1
EXHIBIT 10.31
WARRANT AGREEMENT
AMONG
MONARCH DENTAL CORPORATION,
BANK OF AMERICA, N.A.,
FLEET NATIONAL BANK,
AND
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "Rabobank Nederland"
New York Branch
April 1, 2001
2
WARRANT AGREEMENT
This Warrant Agreement (the "Agreement"), dated as of April __, 2001,
is by and among Monarch Dental Corporation, a Delaware corporation (the
"Company"), Bank of America, N.A., a national banking association ("Bank of
America"), Fleet National Bank, a national banking association ("Fleet"), and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland," New
York Branch ("Rabobank") (each a "Holder" and, collectively, the "Holders").
WITNESSETH:
WHEREAS, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company has agreed to execute
and deliver this Agreement and to issue to the Holders the Warrants hereinafter
described; and
WHEREAS, the Company and the Holders desire to set forth in this
Agreement, among other things, the form and provisions of the Warrant
Certificates, and the terms and conditions upon which they may be issued,
transferred, exchanged, replaced, redeemed and surrendered in connection with
the exercise and redemption of the Warrants;
NOW, THEREFORE, in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions herein set forth, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Affiliate" shall mean with respect to a specified Person, any
other Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" having meanings correlative to the foregoing.
(c) "Business Day" shall mean a day other than a Saturday, Sunday or
legal holiday in the State of Texas.
(d) "Closing Date" shall mean the date hereof.
(e) "Commission" shall mean the Securities and Exchange Commission.
2
3
(f) "Common Stock" shall mean the common stock of the Company, par
value $0.01 per share.
(g) "Demand Registration" shall have the meaning set forth in Section
7.01(a).
(h) "Exercise Price" shall have the meaning set forth in Section 2.02.
(i) "Expiration Date" shall mean the earlier of (i) April 1, 2011 or
(ii) June 30, 2002 in the event the condition set forth in Section 2.03(d) is
satisfied prior to such date.
(j) "Holder" and "Holders" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(k) "Loan Agreement" shall mean that certain Third Amended and Restated
Credit Agreement, dated as of April 1, 2001, by and among the Holders and the
Company.
(l) "Notice of Exercise" shall have the meaning set forth in Section
2.03(a).
(m) "Outstanding Common Stock" shall mean, at any date as of which the
number of shares thereof is to be determined, all shares of Common Stock
outstanding at such date.
(n) "Person" shall mean a corporation, an association, a limited
liability company, a trust, a partnership, a joint venture, an organization, a
business, an individual, a government or political subdivision thereof or a
governmental body.
(o) "Registration Expenses" shall mean all reasonable expenses incident
to the registration of the Underlying Common Stock pursuant to Article VII,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Warrants and the Underlying Common Stock, but not including filing fees,
fees and expenses of compliance with securities or Blue Sky laws or fees and
disbursements of counsel for the underwriters in connection with Blue Sky
qualifications and jurisdictions or Blue Sky compliance as requested by the
Holders and not requested by the underwriters), fronting expenses, printing
expenses (including, without limitation, expenses of printing prospectuses),
messenger and delivery expenses, internal expenses, (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and its independent certified public
accountants (including, without limitation, the expenses of any special audit or
"cold comfort" letters required by or incident to such performance), liability
insurance (if the Company elects to obtain such insurance), the reasonable fees
and expenses of any special experts retained by the Company in connection with
such registration, reasonable fees and expenses of other persons retained by the
Company, and the reasonable fees and expenses of one counsel for the Holders
(selected by the Holders), incurred in connection with each registration
hereunder (but not
3
4
including any underwriting discounts or commissions attributable to the sale of
Underlying Common Stock).
(p) "Subsidiaries" shall mean, with respect to the Company, any
corporation, partnership, joint venture or other legal entity of which the
Company owns, directly or indirectly, 50% or more of the stock or other equity
interests that generally entitle the holders thereof to vote for the election of
the board of directors or other governing body of such corporation or other
legal entity.
(q) "Term Loan" shall mean the term loan in the principal amount of
$80,150,000, plus interest, as described in the Loan Agreement.
(r) "Underlying Common Stock" shall mean the Common Stock acquired upon
the exercise of the Warrants carrying a legend identifying the stock as issued
pursuant to the exercise of the Warrants.
(s) "Warrant" and "Warrants" shall have the meanings set forth in
Section 2.01.
(t) "Warrant Assignment Form" shall have the meaning set forth in
Section 6.01.
(u) "Warrant Certificates" shall have the meaning set forth in Section
2.01.
ARTICLE II
ISSUANCE AND EXERCISE OF WARRANTS
SECTION 2.01. AUTHORIZATION AND ISSUE OF WARRANTS. The Company (a) has
authorized the issuance of warrant certificates, in substantially the form of
Exhibit A attached hereto (the "Warrant Certificates"), granting rights to
purchase shares of Common Stock (herein, together with the rights to purchase
Common Stock thereby, sometimes called, individually, a "Warrant" and,
collectively, the "Warrants") by the Holders pursuant to this Agreement, and (b)
has authorized the issuance of such number of shares of Common Stock as will
permit compliance by the Company with its obligations to issue Common Stock
pursuant to this Agreement and the Warrants.
SECTION 2.02. ISSUANCE OF WARRANTS; EXERCISE PRICE. The Company shall
issue to each Holder, on the date hereof, Warrants as evidenced by the Warrant
Certificates, which in the aggregate shall entitle each Holder, subject to the
terms set forth herein, to purchase from the Company on or after July 1, 2002
(the "Exercise Date") the number of shares of Common Stock ("Warrant Shares")
equal to the percentage of the Outstanding Common Stock (as of the Exercise
Date) set forth opposite such Holder's name on Schedule 2.02 (which shall, in
the aggregate, be equal to five percent (5%) of the Outstanding Common Stock as
of the Exercise Date), subject to the anti-dilution provisions contained in
Sections 8.02 and 8.03, for the exercise price of $0.01 per share (the "Exercise
Price").
4
5
SECTION 2.03. EXERCISE OF WARRANTS.
(a) Manner of Exercise. Each Holder may, from and after the Exercise
Date and until 5:00 p.m., Dallas, Texas time, on the Expiration Date, exercise
the Warrants evidenced by a Warrant Certificate, on any Business Day, for all or
part of the number of shares of Common Stock purchasable thereunder through
surrender of the Warrant Certificate to the Company at its principal office,
accompanied by (i) a duly executed Notice of Exercise in substantially the form
of Exhibit B attached hereto (the "Notice of Exercise") and (ii) payment of the
amount required for the purchase of the Underlying Common Stock. The Company
will within ten (10) days after the exercise of Warrants, at its expense, cause
to be issued in the name of and delivered to the exercising Holder (to the
nearest full share) a certificate or certificates for the number of fully paid
and nonassessable shares of Underlying Common Stock set forth in the applicable
Notice of Exercise. Certificates for such shares of Underlying Common Stock
shall be dated as of the date of surrender of the Warrant for exercise and the
payment of the Exercise Price, notwithstanding any delays in the actual
execution, issuance or delivery of the certificates for the shares so purchased,
and such Holder shall be deemed for all purposes to be the record holder of the
Underlying Common Stock as of the date of such surrender and payment of the
Exercise Price.
(b) Expiration of Warrants. Warrants that have not previously been
redeemed or exercised shall expire upon the Expiration Date.
(c) Exchange of Shares for Exercise Price. Each Holder at its option
may provide the Exercise Price under this Warrant by reducing the number of
shares for which the Warrant is otherwise exercisable by the number of shares
having fair market value equal to the Exercise Price. In such a case, delivery
of the Exercise Price shall be effected by such Holder's written notice to the
Company of such reduction. For purposes hereof, the sum of the average of any
publicly-reported closing bid and asked prices for the Common Stock on each of
the last ten (10) trading days prior to the date of exercise divided by ten
(10), shall be deemed to be the fair market value of the Common Stock.
