EXHIBIT 10.5
-------------------------------------------------------
NUCO2 INC.
and
THE INVESTORS PARTY HERETO
---------------
WARRANT AGREEMENT
Dated as of August 25, 2003
---------------
-------------------------------------------------------
TABLE OF CONTENTS
Page
----
Section 1. Definitions, Accounting Terms and Determinations...................1
1.01 Definitions......................................................1
1.02 Accounting Terms and Determinations..............................7
Section 2. Purchase, Sale and Exercise of Warrants............................7
2.01 Authorization and Issuance of Shares and Warrants................7
2.02 The Closing......................................................8
2.03 Initial Holder Representations, Warranties and Agreements........8
2.04 Securities Act Compliance........................................8
2.05 Exercise of Warrants.............................................9
2.06 Issue Price; Original Issue Discount............................10
Section 3. Representations and Warranties....................................10
3.01 Existence.......................................................10
3.02 No Breach.......................................................11
3.03 Corporate Action................................................11
3.04 Approvals.......................................................11
3.05 Investment Company Act..........................................11
3.06 Public Utility Holding Company Act..............................11
3.07 Capitalization..................................................12
3.08 Private Offering................................................12
3.09 SEC Documents; Financial Statements.............................12
Section 4. Transfers Generally; Securities Act Compliance....................12
4.01 Transfers Generally.............................................12
4.02 Transfers of Restricted Securities Pursuant
to Registration Statements and Rule 144, Etc....................13
4.03 Notice of Certain Transfers.....................................13
4.04 Restrictive Legend..............................................13
4.05 Termination of Restrictions.....................................14
Section 5. Additional Provisions Relating to Transfers.......................14
5.01 Disposition of Securities.......................................14
5.02 Transfer Restriction............................................15
5.03 Repurchase of Common Stock......................................15
5.04 Cancellation and Reissuance.....................................15
5.05 Transfer, Division and Combination..............................15
Section 6. Adjustment of Stock Unit..........................................16
6.01 Stock Dividends, Subdivisions and Combinations..................16
6.02 Issuance of Additional Shares of Common Stock...................16
6.03 Issuance of Options.............................................17
(i)
Page
----
6.04 Issuance of Convertible Securities..............................18
6.05 Superseding Adjustment of Stock Unit............................18
6.06 Other Provisions Applicable to Adjustments
Under this Section 6............................................19
Section 7. Consolidation, Merger, Share Exchange, etc.; Distributions........21
7.01 Consolidation, Merger, Share Exchange, etc......................21
7.02 Distributions upon Declaration of Dividend or
Other Distribution..............................................21
7.03 Dilution in Case of Other Securities............................22
Section 8. Notice to Warrant Holders.........................................22
8.01 Notice of Adjustment of Stock Unit or Exercise Price............22
8.02 Notice of Certain Corporate Actions.............................22
8.03 Limitation on Holders' Rights...................................23
Section 9. Reservation and Authorization of Common Stock.....................23
Section 10. Taking of Record; Stock and Warrant Transfer Books...............24
Section 11. Holders' Special Rights..........................................24
11.01 Replacement of Instruments.....................................24
11.02 Restrictions on Certain Action.................................24
11.03 Inspection Rights..............................................25
11.04 Board Attendance...............................................25
11.05 Right to Purchase Equity Securities............................25
Section 12. Registration.....................................................26
12.01 Notice.........................................................26
12.02 Proration......................................................28
12.03 Registration Procedures........................................29
12.04 Holdback on Sales..............................................31
12.05 Expenses.......................................................31
12.06 Indemnification................................................32
12.07 No Other Registration Rights...................................34
12.08 Rule 144.......................................................34
Section 13. Miscellaneous....................................................34
13.01 Waiver.........................................................34
13.02 Notices........................................................34
13.03 Office of the Company..........................................34
13.04 Expenses, Transfer Taxes and Other Charges.....................35
13.05 Amendments, Etc................................................35
13.06 Successors and Assigns.........................................35
13.07 Survival.......................................................36
13.08 Regulation Y...................................................36
13.09 Captions.......................................................36
13.10 Counterparts...................................................36
13.11 Governing Law..................................................36
13.12 Severability...................................................36
(ii)
Page
----
13.13 Entire Agreement...............................................36
13.14 No Third Party Beneficiary.....................................36
SCHEDULE 1 - Schedule of Warrants and Options
SCHEDULE 2 - Authorized and Outstanding Capital Stock
SCHEDULE 3 - Existing Registration Rights
ANNEX 1 - Form of Warrant
(iii)
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of August 25, 2003 among: NuCo2 INC., a
corporation duly organized and validly existing under the laws of the State of
Florida (the "COMPANY"); and each of the investors signatory hereto
(individually, an "INITIAL HOLDER" and, collectively, the "INITIAL HOLDERS").
WHEREAS, in connection with the issuance by the Company of
$30,000,000 aggregate principal amount of Senior Subordinated Notes (the
"NOTES") and as an inducement for the purchase by the Initial Holders of the
Notes, the Company has agreed to issue Warrants to the Initial Holders providing
for the purchase of shares of Common Stock of the Company, in the manner
hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
Section 1. DEFINITIONS, ACCOUNTING TERMS AND DETERMINATIONS.
1.01 DEFINITIONS. Except as expressly provided herein, the following
terms shall have the following meanings (all terms in this Section 1 or in other
provisions of this Agreement in the singular to have the same meanings in the
plural and vice versa):
"1995 STOCK OPTION PLAN" shall mean the Company's 1995 Stock Option
Plan for employees as the same may be amended from time to time.
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares (including
treasury shares) of Common Stock issued or sold by the Company on or after the
date hereof, other than (i) the shares of Common Stock described as being issued
and outstanding in Section 3.07 hereof and (ii) the Option Stock, Options and
Warrants listed on Schedule 1 hereto.
"AFFILIATE" shall have the meaning assigned thereto in Rule 12b-2 of
the Exchange Act. Notwithstanding the foregoing, (a) no individual shall be
deemed to be an Affiliate of a corporation solely by reason of his or her being
an officer or director of such corporation, and (b) none of the Initial Holders
(or any of their Affiliates) shall be an Affiliate of the Company.
"BANK HOLDING COMPANY AFFILIATE" shall mean, with respect to any
Holder that is a BHCA Holder, (i) if such Holder is a bank holding company, any
company controlled by such bank holding company or (ii) the bank holding company
that controls such Holder and any other Person controlled by such bank holding
company.
"BHCA HOLDER" shall mean a bank holding company or a subsidiary of a
bank holding company.
"BOARD" shall mean the Board of Directors of the Company.
Warrant Agreement
-----------------
-2-
"BUSINESS DAY" shall mean any day on which commercial banks are not
authorized or required to close in New York City.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other similar or successor agency of the Federal government with primary
responsibility for administering the Securities Act.
"COMMON STOCK" shall mean the Company's authorized Common Stock, par
value $.001 per share, and any stock into which such Common Stock may thereafter
be changed, and also shall include stock of the Company of any other class
(including, without limitation, any future class(es) of such Common Stock),
which is not preferred as to dividends or assets over any class of stock of the
Company and which is not subject to redemption.
"COMPANY" shall have the meaning assigned to such term in the first
paragraph of this Agreement, and shall include any successors and permitted
assigns of the Company.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
or exercisable for Additional Shares of Common Stock, either immediately or upon
the arrival of a specified date or the happening of a specified event.
"CONVERTIBLE SECURITY VALUE" shall mean the fair market value of a
Convertible Security on the date of issuance, reasonably determined in good
faith by the Board, less the proceeds received by the Company for such
conversion or exchange.
"CURRENT MARKET PRICE", per share of Common Stock, for the purposes
of any provision hereof or of a Warrant at the date herein or therein specified,
shall be deemed to be (a) with respect to any Additional Shares of Common Stock
issued (or to be issued) in a public offering (other than a public offering
effected as a part of a merger or other acquisition transaction by the Company,
in which case paragraph (b) below shall apply), the offering price of such
Additional Shares and (b) otherwise, the average of the daily market prices for
each day during the 20 consecutive trading days immediately preceding such date
as of which such a price can be established in the manner set forth in the next
sentence. The market price for each such trading day shall be the last sale
price on such day as reported in the Consolidated Last Sale Reporting System or
as quoted in the National Association of Securities Dealers Automated Quotation
System, or if such last sale price is not available, the average of the closing
bid and asked prices as reported in either such system. Notwithstanding the
foregoing, the "Current Market Price" per share of Common stock for shares to be
issued in connection with an acquisition of assets or stock, a tender or
exchange offer, a merger or other business combination shall be deemed to be the
price per share as determined in such acquisition, tender or exchange offer,
merger or other business combination agreement.
Warrant Agreement
-----------------
-3-
"CURRENT WARRANT PRICE", for the purpose of any provision hereof or
of a Warrant at the date herein or therein specified, shall mean the amount per
share of Common Stock equal to the quotient resulting from dividing the Exercise
Price per Stock Unit in effect on such date by the number of shares (including
any fractional share) of Common Stock comprising a Stock Unit on such date.
"DATE OF ISSUANCE" shall have the meaning assigned to such term in
Section 11.05 hereof.
"DEMAND NOTICE" shall have the meaning assigned to such term in
Section 12.01 hereof.
"DEMAND REGISTRATION" shall have the meaning assigned to such term
in Section 12.01 hereof.
"DIRECTORS' STOCK OPTION PLAN" shall mean the Company's Directors'
Stock Option Plan for non-employee directors as the same may be amended from
time to time.
"ELECTION NOTICE" shall have the meaning assigned to such term in
Section 11.05 hereof.
"ELECTION PERIOD" shall have the meaning assigned to such term in
Section 11.05 hereof.
"EQUITY SECURITIES" shall mean any securities the rights of which
are in the nature of those of the Company's Common Stock, including, without
limitation, common stock, any securities having the right to vote for the
election of directors, stock appreciation rights, and securities convertible
into any of the foregoing.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time or any replacement act.
"EXERCISE NOTICE" shall have the meaning assigned to such term in
Section 2.05 hereof.
"EXERCISE PRICE" shall have the meaning assigned to such term in the
form of Warrant attached as Annex 1 hereto.
"EXPIRATION DATE" shall have the meaning assigned to such term in
the form of Warrant attached as Annex 1 hereto.
"GAAP" shall mean generally accepted accounting principles applied
on a consistent basis.
Warrant Agreement
-----------------
-4-
"GOVERNMENTAL AUTHORITY" shall mean 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 any such government.
"HOLDER" shall mean any Person who acquires Restricted Warrants
pursuant to the provisions of this Agreement, including, without limitation, the
Initial Holders, any Affiliate of the Initial Holders, any Person who becomes a
party to this Agreement pursuant to Section 5.04 and an Affiliate of such Person
and any permitted transferees of any of the foregoing.
"INITIAL HOLDER" shall have the meaning assigned to such term in the
first paragraph of this Agreement.
"INDEMNIFIED PARTY" shall have the meaning assigned to such term in
Section 12.06 hereof.
"INDEMNIFYING PARTY" shall have the meaning assigned to such term in
Section 12.06 hereof.
"ISSUE PRICE" shall have the meaning assigned to such term in
Section 11.05 hereof.
"LIEN" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, conditional sale or title retaining
contract, sale and leaseback transaction, financing statement filing, or any
other type of lien, charge, encumbrance or preferential arrangement.
"MAJORITY HOLDERS" shall mean Holders of a majority of the Warrant
Stock issued or issuable upon exercise of the Warrants. For purposes of giving
notices hereunder, Holders of Warrants shall be deemed holders of Warrant Stock
issued upon the exercise thereof.
"MAJORITY INITIAL HOLDERS" shall mean Initial Holders of a majority
of the Warrant Stock issued or issuable upon exercise of the Warrants. For
purposes of giving notices hereunder, Initial Holders of Warrants shall be
deemed holders of Warrant Stock issued upon the exercise thereof.
"NOTES" shall have the meaning assigned to such term in the second
paragraph of this Agreement.
"NOTICE OF ISSUANCE" shall have the meaning assigned to such term in
Section 11.05 hereof.
