WARRANT PURCHASE AGREEMENT
BETWEEN
CREATIVE HOST SERVICES, INC.
AND
ING CAPITAL LLC
Dated as of January 17, 2003
TABLE OF CONTENTS
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Page
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RECITALS: 1
SECTION 1. Definitions 1
SECTION 2. Purchase and Sale of Warrants; Closing 7
SECTION 3. Investment Representations 7
SECTION 4. Conditions Precedent 7
SECTION 5. Warranties, etc. 9
(a) Credit Agreement Warranties 9
(b) Power, Authority, etc. 9
(c) Due Authorization 9
(d) Validity, etc. 9
(e) Capitalization and Ownership of the Company 9
(f) Authorization and Issuance of Warrants 10
(g) Securities Laws 10
(h) No Integration of Issue 10
SECTION 6. Covenants 10
(a) Financial and Business Information 11
(b) Information 11
(c) Maintenance of Corporate Existence, etc. 12
(d) Maintenance of Books and Records 12
(e) Inconsistent Agreements 12
(f) Organic Documents 12
(g) Transactions with Affiliates 12
(h) Issuance of Additional Rights, Options and Warrants 13
(i) Antitakeover Statutes 13
(j) Governmental Approvals 13
(k) Cash Distributions and Dividends 13
SECTION 7. Warrant Certificates 13
SECTION 8. Execution of Warrant Certificates 13
SECTION 9. Registration 14
SECTION 10. Registration of Transfers and Exchanges 14
SECTION 11. Exercise of Warrants; Conversion of Warrants 17
SECTION 12. Payment of Taxes 18
SECTION 13. Mutilated or Missing Warrant Certificates 18
SECTION 14. Reservation of Warrant Shares. 18
SECTION 15. Adjustment of Exercise Price and Number of Warrant
Shares Issuable 19
(b) Adjustment for Common Stock Issues 19
(c) Adjustment for Convertible Securities Issues 20
(d) Adjustment for Right, Option and Warrant Issues 21
(e) Consideration Received 22
(f) Reorganization of the Company. 23
(g) Adjustment in Number of Shares. 24
(h) Special Adjustment in Respect of Exercise of Eight-Dollar Option
Securities. 24
SECTION 16. Determination of Fair Market Value per Share 25
SECTION 17. Fractional Interests 25
SECTION 18. Notice to Warrant Holders 26
SECTION 19. Tag-Along Rights; Limitation on Put Rights 27
SECTION 20. Notices 28
SECTION 21. Costs and Expenses 29
SECTION 22. Indemnification 29
SECTION 23. Successors 30
SECTION 24. Termination 30
SECTION 25. Governing Law 30
SECTION 26. Benefits of this Agreement 31
SECTION 27. Counterparts 31
SECTION 28. Amendments; Waiver 31
SECTION 29. Waiver of Jury Trial 31
SECTION 30. Jurisdiction 31
SECTION 31. Specific Performance 32
SECTION 32. Confidentiality 32
SECTION 33. Entire Agreement 33
SECTION 34. Severability 33
WARRANT PURCHASE AGREEMENT
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THIS WARRANT PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of January 17, 2003 by and between CREATIVE HOST SERVICES, INC., a California
corporation (the "Company"), and ING CAPITAL LLC, a Delaware limited liability
company (the "Purchaser").
W I T N E S S E T H:
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RECITALS:
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A. Simultaneously herewith, Purchaser is entering into a Credit
Agreement, dated of even date herewith, by and among Company, Purchaser as
lender (Purchaser and any subsequent lender under the Credit Agreement, a
"Lender" and collectively the "Lenders"), and Purchaser as agent for the
Lenders, pursuant to which Purchaser has agreed, upon the terms and subject to
the conditions set forth therein, to make Loans from time to time to the
Borrower and to cause the issuance of Letters of Credit from time to time for
the account of the Borrower and its Subsidiaries;
B. It is a condition precedent to the making of the initial Loans
by Purchaser pursuant to the Credit Agreement and the issuance of the initial
Letters of Credit that the Company agree to issue to the Purchaser warrants
initially exercisable for 452,050 shares of common stock, no par value, of the
Company for an initial exercise price of $1.87 per share; and
C. The Purchaser and the Company desire to set forth in this Agreement
the terms and provisions of such warrants and the conditions to the issuance and
sale of such warrants to the Purchaser;
NOW, THEREFORE, in consideration of the premises and the agreements herein
set forth and to induce Purchaser to proceed with the transactions contemplated
by the Credit Agreement, the parties hereto, intending to be legally bound,
hereby agree as follows
SECTION 1. Definitions. Capitalized terms appearing herein and not
otherwise defined herein shall have the meanings ascribed thereto in the Credit
Agreement (irrespective of whether the Credit Agreement is in effect or has been
terminated). The following terms (whether or not underscored) when used in this
Agreement, including its preamble and recitals, shall, except where the context
otherwise requires, have the following meanings (such meanings to be equally
applicable to the singular and plural forms thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls or is controlled by or under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power:
(i) to vote 5% or more of the securities having ordinary voting power
for the election of directors of such Person; or
(ii) to direct or cause the direction of the management or policies of
such Person whether by contract or otherwise;
provided that no Lender shall be deemed to constitute an Affiliate of the
Company solely by virtue of holding Warrants or Warrant Shares.
"Agreement" means this Warrant Purchase Agreement as in effect on the date
hereof and as hereafter amended, supplemented, restated or otherwise modified.
"Business Day" means any day which is neither a Saturday, a Sunday nor a
legal holiday on which banks are authorized or required to be closed in New
York, New York.
"Change in Control" shall have the meaning set forth in the Credit
Agreement.
"Closing" means the closing of the sale and purchase of the Warrants as
contemplated hereby.
"Closing Date" means January 17, 2003, the date of the Closing.
"Common Stock" means shares now or hereafter authorized of any class of
common stock of the Company and any other capital 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 upon
voluntary or involuntary liquidation, dissolution or winding up of the Company
or in the earnings of the Company without limit as to per share amount, and
shall include, without limitation, the presently authorized 20,000,000 shares of
Common Stock, no par value per share.
"Company" is defined in the Preamble.
"Conversion Right" is defined in Section 11(b).
"Convertible Securities" is defined in Section 15(c).
"Credit Agreement" means the Credit Agreement, dated as of even date
herewith, by and among the Company, Purchaser and any other Lenders, and
Purchaser as agent for the Lenders, as in effect on the date hereof and
hereafter amended, supplemented, restated or otherwise modified.
"Eight-Dollar Option Securities" means Option Securities issued by the
Company and outstanding on the Closing Date having an exercise price equal to or
greater than $8.00 per share of Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Excluded Shares" means (i) shares of Common Stock to be issued upon
exercise or conversion of the Warrants and (ii) shares of Common Stock issuable
upon exercise or conversion of any Eight-Dollar Option Securities.
"Exercise Price" means $1.87 per share of Common Stock issuable upon
exercise of the Warrants, as adjusted from time to time in accordance with this
Agreement.
"Fair Market Value per Share" means the fair market value of a share of
Common Stock of the Company, and shall be equal to (A) as long as the Company
constitutes a Public Company and shares of Common Stock are traded on a national
securities exchange or quoted in a national inter-dealer quotation system, the
Quoted Price for Common Stock on the trading day immediately preceding the date
of determination and (B) otherwise the quotient of (x) the fair market value of
the Company and its Subsidiaries taken as a whole on the date of determination,
taking into account all the factors relevant thereto, including, without
limitation, the highest of the prices that could be obtained from an
arms'-length sale without time constraints of (1) all or substantially all of
the assets of the Company and the Subsidiaries subject to or after satisfaction
of all liabilities of the Company and the Subsidiaries or (2) all of the Fully
Diluted Shares, whether by stock sale, merger, consolidation or otherwise,
divided by (y) the number of Fully Diluted Shares on the date of determination.
In no event shall the Fair Market Value per Share be reduced or discounted on
the basis that any securities to be valued on the basis of such Fair Market
Value per Share may represent the right to acquire a minority interest in the
Company or may not be freely transferable under federal or state securities
laws, or for any other reason. The Fair Market Value per Share shall be
determined as provided in Section 16.
"Fully Diluted Shares" means, as of any date of determination, the number
of shares of Common Stock of the Company equal to the sum of (i) the number of
shares of Common Stock outstanding on such date of determination, plus (ii) the
number of Warrant Shares receivable upon conversion of all outstanding Warrants
as of such date of determination pursuant to Section 11(b), plus (iii) the
number of shares of Common Stock that would be issued in respect of all Option
Securities and Convertible Securities of the Company (other than Eight-Dollar
Option Securities) outstanding and immediately exercisable or convertible as of
such date of determination if such Option Securities or Convertible Securities
were to be converted into shares of Common Stock in accordance with the
following formula:
X = Y (A - B)
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A
where: X = the number of shares to be issued to the holders of such
Option Securities or Convertible Securities;
Y = the number of shares for which such Option Securities or
Convertible Securities are exercisable or convertible;
A = the Fair Market Value per Share as of the date of
determination; and
B = the exercise or conversion price for such Option
Securities or Convertible Securities;
provided, however, that the term "Fully Diluted Shares" as used in the
definition of Fair Market Value per Share shall mean the number of issued and
outstanding shares of Common Stock plus the number of Warrant Shares purchasable
and receivable upon exercise of the rights represented by the Warrant
Certificates pursuant to Section 11(a).
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means each twelve-month accounting period of the Company
ending December 31 of any calendar year.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Holders" means, collectively, Purchaser and any subsequent registered
holders, from time to time, of Warrant Securities.
"Indemnified Liabilities" is defined in Section 22.
"Indemnified Parties" is defined in Section 22.
"Lien" shall have the meaning set forth in the Credit Agreement.
"Lender" is defined in Recital A.
"Obligations" means all obligations of the Company with respect to the
repayment or performance of any obligations (monetary or otherwise) of the
Company arising under or in connection with the Credit Agreement or the other
"Loan Documents" (as such term is defined in the Credit Agreement) and the
Warrant Documents.
"Offer" is defined in Section 19(a).
"Offer Notice" is defined in Section 19(a).
"Option Securities" is defined in Section 15(d).
"Organic Document" means, relative to any Person, its articles or
certificate of incorporation or organization or certificate of limited
partnership or organization, its bylaws, partnership or operating agreement or
other organizational documents, and all stockholders agreements, voting trusts
and similar arrangements applicable to any of its Stock or partnership interests
or other ownership interests, in each case, as amended.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Preferred Stock" means shares hereafter authorized of any class of capital
stock of the Company other than Common Stock.
"Prospective Purchaser" shall have the meaning set forth in Section 19(a).
"Public Company" means a company (i) which is subject to the reporting
requirements of Section 15(d) of the Exchange Act, or (ii) any of whose
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act.
"Purchaser" is defined in the Preamble.
"Quoted Price" of Common Stock for each day means the last reported sales
price of Common Stock on such day as reported by NASDAQ or NASDAQ Small Cap or,
if Common Stock is listed on a national securities exchange, the last reported
sales price of Common Stock on such exchange (which shall be consolidated
trading if applicable to such exchange) on such day, or if not so reported or
listed, the average of the last reported bid and ask prices of Common Stock on
such day, in each case as appropriately adjusted for any stock splits or reverse
stock splits occurring after the Closing Date.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated of even date herewith, between the Company and the Purchaser, as in effect
on the date hereof and as hereafter amended, supplemented, restated or otherwise
modified.
"Regulatory Approval" means each and every approval, consent, filing and
registration by or with any federal, state or other regulatory authority
(domestic or foreign) necessary to authorize or permit the execution, delivery
or performance of this Agreement or any other Warrant Document, for the validity
or enforceability hereof or thereof or for the consummation of the transactions
contemplated hereby or thereby.
"Required Holders" means Holders holding at least 66-2/3% of the Warrant
Securities outstanding (treating all Warrants as fully exercised for the Warrant
Shares to which Holders would be entitled upon exercise of such Warrants) or, if
any matter affects the interest of less than all of the Holders, then Holders
holding at least 66-2/3% of the Warrant Securities so affected, as the context
may require.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securities Legend" is defined in Section 10(d).
"Stock" means any capital stock of the Company.
"Subsidiary" of any corporation means any other corporation, partnership or
limited liability company of which greater than 50% of the outstanding shares of
Stock or other ownership interests having ordinary voting power for the election
of directors (or others serving equivalent functions) is owned directly or
indirectly by such corporation. Except as otherwise indicated herein,
references to Subsidiaries shall refer to Subsidiaries of the Company.
"Substitute Securities" is defined in Section 15(f).
"Transfer Agent" is defined in Section 14.
"Warrant Certificates" means the certificates evidencing the Warrants in
the form of Exhibit A.
"WarrantDocuments" means, collectively, this Agreement, the Warrants, the
Registration Rights Agreement and any other document, instrument or agreement
executed or delivered in connection with any of the foregoing to which the
Company is a party, but excluding the Credit Agreement and the other "Loan
Documents" (as such term is defined in the Credit Agreement).
"Warrant Securities" means, collectively, the Warrants and Warrant Shares.
"Warrant Shares" means the securities which a Holder may acquire upon
exercise or conversion of a Warrant, together with any other securities which
such Holder may acquire on account of any such Warrant Shares whether upon the
making or paying of any dividend or other distribution on Common Stock, upon any
split-up of such Common Stock, upon a recapitalization, merger, consolidation,
share exchange, reorganization or other transaction or series of related
transactions in which shares of Common Stock are changed into or exchanged for
securities of another corporation, upon exercise of any preemptive right (or the
exercise or conversion of any security which such Holder may acquire in
connection with the exercise of any preemptive right) with respect to any such
Common Stock or otherwise.
"Warrants" is defined in Section 2.
(b) Terms Defined in Credit Agreement. Capitalized terms appearing
herein and not otherwise defined herein shall have the meanings ascribed thereto
in the Credit Agreement (irrespective of whether the Credit Agreement is in
effect or has been terminated).
(c) Cross-References. Unless otherwise specified, references in this
Agreement to any Article or Section are references to such Article or Section of
this Agreement, and unless otherwise specified, references in any Article,
Section or definition to any clause or subsection are references to such clause
or subsection of such Section, Article or definition.
SECTION 2. Purchase and Sale of Warrants; Closing. Subject to the
funding of the Loans by Purchaser pursuant to the Credit Agreement, the Company
hereby agrees to sell to the Purchaser and, subject to the provisions of Section
4, the Purchaser hereby agrees to purchase from the Company, for an aggregate
purchase price of $1.00 and other good and valuable consideration, all of which
shall be deemed to have been received by the Company upon the funding of the
initial Loans under the Credit Agreement, warrants to purchase 452,050 shares of
Common Stock of the Company for an initial exercise price of $1.87 per share
(together with any warrants issued in substitution or replacement therefore, the
"Warrants"). The sale and purchase of the Warrants shall take place at the
Closing at the offices of King & Spalding, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, XX 00000, at 10:00 a.m. on January 17, 2003, or such other place and time
as may be agreed upon by the Purchaser and the Company. At the Closing, the
Company will deliver to the Purchaser, upon payment therefor, Warrant
Certificates in the form of Exhibit A evidencing the Warrants to be purchased by
the Purchaser in such denomination or denominations as the Purchaser may request
and registered in its name or the name of its nominee and dated the Closing
Date.
SECTION 3. Investment Representations. Purchaser represents and warrants
that it is purchasing the Warrants and any Warrant Shares issuable upon exercise
or conversion of the Warrants for its own account, for investment purposes and
not with a view to the distribution thereof; provided, however, that the
foregoing representation shall not be construed as imposing any limitation on
the Purchaser's right to transfer any of the Warrants or Warrant Shares that is
not otherwise expressly set forth in the Warrant Documents or required under
applicable law. Purchaser represents and warrants that, as of the date hereof,
Purchaser qualifies as an "accredited investor" as such term is defined in Rule
501(a) of Regulation D under the Securities Act.
SECTION 4. Conditions Precedent. The obligation of the Purchaser to
purchase the Warrants on the Closing Date pursuant to Section 2 hereof shall be
subject to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 4, except as the Purchaser shall otherwise
consent:
(a) the accuracy of the representations and warranties set forth in
this Agreement and in the other Warrant Documents in all material respects;
(b) the compliance by the Company in all material respects with all
covenants and agreements required to be performed by it under the Warrant
Documents and the Loan Documents on or prior to the Closing;
(c) the satisfaction of all of the conditions precedent set forth in
Article 4 of the Credit Agreement;
(d) Purchaser's receipt of Warrant Certificates registered in Purchaser's
name (or in the name of a nominee of Purchaser) evidencing the Warrants;
(e) Purchaser's receipt of the Registration Rights Agreement with
respect to the Warrants, in form and substance satisfactory to Purchaser, duly
executed and delivered by the Company and dated the Closing Date;
(f) Purchaser's receipt of a copy of the Company's articles of
incorporation, including provisions reasonably satisfactory to the Purchaser
relating to the Company's capital structure, certified as of a recent date by
the Secretary of State of the State of California;
(g) Purchaser's receipt of a certificate of the secretary or an
assistant secretary of the Company, together with true and correct copies of the
bylaws and resolutions of the Board of Directors and, to the extent necessary,
the stockholders of the Company authorizing or ratifying the execution, delivery
and performance of this Agreement and the other Warrant Documents, and
authorizing the creation and issuance of the Warrants and the Warrant Shares;
and setting forth the names of the officers of the Company authorized to execute
this Agreement and the other Warrant Documents, together with a specimen of the
true signatures of each such authorized officer;
(h) Purchaser's receipt of certified copies of all documents evidencing
any other necessary corporate action, consents and governmental approvals or
filings (if any) with respect to this Agreement and the other Warrant Documents;
(i) Purchaser's receipt of an opinion, dated the Closing Date, from Xxxx
Xxxxxx, counsel to the Company, in form and substance satisfactory to Purchaser
and its counsel, and covering such matters as the Purchaser may request;
(j) All proceedings taken in connection with the transactions
contemplated by this Agreement and the other Warrant Documents shall be
satisfactory in form and substance to Purchaser and its counsel, and Purchaser
and its counsel shall have received copies (executed or certified as may be
appropriate) of all documents, instruments and agreements which Purchaser or its
counsel may request in connection with the consummation of such transactions.
SECTION 5. Warranties, etc. In order to induce Purchaser to enter
into this Agreement, to engage in the transactions contemplated herein and in
the other Warrant Documents and to purchase the Warrants hereunder, the Company
represents and warrants unto Purchaser as set forth in this Section 5, each and
all of which representations and warranties are made as of the Closing Date and
shall survive the execution and delivery of this Agreement and the Closing:
(a) Credit Agreement Warranties. Each of the representations and
warranties of the Company set forth in the Credit Agreement is true and correct.
(b) Power, Authority, etc. The Company has full power and authority to
enter into and perform its obligations under this Agreement and each of the
other Warrant Documents.
(c) Due Authorization. The execution and delivery by the Company of this
Agreement and each of the other Warrant Documents, the performance by the
Company of its obligations hereunder and thereunder and the issuance of the
Warrants hereunder by the Company have been duly authorized by all necessary
corporate action, do not require any Regulatory Approval (except those
Regulatory Approvals already obtained), do not and will not conflict with,
result in any violation of, or constitute any default under, any provision of
any Organic Document of the Company or any Subsidiary, any agreement or
instrument to which the Company or any of it's Subsidiaries is a party or by
which it or any of its property is bound, or any law or governmental regulation
or court decree or order and will not result in or require the creation or
imposition of any lien on any of the Company's or any Subsidiary's properties
pursuant to the provisions of any such agreement or instrument. No vote
(including any vote under the rules of any securities exchange or trading system
or market on which any of the Company's securities are listed or traded) on the
part of the stockholders of the Company, other than those which have been
obtained, is required to approve or authorize any of the transactions
contemplated by this Agreement, any of the other Warrant Documents or any of the
Loan Documents or the authorization of the issuance of Warrant Securities or any
shares of capital stock to be issued pursuant to the Loan Documents. None of the
transactions contemplated by this Agreement, any of the other Warrant Documents
or any of the Loan Documents (including the issuance of the Warrant Securities
or any shares of capital stock to be issued pursuant to the Loan Documents) will
give rise to any payment or the acceleration of any obligation (whether with or
without the passage of time or upon the occurrence of any event) to any
director, officer or employee of the Company or any Subsidiary.
(d) Validity, etc. This Agreement and each of the other Warrant
Documents constitutes the legal, valid and binding obligations of the Company
enforceable in accordance with their respective terms, subject to (i) the effect
of any applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally; and (ii) the effect of general principles of equity
(regardless of whether considered in a proceeding in equity or at law).
(e) Capitalization and Ownership of the Company. The authorized capital
stock of the Company consists of 200,000,000 shares of Common Stock, 8,006,210
shares of which are outstanding on the Closing Date. The record and, to the best
knowledge of the Company, beneficial ownership of the outstanding capital stock
of the Company as of the Closing Date is set forth in Exhibit B. All such
outstanding shares are duly authorized, validly issued, fully paid and
nonassessable, and are not, and will not have been, issued in violation of any
preemptive rights. No issued, no authorized but unissued and no treasury shares
of capital stock of the Company are subject to any preemptive right, option,
warrant, right of conversion or purchase or any similar right issued or granted
by the Company or, to the best knowledge of the Company, by any of its
shareholders. Except as set forth in Section 19, there are no agreements or
understandings with respect to the voting, sale or transfer of any shares of
capital stock of the Company to which the Company or, to the best knowledge of
the Company, any of its shareholders is a party.
(f) Authorization and Issuance of Warrants. The issuance of the Warrants
has been duly authorized and, upon delivery to Purchaser of the Warrant
Certificates therefor in accordance with the terms hereof, the Warrants will
have been validly issued and fully paid and nonassessable, free and clear of all
Liens and the issuance thereof will not give rise to any preemptive rights. The
issuance of the shares of Common Stock upon exercise or conversion of the
Warrants has been duly authorized and, when issued upon exercise or conversion
of the Warrants in accordance with the terms hereof, such shares will have been
validly issued and fully paid and nonassessable. 452,050 shares of Common Stock
have been duly reserved for issuance upon the exercise or conversion of the
Warrants. Except as set forth in the Registration Rights Agreement, no Person
has the right to demand or any other right to cause the Company to file any
registration statement under the Securities Act relating to any securities of
the Company or any right to participate in the any such registration.
(g) Securities Laws. In reliance on the investment representations
contained in Section 3, the offer, issuance, sale and delivery of the Warrants
to the Purchaser as provided in this Agreement, and the issuance and delivery of
Common Stock upon the exercise or conversion of the Warrants by the Purchaser,
are and will be exempt from the registration requirements of the Securities Act
and all applicable state securities laws, as such laws are currently in effect.
(h) No Integration of Issue. Neither the Company nor any Person authorized
or employed by the Company as agent, broker or otherwise in connection with the
offering of the Warrants has offered the Warrants for sale to, or solicited any
offers to buy the Warrants from, or otherwise approached or negotiated or
communicated in respect thereof with, anyone other than Purchaser. Neither the
Company nor any Person acting on behalf of the Company will sell or offer any
class of securities to, or solicit any offers to buy any class of securities
from, or otherwise approach, negotiate or communicate in respect thereof with,
any Person so as to require the registration of the Warrants under the
Securities Act or any applicable state securities laws.
SECTION 6. Covenants. The Company agrees with each Holder that, until
the termination of this Agreement pursuant to Section 24, the Company will
perform the obligations set forth in this Section 6:
(a) Financial and Business Information. The Company will furnish, or
will cause to be furnished, to each Holder copies of the following financial
statements, reports and information:
(i) promptly when available and in any event within ninety (90) days
after the close of each Fiscal Year, a consolidated and consolidating balance
sheet at the close of such Fiscal Year, and related consolidated and
consolidating statements of income and cash flows for such Fiscal Year, of the
Company and its Subsidiaries (with comparable information at the close of and
for the prior Fiscal Year), certified (in the case of consolidated statements)
without qualification by Deloitte & Touche, L.L.P. or other nationally
recognized independent public accountants, together with a report containing
management's discussion and analysis of financial condition and results of
operation of the Company and its Subsidiaries (delivery to the Holders of an
annual report on Form 10-K filed under the Exchange Act for such Fiscal Year
shall satisfy the requirements of this clause (a)(i) with respect to such Fiscal
Year);
(ii) promptly when available and in any event within forty-five (45)
days after the close of each calendar month of each Fiscal Year, consolidated
and consolidating balance sheets at the close of each calendar month, and
consolidated and consolidating statements of operations, retained earnings, and
cash flows for such month and for the period commencing at the close of the
previous month and ending with the close of such month, of the Company and its
Subsidiaries (with comparable information at the close of and for the
corresponding month of the prior Fiscal Year and for the corresponding portion
of such prior Fiscal Year), certified by the chief financial or executive
officer of the Company (delivery to the Holders of a quarterly report on Form
10-Q filed under the Exchange Act with respect to any Fiscal Quarter will
satisfy the requirements of this clause (a)(ii) with respect to such Fiscal
Quarter);
(iii) within forty-five (45) days after the close of each Fiscal
Quarter, a brief report containing management's discussion and analysis of the
financial condition and results of operations of the Company and its
Subsidiaries (including a discussion and analysis of any changes compared to
prior results); and
(iv) promptly upon the sending or filing thereof, copies of all reports
that the Company sends to its security holders generally, and copies of all
reports and registration statements that the Company or any of its Subsidiaries
files with the SEC or any national securities exchange.
(b) Information. Company shall provide the following:
(i) Filings. The Company will file with the SEC on or before the
required date all regular or periodic reports required pursuant to the Exchange
Act and deliver to each Holder, promptly upon its becoming available, one copy
of each report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report filed pursuant to
the Exchange Act and any registration statement, prospectus or written
communication (other than transmittal letters) pursuant to the Securities Act
filed by the Company with (i) the SEC or (ii) any national securities exchange;
and
(ii) Rule 144. The Company will use its best efforts to make publicly
available information concerning the Company sufficient to allow any Holder to
dispose of all or a portion of the Warrant Securities pursuant to Rule 144 (or
any successor provision) promulgated by the SEC under the Securities Act.
(c) Maintenance of Corporate Existence, etc. The Company will cause to
be done at all times all things necessary to maintain and preserve the corporate
existence of the Company and its Subsidiaries
(d) Maintenance of Books and Records. The Company will, and will cause each
Subsidiary to, keep books and records reflecting all of its business affairs and
transactions in accordance with GAAP.
(e) Inconsistent Agreements. The Company will not, and will not permit any
Subsidiary to, enter into any agreement containing any provision which would be
violated or breached by the issuance of the Warrants or the Warrant Shares or by
the performance by the Company or any Subsidiary of its obligations under this
Agreement or under any other Warrant Documents.
(f) Organic Documents. The Company shall not permit to occur any amendment,
alteration or modification to its Organic Documents, as constituted on the date
hereof, the effect of which would be to alter, impair or materially adversely
affect either the rights and benefits of Purchaser or the Holders or the duties
and obligations of the Company under this Agreement and the other Warrant
Documents.
(g) Transactions with Affiliates. The Company will not, and will not permit
any Subsidiary to, enter into, or cause, suffer or permit to exist:
(i) any arrangement or contract with any of its Affiliates of a nature
customarily entered into by Persons which are Affiliates of each other
(including management or similar contracts or arrangements relating to the
allocation of revenues, expenses or otherwise) requiring any payments to be made
by the Company or any of its Subsidiaries to any Affiliate, other than any
arrangement solely among the Company and its wholly-owned Subsidiaries; and
(ii) any other transaction, arrangement or contract with any of its
Affiliates which is on terms which are less favorable than are obtainable in a
transaction from any Person which is not one of its Affiliate.
(h) Issuance of Additional Rights, Options and Warrants. The Company
shall not issue any rights, options or warrants to subscribe for, purchase or
otherwise acquire Common Stock or Convertible Securities), whether or not the
right to exercise such rights, options or warrants or to convert or exchange
such Convertible Securities is immediately exercisable or is conditioned upon
the passage of time, an occurrence or non-occurrence of some other event, or
both; provided, however, that the Company may issue options to purchase its
Common Stock to its employees and directors provided that the maximum number of
shares of Common Stock issuable upon exercise of such options together with the
maximum number of shares of Common Stock issuable upon exercise of all Option
Securities outstanding on the Closing Date (other than Eight-Dollar Option
Securities) shall not exceed 800,621 (as adjusted appropriately adjusted for any
stock splits or reverse stock splits occurring after the Closing Date).
(i) Antitakeover Statutes. The Company shall take all action necessary to
avoid the application of any "fair price," "moratorium," "control share
acquisition," "business combination," "shareholder protection" or similar
antitakeover statute to the transactions contemplated by this Agreement or any
other Warrant Document (including the issuance of the Warrant Securities).
(j) Governmental Approvals. The Company will, and will cooperate with the
Holders to, secure all necessary consents, approvals, authorizations and
exemptions from all governmental authorities in connection with the exercise or
conversion of the Warrants and the issuance of shares of Common Stock upon
exercise or conversion of the Warrants.
(k) Cash Distributions and Dividends. The Company shall not pay a dividend
or make a distribution to the holders of its Stock of any securities (other than
Stock) or property (including cash and securities of other companies) of the
Company, or any rights, options or warrants to purchase securities (other than
Stock) or property (including securities of other companies) of the Company.
SECTION 7. Warrant Certificates. The Warrant Certificates to be
delivered pursuant to this Agreement shall be in registered form only as
provided in Section 9 and in the form set forth as ExhibitA.
SECTION 8. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of the Company by the duly authorized officers of the Company
under its corporate seal. Each such signature upon the Warrant Certificates may
be in the form of a facsimile signature of the duly authorized officers of the
Company and may be printed or otherwise reproduced on the Warrant Certificates
and for that purpose the Company may adopt and use the facsimile signature of
any person who shall have been a duly authorized officer of the Company,
notwithstanding the fact that at the time the Warrant Certificates shall be
delivered or disposed of such person shall have ceased to hold such office. The
seal of the Company may be in the form of a facsimile thereof and may be
impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate although at the date of the execution
of this Agreement such person was not such officer.
SECTION 9. Registration. The Company shall number and register the Warrant
Certificates in a register as they are issued. The Company may deem and treat
the registered holder(s) of the Warrant Certificates as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon made
by anyone) for all purposes and shall not be affected by any notice to the
contrary.
SECTION 10. Registration of Transfers and Exchanges.
(a) The Company shall from time to time register the transfer of any
outstanding Warrant Certificates in a Warrant register to be maintained by the
Company upon surrender of such Warrant Certificates accompanied by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Company, duly executed by the Holder or Holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney; provided,
however, that prior to effecting such transfer, the transferee shall agree (in a
form reasonably satisfactory to the Company) to be bound by the terms of this
Agreement. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be canceled and disposed of by the Company. Until the Warrant Certificate
is transferred on the Warrant register of the Company, the Company may treat the
Holder as shown in the Warrant register as the absolute owner of the Warrant
Certificate for all purposes, and notwithstanding any notice to the contrary.
The Company agrees that it will make the Warrant register available for
inspection by the Holders during normal business hours at its office and that
the Holders may rely on the Warrant register for purposes of complying with the
preceding sentence.
(b) The Warrants shall be transferable in whole or in part and, in the
event that a Warrant Certificate is transferred in respect of fewer than all the
Warrants evidenced by the Warrant Certificate, a new Warrant Certificate
evidencing the remaining Warrant or Warrants will be issued and delivered
pursuant to the provisions of this Section 10 and of Section 8.
(c) If any transfer of Warrants or Warrant Shares is not made pursuant
to an effective registration statement under the Securities Act, the Holder
will, if reasonably requested by the Company, deliver to the Company an opinion
of counsel, which may be counsel to the Holder but which must be reasonably
satisfactory to the Company, reasonably satisfactory in form, scope and
substance to the Company, that such Warrants or Warrant Shares may be sold
without registration under the Securities Act, as well:
(i) as an investment covenant reasonably satisfactory to the Company
signed by the proposed transferee (except that no such covenant will be required
in connection with a transfer effected in accordance with Rule 144A under the
Securities Act); and
(ii) an agreement by such transferee to the impression of the
restrictive legends set forth below on the Warrant Certificate or on the
certificate evidencing such Warrant Shares.
(d) The Holders agree that each Warrant Certificate and each
certificate representing Warrant Shares will bear the following legend (the
"Securities Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER
REASONABLY ACCEPTABLE TO THE COMPANY) AS TO AN EXEMPTION, FROM THE REGISTRATION
PROVISIONS OF SAID ACT OR LAWS."
(e) Notwithstanding the foregoing provisions of this Section 10, the
restrictions upon the transferability of the Warrant Securities and the
Securities Legend requirement set forth in this Section 10 shall terminate as to
any of the Warrant Securities (i) when and so long as such Warrant Security
shall have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such Securities Legend is not
required in order to ensure compliance with the Securities Act. Whenever the
restrictions imposed by this Section 10 shall terminate as to any Warrant
Securities, the Holder thereof shall be entitled to receive from the Company, a
new Warrant Certificate or certificate for Warrant Shares bearing the following
legend in place of the Securities Legend set forth above:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE TERMINATED ON ______________, 20__, AND ARE OF NO FURTHER FORCE AND
EFFECT."
(f) The Holders further agree that each Warrant Certificate and each
certificate representing Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF JANUARY 17, 2003, BETWEEN CREATIVE HOST
SERVICES, INC. (THE "COMPANY") AND ING CAPITAL LLC (THE "PURCHASER"), AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF JANUARY 17, 2003, BETWEEN THE
COMPANY AND THE PURCHASER, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN
OFFICE OF THE COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER
OF SUCH SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID."
(g) Warrant Certificates may be exchanged at the option of the
Holder(s) thereof when surrendered to the Company at its office for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants, including, without limitation, upon
an adjustment in the Exercise Price or in the number of Warrant Shares
purchasable upon exercise of the Warrants. Warrant Certificates surrendered for
exchange shall be canceled and disposed of by the Company.
SECTION 11. Exercise of Warrants; Conversion of Warrants.
(a) Subject to the terms of this Agreement, each Holder shall have the
right, which may be exercised at any time or from time to time prior to January
17, 2012, to receive from the Company the number of fully paid and nonassessable
Warrant Shares which such Holder may at the time be entitled to receive on
exercise or any part of the Warrants and payment of the appropriate Exercise
Price then in effect for such Warrant Shares. A Warrant may be exercised upon
surrender to the Company at its office designated for such purpose (the address
of which is set forth in Section 20) of the certificate or certificates
evidencing the Warrants to be exercised with the form of election to purchase
attached thereto properly completed and signed, upon payment to the Company of
the appropriate Exercise Price for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made in cash or by check payable to the order of the Company. Upon
such surrender of Warrant Certificates and payment of the appropriate Exercise
Price, the Company shall issue and cause to be delivered with all reasonable
dispatch (and in any event within ten (10) Business Days of such surrender and
payment) to or upon the written order of the Holder, and in the name of the
Holder or the Holder's nominee, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants together with
such other property (including cash) and securities as may then be deliverable
upon such exercise, including cash for fractional Warrant Shares as provided in
Section 17. Such certificate or certificates shall be deemed to have been
issued and the Person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrant Certificates and payment of the Exercise Price.
(b) Subject to the terms of this Agreement, each Holder shall have the
right (the "Conversion Right"), which may be exercised at any time or from time
to time prior to January 17, 2012, to convert the Warrants, in whole or in part,
into the number of fully paid and nonassessable Warrant Shares calculated
pursuant to the following formula:
X = Y (A-B)
--------
A
where: X = the number of Warrant Shares to be issued to the
Holders upon conversion;
Y = the number of Warrant Shares for which the Conversion
Right is being exercised;
A = the Fair Market Value per Share as of the date of
exercise of such Conversion Right; and
B = the Exercise Price with respect to such Warrants.
(c) A Warrant may be converted upon surrender to the Company at its
office designated for such purpose (the address of which is set forth in Section
20) of the certificate or certificates evidencing the Warrants to be converted
with the form of election to convert attached thereto properly completed and
signed. Upon such surrender of Warrant Certificates, the Company shall issue
and cause to be delivered with all reasonable dispatch (and in any event within
ten (10) Business Days of such surrender) to or upon the written order of the
Holder, and in the name of the Holder or the Holder's nominee, a certificate or
certificates for the number of full Warrant Shares issuable upon the conversion
of such Warrants together with such other property (including cash) and
securities as may then be deliverable upon such conversion, including cash for
fractional Warrant Shares as provided in Section 16. Such certificate or
certificates shall be deemed to have been issued and the Person so named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrant Certificates.
(d) The Warrants shall be exercisable and convertible, at the election
of the Holders thereof, either in full or from time to time in part, and in the
event that a Warrant Certificate is exercised or converted in respect of fewer
than all of the Warrant Shares issuable pursuant to such Warrant Certificate at
any time prior to the date of expiration of the Warrants, a new Warrant
Certificate evidencing the remaining Warrant or Warrants will be issued and
delivered pursuant to the provisions of this Section 11 and of Section 8. All
Warrant Certificates surrendered upon exercise or conversion of Warrants shall
be canceled and disposed of by the Company. The Company shall keep copies of
this Agreement and any notices received hereunder available for inspection
during normal business hours at its office. The Company will furnish, at its
expense, copies of this Agreement and all such notices, upon request, to any
Holder of any Warrant Certificates.
SECTION 12. Payment of Taxes. The Company will pay all stamp and
transfer taxes in connection with the issuance, sale and delivery of the
Warrants hereunder, as well as all such taxes attributable to the initial
issuance of Warrant Shares upon the exercise of Warrants and payment of the
appropriate Exercise Price or upon conversion of the Warrants. The Company will
not, however, be required to pay any tax or other similar charges imposed in
connection with any transfer of any Warrant Securities. Nothing herein shall be
construed as requiring the Company to pay any taxes imposed in respect of income
realized by any Holder upon the purchase, transfer or exercise of Warrants.
SECTION 13. Mutilated or Missing Warrant Certificates. Upon receipt by the
Company of evidence reasonably satisfactory to the Company (which shall include
an affidavit of the Holder) that any Warrant Certificate shall have been
mutilated, lost, stolen or destroyed and, in the case of loss, theft or
destruction, a customary indemnity agreement from the Holder of such Warrant
Certificate, the Company shall issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equal number of Warrants.
SECTION 14. Reservation of Warrant Shares. The Company will at all times
that any Warrant is exercisable reserve and keep available, free from preemptive
or similar rights, out of the aggregate of its authorized but unissued capital
stock or its authorized and issued capital stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise or conversion of Warrants, the maximum number of shares of each class
of capital stock constituting a part of the Warrant Shares which may then be
deliverable upon the exercise or conversion of all outstanding Warrants. The
Company shall cause all shares of Common Stock issuable upon exercise or
conversion of the Warrants to be (x) listed (or to be listed subject to notice
of issuance) on each securities exchange on which shares of Common Stock are
listed, or (y) admitted for trading in any inter-dealer quotation system on
which shares of Common Stock are traded. The Company or, if appointed, the
transfer agent for shares of each class of capital stock of the Company (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise or conversion of the Warrants
will be irrevocably authorized and directed at all times to reserve such number
of authorized shares as shall be required for such purpose. The Company will
keep a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of the rights of purchase or conversion represented by the
Warrants. The Company will furnish such Transfer Agent a copy of all notices of
adjustments, and certificates related thereto, transmitted to each Holder
pursuant to Section 8. Before taking any action which would cause an adjustment
pursuant to Section 15 to the maximum number of Warrant Shares deliverable upon
the exercise of all outstanding Warrants the then authorized number of shares of
Common Stock, the Company shall cause to be authorized additional shares of
Common Stock such that such maximum number of shares of Common Stock deliverable
upon exercise of all outstanding Warrants does not exceed the number of shares
of Common Stock authorized pursuant to the Organic Documents of the Company.
Before taking any action which would cause an adjustment pursuant to Section 15
to reduce the Exercise Price below the then par value (if any) of the Warrant
Shares, the Company will take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares at the Exercise Price as so
adjusted.
SECTION 15. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable or issued
upon the exercise of each Warrant are subject to adjustment from time to time
upon the occurrence of any of the events enumerated in this Section 15.
(a) Adjustment for Change in Capital Stock of the Company. If the
Company (i) subdivides its outstanding shares of any class of Common Stock into
a greater number of shares, (ii) combines its outstanding shares of any class
of Common stock into a smaller number of shares, (iii) makes a distribution on
any class of its Common Stock in shares of its Stock other than Common Stock, or
(iv) issues by reclassification of any class of its Common Stock any shares of
its Stock, then the Exercise Price in effect immediately prior to such action
shall be proportionately adjusted so that the Holder of any Warrant thereafter
exercised may receive the aggregate number and kind of shares of capital stock
of the Company which it would have owned immediately following such action if
such Warrant had been exercised immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above shall
occur, and shall become effective immediately after the effective date in the
case of a subdivision, combination or reclassification. If after an adjustment a
Holder of a Warrant upon exercise of such Warrant may receive shares of two or
more classes of capital stock of the Company, the Board of Directors of the
Company shall determine in the good faith exercise of its reasonable business
judgment the allocation of the adjusted Exercise Price between the classes of
capital stock. After such allocation, the exercise privilege and the Exercise
Price of each class of capital stock shall thereafter be subject to adjustment
on terms comparable to those in this Section 15.
(b) Adjustment for Common Stock Issues. If the Company issues shares of
Common Stock for a consideration per share less than the Fair Market Value per
Share on the date the Company fixes the offering price of such additional
shares, the Exercise Price shall be adjusted in accordance with the following
formula:
P
-
E' = E x (O + M)
-------
A
where: E' = the adjusted Exercise Price;
E = the then current Exercise Price;
O = the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional
shares;
P = the aggregate consideration received for the issuance of
such additional shares;
M = the Fair Market Value per Share on the date the Company
fixes the offering price of such additional shares; and
A = the number of shares of Common Stock outstanding
immediately after the 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 Section 15(b)
does not apply to (i) the transactions described in Section 15(a) or (ii) any
transaction for which an adjustment has been made pursuant to the provisions of
Section 15(c) or Section 15(d), or (iii) the issuance of any Excluded Shares.
(c) Adjustment for Convertible Securities Issues. If the Company
issues any evidences of indebtedness, shares of stock or other securities which,
with or without payment of additional consideration in cash or property, are
convertible into or exchangeable for shares of Common Stock, whether or not the
right to convert or exchange there-under is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence of some
other event, or both ("Convertible Securities"), for a consideration per share
of Common Stock initially deliverable upon conversion or exchange of such
Convert-ible Securities less than the Fair Market Value per Share on the date of
issuance of such Convertible Securities, the Exercise Price shall be adjusted in
accordance with the following formula:
P
-
E' = E x O + M
-------
O + D
where: E' = the adjusted Exercise Price;
E = the then current Exercise Price;
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such Convertible Securities;
P = the aggregate consideration received for the issuance of such
Convertible Securities; and
M = the Fair Market Value per Share on the date of issuance of
such Convertible Securities; and
D = the maximum number of shares of Common Stock deliverable upon
exercise, conversion or in exchange of such Convertible
Securities at the lowest price at which the Convertible
Securities can be converted into or exchanged for Common
Stock, regardless of whether such lowest price is the initial
price or is conditioned upon the passage of time, the
occurrence or non-occurrence of some other event, or both.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance. This Section 15(c)
shall not apply to the issuance of any Convertible Securities for which an
adjustment has been made pursuant to Section 15(d).
(d) Adjustment for Right, Option and Warrant Issues. If the Company
issues any rights, options or warrants to subscribe for or purchase or otherwise
acquire Common Stock or Convertible Securities, whether or not the right to
exercise such rights, options or warrants is immediately exercisable or is
conditioned upon the passage of time, the occurrence or non-occurrence of some
other event, or both (the "Option Securities"), for a consideration per share of
Common Stock initially deliverable upon exercise of such Option Securities (and
in the case of Option Securities to acquire Convertible Securities, upon
conversion or exchange of such Convertible Securities) less than the Fair Market
Value per Share on the date of issuance of such Option Securities, the Exercise
Price shall be adjusted in accordance with the following formula:
P
-
E' = E x O + M
-------
O + D
where: E' = the adjusted Exercise Price;
E = the then current Exercise Price;
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such Option Securities;
P = the aggregate consideration received for the issuance of
such Option Securities;
M = the Fair Market Value per Share on the date of issuance of
such Option Securities; and
D = the maximum number of shares of Common Stock deliverable
upon exercise, conversion or in exchange of such Option
Securities at the lowest price at which the Option
Securities may be exercised to purchase or otherwise
acquire Common Stock, regardless of whether the lowest
price is the initial price or is conditioned upon the
passage of time, the occurrence or non-occurrence of
some other event, or both.
The adjustment shall be made successively whenever any such issuance is made,
and shall become effective immediately after such issuance.
(e) Consideration Received. For purposes of any computation respecting
consideration received pursuant to any subsection of this Section 15, the
following shall apply:
(i) In the case of the issuance of shares of Common Stock for cash, the
consideration received shall be the amount of cash receivable by the Company
therefor, without deduction therefrom of any reasonable expenses incurred by the
Company in connection therewith or any reasonable underwriters' discounts, fees
and commissions paid or allowed by the Company in connection therewith.
(ii) In the case of the issuance of shares of Common Stock for a
consideration consisting in whole or in part of other than cash, the
consideration other than cash shall, subject to the following provision of this
paragraph (ii), be deemed to be the fair market value thereof as determined by
the Board of Directors of the Company in the good faith exercise of its business
judgment, without deduction therefrom of any reasonable expenses incurred by the
Company in connection therewith. In any circumstances in which the fair market
value of any such consideration is to be determined pursuant to this paragraph
(ii), the Company shall give to the Holders written notice of the proposed fair
market value, as determined in good faith by the Board of Directors of the
Company. If the Company and the Required Holders agree upon the fair market
value then the fair market value for purposes of this paragraph (ii) shall be as
so agreed. If the Required Holders and the Company do not agree upon such fair
market value, then the Required Holders and the Company shall appoint a
recognized investment banking firm of national reputation, reasonably acceptable
to the Required Holders and the Company. If the Company and the Required
Holders cannot agree on the appointment of a mutually acceptable investment
banking firm, or if the firm so appointed declines or fails to serve, then the
Required Holders and the Company shall each choose one such investment banking
firm and the respective firms so chosen shall appoint another recognized
investment banking firm of national reputation. The investment banking firm so
selected shall appraise the fair market value for the purposes of this paragraph
(ii), and such investment banking firm shall make such appraisal (which shall be
in the form of a written report signed by such investment banking firm) and, for
the purposes of determining the fair market value pursuant to this paragraph
(ii), such appraised fair market value determined as herein provided shall be
final and conclusive on the Company and the Holders. If the appraised value of
the Company as determined by such investment banking firm is equal to or less
than that determined by the Board of Directors of the Company in accordance with
this paragraph (ii), then all fees and expenses of such investment banking firm
shall be paid by the Holders requesting such appraisal. If the appraised value
of the Company as determined by such investment banking firm is greater than
that determined by the Board of Directors in accordance with this paragraph
(ii), then all fees and expenses of such investment banking firm shall be paid
by the Company.
(iii) In the case of the issuance of Convertible Securities or Option
Securities, the aggregate consideration received therefor shall be deemed to be
the consideration received by the Company for the issuance of such Convertible
Securities or Option Securities, as the case may be, plus the additional minimum
consideration, if any, to be received by the Company upon the conversion,
exchange or exercise thereof (the consideration in each case to be determined in
the same manner as provided in clauses (i) and (ii) of this subsection (e)).
(f) Reorganization of the Company. In the event of any capital
reorganization, recapitalization or reclassification of the capital stock of the
Company, or consolidation, merger or amalgamation of the Company with another
entity, any acquisition of capital stock of the Company by means of a share
exchange, or the sale, lease, transfer, conveyance or other disposition of all
or substantially all of its assets to another entity, then, as a condition of
such reorganization, recapitalization, reclassification, consolidation, merger,
amalgamation, share exchange or sale, lease, transfer, conveyance or other
disposition, lawful and adequate provision shall be made whereby the Holders of
the Warrant Certificates shall thereafter have the right to purchase and
receive, on the basis and upon the terms and conditions specified in this
Agreement and in lieu of the Warrant Shares immediately theretofore purchasable
and receivable upon the exercise of the rights represented by the Warrants, such
shares of stock, securities, cash or property as may be issued or payable with
respect to or in exchange for the number of Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented by the Warrant Certificates. If such consolidation, merger,
amalgamation, share exchange, sale, lease, transfer, conveyance or other
disposition is with any Person or group of Persons (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) who shall have made a purchase,
tender or exchange offer which was accepted by the holders of not less than
twenty percent (20%) of the outstanding shares of Common Stock of the Company,
the Holders of the Warrants shall have been given a reasonable opportunity (and,
in no event, less than 30 days) to elect to receive, either (x) the stock,
securities, cash or property it would have received pursuant to the immediately
preceding sentence or (y) the stock, securities, cash or property issued or paid
(or to be issued or paid) to holders of the Common Stock in accordance with such
offer. In any such case appropriate provision shall be made with respect to the
rights and interests of the Holders of the Warrants to the end that the
provisions of this Agreement (including, without limitation, provisions for
adjustment of the Exercise Price and of the number and type of securities
purchasable upon the exercise of the Warrants) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities, cash or
property thereafter deliverable upon the exercise of the Warrants. The Company
shall not effect any such consolidation, merger, amalgamation, share exchange or
sale, lease, transfer, conveyance or other disposition unless prior to or
simultaneously with the consummation thereof the successor entity (if other than
the Company) resulting from such consolidation, merger or amalgamation, share
exchange or the entity purchasing or otherwise acquiring such assets or shares
(i) shall assume by a supplemental Warrant Agreement, satisfactory in form,
scope and substance to the Required Holders (which shall be mailed or delivered
to the Holders of the Warrants at the last address of such Holders appearing on
the books of the Company) the obligation to deliver to such Holders such shares
of stock, securities, cash or property as, in accordance with the foregoing
provisions, such Holders may be entitled to purchase (the "Substitute
Securities") and (ii) shall assume all of the obligations of the Company set
forth in this Agreement and the Registration Rights Agreement. Following such
assumption such obligations shall apply to the Substitute Securities rather
than to the Warrant Shares. If the issuer of securities deliverable upon
exercise of Warrants under the supplemental Warrant Agreement is an Affiliate of
the formed, surviving, transferee or lessee entity, such issuer shall join the
supplemental Warrant Agreement. The foregoing provisions of this paragraph
shall similarly apply to successive reorganizations, recapitalizations,
reclassifications, consolidations, mergers, amalgamations, share exchanges,
sales, leases, transfers, conveyances or other dispositions.
(g) Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to this Section 15, each Warrant outstanding prior to the making
of the adjustment in the Exercise Price shall thereafter evidence the right to
receive upon payment of the adjusted Exercise Price that number of Warrant
Shares (calculated to the nearest hundredth) obtained from the following
formula:
N'= N x E
-
E'
where: N' = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price;
N = the number of Warrant Shares previously issuable upon exercise
of a Warrant by payment of the Exercise Price prior to
adjustment;
E' = the adjusted Exercise Price; and
E = the Exercise Price prior to adjustment.
(h) Special Adjustment in Respect of Exercise of Eight-Dollar Option
Securities. In the event that after the Closing Date any Eight-Dollar Option
Securities are exercised or converted, immediately prior to the conversion or
exercise of any or all of the Warrants pursuant to Section 11, the number of
Warrant Shares issuable upon exercise of such Warrants shall be recalculated,
and the number of Warrant Shares that have been issued shall be adjusted from
time to time, in accordance with the following formula, after taking into
account any other adjustments required under this Section 15:
N'= N x FDS'
----
FDS
where: N' = the number of shares of Common Stock issuable upon exercise
of such Warrants immediately following such adjustment;
N = the number of shares of Common Stock issuable upon exercise
of such Warrants immediately prior to such adjustment;
FDS = the number of Fully Diluted Shares prior to such exercise or
conversion of Eight-Dollar Options; and
FDS' = the number of Fully Diluted Shares immediately after such
exercise or conversion of Eight-Dollar Options.
SECTION 16. Determination of Fair Market Value per Share.
(a) In any circumstance in which the Fair Market Value per Share is
required to be determined in this Agreement, not later than ten (10) days
following the date as of which such determination is required (and in any event
prior to issuing any shares of Common Stock, any Convertible Securities or any
Option Securities), the Company shall cause the Board of Directors of the
Company to determine in good faith the Fair Market Value per Share. Within five
(5) Business Days of such determination by the Board of Directors of the Company
(but in no event later than thirty (30) days prior to issuance of Common Stock,
Convertible Securities or Option Securities), the Company shall give the Holders
written notice of the proposed Fair Market Value per Share. If the Company and
such Holders agree upon the Fair Market Value per Share, then the Fair Market
Value per Share shall be as so agreed. If the Company and the Required Holders
do not agree upon such Fair Market Value per Share, then the Fair Market Value
per Share shall be determined as provided in Section 16(b).
(b) If the Required Holders and the Company do not agree upon such Fair
Market Value per Share, then the Required Holders and the Company shall appoint
a recognized investment banking firm of national reputation, reasonably
acceptable to the Required Holders and the Company. If the Company and the
Required Holders cannot agree on the appointment of a mutually acceptable
investment banking firm, then the Required Holders and the Company shall each
choose one such investment banking firm and the respective firms so chosen shall
appoint another recognized investment banking firm of national reputation. The
investment banking firm so selected shall appraise the value of the Company
(which shall be in the form of a written report signed by such investment
banking firm), and such appraised value of the Company determined as herein
provided shall be final and conclusive and binding on the Company and the
Holders. All fees and expenses of such investment banking firm shall be paid by
the Company.
SECTION 17. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon exercise
thereof shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of the
Warrant Shares would, except for the provisions of this Section 17, be issuable
on the exercise of any Warrants (or specified portion thereof), the Company
shall pay an amount in cash equal to the Fair Market Value per Share on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction.
SECTION 18. Notice to Warrant Holders. Upon any adjustment of the Exercise
Price or number or type of securities purchasable upon exercise of the Warrants
pursuant to Section 15, the Company shall promptly thereafter (i) upon the
request of the Required Holders, cause to be filed with the Company a
certificate of the chief financial officer of the Company setting forth the
Exercise Price and the number and type of securities or other property
constituting Warrant Shares after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and, in the case of an adjustment pursuant to Section
15(f), setting forth the number and type of securities or other property
constituting Warrant Shares (or portion thereof) issuable, after such adjustment
in the Exercise Price or number of Warrant Shares purchasable upon exercise of
the Warrants, upon exercise of a Warrant and payment of the adjusted Exercise
Price, and (ii) cause to be given to each of the Holders of the Warrant
Certificates written notice of such adjustments, together with a copy of such
certificate. Where appropriate, such notice may be given in advance and included
as a part of the notice required to be given under the other provisions of this
Section 18. In the event:
(a) the Company shall authorize the issuance to holders (although not
necessarily to all such holders) of shares of Stock or rights, options or
warrants to subscribe for or purchase or otherwise acquire shares of Stock or of
any other securities or property (including securities of any other issuer) or
of any other subscription rights, options or warrants; or
(b) the Company shall authorize the payment of any dividend or
distribution to holders of shares of Stock of cash, Stock or other securities or
property (including securities of any other issuer) of the Company; or
(c) of any capital reorganization, reclassification or recapitalization
of the Stock of the Company, or any amalgamation, consolidation or merger to
which the Company is a party, or any acquisition of Stock of the Company through
a share exchange, or of the sale, lease, conveyance, transfer or other
disposition of the properties and assets of the Company substantially as an
entirety, or a purchase, tender or exchange offer for shares of Common Stock or
other securities constituting part of the Warrant Shares (whether by the Company
or some other party); or
(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 Price or number of Warrant Shares purchasable upon
exercise of the Warrants pursuant to Section 15; then the Company shall cause to
be given to each of the Holders, at least 20 days prior to the applicable record
date hereinafter specified (or promptly in the case of events for which there is
no record date), a written notice stating (as applicable) (i) the date as of
which the holders of record of shares of Stock entitled to receive any such
rights, options, warrants or dividends or distribution are to be determined,
(ii) the date on which any such reclassification, recapitalization or
reorganization, consolidation, merger, amalgamation, share exchange, sale,
lease, conveyance, transfer, disposition, dissolution, liquidation or winding up
is expected to become effective or be consummated, or (iii) the initial
expiration date set forth in any purchase, tender or exchange offer for shares
of Stock, and the date as of which it is expected that holders of record of
shares of Stock or other securities constituting a part of the Warrant Shares
(or securities into which the Warrant Shares may be converted) shall be entitled
to exchange such shares or securities for securities or other property, if any,
deliverable upon such reclassification, recapitalization, reorganization,
consolidation, merger, amalgamation, share exchange, sale, lease, conveyance,
transfer, disposition, dissolution, liquidation or winding up. Nothing contained
in this Agreement or in any of the Warrant Certificates shall be construed as
conferring upon the Holders the right to vote or to consent as stockholders in
respect of the meetings of stockholders or the election of members of the Board
of Directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
SECTION 19. Tag-Along Rights; Limitation on Put Rights.
(a) If at any time the Company shall determine to enter into any
transaction or series of transactions that would result in a Change of Control
(a "Change of Control Transaction") (any third party proposing to enter into
such transaction or transactions being hereinafter referred to as a "Prospective
Purchaser"), the Company and any Prospective Purchaser shall first give written
notice (the "Offer Notice") to all of the Holders, specifying the name and
address of the Prospective Purchaser and the number of shares, if any, of Stock
proposed to be issued, sold, transferred or otherwise disposed of and setting
forth in reasonable detail the price, structure and other terms and conditions
of the Change of Control Transaction. The Offer Notice shall represent the
offer (the "Offer") from the Prospective Purchaser to each of the Holders of the
right to sell to the Prospective Purchaser as a condition to the consummation of
the proposed transaction described in the Offer Notice, all Warrant Securities
then owned by each Holder to the Prospective Purchaser and, at the option of the
Holders, on the same terms and conditions (including price and form of
consideration) as are being offered by the Prospective Purchaser to the Company
or at the Fair Market Value per Share, determined as of the date of the Offer
Notice, minus the Exercise Price (if any). Each Holder shall have thirty (30)
days from the date of receipt of the Offer Notice to give written notice of its
intention to accept or reject the Offer. Failure to respond within such
thirty-day period shall be deemed notice of rejection. In the event that any
Holder gives written notice to the Company and the Prospective Purchaser of its
intention to accept such Offer, then such written notice, taken in conjunction
with the Offer Notice, shall constitute a valid and legally binding agreement,
and each of the Holders so giving such written notice shall be entitled to sell
to the Prospective Purchaser, contemporaneously with the consummation of the
Change of Control Transaction, all of the Warrant Securities at the price
specified therefor by such Holder in accordance with this Section 19(a). In the
event that all of the Holders reject or are deemed to have rejected the offer
represented by the Offer Notice, the Company shall be free to proceed to
consummate such Change of Control Transaction on the terms and conditions set
forth in the Offer Notice, provided that such sale is not otherwise prohibited
by any agreement between the Company and the Purchaser. In the event the
Company fails to complete the proposed sale, transfer or other disposition
within ninety (90) days after the Holder or Holders rejected or were deemed to
have rejected the Offer, such transaction or transactions shall again be subject
to the provisions of this Section 19(a). The provisions of this Section 19(a)
shall apply until the termination of this Agreement pursuant to Section 24 to
any Person who acquires in any manner any Warrant Securities from any Holder.
(b) The Company covenants and agrees that, neither the Company nor any
of its Subsidiaries shall, directly or indirectly, grant to any Person or agree
to or otherwise become obligated in respect of any rights to require the Company
or any of its Subsidiaries to purchase securities of the Company upon the demand
of any Person. The Company represents and warrants that neither it nor any of
its Subsidiaries has previously entered into any agreement granting any such
rights to any Person.
SECTION 20. Notices. All notices, consents, approvals, agreements and
other communications provided hereunder shall be in writing or by telecopy and
shall be sufficiently given to the Purchaser, the Holders and the Company if
addressed or delivered to them at the following addresses:
If to the Purchaser: ING Capital
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Credit Officer
Telecopier No.: (000) 000-0000
with copies to: ING Capital LLC
Acquisition Finance Group
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
and a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telecopier No.: (000) 000-0000
If to any other At its last known address appearing
Holder: on the books of the Company maintained for such
purpose
If to the Company: Creative Host Services, Inc.
00000 Xxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxx
Telecopier No.: (000) 000-0000
or at such other address as any party may designate to any other party by
written notice. All such notices and communications shall be deemed to have
been duly given: (i) at the time delivered by hand, if personally delivered,
(ii) when received, if deposited in the mail, postage prepaid, (iii) when
transmission is verified, if telecopied, and (iv) on the next Business Day, if
timely delivered to an air courier guaranteeing overnight delivery.
SECTION 21. Costs and Expenses. The Company agrees to pay all
reasonable out-of-pocket expenses of the Purchaser (including reasonable fees
and expenses of counsel retained by the Purchaser from time to time) in
connection with (i) the negotiation, preparation, execution, and delivery of
this Agreement and each other Warrant Document, whether or not the transactions
contemplated hereby are consummated, and (ii) at the request of the Purchaser,
the consideration of legal questions relevant hereto and thereto. The Company
also agrees to reimburse the Purchaser and each Holder upon demand for all
reasonable out-of-pocket expenses (including reasonable attorneys' fees and
expenses) incurred by the Purchaser or such Holder in enforcing the obligations
of the Company under this Agreement or any other Warrant Document or in
connection with any amendment, waiver, consent, supplement or other modification
to this Agreement or any Warrant Document.
SECTION 22. Indemnification. In consideration of the transactions
contemplated by this Agreement and the other Warrant Documents, the Company
hereby agrees to indemnify, exonerate and hold the Purchaser and each Holder,
each of their respective successors and assigns, each of the respective
officers, directors, employees, attorneys and agents of the Purchaser and each
Holder and each of their respective successors and assigns (collectively, the
"Indemnified Parties") free and harmless from and against any and all actions,
causes of action, suits, losses, costs, liabilities, damages and expenses
(irrespective of whether such Indemnified Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them or asserted or awarded against the Indemnified Parties or
any of them as a result of, or arising out of, or relating to:
(i) any transaction contemplated by this Agreement or any other Warrant
Document;
(ii) the making of any claim by any investment banking firm, broker or
third party that it is entitled to compensation from any Indemnified Party in
connection with this Agreement;
(iii) any claim, investigation, litigation, or proceeding made or commenced
by a third party related to this Agreement or any other Warrant Documents,
whether or not the Indemnified Party or any other Indemnified Party is party
thereto;
(iv) the breach by the Company of any representation or warranty set
forth in this Agreement or in any other Warrant Document; or
(v) the failure of the Company to comply with all terms, conditions,
and covenants set forth in this Agreement or in any other Warrant Document.
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
negligence or willful misconduct as determined by a final and nonappealable
decision of a court of competent jurisdiction. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company hereby
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law. The
foregoing indemnity shall become effective immediately upon the execution and
delivery hereof and shall remain operative and in full force and effect
notwithstanding the consummation of the transactions contemplated hereunder, the
issuance or exercise of the Warrants hereunder, the termination of this
Agreement pursuant to Section 24, the invalidity or unenforceability of any term
or provision of this Agreement or any other Warrant Document, or any
investigation made by or on behalf of any Holder or the Purchaser.
SECTION 23. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors and assigns, including those
by operation of law, merger, consolidation or as otherwise provided in Section
15(f).
SECTION 24. Termination. Except as otherwise provided herein, this
Agreement shall terminate when (a) all Warrants have expired unexercised in
accordance with their terms, and (b) all obligations of the Company (or any
successor to either of them) shall have been satisfied in full and all
contingencies in respect thereof shall no longer exist.
SECTION 25. Governing Law. THIS AGREEMENT AND THE WARRANTS SHALL BE
GOVERNED BY THOSE PROVISIONS OF THE CORPORATE CODE OF THE JURISDICTION IN WHICH
THE COMPANY IS INCORPORATED AND ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE OF THE
JURISDICTION IN WHICH THE COMPANY IS INCORPORATED WHICH ARE NECESSARILY
APPLICABLE TO SECURITIES ISSUED BY A CORPORATION INCORPORATED IN SUCH
JURISDICTION AND OTHERWISE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS
OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF SAID STATE.
SECTION 26. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company and the Holders any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company and the Holders.
SECTION 27. Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute one and the same
instrument.
SECTION 28. Amendments; Waiver. No provision of this Agreement may be
amended or waived except by an instrument in writing signed by the party sought
to be bound; provided, however, that any amendment requested or waiver sought
from the Holders of any provision of this Agreement which affects Holders
generally may be given by the Required Holders and any waiver so given shall be
binding on all Holders; provided further, that the provisions of Section 11 with
respect to the type of securities for which the Warrants are exercisable may not
be changed without the consent of each Holder affected thereby. No failure or
delay by any party in exercising any right or remedy hereunder shall operate as
a waiver thereof, nor shall a waiver of a particular right or remedy on one
occasion be deemed a waiver of any other right or remedy or a waiver of the same
right or remedy on any subsequent occasion.
SECTION 29. Waiver of Jury Trial. THE PURCHASER, EACH HOLDER AND THE
COMPANY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ON THE
WARRANTS OR ON ANY OF THE OTHER WARRANT DOCUMENTS, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH, THIS AGREEMENT, THE WARRANTS OR ANY OF THE OTHER WARRANT
DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE PURCHASER, ANY HOLDER OR THE COMPANY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER'S ENTERING INTO THIS
AGREEMENT.
SECTION 30. Jurisdiction. The Company hereby agrees that any legal action
or proceeding against it with respect to this Agreement, the Warrants or any of
the other Warrant Documents may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York as
any Holder may elect, and, by execution and delivery hereof, it consents for
itself and in respect of its property, generally and unconditionally, to and
accepts the jurisdiction of the aforesaid courts and agrees that such
jurisdiction shall be exclusive, unless waived by the Required Holders in
writing, with respect to any action or proceeding brought by it against such
Holders. The Company hereby irrevocably designates, appoints and empowers CT
Corporation System, whose present address is 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as its authorized agent to receive, for and on its behalf and its
property, service of process in the State of New York when and as such legal
actions or proceedings may be brought in the courts of the State of New York or
of the United States of America sitting in New York, and such service of process
shall be deemed complete upon the date of delivery thereof to such agent whether
or not such agent gives notice thereof to the Company, or upon the earliest of
any other date permitted by applicable law. The Company shall furnish the
consent of CT Corporation System so to act to the Agent on or prior to the
Closing Date. It is understood that a copy of said process served on such agent
will as soon as practicable be forwarded to the Company, at its address set
forth below, but its failure to receive such copy shall not affect in any way
the service of said process on said agent as the agent of the Company. The
Company irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of the
copies thereof by certified mail, return receipt requested, postage prepaid, to
it at its address set forth herein, such service to become effective upon the
earlier of (i) the date 10 calendar days after such mailing and (ii) any earlier
date permitted by applicable law. The Company agrees that Sections 5-1401 and
5-1402 of the General Obligations Law of the State of New York shall apply to
this Agreement and each of the other Warrant Documents and waives any right to
stay or to dismiss any action or proceeding brought before said courts on the
basis of forum non conveniens. Nothing herein shall affect the right of any
Holder to bring proceedings against the Company in the courts of any other
jurisdiction or to serve process in any other manner permitted by applicable
law.
SECTION 31. Specific Performance. The Company recognizes that the
rights of the Holders under this Agreement and the other Warrant Documents are
unique and, accordingly, the Holders shall, in addition to such other remedies
as may be available to any of them at law or in equity, have the right to
enforce their rights hereunder and thereunder by actions for injunctive relief
and specific performance to the extent permitted by law. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement or any of the
other Warrant Documents and hereby agrees to waive in any action for specific
performance the defense that a remedy at law would be adequate. This Agreement
is not intended to limit or abridge any rights of the Holders which may exist
apart from this Agreement.
SECTION 32. Confidentiality. The Holders shall hold all non-public,
proprietary or confidential information (which has been identified as such by
the Company) obtained pursuant to the requirements of this Agreement in
accordance with their customary procedures for handling confidential information
of this nature; provided, however, that each Holder may make disclosure of any
such information to its examiners, Affiliates, outside auditors, counsel,
consultants, appraisers and other professional advisors in connection with this
Agreement or as reasonably required by any proposed transferee in connection
with the contemplated transfer of any Warrant Securities (but only if the
proposed transferee agrees to be bound by the terms of this Section 32) or as
required or requested by an Governmental Authority or representative thereof or
in connection with the enforcement hereof or of any other Warrant Document or
pursuant to legal process. In no event shall any Holder be obligated or required
to return any materials furnished to it by the Company.
SECTION 33. Entire Agreement. The parties hereto agree that this Agreement,
the Registration Rights Agreement and the Loan Documents constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between them as to such
subject matter; and there are no restrictions, agreements, arrangements, oral or
written, between any or all of the parties relating to the subject matter hereof
which are not fully expressed or referred to herein or therein.
SECTION 34. Severability. If any provision of this Agreement shall be held
or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution, statute, rule or public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision or provisions
in question, invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute, rule or public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid,
inoperative or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
CREATIVE HOST SERVICES, INC.
By: /S/ Xxxxx Xxx
-------------
Name: Xxxxx Xxx
Title: President
ING Capital LLC
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
Managing Director
EXHIBIT A
---------
FORM OF WARRANT CERTIFICATE
---------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION, OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS
TO AN EXEMPTION, FROM THE REGISTRATION PROVISIONS OF SAID ACT OR LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
WARRANT PURCHASE AGREEMENT, DATED AS OF JANUARY 17, 2003, BETWEEN CREATIVE HOST
SERVICES, INC. (THE "COMPANY") AND ING CAPTIAL LLC (THE "PURCHASER") AND A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF JANUARY 17, 2003, BETWEEN THE COMPANY
AND THE PURCHASER, COPIES OF EACH OF WHICH ARE ON FILE AT THE MAIN OFFICE OF THE
COMPANY. ANY SALE OR TRANSFER OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS OF THOSE AGREEMENTS AND ANY SALE OR TRANSFER OF SUCH
SECURITIES IN VIOLATION OF SAID AGREEMENTS SHALL BE INVALID.
Certificate No. __ _______ Warrants
Warrant Certificate
CREATIVE HOST SERVICES, INC.
This Warrant Certificate certifies that _________________________________,
or registered assigns, is the registered holder of the number of Warrants (the
"Warrants") set forth above to purchase shares of common stock, no par value per
share (the "Common Stock"), of CREATIVE HOST SERVICES, INC., a California
corporation (the "Company"). Each Warrant entitles the holder upon exercise to
receive from the Company one fully paid and nonassessable share of Common Stock
(a "Warrant Share") at the initial exercise price (the "Exercise Price") of
$_____, payable in lawful money of the United States of America, upon surrender
of this Warrant Certificate and payment of the Exercise Price, if applicable, at
the office of the Company designated for such purpose, subject to the conditions
set forth herein and in the Warrant Agreement referenced below. The Exercise
Price and number and type of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment before and after issue upon the occurrence of
certain events, as set forth in the Warrant Agreement. Each Warrant also
entitles the holder to convert such Warrant into the number of Warrant Shares
determined in accordance with Section 11(b) of the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Purchase Agreement dated as of January 17, 2003 (the "Warrant
Agreement"), duly executed and delivered by the Company and ING Capital LLC
("ING"), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, obligations and duties hereunder of the Company and the holders of the
Warrants (the words "holders" or "holder" meaning the registered holders or
registered holder). A copy of the Warrant Agreement may be obtained by the
holder hereof upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise
such Warrants under and pursuant to the terms and conditions of the Warrant
Agreement by surrendering this Warrant Certificate, with the form of election to
purchase attached hereto (and by this reference made a part hereof) properly
completed and executed, together with payment of the Exercise Price in cash at
the office of the Company designated for such purpose. In the event that any
exercise of Warrants evidenced hereby shall be for less than the total number of
Warrants evidenced hereby, there shall be issued by the Company to the holder
hereof or such holder's registered assignee a new Warrant Certificate evidencing
the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted. No fractional shares of Warrant
Shares will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights as
set forth in a Registration Rights Agreement dated as of January 17, 2003, among
the Company and ING (the "Registration Rights Agreement"). By acceptance of
this Warrant Certificate, the holder hereof agrees that upon exercise of any or
all of the Warrants evidenced hereby, such holder will be bound by the
Registration Rights Agreement. A copy of the Registration Rights Agreement may
be obtained by the holder hereof upon written request to the Company.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, for another Warrant Certificate
or Warrant Certificates of like tenor evidencing in the aggregate a like number
of Warrants.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing made hereon) for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its duly authorized officer and has caused its corporate seal to be
affixed hereunto or imprinted hereon.
Dated: January 17, 2003 CREATIVE HOST SERVICES, INC.
By: ____________________________________
Name:
Title:
[CORPORATE SEAL]
FORM OF ELECTION TO PURCHASE
[To Be Executed Upon Exercise of Warrant]
The undersigned holder hereby represents that such holder is the registered
holder of this Warrant Certificate, and hereby irrevocably elects to exercise
the right, represented by this Warrant Certificate, to receive ____________
shares of Common Stock, no par value per share (the "Common Stock"), of CREATIVE
HOST SERVICES, INC. (the "Company") and herewith tenders payment for such shares
to the order of the Company in the amount of $___________ in accordance with the
terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of the undersigned or such holder's nominee hereinafter
set forth, and further that such certificate be delivered to the undersigned at
the address hereinafter set forth or to such other person or entity as is
hereinafter set forth. If said number of shares is less than all of the shares
of Common Stock purchasable hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or such holder's nominee hereinafter
set forth, and further that such Warrant Certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
----------------------------------------
Name: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
Certificate to be delivered as follows:
---------------------------------------
Name: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
Date:____________________
_______________________________________
(Signature must conform in all respects to the name of the holder as specified
on the face of the Warrant Certificate, unless Form of Assignment has been
executed)
FORM OF ELECTION TO CONVERT
[To be Executed Upon Conversion of Warrant]
The undersigned holder hereby represents that such holder is the registered
holder of this Warrant Certificate, and hereby irrevocably elects to exercise
the right, represented by this Warrant Certificate, to convert the Warrants
evidenced by this Warrant Certificate into ____________ shares of Common Stock,
no par value per share (the "Common Stock"), of CREATIVE HOST SERVICES, INC(the
"Company"). The undersigned requests that a certificate for such shares be
registered in the name of the undersigned or such holder's nominee hereinafter
set forth, and further that such certificate be delivered to the undersigned at
the address hereinafter set forth or to such other person or entity as is
hereinafter set forth. If said number of shares is less than all of the shares
of Common Stock convertible hereunder, the undersigned requests that a new
Warrant Certificate representing the remaining balance of such shares be
registered in the name of the undersigned or such holder's nominee hereinafter
set forth, and further that such Warrant Certificate be delivered to the
undersigned at the address hereinafter set forth or to such other person or
entity as is hereinafter set forth.
Certificate to be registered as follows:
----------------------------------------
Name: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
Certificate to be delivered as follows:
---------------------------------------
Name: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
Date:____________________
_______________________________________
(Signature must conform in all respects to the name of the holder as specified
on the face of the Warrant Certificate, unless Form of Assignment has been
executed)
FORM OF ASSIGNMENT
[To be executed upon Transfer of Warrant]
FOR VALUE RECEIVED, the undersigned registered holder of the enclosed Warrant
Certificate hereby sells, assigns and transfers unto
_______________________________________ the right represented by such Warrant
Certificate to purchase _____________ shares of Common Stock of CREATIVE HOST
SERVICES, INC. to which such Warrant Certificate relates, and appoints
_________________________________________________ Attorney to make such transfer
on the books of CREATIVE HOST SERVICES, INC. maintained for such purpose, with
full power of substitution in the premises.
Date:___________________
_______________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate)
_____________________________________
(Street Address)
_____________________________________
(City) (State) (Zip Code)
EXHIBIT B
---------
HOLDERS OF THE COMPANY'S STOCK
------------------------------
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER(1) OF BENEFICIAL OWNER(2) CLASS (3)
------------------- ---------------------- ----------
Xxxx Xxxxxxx Xxxxxxx, IV 2,803,898(4) 34.4%
c/x Xxxxxxx Burglar Alarm
000 Xxxx 00xx Xxxxxx
Xxxxxx, XX 00000-0000
OFFICERS AND DIRECTORS:
Xxxxx Xxx 1,045,000(5) 12.9%
Xxxx X. Xxxxxxx 90,000(6) 1.1%
Xxxxxx X. Xxxxxx 77,800(7) 1.0%
Xxxxxxx X. Xxxxxxx 35,000(8) 0.4%
Xxxxxxx Xxxxxxxx 80,000(9) 1.0%
Xxxxx Xxxxxxx, Xx. 59,944(10) 0.7%
ALL OFFICERS AND DIRECTORS 1,387,744 16.5%
AS A GROUP (6 PERSONS)