(d) Expiration of Warrants Prior to Exercise Date. In the event the
Loans (as defined in the Loan Agreement) are repaid in full prior to the
Exercise Date, the Warrants shall become null and void and shall have no effect
and the Warrant Certificates representing such warrants shall be returned to the
Company for cancellation.
SECTION 2.04. NO OBLIGATION TO EXERCISE WARRANTS. This Agreement does
not impose any obligation on any Holder to exercise Warrants.
SECTION 2.05. TAXES. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issuance or delivery of any shares of Underlying Common Stock,
unless such tax or charge is imposed by law upon any Holder, in which case such
taxes or charges shall be paid by such Holder. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Underlying
Common Stock issuable upon exercise of Warrants in any name other than that of
the exercising Holder, and in such case the Company shall not be required to
issue or deliver any stock certificate until such
5
6
tax or other charge has been paid or it has been established to the reasonable
satisfaction of the Company that no such tax or other charge is due.
SECTION 2.06. FRACTIONAL SHARES. The Company shall not be required to
issue a fractional share of Common Stock upon the exercise of Warrants. As to
any fraction of a share which a Holder would otherwise be entailed to purchase
upon such exercise, such fraction shall be rounded upward or downward to the
nearest whole share.
SECTION 2.07. PARTIAL EXERCISE. The Warrants shall be exercisable
commencing on the Exercise Date, at the election of the Holders thereof, either
in full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new certificate evidencing the remaining Warrant or Warrants
will be issued and delivered pursuant to the provisions of this Section.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Holders as of the date
hereof as follows:
SECTION 3.01. CORPORATE ACTION; AUTHORIZATION. The execution, delivery
and performance by the Company of this Agreement and the Warrants and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate action and (a) do not and will not violate or
conflict with (i) the Certificate of Incorporation or Bylaws of the Company, or
any amendments thereto, or (ii) any law, rule or regulation or any order, writ,
injunction or decree of any court, governmental authority, or arbitrator, the
effect of which will have a material adverse effect on the Company, and (b) do
not and will not conflict with, result in a breach of, or constitute a default
under, or result in the imposition of any lien upon any of the assets or rights
of the Company pursuant to the provisions of, any indenture, mortgage, deed of
trust, security agreement, franchise, permit, license, or other instrument or
agreement by which the Company or any of its respective properties is bound. The
shares of Underlying Common Stock to be issued upon exercise of the Warrants
have been duly and validly authorized and reserved for issuance, and when issued
in compliance with the terms of this Agreement and the Warrants, will be validly
issued, fully-paid and nonassessable and free of any liens or encumbrances.
Neither the Warrants nor the shares of Underlying Common Stock are, or will be,
subject to any preemptive rights or rights of first refusal. This Agreement and
the Warrants have been duly executed and delivered by the Company and constitute
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies.
SECTION 3.02. ORGANIZATION AND GOOD STANDING; QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with all requisite corporate power and
authority to carry on the business in which it is engaged, to own the properties
it owns, to execute and deliver this Agreement and the Warrants, and to
consummate the transactions contemplated hereby.
6
7
SECTION 3.03. CONSENTS. The Company has all material licenses, permits,
certificates, orders, approvals and authority from federal, state or local
governmental agencies that are necessary to conduct the businesses of the
Company, and no suspension or cancellation of any such material licenses,
permits, certificates, orders, approvals or authority is pending or, to the
Company's knowledge, threatened; and the transactions contemplated by this
Agreement will not cause cancellation or suspension or have any effect upon any
of such material licenses, permits, certificates, orders, approvals or
authority. Neither the nature of the Company or of any of its Subsidiaries, or
of any of their respective businesses or properties, nor any relationship
between the Company or any Subsidiary and any other Person, nor any circumstance
in connection with the offer or issue of the Warrants and the Underlying Common
Stock is such as to require consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority on the part of
the Company as a condition to the execution and delivery of this Agreement, the
Warrants and/or the issuance of the Underlying Common Stock, except as may be
necessary or advisable to effect compliance with federal and state securities
laws.
SECTION 3.04. CAPITALIZATION. The authorized capital stock of the
Company on the date hereof consists of (a) 2,000,000 shares of Preferred Stock,
of which none are issued and outstanding, and (b) 50,000,000 shares of Common
Stock, of which 12,960,964 shares are issued and outstanding. The Common Stock
and the Preferred Stock have the rights and preferences set forth in the
Certificate of Incorporation of the Company, a true, correct and complete copy
of which, together with the Bylaws of the Company, has heretofore been delivered
to the Holders. All of the capital stock of the Company outstanding as of the
date hereof has been validly issued, fully paid and non-assessable. Except as
provided in Schedule 3.04 hereof, no subscription, warrant, option or other
right to purchase or acquire any shares of any class of stock of the Company or
any security convertible into or exchangeable for any such shares, in each case
issued by or binding upon the Company, is outstanding on the date hereof. Except
as set forth in Schedule 3.04: (a) the Company is not obligated to redeem any
shares of capital stock of the Company; (b) the Company is not obligated to
register under the Act any securities of the Company; (c) no preemptive rights
or rights of first refusal exist with respect to the capital stock of the
Company; and (d) there are no agreements or arrangements between any
securityholders of the Company or between any securityholder of the Company and
the Company related to the Company or its capital stock.
SECTION 3.05. ACCURACY OF INFORMATION. The factual information
furnished by or on behalf of the Company to the Holders in connection with this
Agreement or any transaction contemplated hereby does not contain any untrue
statements of material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. RESERVATION FOR ISSUANCE. The Company shall reserve, free
from any preemptive rights or rights of first refusal, a sufficient number of
shares of authorized but unissued Common Stock for issuance with respect to this
Agreement and will refrain from taking
7
8
any action that would hinder the Company's ability to perform its
responsibilities under this Agreement. Further, the Company shall reserve such
additional number of shares of authorized but unissued Common Stock for issuance
from time to time as the number of shares the Warrants evidence the right to
purchase increases as a result of additional issuances of shares or adjustments
as provided in this Agreement.
SECTION 4.02. DIVIDENDS. In the event that the Company shall declare or
pay dividends to its stockholders other than dividends payable in Common Stock,
the Company shall keep in an escrow account, at no additional cost to the
Holders, for the benefit of each Holder, an amount equal to the amount that such
Holder would have been entitled to upon payment if such Holder had exercised the
Warrants immediately prior thereto, to be paid to such Holder (together with all
accrued interest thereon) upon exercise of the Warrants. In the event that a
Holder does not exercise all or part of the Warrants prior to the Expiration
Date, the amount in the escrow account that had been set aside with respect to
Underlying Common Stock subject to unexercised Warrants shall remain the
property of the Company.
SECTION 4.03. PROHIBITED ACTIONS. Without the prior written consent of
the Holders, the Company shall not change the par value of the Common Stock from
$0.01 per share.
ARTICLE V
INVESTMENT INTENT
SECTION 5.01. INVESTMENT INTENT; RESTRICTED SECURITIES. Each Holder
represents and warrants that it is acquiring the Warrants and shall be acquiring
the Underlying Common Stock solely for its own account and not with a view to or
for resale in connection with any distribution or public offering thereof within
the meaning of any securities laws and regulations, unless such distribution or
offering is registered under the Act or any exemption from such registration is
available. Each Holder realizes that the resale of the Warrants and the
Underlying Common Stock is restricted by federal and state securities laws and,
accordingly, the Warrants and the Underlying Common Stock must be held
indefinitely unless the resale thereof is subsequently registered under the Act,
or an exemption from such registration is available. Each Holder realizes that
the grant of the Warrants and the sale of the Underlying Common Stock to such
Holder have not been registered under the Act or under any state securities laws
by reason of a specific exemption under the provisions of the Act that may
depend in part upon the such Holder's "investment intent." Accordingly, the
economic risk of the acquisition of such Warrants and Underlying Common Stock
must be borne by the Holders indefinitely unless the resale of the Warrants or
the Underlying Common Stock is subsequently registered under the Act or an
exemption from such registration is available. Each Holder acknowledges and
understands that the Warrants and the Underlying Common Stock are "restricted
securities" as that term is defined in Rule 144 under the Act and are subject to
all of the terms and provisions thereof. Each Holder acknowledges and consents
that the certificates for the Warrants will be legended substantially as
follows:
THE SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR
8
9
UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
(1) REGISTRATION UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR (2) QUALIFICATION FOR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
THE TRANSFER OF THIS WARRANT IS SUBJECT TO THE CONDITIONS
SPECIFIED IN A WARRANT AGREEMENT DATED AS OF APRIL 1, 2001 AMONG
THE COMPANY, BANK OF AMERICA, N.A., A NATIONAL BANKING
ASSOCIATION, FLEET NATIONAL BANK, A NATIONAL BANKING ASSOCIATION,
AND COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND," NEW YORK BRANCH, AS MODIFIED AND
SUPPLEMENTED FROM TIME TO TIME, AND NO TRANSFER OF THIS WARRANT
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. A COPY OF THE FORM OF SUCH AGREEMENT IS ON FILE AND
MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
COMPANY. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF SUCH
AGREEMENT.
Each Holder acknowledges and consents that the certificates for the Underlying
Common Stock will be, when issued, legended substantially as follows:
THE SALE OF THE COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER ANY STATE SECURITIES LAW AND SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE WARRANT
AGREEMENT AND ONLY WITH (1) REGISTRATION UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (2) QUALIFICATION FOR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
ARTICLE VI
TRANSFER OF WARRANTS
SECTION 6.01. TRANSFER. Subject to the terms hereof, the Warrants and
all rights hereunder and thereunder are transferable, in whole or in part, on
the books of the Company maintained for such purpose at the Company's principal
office by each Holder, upon surrender of the Warrant Certificate to the Company
at its principal office, accompanied by (i) a duly executed form of warrant
assignment, substantially in the form of Exhibit C attached hereto (the "Warrant
Assignment Form"), and (ii) payment of any necessary transfer tax or other
9
10
governmental charge imposed upon such transfer. Upon any partial transfer, the
Company will issue and deliver to the assigning Holder a new Warrant or
Certificate or Certificates with respect to the Warrants not so transferred.
ARTICLE VII
REGISTRATION RIGHTS
SECTION 7.01. DEMAND REGISTRATION.
(a) Generally. No more than two (2) times, each Holder holding, in the
aggregate, Warrants to purchase 65,505 shares of the Underlying Common Stock as
of the date hereof (as adjusted for stock splits, dividends, recapitalizations
and the like), shall have the right, from time to time, to make written request
to the Company with respect to registration under the Act of all or any part of
its Underlying Common Stock (each, a "Demand Registration"), and the Company
will pay Registration Expenses with respect to such Demand Registration. The
Company will, promptly following the receipt of a Demand Registration notice,
prepare and file, and use its commercially reasonable efforts to prosecute to
effectiveness, an appropriate filing with the Commission of a registration
statement covering such Underlying Common Stock and the proposed sale or
distribution thereof under the Act. The Company shall maintain the effectiveness
of any registration statement filed hereunder for a period ending on the earlier
of 180 days (excluding any days on which a Holder was prohibited from selling by
virtue of a Delay Notice delivered under Section 7.04(b)) or until all offered
shares are sold pursuant to such registration statement.
(b) Incomplete Public Offerings, Etc. The Company shall have the right
to postpone the filing or effectiveness of any Demand Registration for a
reasonable period of time, but not in excess of 105 days, if (i) the Company is
conducting or is actively pursuing a public offering, (ii) the Company has been
advised by legal counsel that such filing or effectiveness would require
disclosure of a material financing, acquisition or other corporate transaction,
and the Board of Directors of the Company determines in good faith that such
disclosure is not in the best interests of the Company and its stockholders or
(iii) the Board of Directors of the Company determines in good faith that there
is a valid business purpose or reason for delaying filing or effectiveness.
(c) No Right of Company or Other Person to Piggyback on Required
Registrations. Neither the Company nor any Person (other than Holders) owning
any of its securities shall have the right to include any of the Company's
securities in a registration statement initiated as a Demand Registration under
this Section 7.01, unless (i) such securities are of the same class as the
Underlying Common Stock being registered, (ii) if such Demand Registration is an
underwritten offering, the Company or such Persons, as applicable, agree in
writing to sell their securities on the same terms and conditions as apply to
the Underlying Common Stock being sold and (iii) the inclusion of any of the
Company's securities could not reasonably be expected to affect the number of
securities or offering price of such securities to be sold by such Holder. If
any Persons owning any securities of the Company register securities of the
Company in a Demand Registration (in accordance with the provisions of this
Section 7.01(e)), such Persons shall pay the fees and expenses of counsel to
such Persons and their pro rata share of the
10
11
Registration Expenses if the Registration Expenses for such registration are
not paid by the Company for any reason.
(d) Selection of Underwriters and Counsel, Etc. If a Demand
Registration involves an underwritten offering: (i) the Company shall have the
right to select the investment banker or bankers and manager or managers to
administer the offering (provided that such investment bankers and managers must
be reasonably satisfactory to the Holders); and (ii) the Holders shall have the
right to select the counsel to represent the Holders.
(e) Limitations on Demand Registrations. Notwithstanding anything
herein to the contrary, the Company shall not be obligated to honor a request
for a Demand Registration in connection with any request for a Demand
Registration pursuant to which a registration statement would be declared
effective prior to the expiration of 365 days following the last effective date
of any previous registration statement pursuant to this Section 7.01.
SECTION 7.02. OTHER REGISTRATION.
(a) Piggyback Registrations. If the Company shall propose the
registration on an appropriate form under the Act of the sale of any of its
securities, for itself or for any other securityholder of the Company (other
than a registration statement on Form S-4 or S-8, or any form substituted
therefor), the Company shall, in respect of each such proposed registration
occurring after the Closing Date, promptly give the Holders written notice, or
telegraphic or telephonic notice followed as soon as practicable by written
confirmation thereof, of such proposed registration. Upon written notice or
telegraphic or telephonic notice of the Holders followed as soon as practicable
by written confirmation thereof, given to the Company within ten (10) Business
Days after the giving of such notice of a proposed offering by the Company, the
Company shall use its commercially reasonable efforts to include or cause to be
included in any registration statement related to such proposed offering the
sale of all or such portion of the Underlying Common Stock as a Holder may
request; provided, however, that the Company may at any time withdraw or cease
proceeding with any such registration if it shall at the same time withdraw or
cease proceeding with the registration of the sale of the securities originally
proposed to be registered; and provided further, however, that if the Company is
advised in writing in good faith by any managing underwriter of the Company's
securities being offered in an underwritten public offering pursuant to such
registration statement that the amount to be sold by Persons other than the
Company (collectively, the "Selling Stockholders") is greater than the amount
which can be offered without adversely affecting the offering, the Company may
reduce (a "Cutback") the amount offered for the accounts of Selling Stockholders
(including Holders) to a number deemed satisfactory by such managing underwriter
and shares to be excluded shall be determined in the following sequence: (i)
first, securities held by any Persons not having any such contractual,
incidental registration rights, and (ii) second, the securities sought to be
registered by Selling Stockholders (including the Holders) on a pro rata basis
in accordance with the total number of securities sought to be registered by all
Selling Stockholders. In the event that the proposed registration by the Company
is, in whole or in part, an underwritten public offering of Common Stock, any
request pursuant to this Section 7.02 to register shall specify that such
Underlying Common Stock is to be included in the underwriting on the same terms
and conditions as the shares of Common Stock, if any, otherwise being sold
through underwriters under such registration.
11
12
(b) Expenses. All Registration Expenses pursuant to this Section 7.02
shall be borne by the Company.