"ON A FULLY DILUTED BASIS" shall mean, with respect to the Common
Stock of the Company outstanding at any time, the number of shares of such
Common Stock then issued and outstanding, assuming full conversion, exercise and
exchange of all issued and outstanding Convertible Securities and Options that
shall be (or may become) exchangeable for, or exercisable or convertible into,
such Common Stock, including Warrants with respect thereto; provided that the
Warrant Agreement
-----------------
-5-
number of shares of Common Stock deemed to be outstanding "on a fully diluted
basis" shall be reduced (without duplication) by the number of shares of Common
Stock purchasable or issuable upon exercise, conversion or exchange of (i)
Options or Convertible Securities at the time of calculation that are Out of the
Money and (ii) Options issued under the Stock Option Plans.
"OPTION" shall mean any warrant, option or other right to subscribe
for or purchase Additional Shares of Common Stock or Convertible Securities,
including those listed on Schedule I hereto.
"OPTION STOCK" shall mean shares of Common Stock not to exceed, in
the aggregate, 1,950,000 shares of Common Stock, issued or issuable in
accordance with the Stock Option Plans, provided that (i) in the case of the
1995 Stock Option Plan, the option exercise price at the time of such grant is
not less than 75% of the fair market value of such shares on the date of such
grant as reasonably determined in good faith by the Stock Option or other
administering Committee of the Board and (ii) the number of shares of Common
Stock specified above shall be adjusted as appropriate to reflect any stock
split, stock consolidation, subdivision or combination affecting the Common
Stock.
"OTHER SECURITIES" shall mean any stock (other than Warrant Stock)
and other securities of the Company or any other Person (corporate or otherwise)
which a Holder at any time shall be entitled to receive, or shall have received,
upon exercise of the Warrants held by such Holder or pursuant to Section 7
hereof, in lieu of or in addition to Warrant Stock, or which at any time shall
be issuable or shall have been issued in exchange for or in replacement of
Warrant Stock or Other Securities received in an earlier exchange, exercise or
replacement of Warrant Stock.
"OUT OF THE MONEY" shall mean (a) in the case of an Option, that the
fair market value of the shares of any Common Stock which the holder thereof is
entitled to purchase or subscribe for is less than the exercise price of such
Option and (b) in the case of a Convertible Security, that the quotient
resulting from dividing the fair market value of such Convertible Security by
the number of shares of any Common Stock into or for which such Convertible
Security is exercisable, convertible or exchangeable is greater than the fair
market value of a share of such Common Stock.
"PARTICIPATING SECURITY" shall mean any security (other than Common
Stock) the rights of the holders of which are not limited to (i) a fixed sum or
percentage of liquidation preference or principal amount, (ii) a sum determined
by reference to a formula based on a published index of interest rates, (iii) an
interest rate publicly announced by a financial institution or a similar index
of interest rates in respect of interest or dividends or (iv) a fixed sum or
percentage of principal amount or liquidation preference in any distribution of
assets.
"PERSON" shall mean a corporation, an association, a limited
liability company, a partnership, a joint venture, an organization, a business,
an individual or a Government Authority.
Warrant Agreement
-----------------
-6-
"PREFERRED STOCK" shall mean, as to any Person, any capital stock of
such Person which is preferred as to dividends or assets over any other class of
any other stock of such Person.
"REGULATED HOLDER" shall mean a Holder which is a bank, a bank
holding company or an Affiliate of any of the foregoing. A Regulated Holder
shall be deemed to have a "Regulatory Problem" when (i) such Regulated Holder's
investment in the Warrants and/or Warrant Stock exceeds any limitation to which
it is subject, or is otherwise not permitted, under any law, rule or regulation
of any Governmental Authority (including any position to that effect taken by
such Governmental Authority), or (ii) restrictions are imposed on such Regulated
Holder which, in its reasonable judgment, make it illegal or unduly burdensome
for such Regulated Holder to continue to hold such Warrants and/or Warrant
Stock.
"REGULATION Y" shall mean Regulation Y promulgated by the Board of
Governors of the Federal Reserve System (12 C.F.R. 225) or any successor
regulation.
"REPRESENTATIVE" shall have the meaning assigned to such term in
Section 11.04 of this Agreement.
"RESTRICTED CERTIFICATE" shall mean a certificate for Common Stock,
Warrants or Other Securities bearing the restrictive legend set forth in Section
4.04 hereof.
"RESTRICTED SECURITIES" shall mean Restricted Stock and Restricted
Warrants.
"RESTRICTED STOCK" shall mean Common Stock evidenced by a Restricted
Certificate.
"RESTRICTED WARRANTS" shall mean Warrants evidenced by a Restricted
Certificate.
"RULE 144" shall mean Rule 144 as promulgated by the Commission
under the Securities Act and any successor provision thereto, all as the same
shall be in effect at the time.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the time or any replacement act.
"SELLER" shall have the meaning assigned to such term in Section
12.01 hereof.
"SELLER NOTICE" shall have the meaning assigned to such term in
Section 12.01 hereof.
"SHAREHOLDER" shall mean any Person who directly or indirectly owns
any shares of Common Stock of the Company.
Warrant Agreement
-----------------
-7-
"STOCK OPTION PLANS" shall mean the Company's 1995 Stock Option Plan
and the Company's Directors' Stock Option Plan.
"STOCK UNIT" shall mean one share of Common Stock, as such Common
Stock is constituted on the date hereof, and thereafter shall mean such number
of shares (including any fractional shares) of Common Stock and Other
Securities, cash or other property as shall result from the adjustments
specified in Sections 6 and 7 hereof.
"SUBSIDIARY" shall mean, for any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation or other entity is at the time directly or indirectly owned or
controlled by such Person and/or one or more Subsidiaries of such Person.
"TRANSFER" shall mean any disposition of any Restricted Securities,
or of any interest in any thereof, which would constitute a sale thereof within
the meaning of the Securities Act.
"WARRANTS" shall mean the warrant certificates covering the purchase
of Stock Units, each in the form of Annex 1 to this Agreement, originally issued
by the Company pursuant to Section 2 hereof, and all Warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and expiry
date, except as to the number of Stock Units for which they may be exercised and
the Exercise Price.
"WARRANT STOCK" shall mean the shares of Common Stock of the Company
purchasable or purchased upon the exercise of Warrants issued by the Company,
including any such Common Stock into which such Common Stock may thereafter be
changed.
1.02 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise may be
expressly provided herein, all accounting terms used herein shall be
interpreted, and all certificates and reports as to financial matters required
to be delivered to the Holders hereunder and under the Warrants shall be
prepared, in accordance with GAAP. All calculations made for purposes of
determining compliance with the terms of this Agreement and the Warrants shall
(except as may be expressly provided herein) be made by application of GAAP.
Section 2. PURCHASE, SALE AND EXERCISE OF WARRANTS.
2.01 AUTHORIZATION AND ISSUANCE OF SHARES AND WARRANTS. The Company
has authorized: (a) the issue of the Warrants for issuance to the Initial
Holders pursuant to this Agreement; and (b) the reservation for issuance of such
number of shares of its Common Stock as shall be issuable upon exercise of the
Warrants.
Warrant Agreement
-----------------
-8-
2.02 THE CLOSING.
(a) The Company shall issue to each Initial Holder, on the date
hereof and for no cash consideration, Warrants covering such number of Stock
Units as is specified opposite the name of such Initial Holder on the signature
page(s) hereto. The number of shares of Common Stock comprising each Stock Unit
covered by the Warrants issued under this Agreement shall be subject to
adjustment as provided in Sections 6 and 7 hereof.
(b) On the date hereof, the Company shall deliver to each Initial
Holder a single certificate for the Warrants to be acquired by such Initial
Holder hereunder, registered in the name of such Initial Holder, except that, if
such Initial Holder shall notify the Company in writing prior to such issuance
that it desires certificates for Warrants to be issued in other denominations or
registered in the name or names of any Person or Persons referred to in Section
5.01(a)(i) or (ii) hereof or any nominee or nominees for its or their benefit,
then the certificates for Warrants to be issued by the Company shall be issued
to such Initial Holder in the denominations and registered in the name or names
specified in such notice.
(c) On the date hereof, the Company will deliver to each Initial
Holder a legal opinion from counsel to the Company in form and substance
reasonably satisfactory to each Initial Holder.
2.03 INITIAL HOLDER REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Each
Initial Holder represents and warrants to, and agrees with the Company that (a)
such Initial Holder is purchasing for its own account, and not with a view to
the resale or distribution of such Warrants or the Warrant Stock or any part
thereof, and such Initial Holder is prepared to bear the economic risk of
retaining such Warrants and the Warrant Stock for an indefinite period, all
without prejudice, however, to the right of such Initial Holder at any time, in
accordance with this Agreement, lawfully to sell or otherwise to dispose of all
or any part of such Warrants or the Warrant Stock held by it, (b) such Initial
Holder is an "accredited investor" (as defined in Rule 501 of Regulation D
promulgated under the Securities Act), (c) such Initial Holder is experienced in
evaluating and investing in securities, and understands that the Warrants and
the Warrant Stock will be restricted securities, and that a legend to that
effect shall be placed on the Restricted Securities, and no public market shall
exist for the disposition or transfer of such Restricted Securities, and (d) the
acquisition, holding and any transfer of any Restricted Securities by an Initial
Holder shall be in compliance with all laws applicable to such Initial Holder.
2.04 SECURITIES ACT COMPLIANCE. Each Initial Holder understands that
the Company has not registered or qualified the Warrants or the Warrant Stock
under the Securities Act or any applicable state securities laws and each
Initial Holder agrees that neither the Warrants nor the Warrant Stock shall be
sold or offered for sale without registration under the Securities Act or the
availability of an exemption therefrom, all as more fully provided in Section 4
hereof.
Warrant Agreement
-----------------
-9-
2.05 EXERCISE OF WARRANTS. On and after the date hereof and until
5:00 p.m., New York City time, on the Expiration Date, each Holder may, on one
or more occasions, on any Business Day, in whole or in part:
(a) exercise for cash all or some of the Warrants held by it; and
(b) convert all or some of the Warrants held by it into the number
of shares of Common Stock for each Stock Unit evidenced by such Warrant
which is being so converted, equal to (a)(i) the product of (x) the number
of shares of Common Stock comprising a Stock Unit at the time of such
conversion and (y) the Current Market Price per share of Common Stock at
the time of such conversion minus (ii) the Exercise Price per Stock Unit
at the time of such conversion, divided by (b) the Current Market Price
per share of Common Stock at the time of such conversion,
in each case by delivering to the Company, at its office maintained for such
purpose pursuant to Section 13.03 hereof:
(i) a written notice (the "Exercise Notice") of such Holder's
election to exercise such Warrant or convert such Warrant, as the case may
be, in the form of the Exercise Form set out at the end thereof (or a
reasonable facsimile thereof), which notice shall specify the number of
Stock Units to be purchased or converted, as the case may be; and
(ii) such Warrant,
and, in the case of an exercise of such Warrant, a certified or bank check or
checks payable to the Company in an aggregate amount equal to the aggregate
Exercise Price for the number of Stock Units as to which such Warrant is being
exercised. Upon receipt thereof, the Company shall, as promptly as practicable
and in any event within five Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to such Holder a stock certificate
or certificates representing the aggregate number of shares of Warrant Stock and
Other Securities issuable upon such exercise or conversion and any other
property to which such Holder is entitled by virtue of the exercise of any
Warrants.
If a Holder is a BHCA Holder, such Holder shall not, and shall not
permit any of its Bank Holding Company Affiliates to, exercise any Warrant if,
after giving effect to such exercise, (i) such Holder and its Bank Holding
Company Affiliates would own more than 5% of the total issued and outstanding
shares of Common Stock on a fully-diluted basis or (ii) such Holder would be
deemed under Regulation Y to have the power to exercise, directly or indirectly,
a controlling influence over the management or policies of, or would otherwise
control, the Company unless such Holder is a financial holding company and
exercises such Warrant in reliance on, and in compliance with, the merchant
banking exemption set forth in Regulation Y. For purposes of clause (ii)of this
paragraph, a reasoned opinion of counsel to such Holder delivered to such Holder
(which is based on facts and circumstances deemed appropriate by such counsel)
to the effect that such Holder does not have the power to exercise such a
controlling influence or otherwise control the Company shall be conclusive.
Warrant Agreement
-----------------
-10-
The stock certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in the Exercise Notice and
shall be registered in the name of such Holder or such name or names as shall be
designated in such Exercise Notice. Such stock certificate or certificates shall
be deemed to have been issued and such Holder or any other Person so designated
to be named therein shall be deemed to have become a holder of record of such
shares, including, to the extent permitted by law, the right to vote such shares
or to consent or to receive notice as a Shareholder, as of the date on which the
last of the Exercise Notice, payment of the Exercise Price and the Warrant to
which such exercise relates is received by the Company as aforesaid, and all
taxes required to be paid by Holder, if any, pursuant to Section 13.04(c)
hereof, prior to the issuance of such shares have been paid. If such Warrant
shall have been exercised or converted only in part, the Company shall, at the
time of delivery of the certificate or certificates representing Warrant Stock
and other securities, execute and deliver to such Holder a new Warrant
evidencing the rights of such Holder to purchase (or convert) the unpurchased
(or unconverted) Stock Units called for by such Warrant, which new Warrant shall
in all other respects be identical with the surrendered Warrant.
All shares of Common Stock issuable upon the exercise or conversion
of a Warrant shall, upon payment therefor in accordance herewith, be duly and
validly issued by the Company, fully paid and nonassessable and free and clear
of all Liens.
The Company shall not be required to issue a fractional share of
Common Stock or Other Securities upon exercise or conversion of any Warrant. As
to any fraction of a share of Common Stock or Other Securities which a Holder
would otherwise be entitled to purchase upon such exercise or conversion, the
Company may in lieu of the issuance of a fractional share pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
Current Market Price per share of Common Stock or Other Securities on the date
of exercise.
2.06 ISSUE PRICE; ORIGINAL ISSUE DISCOUNT. Having considered all
facts relevant to a determination of the value of the Notes and the Warrants
being acquired by the Initial Holders, the Company and the Initial Holders have
concluded and do hereby agree that, for the purposes of Section 305 and of
Section 1273 of the Code, and for purposes of determining any original issue
discount with respect to the Notes to be issued at the closing hereof, the issue
price for the Notes and the Warrants is $28,594,485 and $1,405,515,
respectively. The Company and the Holders agree not to take a position on any
income tax return, before any governmental agency charged with collection of any
income tax or in any judicial proceeding that is inconsistent herewith, unless
required to do so pursuant to a "Determination" within the meaning of Section
1313(a)(i) of the Code.
Section 3. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants to the Initial Holders that:
3.01 EXISTENCE. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida.
Warrant Agreement
-----------------
-11-
3.02 NO BREACH. Except as described in Section 3.04 hereof, none of
the execution and delivery of this Agreement and the Warrants, the consummation
of the transactions herein and therein contemplated and compliance with the
terms and provisions hereof and thereof will conflict with or result in a breach
of, or require any consent under, the charter or by-laws of the Company or any
applicable law or regulation, or any order, writ, injunction or decree of any
court or Governmental Authority, or any agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
or to which any of them is subject, or constitute a default under any such
agreement or instrument, which conflict, breach, failure to obtain consent or
default would have a material adverse effect on the financial condition of the
Company and its Subsidiaries, taken as a whole, or on the ability of the Company
to perform its obligations hereunder.
3.03 CORPORATE ACTION. The Company has all necessary corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the Warrants; the execution, delivery and performance by the
Company of this Agreement and the Warrants have been duly authorized by all
necessary corporate action (including all required shareholder action) on the
part of the Company; this Agreement has been duly executed and delivered by the
Company and constitutes, and the Warrants when executed, issued and delivered
pursuant to this Agreement will constitute, valid and legally binding
obligations of the Company entitled to the benefits provided therein, and the
Warrant Stock initially covered by the Warrants shall, when issued and delivered
against payment therefor in accordance with the Warrants, be duly and validly
issued, fully paid and nonassessable; and the Warrants when executed and
delivered by the Company will constitute, its legal, valid and binding
obligations, enforceable against it in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally, and by general principles of equity
(regardless of whether enforcement is sought at equity or in law).
3.04 APPROVALS. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Company of this Agreement or of the
Warrants or for the validity or enforceability hereof or thereof. Any such
action required to be taken as a condition to the execution and delivery of this
Agreement and the Warrants, or the issuance of the Warrants, has been duly taken
by all such Governmental Authorities or other Persons, as the case may be.
3.05 INVESTMENT COMPANY ACT. Neither the Company nor any of its
Subsidiaries is an "investment company", or a company "controlled by" an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
3.06 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company nor any
of its Subsidiaries is a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Warrant Agreement
-----------------
-12-
3.07 CAPITALIZATION.
(a) Upon the issuance of the Warrants under this Agreement, the
total number of shares of capital stock which the Company has authority to issue
and the outstanding shares of the Company will be as set forth in Schedule 2
hereto. Upon the issuance of the Warrants under this Agreement, the Company
shall not have outstanding any stock or securities convertible into or
exchangeable for any shares of capital stock nor shall it have outstanding any
rights to subscribe for or to purchase, or any Options for the purchase of, or
any agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, any capital stock or
stock or securities convertible into or exchangeable for any capital stock other
than (i) the Warrants to be issued pursuant to this Agreement, and (ii) the
Option Stock, Options and Warrants listed on Schedule 1.
(b) There is not in effect on the date hereof any agreement by the
Company pursuant to which any holders of securities of the Company have a right
to cause the Company to register such securities under the Securities Act other
than (i) this Agreement and (ii) the agreements and instruments listed on
Schedule 3.
3.08 PRIVATE OFFERING. The purchases to be made by the Initial
Holders pursuant to this Agreement are to be separate and several purchases. The
Company agrees that neither it nor anyone acting on its behalf has offered or
will offer the Warrants or the Warrant Stock, or any part thereof, or any
similar securities for issue or sale to, or has solicited or will solicit any
offer to acquire any of the same from, anyone so as to bring the issuance and
sale of the Warrants within the provisions of Section 5 of the Securities Act.
3.09 SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed in a
timely manner all documents that the Company was required to file with the
Commission under Sections 13, 14(a) and 15(d) of the Exchange Act, since its
initial public offering. As of their respective filing dates, all documents
filed by the Company with the Commission ("SEC Documents") complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as applicable. None of the SEC Documents as of their respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents (the "FINANCIAL STATEMENTS") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the Commission with respect thereto. The Financial Statements
have been prepared in accordance with GAAP and fairly present the consolidated
financial position of the Company and any Subsidiaries at the dates thereof and
the consolidated results of their operations and consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments).
Section 4. TRANSFERS GENERALLY; SECURITIES ACT COMPLIANCE.
4.01 TRANSFERS GENERALLY. Except as otherwise permitted by Section 5
hereof, the Restricted Securities shall only be transferable upon the conditions
specified in this Section 4, which conditions are intended, among other things,
Warrant Agreement
-----------------
-13-
to insure compliance with the provisions of Regulation Y and the Securities Act
in respect of the transfer of any Restricted Securities. Any Holder shall, by
its acceptance of any Warrant hereunder, be deemed to have made the
representations, warranties and agreements set forth in Section 2.03 hereof on
the date of such acceptance.
4.02 TRANSFERS OF RESTRICTED SECURITIES PURSUANT TO REGISTRATION
STATEMENTS AND RULE 144, ETC. The Restricted Securities may be offered or sold
by the Holder thereof pursuant to (a) an effective registration statement under
the Securities Act, (b) to the extent applicable, Rule 144 or (c) subject to
Section 4.03 hereof, any other applicable exemption from the Securities Act.
4.03 NOTICE OF CERTAIN TRANSFERS. If any Holder of any Restricted
Security desires to transfer such Restricted Security other than pursuant to an
effective registration statement, Rule 144 under the Securities Act an
applicable exemption from the Securities Act or in accordance with Section
5.01(a) hereof, such Holder shall deliver to the Company at least 7 Business
Days' prior written notice with respect to the proposed transfer, together with
an opinion (at such Holder's expense) of Milbank, Tweed, Xxxxxx & XxXxxx LLP, or
such other counsel reasonably satisfactory to the Company, to the effect that an
exemption from registration under the Securities Act is available and specifying
the applicable exemption.
4.04 RESTRICTIVE LEGEND. Unless and until otherwise permitted by
this Section 4, each certificate for Warrants issued under this Agreement, each
certificate for any Warrants issued to any subsequent transferee of any such
certificate, each certificate for any Warrant Stock issued upon exercise of any
Warrant, each certificate for any Warrant Stock issued to any subsequent
transferee of any such certificate, each certificate for any Other Securities
issued in connection with the exercise of any Warrant and each certificate for
any Other Securities issued to any subsequent transferee of any such certificate
in respect thereof, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD
OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM."
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THAT
CERTAIN WARRANT AGREEMENT DATED AS OF AUGUST 25, 2003,
BETWEEN NUCO2 INC., A FLORIDA CORPORATION, AND CERTAIN
INITIAL HOLDERS, AS SUCH WARRANT AGREEMENT MAY BE MODIFIED
AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
Warrant Agreement
-----------------
-14-
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. A COPY OF THE FORM OF SUCH WARRANT
AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE AFORESAID CORPORATION. THE HOLDER
OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE,
AGREES TO BE BOUND BY THE PROVISIONS OF SUCH WARRANT
AGREEMENT."
4.05 TERMINATION OF RESTRICTIONS. The restrictions imposed
by this Section 4 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 sold by the Holder thereof in
accordance with such registration or sold under and pursuant to Rule
144 or are eligible to be sold pursuant to paragraph (k) of Rule 144.
Whenever the restrictions imposed by this Section 4 shall terminate as
to any Restricted Security as hereinabove provided, the Holder thereof
shall, upon written request, be entitled to receive from the Company,
without expense, a new certificate evidencing such Restricted Security
not bearing the restrictive legend otherwise required to be borne by a
certificate evidencing such Restricted Security.
Section 5. ADDITIONAL PROVISIONS RELATING TO TRANSFERS.
5.01 DISPOSITION OF SECURITIES. Subject to compliance with all of
the provisions of Section 4 hereof, any Holder shall have the right to transfer
any Restricted Securities to any Person.
(a) Subject to compliance with the provisions of Section 4 hereof,
except with respect to the requirement for an opinion of counsel to the Holder,
which shall not be required under this Section 5.01(a), any Holder shall have
the right to transfer any Restricted Securities:
(i) to any Person who at the time owns
(directly or indirectly) at least a majority of the
voting capital stock or other equity interests of such
Holder;
(ii) to any Person at least a majority of
whose voting capital stock shall at the time be owned
(directly or indirectly) by such Holder or by any Person
who owns (directly or indirectly) at least a majority of
the voting capital stock or other equity interests of
such Holder; or
(iii) to another Initial Holder.
(b) If, in the reasonable judgment of a Holder, a transfer is
required to be effected by such Holder because of a Regulatory Problem, the
Company shall use reasonable efforts to assist such Holder in disposing of its
Warrants and Warrant Stock, subject to and in accordance with the terms of this
Agreement and applicable law, to any prospective purchaser which is a financial
institution or other institutional investor approved by the Company (which
approval shall not be unreasonably withheld or delayed) of the Warrants or
Warrant Stock owned by such Holder as such purchaser may reasonably request
(provided that, the Company shall not be required to make available to such
Warrant Agreement
-----------------
-15-
purchaser any documents or information if doing so would, in the reasonable
judgment of counsel to the Company, compromise any attorney-client privilege
existing with respect thereto) or to a direct or indirect competitor of the
Company.
(c) In the event of any underwritten public offering of Restricted
Securities in which a Holder which is subject to the provisions of Regulation Y
is participating, the Company shall use its reasonable efforts to assist the
underwriter in ensuring that any Warrants or Warrant Stock issued by the Company
and sold by such Holder are widely disseminated.
5.02 TRANSFER RESTRICTION. Notwithstanding anything in this
Agreement or the Warrants to the contrary, no Holder subject to the provisions
of Regulation Y shall transfer any Warrants or shares of Warrant Stock issued by
the Company and held by it, if, as a result of such transfer or the right to
effect such transfer, such Holder would be deemed under Regulation Y to have the
power to exercise, directly or indirectly, a controlling influence over the
management or policies of, or otherwise control, the Company (and, for purposes
of this restriction, a reasoned opinion of counsel to such Holder delivered to
such Holder (which is based on facts and circumstances deemed appropriate by
such counsel) to the effect that such Holder does not have the power to exercise
such a controlling influence or otherwise control the Company shall be
conclusive).
5.03 REPURCHASE OF COMMON STOCK. The Company shall give 30 days
prior written notice to each Holder before purchasing, redeeming, retiring or
otherwise acquiring any shares of Common Stock of the Company.
5.04 CANCELLATION AND REISSUANCE. If any Initial Holder or any of
its Affiliates assigns or otherwise transfers any of its Notes, or assigns any
of its rights or obligations thereunder to any Person, such Initial Holder may
request (upon 10 Business Days' prior notice to the Company) that a number of
Warrants held by such Initial Holder be cancelled on the date of such assignment
and transfer and that a like number of Warrants be issued by the Company to the
Person to whom such Notes are being assigned or otherwise transferred. Upon the
date specified in such request, the Company shall issue, and the Initial Holder
shall deliver to the Company for cancellation, such number of Warrants as
aforesaid and the Company and such Person shall execute and deliver an
instrument pursuant to which such Person becomes a "Holder" hereunder entitled
to all the benefits accorded to a Holder under, and subject to all of the
obligations imposed upon a Holder pursuant to, this Agreement and the Warrants.
5.05 TRANSFER, DIVISION AND COMBINATION. Subject to Sections 4 and 5
hereof, transfer of a Warrant and all rights thereunder, in whole or in part
(the "Transferred Warrant"), shall be registered on the books of the Company to
be maintained for such purpose, upon surrender of such Transferred Warrant at
the office of the Company maintained for such purpose pursuant to Section 13.03
hereof, together with a written assignment substantially in the form set out at
the end of such Transferred Warrant, duly executed by the relevant Holder and
payment of funds sufficient to pay any transfer taxes payable upon the making of
such transfer. Upon such surrender and, if required, such payment, the Company
shall, subject to Sections 4 and 5 hereof and the immediately following
sentence, (a) execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in such instrument of
Warrant Agreement
-----------------
-16-
assignment, (b) issue to the assignor a new Warrant evidencing the portion of
such Transferred Warrant not so assigned or transferred and (c) promptly cancel
such Transferred Warrant. A Warrant, if properly assigned in compliance with
Sections 4 and 5 hereof, may be exercised by an assignee for the purchase of
shares of Common Stock without having a new Warrant or Warrants issued.
Notwithstanding any provision herein to the contrary, the Company shall not be
required to register the transfer of Warrants or Warrant Stock in the name of
any Person who acquired such Warrant (or part thereof) or any Warrant Stock
otherwise than in accordance with this Agreement.
The Company shall maintain with its transfer agent or at its
aforesaid office, books for the registration and transfer of the Warrants.
Section 6. ADJUSTMENT OF STOCK UNIT. The number of shares of Common
Stock comprising a Stock Unit shall be subject to adjustment from time to time
as set forth in this Section 6. All of the adjustments referred to in this
Section 6 shall only apply to Warrants which have not yet been exercised. The
Company shall not create any class of Common Stock which carries any rights to
dividends or assets differing in any respect from the rights of the Common Stock
on the date hereof.
6.01 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) declare or pay a dividend payable in Additional Shares of Common
Stock, or
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the number of shares of Common Stock comprising a Stock Unit immediately
after the occurrence of any such event shall be adjusted to equal the number of
shares of Common Stock which a record holder of the number of shares of Common
Stock comprising a Stock Unit immediately prior to the happening of such event
would own or be entitled to receive after the happening of such event.
6.02 Issuance of Additional Shares of Common Stock. If at any time
the Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price at the time the
Additional Shares of Common Stock are issued, then the number of shares of
Common Stock thereafter comprising a Stock Unit shall be adjusted to that number
determined by multiplying the number of shares of Common Stock comprising a
Stock Unit immediately prior to such adjustment by a fraction (a) the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Additional Shares of Common Stock plus the number
Warrant Agreement
-----------------
-17-
of such Additional Shares of Common Stock so issued, and (b) the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to the issuance of such Additional Shares of Common Stock plus the number
of shares of Common Stock which the aggregate consideration for the total number
of such Additional Shares of Common Stock so issued would purchase at the
Current Market Price. For purposes of this Section 6.02, for all issuances of
shares of Common Stock except for those shares issued in connection with an
acquisition of assets or stock, a tender or exchange offer, a merger or other
business combination, the date as of which the Current Market Price shall be
computed shall be the earlier of (i) the date on which the Company shall enter
into a firm contract for the issuance of such Additional Shares of Common Stock
and (ii) the date of actual issuance of such Additional Shares of Common Stock.
Subject to Section 6.05 hereof, no further adjustment of the number of shares of
Common Stock comprising a Stock Unit shall be made under this Section 6.02 upon
the issuance of any Additional Shares of Common Stock:
(a) for which an adjustment is provided under Section 6.01 hereof;
(b) which are issued pursuant to the exercise of any Options or the
conversion, exchange or exercise of any Convertible Securities, if any
such adjustment shall previously have been made upon the issuance of such
Options or Convertible Securities (or upon the issuance of any Option
therefor) pursuant to Section 6.03 or 6.04 hereof; or
(c) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 7.02 hereof.
6.03 ISSUANCE OF OPTIONS. If at any time the Company shall issue or
sell, or shall fix a record date for the determination of holders of any class
of securities entitled to receive, any Options, whether or not the rights to
purchase thereunder are immediately exercisable, and the consideration received
by the Company in payment for such Options (determined in accordance with
Section 6.06(a) hereof) shall be less than the Current Market Price in effect on
the date of and immediately prior to such issuance, sale or fixing of a record
date, then the number of shares of Common Stock thereafter comprising a Stock
Unit shall be adjusted as provided in Section 6.02 hereof on the basis that (a)
the maximum number of Additional Shares of Common Stock issuable pursuant to all
such Options shall be deemed to have been issued as of (and, accordingly, the
date as of which the Current Market Price shall be computed shall be) the
computation date specified in the next succeeding sentence of this Section 6.03,
and (b) the aggregate consideration for such maximum number of Additional Shares
of Common Stock shall be (subject to Section 6.05 hereof) the consideration
received by the Company for the issuance or sale of such Additional Shares of
Common Stock pursuant to the terms of such Options or pursuant to the terms of
such Convertible Securities. For purposes of this Section 6.03, the computation
date for clause (a) above shall be the earlier of (i) the date on which the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive any such Options, (ii) the date on which the
Company shall enter into a firm contract for the issuance or sale of such
Options and (iii) the date on which the Company shall issue or sell such
Options. No further adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made under this Section 6.03 upon the issuance
or sale of any Options to subscribe for or purchase any Additional Shares of
Warrant Agreement
-----------------
-18-
Common Stock or any Convertible Securities or upon the subsequent issue or sale
of Additional Shares of Common Stock upon the exercise of such Options, if any
such adjustment shall previously have been made upon the issuance or sale of
such Option or upon the setting of a record date therefor, or upon any deemed
issuance or sale of such Additional Shares of Common Stock, as a distribution or
a dividend which is distributed or declared and paid in accordance with Section
7.02 hereof. Notwithstanding the foregoing, any issuance of an Option which is
issued together with a debt security of the Company, as a unit, shall be treated
for the purpose of this Section 6 as the issuance of a Convertible Security.
6.04 ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall issue or sell any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the
consideration received by the Company in payment for such Convertible Securities
shall be less than the Convertible Security Value thereof, then the number of
shares of Common Stock thereafter comprising a Stock Unit shall be increased to
a number of shares of Common Stock having a value immediately following the
computation date (as established below) equal to the value of the number of
shares comprising such Stock Unit immediately before such increase. For this
purpose, the value before the increase will be the Current Market Price of the
Common Stock (determined as at the date immediately preceding such increase)
divided by the number of shares of Common Stock outstanding on a fully diluted
basis, and the value immediately following the computation date shall be the
foregoing value, except that the numerator shall be the Current Market Price
plus the cash amount paid to the Company for such Convertible Securities less
the Convertible Security Value of such Convertible Securities on issuance and
the denominator shall be increased by the number of Additional Shares of Common
Stock issuable on exercise of such Convertible Securities. For purposes of this
Section 6.04, the computation date shall be the earliest of (i) the date on
which the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any such Convertible Securities, (ii) the
date on which the Company shall enter into a firm contract for the issuance or
sale of such Convertible Securities and (iii) the date of actual issuance or
sale of such Convertible Securities. No further adjustment of the number of
shares of Common Stock comprising a Stock Unit shall be made under this Section
6.04 upon the issuance or sale of any Convertible Securities or the conversion
or exchange of such Convertible Securities into Additional Shares of Common
Stock:
(A) which are issued or sold pursuant to the
exercise of any Option therefor, if any such adjustment shall
previously have been made upon the issuance or sale of an Option
relating to such Convertible Securities pursuant to Section 6.03
hereof; or
(B) if any such adjustment in respect thereof shall
previously have been made upon the setting of a record date
therefor, or upon any deemed issuance or sale of such Convertible
Securities; or
(C) as a distribution or a dividend which is
distributed or declared and paid in accordance with Section 7.02
hereof.
6.05 SUPERSEDING ADJUSTMENT OF STOCK UNIT. If, at any time after any
adjustment of the number of shares of Common Stock comprising a Stock Unit shall
have been made pursuant to Section 6.03 or 6.04 hereof as a result of the
issuance of Options or Convertible Securities, or after any new adjustment of
the number of shares of Common Stock comprising a Stock Unit shall have been
Warrant Agreement
-----------------
-19-
made pursuant to this Section 6.05, (a) such Options or the right of conversion,
exchange or exercise of such Convertible Securities shall expire, and all or a
portion of such Options or the right of conversion, exchange or exercise with
respect to all or a portion of such Convertible Securities, as the case may be,
shall not have been exercised or treated as having been exercised or otherwise
canceled or acquired by the Company in connection with any settlement
(including, without limitation, any cash settlement) of such Options or the
rights of conversion, or exchange or exercise of such convertible Securities, or
(b) there has been any change (whether by the passage of time or otherwise) in
the number of shares issuable upon exercise, conversion or exchange of such
Options or Convertible Securities (including as a result of the operation of
antidilution provisions applicable thereto), or (c) the consideration per share,
for which Additional Shares of Common Stock are issuable pursuant to such
Options or the terms of any Convertible Securities, or the maturity of any such
Convertible Security, shall be changed (whether by the passage of time or
otherwise) then such previous adjustment shall be rescinded and annulled and the
Additional Shares of Common Stock which were deemed to have been issued by
virtue of the computation made in connection with the adjustment so rescinded
and annulled shall no longer be deemed to have been issued by virtue of such
computation. Thereupon, a recomputation shall be made of the effect of such
Options or Convertible Securities on the basis of:
(i) treating the number of Additional Shares of Common
Stock, if any, theretofore actually issued or sold pursuant to the
previous exercise of such Options or such right of conversion or
exchange, as having been issued or sold on the date or dates of such
issuance as determined for purposes of such previous adjustment and
for the consideration actually received therefor;
(ii) treating the maximum number of Additional Shares of
Common Stock (A) issuable pursuant to all Options which then remain
outstanding and (B) necessary to effect the conversion or exchange
of all Convertible Securities which then remain outstanding, as
having been issued (subject, however, to further adjustment under
this Section 6.05); and
(iii) making the computations called for in Section 6.04
hereof on the basis of the revised terms of such Convertible
Securities as if the securities being subject to recomputation were
newly issued as of the relevant recomputation date and, if and to
the extent called for by the foregoing provisions of this Section 6
on the basis aforesaid, a new adjustment of the number of shares of
Common Stock comprising a Stock Unit shall be made, and such new
adjustment shall supersede the previous adjustment so rescinded and
annulled.
6.06 Other Provisions Applicable to Adjustments Under this Section
6. The following provisions shall be applicable to the making of adjustments of
the number of shares of Common Stock comprising a Stock Unit hereinbefore
provided for in this Section 6, irrespective of the accounting treatment of any
consideration described below:
(a) COMPUTATION OF CONSIDERATION. To the extent that any Additional
Shares of Common Stock, any Options or any Convertible Securities shall be
issued for cash consideration, the consideration received by the Company
Warrant Agreement
-----------------
-20-
therefor shall be deemed to be the amount of cash received by the Company
therefor, or, if such Additional Shares of Common Stock, Options or
Convertible Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock, Options
or Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering
price. To the extent that such issuance or sale shall be for consideration
other than cash, then the amount of such consideration shall be deemed to
be the fair market value of such consideration at the time of such
issuance, as reasonably determined by the Board. The consideration for any
Additional Shares of Common Stock issuable pursuant to any Option to
subscribe for or purchase the same shall be the consideration received or
receivable by the Company for the sale or issuance of such Option plus the
additional consideration payable to the Company upon the exercise thereof
in full. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities shall be the
consideration paid or payable to the Company in respect of the
subscription for, sale or issuance of such Convertible Securities plus the
additional consideration payable to the Company upon the conversion or
exchange thereof in full. In case of the issuance at any time of any
Additional Shares of Common Stock in payment or satisfaction of any
dividend upon any class of stock other than Common Stock, the Company
shall be deemed to have received for such Additional Shares of Common
Stock consideration equal to the amount of such dividend so paid or
satisfied.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
Section 6 shall be made whenever and as often as any specified event
requiring an adjustment shall occur except that any adjustment of the
number of shares of Common Stock comprising a Stock Unit that would
otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 6.01 hereof) up to but not beyond the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the aggregate Exercise Price for all
Warrants then outstanding. Any adjustment representing a change of less
than such minimum percent (except as aforesaid) shall be carried forward
and made as soon as such adjustment, together with other adjustments
required by this Section 6 and not previously made, would result in a
minimum adjustment on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be taken into
account to the nearest one-hundredth of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. (i) If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution thereof to
Shareholders, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then no adjustment shall be
Warrant Agreement
-----------------
-21-
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled, and no
adjustment in the number of shares of Common Stock thereafter comprising a
Stock Unit under Section 6.02, 6.03 or 6.04 hereof shall be made in
respect of the Warrants held by such Holder. (ii) No adjustment shall be
made hereunder in respect of the issuance of Option Stock or options
representing the right to acquire Option Stock.
Section 7. CONSOLIDATION, MERGER, SHARE EXCHANGE, ETC.;
Distributions. The provisions set forth in this Section 7 shall only apply to
Warrants which have not yet been exercised.
7.01 CONSOLIDATION, MERGER, SHARE EXCHANGE, ETC. In case a
consolidation, merger or share exchange of the Company shall be effected with
another Person after the date hereof and the Company shall not be the surviving
entity, or the Company shall be the surviving entity but its Common Stock shall
be changed into securities or other property of another Person, or the sale,
lease or transfer of all or a substantial part of its assets to another Person
shall be effected after the date hereof, then, as a condition of such
consolidation, merger, share exchange, sale, lease or transfer, lawful and
adequate provision shall be made whereby each Holder shall thereafter have the
right to purchase and receive, upon the exercise of its Warrants, on the basis
and the terms and conditions specified herein (and in lieu of each Stock Unit
immediately theretofore purchasable and receivable upon the exercise of the
Warrants), such shares of stock, securities, cash or other property receivable
upon such consolidation, merger, share exchange, sale, lease or transfer as such
Holder would have been entitled to receive if its Warrants had been exercised
immediately prior to such event. In any such case, appropriate and equitable
provision also shall be made with respect to the rights and interests of each
Holder to the end that the provisions hereof (including Section 6 hereof) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities, cash or other property thereafter deliverable upon the
exercise of any Warrants. The Company shall not effect any such consolidation,
merger, share exchange, sale, lease or transfer unless prior to or
simultaneously with the consummation thereof the successor Person (if other than
the Company) resulting from such consolidation, merger or share exchange or the
Person purchasing, leasing or otherwise acquiring such assets shall assume, by
written instrument, the obligation to deliver to such Holder such shares of
stock, securities, cash or other property as, in accordance with the foregoing
provisions, such Holder may be entitled to upon the exercise of its Warrants.
The above provisions of this Section 7.01 shall similarly apply to successive
consolidations, mergers, share exchanges, sales, leases or transfers.
7.02 DISTRIBUTIONS UPON DECLARATION OF DIVIDEND OR OTHER
DISTRIBUTION. So long as any Warrants remain outstanding, the Company shall pay,
upon the declaration and payment of any dividend or distribution (whether such
dividend or distribution is in the form of cash, debt securities, equity
securities or other property) on any class of Common Stock, to each Holder the
dividend or distribution that such Holder would be otherwise entitled to receive
had such Holder exercised the Warrants held by it in full immediately prior to
the taking of record of those holders of Common Stock entitled to any such
dividend or distribution, provided that, this provision shall apply only to
dividends or distributions in respect of the Common Stock other than ordinary,
periodic cash dividends paid out of earned surplus of the Company. If such
Warrant Agreement
-----------------
-22-
dividend or distribution is in the form of a voting equity security, such Holder
will be entitled to receive, at its option, in its stead non-voting equity
securities otherwise identical to and convertible at such Holder's option into
the equity securities to which such Holder is otherwise entitled thereunder and
continuing benefiting from antidilution provisions similar to those herein. This
provision shall not apply to stock dividends of Additional Shares of Common
Stock, or to a reclassification or recapitalization, provided that the Company
adjusts the number of shares of Common Stock comprising a Stock Unit pursuant to
Section 6.01 hereof.
7.03 DILUTION IN CASE OF OTHER SECURITIES. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Section 7.01
hereof) or to subscription, purchase or other acquisition pursuant to any
rights, options, warrants to subscribe for, purchase or otherwise acquire either
Additional Shares of Common Stock or securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock, issued
or granted by the Company (or any such other issuer or Person) for a
consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of Section 6 hereof, the purchase rights
granted by the Warrants, then, and in each such case, the computations,
adjustments and readjustments provided for in said Section 6 with respect to the
Stock Units shall be made as nearly as possible in the manner so provided and
applied to determine the amount of Other Securities from time to time receivable
upon the exercise of the Warrants, so as to protect the Holders against the
effect of such dilution.
Section 8. NOTICE TO WARRANT HOLDERS.
8.01 NOTICE OF ADJUSTMENT OF STOCK UNIT OR EXERCISE PRICE. Whenever
the number of shares of Common Stock comprising a Stock Unit shall be adjusted
pursuant to Section 6 or 7 hereof, the Company shall forthwith obtain a
certificate signed by the chief financial officer of the Company, setting forth,
in reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a description of the basis on which
the Board determined the fair market value of Additional Shares of Common Stock
issued or sold and, if the consideration therefor was other than cash, a
description of how such consideration was valued), specifying the number of
shares of Common Stock comprising a Stock Unit and (if such adjustment was made
pursuant to Section 7 hereof) describing the number and kind of any other
securities comprising a Stock Unit, and any change in the Exercise Price, after
giving effect to such adjustment or change. The Company shall promptly and in
any case within 10 days after the making of such adjustments cause a signed copy
of such certificate to be delivered to each Holder in accordance with Section
13.02 hereof. The Company shall keep at its office or agency, maintained for the
purpose pursuant to Section 13.03 hereof, copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective permitted purchaser of a Warrant
designated by a holder thereof.
8.02 NOTICE OF CERTAIN CORPORATE ACTIONS. In case the Company shall
propose (a) to pay any dividend (other than a regular periodic dividend payable
in cash out of earned surplus) to the holders of its Common Stock or to make any
other distribution to the holders of its Common Stock, or (b) to offer to the
Warrant Agreement
-----------------
-23-
holders of its Common Stock rights to subscribe for or to purchase any
Additional Shares of Common Stock or Other Securities, rights or options, or (c)
to effect any reclassification of its Common Stock (other than a
reclassification involving only the subdivision, or combination, of outstanding
shares of Common Stock), or (d) to effect any capital reorganization, or (e) to
effect any consolidation, merger or share exchange in which the Company is not
the surviving entity, or is the surviving entity but its Common Stock shall be
changed into securities or other property of another Person, or sale, lease,
transfer or other disposition of all or a majority of its property, assets or
business, or (f) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each Holder, in
accordance with Section 13.02 hereof, a notice of such proposed action, which
shall specify the date on which a record is to be taken for the purposes of such
stock dividend, distribution or offering of rights, or the date on which such
reclassification, reorganization, consolidation, merger, share exchange, sale,
lease, transfer, disposition, liquidation, dissolution or winding up is to take
place and the date of participation therein by the holders of Common Stock, if
any such date is to be fixed and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock, if any, and the number and kind of any other shares of
stock which will comprise a Stock Unit, and the purchase price or prices
thereof, after giving effect to any adjustment, if any, which will be required
as a result of such action. Such notice shall be so given in the case of any
action covered by clause (a) or (b) above at least 20 days prior to the record
date for determining holders of the Common Stock for purposes of such action,
and in the case of any other such action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
8.03 LIMITATION ON HOLDERS' RIGHTS. Prior to the exercise of any
Warrant, the Holder thereof shall not be entitled to any rights of a Shareholder
(subject to Section 7.02 hereof with respect to dividends and distributions),
including, without limitation, the right to vote or receive dividends or other
distributions, or any notice of any proceedings of the Company except as
expressly provided in this Agreement.
Section 9. RESERVATION AND AUTHORIZATION OF COMMON STOCK. The
Company shall at all times reserve and keep available for issue upon the
exercise or conversion of Warrants such number of its authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in full of
all outstanding Warrants from time to time. All shares of Common Stock which
shall be so issuable, when issued upon exercise of any Warrant and payment of
the applicable Exercise Price therefor in accordance with the terms hereof and
of the Warrants, shall be duly and validly issued by the Company, fully paid and
nonassessable and free and clear of all Liens.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or which would cause an
adjustment reducing the Current Warrant Price per share of Common Stock below
the then par value, if any, of the shares of Common Stock issuable upon exercise
of the Warrants, the Company shall take any corporate action which is necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock free and clear of all Liens upon the
exercise of all the Warrants immediately after the taking of such action.
Warrant Agreement
-----------------
-24-
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or in the Current
Warrant Price per share of Common Stock, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
The Company will list on each national securities exchange on which
any Common Stock may at any time be listed, subject to official notice of
issuance upon exercise of the Warrants, and will maintain such listing of, all
shares of Common Stock from time to time issuable upon the exercise of the
Warrants. The Company will also so list on each national securities exchange,
and will maintain such listing of, any Other Securities if at the time any
securities of the same class shall be listed on such national securities
exchange by the Company.
Section 10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.
(a) In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any provision
of Section 6 and Section 7.02 hereof refers to the taking of a record of such
holders, the Company shall in each such case take such a record as of the close
of business on a Business Day.
(b) The Company shall not close its stock transfer books or Warrant
transfer books for the purpose of preventing or delaying the exercise,
conversion or transfer of any Warrant.
Section 11. HOLDERS' SPECIAL RIGHTS.
11.01 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 issued by the Company, and
(a) in the case of loss, theft or destruction, of an indemnity
reasonably satisfactory to it, provided that, if the owner of the same
is an Initial Holder, its own agreement of indemnity shall be deemed
to be satisfactory, or if the owner of the same is a Holder the
Company may require a bond, or
(b) in the case of mutilation, upon surrender or cancellation
thereof,
the Company, at its expense, shall execute, register and deliver, in lieu
thereof, a new certificate or instrument for (or covering the purchase of) an
equal number of Warrants or Warrant Stock.
11.02 RESTRICTIONS ON CERTAIN ACTION.
(a) The Company shall not at any time enter into an agreement or
other instrument limiting in any manner (other than in a de minimis manner) its
ability to perform its obligations under this Agreement or making such
performance or the issuance of shares of Common Stock upon the exercise of any
Warrant issued by it a default under any such agreement or instrument.
Warrant Agreement
-----------------
-25-
(b) So long as at least 50% of all of the Warrants issued to the
Initial Holders hereunder shall remain outstanding, neither the Company nor any
of its Subsidiaries shall (i) issue any Participating Security or Options for or
Convertible Securities convertible into a Participating Security, (ii) issue any
class of equity other than Common Stock outstanding on the date hereof and any
Preferred Stock of the Company or (iii) make or agree to make payments to any
Person, such as any "phantom" stock payments, where the amount thereof is
calculated with reference to fair market or equity value of the Company or any
of the Subsidiaries.
11.03 INSPECTION RIGHTS. As and when requested, the Company shall
provide to any transferee of Notes who is a Holder of or an Initial Holder of
more than 15% of the total outstanding Warrants or the agents or representatives
of such holder all information and/or access to all information in respect of
the Company and its Subsidiaries as the Company provides to members of the Board
at the same time or times and/or subject to the same conditions to which such
information or access thereto is provided to such members of the Board
11.04 BOARD ATTENDANCE. So long as the Initial Holders own 50% or
more of the Warrants and the Warrant Stock, one representative (the
"Representative") appointed by the Majority Initial Holders shall be entitled to
attend all meetings of (i) the Board (ii) the board of directors of any
Subsidiary of the Company and (iii) any committee of (i) and (ii) above
provided, however, that the Representative shall not be entitled to vote at any
such meeting. The Company shall reimburse, by Company check mailed within 30
Business Days of receipt by the Company of proper documentation thereof, the
reasonable out-of-pocket expenses incurred by the Representative in connection
with attendance at any meetings pursuant to this Section 11.04; provided,
however, that the Representative shall not be entitled to reimbursement for
first-class travel.
11.05 RIGHT TO PURCHASE EQUITY SECURITIES. (a) So long as an Initial
Holder owns any Warrants or Warrant Stock, if the Company proposes to and does
issue any Equity Securities (other than in a registered public offering or in a
transaction in which Equity Securities are exchanged for the assets or
securities of another person; provided that the Board has determined in good
faith that the assets or securities received by the Company in such exchange
have a fair value at least equal to the value of the Equity Securities of the
Company exchanged therefor) the Company shall offer each such Initial Holder the
right to participate proportionately in a percentage amount equal to the
percentage of the Company's Common Stock (on a fully diluted basis) represented
by the Warrants and/or Warrant Stock held by each such Initial Holder as of the
date of issuance of any such Equity Securities (the "Date of Issuance") and on
the same terms and conditions and at the same per unit price (the "Issue
Price"). The Company shall give written notice to each such Initial Holders of
any such issuance as far in advance of the Date of Issuance as possible, but in
no event less than 10 days in advance of the Date of Issuance (a "Notice of
Issuance"). The Notice of Issuance will describe in reasonable detail the terms
and conditions of the proposed issuance, including the Issue Price, the maximum
number of Equity Securities that each Initial Holder will be entitled to
purchase (assuming for this purpose only that the number of Warrants and/or
Warrant Agreement
-----------------
-26-
shares of Warrant Stock held by each Initial Holder does not change between the
date of the giving of such notice and the Date of Issuance) on the Date of
Issuance.
(b) Each such Initial Holder shall have the option to elect to
purchase all or part of such Initial Holder's portion of the Equity Securities
described in a Notice of Issuance at the Issue Price and on the other terms
contained in the Notice of Issuance by notifying the Company in writing (an
"Election Notice") at least two business days prior to the Date of Issuance (the
"Election Period"), at which time such Initial Holder shall become irrevocably
bound (subject to the satisfaction of all regulatory requirements) to purchase
such Equity Securities. Each Election Notice will indicate the number of units
that each Initial Holder elects to purchase.
(c) Any purchase and sale pursuant to the provisions of this Section
11.05 shall occur on the Date of Issuance at the principal offices of the
Company unless otherwise agreed. At any closing of a purchase and sale in
accordance with this Section 11.05, the Company will deliver certificates
evidencing the Equity Securities to be so purchased against delivery by each
Initial Holder of an amount equal to the number of units that each Initial
Holder has elected to purchase multiplied by the Issue Price. Such amount will
be payable at such closing. Each Initial Holder making a purchase of Equity
Securities pursuant to this Section 11.05 shall be responsible for the payment
of any transfer or other taxes due as a result of such purchase and such taxes
shall be payable at the closing (unless such Initial Holder provides evidence in
form satisfactory to the Company that such taxes have been paid).
(d) The failure of any Initial Holder to exercise its right to
purchase Equity Securities under this Section 11.05 in connection with any one
issuance of Equity Securities by the Company will not, in any manner, waive or
otherwise impair the rights of such Initial Holder to purchase such Initial
Holder's share of Equity Securities in connection with any other proposed
issuance of Equity Securities to which this Section 11.05 is applicable.
(e) Notwithstanding anything contained in this Section 11.05 to the
contrary, the Company may at any time, regardless of whether an Election Notice
has been given, prior to the Date of Issuance abandon an offering as to which it
has given a Notice of Issuance, in which case the Initial Holders shall have no
further right to purchase the Equity Securities described in such Notice of
Issuance.
Section 12. REGISTRATION.
12.01 NOTICE. On and after the date of this Agreement (a) upon
receipt of notice (a "Demand Notice") from the Majority Holders requesting that
the Company effect the registration of Warrants or shares of Warrant Stock held
by any Holder or Holders, or (b) whenever the Company otherwise proposes to
effect the registration of any Common Stock under the Securities Act, the
Company shall promptly, and in any event at least 20 days prior to the
anticipated filing date of the proposed registration statement, give written
notice of such proposed registration to all Holders. Each Holder that wishes to
register its Warrants or shares of Warrant Stock (each, a "SELLER") shall,
within 15 days after receipt of such notice from the Company, deliver to the
Company a notice (a "SELLER NOTICE") stating that such Seller wishes to
Warrant Agreement
-----------------
-27-
participate in such offering and setting forth the number of shares of Warrant
Stock that such Seller desires to include in such offering. The Company
thereupon shall, subject to Section 12.01(c) as expeditiously as possible, use
its best efforts to effect the registration under the Securities Act of such
shares of Warrant Stock (any such registration effected or undertaken pursuant
to a Demand Notice being herein referred to as a "DEMAND REGISTRATION");
provided, however, that the Company shall not be required to effect more than
two Demand Registrations provided, further that the Company's obligation to
effect registration of Warrants or shares of Warrant Stock under Section
12.01(b) shall be unlimited in number. In the event that (i) the amount of
securities proposed to be sold by Sellers pursuant to a Demand Notice shall be
reduced pursuant to Section 12.02(a) hereof to an amount which is less than 75%
of the amount of securities originally proposed to be sold by Sellers, or (ii)
any Demand Notice shall be withdrawn by the Holder or Holders originally giving
such Demand Notice at any time prior to the filing by the Company of a
preliminary registration statement in connection with such Demand Notice, then,
in such event, no right to a Demand Registration shall be deemed to have been
exercised or forfeited and such Demand Notice shall not operate to reduce the
Company's obligation to effect a Demand Registration pursuant to a Demand Notice
on two occasions; provided, however, if the Demand Notice is withdrawn by the
Holder or Holders originally giving such Demand Notice as provided in
subparagraph (ii) above, the right to a Demand Registration shall be deemed to
have been exercised if such Holder or Holders does not reimburse the Company for
all costs and expenses of such withdrawn registration.
(c) DEFERRAL OF FILING. The Company may defer the filing (but not
the preparation) of a registration statement required by Section 12.01(a) until
a date not later than 60 days in the case of clause (i) below and, in the case
of clause (ii) below, 180 days (or, if longer, 90 days after the effective date
of the registration statement contemplated by clause (ii) below), after the date
of the Demand Notice if (i) at the time the Company receives the Demand Notice,
the Company or any of its Subsidiaries is engaged in confidential negotiations
or other confidential business activities, disclosure of which would be required
in such registration statement (but would not be required if such registration
statement were not filed), and the Board determines in good faith that such
disclosure would be materially detrimental to the Company and its shareholders
or would have a material adverse effect on any such confidential negotiations or
other confidential business activities, or (ii) prior to receiving the Demand
Notice, the Board had determined to effect a registered underwritten public
offering of the Company's securities for the Company's account and the Company
had taken substantial steps (including, but not limited to, selecting a managing
underwriter for such offering) and is proceeding with reasonable diligence to
effect such offering. A deferral of the filing of a registration statement
pursuant to this Section 12.01(c) shall be lifted, and the requested
registration statement shall be filed forthwith, if, in the case of a deferral
pursuant to clause (i) of the preceding sentence, the negotiations or other
activities are disclosed or terminated, or, in the case of a deferral pursuant
to clause (ii) of the preceding sentence, the proposed registration for the
Company's account is abandoned. In order to defer the filing of a registration
statement pursuant to this Section 12.01(c), the Company shall promptly (but in
any event within 10 days), upon determining to seek such deferral, deliver to
each Seller a certificate signed by an executive officer of the Company pursuant
to this Section 12.01(c) and a general statement of the reason for such deferral
and an approximation of the anticipated delay. Within 15 days after receiving
such certificate, Seller's holding a majority in interest of the Warrant Stock
Warrant Agreement
-----------------
-28-
for which registration was previously requested may withdraw such request by
giving notice to the Company; if withdrawn, the Demand Notice shall be deemed
not to have been made for all purposes of this Agreement. The Company may not
invoke its right to defer the filing of a registration statement under this
Section 12.01(c) more than once in any eighteen month period.
(d) If the Majority Holders so elect, the offering of the Warrants,
the Warrant Stock and/or the Other Securities pursuant to a Demand Registration
shall be in the form of an underwritten offering. If any Demand Registration is
in the form of an underwritten offering, the Majority Holders will select and
obtain the investment banker or investment bankers that will administer the
offering; provided, that such investment banker shall be reasonably satisfactory
to the Company.
12.02 PRORATION.
(a) In the case of a Demand Registration, if the underwriter (or, if
the offering is not underwritten, an independent financial advisor to the
Sellers) determines that marketing factors require a limitation on the number of
securities to be offered and sold, there shall be included in such registration
only that number of securities that the underwriter, or financial advisor, as
the case may be, reasonably believes will not jeopardize the success of the
offering. Any reduction in the number of securities to be so offered shall first
be pro-rata among all Persons (other than the Company) proposing to sell
securities pursuant to such offering who are not Sellers, based on the number of
securities originally proposed to be sold by each of them, and then, if
necessary, pro-rata among all Sellers based on the number of securities
originally proposed to be sold by each of them.
(b) In the case of a registration to be effected pursuant to Section
12.01(b) hereof, if the underwriter (or, if the offering is not underwritten, an
independent financial advisor to the Company) determines that marketing factors
require a limitation on the number of securities to be offered and sold in the
offering, including securities requested to be offered and sold by Sellers,
there shall be included in the offering only that number of securities that the
underwriter, or financial advisor, as the case may be, reasonably believes will
not jeopardize the success of the offering. Any reduction in the number of
securities to be so offered shall be pro-rata among the Shareholders, the
Sellers and all other Persons, proposing to sell securities pursuant to such
offering, based on the number of securities originally proposed to be sold by
each such Person.
Nothing contained herein shall be construed to limit in any way the Company's
right, in its sole discretion, to withdraw any registration statement (other
than a registration statement filed pursuant to a Demand Notice) before such
registration statement becomes effective, or to postpone the offering of
securities contemplated by any such registration statement.
Warrant Agreement
-----------------
-29-
12.03 REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of Section 12.01(a) hereof or, with respect to
subsections (iii), (vi), (vii), (viii), (ix), (x) and (xiii) of this Section
12.03, by the provisions of Section 12.01(a) or (b) hereof, to use its best
efforts to effect the registration of any of its securities under the Securities
Act, the Company shall, as expeditiously as possible,
(i) prepare and file with the Commission a registration
statement on Form X-0, Xxxx X-0 or such other "short-form" as may be
available with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for a
period of not less than 90 days to permit the sale of such securities
in accordance with the plan of distribution chosen by the Seller or
Sellers and the underwriter;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the sale or other disposition of all securities
covered by such registration statement;
(iii) furnish to each Seller such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Seller may reasonably request in order to facilitate the public sale or
other disposition of the securities owned by such Seller;
(iv) use its best efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions within the United
States as each Seller shall reasonably request, and do such other
reasonable acts and things as may be requested of it to enable such
Seller to consummate the public sale or other disposition in such
jurisdictions of the securities owned by such Seller, except that the
Company shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not
so qualified;
(v) use its best efforts to cause the securities covered by
such registration statement to be registered with or approved by such
other U.S. or state governmental agencies or authorities as may be
necessary to enable the Seller or Sellers thereof to consummate the
disposition of such securities;
(vi) notify each Seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the Company's
becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing (upon receipt of which
each Seller agrees to forthwith cease making offers and sales of such
Warrant Agreement
-----------------
-30-
securities pursuant to such prospectus and to deliver to the Company
any copies of such prospectus then in the possession of such Seller),
and at the request of any such Seller promptly prepare and furnish to
such Seller a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include 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 not misleading in
the light of the circumstances then existing;
(vii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with
one of the first three months after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(viii) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission;
(ix) use its best efforts to list such securities on any
securities exchange on which the Common Stock of the Company is then
listed, or, if not so listed, on a national securities exchange, if the
listing of such securities is then permitted under the rules of such
exchange;
(x) provide a transfer agent and registrar for all the
securities covered by such registration statement not later than the
effective date of such registration statement;
(xi) enter into such agreements (including an underwriting
agreement in customary form containing without limitation customary
indemnity and contribution provisions for the benefit of the
underwriter or underwriters and the Seller or Sellers) and take such
other actions as the Seller or Sellers shall reasonably request in
order to expedite or facilitate the disposition of such securities;
(xii) obtain an opinion from the Company's counsel and a
"cold comfort" letter from the Company's independent public accountants
in customary form and covering such matters as the Seller or Sellers
shall reasonably request;
(xiii) make available for inspection by any Seller of
securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such Seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company's officers,
directors and employees to supply all information reasonably requested
by any such Seller, underwriter, attorney, accountant or agent in
connection with such registration statement; and
(xiv) permit any Seller of securities covered by such
registration statement to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment
of such Seller should be included.
Warrant Agreement
-----------------
-31-
If any such registration or comparable statement refers to any Seller by name or
otherwise as the holder of any securities of the Company, then such Seller shall
have the right to require (A) the insertion therein of language, in form and
substance satisfactory to such Seller, to the effect that the holding by such
Seller of such securities is not to be construed as a recommendation by such
Seller of the investment quality of the Company's securities covered thereby and
that such holding does not imply that such Seller will assist in meeting any
future financial requirements of the Company, or (B) in the event that such
reference to such Seller by name or otherwise is not required by the Securities
Act, the deletion of the reference to such Seller.
The Company may require each Holder of securities to, and each such
Holder, as a condition to including Securities in such registration, shall,
furnish the Company with such information and affidavits regarding such holder
and the distribution of such securities as the Company may from time to time
reasonably request in writing in connection with such registration. No Seller
may participate in any underwritten registration hereunder unless such Seller
(a) agrees to sell such Seller's securities 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, lock-ups, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and these
registration rights.
Each Seller of securities agrees that upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
12.03(vi), such Seller will forthwith discontinue such Seller's disposition of
securities pursuant to the registration statement relating to such securities
until such Seller's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 12.03(vi) and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Seller's possession of any prospectus
relating to such securities at the time of receipt of such notice.
12.04 HOLDBACK ON SALES. The Company and the Holders hereby agree
not to effect any public sale or distribution of any securities similar to those
registered in accordance with Section 12.03 hereof during the 14 day period
prior to, and during the 45 day period beginning on, the effective date of any
registration statement (except as part of such registration statement).
12.05 EXPENSES. Subject to Section 12.01, all reasonable expenses
incurred in complying with this Section, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, the reasonable fees and disbursements of one counsel
for the Seller or the Sellers (to be chosen by the Seller or by the Sellers
holding a majority of the securities to be included by Sellers in a registration
statement), expenses of any special audits incident to or required by any such
registration and expenses of complying with the securities or blue sky laws of
any jurisdictions (provided, however, that the Company may delay such
Warrant Agreement
-----------------
-32-
registration for up to 30 days, if such delay will eliminate the need for such
special audit), shall be paid by the Company; provided, that in no event shall
the Company be required to pay any underwriting discounts, commissions or fees
attributable to the sale of Warrant Shares by a Seller hereunder.
12.06 INDEMNIFICATION.
(a) In the event of any registration of any of its securities under
the Securities Act pursuant to this Section 12, the Company shall, and hereby
agrees to, indemnify and hold harmless each Seller of such securities, its
directors and officers, partners, and each other Person, if any, who controls
such Seller within the meaning of Section 15 of the Securities Act, against any
losses to which such Seller or any such director, officer, partner or Person may
become subject under the Securities Act or any other statute or at common law,
insofar as such losses (or actions in respect thereof) arise out of or are based
upon any alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus with respect
thereto, or any amendment or supplement thereto, or any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such Seller or such
director, officer, partner or participating Person or controlling Person for any
legal or any other expenses reasonably incurred by such Seller or such director,
officer, partner or participating Person or controlling Person in connection
with investigating or defending any such loss; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss
arises out of or is based upon any alleged untrue statement or alleged omission
made in such registration statement, preliminary prospectus, prospectus, or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company for inclusion therein through an instrument
duly executed by such Seller; provided further, however that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this paragraph
shall not apply to the extent that any such loss, claim, damage, liability or
expense results from the fact that a current copy of the prospectus was not sent
or given to the Person asserting any such loss, claim, damage, liability or
expense at or prior to the written confirmation of the sale of the securities
concerned to such Person if the Company had prior thereto given such Seller the
notice referred to in Section 12.03(vi) hereof and provided to such Seller a
supplemented or amended prospectus as contemplated by Section 12.03(vi), and
such current copy of the prospectus would have cured the defect giving rise to
such loss, claim, damage, liability or expense. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such Seller or such director, officer or participating Person or controlling
Person, and shall survive the transfer of such securities by such Seller.
(b) Each Seller of securities which are included in a registration
statement hereunder, as a condition to including securities in such registration
statement, shall, to the full extent permitted by law, indemnify and hold
harmless the Company, its directors and officers and each other Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act,
against any losses to which the Company or any such director, officer or Person
may become subject under the Securities Act or otherwise, insofar as such losses
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any preliminary prospectus, final prospectus or summary
Warrant Agreement
-----------------
-33-
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading, if such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Seller specifically for use in the
preparation thereof; provided, however, that the obligation to provide
indemnification pursuant to this Section 12.06(b) shall be several, and not
joint and several, among such Sellers on the basis of the number of securities
included by each in such registration statement and the aggregate amount which
may be recovered from any holder of securities pursuant to the indemnification
provided for in this Section 12.06(b) in connection with any sale of securities
shall be limited to the total proceeds received by such holder from the sale of
such securities. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or any such other
Person and shall survive the transfer of such securities by such Seller.
(c) Promptly after receipt by any Person under this Section of
notice of the commencement of any action, such Person (an "INDEMNIFIED PARTY")
shall, if a claim in respect thereof is to be made against any other Person (an
"INDEMNIFYING PARTY") for indemnity under this Section, notify the Indemnifying
Party in writing of the commencement thereof; but the omission so to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
any Indemnified Party, except to the extent that the Indemnifying Party is
prejudiced thereby. The Indemnifying Party may, upon being notified of such
action, assume the defense thereof, with counsel satisfactory to such
Indemnified Party, and, after such assumption, the Indemnifying Party shall not
be liable to such Indemnified Party under this Section for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
Indemnified Party, in connection with the defense thereof; provided, however,
that the Indemnifying Party may not assume the defense of the action, and shall
remain liable to the Indemnified Party for its legal expenses of counsel and
other expenses, in the event that the Indemnified Party has been advised in
writing by counsel who, in good faith determines that a conflict of interest may
exist between the Indemnified Party and the Indemnifying Party.
(d) If the indemnification provided for in this Section is
unenforceable although available, or insufficient to hold harmless an
Indemnified Party hereunder for any losses (or actions in respect thereof) in
respect of which the provisions of Section 12.06(a) or (b) would otherwise apply
by their terms, then the Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and the Indemnified Party on the
other hand in connection with the statements or omissions which resulted in such
losses (or actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Indemnifying Party on the one hand or
such Indemnified Party on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just and equitable
if contribution pursuant to this subsection were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this subsection. The amount paid or
Warrant Agreement
-----------------
-34-
payable as a result of the losses (or actions in respect thereof) referred to
above in this subsection shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. In no event shall any Seller be required
to contribute in the aggregate an amount exceeding the amount of proceeds
received by such Seller in connection with any offering. 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.
12.07 NO OTHER REGISTRATION RIGHTS. The Company shall not grant any
registration rights to any holder of securities of the Company in respect of
such securities if such registration rights would rank senior to, or otherwise
adversely affect in any material respect, the registration rights granted in
this Section 12.
12.08 RULE 144. The Company covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act so long
as the Company is registered under the Exchange Act. Upon the request of any
Holders, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
Section 13. MISCELLANEOUS.
13.01 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 shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under this
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.
13.02 NOTICES. All notices and other communications provided for
herein and the Warrants (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy), if to (a) any party hereto,
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof; or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party, or (b) any other Person who is the registered Holder of any Warrants or
Warrant Stock, to the address for such Holder as it appears in the stock or
warrant ledger of the Company. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given when transmitted
by telecopier or personally delivered, or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid. The Company agrees to
deliver to each Holder in the manner prescribed by this Section 13.02 any
notices or other communications delivered to the shareholders of the Company.
13.03 OFFICE OF THE COMPANY. So long as any of the Warrants remains
outstanding, the Company shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise, transfer,
division or combination provided herein and in the Warrants. Such office shall
be at 0000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx 00000 unless and until the
Company shall designate and maintain some other office for such purposes and
give notice thereof to all Holders.
Warrant Agreement
-----------------
-35-
13.04 EXPENSES, TRANSFER TAXES AND OTHER CHARGES.
(a) EXPENSES, ETC. The Company agrees to pay or reimburse each of
the Initial Holders for paying: (i) all reasonable out-of-pocket costs and
expenses of the Initial Holders (including, without limitation, the reasonable
fees and expenses of Milbank, Tweed, Xxxxxx & XxXxxx LLP, special counsel to the
Initial Holders), in connection with (x) the negotiation, preparation, execution
and delivery of this Agreement and the issuance of Warrants hereunder and (y)
any amendment, modification or waiver of any of the terms of this Agreement or
the Warrants; and (ii) all reasonable fees, costs and expenses of the Initial
Holders (including reasonable fees of a single counsel for the Holders) in
connection with any default by the Company hereunder or under any Warrant or in
connection with any enforcement action or other proceedings relating hereto or
thereto (including, without limitation, the enforcement of this Section 13.04).
(b) CERTAIN TAXES, ETC. Except as otherwise provided in Section
13.04(c), the Company shall pay all taxes (other than Federal, state or local
income taxes) which may be payable in connection with the execution and delivery
of this Agreement or the issuance and sale of the Warrants hereunder or in
connection with any modification of this 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 obligations of the Company under
this Section 13.04(b) shall survive any redemption, repurchase or acquisition of
Warrants by the Company and the termination of this Agreement.
(c) TRANSFER TAXES, ETC. The Company shall pay any and all expenses,
transfer taxes and other charges, including all costs associated with the
preparation, issue and delivery of stock or warrant certificates, that are
incurred in respect of the issuance or delivery of shares of Common Stock upon
exercise or conversion of the Warrants pursuant to Section 2 thereof or in
connection with any transfer, division or combination of Warrants pursuant to
Section 3 thereof. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in which the
relevant Warrant is registered, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Company the
amount of any such tax, or has established, to the satisfaction of the Company,
that such tax has been paid.
13.05 AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended or modified only
by an instrument in writing signed by the Company and the Holders of at least a
majority of the Restricted Warrants; provided that (a) the consent of the
Holders of Restricted Warrants shall not be required with respect to any
amendment or waiver which does not affect the rights or benefits of such Holders
under this Agreement, (b) the consent of the Holders of Restricted Stock shall
be required with respect to any amendment or waiver of Section 12, and (c) no
such amendment or waiver shall, without the written consent of all Holders of
Restricted Stock and Restricted Warrants at the time outstanding, amend this
Section 13.05.
13.06 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.
Warrant Agreement
-----------------
-36-
13.07 SURVIVAL. 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 shall be considered to have been relied upon by
each Initial Holder and shall survive the execution and delivery of this
Agreement and the issuance of the Warrants or the Warrant Stock regardless of
any investigation made by or on behalf of any Initial Holder. All
representations and warranties made by the Initial Holders herein shall be
considered to have been relied upon by the Company and shall survive the
execution and delivery of this Agreement and the issuance to the Initial Holders
of the Warrants, the Warrant Stock and any Other Securities regardless of any
investigation made by or on behalf of the Company.
13.08 REGULATION Y. The Company shall not be liable for any Holder's
breach of any of the provisions herein relating to Regulation Y.
13.09 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.
13.10 COUNTERPARTS. This Agreement may be executed 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.
13.11 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
13.12 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.
13.13 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and (together with the Warrants) contains the sole and entire
agreement among the parties hereto with respect to the subject matter hereof.
13.14 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto, their
respective successors and permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person.
Warrant Agreement
-----------------
-37-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
COMPANY
-------
NUCO2 INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Title: Chief Financial Officer
Address for Notices:
--------------------
NUCO2 INC.
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
Warrant Agreement
-----------------
-38-
Stock Units
-----------
115,289 X.X. XXXXXX PARTNERS (BHCA). L.P.
BY: JPMP MASTER FUND MANAGER, L.P.,
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name:
Title:
20,277 X.X. XXXXXX PARTNERS GLOBAL
INVESTORS, L.P.
BY: JPMP GLOBAL INVESTORS, L.P.,
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name:
Title:
10,180 X.X. XXXXXX PARTNERS GLOBAL
INVESTORS (CAYMAN), L.P.
BY: JPMP GLOBAL INVESTORS, L.P.,
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name:
Title:
Warrant Agreement
-----------------
-39-
3,116 X.X. XXXXXX PARTNERS GLOBAL
INVESTORS A, L.P.
BY: JPMP GLOBAL INVESTORS, L.P.,
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name:
Title:
1,138 X.X. XXXXXX PARTNERS GLOBAL
INVESTORS (CAYMAN) II, L.P.
BY: JPMP GLOBAL INVESTORS, L.P.,
ITS GENERAL PARTNER
BY: JPMP CAPITAL CORP.,
ITS GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name:
Title:
Address Notices for the foregoing holders:
------------------------------------------
X.X. XXXXXX PARTNERS, LLC.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
---------------
Milbank, Tweed, Xxxxxx & XxXxxx LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Warrant Agreement
-----------------
-40-
30,000 XXXXXXX XXXXXX PRIVATSTIFTUNG
By: /s/ Xxxxx Xxxx
------------------
Title: Trustee
Address for Notices:
--------------------
XXXXXXX XXXXXX PRIVATSTIFTUNG
c/o Xxxxx Xxxx
0 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Telephone:
Fax:
Warrant Agreement
-----------------
-41-
20,000 KBGM LLC
By: /s/ Xxxxxxx Xxxxxxxx
------------------------
Title: Authorized Agent
Address for Notices:
--------------------
KBGM LLC
c/o Xxxxxxx Xxxxxxxx
Xxxxxxxx Business Services
8-D Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax:
Warrant Agreement
-----------------
-42-
100,000 RBS EQUITY CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxxx
--------------------------
Title: Director
Address for Notices:
--------------------
THE ROYAL BANK OF SCOTLAND
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Una Torr
Telephone: 000 000 0000
Fax: 000 000 0000
Warrant Agreement
-----------------
Annex 1 to
Warrant Agreement
[Form of Warrant]
WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND
ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
THE REGISTRATION OR QUALIFICATION PROVISIONS OF
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM.
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN
THAT CERTAIN WARRANT AGREEMENT DATED AS OF AUGUST 25,
2003, BETWEEN NUCO2 INC., A FLORIDA CORPORATION, AND
CERTAIN INITIAL HOLDERS, AS SUCH WARRANT AGREEMENT MAY
BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO
TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE FORM OF
SUCH WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED
AT THE PRINCIPAL EXECUTIVE OFFICE OF THE AFORESAID
CORPORATION. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF SUCH WARRANT AGREEMENT.
No. of Stock Units: ________ Warrant No. ___
WARRANT
to Purchase Common Stock of
NUCO2 INC.
THIS IS TO CERTIFY THAT [NAME OF INITIAL HOLDER], or its registered
assigns, is entitled to purchase in whole or in part from NUCO2 INC., a Florida
corporation (the "Company"), at any time and from time to time on or after the
date hereof, but not later than 5:00 p.m., New York City time, on August 25,
2013 (the "EXPIRATION DATE"), [__] Stock Units (as defined in the Warrant
Agreement referred to below) at a purchase price of $8.79 per Stock Unit,
provided that such purchase price shall not be less than the aggregate par value
of the capital stock contained in a Stock Unit (the "EXERCISE PRICE"), subject
to the terms and conditions set forth herein and in the Warrant Agreement, each
such purchase of a Stock Unit to be made, and to be deemed effective for the
purpose of determining the date of exercise, only upon surrender of this Warrant
to the Company at its office referred to in Section 13.03 of the Warrant
Warrant
-------
-2-
Agreement, with the Form of Exercise attached hereto (or a reasonable facsimile
thereof) duly completed and signed, and upon payment in full to the Company of
the Exercise Price (i) in cash or (ii) by certified or official bank check or
(iii) by any combination of the foregoing, all as provided in the Warrant
Agreement and upon compliance with and subject to the conditions set forth
herein and in the Warrant Agreement.
On and after the date hereof and prior to the Expiration Date, this
Warrant may be converted, in whole or in part, at the Holder's option, into the
number of shares of Common Stock for each Stock Unit evidenced hereby which is
being so converted, equal to (a)(i) the product of (x) the number of shares of
Common Stock comprising a Stock Unit at the time of such conversion and (y) the
Current Market Price per share of Common Stock at the time of such conversion
minus (ii) the Exercise Price per Stock Unit at the time of such conversion,
divided by (b) the Current Market Price per share of Common Stock at the time of
such conversion, all as provided in the Warrant Agreement and upon compliance
with and subject to the conditions set forth herein and in the Warrant
Agreement.
If a Holder is a BHCA Holder, such Holder shall not, and shall not
permit any of its Bank Holding Company Affiliates to, exercise this Warrant if,
after giving effect to such exercise, (i) such Holder and its Bank Holding
Company Affiliates would own more than 5% of the total issued and outstanding
shares of Common Stock on a fully-diluted basis or (ii) such Holder would be
deemed under Regulation Y to have the power to exercise, directly or indirectly,
a controlling influence over the management or policies of, or would otherwise
control, the Company unless such Holder is a financial holding company and
exercises such Warrant in reliance on, and in compliance with, the merchant
banking exemption set forth in Regulation Y. For purposes of clause (ii)of this
paragraph, a reasoned opinion of counsel to such Holder delivered to such Holder
(which is based on facts and circumstances deemed appropriate by such counsel)
to the effect that such Holder does not have the power to exercise such a
controlling influence or otherwise control the Company shall be conclusive.
This Warrant is issued under and in accordance with the Warrant
Agreement dated as of August 25, 2003 between the Company and certain investors
(as the same may be modified and supplemented in accordance with its terms and
as in effect from time to time, the "WARRANT AGREEMENT"), and is subject to the
terms and provisions of the Warrant Agreement, which terms and provisions are
hereby incorporated by reference herein and made a part hereof. Every Holder of
this Warrant consents to all of the terms contained in the Warrant Agreement by
acceptance hereof.
The number of shares of Common Stock or other securities of the
Company constituting one "Stock Unit" are subject to adjustment in certain
events as provided in the Warrant Agreement.
The Company shall not be required to issue a fractional share of
Common Stock upon exercise of this Warrant. As to any fraction of a share which
the Holder hereof would otherwise be entitled to purchase upon such exercise,
the Company may pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.
Warrant
-------
-3-
This Warrant may be exchanged either separately or in combination
with other Warrants at the office of the Company referred to in Section 12.03 of
the Warrant Agreement for new Warrants representing the same aggregate number of
Warrants evidenced by the Warrant or Warrants exchanged, upon surrender of this
and any other Warrant being exchanged and upon compliance with and subject to
the conditions set forth herein and in the Warrant Agreement.
The Warrants and the Warrant Stock shall be transferable only upon
compliance with the conditions specified in Sections 4, 5 and 12 of the Warrant
Agreement, which conditions are intended, among other things, to ensure
compliance with the provisions of the Securities Act in respect of the transfer
of any Warrant or any Warrant Stock, and any Holder hereof shall be bound by the
provisions of (and entitled to the benefits of) said Sections 4, 5 and 12. Upon
any such transfer effected in compliance with said Sections 4, 5 and 12, a new
Warrant or new Warrants of different denominations, representing in the
aggregate a like number of Warrants, will be issued to the transferee. Every
Holder hereof, by accepting this Warrant, consents and agrees with the Company
and with every subsequent Holder of this Warrant that until due presentation for
the registration of transfer of this Warrant on the Warrant register maintained
by the Company, the Company may deem and treat the Person in whose name this
Warrant is registered as the absolute and lawful owner for all purposes
whatsoever and the Company shall not be affected by any notice to the contrary.
Nothing contained in the Warrant Agreement or in this Warrant shall
be construed as conferring on the holder of any Warrants or his or her
transferee any rights whatsoever as a Shareholder of the Company.
No provision hereof, in the absence of affirmative action by the
Holder hereof to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of such Holder, shall give rise to any liability of
such Holder for the Exercise Price or as a Shareholder of the Company, whether
such liability is asserted by the Company, by any creditor of the Company or any
other Person.
Any notices and other communications pursuant to the provisions
hereof shall be sent in accordance with Section 13.02 of the Warrant Agreement.
This Warrant shall be deemed 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 the State of New York without giving effect to the principles of
conflicts of laws thereof.
Each term used herein without definition shall have the meaning
assigned thereto in the Warrant Agreement.
Warrant
-------
-4-
IN WITNESS WHEREOF, the Company has duly executed this Warrant.
Dated: _________ __, 2003
NUCO2 INC.
By___________________________
Name:
Title:
Warrant
-------
FORM OF EXERCISE
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant hereby
SELECT ONE OF THE FOLLOWING TWO CHOICES:
[irrevocably exercises this Warrant for the purchase of Stock
Units of NUCO2 INC., a Florida corporation, and herewith makes
payment therefor in the amount of $_____________, all at the
price and on the terms and conditions specified in this Warrant,]
OR
[irrevocably converts this Warrant into shares of Common Stock of
NUCO2 INC., a Florida corporation, all in the manner and on the
terms and conditions specified in this Warrant,]
and requests that (i) certificates and/or other instruments covering
such Stock Units be issued in accordance with the instructions given
below and (ii) if such Stock Units shall not include all of the Stock
Units to which the Holder is entitled under this Warrant, that a new
Warrant of like tenor and date for the balance of the Stock Units
issuable hereunder be delivered to the undersigned.
Dated: ___________, ____
--------------------------------
(Signature of Registered Holder)
Instructions for issuance and registration of Stock Units:
Name of Registered Holder:____________________________________________
(Please print)
Social Security or Other Identifying Number:__________________________
Please deliver certificate to the following address:
________________________________________
________________________________________
________________________________________
Warrant
-------
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of Stock Units
covered thereby set forth hereinbelow unto:
Number of
Name of Assignee Address Stock Units
---------------- ------- -----------
Dated:__________________
------------------------------
Signature of Registered Holder
------------------------------
Name of Registered Holder
(Please Print)
Witness:
---------------------------
Warrant
-------
