EXHIBIT 10.4
WARRANT AGREEMENT
This Warrant Agreement (the "Agreement"), dated as of July 16, 1998, is by
and between Xxxxxxx-Xxxxxx, Inc., a corporation duly organized and validly
existing under the laws of Delaware (the "Company"), and Colony Investors III,
L.P. (the "Holder").
WITNESSETH:
WHEREAS, the Company wishes to issue and sell to the Holder (i) certain
shares of the Company's common stock, $.01 par value per share (the "Stock"),
pursuant to the Stock Purchase Agreement dated as of the date hereof, between
the Company and the Holder, and (ii) warrants to acquire additional shares of
Stock for an aggregate purchase price of $5,232,610, and may issue certain
additional warrants in connection therewith;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING TERMS AND DETERMINATIONS
As used herein:
"Additional Warrants" has the meaning set forth in Section 3.3 of the
Investor's Agreement.
"Board" means the Board of Directors of the Company.
"Bylaws" means the Amended and Restated Bylaws of the Company as adopted on
April 2, 1992.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company as filed with the Secretary of State of the State of Delaware on
March 27, 1992, as amended through and including April 30, 1998.
"Commission" means the Securities and Exchange Commission or any other
similar or successor agency of the Federal government administering the
Securities Act and/or the Securities Exchange Act of 1934, as amended from time
to time (the "Exchange Act").
"Date of Issuance" shall mean July 16, 1998.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled (whether through
ownership of securities or other ownership interests, by contract or otherwise)
by any of the foregoing.
"Holder" shall have the meaning set forth at the head of this Agreement and
each other Person who acquires the original Warrant Certificate or any Warrant
Certificate issued upon transfer, division, combination, partial exercise of
Warrants or in replacement or substitution therefor or who acquires Warrant
Shares pursuant to the provisions of this Agreement.
"Include" and "Including" shall be construed as if followed by the phrase
"without being limited to."
"Investor's Agreement" means that certain Investor's Agreement between the
Company and the initial Holder dated of even date herewith.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or a Governmental Authority.
"Registration Rights Agreement" means the Registration Rights Agreement of
even date herewith between the Company and the Holder relating to the
registration of the Registrable Securities (as defined therein) under and
pursuant to the Securities Act, as said Registration Rights Agreement shall be
modified and supplemented in accordance with its terms and in effect from time
to time.
"Restricted Securities" means the Warrants, any Additional Warrants and any
Warrant Shares or other securities which have been issued or are issuable upon
the exercise of such Warrants until such time as any such Restricted Securities
(a) have been sold pursuant to an effective registration statement under the
Securities Act or (b) are distributed pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act and, if it has so requested,
the Company has received an opinion of counsel (either its own counsel or, if
the Company so requests, counsel to the holders of such Restricted Securities)
reasonably acceptable to the Company that such Restricted Securities may be so
transferred without registration or pursuant to an exemption under the
Securities Act, and in each such instance the Company has delivered new Warrant
Certificates not bearing the legend prescribed by Section 2.03 hereof.
"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act (as such rule may be amended from time to time or any successor
or similar rule then in force).
"Securities Act" means at any time the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Stockholder" means any Person (excluding any Holder) who owns any shares
of common or preferred stock of the Company (or any successor thereto).
"Transfer" means, unless the context otherwise requires, any disposition of
any Restricted Securities, or of any interest in any thereof, which would
constitute an offer or sale thereof within the meaning of the Securities Act.
"Warrants" shall have the meaning assigned to such term in Section 2.01.
"Warrant Certificate" shall have the meaning assigned to such term in
Section 2.01.
"Warrant Shares" means (a) the shares of Stock purchased or purchasable by
the Holder upon the exercise of the originally issued Warrant or any Additional
Warrants, including any Stock into which such Stock may thereafter be changed or
converted, and (b) if required hereunder, any additional shares of Stock issued
or distributed by way of a dividend, stock split or other distribution in
respect of the Stock referred to in clause (a) above, or acquired by way of any
rights offering or similar offering made in respect of the Stock referred to in
clause (a) above.
Except as otherwise may be expressly provided herein, all accounting terms
used herein shall be interpreted in accordance with generally accepted
accounting principles consistently applied. All calculations made for the
purposes of determining compliance with the terms of this Agreement and the
Warrants shall be made by application of United States generally accepted
accounting principles consistently applied (except as otherwise may be expressly
provided herein).