SECTION 7.03. COMPANY'S OBLIGATIONS IN REGISTRATION. In the event any
Holder participates in an offering of Underlying Common Stock in a registration
statement pursuant to Section 7.01 or Section 7.02, the Company shall:
(a) notify such Holder as to the filing thereof and of all amendments
or supplements thereto filed prior to the effective date of such registration
statement;
(b) notify such Holder immediately, and confirm the notice in writing,
(i) when the prospectus or any prospectus supplement or post-effective amendment
has been filed and, with respect to the registration statement or any
post-effective amendment thereto, when the same becomes effective, (ii) of any
request by the Commission for amendments to the registration statement or
amendment or supplement to the prospectus for additional information relating
thereto, (iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the registration statement under the Act or of the
suspension of any state securities commission of the qualification of the
Underlying Common Stock for offering or sale in any jurisdiction, or the
initiation, or the threatening, of any proceedings for any of the preceding
purposes, (iv) of the receipt of any comments, or requests for additional
information, from the Commission or any state regulatory authority, and (v) of
the existence of any fact or the happening of any event that makes any statement
of a material fact made in the registration statement, prospectus, any amendment
or supplement thereto, or any document incorporated by reference therein untrue,
or that requires the making of any additions to or changes in the registration
statement or the prospectus in order to make the statements therein not
misleading. If the Commission or any state regulatory authority shall enter such
a stop order or order suspending qualification at any time, the Company will
promptly use its commercially reasonable efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(c) during any time when a prospectus is required to be delivered under
the Act during the period required for the distribution of the Underlying Common
Stock, use its commercially reasonable efforts to comply with all requirements
imposed upon it by the Act, as hereafter amended, and by the rules and
regulations promulgated thereunder, so far as necessary to permit the
continuance of sales of or dealings in the Underlying Common Stock pursuant to a
prospectus complying with Section 10(a)(3) of the Act. If at any time when a
prospectus relating to the Underlying Common Stock is required to be delivered
under the Act and any event shall have occurred that would cause the prospectus
relating to the Underlying Common Stock as then amended or supplemented to
include an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading, or
if it is necessary at any time to amend such prospectus to comply with the Act
and the rules and regulations of the Commission promulgated thereunder, the
Company will promptly prepare and file with the Commission an appropriate
amendment or supplement correcting such misstatement or omission in form
satisfactory to the Company's counsel;
12
13
(d) use its commercially reasonable efforts, in cooperation with such
Holder, at or prior to the time the registration statement becomes effective, to
register or qualify the Underlying Common Stock for offering and sale under the
securities or blue sky laws relating to the offering or sale of the Underlying
Common Stock in such jurisdictions as such Holder may reasonably designate, do
any and all other acts or things reasonably necessary or advisable to enable the
disposition in any such jurisdiction of the Underlying Common Stock covered by
the registration statement and to continue the qualifications in effect so long
as required for purposes of the sale of the Underlying Common Stock; provided
that no such qualification shall be required in any jurisdiction where, as a
result thereof, the Company would be subject to service of process for all
purposes other than as to matters and transactions relating to the registration
statement, in any jurisdiction where it is not now so subject. In each
jurisdiction where such qualification shall be effected, the Company will,
unless such Holder agrees that such action is not at the time necessary or
advisable, file and make such statements or reports at such times as are or may
reasonably be required by the laws of such jurisdiction;
(e) use the Company's commercially reasonable efforts to cause the
independent certified public accountants of the Company to deliver to such
Holder, and to the underwriters if the Underlying Common Stock is being sold
through underwriters, letters on the date that the registration statement
becomes effective and on the date the Underlying Common Stock is delivered to
the underwriters for sale pursuant to such registration or, if the Underlying
Common Stock is not being sold through underwriters, on the date that the
registration statement becomes effective, stating that they are independent
certified public accountants within the meaning of the Act and the rules and
regulations of the Commission thereunder, and that, in their opinion, the
financial statements and other financial data of the Company included in the
registration statement or prospectus, or any amendment or supplement thereto,
comply as to form in all material respects with the applicable accounting
requirements of the Act, and such other financial matters as the underwriter, if
any, or such Holder may reasonably request;
(f) after the effective date of such registration statement, prepare,
and promptly notify such Holder of the proposed filing of, and promptly file
with the Commission, each and every amendment or supplement thereto or to any
prospectus forming a part thereof as may be necessary to make any statements
therein not misleading in any material respect;
(g) furnish to such Holder, without charge, as soon as available,
copies of any such registration statement and each preliminary or final
prospectus, or supplement or amendment prepared pursuant thereto, all in such
quantities as such Holder may from time to time reasonably request in order to
facilitate the public sale or other disposition of the Underlying Common Stock.
The Company hereby consents to the use of the prospectus and any amendment or
supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Underlying Common Stock covered by the prospectus or any amendment or supplement
thereto;
(h) make such representations and warranties to any underwriter of the
Underlying Common Stock, and use the Company's best efforts to cause the
Company's counsel to render, at the time or times of the letters referred to in
subparagraph (e) above, such opinions to such underwriter, if any, as such
underwriter may reasonably request;
13
14
(i) prepare and file with the Commission a registration statement with
respect to such Underlying Common Stock and prepare and file with the Commission
such amendments and post-effective amendments to the registration statement as
may be necessary to keep the registration statement effective for 180 days to
complete the proposed distribution; cause the prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Securities Act, and to comply fully with the applicable
provisions of Rules 424 and 430A under the Securities Act in a timely manner;
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such registration statement or
supplement to the prospectus;
(j) if requested by any selling Holder or the underwriter(s), if any,
incorporate in the registration statement or prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
selling Holder and underwriter(s), if any, may reasonably request to have
included therein, with respect to the number of shares of Underlying Common
Stock being sold to such underwriter(s), the purchase price being paid therefor
and any other terms of the offering of the Underlying Common Stock to be sold in
such offering and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after the Company is notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment;
(k) cooperate with the selling Holders and the underwriter(s), if any,
to facilitate the timely preparation and delivery of certificates representing
Underlying Common Stock to be sold and not bearing any restrictive legends; and
enable such Underlying Common Stock to be in such denominations and registered
in such names as the holders or the underwriter(s), if any, may request prior to
any sale of Underlying Common Stock made by such underwriter(s);
(l) cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD") and in the performance
of any due diligence investigation by any underwriter (including any "qualified
independent underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD;
(m) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders, as soon as practicable, a consolidated earnings statement
meeting the requirements of the Act and Rule 158 thereunder (which need not be
audited) for the twelve-month period (i) commencing at the end of any fiscal
quarter in which Underlying Common Stock is sold to underwriters in a firm or
best efforts underwritten offering or (ii) if not sold to underwriters in such
an offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the registration statement;
(n) enter into such customary agreements (including an underwriting
agreement in customary form) in order to expedite or facilitate the disposition
of such Underlying Common Stock; and
14
15
(o) make available for inspection by any holder of Underlying Common
Stock included in such registration statement, any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records"),
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement; provided that Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the registration statement or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction; and provided, further, each holder of Underlying Common Stock
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action and to prevent
disclosure of the Records deemed confidential.
SECTION 7.04. AGREEMENTS BY THE HOLDERS.
(a) Obligations. In connection with the filing of a registration
statement pursuant to this Article VII, if a Holder participates in the offering
of the Underlying Common Stock, such Holder shall:
(i) furnish the Company all material information reasonably
requested by the Company concerning such Holder and the proposed method of sale
or other disposition of the Underlying Common Stock and such other information
and undertakings as shall be reasonably required in connection with the
preparation and filing of any such registration statement covering the sale of
all or part of the Underlying Common Stock and in order to ensure full
compliance with the Act and the rules and regulations of the Commission
thereunder;
(ii) if the Company is at the time entering into an
underwriting agreement covering the sale of its Common Stock, enter into an
underwriting agreement in customary form with the same underwriter or
underwriters who are parties to such underwriting agreement with the Company;
provided that the sales of Underlying Common Stock by such Holder and the
Company thereunder are at the same price and upon the same terms and conditions;
(iii) cooperate in good faith with the Company and its
underwriters, if any, in connection with such registration, including placing
the shares of Underlying Common Stock to be included in such registration
statement in escrow or custody to facilitate the sale and distribution thereof;
and
(iv) each Holder holding at least 1% of the fully-diluted
Outstanding Common Stock agrees, that if requested by the Company and an
underwriter of Common Stock in connection with any public offering of the
Company, not to sell or otherwise transfer or dispose of any shares which are
similar in nature to the securities of the Company being registered held by it
for such period, not to exceed ninety (90) days following the effective date of
the relevant registration statement (except in connection with such
registration) in connection with any other
15
16
public offering of common stock, as such underwriter shall specify reasonably
and in good faith (provided that each officer, director and other holder of 1%
of the fully-diluted Outstanding Common Stock also so agree).
(b) Black-Out Periods. The Holders agree that they shall not sell any
shares of the Underlying Common Stock pursuant to any effective registration
statement during any period of time when, but only so long as, the Company
notifies the Holders (a "Delay Notice") that the Company is in possession of
material non-public information that, in the exercise of its reasonable judgment
based on the advice of its counsel, would be required to be disclosed in a
registration statement (or any amendment or post-effective amendment thereto) in
order to comply with Commission requirements, which material information may
relate, including, without limitation, to a financing project or a pending
acquisition, merger or other material corporate reorganization to which the
Company is or is expected to be a party; provided, however, that the Company
shall advise the Holders in writing as soon as any such delay is no longer
applicable; and provided, further that the Holders shall only be prohibited from
so selling any shares of Underlying Common Stock for up to forty-five (45)
consecutive days (a "Delay Period") following the receipt of a Delay Notice and
any two Delay Periods must be at least thirty (30) days apart during which time
the Holders shall be permitted to sell shares of Underlying Common Stock
pursuant to an effective registration statement.
SECTION 7.05. INDEMNIFICATION; CONTRIBUTION.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder, its officers, directors, agents, employees,
representatives and each person or entity who controls such Holder (within the
meaning of the Act), against all losses, claims, damages, liabilities and
expenses arising out of or based upon any untrue or alleged untrue statement of
material fact contained in any registration statement, any amendment or
supplement thereto, any prospectus or preliminary prospectus 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 light of the circumstances in
which they were made, not misleading, except insofar as the same arise out of or
are based upon any such untrue statement or omission based upon information with
respect to the Holders furnished to the Company by the Holders in writing, or
the failure of the Holders to deliver a prospectus in which such statements or
omissions were corrected. In connection with an underwritten offering, the
Company will indemnify the underwriters thereof, their officers and directors
and each person who controls such underwriters (within the meaning of the Act)
to the same extent as provided above with respect to the sale of Underlying
Common Stock by the Holders. The foregoing indemnification agreement shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by the Holders. In connection with any registration
statement in which a Holder is participating, such Holder will furnish to the
Company in writing such information with respect to the name and address of such
Holder, the amount of Underlying Common Stock held by such Holder, and such
other information as is required by the Company for use in connection with any
such registration statement or prospectus and such Holder severally, not
jointly, agrees to indemnify, to the extent permitted by law, the Company, its
directors and officers and each person or entity who controls the Company
(within the meaning of the Act) against any losses, claims, damages, liabilities
and expenses arising out of or based
16
17
upon any untrue statement of material fact contained in any registration
statement, any amendment or supplement thereto, any prospectus or preliminary
prospectus or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent that such untrue statement or omission is contained in any
information with respect to the Holders furnished to the Company in writing by
such Holder expressly for use in the registration statement or prospectus;
provided, however, that no Holder shall be liable for any claims hereunder in an
amount in excess of the net proceeds received by such Holder from the sale of
the Underlying Common Stock pursuant to the registration statement. If any
action, suit or proceeding shall be brought against the Company, any of its
directors or officers, or any such controlling Person based on the registration
statement or prospectus, and in respect of which indemnity may be sought against
the Holders pursuant to this Section 7.05(b), the Holders shall have the rights
and duties given to the Company by Section 7.05(c) below (except that if the
Company shall have assumed the defense thereof the Holders shall not be required
to do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the Holders'
expense), and the Company, its directors and officers, and any such controlling
Person shall have the rights and duties given to the Holders by Section 7.05(c).
(c) Conduct of Indemnification Proceedings. If any action, suit or
proceeding shall be brought against the Holders or any Person controlling the
Holders in respect of which indemnity may be sought against the Company, the
Holders or such controlling Person shall promptly notify the parties against
whom indemnification is being sought (collectively the "Indemnifying Parties"
and each an "Indemnifying Party"), and such Indemnifying Parties shall assume
the defense thereof, including the employment of counsel and payment of all fees
and expenses; provided, however, that failure to so notify an Indemnifying Party
shall not relieve such Indemnifying Party from any liability unless and to the
extent it is prejudiced as a result of such failure. The Holders or any such
controlling Person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Holders or such
controlling Person unless (i) the Indemnifying Parties have agreed in writing to
pay such fees and expenses, (ii) the Indemnifying Parties have failed to assume
the defense and employ counsel, or (iii) the named parties to any such action,
suit or proceeding (including any impleaded parties) include both the Holders or
such controlling Person and the Indemnifying Parties and the Holders or such
controlling Person shall have been advised in writing by its counsel that
representation of such indemnified party and any Indemnifying Party by the same
counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the Indemnifying Party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of the Holders or such controlling
Person). It is understood, however, that the Indemnifying Parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Holders and
controlling Persons not having actual or potential differing interests with the
Holders or among themselves, which firm shall be designated in writing by the
Holders, and that all such fees and expenses shall be reimbursed as they are
incurred. The Indemnifying Parties shall not be liable for any settlement of any
such action, suit
17
18
or proceeding effected without their written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the Indemnifying Parties agree to indemnify and hold
harmless the Holders, to the extent provided in Section 7.05(a), and any such
controlling Person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in this Section
7.05 from the Indemnifying Party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and indemnified parties shall be determined by reference to,
among other things, whether any statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 7.05(c), any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7.05(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7.05(d), no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
If indemnification is available under this Section 7.05, the
Indemnifying Parties shall indemnify each indemnified party to the full extent
provided in Section 7.05(a) and 7.05(b) without regard to the relative fault of
said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 7.05(d).
(e) The indemnity and contribution agreements contained in this Section
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any of the Holders or any Person
controlling the Holders, the Company, its directors or officers or any Person
controlling the Company. A successor to the Holders or any Person controlling
the Holders, or to the Company, its directors or officers or any Person
controlling the Company shall be entitled to the benefits of the indemnity,
contribution and reimbursement agreements contained in this Section.
(f) No Indemnifying Party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of
18
19
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such action, suit or proceeding.
(g) Notwithstanding the provisions of this Section, the Holders shall
not be required to contribute any amount in excess of the amount by which the
net proceeds received by them in connection with the sale of the Underlying
Common Stock exceeds the amount of any damages which the Holders have otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.
SECTION 7.06. OTHER REGISTRATION RIGHTS. The Company covenants that it
shall not grant any registration rights to any Person which could conflict or be
inconsistent with the provisions of Article VII or which would otherwise
adversely affect the rights of the Holders under this Agreement. If the Company
shall at any time provide to any Person rights with respect to the registration
of securities of the Company under the Act which are, in the sole judgment of
the Holders, on terms or conditions more favorable to such Person than the terms
and conditions provided in this Article VII, the Company shall provide (by way
of amendment to this Agreement or otherwise) such more favorable terms or
conditions to the Holders. In the event of a conflict or inconsistency, the
provisions of this Article VII shall prevail.
SECTION 7.07. RULE 144 REQUIREMENTS. The Company will use reasonable
commercial efforts to file with the Commission such information as the
Commission may require and will use reasonable commercial efforts to make
available Rule 144 under the Securities Act (or any successor exemptive rule).
SECTION 7.08. TERMINATION. The rights granted under Sections 7.01 and
7.02 shall terminate, with respect to any Holder, upon the earlier of (i) sale
of all of the Underlying Common Stock owned by such Holder under a registration
statement and (ii) the date upon which the Holder may sell all shares of
Underlying Common Stock in a single three-month period under Rule 144 as
promulgated under the Act, or such comparable successor statute or rule thereto.
ARTICLE VIII
ADJUSTMENT OF WARRANTS
SECTION 8.01. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER,
ETC. In case of any liquidation of the Company, reorganization or consolidation
of the Company with, or any merger of the Company with or into, another
corporation (other than a consolidation or merger in which the Company is the
surviving corporation) or in case of any sale or transfer (whether in one or
more transactions) of all or substantially all of the assets of the Company, the
corporation resulting from such reorganization or consolidation or surviving
such merger or to which such sale or transfer shall be made, as the case may be,
shall make suitable provision (which shall be fair and equitable to the Holders)
and shall either (i) assume the obligations of the Company hereunder (by written
instrument executed and mailed to the Holders) pursuant to which, upon exercise
of Warrants at any time after the consummation of such reorganization,
consolidation,
19
20
merger or conveyance, or (ii) make suitable provision in connection with the
closing of such reorganization, consolidation, merger or conveyance such that in
the case of either clause (i) or (ii) the Holders shall be entitled to receive
the same amount of cash, stock or other securities or property that such Holder
would have been entitled to receive if such Holder had exercised the Warrants
immediately prior thereto.
SECTION 8.02. ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE. The
number of shares of Common Stock issuable upon the exercise of the Warrants (the
"Exercise Rate") is subject to adjustment from time to time upon the occurrence
of the events enumerated in this Section 8.02 and under the circumstances
described in Section 8.03. For purposes of this Section 8.02, "Common Stock"
means shares now or hereafter authorized of any class of common stock of the
Company and any other stock of the Company, however designated, that has the
right (subject to any prior rights of any class or series of preferred stock) to
participate in any distribution of the assets or earnings of the Company without
limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
1. pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
2. subdivides its outstanding shares of Common Stock into a
greater number of shares;
3. combines its outstanding shares of Common Stock into a
smaller number of shares;
4. makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock, or
5. issues by reclassification of its Common Stock any shares of
its capital stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of the Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which such Holder would have owned immediately following the action if
such Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification. If, after an
adjustment, a Holder of a Warrant upon exercise may receive shares of two or
more classes of capital stock of the Company, the Company shall determine the
allocation of the adjusted Exercise Rate between the classes of capital stock.
After such allocation, the exercise privilege and the Exercise Rate of each
class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section. Such adjustment
shall be made successively whenever any event listed above shall occur.
20
21
(b) Adjustment for Rights Issue. If the Company issues any rights,
options or warrants entitling any person to subscribe for Common Stock or
securities convertible into, or exchangeable or exercisable for, Common Stock at
an offering price (or with an initial conversion, exchange or exercise price
plus such offering price) which is less than the Current Market Price (as
determined herein) per share of Common Stock on the record date for such
issuance (all of the foregoing, "Rights"), the Exercise Rate shall be adjusted
in accordance with the formula:
O + N
E' = Ex ------------
N x P
O + --------
M
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate.
O = the number of shares of Common Stock outstanding on
the record date.
N = the number of additional shares of Common Stock
offered.
P = the offering price per share of the additional shares.
M = the Current Market Price per share of Common Stock on
the record date.
The adjustment shall be made successively whenever any such Rights are
issued and shall become effective immediately after the record date for the
determination of shareholders entitled to receive the Rights in the case of
Rights to be issued to the holders of Common Stock. To the extent that shares of
Common Stock are not delivered after the expiration of such rights or warrants,
the Exercise Rate shall be readjusted to the Exercise Rate which would otherwise
be in effect had the adjustment made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. In the event that such rights or warrants are
not so issued, the Exercise Rate shall again be adjusted to be the Exercise Rate
which would then be in effect if such date fixed for determination of
shareholders entitled to receive such rights or warrants had not been so fixed.
(c) Adjustment for Other Distributions. If the Company distributes to
all holders of its Common Stock any of its assets (including but not limited to
cash), debt securities, preferred stock or any rights or warrants to purchase
any such securities, the Exercise Rate shall be adjusted in accordance with the
formula:
M
E' = Ex -----------
M-F
where:
E' = the adjusted Exercise Rate.
E = the current Exercise Rate.
M = the Current Market Price per share of Common Stock on the
record date.
F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one share of
Common Stock. The Board of Directors shall determine the
fair market value pursuant to Section 8.02(m) based upon the
trading prices of publicly traded securities where
applicable.
21
22
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution.
This subsection does not apply to rights, options or warrants referred to in
subsection (b) of this Section 8.02.
(d) Adjustment for Common Stock Issue. If the Company issues shares of
Common Stock for a consideration per share less than the Current Market Price
per share on the date the Company fixes the offering price of such additional
shares, the Exercise Rate shall be adjusted in accordance with the formula:
O + N
E'= Ex -------------
N x P
O + --------
M
where:
E' = the adjusted Exercise Rate.
E = the then current Exercise Rate.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
N = the number of additional shares of Common Stock issued.
P = the aggregate consideration received per share for the
issuance of such additional shares.
M = the Current Market Price per share on the date of issuance
of such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (a), (b), (c)
and (e) of this Section 8.02;
(2) the exercise of the Warrant, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock;
(3) Common Stock upon the exercise of rights or warrants issued to
the holders of Common Stock;
(4) Common Stock issued to shareholders of any person that is not
affiliated with the Company and that merges into the Company
or a subsidiary of the Company in proportion to their stock
holdings of such person immediately prior to such merger, upon
such merger.
(e) Adjustment for Convertible Securities Issue. If the Company issues
any securities convertible into or exchangeable for Common Stock (other than
securities issued in transactions
22
23
described in subsections (b) and (c) of this Section 8.02) for a consideration
per share of Common Stock initially deliverable upon conversion or exchange of
such securities less than the Current Market Price per share on the date of
issuance of such securities, the Exercise Rate shall be adjusted in accordance
with the formula:
O + N
E' = Ex -----------
N x P
O + --------
M
where:
E' = the adjusted Exercise Rate.
E = the then current Exercise Rate.
O = the number of shares outstanding immediately prior to
the issuance of such securities.
N = the maximum number of shares deliverable upon conversion
of or in exchange for such securities at the initial
conversion or exchange rate.
P = the aggregate consideration received for the issuance of
each such security.
M = the Current Market Price per share on the date of issuance
of such securities.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities has not been issued when such securities are no longer
outstanding, then the Exercise Rate shall promptly be readjusted to the Exercise
Rate which would then be in effect had the adjustment upon the issuance of such
securities been made on the basis of the actual number of shares of Common Stock
issued upon conversion or exchange of such securities.
This subsection (e) does not apply to convertible securities issued to
shareholders of any person that is not affiliated with the Company and that
merges into the Company, or with a subsidiary of the Company, in proportion to
their stock holdings of such person immediately prior to such merger, upon such
merger.
(f) Current Market Price. The current market price per share of Common
Stock (the "Current Market Price") on any date is: (i) if the Common Stock is
not registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the value of the Common Stock as determined by an independent,
nationally recognized investment banking firm experienced in valuation matters
chosen by the Company and reasonably satisfactory to the Warrant holder;
provided, however that the current market value shall be determined by the Board
of Directors of the Company, acting in good faith (which valuation shall be to
the reasonable satisfaction of the Warrant holder), with respect to any Common
Stock issued by the Board of Directors pursuant to a stock option plan for
directors, officers, and consultants or advisers of the Company; and provided,
further, that the Board of Directors shall have such authority referred to in
the immediately preceding proviso with regard to no more than five
23
24
percent (5%) of the authorized Common Stock in the aggregate and the current
market value of any Common Stock in excess of such amount shall be determined as
otherwise set forth in this Section 8.02(f), or (ii) if the Common Stock is
registered under the Exchange Act, the average of the Quoted Prices of the
Common Stock for thirty (30) consecutive trading days commencing forty-five (45)
trading days before the date in question or, if the Common Stock has been
registered for less than thirty (30) consecutive trading days, the average of
the Quoted Prices for all the trading days of the Common Stock. The "Quoted
Price" of the Common Stock is the last reported sales price of the Common Stock
as reported by the NASDAQ National Market System, or if the Common Stock is
listed on a securities exchange, the last reported sales price of the Common
Stock on such exchange which shall be for consolidated trading if applicable to
such exchange, or if neither so reported or listed, the last reported bid price
of the Common Stock. In the absence of one or more such quotations, the Board of
Directors of the Company shall determine the Current Market Price pursuant to
Section 8.02(m) in good faith on the basis of such quotations.
(g) Consideration Received. For purposes of any computation respecting
consideration received pursuant to subsections (d) and (e) of this Section 8.02,
the following shall apply:
1. in the case of the issuance of shares of Common Stock
for cash, the consideration shall be the amount of
such cash, provided that in no case shall any
deduction be made for any commissions, discounts or
other expenses incurred by the Company for any
underwriting of the issue or otherwise in connection
therewith;
2. in the case of the issuance of shares of Common Stock
for a consideration in whole or in part other than
cash, the consideration other than cash shall be
deemed to be the fair market value thereof as
determined in good faith by the Board of Directors
pursuant to Section 8.02(m), based upon the trading
prices of publicly traded securities where
appropriate (irrespective of the accounting treatment
thereof), and described in a resolution of the Board
of Directors of the Company; and
3. in the case of the issuance of securities convertible
into or exchangeable for shares, the aggregate
consideration received therefor shall be deemed to be
the consideration received by the Company for the
issuance of such securities plus the additional
minimum consideration, if any, to be received by the
Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the
same manner as provided in clauses (1) and (2) of
this subsection).
(h) When De Minimis Adjustment May Be Deferred. No adjustment in the
Exercise Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Rate. Any adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section shall be made to the nearest share.
(i) When No Adjustment Required. No adjustment need be made for rights
to purchase Common Stock pursuant to a Company plan for reinvestment of
dividends or interest.
24
25
No adjustment need be made for a change in the par value or no par value of the
Common Stock. To the extent the Warrant becomes convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
(j) Notice of Adjustment. Whenever the Exercise Rate is adjusted, the
Company shall provide the notices required by Section 8.04 hereof.
(k) Voluntary Increase. The Company from time to time may increase the
Exercise Rate by any amount for any period of time if the period is at least
twenty (20) days and if the increase is irrevocable during the period. Whenever
the Exercise Rate is increased, the Company shall mail to the Warrant holder a
notice of the increase. The Company shall mail the notice at least fifteen (15)
days before the date the increased Exercise Rate takes effect. The notice shall
state the increased Exercise Rate and the period it will be in effect. An
increase of the Exercise Rate does not change or adjust the Exercise Rate
otherwise in effect for purposes of subsections (a), (b), (c), (d) and (e) of
this Section 8.02.
(l) Notice of Certain Transactions. If:
1. the Company takes any action that would require an
adjustment in the Exercise Rate pursuant to subsections
(a), (b), (c), (d) or (e) of this Section 8.02; or
2. there is a liquidation or dissolution of the Company, then
the Company shall mail to the Warrant holder a notice
stating the proposed record date for a dividend or
distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation,
merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least fifteen (15) days
before such date. Failure to mail the notice or any defect
in it shall not affect the validity of the transaction.
(m) Company Determination. Any determination that the Company or its
Board of Directors must make pursuant to this Agreement shall be made in good
faith and shall be binding on the Warrant holder, except as set forth herein.
The Company shall give the holder of the Warrant written notice of any such
determination by the Company or its Board of Directors.
SECTION 8.03. NO DILUTION OR IMPAIRMENT; CAPITAL AND OWNERSHIP
STRUCTURE. If any event shall occur as to which the provisions of Section 8.02
are not strictly applicable but the failure to make any adjustment would
adversely affect the purchase rights represented by the Warrants in accordance
with the essential intent and principles of such Section, then, in each such
case, the Company shall appoint, at its own expense, an investment banking firm
of recognized national standing that does not have a direct or material indirect
financial interest in the Company or any of its subsidiaries, who has not been,
and, at the time it is called upon to give independent financial advice to the
Company, is not (and none of its directors, officers, employees, affiliates or
shareholders are) a promoter, director or officer of the Company or any of its
subsidiaries, which shall give their opinion upon the adjustment, if any, on a
basis consistent with the essential intent and principles established in Section
8.02, necessary to preserve, without dilution, the purchase rights, represented
by the Warrants. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of the Warrants and
25
26
shall make the adjustments described therein. The Company will not, by amendment
of its Certificate of Incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of the Warrants, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
the Warrants against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (1) will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock on the exercise of the
Warrants from time to time outstanding and (2) will not take any action which
results in any adjustment of the Exercise Rate if the total number of Warrant
Shares issuable after the action upon the exercise of the Warrants would exceed
the total number of shares of Common Stock then authorized by the Company's
Certificate of Incorporation and available for the purposes of issue upon such
exercise. A consolidation, merger, reorganization or transfer of assets
involving the Company covered by Section 8.01 shall not be prohibited by or
require any adjustment under this Section 8.03.
SECTION 8.04. NOTICES TO THE WARRANT HOLDERS. Upon any adjustment of
the Exercise Rate pursuant to Section 8.02, the Company shall promptly
thereafter cause to be delivered, by first-class mail, postage prepaid, to the
registered holder of each Warrant Certificate at its address appearing on the
warrant register a certificate of an officer of the Company setting forth the
Exercise Rate after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Rate, upon exercise of the Warrant and payment
of the Exercise Price. Where appropriate, such notice may be given in advance
and included as a part of the notice required to be mailed under the other
provisions of this Section 8.04.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants;
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in subsection (a) of Section 8.02 hereof);
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from no par
value to par value, or as a result of a subdivision or combination), or a tender
offer or exchange offer for shares of Common Stock;
26
27
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(e) the Company proposes to take any action which would require an
adjustment of the Exercise Rate pursuant to Section 8.02; then the Company shall
cause to be given to the registered holders of the Warrant Certificates at its,
his or her address appearing on the warrant register, at least twenty (20) days
(or ten (10) days in any case specified in clauses (a) or (b) above) prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first-class mail, postage prepaid,
a written notice stating (i) the date as of which any such subdivision,
combination or reclassification is to be made, or (ii) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
dividends, rights, options, warrants or distribution are to be determined, or
(iii) the initial expiration date set forth in any tender offer or exchange
offer for shares of Common Stock, or (iv) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 8.04 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in the Warrant Certificates
shall be construed as conferring upon the holder thereof the right to vote or to
consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company.
ARTICLE IX
HOLDERS' RIGHTS
SECTION 9.01. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT
CERTIFICATES. If any Warrant Certificate shall become lost, stolen, mutilated or
destroyed, the Company shall, on such reasonable terms as to indemnity or
otherwise as it may impose, including, without limitation, the delivery by a
Holder to the Company (at such Holder's expense) of an affidavit of lost
instrument and an indemnity agreement, issue a new Warrant Certificate of like
denomination, tenor and date as the Warrant Certificate so lost, stolen,
mutilated or destroyed. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
SECTION 9.02. RIGHTS OF WARRANT HOLDERS. No Warrant Certificate shall
entitle the holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to vote, to receive dividends and other
distributions, to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, except as expressly provided herein.
27
28
ARTICLE X
MISCELLANEOUS
SECTION 10.01. AMENDMENT AND WAIVER. Any term, covenant, agreement or
condition in this Agreement may be amended, or compliance therewith be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Company and the Holders.
SECTION 10.02. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto. Neither this Agreement nor any other agreement
contemplated hereby shall be deemed to confer upon any Person not a party hereto
or thereto any rights or remedies hereunder or thereunder except for successors
or assigns of the parties hereto.
SECTION 10.03. ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
SECTION 10.04. SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 10.05. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations and warranties and covenants contained herein shall survive
the execution of this Agreement and the purchase of the Underlying Common Stock,
if any, and continue indefinitely and all statements contained in any
certificate, exhibit or other instrument delivered by or on behalf of the
Company or Holders pursuant to this Agreement shall be deemed to have been
representations and warranties by the Company or the Holders, as the case may
be. After the purchase of the Underlying Common Stock, the Holders shall
continue to be entitled with respect to such shares to all rights to which it
would have been entitled as a Holder under this Agreement. The Company will, at
the time of each exercise of Warrants upon the request of a Holder, acknowledge
in writing, in form reasonably satisfactory to such Holder, its continuing
obligation to afford to such Holder all such rights; provided, however, that if
such Holder shall fail to make any such request, such failure shall not affect
the continuing obligation of the Company to afford to such Holder all such
rights.
28
29
SECTION 10.06. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the substantive laws (but not the rules governing
conflicts of laws) of the State of Delaware.
SECTION 10.07. CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
SECTION 10.08. NOTICE. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person, by
overnight courier or by facsimile transmission. Such notice shall be deemed
received on the date on which it is hand-delivered, delivered by overnight
courier or received by facsimile transmission or on the third Business Day
following the date on which it is so mailed. For purposes of notice, the
addresses of the parties shall be:
If to the Company:
MONARCH DENTAL CORPORATION
0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
With a copy to:
XXXXXXX, PROCTER & XXXX, LLP
Exchange Place
Boston, Massachusetts 02109-2881
Attention: Xxxx X. XxXxxxxx, P.C.
If to Bank of America:
BANK OF AMERICA, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxx
With a copy to:
Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
29
30
If to Fleet:
FLEET NATIONAL BANK
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
If to Rabobank:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "Rabobank
Nederland," New York branch
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Corporate Services
With a copy to:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "Rabobank
Nederland," New York branch
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx Xxxxxx
And a copy to:
JENKENS & XXXXXXXXX
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
SECTION 10.09. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
30
31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HOLDERS:
BANK OF AMERICA, N.A., a national banking
association
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
FLEET NATIONAL BANK
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A.,
"Rabobank Nederland," New York Branch
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
COMPANY:
MONARCH DENTAL CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
31
32
EXHIBIT A
THE SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
ANY STATE SECURITIES LAW AND SUCH WARRANTS MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHOUT (1) REGISTRATION UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (2) QUALIFICATION FOR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
THE TRANSFER OF THIS WARRANT IS SUBJECT TO THE CONDITIONS SPECIFIED IN A WARRANT
AGREEMENT DATED AS OF APRIL 1, 2001 AMONG THE COMPANY, BANK OF AMERICA, N.A., A
NATIONAL BANKING ASSOCIATION, FLEET NATIONAL BANK, A NATIONAL BANKING
ASSOCIATION AND COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
NEDERLAND," NEW YORK BRANCH AS MODIFIED AND SUPPLEMENTED FROM TIME TO TIME, AND
NO TRANSFER OF THIS WARRANT SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED. A COPY OF THE FORM OF SUCH AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE
PROVISIONS OF SUCH AGREEMENT.
No.___ Certificate for Warrants
MONARCH DENTAL CORPORATION
COMMON STOCK PURCHASE WARRANT CERTIFICATE
THIS CERTIFIES that ______________or registered assigns is the registered holder
(the "Holder") of Warrants (the "Warrants") that collectively represent the
right to purchase, prior to expiration, _______________ shares of common stock
(the "Common Stock") of Monarch Dental Corporation, a Delaware corporation (the
"Company"), subject to the dilution protection provisions contained in Section
8.02 and 8.03 of the Warrant Agreement (as hereinafter defined) at the exercise
price of $0.01 per share (the "Exercise Price"), as set forth in the Warrant
Agreement, by the Holder surrendering this Warrant Certificate, with the form of
Notice of Exercise duly executed, at the Company's principal office, and by
paying in full the Exercise Price, plus any transfer taxes as provided in the
Warrant Agreement. Payment of the Exercise Price may be made at the option of
the Holder by certified check or money order payable to the order of the
Company. Terms used herein but not otherwise defined shall have the meanings
ascribed thereto in that certain Warrant Agreement, of even date herewith,
between the Company and Holder.
This Warrant is issued pursuant to the Warrant Agreement, and all
rights of the holder of this Warrant are further governed by, and subject to the
terms and provisions of, the Warrant Agreement, to all of which terms and
provisions the Holder consents by acceptance hereof Copies of the Warrant
Agreement and any amendments thereto are available upon request to the
32
33
Company. The holder of this Warrant shall be entitled to the benefits, rights
and privileges provided under the Warrant Agreement. If any provision herein
conflicts with a provision in the Warrant Agreement, the provision in the
Warrant Agreement shall apply.
The Warrants are subject to expiration pursuant to the terms of the
Warrant Agreement.
Prior to expiration, subject to any applicable laws, rules or
regulations restricting transferability and to any restriction or
transferability that may appear in the Warrant Agreement, the Holder shall be
entitled to transfer this Warrant Certificate in whole or in part upon surrender
of this Warrant Certificate at the principal office of the Company by the
Holder, accompanied by a duly executed Warrant Assignment Form. Upon any such
transfer, a new Warrant Certificate or Certificates representing the same
aggregate number of Warrants will be issued in accordance with instructions in
the Warrant Assignment Form.
Prior to expiration, subject to the foregoing and to the provisions of
the Warrant Agreement, the Holder shall be entitled to exchange this Warrant
Certificate, with or without other Warrant Certificates, for another Warrant
Certificate or Warrant Certificates for the same aggregate number of Warrants,
upon surrender of this Warrant Certificate by the Holder at the principal office
of the Company.
The Holder has the right to require the Company to purchase the
Warrants represented by this Warrant Certificate, or the shares purchased upon
exercise of the Warrants, pursuant to the terms of the Warrant Agreement.
This Warrant Certificate shall not entitle the registered Holder to any
of the rights of a stockholder of the Company, including, without limitation,
the right to vote, to receive dividends and other distributions, or to attend or
receive any notice of meetings of stockholders or any other proceedings of the
Company unless specifically provided in the Warrant Agreement.
This Warrant Certificate and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors and assigns of the Holder and
shall be enforceable by any such successor or assign.
33
34
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed.
MONARCH DENTAL CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
34
35
EXHIBIT B
NOTICE OF EXERCISE
----------------, ------
To Monarch Dental Corporation:
The undersigned _______________________, pursuant to the provisions of
the attached Warrant Certificate, hereby elects to purchase _____% of the
Outstanding Common Stock of Monarch Dental Corporation evidenced by the attached
Warrant Certificate. I have enclosed with this Notice payment of the amount
required to purchase such shares pursuant to the terms of the Warrant Agreement.
Unless otherwise provided in the Warrant Agreement, if I have not
executed this Notice for all of the shares of Common Stock purchasable pursuant
to the Warrant, I am entitled to have, and you will promptly deliver to me, a
new Warrant Certificate issued, of the same tenor as the Warrant Certificate
surrendered herewith, for the purchase of the remaining shares.
Mailing address for stock certificate(s) or funds unless otherwise
ordered:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Very truly yours,
---------------------------------
36
EXHIBIT C
WARRANT ASSIGNMENT FORM
-------------, -----
ASSIGNMENT IN FULL
FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers unto
_______________ all Warrants to purchase shares of Common Stock of the Company
as evidenced by the attached Warrant Certificate and does irrevocably constitute
and appoint ________________, attorney, to transfer such Warrants on the books
of the Company, with full power of substitution in the premises.
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, ______________ hereby sells, assigns and transfers
unto ______________ Warrants to purchase _____% of the Outstanding Common Stock
of the Company as evidenced by the attached Warrant Certificate together with
all rights therein, and does irrevocably constitute and appoint _______________,
attorney, to transfer that part of the such Warrants on the books of the
Company, with full power of substitution in the premises.
Under the provisions of the Warrant Agreement, if the undersigned has
not executed this assignment for all of the shares of Common Stock purchasable
pursuant to the Warrant Certificate, the undersigned is entitled to have a new
Warrant Certificate issued, of the same tenor as the Warrant Certificate
surrendered hereby, for the purchase of the remaining shares not subject to this
assignment. The new Warrant Certificates should be mailed to the following
addresses:
Address of Assignor:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Address of Assignee:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Very truly yours,
37
Agreement to be Bound by Terms
of Warrant Agreement
________________, the Assignee set forth above, hereby agrees to be
bound by the terms of the Warrant Agreement pursuant to which the Warrants were
issued.
Dated:
------------
---------------------
