EXHIBIT 10.3
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WARRANT
TO PURCHASE CLASS A COMMON STOCK OF
FFS HOLDINGS, INC.
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THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.
THIS WARRANT IS, AND THE SECURITIES REPRESENTED HEREBY ARE, ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND OBLIGATIONS SET FORTH IN THE
STOCKHOLDERS AGREEMENT (AS DEFINED BELOW).
Date of Issuance: *
No. of Shares of Common Stock: *
WARRANT
TO PURCHASE CLASS A COMMON STOCK OF
FFS HOLDINGS, INC.
FOR VALUE RECEIVED, FFS HOLDINGS, INC., a Delaware corporation
(the "COMPANY"), hereby grants to Xxxxxxxxxxx Industries, Inc. (the "HOLDER")
the right to purchase from the Company *(1) shares of the Company's class A
common stock, par value $0.01 per share ("COMMON STOCK") (subject to adjustment
as provided herein), pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
1.1. Certain Definitions. In addition to other words and terms
defined elsewhere in this Warrant, the following words and terms shall
have the meanings set forth below (and such meanings shall be equally
applicable to both the singular and plural form of the terms defined, as
the context may require):
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than shares
issued in connection with the exercise or conversion of any warrant, option or
convertible security.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or any other day on which commercial banks in New York, New York are
required to be closed for regular banking business.
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(1) 5% of the total number of shares of Common Stock issued to investors and
outstanding as of the Closing Date under the Stock Purchase Agreement.
"CASH CONSIDERATION PER SHARE" shall have the meaning
specified in Section 2.4.
"CASH CONSIDERATION TRANSACTION" shall have the meaning
specified in Section 2.4 hereof.
"CURRENT EXERCISE PRICE" shall mean, in respect of a share of
Common Stock at any date herein specified, the Exercise Price as adjusted
pursuant to Article 3.
"EXERCISE SHARES" shall have the meaning specified in Section
2.4.
"EXERCISE PRICE" shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1 or Section 2.4, multiplied by (ii) $[THE COMMON STOCK INVESTOR
(INCLUDING THE PRINCIPALS OF THE XXXXXX GROUP) BUY-IN PRICE PER SHARE].
"EXPIRATION ACCELERATION EVENT" shall mean any of the
following: (i) the closing of an Initial Public Offering, (ii) the closing of a
merger or consolidation involving the Company in which shares of Common Stock
representing more than fifty percent (50%) of the outstanding voting power of
the Company are transferred in a bona fide transaction; (iii) the closing of the
sale of all or substantially all of the Company's assets (on a consolidated
basis) in a bona fide transaction; and (iv) a "Compulsory Holdco Sale" as that
term is defined in the Stockholders Agreement.
"EXPIRATION DATE" shall mean the earlier to occur of (i) any
Expiration Acceleration Event and (ii) the later to occur of (A) the tenth
(10th) anniversary of the date hereof and (B) the repayment in full by the
Company of all amounts owed by it to the Holder under the promissory note, of
even date herewith, issued by the Company to the Holder.
"INITIAL PUBLIC OFFERING" shall mean a public offering of the
capital stock of the Company pursuant to a registration statement filed under
the Securities Act of 1933, as amended, in which the net offering proceeds of
such public offering exceed $75,000,000.
"OTHER PROPERTY" shall have the meaning set forth in Section
3.2.
"PERSON" shall mean an individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization
or other entity.
"REPRESENTATIVE" shall mean the Chief Executive Officer of the
Holder, from time to time, or any such person selected by the Chief Executive
Officer of the Holder and consented to by the Company, such consent not to be
unreasonably withheld.
"STOCKHOLDERS AGREEMENT" shall mean the Stockholders' and
Warrant Holder's Agreement, dated as of the date hereof, by and among the
Company, the Holder and certain holders of shares of the Company's common stock.
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"WARRANTS" shall mean this Warrant and any warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall be identical as to terms and conditions and date, except as
to the number of shares of Common Stock for which they may be exercised.
1.2. Other Definitional Provisions; Construction. Whenever the
context so requires, neuter gender includes the masculine and feminine,
the singular number includes the plural and vice versa. The words
"hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not in any
particular provision of this agreement, and references to section,
article, exhibit and like references are references to this Agreement
unless otherwise specified. References in this Agreement to any Person
shall include such Person's successors and permitted assigns.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. From and after the date hereof and until
the Expiration Date, the Holder may exercise this Warrant, on any Business
Day, for all or any part of the number of shares of Common Stock
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the
Holder shall deliver to the Company: (i) a written notice of the Holder's
election to exercise this Warrant, which notice shall specify the number
of shares of Common Stock to be purchased, (ii) payment of the Exercise
Price and (iii) this Warrant. Such notice shall be substantially in the
form of the subscription form attached hereto as Exhibit A, duly executed
by the Holder. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within ten (10) Business Days thereafter,
execute or cause to be executed and deliver or cause to be delivered to
the Holder a certificate or certificates representing the aggregate number
of full shares of Common Stock issuable upon such exercise. This Warrant
shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and the Holder shall be
deemed to have become a holder of record of such shares for all purposes,
as of the date the items listed in (i) through (iii) above have been
received by the Company and all taxes required to be paid by the Holder,
if any, pursuant to Section 2.3 prior to the issuance of such shares have
been paid. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates
representing the shares of Common Stock issuable upon such exercise,
deliver to the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of the Holder, appropriate notation may
be made on this Warrant and the same returned to the Holder.
Payment of the Exercise Price shall be made by certified or
official bank check payable to the Company.
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2.2. Notice of Expiration Acceleration Event. The Company shall
provide notice to the Holder at least ten (10) Business Days prior to the
proposed occurrence of an Expiration Acceleration Event.
2.3. Payment of Taxes. The Company shall pay all expenses in
connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issuance or delivery of the shares of Common
Stock issuable upon exercise of this Warrant, unless such tax or charge is
imposed by law upon the Holder, in which case such taxes or charges shall
be paid by the Holder.
2.4. Cashless Exercise. This Section 2.4 shall apply with respect to
transactions ("CASH CONSIDERATION TRANSACTIONS") whereby all holders of
shares of Common Stock are entitled to receive (whether from the Company
or another Person) an amount in cash as consideration for the transfer,
redemption or surrender of such shares (such amount per share of Common
Stock, the "CASH CONSIDERATION PER SHARE"). If the Holder wishes to
participate in a Cash Consideration Transaction, then, as an alternative
to exercise of this Warrant by payment in cash (or by certified or
official bank check) as provided above in Section 2.1, it may elect to
exercise this Warrant for all or any part of the number of shares of
Common Stock purchasable hereunder (and with respect to which the Holder
would otherwise be eligible to participate in the Cash Consideration
Transaction if it were a holder thereof) (the "EXERCISE SHARES") on a net
basis without the payment of any funds by the Holder, in which case the
Holder shall be entitled to receive (at the same time and otherwise in the
same manner as participating holders of shares of Common Stock are paid in
connection with the Cash Consideration Transaction) an amount in cash with
respect to each Exercise Share equal to the (x) the Cash Consideration Per
Share less (y) the Current Exercise Price. Notwithstanding the foregoing,
the Holder will only be entitled to exercise the Warrant pursuant to this
Section 2.4 in connection with a Cash Consideration Transaction if (a) the
Cash Consideration Per Share exceeds the Current Exercise Price and (b)
the Holder delivers to the Company a written notice of the Holder's
election to exercise this Warrant pursuant to this Section 2.4 (in the
manner prescribed in Section 2.1) at least five (5) Business Days prior to
the occurrence of the Cash Consideration Transaction. In the event that
the Cash Consideration Transaction is not consummated, the exercise of
this Warrant by the Holder in accordance with this Section 2.4 shall be
deemed to be null and void.
3. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Article 3.
3.1. Stock Dividends, Subdivisions and Combinations. If at any time
the Company shall:
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(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this
Warrant is exercisable immediately after the occurrence of any such event
shall be adjusted to equal the number of shares of Common Stock which a
record holder of the same number of shares of Common Stock for which this
Warrant is exercisable immediately prior to the occurrence of such event
would own or be entitled to receive after the happening of such event, and
(ii) the Current Exercise Price shall be adjusted to equal (A) the Current
Exercise Price in effect prior to such adjustment multiplied by the number
of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares
for which this Warrant is exercisable immediately after such adjustment.
3.2. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. Except in the case of an Expiration Acceleration
Event, if the Company shall reorganize its capital, reclassify its capital
stock, recapitalize its capital structure, consolidate or merge with or
into another Person (where the Company is not the surviving corporation or
where there is a change in or distribution with respect to the Common
Stock of the Company) and, pursuant to the terms of such reorganization,
reclassification, merger or consolidation, shares of common stock of the
successor or acquiring Person, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or
other subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring Person ("OTHER PROPERTY"), are to be
received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, upon exercise
of such Warrant, the number of shares of common stock of the successor or
acquiring Person or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger or consolidation by a holder of the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such event. In case of any such reorganization, reclassification,
merger or consolidation, the successor or acquiring Person (if other than
the Company) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of shares of Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Article 3. For
purposes of this Section 3.2, "common stock of the successor or
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acquiring Person" shall include equity securities of such Person of any
class which is not preferred as to dividends (or similar distributions of
profit or surplus) or assets over any other class of equity security of
such Person and which is not subject to redemption and shall also include
any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such equity securities,
either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to
subscribe for or purchase any such equity securities. The foregoing
provisions of this Section 3.2 shall similarly apply to successive
reorganizations, reclassifications, mergers or consolidations.
3.3. Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Exercise Price provided for in this Article 3:
(a) When Adjustments to Be Made. The adjustments required by
this Article 3 shall be made whenever and as often as any specified event
requiring an adjustment shall occur. For the purpose of any adjustment,
any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) No Fractional Interests. In computing adjustments under
this Article 3, fractional interests in Common Stock shall be rounded up
to the nearest whole number.
(c) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution and shall, thereafter and
before the distribution to stockholders thereof, legally abandon its plan
to pay such dividend or distribution, then thereafter no adjustment shall
be required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
4. NOTICES TO WARRANT HOLDERS
4.1. Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at
which a share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Article 3, the Company shall
forthwith prepare a certificate to be executed by an officer of the
Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated,
specifying the number of shares of Common Stock for which this Warrant is
exercisable and (if such adjustment was made pursuant to Section 3.2)
describing the number and kind of any shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase
price or prices thereof, after giving effect to such adjustment or change.
4.2. Notice of Corporate Action. If at any time:
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(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution; or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with another Person;
or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall give to the Holder (i) at least 15
Business Days' prior written notice of the record date for such dividend
or distribution or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, dissolution,
liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, dissolution,
liquidation or winding up, at least 10 Business Days' prior written notice
of the date when the same shall take place. Such notice in accordance with
the foregoing clause also shall specify (i) the date on which any such
record is to be taken for the purpose of such dividend or distribution,
the date on which the holders of Common Stock shall be entitled to any
such dividend or distribution, and the amount and character thereof, and
(ii) the date on which any such reorganization, reclassification, merger,
consolidation, dissolution, liquidation or winding up is to take place and
the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, merger, consolidation, dissolution, liquidation or
winding up.
5. RESERVATION AND AUTHORIZATION OF COMMON STOCK
From and after the Closing Date, the Company shall at all
times reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon exercise of
any Warrant and payment therefor in accordance with the terms of such Warrant,
shall be duly and validly issued and fully paid and nonassessable.
6. INFORMATION RIGHTS AND BOARD OBSERVER STATUS
The Representative shall (a) receive all notices and
information that the Company distributes to the Board of Directors and (b) have
the right to attend and observe in a nonvoting capacity, but not participate in
discussions at, all meetings of the Board of Directors; provided, however, that
the Company reserves the right to exclude the Representative from access to any
material meeting or portion thereof if the Board of Directors believes in good
faith that (i) the Representative would, if such Representative were a director,
be an "interested director" with respect to such matters within the meaning of
Section 144 of the Delaware General Corporation Law or otherwise have a conflict
of interest with respect to such matters or (ii) upon the advice of counsel,
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exclusion of the Representative is reasonably necessary to preserve the
attorney-client privilege. As a condition to the Representative's rights
hereunder, the Representative shall agree to maintain the confidentiality of all
Company information and all proceedings of the Board of Directors to the same
extent as the Representative would be required to do if the Representative were
a director of the Company.
7. REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY
If any shares of Common Stock required to be reserved for
issuance upon exercise of Warrants pursuant to Article 5 require registration or
qualification with any governmental authority or other governmental approval or
filing under any federal or state law before such shares may be so issued, the
Company will in good faith and as expeditiously as possible and at its expense
endeavor to cause such shares to be duly registered.
8. TAKING OF RECORD; STOCK BOOKS
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any provision
of Article 3 refers to the taking of a record of such holders, the Company will
in each such case take such a record and will take such record as of the close
of business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock ledger or
other books so as to result in preventing or delaying the exercise of any
Warrant.
9. LOSS OR MUTILATION
Upon receipt by the Company from the Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant and indemnity reasonably satisfactory
to it, and in case of mutilation upon surrender and cancellation hereof, the
Company will execute and deliver in lieu hereof a new Warrant of like tenor to
the Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
10. LIMITATION OF LIABILITY AND RIGHTS
No provision hereof, in the absence of affirmative action by
the Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of the Holder hereof, shall (i) give rise to any liability
of such the Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company or (ii) confer upon the Holder rights as a
stockholder of the Company.
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11. WARRANT NoT TRANSFERABLE
Neither this Warrant, nor any of the Holder's rights
hereunder, may be transferred by the Holder to any Person without the prior
written consent of the Company, and any purported transfer in violation of this
Article 11 shall be null and void.
12. "GOOD FAITH" DETERMINATIONS BY THE BOARD OF DIRECTORS
Whenever the Board of Directors of the Company is required to
make a determination in good faith of the fair value of any item under Article
3, such determination may be challenged in good faith by the Holder, and any
dispute shall be resolved by an accounting firm of recognized national standing
selected by the Company and reasonably acceptable to the Holder.
13. PREEMPTIVE RIGHTs
[THE WARRANT IS TO CONTAIN THE SAME PREEMPTIVE RIGHTS AS THOSE
CONTAINED IN THE STOCKHOLDERS' AND WARRANT HOLDER'S AGREEMENT, AND THE HOLDER
WILL HAVE THE SAME PREEMPTIVE RIGHTS AS THE INITIAL COMMON STOCK INVESTORS
(INCLUDING THE PRINCIPALS OF THE XXXXXX GROUP).]
14. MISCELLANEOUS
14.1. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be
made pursuant to the provisions of this Warrant shall be in writing and
shall be delivered personally, by facsimile (which is confirmed as
provided below) or by overnight courier (providing proof of delivery) to
the applicable party at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to the Company:
*
If to the Holder:
*
Notice given by personal delivery or overnight courier shall be effective
upon actual receipt. Notice given by facsimile shall be confirmed by
appropriate answer back and shall be effective upon actual receipt if
received during the recipient's normal business hours, or at the beginning
of the recipient's next Business Day if not received during the
recipient's normal business hours.
14.2. Successors. This Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company
and the Holder.
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14.3. Amendment. This Warrant may only be modified or amended with
the written consent of the Company and the Holder.
14.4. Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions
of this Warrant.
14.5. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.6. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
giving effect to any conflicts of laws principles of such State that may
refer the governance or construction of the Warrant to the laws of another
jurisdiction.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: *, 2004
FFS HOLDINGS, INC.
By:___________________________
Name:
Title:
Attest:
By:______________________
Name:
Title:
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
Reference is made the warrant, dated as of * , 2004, issued by
FFS Holdings, Inc. to Xxxxxxxxxxx Industries, Inc. (the "WARRANT"). Capitalized
terms used herein which are not otherwise defined shall have the respective
meanings ascribed to them in the Warrant.
The undersigned hereby irrevocably exercises the Warrant for the
purchase of ______ shares of Common Stock of FFS Holdings, Inc. and [herewith
makes payment therefor in the amount of $__________][elects to purchase such
shares in accordance with the Cashless Exercise provisions of Section 2.4 of the
Warrant], all at the price and on the terms and conditions specified in the
Warrant, and, if such shares of Common Stock shall not include all of the shares
of Common Stock purchasable and issuable as provided in the Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
purchasable and issuable thereunder be delivered to the undersigned.
XXXXXXXXXXX INDUSTRIES, INC.
By:___________________________
Name:
Title:
