conduct of their respective
businesses (other than such laws, rules, regulations, licenses,
franchises, approvals, certificates or permits that are immaterial in
scope or application to the Company and its Subsidiaries, taken as a
whole), including, without limitation, licenses, franchises and
approvals from the United States Food and Drug Administration and the
United States Federal Trade Commission, except where the failure to
comply with any of the foregoing would not have a Material Adverse
Effect. Except as otherwise set forth in the Memorandum, there are no
citations or notices of forfeiture or other proceedings pending or, to
the best knowledge of the Company, threatened or any basis therefor,
which would lead to the revocation, termination, suspension or non-
renewal of any such license, franchise, approval, certificate or
permit the result of which could reasonably be expected to have a
Material Adverse Effect. Except as otherwise set forth in the
Memorandum, there are no restrictions or limitations contained in any
applicable license, franchise, approval, certificate or permit, or, to
the best knowledge of the Company, threatened or proposed in any
pending or contemplated hearing, proceeding or procedure, that could
reasonably be expected to have a Material Adverse Effect.
(u) Neither the Company nor any of its affiliates (as defined in
Rule 501(b) of Regulation D under the Act) has directly, or through
any agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Act) which is or will be integrated with the sale of the Securities in
a manner that would require the registration under the Act of the
Securities or (ii) engaged in any form of general solicitation or
general advertising in connection with the offering of the Preferred
Stock (as those terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of Section
4(2) of the Act.
(v) Assuming the accuracy of the Initial Purchaser's
representations and warranties set forth in Section 3.2 hereof and the
representations and warranties of each subsequent transferee that is
an "Accredited Investor" (as set forth in a certificate required to be
delivered by each such subsequent transferee) and the due performance
by the Initial Purchaser of the covenants and agreements set forth in
Section 3.2
<PAGE>
-18-
hereof, the sale of the Securities to the Initial
Purchaser in the manner contemplated by this Agreement does not
require registration under the Act.
(w) No securities of the Company or any of its Subsidiaries are
of the same class (within the meaning of Rule 144A under the Act) as
the Securities and listed on a national securities exchange registered
under Section 6 of the Exchange Act, or quoted in a U.S. automated
interdealer quotation system.
(x) None of the Company or its Subsidiaries has taken, nor will
any of them take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Securities.
(y) None of the Company, its Subsidiaries, any of their
respective Affiliates or any person acting on its or their behalf
(other than the Initial Purchaser and its Affiliates, as to whom the
Company makes no representation) has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act
("Regulation S") with respect to the Securities and the Company, its
Subsidiaries and their respective affiliates and any person acting on
its or their behalf (other than the Initial Purchaser and its
Affiliates, as to whom the Company makes no representation) has acted
in accordance with the offering restrictions requirement of
Regulation S.
(z) The Company and its Subsidiaries have complied with all
provisions of Florida H.B. 1771, codified as Section 517.075 of the
Florida Statutes and all regulations promulgated thereunder relating
to issuers doing business with the Government of Cuba or with any
person or any affiliate located in Cuba.
The Initial Purchaser acknowledges that the Company is not making
any representation or warranty to the Initial Purchaser in connection with
the sale of the Securities and the transactions contemplated hereby except
as specifically set forth in this Section 3.1.
Section 3.2. REPRESENTATIONS AND WARRANTIES OF THE INITIAL
PURCHASER. (a) The Initial Purchaser represents and warrants to, and
covenants and agrees with, the Company that: (1) the Securities sold to
the Initial Purchaser pursuant to be acquired by it hereunder are being
acquired for its own account or an account with respect to which it
exercises sole investment
<PAGE>
-19-
discretion and it or any such account is a
"qualified institutional buyer" as defined in Rule 144A of the Act ("QIB")
and has no intention of distributing or reselling such Securities or any
part thereof in any transaction which would be in violation of the
securities laws of the United States of America or any state; (2) it has
not solicited offers for, or offered or sold, and will not solicit offers
for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, or with respect to
any such securities sold in reliance on Regulation S of the Act, by means
of any directed selling efforts within the meaning of Rule 903 under the
Act and the Commission's Release No. 33-6863, (3) it acknowledges that the
Securities have not been or will not be registered under the Act and that
none of the Securities may be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except as set forth
below; (4) it shall not resell or otherwise transfer any of such Securities
except (A) to the Company or any of its Subsidiaries, (B) inside the United
States to a QIB in compliance with Rule 144A or, if any such Person is
buying for one or more institutional accounts for which such person is
acting as fiduciary or agent, only when such Person has represented to the
Initial Purchaser that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A,
and, in each case, in transactions under Rule 144A, (C) inside the United
States to a limited number of other institutional investors reasonably
believed by the Initial Purchaser to be "Accredited Investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) of the Act) that, prior to such
transfer, furnishes (or has furnished on its behalf by U.S. broker-dealer)
to the Initial Purchaser and the Company a signed letter containing certain
representations and agreements relating to the restrictions on transfer of
the Securities set forth in an annex to the Memorandum in private sales
exempt from registration under the Securities Act with a minimum aggregate
liquidation preference of $250,000, (D) outside the United States in
compliance with Rule 904 under the Act, (E) pursuant to any other exemption
from registration provided under the Act (if available) including Rule 144
thereunder or (F) pursuant to an effective registration statement under the
Act; and (5) it will give to each person to whom it transfers the
Securities notice of any restrictions on transfer of such Securities and
subject to the Company's right prior to any such offer, sale or transfer
pursuant to clause (E) to require the delivery of an opinion of counsel,
certification and/or other information satisfactory to it; and subject,
nevertheless, to the disposition of the Initial Purchaser's property being
at all times within its control; and provided that with respect to clause
(C) and (D) above, each such transfer is effected by delivery to such
purchaser of securities in definitive form and registered in
<PAGE>
-20-
its name (or its nominee's name) on the books maintained by the Transfer
Agent. The Initial Purchaser agrees to deliver at the Time of Purchase,
a letter to the Company confirming its compliance with the foregoing
requirements.
(b) The Initial Purchaser represents that it is not an insurance
company and that no part of the funds to be used to purchase the Securities
constitutes assets of any employee benefit plan, except as otherwise
disclosed in writing to the Company on or prior to the Closing date. As
used in this Section 3.2(b), the term "employee benefit plan" shall have
the meaning assigned to such term in Section 3 of ERISA.
(c) The Initial Purchaser also represents and warrants to the
Company that (i) it has received and reviewed the Memorandum; (ii) it has
delivered the Memorandum to each Person acquiring the Securities from it
prior to the time of such Person's purchase; (iii) it has authorized the
purchase of the Securities; and (iv) the purchase of Securities does not
violate its charter, by-laws, other organizational documents or any law or
regulation to which it is subject.
(d) This Agreement has been duly authorized by the Initial
Purchaser and, when executed and delivered by the Initial Purchaser
(assuming the due authorization, execution and delivery by the Company),
will constitute a valid and legally binding agreement of the Initial
Purchaser, enforceable against it in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights and remedies generally,
(ii) general equitable principles whether asserted in an action at law or
in equity, and that such enforceability may be subject to the discretion of
the court before which any proceedings therefor may be brought and
(iii) rights to indemnity or contribution may be limited by federal or
state securities laws or the public policy underlying such laws.
(e) Promptly following the occurrence thereof, the Initial
Purchaser will advise the Company of the date on which it and its
Affiliates first ceased to hold the Securities acquired as part of the
initial distribution thereof.
<PAGE>
-21-
ARTICLE IV.
CONDITIONS PRECEDENT TO CLOSING
4.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE INITIAL
PURCHASER. The obligation of the Initial Purchaser to purchase the
Securities to be purchased by it hereunder is subject, at the Time of
Purchase, to the satisfaction of the following conditions:
(a) The Initial Purchaser shall have received opinions,
addressed to it in form and substance reasonably satisfactory to the
Initial Purchaser and dated the Time of Purchase of John R. Jackson,
Esq., general counsel to the Company, and of Paul, Weiss, Rifkind,
Wharton & Garrison, special counsel to the Company and the Material
Subsidiaries.
(b) The Initial Purchaser shall have received an opinion,
addressed to it in form and substance reasonably satisfactory to the
Initial Purchaser and dated the Time of Purchase of Cahill Gordon &
Reindel, special counsel to the Initial Purchaser (the "Special
Counsel").
In rendering such opinions in accordance with Sections 4.1(a) and
(b), each such counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of
the Company and the Material Subsidiaries and representations of the
Initial Purchaser and by government officials, and upon such other
documents as such counsel deem appropriate as a basis for their
opinion. Each such counsel may specify the jurisdictions in which it
is admitted to practice and that it is not admitted to practice in any
other jurisdiction and is not an expert in the law of any other
jurisdiction.
(c) The representations and warranties made by the Company
herein shall be true and correct in all material respects (except for
changes expressly provided for in this Agreement) on and as of the
Time of Purchase, with the same effect as though such representations
and warranties had been made on and as of the Time of Purchase, except
for representations and warranties expressly made as of an earlier
date, which need only be true and correct in all material respects as
of such earlier date and the Company shall have complied in all
material respects with all of its agreements as set forth in this
Agreement and in the Basic Documents, as the case may be, required to
be performed by it at or prior to the Time of Purchase.
<PAGE>
-22-
(d) The Initial Purchaser shall have received from Deloitte &
Touche LLP a comfort letter dated the Closing in form and substance
reasonably satisfactory to the Initial Purchaser.
(e) Subsequent to the date of the Memorandum, (i) there shall
not have been any change, or any development involving a prospective
change, which has affected or may affect materially and adversely the
businesses or properties or the financial condition or the results of
operations of the Company and the Subsidiaries, taken as a whole (it
being understood that the failure to consummate any of the Pending
Acquisitions alone shall not be deemed to constitute such a change);
and (ii) except for the Pending Acquisitions, the Company and the
Subsidiaries shall have conducted their respective businesses only in
the ordinary course.
(f) At the Time of Purchase, and after giving effect to the
consummation of the transactions contemplated by this Agreement and
the Basic Documents, there shall exist no Default or Event of Default.
(g) As to the Initial Purchaser, the purchase of and payment for
the Securities (i) shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation
(including, without limitation, Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System), (ii) shall not subject
the Initial Purchaser to any penalty, or in its reasonable judgment,
other onerous condition under or pursuant to any applicable law or
governmental regulation (provided, however, that such regulation, law
or onerous condition was not in effect at the date of this Agreement),
and (iii) shall be permitted by the laws and regulations of the
jurisdictions to which it is subject.
(h) At the Time of Purchase, the Initial Purchaser shall have
received a certificate, dated the Time of Purchase or such Additional
Time of Purchase, as the case may be, from the Company stating that
the conditions specified in Sections 4.1(c), (e) and (f) have been
satisfied or duly waived at the Time of Purchase or Additional Time of
Purchase.
(i) Each of the Basic Documents shall be substantially in the
form attached hereto or described herein and the Basic Documents and
the Stockholder's Agreement shall have been executed and delivered by
all the respective parties thereto and shall be in full force and
effect.
<PAGE>
-23-
(j) The Time of Purchase shall not be later than 5:00 P.M., New
York City time, on August 15, 1996, subject to extension if the
Initial Purchaser agrees to extend the Time of Purchase upon request
to do so by the Company.
(k) All proceedings taken in connection with the issuance of the
Securities and the transactions contemplated by this Agreement, the
Basic Documents and all documents and papers relating thereto shall be
reasonably satisfactory to the Initial Purchaser and Special Counsel.
The Initial Purchaser and Special Counsel shall have received copies
of such papers and documents as they may reasonably request in
connection therewith, all in form and substance reasonably
satisfactory to them.
(l) All costs due and owing and other reasonable expenses
(including, without limitation, reasonable legal fees and expenses)
required to be paid to or on behalf of the Initial Purchaser on or
prior to the Time of Purchase or the Additional Time of Purchase, as
the case may be, pursuant to this Agreement.
(m) The Certificate of Designation shall have been duly filed
with the Secretary of State of the State of Delaware.
(n) Thomas V. Bonoma shall have executed an employment contract,
in form and substance satisfactory to the Initial Purchaser, to act as
Chief Executive Officer of the Company for a period of not less than 4
years.
(o) The Nomura Waiver shall have been executed and delivered by
Nomura Holdings America Inc. in form and substance satisfactory to the
Initial Purchaser and shall be in full force and effect.
(p) Any Notes Waiver shall have been executed and delivered by
holders of a majority in principal amount of the Notes and shall be in
full force and effect.
(q) In the event that the Initial Purchaser exercises its Option
provided in Section 2.1 hereof to purchase all or any portion of the
Option Units, the representations and warranties of the Company
contained herein and the statements in any certificates, opinions and
comfort letters furnished by the Company, its counsel or accountants
hereunder shall be true and correct as of the date of the Additional
Closing and bring-down certificates, opinions and comfort letters to
that effect shall be delivered on such date.
<PAGE>
-24-
On or before the Time of Purchase or the Additional Time of
Purchase, as the case may be, the Initial Purchaser and Special Counsel
shall have received such further documents, opinions, certificates and
schedules or other instruments relating to the business, corporate, legal
and financial affairs of the Company and its Subsidiaries as they may
reasonably request.
Section 4.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to issue and sell the Securities pursuant to
this Agreement are subject, at the Time of Purchase, to the satisfaction of
the following conditions:
(a) The representations and warranties made by the Initial
Purchaser herein shall be true and correct in all material respects at
and as of the Time of Purchase with the same effect as though such
representations and warranties had been made on and as of the Time of
Purchase.
(b) The issuance or sale of the Securities (i) shall not be
enjoined under the laws of any jurisdiction to which the Company is
subject (temporarily or permanently) at the Time of Purchase,
(ii) shall not subject the Company to any penalty, or in its
reasonable judgment, other onerous condition under or pursuant to any
applicable law or governmental regulation (provided, however, that
such regulation, law or onerous condition was not in effect at the
date of this Agreement), and (iii) shall be permitted by the laws and
regulations of the jurisdictions to which it is subject.
(c) Each of the Basic Documents shall be satisfactory in form
and substance to the Company and shall have been executed and
delivered by all respective parties thereto and shall be in full force
and effect and counsel to the Company shall have received a copy of
each of such documents duly executed by such parties.
(d) The Nomura Waiver shall have been executed and delivered by
Nomura Holding America Inc. in form and substance satisfactory to the
Company and shall be in full force and effect.
(e) Any Notes Waiver shall have been executed and delivered by
holders of a majority in aggregate principal amount of the Notes and
shall be in full force and effect.
(f) The Preemptive Right Opinion shall have been received by the
Company in a form and substance acceptable to it.
<PAGE>
-25-
ARTICLE V
COVENANTS
Section 5.1 COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Initial Purchaser that:
(a) The Company will not amend or supplement the Memorandum or
any amendment or supplement thereto of which the Initial Purchaser
shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall not have given
its consent, which consent shall not be unreasonably withheld. The
Company will promptly, upon the reasonable request of the Initial
Purchaser or counsel to the Initial Purchaser, make any amendments or
supplements to the Memorandum that may be necessary or advisable in
the opinion of the Initial Purchaser or counsel to the Initial
Purchaser in connection with the resale of the Securities by the
Initial Purchaser.
(b) The Company will cooperate with the Initial Purchaser in
arranging for the qualification of the Securities for offering and
sale under the securities or "Blue Sky" laws of such jurisdictions as
the Initial Purchaser may designate and will continue such
qualifications in effect for as long as may be reasonably necessary to
complete the resale of the Securities; PROVIDED, HOWEVER, that in
connection therewith, the Company shall not be required to qualify as
a foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation in excess of
a nominal dollar amount in any such jurisdiction where it is not then
so subject.
(c) If, at any time prior to the completion of the distribution
by the Initial Purchaser of the Securities, any event occurs or
information becomes known as a result of which the Memorandum as then
amended or supplemented would include any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Memorandum to comply with
applicable law, the Company will promptly notify the Initial Purchaser
thereof (who thereafter will not use such Memorandum until
appropriately amended or supplemented) and will prepare at the expense
of the Company, an amendment or supplement to the Memorandum that
corrects such statement or omission or effects such compliance;
PROVIDED, HOWEVER, that the Company's
<PAGE>
-26-
obligation hereunder shall not
be applicable to the extent resale by the Initial Purchaser may be
accomplished pursuant to a Registration Statement (as defined in the
Preferred Stock Registration Rights Agreement). Notwithstanding any
provision of paragraph (a) or (c) of this Section 5.1, however, the
Company's obligation under paragraph (a) and (c) of this Section
5.1(a) shall terminate on the earliest to occur of (i) 180 days after
the date of the Memorandum (exclusive of any days during which use of
the Memorandum is suspended as set forth below) and (ii) the date upon
which you and your affiliates first cease to hold Securities acquired
as part of the initial distribution thereof; provided, however, that
the Company shall, if requested by the Initial Purchaser, amend or
supplement the Memorandum as provided in the second sentence of
Section 5.1(a) after such 180-day period (but in no event beyond the
date on which an Exchange Offer is consummated pursuant to the
Registration Rights Agreement) so long as an Initial Purchaser shall
have agreed to reimburse the Company for its reasonable expenses in
connection therewith. In addition, after 30 days from the date
hereof, the Company shall not be required to amend or supplement the
Memorandum pursuant to paragraph (a) or (c) of this Section 5.1(a) in
the event that, and for so long as (A) an event occurs and is
continuing as a result of which the Memorandum as then amended or
supplemented would, in the Company's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in
the light of the circumstances under when they are made, and (B) the
Company determines in its good faith judgment that the disclosure of
such event at such time would materially adversely affect the
interests of the Company. The Company agrees to notify you to suspend
use of the Memorandum as promptly as practicable after the occurrence
of such an event, and you hereby agree to suspend use of the
Memorandum until the Company has amended or supplemented the
Memorandum to correct such misstatement or omission. At such time as
such public disclosure is otherwise made or the Company determines in
its good faith judgment that the disclosure in the Memorandum of an
event described above would no longer materially adversely affect the
Company or that such disclosure is not necessary, the Company agrees
promptly to notify you of such determination, to amend or supplement
the Memorandum if necessary to correct any untrue statement or
omission therein and to furnish you such numbers of copies of the
Memorandum, as so amended or supplemented, as you may reasonably
request.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as
<PAGE>
-27-
many copies of the Memorandum or any amendment or supplement thereto
as the Initial Purchaser may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Memorandum.
(f) For and during the period ending on the fifth anniversary of
the Time of Purchase, the Company will furnish to the Initial
Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the holders of the Securities
and, promptly after available, copies of any reports or financial
statements furnished to or filed by the Company with the Commission or
any national securities exchange on which any class of securities of
the Company may be listed.
(g) Prior to the Time of Purchase, the Company will furnish to
the Initial Purchaser, as soon as they have been prepared, a copy of
any unaudited interim financial statements of the Company for any
period subsequent to the period covered by the most recent financial
statements appearing in the Memorandum.
(h) None of the Company or any of its Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Securities in a manner which would
require the registration under the Act of the Securities.
(i) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or
in any manner involving a public offering within the meaning of
Section 4(2) of the Act.
(j) For so long as any of the Securities remain outstanding and
are "restricted securities" within the meaning of Rule 144(a)(3) under
the Act and not salable in full under Rule 144 under the Act (or any
successor provision), the Company will make available, upon request,
to any seller of such Securities the information specified in Rule
144A(d)(4) under the Act, unless the Company is then subject to
Section 13 or 15(d) of the Exchange Act.
(k) The Company will use its best efforts to (i) permit the
Securities to be included for quotation on PORTAL and (ii)
<PAGE>
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permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(l) The Company will use its reasonable best efforts to do and
perform all things required to be done and performed by it under this
Agreement and the other Basic Documents prior to or after the Closing
and to satisfy all conditions precedent on its part to the obligations
of the Initial Purchaser to purchase and accept delivery of the
Securities.
(m) To the extent reasonably permitted by applicable law, the
Company will treat the Preferred Stock as "stock" for purposes of the
Code.
ARTICLE VI
FEES
Section 6.1. COSTS, EXPENSES AND TAXES. The Company agrees to pay
all costs and expenses incident to the performance of its obligations under
this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 8.2 hereof,
including, but not limited to, all costs and expenses incident to (i) its
negotiation, preparation, printing, typing, reproduction, execution and
delivery of this Agreement and each of the other Basic Documents, any
amendment or supplement to or modification of any of the foregoing and any
and all other documents furnished pursuant hereto or thereto or in
connection herewith or therewith, (ii) any costs of printing the Memorandum
and the Memorandum and any amendment or supplement thereto, any other
marketing related materials and any "Blue Sky" memoranda (which shall
include the reasonable disbursements of counsel to the Initial Purchaser in
respect thereof), (iii) all arrangements relating to the delivery to the
Initial Purchaser of copies of the foregoing documents, (iv) the fees and
disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company and the Initial Purchaser, (v) preparation
(including printing), issuance and delivery to the Initial Purchaser of the
Securities, (vi) the qualification of the Securities under state securities
and "Blue Sky" laws, including filing fees and reasonable fees and
disbursements of counsel to the Initial Purchaser relating thereto, (vii)
all expenses and listing fees incurred in connection with the application
for quotation of the Securities on PORTAL, and (ix) except as limited by
Article VII, all costs and expenses (including without limitation,
reasonable attorneys' fees and expenses), if any, in connection with the
enforcement of this Agreement, the Securities or any other agreement
furnished pursuant hereto or thereto or in connection herewith or
therewith. In addition, the
<PAGE>
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Company shall pay any and all stamp, transfer
and other similar taxes (but excluding any income, franchise, personal
property, AD VALOREM or gross receipts taxes) payable or determined to be
payable in connection with the execution and delivery of this Agreement,
any of the other Basic Documents or the issuance of the Securities, and
shall save and hold the Initial Purchaser harmless from and against any and
all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes (other than if such delay is caused by the
Initial Purchaser).
ARTICLE VII
INDEMNITY
Section 7.1 INDEMNITY.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees and
covenants to hold harmless and indemnify the Initial Purchaser and each
person, if any, who controls the Initial Purchaser within the meaning of
Section 20 of the Exchange Act from and against any losses, claims,
damages, liabilities and expenses (including expenses of investigation) to
which the Initial Purchaser or such controlling person may become subject
(i) arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the Memorandum (as updated and
amended and delivered to the Initial Purchaser) and any amendments or
supplements thereto (as updated and amended and delivered to the Initial
Purchaser), the Basic Documents, any documents filed with the Commission or
any State Commission (collectively, the "Offering Materials") or arising
out of or based upon the omission or alleged omission to state in the
Offering Materials (as updated and amended and delivered to the Initial
Purchaser) a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading or (ii) arising out of, based upon or in any way
related or attributed to claims, actions or proceedings relating to this
Agreement or the subject matter of this Agreement and resulting from any
breach of any representation, warranty, covenant or agreement of the
Company or any of the Material Subsidiaries contained in this Agreement or
(iii) arising in any manner out of or in connection with such Person being
a Initial Purchaser of the Securities and relating to any action taken or
omitted to be taken by the Company or any of the Material Subsidiaries in
violation of this Agreement; PROVIDED, HOWEVER, that the Company shall not
be liable under this paragraph (a) (x) to the extent that such losses,
claims, damages and liabilities arose out of or are based upon an untrue
statement or omission made in any of the documents referred to in this
paragraph (a) in reliance upon and in conformity with the information
relating to the Initial Purchaser furnished in
<PAGE>
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writing by the Initial
Purchaser for inclusion therein (or for a breach by the Initial Purchaser
of any representation, warranty, covenant or agreement contained in the
Agreement); PROVIDED, FURTHER, that the Company shall not be liable under
this paragraph (a) to the extent that such losses, claims,
damages, or liabilities arose out of or are based upon an untrue statement
or omission made in the Memorandum that is corrected in the Memorandum (or
any amendment or supplement thereto) if the person asserting such loss,
claim, damage or liability purchased Securities from the Initial Purchaser
was not given the Memorandum (or any amendment or supplement thereto) on or
prior to the confirmation of the sale of such Securities or (y) any amounts
paid in settlement of claims without its written consent, which consent
shall not be unreasonably withheld, or to the extent that it is finally
judicially determined that such losses, claims, damages or liabilities
arose primarily (x) out of untrue statements or omissions made in the
Offering Materials in reliance upon and in conformity with the information
relating to the Initial Purchaser furnished in writing by the Initial
Purchaser for inclusion therein (or for a breach by the Initial Purchaser
of any representation or warranty contained in this Agreement) or (y) out of
the gross negligence, willful misconduct or bad faith of the Initial
Purchaser or such indemnified person. The Company further agrees to
reimburse the Initial Purchaser for any reasonable legal and other expenses
as they are incurred by it in connection with investigating, preparing to
defend or defending any lawsuits, claims or other proceedings or
investigations arising in any manner out of or in connection with such
Person being an Initial Purchaser; PROVIDED that if the Company reimburses
the Initial Purchaser hereunder for any expenses incurred in connection
with a lawsuit, claim or other proceeding for which indemnification is
sought, the Initial Purchaser hereby agrees to refund such reimbursement of
expenses to the extent it is finally judicially determined that the losses,
claims, damages or liabilities arising out of or in connection with such
lawsuit, claim or other proceedings arose primarily out of the gross
negligence, willful misconduct or bad faith of the Initial Purchaser or
such indemnified person or from a violation by the Initial Purchaser of
legal requirements applicable to the Initial Purchaser solely because of
its character as a particular type of regulated institution. The Company
further agrees that the indemnification, contribution and reimbursement
commitments set forth in this Article VII shall apply whether or not the
Initial Purchaser is a formal party to any such lawsuits, claims or other
proceedings. The indemnity, contribution and expense reimbursement
obligations of the Company under this Article VII shall be in addition to
any liability the Company may otherwise have.
<PAGE>
-31-
(b) INDEMNIFICATION BY THE INITIAL PURCHASER. The Initial
Purchaser agrees and covenants to hold harmless and indemnify the Company
and any Affiliates thereof (including any director, officer, employee,
agent or controlling Person of any of the foregoing) from and against any
losses, claims, damages, liabilities and expenses insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any
untrue statement of any material fact contained in the Offering Materials,
or any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
omission was made in reliance upon and in conformity with the information
relating to the Initial Purchaser furnished in writing by the Initial
Purchaser for inclusion therein. The indemnity, contribution and expense
reimbursement obligations of the Initial Purchaser under this Article VII
shall be in addition to any liability the Initial Purchaser may otherwise
have.
(c) PROCEDURE. If any Person shall be entitled to indemnity
hereunder (the "Indemnified Parties"), such Indemnified Party shall give
prompt notice confirmed in writing to the party or parties from which such
indemnity is sought (the "Indemnifying Parties") of the commencement of any
proceeding (a "Proceeding") with respect to which such Indemnified Party
seeks indemnification or contribution pursuant hereto; PROVIDED, HOWEVER,
that the failure so to notify the Indemnifying Parties shall not relieve
the Indemnifying Parties from any obligation or liability except to the
extent that the Indemnifying Parties have been prejudiced materially by
such failure. The Indemnifying Parties shall have the right, exercisable
by giving written notice to an Indemnified Party promptly after the receipt
of written notice from such Indemnified Party of such Proceeding, to
assume, at the Indemnifying Parties' expense, the defense of any such
Proceeding, with counsel reasonably satisfactory to such Indemnified Party;
PROVIDED, HOWEVER, that an Indemnified Party or parties (if more than one
such Indemnified Party is named in any Proceeding) shall have the right to
employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or parties unless: (1) the Indemnifying
Parties agree to pay such fees and expenses; or (2) the Indemnifying
Parties fail promptly to assume the defense of such Proceeding or fail to
employ counsel reasonably satisfactory to such Indemnified Party or
parties; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party or Parties and the
Indemnifying Party or an Affiliate of the Indemnifying Party and such
Indemnified Parties, and the Indemnifying Parties shall have been advised
in writing by outside
<PAGE>
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counsel that there may be one or more material
defenses available to such Indemnified Party or parties that are different
from or additional to those available to the Indemnifying Parties, in which
case, if such Indemnified Party or parties notifies the Indemnifying
Parties in writing that it elects to employ separate counsel at the expense
of the Indemnifying Parties, the Indemnifying Parties shall not have the
right to assume the defense thereof and such counsel shall be at the
expense of the Indemnifying Parties, it being understood, however, that,
unless there exists a conflict among Indemnified Parties, the Indemnifying
Parties shall not, in connection with any one such Proceeding or separate
but substantially similar or related Proceedings in the same jurisdiction,
arising out of the same general allegations or circumstances, be liable for
the fees and expenses of more than one separate firm of attorneys (together
with appropriate local counsel, if any) at any time for such Indemnified
Party or parties, or for fees and expenses that are not reasonable. No
Indemnified Party or parties will settle any Proceedings without the
written consent of the Indemnifying Party or parties (but such consent will
not be unreasonably withheld).
Section 7.2. CONTRIBUTION. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an
Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then
each applicable Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect not only the
relative benefits received by the Indemnifying Party on the one hand and
the Indemnified Party on the other, but also the relative fault of the
Indemnifying and Indemnified Parties in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Indemnifying and Indemnified Parties shall be deemed to be
in the same proportion as the total proceeds from the offering of the
Securities (before deducting expenses, but after giving effect to the
Initial Purchaser's discount) received by the Company bear to the total
discounts and commissions and the merger and consent advisory fee (the "M&A
Fee") referred to in the caption "Plan of Distribution" in the Memorandum
received by the Initial Purchaser. The relative fault of the Indemnifying
and Indemnified Parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying or Indemnified Parties and each
such party's relative intent, knowledge, access to information
<PAGE>
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and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any reasonable
legal or other fees or expenses incurred by such party in connection with
investigating or defending any such claim.
The Company and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to the immediately preceding
paragraph were determined by any method of allocation which does not take
into account the equitable considerations referred to in such paragraph.
No person guilty of fraudulent misrepresentation shall be entitled to
contribution from any Person.
Notwithstanding any other provision of this Section 7.2, the
Initial Purchaser shall not be obligated to make contributions hereunder
that in the aggregate exceed the total discounts, commissions and other
compensation, including without limitation, the M&A Fee, received by the
Initial Purchaser under this Agreement, less the aggregate amount of any
damages that the Initial Purchaser has otherwise been required to pay by
reason of the untrue or alleged untrue statements or a breach of a
representation or warranty or the omissions or alleged omissions to state a
material fact.
Section 7.3. REGISTRATION RIGHTS AGREEMENTS. Notwithstanding
anything to the contrary in this Article VII, the indemnification and
contribution provisions of the Preferred Stock Registration Rights
Agreement or the Common Stock Registration Rights Agreement shall govern
any claim with respect thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 SURVIVAL OF PROVISIONS. The representations,
warranties and covenants of the Company and the Initial Purchaser made
herein, the indemnity and contribution agreements contained herein and each
of the provisions of Articles V, VII and VIII shall remain operative and in
full force and effect regardless of (a) any investigation made by or on
behalf of the Company, the Initial Purchaser or any Indemnified Party, (b)
acceptance of any of the Securities and payment therefor or (c) disposition
of the Securities by the Initial Purchaser whether by redemption, exchange,
sale or otherwise. The respective agreements, covenants, indemnities and
other statements set forth in Article VII and Section 8.7 shall remain in
full force and
<PAGE>
-34-
effect regardless of any termination or cancellation of this
Agreement.
Section 8.2. TERMINATION. This Agreement may be terminated (as to
the party electing to so terminate it) at any time prior to the Time of
Purchase:
(a) by the Company if any of the conditions specified in Section
4.2 of this Agreement have not been met or waived by the Company pursuant
to the terms of this Agreement;
(b) by the Initial Purchaser if any of the conditions specified
in Section 4.1 of this Agreement have not been met or waived pursuant to
the terms of this Agreement by November 30, 1996.
(c) By the Initial Purchaser if:
(i) the Company or any of its Subsidiaries shall have sustained
any loss or interference with respect to its businesses or properties
from fire, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any strike, labor dispute, slow down
or work stoppage or any legal or governmental proceeding, which loss
or interference, in the sole judgment of the Initial Purchaser, has had
or has a Material Adverse Effect, or there shall have been, in the
sole judgment of the Initial Purchaser, any event or development that,
individually or in the aggregate, has or could be reasonably likely to
have a Material Adverse Effect (including without limitation a change
in control of the Company or any of its Subsidiaries), except in each
case as described in the Memorandum (exclusive of any amendment or
supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United
<PAGE>
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States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchaser, makes it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
(d) Termination of this Agreement pursuant to this Section 8.2
shall be without liability of any party to any other party except as
provided in Section 8.1 hereof.
Section 8.3. NO WAIVER; MODIFICATIONS IN WRITING. (a) No failure or
delay on the part of the Company or the Initial Purchaser in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company
or the Initial Purchaser at law or in equity or otherwise. No waiver of or
consent to any departure by the Company from any provision of this
Agreement shall be effective unless signed in writing by the party entitled
to the benefit thereof, PROVIDED that notice of any such waiver shall be
given to each party hereto as set forth below. Except as otherwise
provided herein, no amendment, modification or termination of any provision
of this Agreement shall be effective unless signed in writing by or on
behalf of the Initial Purchaser. Any amendment, supplement or modification
of or to any provision of this Agreement, any waiver of any provision of
this Agreement, and any consent to any departure by the Company from the
terms of any provision of this Agreement, shall be effective only in the
specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice
to or demand on the Company in any case shall entitle the Company to any
other or further notice or demand in similar or other circumstances.
(b) Except pursuant to Section 2.1 and Article VI hereof, the
Company has not paid or shall not pay, or has not caused or shall not cause
to be paid, directly or indirectly, any remuneration, whether by way of
interest, fee or otherwise, to any holder of any Securities as
consideration for or as an inducement to the purchase by any holder of the
Securities.
Section 8.4. ROLE OF SPECIAL COUNSEL. The role of Cahill Gordon &
Reindel, special counsel to the Initial Purchaser,
<PAGE>
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has been limited to
functioning on this Agreement and such firm has not performed a due
diligence investigation with respect to the Company or any of its
Subsidiaries or their respective affairs.
Section 8.5. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The
statements set forth in the first sentence of the third paragraph under the
heading "Plan of Distribution" in the Memorandum (to the extent such
statements relate to the Initial Purchaser) constitute the only information
furnished by the Initial Purchaser to the Company for the purposes of
Sections 3.1(a) and 7.1(a) and (b) hereof.
Section 8.6. COMMUNICATIONS. All notices, demands and other
communications provided for hereunder shall be in writing and, (a) if to
the Initial Purchaser, shall be given by registered or certified mail,
return receipt requested, telex, telegram, telecopy, courier service or
personal delivery, addressed to CIBC Wood Gundy Securities Corp., 425
Lexington Avenue, 3rd Floor, New York, New York 10017 or to such other
address as the Initial Purchaser may designate to the Company in writing
with a copy to Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005, Attention: Roger Meltzer, Esq., (b) if to the Company, shall be
given by similar means to Renaissance Cosmetics, Inc., 955 Massachusetts
Avenue, Cambridge, Massachusetts 02139, Attention: President, with copies
to Renaissance Cosmetics, Inc., 635 Madison Avenue, New York, New York
10022, Attention: John R. Jackson, Esq., General Counsel, and Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10019, Attention: Paul D. Ginsberg, Esq., or at such other address as
the Company may designate in writing. In each case notices, demands and
other communications shall be deemed given when received.
Section 8.7. DETERMINATIONS. All determinations to be made by the
Company or the Initial Purchaser hereunder in its opinion or judgment or
with its approval or otherwise shall be made by it in its sole discretion
(except as expressly provided otherwise).
Section 8.8. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 8.9. SUCCESSORS. This Agreement shall inure to the benefit
of and be binding upon the Initial Purchaser, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this agreement is intended or
<PAGE>
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shall be construed to give any
other Person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such Persons and for the
benefit of no other Person except that (i) the indemnities of the Company
contained in Section 7.1(a) of this Agreement shall also be for the benefit
of the directors, officers, employees and agents of the Initial Purchaser
and any Person or Persons who control the Initial Purchaser within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii)
the indemnities of the Initial Purchaser contained in Section 7.1(b) of
this Agreement shall also be for the benefit of the directors of the
Company, its officers, employees and agents and any Person or Persons who
control the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Securities from the Initial Purchaser
will be deemed a successor because of such purchase.
SECTION 8.10. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8.11. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.12. HEADINGS. The Article and Section headings and Table
of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
RENAISSANCE COSMETICS, INC.
By:/s/ John R. Jackson
Name: John R. Jackson
Title: Vice President
CIBC WOOD GUNDY SECURITIES CORP.
By:/s/Dean C. Kehler
Name: Dean C. Kehler
Title: Managing Director
<PAGE>
SCHEDULE 3.1(c)
HOUBIGANT (1995) LIMITED/HOUBIGANT (1995) LIMITEE
DANA PERFUMES (CANADA) LTD.
MARCAFIN S.A.
PERFUMES DANA DO BRAZIL, S.A.
RENAISSANCE ACQUISITION, INC.
REGISTRATION RIGHTS AGREEMENT
Dated as of August 15, 1996
by and between
RENAISSANCE COSMETICS, INC.
and
CIBC WOOD GUNDY SECURITIES CORP.
as Initial Purchaser
TABLE OF CONTENTS
PAGE
1. Definitions 1
2. Exchange Offer 4
3. Shelf Registration 8
4. Additional Dividends 10
5. Registration Procedures 11
6. Registration Expenses 21
7. Indemnification 23
8. Rules 144 and 144A 26
9. Underwritten Registrations 27
10. Miscellaneous 27
(a) Remedies 27
(b) No Inconsistent Agreements 27
(c) Adjustments Affecting Registrable
Shares 27
(d) Amendments and Waivers 28
(e) Notices 28
(f) Successors and Assigns 28
(g) Counterparts 29
<PAGE>
(h) Headings 29
(i) Governing Law 29
(j) Severability 29
(k) Entire Agreement 29
(l) Shares Held by the Company or Its
Affiliates 29
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is dated as
of May 29, 1996, by and between Renaissance Cosmetics, Inc., a Delaware
corporation (the "Company") and CIBC WOOD GUNDY SECURITIES CORP., as
Initial Purchaser (the "Initial Purchaser").
This Agreement is entered into in connection with the Securities
Purchase Agreement, dated as of August , 1996, between the Company and
the Initial Purchaser (the "Purchase Agreement") relating to the sale by
the Company to the Initial Purchaser of $80,000,000 aggregate liquidation
value of the Company's Senior Redeemable Preferred Stock, Series B, par
value $.01 per share (the "Preferred Shares") and the option to the
Initial Purchaser to purchase an additional $20,000,000 aggregate
liquidation value of the Company's Senior Redeemable Preferred Stock,
Series B, par value $.01 per share (the "Option Shares") and warrants to
purchase Company Common Stock (the "Warrants"). The aggregate
liquidation value of the Preferred Stock will increase to the extent that
accrued dividends thereon are not paid in cash through the issuance of
additional shares of Preferred Stock. In order to induce the Initial
Purchaser to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights set forth in this Agreement for the
benefit of the Initial Purchaser and its direct and indirect transferees.
The execution and delivery of this Agreement is a condition to the
Initial Purchaser's obligation to purchase the Preferred Shares and the
Warrants under the Purchase Agreement.
The parties hereby agree as follows:
1.DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
ADDITIONAL DIVIDENDS: See Section 4.
ADVICE: See Section 5.
APPLICABLE PERIOD: See Section 2.
CERTIFICATE OF DESIGNATION: The Certificate of Designation duly
adopted by the Board of Directors of the Company setting forth the
rights, preferences and priorities of the Preferred Shares and filed
with, and accepted for filing, so as to be effective, by the Secretary of
State of the State of Delaware prior to the Closing hereunder and which
is substantially in the form of Exhibit 1 to the Purchase Agreement.
CLOSING: See Purchase Agreement.
<PAGE>
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COMPANY: See the introductory paragraph to this Agreement.
EFFECTIVENESS DATE: The 135th day after the Issue Date.
EFFECTIVENESS PERIOD: See Section 3.
EVENT DATE: See Section 4.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
EXCHANGE OFFER: See Section 2.
EXCHANGE REGISTRATION STATEMENT: See Section 2.
EXCHANGE SHARES: See Section 2.
FILING DATE: The 60th day after the Issue Date.
HOLDER: Any holder of a Registrable Share or Registrable Shares.
INDEMNIFIED PERSON: See Section 7.
INDEMNIFYING PERSON: See Section 7.
INITIAL PURCHASER: See the introductory paragraph of this
Agreement.
INITIAL SHELF REGISTRATION: See Section 3.
INSPECTORS: See Section 5.
ISSUE DATE: The date on which the Preferred Shares are sold to
the Purchaser pursuant to the Purchase Agreement.
NASD: See Section 5.
PARTICIPANT: See Section 7.
PARTICIPATING BROKER-DEALER: See Section 2.
PERSON: An individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
other legal entity.
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PREFERRED SHARES: See the introductory paragraphs to this
Agreement.
PRIVATE EXCHANGE: See Section 2.
PRIVATE EXCHANGE SHARES: See Section 2.
PROSPECTUS: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and
a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in
reliance upon Rule 430A promulgated under the Securities Act), as amended
or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Shares covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
PURCHASE AGREEMENT: See the introductory paragraphs to this
Agreement.
RECORDS: See Section 5.
REGISTRABLE SHARES: The Preferred Shares upon original issuance
of the Preferred Shares to the Initial Purchaser under the Purchase
Agreement (including the Option Shares) and at all times subsequent
thereto and, if issued, the Private Exchange Shares, until in the case of
such Preferred Shares or Private Exchange Shares, as the case may be,
(i) a Registration Statement covering such Preferred Shares or Private
Exchange Shares, as the case may be, has been declared effective by the
SEC and such Preferred Shares or Private Exchange Shares, as the case may
be, have been disposed of in accordance with such effective Registration
Statement, (ii) such Preferred Shares or Private Exchange Shares, as the
case may be, are sold in compliance with Rule 144, (iii) in the case of
any Preferred Share, such Preferred Share has been exchanged for an
Exchange Share or Exchange Shares pursuant to an Exchange Offer or
(iv) such Preferred Shares or Private Exchange Shares, as the case may
be, cease to be outstanding.
REGISTRATION DEFAULT: See Section 4.
REGISTRATION STATEMENT: Any registration statement of the
Company, including, but not limited to, the Exchange Registration
Statement, which covers any of the Registrable Shares pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration
<PAGE>
-4-
statement, including post-effective
amendments, all exhibits, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
RULE 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery
requirements of the Securities Act.
RULE 144A: Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such
securities being free of the registration and prospectus delivery
requirements of the Securities Act.
RULE 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
SECURITIES ACT: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
SHELF NOTICE: See Section 2.
SHELF REGISTRATION: See Section 3.
SUBSEQUENT SHELF REGISTRATION: See Section 3.
UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING: A
registration in which securities of the Company are sold to an
underwriter(s) for reoffering to the public.
2. EXCHANGE OFFER
(a) To the extent not prohibited by any applicable law or
applicable interpretation of the SEC, the Company agrees to use its best
efforts to file with the SEC as soon as practicable, but in no event
later than the Filing Date, an offer to exchange (the "Exchange Offer")
any and all of the Registrable Shares for a like aggregate liquidation
value of preferred equity securities of the
<PAGE>
-5-
Company which are
substantially identical to the Preferred Shares (the "Exchange Shares")
(and which are entitled to the benefits of the Certificate of
Designation), except that the Exchange Shares shall have been registered
pursuant to an effective Registration Statement under the Securities Act.
The Exchange Offer will be registered under the Securities Act on the
appropriate form (the "Exchange Registration Statement") and will comply
with all applicable tender offer rules and regulations under the Exchange
Act. The Company agrees to use its best efforts to (x) cause the
Exchange Registration Statement to become effective under the Securities
Act on or before the Effectiveness Date; (y) keep the Exchange Offer open
for at least 30 days (or longer if required by applicable law) after the
date that notice of the Exchange Offer is mailed to Holders; and
(z) consummate the Exchange Offer on or prior to the 60th day following
the date on which the Exchange Registration Statement is declared
effective. Each Holder who participates in the Exchange Offer will be
required to represent that any Exchange Shares received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement
or understanding with any person to participate in the distribution of
the Exchange Shares, and that such Holder is not an affiliate of the
Company within the meaning of Rule 405 under the Securities Act or if it
is an affiliate, that it will comply with the registration and prospectus
delivery requirements of the Securities Act, to the extent applicable.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply,
MUTATIS MUTANDIS, solely with respect to Exchange Shares held by
Participating Broker-Dealers (as defined below), and the Company shall
have no further obligation to register Registrable Shares pursuant to
Section 3 of this Agreement.
(b) The Company shall include within the Prospectus contained in
the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchaser, which
shall contain a summary statement of the positions taken or policies made
by the Staff of the SEC with respect to the potential "underwriter"
status of any broker-dealer that is the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of Exchange Shares received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"),
whether such positions or policies have been publicly disseminated by the
Staff of the SEC or such positions or policies, in the reasonable
judgment of the Initial Purchaser, represent the prevailing views of the
Staff of the SEC. Such "Plan of Distribution" section shall also allow
the use of the prospectus by all persons subject to the prospectus
delivery requirements of the Securities Act, including all Participating
Broker-Dealers, and include a statement describing
<PAGE>
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the means by which
Participating Broker-Dealers may resell the Exchange Shares.
The Company shall use its best efforts to keep the Exchange
Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be
lawfully delivered by all persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such
persons must comply with such requirements in order to resell the
Exchange Shares, PROVIDED that such period shall not exceed 90 days (or
such longer period if extended pursuant to the last paragraph of Section
5) (the "Applicable Period") provided that each holder agrees that, upon
receipt of notice from the Company of the occurrence of any event which
makes any statement in the Prospectus untrue in any material respect or
which requires the making of any changes in the Prospectus in order to
make the statements therein not misleading (which notice the Company
agrees to deliver promptly to such holders), such holder will suspend use
of the prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission and has furnished
copies of the amended or supplemented prospectus to such holder. In such
event, the Applicable Period shall be extended pursuant to the last
paragraph of Section 5.
If, prior to consummation of the Exchange Offer, the Initial
Purchaser holds any Preferred Shares acquired by it and having, or which
are reasonably likely to be determined to have, the status of an unsold
allotment in the initial distribution, the Company upon the request of
the Initial Purchaser shall, simultaneously with the delivery of the
Exchange Shares in the Exchange Offer, issue and deliver to the Initial
Purchaser, in exchange (the "Private Exchange") for the Preferred Shares
held by such Initial Purchaser, a like liquidation value of preferred
equity securities of the Company that are identical in all material
respects to the Exchange Shares (the "Private Exchange Shares") (and
which are issued pursuant to the same certificate of designation as the
Exchange Shares). The Private Exchange Shares shall bear the same CUSIP
number as the Exchange Shares.
Dividends on the Exchange Shares and any Private Exchange Shares
will accrue from the later of (A) the last dividend payment date on which
dividends were paid on the Preferred Shares surrendered in exchange
therefor or, (B) if no dividends have been paid on the Preferred Shares,
from the Issue Date.
In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together
<PAGE>
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with an appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York; and
(iii) permit Holders to withdraw tendered Preferred Shares at any
time prior to the close of business, New York time, on the last
business day on which the Exchange Offer shall remain open (which shall
be a period of at least 60 days from the date notice is mailed or
longer if required by applicable law) (the "Exchange Date").
As soon as practicable after the close of the Exchange Offer or
the Private Exchange, as the case may be, the Company shall:
(i) accept for exchange all Preferred Shares tendered and not
validly withdrawn pursuant to the Exchange Offer [or the Private
Exchange, as the case may be;]
(ii) deliver to the Company for cancellation all Preferred Shares
so accepted for exchange; and
(iii) issue and deliver promptly to each Holder of Preferred
Shares, Exchange Shares equal in liquidation value to the Preferred
Shares of such Holder so accepted for exchange.
The Exchange Shares and the Private Exchange Shares shall be
issued pursuant to their respective Certificates of Designation, will
vote and consent together on all matters with the Preferred Shares as one
class to the extent the Preferred Shares have voting rights pursuant to
the Certificate of Designation or as provided by applicable law, and will
not have the right to vote or consent as a class separate from the
Preferred Shares on any matter.
(c) If (1) prior to the consummation of the Exchange Offer, the
Company or Holders of at least a majority in aggregate liquidation value
of the Registrable Shares reasonably determine in good faith that (i) the
Exchange Shares would not, upon receipt, be tradeable by such Holders
which are not affiliates (within the meaning of the Securities Act) of
the Company without restriction under the Securities Act and without
restrictions under applicable state securities laws, or (ii) after
conferring with counsel, the SEC is unlikely to permit the consummation
of the Exchange Offer prior to the Effectiveness Date (in which case the
Company may withdraw the Exchange Registration Statement, if filed, or
elect not
<PAGE>
-8-
to file it, if not already filed), (2) subsequent to the
Exchange Date if the Initial Purchaser shall not have sold all of the
Registrable Securities initially purchased by it to unaffiliated
investors and if the Initial Purchaser so requests, or (3) the Exchange
Offer is commenced and not consummated within 195 days of the Issue Date,
then the Company shall promptly deliver to the Holders written notice
thereof (the "Shelf Notice") and shall file an Initial Shelf Registration
pursuant to Section 3. Following the delivery of a Shelf Notice to the
Holders of Registrable Shares, the Company shall not have any further
obligation to conduct the Exchange Offer or the Private Exchange under
this Section 2.
3.SHELF REGISTRATION
If a Shelf Notice is delivered as contemplated by Section 2(c),
then:
(a) INITIAL SHELF REGISTRATION. The Company shall prepare and
file with the SEC a Registration Statement for an offering to be made on
a continuous basis pursuant to Rule 415 covering all of the Registrable
Shares (the "Initial Shelf Registration"). If the Company shall have not
yet filed an Exchange Registration Statement, the Company shall use its
best efforts to file with the SEC the Initial Shelf Registration on or
prior to the Filing Date. In any other instance, the Company shall use
its best efforts to file with the SEC the Initial Shelf Registration
within 30 days of the delivery of the Shelf Notice. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Shares for resale by such Holders in the
manner or manners designated by them (including, without limitation, one
or more underwritten offerings). Except to the extent required by any
agreement to which the Company is a party, the Company shall not permit
any securities other than the Registrable Shares to be included in the
Initial Shelf Registration or any Subsequent Shelf Registration (as
defined below). The Company shall use its best efforts to cause the
Initial Shelf Registration to be declared effective under the Securities
Act on or prior to the Effectiveness Date and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the
date which is 36 months from the date on which such Initial Shelf
Registration is declared effective (subject to extension pursuant to the
last paragraph of Section 5 hereof) if the Shelf Registration is a result
of an event described in Section 2(c)(1) or (3) or until the date that is
120 days from the date the Shelf Registration is declared effective
(subject to extension pursuant to the last sentence of Section 5 hereof)
if the Shelf Registration is as a result of the event described in
Section 2(c)(2) (as applicable the "Effectiveness Period"), or such
shorter
<PAGE>
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period ending when (i) all Registrable Shares covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf
Registration covering all of the Registrable Shares has been declared
effective under the Securities Act provided that each holder of
Registrable Securities agrees that, upon receipt of notice from the
Company of the happening of any event which makes any statement in the
Prospectus untrue in any material respect or which requires the making of
any changes in the Prospectus in order to make the statements therein not
misleading (which notice the Company agrees to deliver promptly to such
holders), such holders of Registrable Securities will suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus
to correct such misstatement or omission and has furnished copies of the
amended or supplemented prospectus to such holders of Registrable
Securities. If the Company shall give any such notice to suspend the use
of Prospectus, the applicable Effectiveness Period shall be extended
pursuant to the last paragraph of Section 5 hereof.
(b). SUBSEQUENT SHELF REGISTRATIONS. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective
for any reason at any time during the Effectiveness Period (other than
because of the sale of all of the securities registered thereunder), the
Company shall use its best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within
45 days of such cessation of effectiveness amend the Shelf Registration
in a manner reasonably expected to obtain the withdrawal of the order
suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the
Registrable Shares (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Company shall use its best efforts to
cause the Subsequent Shelf Registration to be declared effective as soon
as practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the
Initial Shelf Registration or any Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf
Registration" means the Initial Shelf Registration and any Subsequent
Shelf Registration.
(c) SUPPLEMENTS AND AMENDMENTS. The Company shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for
such Shelf Registration, if required by the Securities Act, or if
requested by the Holders of a majority in aggregate liquidation value of
the Registrable Shares covered by
<PAGE>
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such Registration Statement or by any
underwriter(s) of such Registrable Shares provided that the Company shall
not be required to amend or supplement the Shelf Registration Statement,
any related prospectus or any document incorporated therein by reference
in the event that, and for so long as, (A) any event occurs and is
continuing as a result of which the Shelf Registration Statement, any
related prospectus or any document incorporated therein by reference, as
amended or supplemented would, in the Company's good faith judgment,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in light of the circumstances under which they are made and
(B) the Company determines in its good faith judgment that the disclosure
of such events at such time would materially adversely affect the
interests of the Company. In such event, the Applicable Period or the
Applicable Effectiveness Period, as the case may be, shall be extended
pursuant to the last paragraph of Section 5.
4. ADDITIONAL DIVIDENDS
(a) The Company and the Initial Purchaser agree that the Holders
of Registrable Shares will suffer damages if the Company fails to fulfill
its obligations under Section 2 or Section 3 hereof and that it would not
be feasible to ascertain the extent of such damages with precision.
Accordingly, in lieu of any other damages that might be obtainable, the
Company agrees to pay additional dividends on the Preferred Shares
("Additional Dividends") under the circumstances set forth below:
(i) if the Exchange Offer Registration Statement or the Initial
Shelf Registration has not been filed on or prior to the Filing Date;
(ii) if the Exchange Offer Registration Statement or the Initial
Shelf Registration has not been declared effective on or prior to the
Effectiveness Date; and
(iii) if either (A) the Company has not exchanged the Exchange
Shares for all Preferred Shares validly tendered in accordance with the
terms of the Exchange Offer on or prior to 195 days after the Issue
Date or (B) the Exchange Offer Registration Statement ceases to be
effective at any time prior to the time that the Exchange Offer is
consummated or (C) if applicable, the Shelf Registration Statement has
been declared effective and such Shelf Registration Statement ceases to
be effective at any time during the Effectiveness Period;
<PAGE>
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(each such event referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to holders of the
Preferred Shares will be the immediate accrual of Additional Dividends as
follows: the per annum dividend rate on the Preferred Shares will
increase by 50 basis points upon the occurrence of a Registration
Default; and the per annum dividend rate will increase by an additional
25 basis points for each subsequent 90-day period during which the
Registration Default remains uncured, up to a maximum additional dividend
rate of 200 basis points per annum, PROVIDED, HOWEVER, that (1) upon the
filing of the Exchange Registration Statement or the Initial Shelf
Registration (in the case of (i) above), (2) upon the effectiveness of
the Exchange Registration Statement or a Shelf Registration (in the case
of (ii) above) or (3) upon the exchange of Exchange Shares for all
Preferred Shares tendered (in the case of (iii)(A) above), or upon the
effectiveness of the Exchange Registration Statement which had ceased to
remain effective (in the case of (iii)(B) above), or upon the
effectiveness of the Shelf Registration which had ceased to remain
effective (in the case of (iii)(C) above), any Additional Dividends on
the Preferred Shares as a result of such clause (i), (ii) or (iii) (or
the relevant subclause thereof), as the case may be, shall cease to
accrue and the dividend rate on the Preferred Shares will revert to the
dividend rate originally borne by the Preferred Shares.
(b) The Company shall notify the Holders within three business
days after each and every date on which an event occurs in respect of
which any Additional Dividend is required to be paid (an "Event Date").
Any amounts of Additional Dividends due pursuant to (a)(i), (a)(ii) or
(a)(iii) of this Section 4 will be payable in cash or in additional
Preferred Shares as contemplated by the Certificate of Designation
quarterly on each February 15, May 15, August 15 and November 15 to the
Holders of record on the fifteenth day immediately preceding such dates),
commencing with the first such date occurring after any such Additional
Dividend commences to accrue. The amount of an Additional Dividend will
be determined by multiplying the applicable Additional Dividend rate by
the principal amount of the Registrable Shares, multiplied by a fraction,
the numerator of which is the number of days such Additional Dividend
rate was applicable during such period (determined on the basis of a 360-
day year comprised of twelve 30-day months), and the denominator of which
is 360.
5.REGISTRATION PROCEDURES
In connection with the registration of any Registrable Shares or
Private Exchange Shares pursuant to Section 2 or 3 hereof, the Company
shall effect such registrations to permit the sale of such Registrable
Shares or Private Exchange Shares in
<PAGE>
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accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Company shall:
(a) Prepare and file with the SEC, prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and to use their respective best efforts to cause each
such Registration Statement to become effective and remain effective as
provided herein, PROVIDED that, if (1) such filing is pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered under
the Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the
Holders of the Registrable Shares and each such Participating
Broker-Dealer, as the case may be, covered by such Registration
Statement, their counsel and the managing underwriter(s), if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (at least 5
business days prior to such filing). The Company shall not file any
Registration Statement or Prospectus or any amendments or supplements
thereto in respect of which the Holders must be afforded an opportunity
to review prior to the filing of such document, if the Holders of a
majority in aggregate liquidation value of the Registrable Shares
covered by such Registration Statement, or such Participating
Broker-Dealer, as the case may be, their counsel, or the managing
underwriter(s), if any, shall reasonably object.
(b) Subject to the proviso contained in Section 3(c), prepare and
file with the SEC such amendments and post-effective amendments to each
Shelf Registration or Exchange Registration Statement, as the case may
be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be
supplemented by any Prospectus supplement required by applicable law,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to them with
respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of
<PAGE>
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any securities being sold by a Participating Broker-Dealer covered by
any such Prospectus.
(c) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, notify the selling
Holders of Registrable Shares, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriter(s), if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment thereto has been
filed, and, with respect to a Registration Statement or any
post-effective amendment thereto, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment thereto including
financial statements and schedules, documents incorporated or deemed to
be incorporated by reference and exhibits), (ii) of the issuance by the
SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the
Registrable Shares the representations and warranties of the Company
contained in any agreement (including any underwriting agreement)
contemplated by Section 5(n) below cease to be true and correct,
(iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of
a Registration Statement or any of the Registrable Shares or the
Exchange Shares to be sold by any Participating Broker-Dealer for offer
or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in,
or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in
the case of the
<PAGE>
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Prospectus, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and
(vi) of the Company's reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, use its best efforts to
prevent the issuance of any order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of a Prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Shares or the Exchange Shares
to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest possible
moment.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter(s), if any, or the Holders of a
majority in aggregate liquidation value of the Registrable Shares being
sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment
thereto such information as the managing underwriter(s), if any, or
such Holders or counsel reasonably request to be included therein,
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment thereto as soon as practicable after the
Company has received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment thereto and
(iii) supplement or make amendments to such Registration Statement
provided that the Company shall not be required to amend or supplement
the Shelf Registration Statement, any related prospectus or any
document incorporated therein by reference in the event that, and for
so long as, (A) any event occurs and is continuing as a result of which
the Shelf Registration Statement, any related prospectus or any
document incorporated therein by reference, as amended or supplemented
would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in light of the
circumstances under which they are made and (B) the Company
<PAGE>
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determines in its good faith judgment that the disclosure of such events
at such time would materially adversely affect the interests of the
Company. In such event, the Applicable Period or the Applicable
Effectiveness Period, as the case may be, shall be extended pursuant
to the last paragraph of Section 5.
(f) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, furnish to each selling
Holder of Registrable Shares and to each such Participating
Broker-Dealer who so requests and to counsel and the managing
underwriter(s), if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, deliver to each selling
Holder of Registrable Shares, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the managing underwriter or
underwriters, if any, without charge, as many copies of the Prospectus
or Prospectuses (including each form of preliminary prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by
each of the selling Holders of Registrable Shares or each such
Participating Broker-Dealer, as the case may be, and the managing
underwriter or underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Registrable Shares covered
by or the sale by Participating Broker-Dealers of the Exchange Shares
pursuant to such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Shares or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Shares during the Applicable Period,
<PAGE>
-16-
to use its best efforts to
register or qualify, and to cooperate with the selling Holders of
Registrable Shares or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of
such Registrable Shares for offer and sale under the state securities
or "blue sky" laws of such jurisdictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters, if any, reasonably request in writing,
PROVIDED that where Exchange Shares held by Participating
Broker-Dealers or Registrable Shares are offered other than through an
underwritten offering, the Company agrees to cause its counsel to
perform "blue sky" investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Shares held by Participating Broker-Dealers or the
Registrable Shares covered by the applicable Registration Statement;
PROVIDED that the Company shall not be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or
(C) subject itself to taxation in excess of a nominal dollar amount in
any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Shares and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Shares to be sold, which certificates shall not bear any restrictive
legends and, if requested by the selling Holders, shall be in a form
eligible for deposit with The Depository Trust Company; and enable such
Registrable Shares to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or Holders
may reasonably request.
(j) Use its best efforts to cause the Registrable Shares covered
by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
enable the seller or sellers thereof or the managing underwriter or
underwriters, if any, to consummate the disposition of such Registrable
Shares, except
<PAGE>
-17-
as may be required solely as a consequence of the nature
of such selling Holder's business, in which case the Company will
cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, upon the occurrence of
any event contemplated by paragraph 5(c)(v) or 5(c)(vi) above, as
promptly as reasonably practicable prepare and (subject to Section 5(a)
above) file with the SEC, at the expense of the Company, a supplement
or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, or file any other
required document so that, as thereafter delivered to the purchasers of
the Registrable Shares being sold thereunder or to the purchasers of
the Exchange Shares to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading provided that the Company shall not be required to amend or
supplement the Shelf Registration Statement, any related prospectus or
any document incorporated therein by reference in the event that, and
for so long as, (A) any event occurs and is continuing as a result of
which the Shelf Registration Statement, any related prospectus or any
document incorporated therein by reference, as amended or supplemented
would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in light of the
circumstances under which they are made and (B) the Company determines
in its good faith judgment that the disclosure of such events at such
time would materially adversely affect the interests of the Company.
In such event, the Applicable Period or the Applicable Effectiveness
Period, as the case may be, shall be extended pursuant to the last
paragraph of Section 5.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Shares, (i) provide the Holders
with printed certificates for the Registrable Shares in a form eligible
for deposit with The
<PAGE>
-18-
Depository Trust Company if the Holders so request
and (ii) provide a CUSIP number for the Registrable Shares.
(m) In connection with an underwritten offering of Registrable
Shares pursuant to a Shelf Registration, enter into an underwriting
agreement as is customary in underwritten offerings of preferred equity
securities similar to the Preferred Shares and take all such other
actions as are reasonably requested by the managing underwriter(s), if
any, in order to expedite or facilitate the registration or the
disposition of such Registrable Shares and, in such connection,
(i) make such representations and warranties to the managing
underwriter or underwriters on behalf of any underwriters, with respect
to the business of the Company and its subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as are
customarily made by issuers to underwriters in underwritten offerings
of preferred equity securities, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Company and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the managing underwriter or
underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of preferred equity securities and
such other matters as may be reasonably requested by underwriters;
(iii) obtain "cold comfort" letters and updates thereof in form and
substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Registration
Statement), addressed to the managing underwriter or underwriters on
behalf of any underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings of preferred equity
securities and such other matters as reasonably requested by the
managing underwriter or underwriters; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in
Section 7 hereof (or such other provisions and procedures acceptable to
Holders of a majority in aggregate liquidation value of Registrable
Shares covered by such Registration Statement and the managing
underwriter or underwriters or agents) with respect to all parties to
be indemnified pursuant to said Section. The above shall be done
<PAGE>
-19-
at each closing under such underwriting agreement, or as and to the extent
required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3,
or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Shares during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Shares being sold,
or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters participating in any such
disposition of Registrable Shares, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, subject to customary confidentiality undertakings, all
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise
any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company and its subsidiaries to supply
all information in each case reasonably requested by any such Inspector
in connection with such Registration Statement. Records which the
Company determines, in good faith, to be confidential and any Records
which it notifies the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such Records
is necessary to avoid or correct a material misstatement or material
omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public. Each selling Holder of
such Registrable Shares and each such Participating Broker-Dealer or
underwriter will be required to agree that information obtained by it
as a result of such inspections shall be deemed confidential and shall
not be used by it as the basis for any market transactions in the
securities of the Company or its subsidiaries unless and until such is
made generally available to the public. Each selling Holder of such
Registrable Shares and each such Participating Broker-Dealer will be
required to further agree that it will, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, give
notice to the Company and allow the Company to undertake appropriate
action to prevent disclosure of the Records deemed confidential at its
expense.
<PAGE>
-20-
(o) Comply with all applicable rules and regulations of the SEC
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (i) commencing at the end of any fiscal quarter in
which Registrable Shares are sold to underwriters in a firm commitment
or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month
periods.
(p) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Company in a form customary for
underwritten offerings of preferred equity securities similar to the
Preferred Shares, addressed to the Holders of Registrable Shares
participating in the Exchange Offer or the Private Exchange, as the
case may be, and which includes an opinion that the Company has duly
issued the Exchange Shares and the Private Exchange Shares, as the case
may be.
(q) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Shares by Holders to the
Company (or to such other Person as directed by the Company) in
exchange for the Exchange Shares or the Private Exchange Shares, as the
case may be, the Company shall mark, or cause to be marked, on such
Registrable Shares that such Registrable Shares are being cancelled in
exchange for the Exchange Shares or the Private Exchange Shares, as the
case may be; in no event shall such Registrable Shares be marked as
paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Shares covered by
any Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Shares and their
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the "NASD").
(s) Use its best efforts to take all other steps necessary to
effect the registration of the Registrable Shares covered by a
Registration Statement contemplated hereby.
The Company may require each seller of Registrable Shares or
Participating Broker-Dealer as to which any registration is
<PAGE>
-21-
being effected to furnish to the Company such information regarding such
seller or Participating Broker-Dealer and the distribution of such
Registrable Shares or Exchange Shares to be sold by such Participating
Broker-Dealer, as the case may be, as the Company may, from time to time,
reasonably request. The Company may exclude from such registration the
Registrable Shares of any seller or Participating Broker-Dealer who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Holder of Registrable Shares and each Participating
Broker-Dealer agrees by acquisition of such Registrable Shares or
Exchange Shares to be sold by such Participating Broker-Dealer, as the
case may be, that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii),
5(c)(iv), 5(c)(v) or 5(c)(vi), such Holder will forthwith discontinue
disposition of such Registrable Shares covered by such Registration
Statement or Prospectus or Exchange Shares to be sold by such Holder or
Participating Broker-Dealer, as the case may be, until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements
thereto. In the event the Company shall give any such notice, each of
the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the
giving of such notice to and including the date when each seller of
Registrable Shares covered by such Registration Statement or Exchange
Shares to be sold by such Holder or Participating Broker-Dealer, as the
case may be, shall have received (x) the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) or (y) the Advice.
6. REGISTRATION EXPENSES
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the
Company, whether or not the Exchange Offer or a Shelf Registration is
filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees
with respect to filings required to be made with the NASD in connection
with an underwritten offering and (B) fees and expenses of compliance
with state securities or "blue sky" laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with "blue
sky" qualifications of the Registrable Shares or Exchange Shares
and determination of the eligibility of the Registrable Shares or Exchange
Shares for investment under the laws of such jurisdictions
<PAGE>
-22-
(x) where the holders of Registrable Shares are located, in the case of the
Exchange Shares, or (y) as provided in Section 5(h), in the case of Registrable
Shares or Exchange Shares to be sold by a Participating Broker-Dealer
during the Applicable Period)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Shares or Exchange Shares in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is reasonably requested by the managing underwriter or
underwriters, if any, or, in respect of Registrable Shares or Exchange
Shares to be sold by any Participating Broker-Dealer during the
Applicable Period, by the Holders of a majority in aggregate liquidation
value of the Registrable Shares included in any Registration Statement or
of such Exchange Shares, as the case may be), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the
Company and reasonable fees and disbursements of one special counsel for
the sellers of Registrable Shares under the Shelf Registration (subject
to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(m)(iii)
(including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance),
(vi) Securities Act liability insurance, if the Company desires such
insurance, (vii) fees and expenses of all other Persons retained by the
Company, (viii) internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the
Company performing legal or accounting duties), (ix) the expense of any
annual or special audit, (x) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities
exchange, (xi) the fees and disbursements of underwriters, if any,
customarily paid by issuers or sellers of securities, and (xii) the
expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales
agreements and any other documents necessary in order to comply with this
Agreement.
(b) In connection with any Shelf Registration hereunder, the
Company shall reimburse the Holders of the Registrable Shares being
registered in such registration for the fees and disbursements, not to
exceed $25,000, of not more than one counsel (in addition to appropriate
local counsel) chosen by the Holders of a majority in aggregate
liquidation value of the Registrable Shares to be included in such
Registration Statement and other reasonable out-of-pocket expenses of the
Holders of Registrable Shares incurred in connection with the
registration of the Registrable Shares, in all cases upon presentation of
reasonably detailed and appropriate documentation.
<PAGE>
-23-
7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder
of Registrable Shares and each Participating Broker-Dealer selling
Exchange Shares during the Applicable Period, the officers and directors
of each such person, and each person, if any, who controls any such
person within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Participant"), from and against
any and all losses, claims, damages and liabilities (including, without
limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any
Participant furnished to the Company in writing by such Participant
expressly for use therein; PROVIDED that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of
any Participant (or to the benefit of any person controlling such
Participant) from whom the person asserting any such losses, claims,
damages or liabilities purchased Registrable Shares or Exchange Shares if
such untrue statement or omission or alleged untrue statement or omission
made in such preliminary prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the
related Prospectus (as so amended or supplemented) shall have been
furnished to such Participant at or prior to the sale of such Registrable
or Exchange Shares, as the case may be, to such person; and PROVIDED,
FURTHER, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any preliminary prospectus included
in the Shelf Registration Statement if (i) such Holder failed to send or
deliver a copy of the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Shares and (ii) the Prospectus
would have completely corrected such untrue statement or omission.
<PAGE>
-24-
(b) Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless the Company, its directors and
officers and each person who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to each
Participant, but only with reference to information relating to such
Participant furnished to the Company in writing by such Participant
expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary prospectus. The
liability of any Participant under this paragraph (b) shall in no event
exceed the proceeds received by such Participant from sales of
Registrable Shares giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnity may be sought
pursuant to either paragraph (a) or (b) of this Section 7, such person
(the "Indemnified Person") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Person") in writing, and
the Indemnifying Person, upon request of the Indemnified Person, shall
retain one counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others the Indemnifying Person
may reasonably designate in such proceeding and shall pay the reasonable
fees and expenses actually incurred by such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed
in writing to the contrary, (ii) the Indemnifying Person has failed
within a reasonable time to retain counsel reasonably satisfactory to the
Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person
and the Indemnified Person and representations of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the
same jurisdiction, be liable for the fees and expenses of more than one
separate law firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they
are incurred. Any such separate firm for the Participants and such
control persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Shares sold
by all such Participants and any such separate firm for the Company, its
directors, officers and such control persons of the Company shall be
designated in writing by the Company. The
<PAGE>
-25-
Indemnifying Person shall not
be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify
any Indemnified Person from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying
Person to reimburse the Indemnified Person for reasonable fees and
expenses actually incurred by counsel as contemplated by the third
sentence of this paragraph, the Indemnifying Person agrees that it shall
be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days
after receipt by such Indemnifying Person of the aforesaid request and
(ii) such Indemnifying Person shall not have reimbursed the Indemnified
Person in accordance with such request prior to the date of such
settlement; PROVIDED, HOWEVER, that the Indemnifying Person shall not be
liable for any settlement effected without its consent pursuant to this
sentence if the Indemnifying Party is contesting, in good faith, the
request for reimbursement. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on
claims that are the subject matter of such proceeding.
If the indemnification provided for in paragraphs (a) and (b) of
this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Participants on
the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on
the one hand and the Participants on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Participants and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
<PAGE>
-26-
The parties shall agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by PRO RATA
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Person as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses
actually incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall a Participant be required
to contribute any amount in excess of the amount by which proceeds
received by such Participant from sales of Registrable Shares or Exchange
Shares exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. RULES 144 AND 144A
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if
at any time the Company is not required to file such reports, it will,
upon the request of any Holder of Registrable Shares, make publicly
available other information of a like nature so long as necessary to
permit sales pursuant to Rule 144 or Rule 144A under the Securities Act.
The Company further covenants that so long as any Registrable Shares
remain outstanding to make available to any Holder of Registrable Shares
in connection with any sale thereof, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales of
such Registrable Shares pursuant to (a) such Rule 144A, or (b) any
similar rule or regulation hereafter adopted by the SEC.
<PAGE>
-27-
9. UNDERWRITTEN REGISTRATIONS
If any of the Registrable Shares covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will manage the offering
will be selected by the Company and reasonably acceptable to Holders of a
majority in aggregate liquidation value of such Registrable Shares
included in such offering.
No Holder of Registrable Shares may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Registrable Shares on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents required under the terms of such underwriting
arrangements.
10. MISCELLANEOUS
(a) REMEDIES. In the event of a breach by the Company of any of
its obligations under this Agreement, other than the occurrence of an
event which requires payment of Additional Dividends, each Holder of
Registrable Shares, in addition to being entitled to exercise all rights
provided herein or, in the case of the Initial Purchaser, in the Purchase
Agreement or granted by law, including recovery of damages, will be
entitled to a specific performance of its rights under this Agreement.
(b) NO INCONSISTENT AGREEMENTS. Except for the old Warrant
Agreement (as defined in the Purchase Agreement), the Company has not, as
of the date hereof, and the Company shall not, after the date of this
Agreement, enter into any agreement with respect to any of its securities
that is inconsistent in all material respects with the rights granted to
the Holders of Registrable Shares in this Agreement or otherwise
conflicts with the provisions hereof in all material respects. Except
for the Old Warrant Agreement (as defined in the Purchase Agreement), the
Company has not entered and will not enter into any agreement with
respect to any of its securities which will grant to any Person
piggy-back rights with respect to a Registration Statement.
(c) ADJUSTMENTS AFFECTING REGISTRABLE SHARES. The Company shall
not, directly or indirectly, take any action with respect to the
Registrable Shares as a class that would adversely affect, in any
material respect, the ability of the Holders of Registrable Shares to
include such Registrable Shares in a registration undertaken pursuant to
this Agreement.
<PAGE>
-28-
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate liquidation value of Registrable Shares. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Shares whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect,
impair, limit or compromise the rights of other Holders of Registrable
Shares may be given by Holders of at least a majority in aggregate
liquidation value of the Registrable Shares being sold by such Holders
pursuant to such Registration Statement, PROVIDED that the provisions of
this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery,
registered first-class mail, next-day air courier or telecopier:
i. if to a Holder of Registrable Shares, CIBC Wood Gundy
Securities Corp., 425 Lexington Avenue, 3rd Floor, New York, New York
10017, with a copy to Cahill Gordon & Reindel, 80 Pine Street, New
York, New York 10005, Attention: Roger Meltzer, Esq.; and
ii. if to the Company, Renaissance Cosmetics, Inc., 955
Massachusetts Avenue, Cambridge, Massachusetts 02139, Attention: Chief
Executive Officer, with a copy to Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, New York 10019,
Attention: Paul D. Ginsberg, Esq.
All such notices and communications shall be deemed to have been
duly given: (i) when delivered by hand, if personally delivered;
(ii) five business days after being deposited in the mail, postage
prepaid, if mailed; (iii) one business day after being timely delivered
to a next-day air courier; and (iv) when receipt is acknowledged by the
addressee, if telecopied.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Shares.
<PAGE>
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(g) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(j) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term,
provision, covenant or restriction.
(k) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein.
(l) SHARES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Shares is required hereunder, Registrable Shares held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
<PAGE>
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
RENAISSANCE COSMETICS, INC.
By:/s/ John R. Jackson
-------------------------------
Name: John R. Jackson
Title: Vice President
CIBC WOOD GUNDY SECURITIES CORP.
By: /s/ Jay Bloom
--------------------------------
Name: Jay Bloom
Title: Managing Director
COMMON STOCK REGISTRATION RIGHTS AGREEMENT
DATED AS OF AUGUST 15, 1996
BETWEEN
RENAISSANCE COSMETICS, INC.
AND
CIBC WOOD GUNDY SECURITIES CORP.,
AS INITIAL PURCHASER
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions 1
2. Registration Rights 5
3. Transfers of Common Stock 12
4. Registration Procedures 12
5. Indemnification and Contribution 16
6. Miscellaneous 19
a. No Inconsistent Agreements 19
b. Amendments and Waivers 19
c. Notices 20
d. Successors and Assigns 20
e. Rules 144 and 144A 20
f. Counterparts 21
g. Headings 21
h. Governing Law 21
i. Severability 21
j. Entire Agreement 21
Exhibit A
-i-
<PAGE>
THIS COMMON STOCK REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is made and entered into as of August , 1996, between Renaissance
Cosmetics, Inc., a Delaware corporation (the "Company"), and CIBC WOOD
GUNDY SECURITIES CORP., as Initial Purchaser (the "Initial Purchaser").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of August 8, 1996, between the Company and the
Initial Purchaser (the "Purchase Agreement"), relating to the sale by the
Company to the Initial Purchaser of $80,000,000 in aggregate liquidation
value of its Senior Redeemable Preferred Stock, Series B, par value $.01
per share (the "Preferred Stock") and warrants (the "Warrants") to
purchase Company Common Stock, par value $.01 per share (the "Common
Stock"). The aggregate liquidation value of the Preferred Stock will
increase to the extent that accrued dividends thereon are not paid in
cash or through the issuance of additional shares of Preferred Stock. In
order to induce the Initial Purchaser to enter into the Purchase
Agreement, the Company has agreed to provide to the Initial Purchaser and
its direct and indirect transferees (the "Holders"), among other things,
the registration rights for the Common Stock set forth in this Agreement
in the event the Initial Purchaser or any Holders acquire Company Common
Stock upon exercise of the Warrants. The execution of this Agreement is
a condition to the obligations of the Initial Purchaser to purchase the
Preferred Stock and Warrants under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. DEFINITIONS. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"CAPITAL STOCK" shall mean, with respect to any Person, any and
all shares or other equivalents (however designated) of capital stock,
partnership interests or any other participation, right or other
interest in the nature of an equity interest in such Person or any
option, warrant or other security convertible into any of the
foregoing.
"CERTIFICATE OF DESIGNATION" means the Certificate of Designation
duly adopted by the Board of Directors of the Company setting forth the
rights, preferences and priorities of the Preferred Stock and filed
with and accepted for filing, so as to be effective, by the Secretary
of State of the State of Delaware.
<PAGE>
-2-
"CLOSING DATE" shall mean the date of the Closing referred to in
the Purchase Agreement.
"COMMON STOCK" shall have the meaning set forth in the second
paragraph of the preamble of this Agreement.
"COMPANY" shall have the meaning set forth in the preamble and
shall also include the Company's successors.
"DEMAND REGISTRATION" shall have the meaning set forth in Section
2.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"FAIR MARKET VALUE" shall mean the value of any securities as
determined (without any discount for lack of liquidity, the amount of
Common Stock proposed to be sold or the fact that the shares of Common
Stock held by any Holder of such security may represent a minority
interest in a private company) by a nationally recognized investment
banking firm selected by the Company for the determination of such
value.
"HOLDER" shall mean the Initial Purchaser, for so long as the
Initial Purchaser owns any Common Stock or Warrants, and each of its
successors, assigns and direct and indirect transferees who become
registered owners of Common Stock or Warrants.
"INCLUDED SHARES" shall have the meaning set forth in
Section 2.1(a).
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
5(c).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
5(c).
"INITIAL PURCHASER" shall have the meaning in the introductory
paragraph of the preamble of this Agreement.
"LEGAL HOLIDAY" shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law,
regulation or executive order to remain closed. If a payment date is a
Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday.
<PAGE>
-3-
"PERSON" shall mean an individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, or other legal entity.
"PIGGY-BACK REGISTRATION" shall have the meaning set forth in
Section 2.2.
"PREFERRED STOCK" shall have the meaning set forth in the
preamble.
"PROSPECTUS" means a prospectus which meets the requirements of
Section 10 of the Securities Act.
"PUBLIC EQUITY OFFERING" shall mean a public offering by the
Company of shares of its common stock on a registration statement filed
under the Securities Act (however designated and whether voting or
non-voting) (other than a registration statement filed on Form S-4 or
S-8 or similar form).
"PURCHASE AGREEMENT" shall have the meaning set forth in the
preamble.
"PURCHASE ELECTION" shall have the meaning set forth in Section
2.1(b).
"PURCHASE OFFER" shall have the meaning set forth in Section
2.1(b).
"PURCHASE OFFER PAYMENT DATE" shall have the meaning set forth in
Section 2.1(b).
"INITIAL PURCHASER" shall have the meaning set forth in the
preamble.
"REGISTRABLE SECURITIES" shall mean the shares of Common Stock
acquired by the Initial Purchaser pursuant to the Purchase Agreement.
As to any particular Registrable Securities, such securities shall
cease to be Registrable Securities when (i) a Registration Statement
with respect to such securities shall have been declared effective
under the Securities Act and such securities shall have been disposed
of pursuant to such Registration Statement, (ii) such securities have
been sold to the public pursuant to Rule 144 (or any similar provision
then in force, but not Rule 144A) under the Securities Act or, in the
opinion of counsel to the Company, such securities may be sold under
Rule 144(k) under the Securities Act, (iii) such securities shall have
been otherwise transferred by such Holder and new certificates for such
securities not bearing a legend restricting further
<PAGE>
-4-
transfer shall have been delivered by the Company or its transfer agent
and subsequent disposition of such securities shall not require registration
or qualification under the Securities Act or any similar state law then in
force or (iv) such securities shall have ceased to be outstanding.
"REGISTRATION EXPENSES" shall mean all expenses incident to the
Company's performance of or compliance with this Agreement, including,
without limitation, all SEC and stock exchange or National Association
of Securities Dealers, Inc. registration and filing fees and expenses,
fees and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications
of the Registrable Securities), rating agency fees, printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company and all independent certified public
accountants (but not including any underwriting discounts or
commissions or transfer taxes, if any, attributable to the sale of
Registrable Securities by Holders of such Registrable Securities or
fees and expenses of counsel to the Selling Holders).
"REGISTRATION STATEMENT" shall mean any registration statement of
the Company which covers any of the shares of Common Stock pursuant to
the provisions of this Agreement, including the Prospectus, amendments
and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated
by reference or deemed to be incorporated by reference in such
Registration Statement.
"REQUISITE SHARES" shall mean a number of Registrable Securities
equal to not less than 25% of the Registrable Securities held in the
aggregate by all Holders.
"RULE 144" shall mean Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting
in offers and sales by subsequent holders that are not affiliates of an
issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"RULE 144A" shall mean Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter
<PAGE>
-5-
adopted by the SEC providing for
offers and sales of securities made in compliance therewith resulting
in offers and sales by subsequent holders that are not affiliates of an
issuer of such securities being free of the registration and prospectus
delivery requirements of the Securities Act.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING HOLDER" shall mean a Holder who is selling Common Stock
in accordance with the provisions of Section 2.1 or 2.2 hereof.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated
August 18, 1994 between the Company and each of the individuals or
entities which are parties thereto and attached to the Purchase
Agreement as Exhibit 4.
"TRIGGERING EVENT" shall have the meaning set forth in Section
2.1.
"WARRANT AGREEMENT" means the Warrant Agreement dated as of
August , 1996 between the Company and Firstar Trust Company, as
Warrant Agent and attached to the Purchase Agreement as Exhibit 3.
"WITHDRAWAL ELECTION" shall have the meaning set forth in Section
2.3.
2. REGISTRATION RIGHTS.
2.1 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. At any time and from time to time
on or after the fifth anniversary of the Closing Date (each a "Triggering
Event"), Holders owning, individually or in the aggregate, at least the
Requisite Shares may make a written request for registration under the
Securities Act of their Registrable Securities (a "Demand Registration").
Any such request will specify the number of Registrable Securities
proposed to be sold (which shall not be less than the Requisite Shares)
and will also specify the intended method of disposition thereof. Upon a
demand, the Company will prepare, file and use its best efforts to cause
to be effective within 180 days of such demand a Registration Statement
in respect of all the Registrable Securities. The Company shall give
written notice of such registration request within 10 days after the
receipt thereof to all other Holders.
<PAGE>
-6-
Within 20 days after receipt of
such notice by any Holder, such Holder may request in writing that
Registrable Securities be included in such registration and the Company
shall include in the Demand Registration the Registrable Securities of
any such Selling Holder requested to be so included (the "Included
Shares"). Each such request by such other Selling Holders shall specify
the number of Included Shares proposed to be sold and the intended method
of disposition thereof. Subject to Section 2.1(c), in no event shall the
Company be required to register Registrable Securities pursuant to this
Section 2.1 more than a maximum of two separate occasions.
(b) REPURCHASE ELECTION. (i) Notwithstanding the foregoing
provisions of Section 2.1(a), the Company shall not be obligated to
effect a Demand Registration if the Company elects to make an offer to
repurchase (a "Purchase Offer") all of the Included Shares (a "Purchase
Election") by mailing notice of such Purchase Offer to all Holders of
Included Shares on a date (the "Purchase Election Date") not more than 60
days after the receipt of any request for a Demand Registration and
indicating in such Purchase Offer that the Purchase Election will be
consummated on a Business Day (the "Purchase Offer Payment Date") not
more than 60 days after the Purchase Election Date at a price equal to
the Fair Market Value of each share of Common Stock owned by the Holder
or, if later, 10 days after the determination of the Fair Market Value of
the Common Stock.
(ii) Notice of a Purchase Offer shall be mailed by the Company (or
caused to be mailed by the Company), not less than 30 days nor more than
40 days before the Purchase Offer Payment Date to each Holder of Included
Shares at its last registered address. The Purchase Offer shall remain
open from the time of mailing for at least 20 Business Days and until
5:00 p.m., New York City time, on the Business Day next preceding the
Purchase Offer Payment Date. The notice, which shall govern the terms of
the Purchase Offer, shall include such disclosures as are required by law
and shall state:
(1) that the Purchase Offer is being made pursuant to this
Section 2.1(b) and that all Included Shares tendered for repurchase
will be accepted for payment;
(2) the purchase price per share of Common Stock calculated as
set forth above and the Purchase Offer Payment Date;
(3) that any Included Shares accepted for payment pursuant to the
Purchase Offer shall cease to be outstanding after the Purchase Offer
Payment Date unless the Company defaults in making payment therefor of
the purchase price;
<PAGE>
-7-
(4) that Holders electing to have Included Shares purchased
pursuant to a Purchase Offer will be required to surrender such share
of Common Stock, together with a completed letter of transmittal, to
the Company (or its agent as designated by the Company in such notice)
at the address specified in the notice no later than 5:00 p.m. New York
City time on the Business Day prior to the Purchase Offer Payment Date;
(5) that Holders will be entitled to withdraw their election if
the Company (or such designated agent) receives, not later than
5:00 p.m. New York City time on the Business Day prior to the Purchase
Offer Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the number of shares of Common
Stock delivered for purchase and a statement that such Holder is
withdrawing its election to have such shares of Common Stock purchased
and promptly thereafter the Company (or such designated agent) shall
redeliver the withdrawn shares of Common Stock to the Holder;
(6) that a Holder electing not to tender such Holder's Included
Shares for purchase pursuant to such Purchase Offer by 5:00 p.m. New
York City time on the Business Day prior to the Purchase Offer Payment
Date will have no continuing right to require the Company to repurchase
such Holder's Included Shares; and
(7) that Holders whose shares of Common Stock are tendered for
purchase in part only will be issued new certificates representing the
number of the unpurchased shares of Common Stock surrendered.
On the Purchase Offer Payment Date, the Company shall (i) accept
for payment Included Shares or portions thereof tendered pursuant to the
Purchase Offer, (ii) promptly deliver to Holders of shares of Common
Stock so accepted payment of the purchase price therefor and (iii) issue
and mail or deliver to such Holders new certificates representing a
number of shares of Common Stock equal to the unpurchased portion of the
shares of Common Stock surrendered. Upon payment for all Included Shares
tendered pursuant to a Purchase Offer the Company shall be deemed to have
effected the Demand Registration (including without limitation for
purposes of the last sentence of Section 2.1(a)).
The Company shall comply, to the extent applicable, with the
requirements of Sections 13 and 14 of the Exchange Act, and any other
securities laws or regulations in connection with the repurchase of
Registrable Securities pursuant to a Purchase Offer.
<PAGE>
-8-
To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this Section 2.1(b), the Company shall
comply with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations under this Section 2.1(b)
by virtue thereof.
(c) EFFECTIVE REGISTRATION. A registration will not be deemed to
have been effected as a Demand Registration unless it has been declared
effective by the SEC and the Company has complied in all material
respects with its obligations under this Agreement with respect thereto;
PROVIDED that if, after it has become effective, the offering of
Registrable Securities pursuant to such registration is or becomes the
subject of any stop order, injunction or other order or requirement of
the SEC or any other governmental or administrative agency, or if any
court prevents or otherwise limits the sale of Registrable Securities
pursuant to the registration (for any reason other than the act or
omissions of the Selling Holders), such registration will be deemed not
to have been effected. If (i) a registration requested pursuant to this
Section 2.1 is deemed not to have been effected or (ii) the registration
requested pursuant to this Section 2.1 does not remain effective for a
period of at least 90 days beyond the effective date thereof or until the
earlier consummation of the distribution by the Selling Holders of the
Included Shares, then the Company shall continue to be obligated to
effect an additional registration pursuant to this Section 2.1. The
Selling Holders of Registrable Securities shall be permitted to withdraw
all or any part of the Included Shares from a Demand Registration at any
time prior to the effective date of such Demand Registration. If at any
time a Registration Statement is filed pursuant to a Demand Registration,
and subsequently a sufficient number of Included Shares are withdrawn
from the Demand Registration so that such Registration Statement does not
cover at least 25% of the Registrable Securities held by all Holders, the
Selling Holders who have not withdrawn their Included Shares shall have
the opportunity to include an additional number of Registrable Securities
in the Demand Registration so that such Registration Statement covers at
least 25% of the Registrable Securities held by all Holders. If an
additional number of Registrable Securities is not so included so that
such Registration Statement does not cover at least 25% of the
Registrable Securities held by all Holders, the Company may withdraw the
Registration Statement. In the event that a Registration Statement has
been filed and the Company withdraws the Registration Statement solely
due to the occurrence of the events specified in the prior two sentences,
such withdrawn Registration Statement will count as a Demand
Registration; otherwise such withdrawn Registration Statement will not
count as a Demand Registration and the Company shall continue to be
obligated to effect a registration pursuant to this Section 2.1.
<PAGE>
-9-
(d) PRIORITY IN DEMAND REGISTRATIONS PURSUANT TO SECTION 2.1. If
a Demand Registration pursuant to this Section 2.1 involves an
underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of securities requested to be
included in such registration (including securities of the Company which
are not Registrable Securities) exceeds the number which can be sold in
such offering, the Company will include in such registration only the
Registrable Securities requested by the managing underwriter(s) to be
included in such registration. In the event that the number of
Registrable Securities requested to be included in such registration
exceeds the number which, in the opinion of such managing underwriter,
can be sold, the number of such Registrable Securities to be included in
such registration shall be allocated pro rata among all requesting
Holders on the basis of the relative number of shares of Registrable
Securities then held by each such Holder (provided that any shares
thereby allocated to any such Holder that exceed such Holder's request
shall be reallocated among the remaining requesting Holders in like
manner). In the event that the number of Registrable Securities
requested to be included in such registration is less than the number
which, in the opinion of the managing underwriter, can be sold, the
Company may include in such registration the securities the Company
proposes to sell up to the number of securities that, in the opinion of
the managing underwriter, can be sold.
(e) SELECTION OF UNDERWRITER. If the Selling Holders so elect,
the offering of such Registrable Securities pursuant to such Demand
Registration shall be in the form of an underwritten offering. The
Company shall select one or more nationally recognized firms of
investment bankers, who shall be reasonably acceptable to the Selling
Holders, to act as the managing underwriter or underwriters in connection
with such offering and shall select any additional investment banker(s)
and manager(s) to be used in connection with the offering.
(f) EXPENSES. The Company will pay all Registration Expenses in
connection with the registrations requested pursuant to Section 2.1(a).
Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such
Holder's Registrable Securities pursuant to a registration statement
requested pursuant to this Section 2.1.
2.2 PIGGY-BACK REGISTRATION. If at any time after the Company's
initial public offering of Common Stock the Company proposes to file a
Registration Statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of
its respective securityholders of any class of its common equity
securities (other than (i) a
<PAGE>
-10-
Registration Statement on Form S-4 or S-8
(or any substitute form that may be adopted by the SEC) or (ii) a
Registration Statement filed in connection with an offer or offering of
securities solely to the Company's existing securityholders), then the
Company shall give written notice of such proposed filing to the Holders
of Registrable Securities as soon as practicable (but in no event less
than 20 Business Days before the anticipated filing date), and such
notice shall offer such Holders the opportunity to register such number
of shares of Registrable Securities as each such Holder may request
(which request shall specify the Registrable Securities intended to be
disposed of by such Selling Holder and the intended method of
distribution thereof) (a "Piggy-Back Registration"). The Company shall
use its reasonable best efforts to cause the managing underwriter or
underwriters of such proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any
similar securities of the Company or any other securityholder included
therein and to permit the sale or other disposition of such Registrable
Securities in accordance with the intended method of distribution thereof
except as otherwise provided in Section 2.3. Any Selling Holder shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any Registration Statement pursuant to this Section 2.2 by
giving written notice to the Company of its request to withdraw no later
than 5 Business Days before such Registration Statement becomes
effective. The Company may withdraw a Piggy-Back Registration at any
time prior to the time it becomes effective; PROVIDED that the Company
shall give prompt notice thereof to participating Selling Holders. The
Company will pay all Registration Expenses in connection with each
registration of Registrable Securities requested pursuant to this
Section 2.2, and each Holder shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Registrable Securities pursuant to a
registration statement effected pursuant to this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company
of its obligation to effect a registration upon the request of Holders
pursuant to Section 2.1, and no failure to effect a registration under
this Section 2.2 and to complete the sale of shares of Class A Common
Stock in connection therewith shall relieve the Company of any other
obligation under this Agreement.
<PAGE>
-11-
2.3 REDUCTION OF OFFERING.
(a) PIGGY-BACK REGISTRATION. (i) If the managing underwriter(s)
of any underwritten offering described in Section 2.2 have informed, in
writing, the Selling Holders of the Registrable Securities requesting
inclusion in such offering that it is their opinion that the total number
of shares which the Company, the Selling Holders and any other Persons
desiring to participate in such registration intend to include in such
offering is such as to adversely affect the success of such offering,
including the price at which such securities can be sold, then the number
of shares to be offered for the account of the Selling Holders and all
such other Persons (other than the Company) participating in such
registration shall be reduced or limited PRO RATA in proportion to the
respective number of shares requested to be registered to the extent
necessary to reduce the total number of shares requested to be included
in such offering to the number of shares, if any, recommended by such
managing underwriters; PROVIDED, HOWEVER, that if such offering is
effected for the account of any securityholder of the Company other than
the Selling Holders, pursuant to the demand registration rights of any
such securityholder, then the number of shares to be offered for the
account of the Selling Holders and all other Persons (other than the
Company) participating in such registration (but not such securityholders
who have exercised their demand registration rights) shall be reduced or
limited PRO RATA in proportion to the respective number of shares
requested to be registered to the extent necessary to reduce the total
number of shares requested to be included in such offering to the number
of shares, if any, recommended by such managing underwriters.
(ii) If the managing underwriter or underwriters of any
underwritten offering described in Section 2.2 notify the Selling Holders
requesting inclusion of Registrable Securities in such offering, that the
kind of securities that the Selling Holders, the Company and any other
Persons desiring to participate in such registration intend to include in
such offering is such as to adversely affect the success of such
offering, (x) the Registrable Securities to be included in such offering
shall be reduced as described in clause (i) above or (y) if a reduction
in the Registrable Securities pursuant to clause (i) above would, in the
judgment of the managing underwriter(s) or underwriters, be insufficient
to substantially eliminate such adverse effect that inclusion of the
Registrable Securities requested to be included would have on such
offering, such Registrable Securities will be excluded from such
offering.
(b) If, as a result of the proration provisions of this
Section 2.3, any Selling Holder shall not be entitled to include
<PAGE>
-12-
all Registrable Securities in a Piggy-Back Registration that such Selling
Holder has requested to be included, such Selling Holder may elect to
withdraw his request to include Registrable Securities in such
registration (a "Withdrawal Election"); PROVIDED, HOWEVER, that a
Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, a Selling Holder shall no longer have any right to include
Registrable Securities in the registration as to which such Withdrawal
Election was made.
3. TRANSFERS OF COMMON STOCK.
3.1 All shares of Common Stock owned by a Holder at any time and
from time to time outstanding that are Registrable Securities shall be
held subject to the conditions and restrictions set forth in the
Stockholders Agreement as if the holder thereof were a party to the
Stockholders Agreement unless any such provision shall be superseded by a
provision in the Warrant Agreement.
4. REGISTRATION PROCEDURES. In connection with the obligations
of the Company with respect to any Registration Statement pursuant to
Sections 2.1 and 2.2 hereof, the Company shall:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form (i) shall be
selected by the Company and (ii) shall comply as to form in all
material respects with the requirements of the applicable form and
include all financial statements required by the SEC to be filed
therewith, and the Company shall use its best efforts to cause such
Registration Statement to become effective and remain effective in
accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be
necessary to keep such Registration Statement effective for the
applicable period, cause each Prospectus to be supplemented by any
required prospectus supplement and, as so supplemented, to be filed
pursuant to Rule 424 under the Securities Act;
(c) furnish to each Holder of Registrable Securities and to each
underwriter of an underwritten offering of Registrable Securities, if
any, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and
such other documents as such Holder or underwriter may reasonably
request, in order to
<PAGE>
-13-
facilitate the public sale or other disposition of
the Registrable Securities;
(d) use its best efforts to register or qualify the Registrable
Securities under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder thereof covered by a Registration
Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, and
do any and all other acts and things which may be reasonably necessary
or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Securities owned by such
Holder; PROVIDED, HOWEVER, that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction where it is
not then so qualified, (ii) take any action that would subject it to
general service of process in any jurisdiction in which it is not then
so subject or (iii) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction;
(e) notify each Holder of Registrable Securities promptly and, if
requested by such Holder, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become
effective, (iii) of the issuance by the SEC or any state securities
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if, between the effective date of a Registration
Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company contained in
any underwriting agreement, securities sales agreement or other similar
agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation
of any proceeding for such purpose and (v) of the happening of any
event during the period a Registration Statement is effective which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making
of any changes in such Registration Statement or Prospectus in order to
make the statements therein not misleading;
<PAGE>
-14-
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment;
(g) furnish to each Holder of Registrable Securities and to the
Initial Purchasers, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (with
documents incorporated therein by reference or exhibits thereto);
(h) cooperate with the Selling Holders of Registrable Securities
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any
restrictive legends and registered in such names as the Selling Holders
may reasonably request at least two business days prior to the closing
of any sale of Registrable Securities;
(i) upon the occurrence of any event contemplated by
Section 4(e)(v) hereof, use reasonable efforts to prepare a supplement
or post-effective amendment to a Registration Statement or the related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company shall not be required to amend or supplement
a Registration Statement, any related Prospectus or any document
incorporated therein by reference in the event that, and for so long
as, an event occurs and is continuing as a result of which the
Registration Statement, any related Prospectus or any document
incorporated therein by reference as then amended or supplemented
would, in the Company's good faith judgment, contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Company agrees to
notify each Holder to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or
omission. At such time as such public disclosure is otherwise made or
the Company determines in good faith that such disclosure is not
necessary, the Company agrees promptly to notify each Holder of such
determination, to amend or supplement the Prospectus if necessary to
correct any untrue statement or omission
<PAGE>
-15-
therein and to furnish each Holder such numbers of copies of
the Prospectus as so amended or supplemented as each Holder may
reasonably request;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
after initial filing of a Registration Statement, provide copies of
such document to the Holders and make available for discussion of such
document the representatives of the Company as shall be reasonably
requested by the Holders of Registrable Securities;
(k) obtain a CUSIP number for the Common Stock;
(l) (i) make reasonably available for inspection by a
representative of, and counsel for, any managing underwriter
participating in any disposition pursuant to a Registration Statement,
all relevant financial and other records, pertinent corporate documents
and properties of the Company and (ii) cause the Company's officers,
directors and employees to supply all relevant information reasonably
requested by such representative, counsel or any such managing
underwriter in connection with any such Registration Statement;
(m) take all action necessary so that the shares of Common Stock
will be listed on the principal securities exchanges and markets within
the United States of America (including the NASDAQ National Market
System), if any, on which other shares of Common Stock are then listed;
and
(n) if requested by the Holders in connection with any
Registration Statement, shall use its best efforts to cause (w) counsel
for the Company to deliver an opinion relating to the Registration
Statement and the Common Stock, in customary form, (x) its officers to
execute and deliver all customary documents and certificates requested
by a representative of the Holders or any managing underwriter, as
applicable and (y) its independent public accountants to provide a
comfort letter in customary form.
The Company may, as a condition to such Holder's participation in
any Registration Statement, require each Holder of Registrable Securities
to (i) furnish to the Company such information regarding the Holder and
the proposed distribution by such Holder of such Registrable Securities
as the Company may from
<PAGE>
-16-
time to time reasonably request in writing and (ii) agree in writing
to be bound by this Agreement.
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
indemnify and hold harmless each Holder and each person, if any, who
controls such Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against all
losses, claims, damages and liabilities (including, without limitation,
any reasonable legal fees or other expenses actually incurred by any
Holder or any such controlling or affiliated person in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which
Registrable Securities were registered under the Securities Act, or
caused by any omission or alleged omission to state therein a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or caused by
any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by
any omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Holder
furnished to the Company in writing by such Holder expressly for use in
any such Registration Statement or Prospectus; PROVIDED that the
foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Holder (or to the benefit of any person
controlling such Holder) from whom the person asserting any such losses,
claims, damages or liabilities purchased Registrable Securities if such
untrue statement or omission or alleged untrue statement or omission made
in such preliminary prospectus is eliminated or remedied in the related
Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the
related Prospectus (as so amended or supplemented) shall have been
furnished to such Holder at or prior to the sale of such Registrable
Securities, as the case may be, to such person; and PROVIDED, FURTHER,
that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if (i) such Holder
failed to send or deliver a copy of the Prospectus with or prior to the
delivery of written confirmation of the sale of
<PAGE>
-17-
Registrable Securities and (ii) the Prospectus would have completely
corrected such untrue statement or omission.
(b) Each Holder agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers and each
person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to such Holder,
but only with reference to information relating to such Holder furnished
to the Company in writing by such Holder expressly for use in any
Registration Statement (or any amendment thereto), any Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus. The
liability of any Holder under this paragraph (b) shall in no event exceed
the proceeds received by such Holder from sales of Registrable Securities
giving rise to such obligations.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to either paragraph (a) or (b)
above, such person (the "indemnified party") shall promptly notify the
person against which such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel relating to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed
in writing to the retention of such counsel or (ii) the indemnifying
party fails promptly to assume the defense of such proceeding or fails to
employ counsel reasonably satisfactory to such indemnified party or
parties or (iii) the named parties to any such proceeding (including any
impleaded parties) include both such indemnified party or parties and the
indemnifying parties or an affiliate of the indemnifying parties or such
indemnified parties, and there may be one or more defenses available to
such indemnified party or parties that are different from or additional
to those available to the indemnifying parties, in which case, if such
indemnified party or parties notifies the indemnifying parties in writing
that it elects to employ separate counsel of its choice at the expense of
the indemnifying parties, the indemnifying parties shall not have the
right to assume the defense thereof and such counsel shall be at the
expense of the indemnifying parties, it being understood, however, that
unless there exists a conflict among indemnified parties, the
indemnifying parties shall not, in connection with any
<PAGE>
-18-
one such
proceeding or separate but substantially similar or related proceedings
in the same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one
separate firm of attorneys (together with appropriate local counsel) at
any time for such indemnified party or parties. The indemnifying party
shall not be liable for any settlement of any proceeding effected without
its written consent but, if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which
any indemnified party is a party, and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on
claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph
(a) or (b) of this Section 5 is unavailable to an indemnified party in
respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Holders on the
other hand in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company on
the one hand and the Holders on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(e) The Company and each Holder agrees that it would not be just
or equitable if contribution pursuant to this Section 5 were determined
by PRO RATA allocation or by any other method of allocation that does not
take account of the equitable considerations referred to in paragraph (d)
above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred (and not otherwise
reimbursed) by such indemnified party in connection with
<PAGE>
-19-
investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 5, in no event shall a Selling Holder be required to
contribute any amount in excess of the amount by which proceeds received
by such Selling Holder from sales of Registrable Securities exceeds the
amount of damages that such Selling Holder has otherwise been required to
pay by reason of such untrue or allegedly untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in
equity.
6. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. (i) Subject to clause (ii)
below, except for the Warrant Agreement (as defined in the Purchase
Agreement), the Company has not entered into nor will the Company on or
after the date of this Agreement enter into any agreement which is
inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the
holders of the Company's other issued and outstanding securities, if any,
under any such agreements.
(ii) The rights of Holders to require the Company to effect a
Demand Registration pursuant to Section 2.1 of this Agreement shall be
subject to the prior rights and obligations of the parties in the
Stockholders Agreement, but only to the extent that such prior rights
and/or obligations actually conflict with the Demand Registration rights
provided for herein and as in effect on the date hereof.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the
written consent of Holders of at least a majority in aggregate number of
the outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or consent; PROVIDED, HOWEVER, a waiver
or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect the rights of other Holders of
<PAGE>
-20-
Registrable Securities may be given by the Holders of a majority of the
Registrable Securities proposed to be sold.
(c) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or any courier
guaranteeing overnight delivery (i) if to a Holder, at the most current
address given by such Holder to the Company by means of a notice given in
accordance with the provisions of this Section 6(c), which address
initially is, with respect to the Initial Purchaser, the address set
forth in the Purchase Agreement, with a copy to: Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, Attention: Roger
Meltzer, Esq.; and (ii) if to the Company, initially at the Company's
address set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of
this Section 6(c), with a copy to: Paul, Weiss, Rifkind, Wharton &
Garrison, 1285 Avenue of the Americas, New York, New York 10019,
Attention: Paul D. Ginsberg, Esq.
All such notices and communications shall be deemed to have been
duly given: (i) at the time delivered by hand, if personally delivered,
five business days after being deposited in the mail, postage prepaid, if
mailed; (ii) when answered back, if telexed; (iii) when receipt is
acknowledged, if telecopied; and (iv) on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of
each of the parties, including, without limitation and without the need
for an express assignment, subsequent Holders; PROVIDED, HOWEVER, that
nothing herein shall be deemed to permit any assignment, transfer or
other disposition of Registrable Securities in violation of the terms of
this Agreement or the Purchase Agreement. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions
of this Agreement and such person shall be entitled to receive the
benefits hereof.
(e) RULES 144 AND 144A. The Company covenants that it will file
the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder
in a timely manner and, if at any time the Company is not required to
file such reports, it will,
<PAGE>
-21-
upon the request of any Holder of Registrable
Securities, make publicly available other information of a like nature so
long as necessary to permit sales pursuant to Rule 144 or Rule 144A under
the Securities Act. The Company further covenants that so long as any
Registrable Securities remain outstanding to make available to any Holder
of Registrable Securities in connection with any sale thereof, the
information required by Rule 144A(d)(4) under the Securities Act in order
to permit resales of such Registrable Securities pursuant to (a) such
Rule 144A, or (b) any similar rule or regulation hereafter adopted by the
SEC.
(f) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(i) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be affected or
impaired thereby.
(j) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement, is intended by the parties as a final expression of their
agreement, and is intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein and therein.
<PAGE>
-22-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
RENAISSANCE COSMETICS, INC.
By: /s/ John R. Jackson
-------------------------------
Name: John R. Jackson
Title: Vice President
CIBC WOOD GUNDY SECURITIES CORP.,
as Initial Purchaser
By: /s/ Jay Bloom
_____________________________
Name: Jay Bloom
Title: Managing Director
WARRANT AGREEMENT
Between
RENAISSANCE COSMETICS, INC.
and
FIRSTAR TRUST COMPANY as
Warrant Agent
_________________________
Dated as of August 15, 1996
<PAGE>
TABLE OF CONTENTS
Page
1. Appointment of Warrant Agent................................ 1
2. Warrant Certificates........................................ 2
3. Execution of Warrant Certificates........................... 2
4. Registration and Countersignature........................... 3
5. Transfer and Exchange of Warrants........................... 3
6. Registration of Transfers and Exchanges..................... 4
7. Terms of Warrants; Exercise of Warrants..................... 10
8. Payment of Taxes............................................ 13
9. Mutilated or Missing Warrant Certificates................... 13
10. Reservation of Warrant Shares............................... 13
11. Public Equity Offering of Class A Common Stock;
Obtaining Stock Exchange Listings........................ 14
12. Adjustment of Number of Warrant Shares Issuable............. 15
13. Fractional Interests........................................ 27
14. Notices to Warrant Holders.................................. 28
15. Notices to the Company and Warrant Agent.................... 30
16. Supplements and Amendments.................................. 30
17. Concerning the Warrant Agent................................ 31
18. Change of Warrant Agent..................................... 34
19. Identity of Transfer Agent.................................. 35
20. Registration Rights......................................... 35
21. Successors.................................................. 35
22. Termination................................................. 35
23. Governing Law............................................... 35
24. Benefits of This Agreement.................................. 35
25. Counterparts................................................ 36
26. Headings.................................................... 36
Exhibit A. Form of Warrant Certificate..................... A-1
Exhibit B. Certificate..................................... B-2
Exhibit C. Legends......................................... C-1
Exhibit D. Transferee Letter............................... D-1
-i-
<PAGE>
WARRANT AGREEMENT (the "Agreement"), dated as of August 15,
1996, between Renaissance Cosmetics, Inc., a Delaware corporation (together
with any successors and assigns, the "Company"), and FIRSTAR TRUST COMPANY,
as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue and sell pursuant to a
Securities Purchase Agreement (the "Purchase Agreement"), dated as of
August 8, 1996, between the Company and CIBC Wood Gundy Securities Corp.,
as Initial Purchaser (the "Initial Purchaser"), $80,000,000 in aggregate
liquidation value of its Senior Redeemable Preferred Stock, Series B, par
value $.01 per share (the "Preferred Stock"), along with 80,000 Warrants
(each an "Initial Warrant," and collectively, the "Initial Warrants"), for
the purchase of shares of its Common Stock, par value $.01 per share (the
"Common Stock") constituting approximately 16% of the Company's fully
diluted Common Stock as of the date hereof;
WHEREAS, the Company has granted to the Initial Purchaser an
option (the "Purchase Option") exercisable within 30 days of the date
hereof, to acquire up to an additional $20,000,000 in aggregate liquidation
value of the Preferred Stock, along with an additional 20,000 Warrants (the
"Additional Warrants" and together with the Initial Warrants, collectively,
the "Warrants") constituting approximately 4% of the Company's fully
diluted Common Stock as of the date of such issuance (the shares of Common
Stock issuable upon exercise of the Warrants being referred to herein as
the "Warrant Shares");
WHEREAS, the Company desires the Warrant Agent to act on behalf
of the Company and the Warrant Agent is willing to act in connection with
the issuance, transfer, exchange and exercise of Warrants as provided
herein; and
WHEREAS, the holders of Warrants and Warrant Shares shall, from
time to time, have certain rights and obligations with respect thereto as
set forth in the Common Stock Registration Rights Agreement, dated as of
August 15, 1996, between the Company and the Purchaser;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as
follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance
with the instructions hereinafter set
<PAGE>
-2-
forth in this Agreement, and the Warrant Agent hereby accepts such
appointment.
SECTION 2. WARRANT CERTIFICATES. The Warrants will initially
be issued either in global form (the "Global Warrants"), substantially in
the form of Exhibit A hereto (including the footnote thereto), or in
registered form as definitive Warrant certificates (the "Definitive
Warrants"). Any certificates (the "Warrant Certificates") evidencing the
Global Warrants or the Definitive Warrants to be delivered pursuant to this
Agreement shall be substantially in the form set forth in Exhibit A hereto.
Such Global Warrants shall represent such of the outstanding Warrants as
shall be specified therein and each shall provide that it shall represent
the aggregate amount of outstanding Warrants from time to time endorsed
thereon and that the aggregate amount of outstanding Warrants represented
thereby may from time to time be reduced or increased, as appropriate. Any
endorsement of a Global Warrant to reflect the amount of any increase or
decrease in the amount of outstanding Warrants represented thereby shall be
made by the Warrant Agent and Depositary (as defined below) in accordance
with instructions given by the holder thereof. The Depository Trust
Company shall act as the Depositary with respect to the Global Warrants
until a successor shall be appointed by the Company. Upon written request,
a Warrant holder may receive from the Depositary and Warrant Agent
Definitive Warrants as set forth in Section 6 below.
SECTION 3. EXECUTION OF WARRANT CERTIFICATES. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of
the Board or its President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer or a Vice President and by its Secretary
or an Assistant Secretary under its corporate seal. Each such signature
upon the Warrant Certificates may be in the form of a facsimile signature
of the present or any future Chairman of the Board, President, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, a Vice
President, Secretary or Assistant Secretary and may be imprinted or
otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall
have been Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be countersigned and delivered or disposed of such
person shall have ceased to hold such office. The seal of the Company may
be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Warrant Certificates.
<PAGE>
-3-
In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent,
or disposed of by the Company, such Warrant Certificates nevertheless may
be countersigned and delivered or disposed of as though such person had not
ceased to be such officer of the Company; and any Warrant Certificate may
be signed on behalf of the Company by any person 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 Warrant Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 4. REGISTRATION AND COUNTERSIGNATURE. The Warrants
shall be numbered and shall be registered on the books of the Company
maintained at the principal office of the Warrant Agent in the city of
Milwaukee, Wisconsin (the "Warrant Register") as they are issued.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Warrant Agent shall, upon written instructions of the
Chairman of the Board, the President, Chief Executive Officer, Chief
Operating Officer, Chief Financial Officer, a Vice President, the Secretary
or an Assistant Secretary of the Company, initially countersign and deliver
Warrants entitling the holders thereof to purchase not more than the number
of Warrant Shares referred to above in the first recital hereof and shall
thereafter countersign and deliver Warrants as otherwise provided in this
Agreement.
The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the
absolute owners thereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes, and neither the Company
nor the Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. TRANSFER AND EXCHANGE OF WARRANTS. The Warrant
Agent shall from time to time, subject to the limitations of Section 6,
register the transfer of any outstanding Warrants upon the records to be
maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied (if so required by it) by a written instrument or instruments
of transfer in form satisfactory to the Warrant Agent, duly
<PAGE>
-4-
executed by the registered Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Subject to the
terms of this Agreement, each Warrant Certificate may be exchanged for another
certificate or certificates entitling the Holder thereof to purchase a like
aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitle each Holder to purchase. Any Holder desiring to
exchange a Warrant Certificate or Warrant Certificates shall make such request
in writing delivered to the Warrant Agent, and shall surrender, duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, the Warrant
Certificate or Warrant Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall
countersign and deliver by certified or first class mail a new Warrant
Certificate or Warrant Certificates to the persons entitled thereto. The
Warrant Certificates may be exchanged at the option of the Holder thereof,
when surrendered at the office or agency of the Company maintained for such
purpose, which initially will be the corporate trust office of the Warrant
Agent in Milwaukee, Wisconsin for another Warrant Certificate, or other
Warrant Certificates of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of
Warrant Shares.
No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may
require payment of a sum sufficient to cover any stamp or other tax or
other governmental charge that is imposed in connection with any such
exchange or registration of transfer.
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) Transfer and Exchange of Definitive Warrants. When
Definitive Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as
requested if its requirements under this Agreement
<PAGE>
-5-
are met; PROVIDED, HOWEVER, that the Definitive Warrants
presented or surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction
of transfer in form satisfactory to the Warrant Agent, duly
executed by the Holder thereof or by such Holder's attorney,
duly authorized in writing; and
(y) in the case of Warrants (the "Restricted Warrants") which
constitute Restricted Securities (as such term is defined in
Rule 144(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act")), such Warrants shall be accompanied, in the
reasonable discretion of the Company, by the following
additional information and documents, as applicable, however,
it being understood that the Warrant Agent need not determine
which clause (A) through (C) below is applicable:
(A) if such Restricted Warrant is being delivered to the
Warrant Agent by a Holder for registration in the name of
such Holder, without transfer, a certification from such
holder to that effect (in substantially the form of
Exhibit B hereto); or
(B) if such Restricted Warrant is being transferred to a
qualified institutional buyer (as defined in Rule 144A
under the Act, a "QIB") in accordance with Rule 144A
under the Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or Regulation S under the Securities Act
or pursuant to an effective registration statement under
the Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto) and, with
respect to transfers pursuant to Rule 144 or Regulation
S, an opinion of counsel reasonably acceptable to the
Company and the Warrant Agent to the effect that such
transfer does not require registration under the
Securities Act; or
(C) if such Restricted Warrant is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect (in substantially
<PAGE>
-6-
the form of Exhibit B hereto) and an opinion of counsel
reasonably acceptable to the Company and
to the Warrant Agent to the effect that such transfer
does not require registration under the Securities Act.
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE WARRANT FOR A
BENEFICIAL INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may not be
exchanged for a beneficial interest in a Global Warrant except upon
satisfaction of the requirements set forth below. Upon receipt by the
Warrant Agent of a Definitive Warrant, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Warrant
Agent, together with:
(A) if such Definitive Warrant constitutes a Restricted
Warrant, certification, substantially in the form of
Exhibit B hereto, that such Definitive Warrant is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act; and
(B) written instructions directing the Warrant Agent to make,
or to direct the Depositary to make, an endorsement on
the Global Warrant to reflect an increase in the
aggregate amount of the Warrants represented by the
Global Warrant,
then the Warrant Agent shall cancel such Definitive Warrant and cause, or
direct the Depositary to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Warrant
Agent, the number of Warrant Shares represented by the Global Warrant to be
increased accordingly. If no Global Warrant is then outstanding, the
Company shall issue and the Warrant Agent shall countersign a new Global
Warrant in the appropriate amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer
and exchange of Global Warrants or beneficial interests therein shall be
effected through the Depositary, in accordance with this Warrant Agreement
(including the restrictions on transfer set forth herein) and the
procedures of the Depositary therefor.
<PAGE>
-7-
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR
A DEFINITIVE WARRANT.
(i) Any person having a beneficial interest in a Global Warrant
may upon request exchange such beneficial interest for a
Definitive Warrant. Upon receipt by the Warrant Agent of
written instructions or such other form of instructions as is
customary for the
Depositary from the Depositary or its nominee on behalf of any
person having a beneficial interest in a Global Warrant and
upon receipt by the Warrant Agent of a written order or such
other form of instructions as is customary for the Depositary
or the person designated by the Depositary as having such a
beneficial interest containing registration instructions and,
in the case of a beneficial interest in Restricted Warrants,
the following additional information and documents, however,
it being understood that the Warrant Agent need not determine
which clause (A) through (C) below is applicable:
(A) If such beneficial interest is being transferred to the
person designated by the Depositary as being the
beneficial owner, a certification from such person to
that effect (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance
with Rule 144 or Regulation S under the Securities Act or
pursuant to an effective registration statement under the
Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form of
Exhibit B hereto) and, with respect to transfers pursuant
to Rule 144 or Regulation S, an opinion of counsel
reasonably acceptable to the Company and the Warrant
Agent to the effect that such transfer does not require
registration under the Securities Act; or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in
substantially the form of
<PAGE>
-8-
Exhibit B hereto) and an
opinion of counsel from the transferee or transferor
reasonably acceptable to the Company and to the Warrant
Agent to the effect that such transfer does not require
registration under the Securities Act,
then the Warrant Agent will cause, in accordance with the
standing instructions and procedures
existing between the Depositary and the Warrant Agent, the
aggregate amount of the Global Warrant to be reduced and,
following such reduction, the Company will execute and, upon
receipt of an authentication order in the form of an officers'
certificate signed by the Chief Executive Officer, the
President or any Vice President and the Chief Financial
Officer, the Treasurer, the Secretary or any Assistant
Secretary of the Company (an "Officers' Certificate"), the
Warrant Agent will countersign and deliver to the transferee a
Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 6(d)
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from
its direct or indirect participants or otherwise, shall
instruct the Warrant Agent in writing, provided such
designation is in accordance with this Section 6(d). The
Warrant Agent shall deliver such Definitive Warrants to the
persons in whose names such Definitive Warrants are
registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Warrant Agreement (other than
the provisions set forth in subsection (f) of this Section 6), a Global
Warrant may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
(f) AUTHENTICATION OF DEFINITIVE WARRANTS IN ABSENCE OF
DEPOSITORY. If at any time:
(i) the Depositary for the Global Warrants notifies the Company
that the Depositary is unwilling or unable to continue as
Depositary for the Global Warrant and
<PAGE>
-9-
a successor Depositary for the Global Warrant is not appointed by
the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of
Definitive Warrants under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon receipt of an
Officers' Certificate requesting the countersignature and delivery of
Definitive Warrants, will countersign and deliver Definitive Warrants, in
an aggregate number equal to the aggregate number of Warrants represented
by the Global Warrant, in exchange for such Global Warrant.
(g) LEGENDS.
(i) Except as permitted by the following paragraph (ii), each
Warrant Certificate evidencing the Global Warrants and the
Definitive Warrants (and all Warrants issued in exchange
therefor or substitution thereof) shall bear a legend
substantially as set forth in Exhibit C.
(ii) Upon any sale or transfer of a Warrant pursuant to Rule 144
under the Securities Act made in compliance with Section
6(a)(y) or an effective registration statement under the
Securities Act:
(A) in the case of any Warrant that is a Definitive Warrant,
the Warrant Agent shall permit the Holder thereof to
exchange such Restricted Warrant for a Definitive Warrant
that does not bear the legend set forth in Exhibit C and
rescind any related restriction on the transfer of such
Warrant; and
(B) any such Warrant represented by a Global Warrant shall not
be subject to the provisions set forth in (i) above (such
sales or transfers being subject only to the provisions
of Section 6(c) hereof); provided, however, that with
respect to any request for an exchange of a Warrant that
is represented by a Global Warrant for a Definitive
Warrant that does not bear the legend set forth in
Exhibit C, which request is made in reliance upon Rule
144, the Holder thereof shall certify
<PAGE>
-10-
in writing to the
Warrant Agent that such request is being made pursuant to
Rule 144 (such certification to be substantially in the
form of Exhibit B hereto) and shall obtain an opinion of
counsel, reasonably acceptable to the Company and the
Warrant Agent, to the effect that such transfer does not
require registration under the Securities Act.
(h) CANCELLATION AND/OR ADJUSTMENT OF A GLOBAL WARRANT. At
such time as all beneficial interests in a Global
Warrant have either been exchanged for Definitive Warrants, redeemed,
repurchased or cancelled, such Global Warrant shall be returned to or
retained and cancelled by the Warrant Agent. At any time prior to such
cancellation, if any beneficial interest in a Global Warrant is exchanged
for Definitive Warrants, redeemed, repurchased or cancelled, the number of
Warrants represented by such Global Warrant shall be reduced and an
endorsement shall be made on such Global Warrant by the Warrant Agent to
reflect such reduction.
(i) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
DEFINITIVE WARRANTS.
(i) To permit registrations of transfers and exchanges in accordance
with the terms of this Agreement, the Company shall execute,
and the Warrant Agent shall countersign, Definitive Warrants
and Global Warrants.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration, transfer or exchange of Definitive Warrants or
Global Warrants shall be the valid obligations of the Company,
entitled to the same benefits under this Warrant Agreement as
the Definitive Warrants or Global Warrants surrendered upon the
registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat
the person in whose name any Warrant is registered as the
absolute owner of such Warrant, and neither the Warrant Agent
nor the Company shall be affected by notice to the contrary.
SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRRANTS. Subject to
the terms of this Agreement, each Warrant Holder shall have the right,
which may be exercised commencing on or after the Exercisability Date (as
defined below) and until 5:00
<PAGE>
-11-
p.m., New York City time, on August 31, 2006
(the "Expiration Date"), to receive from the Company the number of fully
paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the
Exercise Price (as defined below) then in effect for such Warrant Shares.
The Company shall promptly notify in writing the Warrant Agent of any event
which requires it to suspend exercise of Warrants pursuant to the proviso
of the preceding sentence and of the termination of any such suspension.
Subject to the next paragraph of this Section 7, each Warrant not exercised
prior to the Expiration Date shall become void and all rights thereunder
and all rights in respect thereof under this Agreement shall cease as of
such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
In the event that at the Expiration Date, the exercise of
Warrants has been suspended such that the Warrants have not been exercised
for a period of one full year, the Expiration Date shall be extended to
such date as is necessary so that the Warrant will have been exercisable
for one full year prior to the Expiration Date.
"Exercisability Date" shall mean August 15, 1996.
The initial price per share at which Warrant Shares shall be
purchasable upon exercise of Warrants (the "Exercise Price") shall be $.01,
subject to adjustment. A Warrant may be exercised upon surrender at the
office or agency of the Company maintained for such purpose, which
initially will be the corporate trust office of the Warrant Agent in New
York, New York, of the certificate or certificates evidencing the Warrants
to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
participant in a recognized Signature Guarantee Medallion Program, and upon
payment to the Warrant Agent for the account of the Company of the Exercise
Price, as adjusted as herein provided, for the number of Warrant Shares in
respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by certified or official
bank check to the order of the Company in New York Clearing House Funds.
Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the Holder and in such name or names as the Warrant Holder
may designate a
<PAGE>
-12-
certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrants together with cash as
provided in Section 12; PROVIDED, HOWEVER, that if any consolidation,
merger or lease or sale of assets is proposed to be effected by the Company
as described in subsection (j) of Section 12 hereof, or a tender offer or
an exchange offer for shares of Common Stock of the Company shall be made,
upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall, as soon as possible, but in any event not
later than three days, other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are not open for business
("Business Day") thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence together
with cash as provided in Section 13. Such certificate or certificates
shall be deemed to have been issued and any person so named therein shall
be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Exercise
Price.
The Warrants shall be exercisable, at the election of the
Holders thereof, either in full or from time to time in part and, in the
event that a certificate evidencing Warrants is exercised in respect of
fewer than all of the Warrant Shares issuable on such exercise at any time
prior to the date of expiration of the Warrants, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the
Warrant Agent is hereby irrevocably authorized to countersign and to
deliver the required new Warrant Certificate or Warrant Certificates
pursuant to the provisions of this Section 7 and of Section 3 hereof, and
the Company, whenever required by the Warrant Agent, will promptly supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by the Warrant Agent in a manner
consistent with the Warrant Agent's customary procedure for such disposal
and in a manner reasonably satisfactory to the Company. The Warrant Agent
shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies received by the Warrant
Agent for the purchase of the Warrant Shares through the exercise of such
Warrants.
<PAGE>
-13-
The Warrant Agent shall keep copies of this Agreement available
for inspection by the Holders during normal business hours at its office.
The Company shall supply the Warrant Agent from time to time with such
numbers of copies of this Agreement as the Warrant Agent may request.
SECTION 8. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrant
Shares upon the exercise of Warrants; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue of any Warrant Certificates
or any certificates for Warrant Shares in a name other than that of the
registered Holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has
been paid.
SECTION 9. MUTILATED OR MISSING WARRANT CERTIFICATES. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue and the Warrant Agent
may countersign, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of
like tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction of such Warrant Certificate and indemnity,
if requested, also satisfactory to them. Applicants for such substitute
Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the
Warrant Agent may prescribe.
SECTION 10. RESERVATION OF WARRANT SHARES. The Company will
at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued Common Stock or its
authorized and issued Common Stock held in its treasury, for the purpose of
enabling it to satisfy any obligation to issue Warrant Shares upon exercise
of Warrants, the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of all outstanding Warrants.
<PAGE>
-14-
The Company or, if appointed, the transfer agent for the Common
Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of
the rights of purchase aforesaid will be irrevocably authorized and
directed at all times to reserve such number of authorized shares as shall
be required for such purpose. The Company will keep a copy of this
Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the Warrants. The
Warrant Agent is hereby irrevocably authorized to requisition from time to
time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of
this Agreement. The Company will supply such Transfer Agent with duly
executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 13. The
Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto transmitted to each Holder
pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants will, upon payment of the Exercise Price
therefor and issue, be validly authorized and issued, fully paid,
nonassessable, free of preemptive rights and free from all taxes, liens,
charges and security interests with respect to the issuance thereof. The
Company will take no action to increase the par value of the Common Stock
to an amount in excess of the Exercise Price, and the Company will not
enter into any agreements inconsistent in any material respect with the
rights of Holders hereunder. The Company will use its reasonable best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Agreement.
SECTION 11. PUBLIC EQUITY OFFERING OF COMMON STOCK; OBTAINING STOCK
EXCHANGE LISITINGS. The Company covenants and agrees with the Warrant
Agent, for the benefit of each Warrant Holder, that at any time while the
Warrants are outstanding, the Company will not make a Public Equity
Offering (as defined below) of any class of its common stock other than the
Common Stock. In the event that, at any time during the period in which
the Warrants are exercisable, the Common Stock is not listed on any
principal securities exchanges or markets within the United States of
America, the Company will use its best
<PAGE>
-15-
efforts to permit the Warrant Shares
to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in the Private Offerings, Resales and Trading through
Automated Linkages market.
"Public Equity Offering" means a public offering by the Company
of shares of its common stock pursuant to an effective registration
statement filed with the Securities and Exchange Commission (other than a
public offering on a registration statement on Form S-4 or S-8 or similar
form).
SECTION 12. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE.
The number of shares of Common Stock issuable upon the exercise of each
Warrant (the "Exercise Rate") is subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 12.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
(i) If the Company:
(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock or other capital stock of the
Company; or
(2) subdivides, combines or reclassifies its outstanding
shares of Common Stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital
stock of the Company which such Holder would have owned immediately
following such action if such Warrant had been exercised immediately prior
to such action.
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution (the "Time of
Determination") and immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the
Company, the board of directors of the Company shall determine the
allocation of the adjusted Exercise Price between the classes of capital
stock. After such
<PAGE>
-16-
allocation, the exercise privilege and the Exercise
Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 12.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(ii) If the Initial Purchaser exercises the Purchase Option in
full or in part, then Holders of the Initial Warrants shall be entitled to
an adjustment to the Exercise Rate in effect immediately prior to such
action with respect to the Initial Warrants (but not the Additional
Warrants) so that such Holders of the Initial Warrants, taken together,
shall be entitled upon exercise of such Initial Warrants to receive Warrant
Shares constituting a percentage of the Company's fully diluted Common
Stock as of the date of issuance of the Additional Warrants that is the
same as the percentage such Warrant Shares constituted of the Company's
fully diluted Common Stock as of the date the Initial Warrants were issued.
Such delivery of additional Warrants to effect the adjustment shall be made
to the Initial Warrants pro rata; provided that, such adjustment shall be
effected by the delivery by the Company to the Holders of the Initial
Warrants of additional Warrants in an amount equal to, and in lieu of
making, the adjustment to the Exercise Rate otherwise allowed for.
(b) ADJUSTMENT FOR CERTAIN ISSUANCES OF COMMON STOCK.
If the Company issues or sells shares of its Common Stock or
distributes any rights, options or warrants to any Person entitling them to
purchase shares of Common Stock, or securities convertible into or
exchangeable for Common Stock, at a price per share less than the Current
Market Value at the Time of Determination, the Exercise Rate shall be
adjusted in accordance with the formula:
E' = E x O + N
O + N x P/M
where:
E' = the adjusted Exercise Rate.
<PAGE>
-17-
E = the Exercise Rate immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
O = the number of Fully Diluted Shares (as defined below)
outstanding immediately prior to the Time of
Determination for any such issuance, sale or
distribution.
N = the number of additional shares of Common Stock issued,
sold or issuable upon exercise of such rights, options
or warrants.
P = the price received in the case of any issuance or sale of
Common Stock or rights, options or warrants inclusive of
the exercise price per share of Common Stock upon
exercise of such rights, options or warrants.
M = the Current Market Value per share of Common Stock on the
Time of Determination for any such issuance, sale or
distribution.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective
immediately after the record date for the determination of stockholders
entitled to receive the rights, options or warrants. Notwithstanding the
foregoing, the Exercise Rate shall not be subject to adjustment in
connection with (i) the issuance of any shares of Common Stock upon
exercise of any such rights, options or warrants which have previously been
the subject of an adjustment under this Agreement for which the required
adjustment has been made and (ii) the exercise of the Warrants. If at the
end of the period during which any such rights, options or warrants are
exercisable, not all rights, options or warrants shall have been exercised,
the Warrant shall be immediately readjusted to what it would have been if
"N" in the above formula had been the number of shares actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTION.
If the Company distributes to all holders of its Common Stock
(i) any evidences of indebtedness of the Company or any of its
subsidiaries, (ii) any assets of the Company or any of its subsidiaries
(other than cash dividends or other cash distributions or distributions
from current or retained earnings or earned surplus), or (iii) any rights,
options or
<PAGE>
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warrants to acquire any of the foregoing or to acquire any other
securities of the Company, the Exercise Rate shall be adjusted in
accordance with the formula:
E' = E x M/M - F
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date mentioned
below.
M = the Current Market Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date mentioned below
of the indebtedness, assets, rights, options or warrants
distributable in respect of one share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
distribution. If an adjustment is made pursuant to clause (iii) above of this
subsection (c) as a result of the issuance of rights, options or warrants and
at the end of the period during which any such rights, options or warrants are
exercisable, not all such rights, options or warrants shall have been exercised,
the Warrant shall be immediately readjusted as if "F" in the above formula was
the fair market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by
the number of shares of Common Stock outstanding on the record date.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 12.
(d) CURRENT MARKET VALUE.
"Current Market Value" per share of Common Stock or of any
other security (herein collectively referred to as a "Security") at any
date shall be:
(1) if the Security is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange
<PAGE>
-19-
Act"), (i) the value
of the Security determined in good faith by the board of directors of
the Company and certified in a board resolution, based on the most
recently completed arm's length transaction between the Company and a
person other than an Affiliate of the Company and the closing of
which occurs on such date or shall have occurred within the six
months preceding such date or (ii) if no such transaction shall have
occurred on such date or within such six-month period, the value of
the Security most recently determined as of a date within the twelve
months preceding such date by the board of directors of the Company
if the transaction is for less than $1,000,000 and is not with an
Affiliate and by an Independent Financial Expert in all other
instances, or
(2) if the Security is registered under the Exchange Act, the
average of the daily closing bid prices (as defined below) for each
Business Day during the period commencing 15 Business Days before
such date and ending on the date one day prior to such date or, if
the Security has been registered under the Exchange Act for less than
15 consecutive Business Days before such date, then the average of
the daily closing bid prices for all of the Business Days before such
date for which daily closing bid prices are available. If the
closing bid price is not determinable for at least 10 Business Days
in such period, the Current Market Value of the Security shall be
determined as if the Security was not registered under the Exchange
Act.
The "closing bid price" for any Security on each Business Day
means: (A) if such Security is listed or admitted to trading on any
securities exchange, the closing price, regular way, on such day on the
principal exchange on which such Security is traded, or if no sale takes
place on such day, the average of the closing bid and asked prices on such
day, (B) if such Security is not then listed or admitted to trading on any
securities exchange, the last reported sale price on such day, or if there
is no such last reported sale price on such day, the average of the closing
bid and the asked prices on such day, as reported by a reputable quotation
source designated by the Company or (C) if neither clause (A) nor (B) is
applicable, the average of the reported high bid and low asked prices on
such day, as reported by a reputable quotation service, or a newspaper of
general circulation in the Borough of Manhattan, City of New York,
customarily published on each Business Day, designated by the Company. If
there are no such prices on a
<PAGE>
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Business Day, then the market price shall not be determinable for such Business
Day.
"Independent Financial Expert" shall mean (a) CIBC Wood Gundy
Securities Corp. (or any successor) or (b) another nationally recognized
investment banking firm reasonably acceptable to the Warrant Agent (i) that
does not (and whose directors, officers, employees and Affiliates do not)
have a direct or indirect material financial interest in the Company, (ii)
that has not been, and, at the time it is called upon to serve as an
Independent Financial Expert under this Agreement is not (and none of whose
directors, officers, employees or Affiliates is) a promoter, director or
officer of the Company, (iii) that has not been retained by the Company for
any purpose, other than to perform an equity valuation, within the
preceding twelve months and (iv) that, in the reasonable judgment of the
board of directors of the Company (certified by a board resolution), is
otherwise qualified to serve as an independent financial advisor. Any such
person may receive customary compensation and indemnification by the
Company for opinions or services it provides as an Independent Financial
Expert.
"Affiliate" of any specified person means any other person
which directly or indirectly through one or more intermediaries controls or
is controlled by, or is under common control with, such specified person.
For the purposes of this definition, "control" (including with correlative
meanings, the terms "controlling," "controlled by" and "under common
control with") as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through
the ownership of voting securities, by agreement or otherwise; PROVIDED,
HOWEVER, that beneficial ownership of at least 10% of the voting securities
of a person shall be deemed to be control.
(e) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the Exercise Rate need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Exercise Rate. Notwithstanding the foregoing, any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment, provided that no such adjustment shall be deferred beyond the
date on which a Warrant is exercised.
<PAGE>
-21-
All calculations under this Section 12 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(f) WHEN NO ADJUSTMENT REQUIRED.
If an adjustment is made upon the establishment of a record
date for a distribution subject to subsections (a), (b) or (c) hereof and
such distribution is subsequently cancelled, the Exercise Rate then in
effect shall be readjusted, effective as of the date when the board of
directors determines to cancel such distribution, to that which would have
been in effect if such record date had not been fixed. If an adjustment
would be required under two or more of paragraphs (a), (b) and (c), such
adjustments will be determined without duplication.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(g) NOTICE OF ADJUSTMENT.
Whenever the Exercise Rate is adjusted, the Company shall
provide the notices required by Section 14 hereof.
(h) VOLUNTARY REDUCTION.
The Company from time to time may increase the Exercise Rate by
any amount for any period of time (including, without limitation,
permanently) if the period is at least 20 Business Days.
An increase of the Exercise Rate under this Sub-section (h)
(other than a permanent increase) does not change or adjust the Exercise
Rate otherwise in effect for purposes of subsections (a), (b) or (c) of
this Section 12.
(i) WHEN ISSUANCE OR PAYMENT MAY BE DEFFERRED.
In any case in which this Section 12 shall require that an
adjustment in the Exercise Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of
such event (i) issuing to the Holder of any Warrant exercised after such
record date the Warrant Shares and other capital stock of the Company, if
any, issuable upon such exercise over and above the Warrant Shares and
other capital stock of the Company, if any, issuable upon
<PAGE>
-22-
such exercise on
the basis of the Exercise Rate prior to such adjustment, and (ii) paying to
such Holder any amount in cash in lieu of a fractional share pursuant to
Section 13; provided, however, that the Company shall deliver to the
Warrant Agent and shall cause the Warrant Agent, on behalf of and at the
expense of the Company, to deliver to such Holder a due bill or other
appropriate instrument evidencing such Holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(j) REORGANIZATIONS.
In case of any capital reorganization, other than in the cases
referred to in Sections 12(a), (b) or (c) hereof, or the consolidation or
merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the continuing corporation and
which does not result in any reclassification of the outstanding shares of
Common Stock into shares of other stock or other securities or property),
or the sale of the property of the Company as an entirety or substantially
as an entirety (collectively such actions being hereinafter referred to as
"Reorganizations"), there shall thereafter be deliverable upon exercise of
any Warrant (in lieu of the number of shares of Common Stock theretofore
deliverable) the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock that would
otherwise have been deliverable upon the exercise of such Warrant would
have been entitled upon such Reorganization if such Warrant had been
exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the
board of directors of the Company, whose determination shall be described
in a duly adopted resolution certified by the Company's Secretary or
Assistant Secretary, shall be made in the application of the provisions
herein set forth with respect to the rights and interests of Holders so
that the provisions set forth herein shall thereafter be applicable, as
nearly as possible, in relation to any such shares or other securities or
property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization
or the corporation purchasing or leasing such assets or other appropriate
corporation or entity shall (i) expressly assume, by a supplemental warrant
agreement
<PAGE>
-23-
or other acknowledgment executed and delivered to the Warrant
Agent the obligation to deliver to the Warrant Agent and to cause the
Warrant Agent to deliver to each such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase, and the due and punctual performance
and observance of each and every covenant, condition, obligation and
liability under this Agreement to be performed and observed by the Company
in the manner prescribed herein and (ii) enter into an agreement providing
to the Holders rights and benefits substantially similar to those enjoyed
by the Holders under the Common Stock Registration Rights and Stockholders
Agreement of even date herewith.
The foregoing provisions of this Section 12(j) shall apply to
successive Reorganization transactions.
(k) DRAG ALONG RIGHTS.
(i) At any time prior to a Public Equity Offering resulting in gross
proceeds to the Company of in excess of $10 million (the "Drag
Along Termination Date"), in connection with any sale,
transfer, exchange or other disposition by any one or more of
the holders of Company Common Stock (collectively, for purposes
of this Sub-section (k), the "Selling Holders") of shares of
Common Stock and/or Common Stock Equivalents representing more
than 50% of the Fully-Diluted Shares (for purposes of this
Sub-section (k), a "Drag Sale"), a majority of the Selling
Holders shall have the right to require each other Holder
(collectively, for purposes of this Section 12, the
"Nonparticipating Holders") to sell a portion of each such
Nonparticipating Holder's Common Stock and Common Stock
Equivalents which represents the same percentage of such
Nonparticipating Holder's Fully-Diluted Shares as the shares
being disposed of by the Selling Holders represent of their Fully-
Diluted Shares. The right of the Selling Holders to require the
Nonparticipating Holders to sell in a Drag Sale must be
exercised pro rata among all Nonparticipating Holders. (For
example, if the Selling Holders are selling 50% of their Fully-
Diluted Shares, each Nonparticipating Holder shall be required
to sell 50% of its Fully-Diluted Shares). All Common Stock and
Common Stock Equivalents sold or transferred by
Nonparticipating Holders pursuant to this Sub-section (k) shall
be sold at the same price and
<PAGE>
-24-
otherwise treated the same, in
substance, as the Common Stock being sold by the Selling
Holders; provided, that if Common Stock Equivalents are being
sold the consideration received by the seller shall be reduced
by the applicable aggregate exercise price (such reduction to
be taken first from any cash consideration to be received) by
the seller.
(ii) The Selling Holders shall give each Nonparticipating Holder at
least 20 days prior written notice of any Drag Sale. In
connection with any Drag Sale the Nonparticipating Holders
shall take such actions as may be reasonably required and
otherwise cooperate in good faith with the Selling Holders
(including, without limitation, the voting of any Common Stock
or other voting capital stock of the Company to approve such
Drag Sale). At the Closing of a Drag Sale, each
Nonparticipating Holder shall deliver to the purchaser the
certificates for all Common Stock and Common Stock Equivalents
being sold by it, duly endorsed for transfer, with the
signature guaranteed, against payment of the appropriate
purchase price.
(iii) This Sub-section (k) shall remain in full force and effect with
respect to the Warrant Shares until the Drag Along Termination
Date without regard to any other termination of this Agreement
and shall survive the exercise of the Warrants and shall be
equally applicable to the Warrant Shares.
(l) TAG ALONG RIGHTS.
(i) At any time prior to the earlier of a Public Equity Offering
resulting in gross proceeds of at least $10 million or August
31, 2002 (the "Tag-Along Termination Date"), in the event any
one or more Holders (collectively, for purposes of this
subsection (l), the "Tag Sellers") desire to sell for value any
shares of Common Stock and/or Common Stock
Equivalents representing more than 5% of the Fully-Diluted
Shares (for purposes of this subsection (l), a "Tag Sale") and,
if they are Selling Holders, they do not elect to exercise
their drag-along rights under subsection (k) hereof, then at
least 20 days prior to the closing of such Tag Sale, such Tag
Along Sellers shall, by written notice, offer (the
"Participation Offer") to each other Holder (collectively, for
purposes of this subsection (l), the "Nonparticipating
<PAGE>
-25-
Tag Holders") the right to sell in the Tag Sale a number of shares
of Common Stock or, if consented to by the transferee, Common
Stock Equivalents, which represents the same percentage of such
Nonparticipating Tag Holder's Fully-Diluted Shares as the
shares being disposed of by the Tag Sellers represent of their
Fully-Diluted Shares; provided that, if the consideration to be
received by the Tag Sellers includes any securities, only
Nonparticipating Tag Holders who have certified to the
reasonable satisfaction of the Tag Sellers that they are QIBs
or accredited investors as defined under United States federal
securities law ("Accredited Holders") shall be entitled to
participate in such Tag Sale. All Common Stock or Common Stock
Equivalents sold or transferred by Nonparticipating Holders
pursuant to this subsection (l) shall be sold at the same price
and otherwise treated the same, in substance, as the securities
of such type being sold by the Tag Sellers; provided, that if
Common Stock Equivalents are being sold the consideration
received by the seller shall be reduced by the applicable
aggregate exercise price (such reduction to be taken first from
any cash consideration to be received) by the seller.
(ii) Within 20 days after their receipt of the Participation Offer,
each eligible Tag Holder who desires to participate in the Tag
Sale shall deliver to the Tag Sellers a written notice
specifying the number of shares of Common Stock and, if
applicable, Common Stock Equivalents that each such
Nonparticipating Tag Holder desires to sell in the
Participation Offer, whereupon each such Nonparticipating Tag
Holder shall be obligated to sell such shares of Common Stock
and, if applicable, Common Stock Equivalents at the closing of
such Tag Sale, if and when it occurs.
(iii) Each eligible Nonparticipating Tag Holder's right to participate
in the proposed Tag Sale and shall be
conditioned upon (i) the consummation of the transactions
contemplated in the Participation Offer with the transferee
named therein and (ii) such Nonparticipating Tag Holder's
execution and delivery of all agreements and other documents as
the Tag Sellers are required to execute and deliver in
connection with such Tag Sale. If any Nonparticipating Tag
Holder shall accept the Participation Offer, the Tag Sellers
shall reduce, to the extent necessary,
<PAGE>
-26-
the number of shares of
Common Stock they otherwise would have sold in the proposed Tag
Sale so as to permit those Nonparticipating Tag Holders who
have accepted the Participation Offer to sell the number of
shares of Common Stock and, if applicable, Common Stock
Equivalents that they are entitled to sell under this
subsection (l).
(iv) This subsection (l) shall remain in full force and effect with
respect to the Warrant Shares until the Drag Termination Date
or the Expiration Date without regard to any other termination
of the provisions of this Agreement.
(m) EXCEPTIONS TO DRAG ALONG AND TAG ALONG RIGHTS.
In no event shall any Reorganization constitute a transfer of
shares of Common Stock or other Common Stock Equivalents for purposes of
subsection (k) or subsection (l) so long as, in connection with any such
Reorganization, all Common Stock and Common Stock Equivalents owned by the
Holders receive the same price per share (in the case of Common Stock
Equivalents, less the applicable exercise price).
(n) FORM OF WARRANTS.
Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and
kind of shares as are stated in the Warrants initially issuable pursuant to
this Agreement.
(o) WARRANT AGENT'S DISCLAIMER.
The Warrant Agent has no duty to determine when an adjustment
under this Section 12 should be made, how it should be made or what it
should be. The Warrant Agent has no duty to determine whether any
provisions of a supplemental warrant agreement under subsection (j) of this
Section 12 are correct. The Warrant Agent makes no representation as to the
validity or value of any securities or assets issued upon exercise of Warrants.
The Warrant Agent shall not be responsible for the Company's failure to comply
with this Section 12.
(p) MISCELLANEOUS.
For purpose of this Section 12 the term "shares of Common
Stock" shall mean (i) shares of the class of stock
<PAGE>
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designated as the Common
Stock, par value $.01 per share of the Company as of the date of this
Agreement, and (ii) shares of any other class of stock resulting from
successive changes or reclassification of such shares consisting solely of
changes in par value, or from par value to no par value, or from no par
value to par value. For purposes of this Section 12 the term "Fully-
Diluted Shares" shall mean (i) the shares of Common Stock outstanding as of
a specified date, and (ii) the shares of Common Stock into or for which
rights, options, warrants or other securities outstanding as of such date
are exercisable or convertible (other than the Warrants). For purposes of
this Section 12, "Common Stock Equivalents" means (without duplication with
any other Common Stock or Common Stock Equivalents) rights, warrants,
options, convertible securities or convertible indebtedness, exchangeable
securities or exchangeable indebtedness, or other rights, exercisable for
or convertible or exchangeable into, directly or indirectly, Common Stock,
whether at the time or upon the occurrence of some future event. In the
event that at any time, as a result of an adjustment made pursuant to this
Section 12, the Holders of Warrants shall become entitled to purchase any
securities of the Company other than, or in addition to, shares of Common
Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained
in subsections (a) through (p) of this Section 12, inclusive, and the
provisions of Sections 7, 8, 10 and 13 with respect to the Warrant Shares
or the Common Stock shall apply on like terms to any such other securities.
SECTION 13. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants.
If more than one Warrant shall be presented for exercise in full at the
same time by the same Holder, the number of full Warrant Shares which shall
be issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants
so presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 13, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall, to the extent it is
permitted by law and its other agreements to do so, pay an amount in cash equal
to the excess of the value (as determined by the Board of Directors in good
faith) of a Warrant Share over the Exercise Price on the day immediately
preceding the date the Warrant is presented for exercise, multiplied by such
fraction.
<PAGE>
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SECTION 14. NOTICES TO WARRANT HOLDERS. Upon any adjustment
pursuant to Section 12 hereof, the Company shall give prompt written notice
of such adjustment to the Warrant Agent and shall cause the Warrant Agent,
on behalf of and at the expense of the Company, within 10 days after
notification is received by the Warrant Agent of such adjustment, to mail
by first class mail, postage prepaid, to each Holder a notice of such
adjustment(s) and shall deliver to the Warrant Agent a certificate of the
Chief Financial Officer of the Company, accompanied by the report thereon
by a firm of independent public accountants selected by the board of
directors of the Company (who may be the regular accountants for the
Company), setting forth in reasonable detail (i) the number of Warrant
Shares purchasable upon the exercise of each Warrant and the Exercise Price
of such Warrant after such adjustment(s), (ii) a brief statement of the
facts requiring such adjustment(s) and (iii) the computation by which such
adjustment(s) was made. Where appropriate, such notice may be given in
advance and included as a part of the notice required under the other
provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all holders
of shares of Common Stock of rights, options or warrants to subscribe
for or purchase shares of Common Stock or of any other subscription
rights or warrants; or
(b) the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets; or
(c) of any consolidation or merger to which the Company is a
party and for which approval of any shareholders of the Company is
required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon exercise of
the Warrants (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
<PAGE>
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(e) the Company proposes to take any action that would
require an adjustment to the Exercise Rate pursuant to Section 12;
then the Company shall give prompt written notice to the Warrant Agent and
shall cause the Warrant Agent, on behalf of and at the expense of the
Company to give to each of the registered holders of the Warrant
Certificates at his or its address appearing on the Warrant Register, at
least 30 days (or 20 days in any case specified in clauses (a) or (b)
above) prior to the applicable record date hereinafter specified, or the
date of the event in the case of events for which there is no record date,
by first-class mail, postage prepaid, a written notice stating (i) the date
as of which the holders of record of shares of Common Stock to be entitled
to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on
which any such consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or consummated,
and the date as of which it is expected that holders of record of shares of
Common Stock shall be entitled to exchange such shares for securities or
other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up. The failure by the Company or the Warrant Agent to give such
notice or any defect therein shall not affect the legality or validity of
any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote
upon any action.
The Company shall give prompt written notice to the Warrant
Agent and shall cause the Warrant Agent, on behalf of and at the expense of
the Company to give to each Holder written notice of any determination to
make a distribution or dividend to the holders of its Common Stock of any
assets (including cash), debt securities, preferred stock, or any rights or
warrants to purchase debt securities, preferred stock, assets or other
securities (other than Common Stock, or rights, options, or warrants to
purchase Common Stock) of the Company, which notice shall state the nature
and amount of such planned dividend or distribution and the record date
therefor, and shall be received by the Holders at least 30 days prior to such
record date therefor.
Nothing contained in this Agreement or in any Warrant
Certificate shall be construed as conferring upon the Holders
<PAGE>
-30-
the right to
vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. NOTICES TO THE COMPANY AND WARRANT AGENT. Any
notice or demand authorized by this Agreement to be given or made by the
Warrant Agent or by any Holder to or on the Company shall be sufficiently
given or made when received at the office of the Company expressly
designated by the Company as its office for purposes of this Agreement
(until the Warrant Agent is otherwise notified in accordance with this
Section 15 by the Company), as follows:
Renaissance Cosmetics, Inc.
955 Massachusetts Avenue
Cambridge, Massachusetts 02139
Attention: Chief Executive Officer
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Paul D. Ginsberg, Esq.
Any notice pursuant to this Agreement to be given by the
Company or by any Holder(s) to the Warrant Agent shall be sufficiently
given when received by the Warrant Agent at the address appearing below
(until the Company is otherwise notified in accordance with this Section by
the Warrant Agent).
Firstar Trust Company
615 East Michigan Street P.O. Box 2077
Milwaukee, Wisconsin 53201-2077
Attention: Mr. Gene E. Ploeger
Fax Number: (414) 287-3904
SECTION 16. SUPPLEMENTS AND AMENDMENTS. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement
without the approval of any holders of Warrants in order to cure any
ambiguity or to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provision herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or
<PAGE>
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desirable and which shall not in any way adversely affect the interests of any
holder of Warrants. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of holders shall require the
written consent of registered holders of a majority of the then outstanding
Warrants. The consent of each holder of a Warrant affected shall be
required for any amendment pursuant to which the Exercise Price would be
increased or the number of Warrant Shares purchasable upon exercise of
Warrants would be decreased (not including adjustments contemplated
hereunder). The Warrant Agent shall be entitled to receive and shall be
fully protected in relying upon an officers' certificate and opinion of
counsel as conclusive evidence that any such amendment or supplement is
authorized or permitted hereunder, that it is not inconsistent herewith,
and that it will be valid and binding upon the Company in accordance with
its terms.
SECTION 17. CONCERNING THE WARRANT AGENT. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
Holders, by their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the Warrant
Certificate shall be taken as statements of the Company, and the
Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or any action
taken by it. The Warrant Agent assumes no responsibility with
respect to the distribution of the Warrants except as herein
otherwise provided.
(b) The Warrant Agent shall not be responsible for any
failure of the Company to comply with the covenants contained in this
Agreement or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself (through its employees) or by or through its attorneys
or agents (which shall not include its employees) and shall not be
responsible for the misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal
counsel satisfactory to it (who may be counsel for the Company), and
the Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder
<PAGE>
-32-
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with the opinion or the advice of such
counsel.
(e) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless
such evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a
certificate signed by the Chairman of the Board, the President, Chief
Financial Officer, one of the Vice Presidents, the Treasurer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate. Without limiting
the foregoing, the Company shall notify the Warrant Agent of the
occurrence of the Exercisability Date on the date it occurs, and
until receipt of such notice the Warrant Agent may be entitled to
assume that any such date has not occurred.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Warrant Agent
(including reasonable fees and expenses of the Warrant Agent's
counsel and agents) in the performance of its duties under this
Agreement, and to indemnify the Warrant Agent and save it harmless
against any and all liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent in
the performance of its duties under this Agreement, except as a
result of the Warrant Agent's negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity satisfactory to the Warrant Agent for any costs and
expenses which may be incurred, but this provision shall not affect
the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without any
<PAGE>
-33-
such security or indemnity. All rights of action under
this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the
production thereof at any trial or other proceeding relative thereto,
and any such action, suit or proceeding instituted by the Warrant
Agent shall be brought in its name as Warrant Agent, and any recovery
of judgment shall be for the ratable benefit of the Holders, as their
respective rights or interests may appear.
(h) The Warrant Agent and any stockholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily
interested in any transactions in which the Company may be
interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement or such director, officer or employee. Nothing
herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity including,
without limitation, acting as Transfer Agent or as a lender to the
Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as agent,
and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not be liable for anything which it may do or
refrain from doing in connection with this Agreement except for its
own negligence or bad faith.
(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken
in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument reasonably
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(k) The Warrant Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant
Agent) or in respect of the validity or execution of any Warrant
(except its countersignature thereof); nor shall the Warrant Agent by
any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Warrant Shares (or other
stock) to be issued pursuant to this
<PAGE>
-34-
Agreement or any Warrant, or as to whether any Warrant Shares (or other
stock) will, when issued, be validly issued, fully paid and nonassessable,
or as to the Exercise Price or the number or amount of Warrant Shares or
other securities or other property issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties,
and shall not be liable for any action taken or suffered to be taken
by it in good faith and without negligence in accordance with
instructions of any such officer or officers.
SECTION 18. CHANGE OF WARRANT AGENT. The Warrant Agent may
resign at any time and be discharged from its duties under this Agreement
by giving to the Company 30 days' notice in writing. The Warrant Agent may
be removed by like notice to the Warrant Agent from the Company. If the
Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period
of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant
Agent or by any Holder (who shall with such notice submit his Warrant for
inspection by the Company), then any Holder may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant
Agent. Pending appointment of a successor warrant agent, either by the
Company or by such court, the duties of the Warrant Agent shall be carried
out by the Company. Any successor warrant agent, whether appointed by the
Company or such a court, shall be a bank or trust company in good standing,
incorporated under the laws of the United States of America or any State
thereof or the District of Columbia and having at the time of its
appointment as warrant agent a combined capital and surplus of at least
$10,000,000. After appointment, the successor warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it
had been originally named as Warrant Agent without further act or deed; but
the former Warrant Agent shall deliver and transfer to the successor
warrant agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Failure to file any notice provided for in this Section 18,
however, or
<PAGE>
-35-
any defect therein, shall not affect the legality or validity
of the resignation or removal of the Warrant Agent or the appointment of
the successor warrant agent, as the case may be. In the event of such
resignation or removal, the Company or the successor warrant agent shall mail
by first class mail, postage prepaid, to each Holder, written notice of such
removal or resignation and the name and address of such successor warrant agent.
SECTION 19. IDENTITY OF TRANSFER AGENT. Forthwith upon the
appointment of any Transfer Agent for the Common Stock, or any other shares
of the Company's capital stock issuable upon the exercise of the Warrants,
the Company shall promptly file with the Warrant Agent a statement setting
forth the name and address of such Transfer Agent.
SECTION 20. REGISTRATION RIGHTS. The Holders shall be
entitled to all of the benefits of that certain Common Stock Registration
Rights Agreement among the Company and the Initial Purchaser dated as of
August , 1996, in connection with the Common Stock to be issued in
connection with the exercise of the Warrants.
SECTION 21. SUCCESSORS. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrant Agent, the
Initial Purchaser or any holder of Warrants shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION 22. TERMINATION. This Agreement shall terminate at
5:00 p.m. New York City time on August 31, 2006. Notwithstanding the
foregoing, this Agreement will terminate on any earlier date if all
Warrants have been exercised or redeemed pursuant to this Agreement.
SECTION 23. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF
LAW RULES THEREOF.
SECTION 24. BENEFITS OF THIS AGREEMENT. Nothing in this
Agreement shall be construed to give to any person or corporation other
than the Company, the Warrant Agent and the registered Holders of the
Warrant Certificates any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the
<PAGE>
-36-
Company, the Warrant Agent and the registered Holders of the
Warrant Certificates.
SECTION 25. COUNTERPARTS. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
SECTION 26. HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
RENAISSANCE COSMETICS, INC.
By:/s/John R. Jackson
Name: John R. Jackson
Title: Vice President
FIRSTAR TRUST COMPANY,
as Warrant Agent
By: /s/Suzanne P. Norman Barnes
Name: Suzanne P. Norman Barnes
Title: Assistant Vice President
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
[THIS SECURITY IS A GLOBAL CERTIFICATE AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR
DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE WARRANT AGREEMENT DATED AS OF
AUGUST , 1996 BETWEEN THE COMPANY AND THE WARRANT AGENT (THE "WARRANT
AGREEMENT"), AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION)
("DTC") TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]1
_________________________
1 This paragraph is to be included only if the Warrant is in
global form.
A-1
<PAGE>
EXERCISABLE ON OR AFTER THE EXERCISABILITY DATE AND ON OR BEFORE
AUGUST 31, 2006
No. _______ _______ Warrants
Warrant Certificate
RENAISSANCE COSMETICS, INC.
This Warrant Certificate certifies that ______, or registered
assigns, is the registered holder of Warrants expiring August 31, 2006 (the
"Warrants") to purchase shares of Common Stock (the "Common Stock") of
Renaissance Cosmetics, Inc., a Delaware corporation (the "Company"). Each
Warrant entitles the holder upon exercise to receive from the Company on or
after the Exercisability Date and on or before 5:00 p.m. New York City Time
on August 31, 2006, one fully paid and nonassessable share of Class A
Common Stock (a "Warrant Share") at the initial exercise price (the
"Exercise Price") of $.01 payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, subject only
to the conditions set forth herein and in the Warrant Agreement referred to
on the reverse hereof. The Exercise Price and number of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events as set forth in the Warrant Agreement.
No Warrant may be exercised before the Exercisability Date or
after 5:00 p.m., New York City Time, on August 31, 2006 and to the extent
not exercised by such time such Warrants shall become void.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the internal laws of the State of New York.
A-2
<PAGE>
IN WITNESS WHEREOF, Renaissance Cosmetics, Inc. has caused this
Warrant Certificate to be signed by its President and by its Secretary,
each by a facsimile of his signature, and has caused a facsimile of its
corporate seal to be affixed hereunto or imprinted hereon.
Dated:
RENAISSANCE COSMETICS, INC.
By: ___________________________
President
By: _________________________
Secretary
Countersigned:
FIRSTAR TRUST COMPANY,
as Warrant Agent
By: _________________________
Authorized Signature
A-3
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring August 31, 2006, entitling the
holder on exercise to receive shares of Common Stock, of the Company (the
"Common Stock"), $.01 par value, and are issued or to be issued pursuant to
a Warrant Agreement dated as of August 15, 1996 (the "Warrant Agreement"),
duly executed and delivered by the Company to FIRSTAR TRUST COMPANY, as
warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the
Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request
to the Company.
Warrants may be exercised at any time on or after the
"Exercisability Date" and on or before August 31, 2006, subject to
extension as provided in the Warrant Agreement. The holder of Warrants
evidenced by this Warrant Certificate may exercise them by surrendering
this Warrant Certificate, with the form of election to purchase set forth
hereon properly completed and executed, together with payment of the
Exercise Price in cash at the office of the Warrant Agent. In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise
of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the number of Warrants set forth on the face hereof may,
subject to certain conditions, be adjusted. No fractions of a share of
Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the
Warrant Agreement.
The holders of the Warrants are entitled to certain
registration rights with respect to the Common Stock purchasable upon exercise
thereof. Such registration rights are set forth in the Common Stock
Registration Rights Agreement, dated
A-4
<PAGE>
as of August 15, 1996, among the Company and the parties named therein.
Warrant Certificates, when surrendered at the office of the Warrant Agent by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) thereof as the absolute owner(s) of this Warrant
Certificate (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the holder(s) hereof, and for all other purposes, and
neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary. Neither the Warrants nor this Warrant Certificate
entitles any holder hereof to any rights of a stockholder of the Company.
A-5
<PAGE>
[Form of Election to Purchase]
(To Be Executed upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive _____ shares of
Common Stock and herewith tenders payment for such shares to the order of
Renaissance Cosmetics, Inc. in the amount of $_____ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares
be registered in the name of ______________, whose address is __________
and that such shares be delivered to _________ whose address is
______________. If said number of shares is less than all of the shares of
Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of _____________, whose address is ________, and
that such Warrant Certificate be delivered to ___________, whose address is
________________.
Signature:
Date:
Signature Guaranteed:
A-6
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS2
The following exchanges of a part of this Global Warrant for certificated
Warrants have been made:
Number of
Warrants of
Amount of Amount of this Global
decrease in increase in Warrant Signature of
number of number of following authorized
Date of Warrants of this Warrants of this such decrease officer of
Exchange Global Warrant Global Warrant (or increase) Warrant Agent
_________________________
2 This is to be included only if the Warrant is in global
form.
A-1
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of Renaissance
Cosmetics, Inc.
This Certificate relates to ____ Warrants held in* book-entry or*
_____ certificated form by ______ (the "Transferor").
The Transferor*:
__
/_/ has requested the Warrant Agent by written order to deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Warrant or Warrants in definitive registered form equal to its
beneficial interest in Warrants represented by such Global Warrant (or the
portion thereof indicated above); or
__
/_/ has requested the Warrant Agent by written order to exchange or
register the transfer of a Warrant or Warrants.
In connection with such request, the Transferor does hereby certify
that Transferor is familiar with the Warrant Agreement (the "Agreement")
relating to the Warrants and the restrictions on transfers thereof as provided
in Section 6 of such Agreement, and that the transfer of this Warrant requested
hereby does not require registration under the Securities Act (as defined
below) because:
__
/_/ Such Warrant is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 6(a)(y)(A) of the Agreement).
__
/_/ Such Warrant is being transferred to a qualified institutional
buyer (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")), in reliance on Rule 144A or in accordance with
Regulation S under the 1933 Act. If such transfer is in accordance with
Regulation S, an opinion of counsel to the effect that such transfer does not
require registration under the Securities Act accompanies this Certificate.
B-1
__
/_/ Such Warrant is being transferred in accordance with Rule 144 under
the Securities Act. An opinion of counsel to the effect that such transfer
does not require registration under the Securities Act accompanies this
Certificate.
__
/_/ Such Warrant is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A or Rule 144 or Regulation S under the Securities Act. An
opinion of counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate.
______________________________
[INSERT NAME
OF TRANSFEROR]
By: _________________________
Date: _____________
*Check applicable box.
B-2
<PAGE>
EXHIBIT C
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
REGISTRATION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR
AN AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN
THE MEANING OF SUBPARAGRAPHS (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH
CASE HAVING AN AGGREGATE LIQUIDATION PREFERENCE OF NOT LESS THAN
$250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, PROVIDED THAT AN INITIAL INVESTOR IS AN
<PAGE>
C-1
INSTITUTIONAL "ACCREDITED INVESTOR"
PURCHASING AS DESCRIBED IN CLAUSE (E) ABOVE SHALL NOT BE PERMITTED TO
TRANSFER THIS SECURITY TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF SUBPARAGRAPHS (A)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT; AND SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO IT, AND IN THE CASE OF ANY OF THE FOREGOING CLAUSES
(A)-(F), A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
COMPANY. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
C-2
<PAGE>
EXHIBIT D
Transferee Letter of Representation
Renaissance Cosmetics, Inc.
955 Massachusetts Avenue
Cambridge, Massachusetts 02139
Ladies and Gentlemen:
In connection with our proposed purchase of Warrants to purchase
Common Stock (the "Securities") of Renaissance Cosmetics, Inc. (the "Company"),
firm that:
1. We understand that any subsequent transfer of the Securities
is subject to certain restrictions and conditions set forth in the
Warrant Agreement dated as of August , 1996 relating to the Securities
and the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
2. We understand that the Securities have not been registered
under the Securities Act, and that the Securities may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Securities within three
years after the original issuance of the Securities, we will do so only
(A) to the Company or any subsidiary thereof, (B) inside the United
States to a "qualified institutional buyer" in compliance with Rule 144A
under the Securities Act, (C) inside the United States to an
"institutional accredited investor" (as defined below) that, prior to
such transfer, furnishes to you a signed letter substantially in the form
of this letter, (D) outside the United States to a foreign person in
compliance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the exemption from registration provided by Rule 144 under
the Securities Act (if available), or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing any of the Securities from us a notice
D-1
<PAGE>
advising such purchaser that resales of the Securities are restricted as
stated herein.
3. We understand that, on any proposed resale of any Securities,
we will be required to furnish to the Company such certifications, legal
opinions and other information as the Company may reasonably require to
confirm that the proposed sale complies with the foregoing restrictions.
We further understand that the Securities purchased by us will bear a
legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Securities, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
The Company is entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
__________________
(Name of Purchaser)
By:
_______________
Date:
_____________
D-2
<PAGE>
Upon transfer the Securities would be registered in the name of the
new beneficial owner as follows:
Name:______________________________
Address:___________________________
Taxpayer ID Number:________________
D-3
For immediate release
Renaissance Cosmetics, Inc.
955 Massachusetts Avenue
Cambridge, MA 02139
Tel: (617) 497-5584
PRESS RELEASE
CAMBRIDGE, MA - August 15, 1996 - Renaissance Cosmetics, Inc. announced
today that it has sold 85,000 units consisting of $85 million aggregate
liquidation preference 14% Senior Redeemable Preferred Stock, Series B
and Warrants to purchase approximately 17% of its outstanding common
stock on a fully-diluted basis. Renaissance will use the net proceeds
from this offering, together with $5 million of proceeds it will receive
from the sale of its Common Stock to occur concurrently with this
offering, to redeem its outstanding senior preferred stock issued during
May and June of 1996, to finance the Company's previously announced
acquisitions and for general corporate purposes. The 85,000 units
include 5,000 units being sold pursuant to the exercise of an option
granted to the initial purchaser, exercisable within thirty days, to
purchase up to an additional 20,000 units. The net proceeds, if any,
from the exercise of the option to purchase up to an additional 15,000
units will be used by the Company to repay indebtedness and for general
corporate purposes.
Dividends on the preferred stock are payable at the rate of 14%
per year in cash or by issuance of additional shares of preferred stock,
at Renaissance's option, through August 31, 2002, and in cash thereafter;
provided that dividends shall
<PAGE>
2
be paid in cash on the first dividend
payment date following the earlier of one year from the date of
redemption of the Company's existing senior notes or August 31, 2002. If
the Company does not pay cash after August 15, 1999 or at any time that
is required to do so, the dividend rate will increase during each quarter
of non-payment up to a maximum rate of 17% per annum. The preferred
stock may be redeemed at the option of the Company on or after September
1, 1999, initially at 108% of the liquidation preference, declining
ratably to 100% of the liquidation preference on or after September 1,
2003, in each case plus accrued and unpaid dividends thereon. The
Company is required to redeem all outstanding shares of preferred stock
on August 31, 2006.
Renaissance manufactures, markets and distributes fragrances,
cosmetics and related products which it sells through the domestic and
international mass-market or self-select distribution channels.
Renaissance brands are sold to over 1,000 retailers with approximately
25,000 locations throughout the United States, and are sold in over 42
foreign countries worldwide. The Renaissance family of fragrance brands
includes several classic brands such as "CHANTILLY," "TABU" and "CANOE."
Through its Cosmar subsidiary, Renaissance is the largest manufacturer
and marketer of artificial fingernails and related nail care products in
the United States, and its brands include "LAJOIE," and "PRO10.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the units, the Senior Redeemable
Preferred Stock, the Warrants or
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3
the Common Stock issuable upon exercise of the Warrants. The securities
offered in the offering have not been registered under the Securities Act of
1933 or under state securities laws, and may not be offered or sold in the
United States absent registration or qualification or an applicable exemption
from registration or qualification requirements.
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