ARTICLE II
ISSUANCE AND EXECUTION OF WARRANTS
Section 2.01. AUTHORIZATION AND ISSUANCE OF SHARES AND WARRANTS. The
Company has authorized: (a) the issuance of warrant certificates substantially
in the form of Annex 1 to this Agreement (each, a "Warrant Certificate"), each
evidencing warrants to purchase shares of Stock (such Warrant Certificate issued
on the Date of Issuance, other Warrant Certificates issued in connection with
Additional Warrants or upon transfer, partial exercise, division or combination
of, or in substitution or replacement for any Warrant Certificate or the rights
to purchase Stock evidenced by each of the foregoing, is, as the context
requires, sometimes referred to herein as a "Warrant" or "Warrants"); and (b)
the issuance of such number of shares of Stock as shall permit the compliance by
the Company with its obligations to issue Stock pursuant to the Warrants. In
addition, each Warrant Certificate may have such letters, numbers or other marks
of identification or designation and such legends, summaries, or endorsements
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as, in any particular case, may be required to comply with any law or with
any rule or regulation of any regulatory authority or agency, or to conform to
customary usage; provided, however, that no such change shall be made which
affects the duties or obligations of the Company without the consent of the
Company.
Section 2.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATE. Each Warrant
Certificate shall be executed on behalf of the Company by the Chairman of the
Board or the Company's President or any Vice President and attested to by its
Secretary or Assistant Secretary, either manually or by facsimile signature
printed thereon. In case any authorized officer of the Company who shall have
signed any Warrant Certificate shall cease to be such officer of the Company
either before or after delivery thereof by the Company to the Holder, the
signature of such person on such Warrant Certificate shall be valid nevertheless
and such Warrant Certificate may be issued and delivered to the person entitled
to receive the Warrants represented thereby with the same force and effect as
though the person who signed such Warrant Certificate had not ceased to be such
officer of the Company. The Warrant Certificate originally issued to the Holder
shall be delivered on the Date of Issuance. The Company shall maintain books
(the "Warrant Register") for the registration of Warrants and the registration
of transfers and exchanges of Warrants.
Section 2.03. TRANSFER AND EXCHANGE OF WARRANTS.
(a) Warrant Certificates evidencing Restricted Securities (and only
such Warrant Certificates) will bear a legend in substantially the
following form:
NEITHER THE EXERCISE OF THE WARRANTS EVIDENCED BY THIS CERTIFICATE NOR THE
ISSUANCE OF SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES MAY NOT
BE SOLD OR TRANSFERRED UNLESS SUCH TRANSFER IS PURSUANT TO (i) A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE
SECURITIES ACT AND THE RULES AND REGULATIONS THEREUNDER OR (ii) AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND, IF IT HAS SO REQUESTED, THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL (EITHER ITS OWN COUNSEL OR, IF THE
COMPANY SO REQUESTS, COUNSEL TO THE HOLDERS OF SUCH SECURITIES) REASONABLY
ACCEPTABLE TO THE COMPANY THAT SUCH SECURITIES MAY BE SO TRANSFERRED.
FURTHERMORE, THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
ARE SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN THE COMPANY'S
CERTIFICATE OF INCORPORATION AND IN A REGISTRATION RIGHTS AGREEMENT AND AN
INVESTOR'S AGREEMENT, BOTH DATED JULY 16, 1998.
(b) In connection with the transfer or exchange of a Restricted
Security or Securities (other than pursuant to an effective registration
statement under the Securities Act) the transferor of such Restricted
Security or Securities, upon request of the Company, shall deliver to the
Company an opinion of counsel, in substance reasonably satisfactory to the
Company, to the effect that such Restricted Security to be issued upon such
transfer or exchange may be so issued without the foregoing legend;
provided that such Restricted Security nonetheless shall contain a legend
referencing the restrictions contained in the Investor's Agreement of even
date herewith.
(c) Subject to paragraphs (a) and (b) above, the Company shall
register the transfer of all or any whole number of Warrants covered by any
outstanding Warrant Certificate in the Warrant Register upon surrender to
the Company of Warrant Certificates accompanied by a written instrument or
instruments of transfer, in form reasonably satisfactory to the Company,
duly executed by the registered Holder or his attorney duly authorized in
writing. Upon any such registration of transfer a new Warrant Certificate
shall be issued to the transferee and the surrendered Warrant Certificate
promptly shall be canceled by the Company. Warrant Certificates may be
exchanged at the option of the Holder thereof, upon surrender, properly
endorsed by the registered Holders, at the Company, with written
instructions, for other Warrant Certificates evidencing in the aggregate a
like number of Warrants. The Company may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any such exchange or transfer.
Section 2.04. TRANSFER AND EXCHANGE OF WARRANTS. All the restrictions
imposed by this Article II upon the transferability of the Restricted Securities
shall cease and terminate as to any particular Restricted Security when such
Restricted Security shall have been effectively registered under the Securities
Act and applicable state securities laws and sold by the Holder thereof in
accordance with such registration or sold under and pursuant to Rule 144.
Whenever the restrictions imposed by this Article II shall terminate as to any
Restricted Security as herein above provided, the Holder thereof shall be
entitled to receive from the Company, without expense (other than payment by the
Holder of any tax or governmental charge that may be imposed), a new certificate
evidencing such Restricted Security not bearing the restrictive legend otherwise
required to be borne by a certificate evidencing such Restricted Security.
ARTICLE III
COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Holder as follows:
Section 3.01. EXISTENCE; QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
Section 3.02. CORPORATE ACTION. The Company has all necessary corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, the Warrants and the Registration Rights Agreement; the execution,
delivery and performance by the Company of this Agreement, the Warrants and the
Registration Rights Agreement have been duly authorized by all necessary
corporate action on the part of the Company; this Agreement has been duly
executed and delivered by the Company and constitutes, and the Registration
Rights Agreement when executed and delivered by the Company will constitute, the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent that
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, or (b) general principles
of equity (regardless of whether such enforcement is considered in a proceeding
in equity or at law); the Warrants and any Additional Warrants, when executed,
issued and delivered pursuant to this Agreement, will constitute the legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, or (ii) general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law); the Warrant
Shares initially covered by the Warrants and any Additional Warrants will be
duly and validly authorized and reserved for issuance and when paid for, issued
and delivered in accordance with the Warrants, shall be duly and validly issued,
fully paid and nonassessable and free and clear of any Liens; and none of the
Warrant Shares issued pursuant to the terms hereof or the Warrants or Additional
Warrants shall be in violation of any preemptive rights of any Stockholder.
Section 3.03. APPROVALS. Except as contemplated by the Registration Rights
Agreement, no authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority or any other Person which shall
not have been obtained on or prior to the Date of Issuance are necessary for the
execution, delivery or performance by the Company of this Agreement, the
Warrants or the Registration Rights Agreement or for the validity or
enforceability thereof.
Section 3.04. CAPITALIZATION. As of the Date of Issuance of the original
Warrant to Holder, the capitalization of the Company consists solely of Stock
and options and warrants to acquire Stock.
ARTICLE IV
HOLDER'S REPRESENTATIONS AND WARRANTIES
The Holder represents and warrants to the Company as follows:
Section 4.01. PURCHASE ENTIRELY FOR OWN ACCOUNT. The Warrant is being
acquired and, if such Warrant is exercised, the Stock issuable upon such
exercise will be acquired, for investment for the Holder's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the federal or state securities laws.
Section 4.02. INVESTMENT EXPERIENCE. The Holder represents that it can bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Warrant and the Stock issuable upon exercise
thereof. The Holder also represents it has not been organized solely for the
purpose of acquiring the Warrant or the Stock issuable upon exercise thereof.
Section 4.03. RESTRICTED SECURITIES. The Holder understands that the
Warrant and the Stock issuable upon exercise of such Warrant are characterized
as "restricted securities" under the federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public
offering and have not been registered under the Securities Act nor qualified
under applicable state securities laws and that under such laws and applicable
regulations such securities may not be resold without registration under the
Securities Act, except in certain limited circumstances. In this connection, the
Holder represents that it is familiar with Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.
Section 4.04. ACCREDITED INVESTOR. The Holder is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
ARTICLE V
HOLDERS; RIGHTS
Section 5.01. DELIVERY EXPENSES. If any Holder surrenders any Warrant
Certificate or Warrant Shares to the Company or a transfer agent of the Company
for exchange for instruments of other denominations or registered in another
name or names, the Company shall cause such new instruments to be issued and
shall deliver, in each case at the cost of the Holder, from the office of such
Holder or from or to the Company or its transfer agent, the surrendered
instrument and any new instruments issued in substitution or replacement for the
surrendered instrument.
Section 5.02. TAXES. The Company shall pay all transfer taxes which may be
payable in connection with the execution and delivery of this Agreement or the
Registration Rights Agreement or the issuance of the Warrants and Warrant Shares
hereunder or in connection with any modification of this Agreement, the
Registration Rights Agreement or the Warrants and shall hold each Holder
harmless without limitation as to time against any and all liabilities with
respect to all such taxes. The Company shall not, however, be required to pay:
(i) federal, state or local income tax; (ii) any intangible personal property,
franchise or similar tax; or (iii) any transfer tax which may be payable in
respect of any transfer of a Warrant or any transfer involved in the issue and
delivery of shares of Stock in a name other than that in which a Warrant is
registered, and no such issue or delivery shall be made unless and until the
Person requesting such issue has established, to the satisfaction of the
Company, that such tax has been paid. The obligations of the Company under this
Section 5.02 shall survive any termination of this Agreement or the Registration
Rights Agreement, and any cancellation or termination of the Warrants.
Section 5.03. REPLACEMENT OF INSTRUMENTS. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants or Warrant Shares, and (a) in the case of loss, theft or destruction,
of indemnity reasonably satisfactory to it, or (b) in the case of mutilation,
upon surrender or cancellation, thereof, the Company, at the Holder's expense,
shall execute, register and deliver, in lieu thereof, a new certificate or
instrument for (or evidencing the right to purchase) an equal number of Warrants
or Warrant Shares.
Section 5.04. CERTAIN RESTRICTIONS. The Company shall not at any time enter
into an agreement or other instrument, and has not entered into an agreement
currently in effect, making performance hereunder or the issuance of shares of
Stock upon the exercise of any Warrant a default under any such agreement or
instrument.
Section 5.05. INDEMNIFICATION. Each party hereto hereby irrevocably
indemnifies the other and saves it harmless against any and all reasonable out
of pocket losses, expenses or liabilities, including judgments, costs and
reasonable counsel fees and expenses arising out of or in connection with a
breach of this Agreement, except as a direct result of the gross negligence, bad
faith or willful misconduct of such other party.
ARTICLE VI
MISCELLANEOUS
Section 6.01. WAIVER. No failure on the part of any Holder to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement, the Warrants or the Registration Rights
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, the Warrants or
the Registration Rights Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
Section 6.02. NOTICES.
(a) All notices, requests and other communications provided for herein
and in the Warrants (including any waivers or consents under, this
Agreement and the Warrants) shall be given or made in writing:
if to the Company: Xxxxxxx-Xxxxxx, Inc.
000 Xxxxxxxx Xxxx, #000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. XxXxxxxx
Fax No.: (000) 000-0000
with copies to: Xxxxx, Xxxxxxxxx & Xxxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
and
White & Case LLP
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
Fax No.: (000) 000-0000
if to the initial Holder: Colony Investors III, L.P.
c/o Colony Capital, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
if to any other person who is the registered Holder of any Warrants or
Warrant Shares, to the address for such Holder as it appears in the stock
or warrant ledger of the Company; or, in the case of any Holder, at such
other address as shall be designated by such party in a notice to the
Company; or, in the case of the Company, at such other address as the
Company may designate in a notice to the Holders.
(b) All such notices, requests and other communications shall be: (i)
personally delivered, sent by courier guaranteeing overnight delivery or
sent by registered or certified mail, return receipt requested, postage
prepaid, in each case given or addressed as aforesaid; and (ii) effective
upon receipt.
Section 6.03. AMENDMENTS, ETC. Any provision of this Agreement may be
amended or modified only by an instrument in writing signed by (a) the Company
and (b) the Holders of at least a majority of the Warrant Shares issued or
issuable upon exercise of the Warrants; provided, however, that no such
amendment or waiver, without the written consent of all Holders of such shares
and Warrants at the time outstanding, shall amend this Section 6.03.
Section 6.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Section 6.05. SURVIVAL.
(a) All representations and warranties made by the Company herein or
in any certificate or other instrument delivered by it or on its behalf
under this Agreement or the Registration Rights Agreement shall be
considered to have been relied upon by each Holder and shall survive the
issuance of the Warrants or the Warrant Shares regardless of any
investigation made by or on behalf of any Holder. All statements in any
such certificate or other instrument so delivered shall constitute
representations and warranties by the Company hereunder.
(b) All representations and warranties made by the Holders herein
shall be considered to have been relied upon by the Company and shall
survive the issuance to the Holders of the Warrants or the Warrant Shares
regardless of any investigation made by the Company or on its behalf.
Section 6.06. CAPTIONS. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 6.07. COUNTERPARTS. This Agreement may be executed on counterpart
signature pages or in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart signature page or
counterpart.
Section 6.07. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be fully performed in such State.
Section 6.9. SEVERABILITY. If 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.
Section 6.10. DEFECTS IN NOTICE. Failure to file any certificate or notice
or to mail any notice, or any defect in any certificate or notice pursuant to
this Agreement shall not affect in any way the rights of any registered Holder
of a Warrant Certificate or the legality or validity of any adjustment made
pursuant to the provisions of the Warrant, or any transaction giving rise to any
such adjustment, or the legality or validity of any action taken or to be taken
by the Company.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
XXXXXXX-XXXXXX, INC.
By: ____________________________
Name:
Title:
COLONY INVESTORS III, L.P.
By: Colony Capital III, L.P.
By: ColonyGP III, Inc.
By: ____________________________
Name:
Title:
