WARRANT AGREEMENT
Between
NORTH ATLANTIC TRADING ACQUISITION COMPANY, INC.
and
UNITED STATES TRUST COMPANY OF NEW YORK
as
Warrant Agent
-------------------------
Dated as of June 25, 1997
WARRANT AGREEMENT (the "Agreement"), dated as of June 25,
1997, between North Atlantic Trading Acquisition Company, Inc., a Delaware
corporation (together with any successors and assigns, the "Company"), and
United States Trust Company of New York, a New York banking corporation, as
Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes, among other things, to issue
and sell pursuant to a Purchase Agreement, dated as of June 18, 1997, among the
Company and NatWest Capital Markets Limited ("NatWest"), as Initial Purchaser
(the "Purchase Agreement"), 1,360,000 shares of its 12% Senior Payment-In-Kind
Preferred Stock (the "Senior PIK Preferred Stock"), along with Warrants (the
"Unit Warrants"), for the purchase of 44,440 shares of its Common Stock, par
value $.01 per share (the "Common Stock," and the shares of Common Stock
issuable upon exercise of the Warrants being referred to herein as the "Warrant
Shares"). The Senior PIK Preferred Stock and Warrants will be sold in units (the
"Units), each Unit representing 1,000 shares of Preferred Stock and one Warrant,
to purchase 32.6765 shares of Common Stock;
WHEREAS, the Company proposes to issue to an entity or
individuals affiliated with NatWest 583 Warrants (the "NatWest Warrants" and
together with the Unit Warrants, the "Warrants");
WHEREAS, the Company wishes the Warrant Agent to act on behalf
of the Company and the Warrant Agent is willing to act in connection with the
issuance, division, transfer, exchange and exercise of Warrants as provided
herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will initially
be issued either in global form (the "Global Warrants"), substantially in the
form of Exhibit A (including footnote I thereto) or in registered form as
physical Warrant certificates (the "Physical Warrants"). Any certificates (the
"Warrant Certificates") evidencing the Global Warrants or the Physical Warrants
to be delivered pursuant to this Agreement shall be substantially in the form
set forth in Exhibit A attached hereto. Such Global Warrants shall represent
such of the outstanding Warrants as shall be specified therein and each shall
provide that it shall represent the aggregate amount of outstanding Warrants
from time to time endorsed thereon and that the
aggregate amount of outstanding Warrants represented thereby may from time
to time be reduced or increased, as appropriate. Any endorsement of a Global
Warrant to reflect the amount of any increase or decrease in the amount of
outstanding Warrants represented thereby shall be made by the Warrant Agent and
Depositary (as defined below) in accordance with instructions given by the
holder thereof. The Depository Trust Company shall act as the Depositary with
respect to the Global Warrants until a successor shall be appointed by the
Company and the Warrant Agent. Upon written request, a Warrant holder may
receive from the Depositary and Warrant Agent Physical Warrants as set forth in
Section 6 below.
SECTION 3. Execution of Warrant Certificates. Warrant
Certificates shall be signed on behalf of the Company by its Chairman of the
Board or its President or a Vice President and by its Secretary or an Assistant
Secretary under its corporate seal. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, President, Chief Executive Officer, Vice
President, Treasurer, Chief Financial Officer, Secretary or Assistant Secretary
and may be imprinted 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 Chairman of the Board, President, Chief Executive Officer,
Vice President, Treasurer, Chief Financial officer, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he 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 countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and 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 Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of
countersignature by the Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrants
shall be numbered and shall be registered on the books of the Company maintained
at the principal office of the Warrant Agent in the Borough of Manhattan, city
of New York (the "Warrant Register") as they are issued.
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Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
The Warrant Agent shall, upon written instructions of the Chairman of the Board,
the President, Chief Executive Officer, a Vice President, the Treasurer, Chief
Financial Officer or an Assistant Secretary of the Company, initially
countersign and deliver Warrants entitling the holders thereof to purchase not
more than the number of Warrant Shares referred to above in the first recital
hereof and shall thereafter countersign and deliver Warrants as otherwise
provided in this Agreement.
The Company and the Warrant Agent may deem and treat the
registered holders (the "Holders") of the Warrant Certificates as the absolute
owners thereof (notwithstanding any notation of ownership or other writing
thereon made by anyone) for all purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
SECTION 5. Transfer and Exchange of Warrants. The Warrant
Agent shall from time to time, subject to the limitations of Section 6, register
the transfer of any outstanding Warrants upon the records to be maintained by it
for that purpose, upon surrender thereof duly endorsed or accompanied (if so
required by it) by a written instrument or instruments of transfer in form
satisfactory to the Warrant Agent, duly executed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney. Subject to the terms of this Agreement, each Warrant
Certificate may be exchanged for another certificate or certificates entitling
the Holder thereof to purchase a like aggregate number of Warrant Shares as the
certificate or certificates surrendered then entitle each Holder to purchase.
Any Holder desiring to exchange a Warrant Certificate or Certificates shall make
such request in writing delivered to the Warrant Agent, and shall surrender,
duly endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall
countersign and deliver by certified mail a new Warrant Certificate or
Certificates to the personsentitled thereto. The Warrant Certificates may be
exchanged at the option of the Holder thereof, when surrendered at the office or
agency of the Company maintained for such purpose, which initially will be the
corporate trust office of the Warrant Agent in New York, New York for another
Warrant Certificate, or other Warrant Certificates of different denominations,
of like tenor and representing in the aggregate the right to purchase a like
number of Warrant Shares.
No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates, but the Company may require
payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that is
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imposed in connection with any such exchange or registration of transfer.
SECTION 6. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Warrants. When
Physical Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Physical
Warrants; or
(ii) to exchange such Physical Warrants for an equal
number of Physical Warrants of other authorized denominations, the
Warrant Agent shall register the transfer or make the exchange as
requested if the requirements under this Agreement as set forth in this
Section 6 for such transactions are met; provided, however, that the
Physical Warrants presented or surrendered for registration of transfer
or exchange:
(I) shall be duly endorsed or accompanied by
a written instrument of transfer in form satisfactory to the
Warrant Agent, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(II) in the case of Physical Warrants the
offer and sale of which have not been registered under the
Securities Act of 1933, as amended (the "Security Act"), such
Physical Warrants shall be accompanied, in the sole discretion
of the Company, by the following additional information and
documents, as applicable:
(A) if such Physical Warrants are being delivered to the
Warrant Agent by a holder for registration in the
name of such holder, without transfer, a
certification from such holder to that effect (in
substantially the form of Exhibit B hereto); or
(B) if such Physical Warrants are being transferred to a
"qualified Institutional buyer" (as defined in Rule
144A under the Securities Act (a "Qualified
Institutional Buyer")) in accordance with Rule 144A
under the Securities Act, a certification to that
effect (in substantially the form of Exhibit B
hereto); or
(C) if such Physical Warrants are being transferred to an
institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities
Act (an "Institutional Accredited Investor"))
delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and a
Transferee
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Certificate for Institutional Accredited
Investors in substantially the form of Exhibit C
hereto; or
(D) if such Physical Warrants are being transferred in
reliance on Regulation S under the Securities Act
("Regulation S"), delivery of a certification to that
effect (in substantially the form of Exhibit B
hereto) and a Transferee Certificate for Regulation S
Transfers in substantially the form of Exhibit D
hereto and an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such Physical Warrants are being transferred in
reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and an
opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act; or
(F) if such Physical Warrants are being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect (in substantially the form of Exhibit
B hereto) and an opinion of counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of Physical Warrants for a
Beneficial Interest in a Global Warrant. A Physical Warrant may not be exchanged
for a beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a Physical
Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Warrant Agent, together with:
(A) a certification, in substantially the form of Exhibit
B hereto, that such Physical Warrant is being
transferred to a Qualified Institutional Buyer; and
(B) written instructions directing the Warrant Agent to
make, or to direct the Depositary to make, an
endorsement on the Global Warrant to reflect an
increase in the aggregate amount of the Warrants
represented by the Global Warrant,
then the Warrant Agent shall cancel such Physical Warrant and cause, or direct
the
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Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall upon written instructions from the Company authenticate a new Global
Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Agreement (including the
restrictions on transfer set forth herein) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for
a Physical Warrant.
(i) Any person having a beneficial interest in a Global
Warrant may upon request exchange such beneficial interest for a
Physical Warrant. Upon receipt by the Warrant Agent of written
instructions or such other form of instructions as is customary for the
Depositary from the Depositary or its nominee on behalf of any person
having a beneficial interest in a Global Warrant and upon receipt by
the Warrant Agent of a written order or such other form of instructions
as is customary for the Depositary or the person designated by the
Depositary as having such a beneficial interest containing registration
instructions and, in the case of any such transfer or exchange of a
beneficial interest in a Global Warrant the offer and sale of which
have not been registered under the Securities Act, the following
additional information and documents:
(A) if such beneficial interest is being transferred to
the person designated by the Depositary as being the
beneficial owner, a certification from such person to
that effect (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being transferred to a
Qualified Institutional Buyer in accordance with Rule
144A under the Securities Act, a certification to
that effect (in substantially the form of Exhibit B
hereto); or
(C) if such beneficial interest is being transferred to
an Institutional Accredited Investor, delivery of a
certification to that effect (in substantially the
form of Exhibit B hereto) and a Certificate for
Institutional Accredited Investors in substantially
the form of Exhibit C hereto; or
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(D) if such beneficial interest is being transferred in
reliance on Regulation S, delivery of a certification
to that effect (in substantially the form of Exhibit
B hereto) and a Transferee Certificate for Regulation
S Transfers in substantially the form of Exhibit D
hereto and an opinion of counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in
reliance on Rule 144 under the Securities Act,
delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and an
opinion of counsel reasonably satisfactory to the
Company to the effect that such transfer is in
compliance with the Securities Act; or
(F) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect (in substantially the form of Exhibit
B hereto) and an opinion of counsel reasonably
satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act,
then the Warrant Agent will cause, in accordance
with the standing instructions and procedures existing between the
Depositary and the Warrant Agent, the aggregate amount of the Global
Warrant to be reduced and, following such reduction, the Company will
execute and, upon receipt of a written instruction in the form of an
Officers' Certificate, the Warrant Agent will countersign and deliver
to the transferee a Physical Warrant.
(ii) Physical Warrants issued in exchange for a beneficial
interest in a Global Warrant pursuant to this Section 6(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Warrant Agent in writing.
The Warrant Agent shall deliver such Physical Warrants to the persons
in whose names such Physical Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Agreement, a Global Warrant may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a
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nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of
Depositary. If at any time:
(i) the Depositary for the Warrants notifies the Company that
the Depositor is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, at its sole discretion, notifies the Warrant
Agent in writing that it elects to cause the issuance of Physical
Warrants under this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon written instructions
from the Company requesting the Warrant Agent to countersign and deliver
Physical Warrants, will countersign and deliver Physical Warrants, in an
aggregate number equal to the aggregate number of Warrants represented by the
Global Warrants, in exchange for such holder's beneficial interest in Global
Warrants.
(g) Legends.
(i) For so long as transfer of a Warrant is not permitted
without registration under the Securities Act, each Warrant Certificate
evidencing such Warrant (and all Warrants issued in exchange therefor
or substitution thereof) shall bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE
144(k) UNDER THE
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SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE WARRANT AGENT A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE WARRANT AGENT), (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND; PROVIDED THAT AN INITIAL INVESTOR THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR PURCHASING AS DESCRIBED IN CLAUSE
(1)(B) ABOVE SHALL NOT BE PERMITTED TO TRANSFER THIS SECURITY TO AN
INSTITUTIONAL ACCREDITED INVESTOR. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE WARRANT
AGENT. IF THE PROPOSED TRANS-FEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR PURCHASING PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND THE ISSUER
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE
THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
THIS WARRANT AND SHARES OF COMMON STOCK OF THE
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COMPANY INTO WHICH THIS WARRANT IS EXERCISABLE ARE SUBJECT TO A COMMON
STOCK REGISTRATION RIGHTS AND STOCKHOLDERS AGREEMENT DATED AS OF JUNE
25, 1997, WHICH CONTAINS PROVISIONS REGARDING THE RESTRICTIONS ON THE
TRANSFER AND PROVISIONS REQUIRING THE MANDATORY TRANSFER OF SUCH SHARES
AND OTHER MATTERS. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF THE COMPANY.
(ii) Until the Separability Date (as hereinafter defined)
each Warrant, other than the NatWest Warrants, shall bear a legend
substantially to the following effect:
THESE SECURITIES HAVE BEEN OFFERED AS PART OF A UNIT. EACH OF THE UNITS
REPRESENTS ONE THOUSAND SHARES OF 12% SENIOR PAYMENT-IN-KIND PREFERRED
STOCK (THE "SENIOR PIK PREFERRED STOCK") OF THE COMPANY AND ONE
WARRANT, EACH WARRANT INITIALLY EXERCISABLE TO PURCHASE 32.6765 SHARES
OF COMMON STOCK OF THE COMPANY. THE SENIOR PIK PREFERRED STOCK AND
WARRANTS WILL NOT BE TRANSFERABLE BY A HOLDER THEREOF SEPARATELY FROM
EACH OTHER UNTIL THE "SEPARABILITY DATE," WHICH SHALL BE THE EARLIEST
OF (i) TEN BUSINESS DAYS FROM THE DATE OF ORIGINAL ISSUANCE OF THE
UNITS OR (ii) SUCH EARLIER DATE AS MAY BE DETERMINED BY NATWEST CAPITAL
MARKETS LIMITED WITH THE CONSENT OF THE COMPANY.
(iii) Each certificate representing Warrant Shares (and all
shares of Common Stock issued in exchange therefor or substitution
therefor) shall bear a legend identical to the legend set forth in
clause (i) above, except that the final paragraph of such legend shall
read as follows (in place of the final paragraph of the legend set
forth in clause (i) above):
THE SHARES OF COMMON STOCK OF THE COMPANY REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A COMMON STOCK REGISTRATION RIGHTS AND
STOCKHOLDERS AGREEMENT DATED AS OF JUNE 25, 1997, WHICH CONTAINS
PROVISIONS REGARDING RESTRICTIONS ON THE TRANSFER AND THE MANDATORY
TRANSFER OF SUCH SHARES AND OTHER MATTERS. A COPY OF SUCH AGREEMENT IS
AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY.
(h) Cancellation and/or Adjustment of a Global Warrant. At
such
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time as all beneficial interests in a Global Warrant have either been
exchanged for Physical Warrants, redeemed, repurchased or cancelled, such Global
Warrant shall be returned to or retained and cancelled by the Warrant Agent. At
any time prior to such cancellation, if any beneficial interest in a Global
Warrant is exchanged for Physical Warrants, redeemed, repurchased or cancelled,
the number of Warrants represented by such Global Warrant shall be reduced and
an endorsement shall be made on such Global Warrant, by the Warrant Agent to
reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Physical Warrants.
(i) To permit registrations of transfers and exchanges, the
Company shall execute, at the Warrant Agent's request, and the Warrant
Agent shall countersign Physical Warrants and Global Warrants.
(ii) All Physical Warrants and Global Warrants issued upon
any registration, transfer or exchange of Physical Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to the
same benefits under this Agreement as the Physical Warrants or Global
Warrants surrendered upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of
any Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute owner of
such Warrant, and neither the Warrant Agent nor the Company shall be
affected by notice to the contrary.
SECTION 7. Separation of Warrants; Terms of Warrants; Exercise
of Warrants. The Senior PIK Preferred Stock and Warrants will not be separately
transferable until the "Separability Date," which shall be the earliest of (i)
ten (10) business days after the date of original issuance of the Warrant
and/or; (ii) such earlier date as may be determined by NatWest with consent of
the Company.
Subject to the terms of this Agreement, each Warrant holder
shall have the right, which may be exercised commencing on or after the date of
issuance and until 5:00 p.m., New York City time, on June 15, 2007 (the
"Expiration Date"), to receive from the Company upon the exercise of each
warrant the number of fully paid and nonassessable Warrant Shares which the
holder may at the time be entitled to receive on exercise of such Warrants and
payment of the Exercise Price (as defined) then in effect for such Warrant
Shares. Each Warrant not exercised prior to the Expiration Date shall become
void and all rights thereunder and all rights in respect thereof under this
Agreement shall cease as of such time. No adjustments as to dividends will be
made upon exercise of the Warrants.
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The initial price per share at which Warrant Shares shall be
purchasable upon exercise of Warrants (the "Exercise Price") shall be $.01,
subject to adjustment, provided, that in no event shall the Exercise Price be
less than $.01 per share. A Warrant may be exercised upon surrender at the
office or agency of the Company maintained for such purpose, which initially
will be the corporate trust office of the Warrant Agent in New York, New York,
of the certificate or certificates evidencing the Warrants to be exercised with
the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by a participant in a recognized
Signature Guarantee Medallion Program, and upon payment to the Warrant Agent for
the account of the Company of the Exercise Price, as adjusted as herein
provided, 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 certified or official bank check to the order of the Company in New York
Clearing House Funds.
Subject to the provisions of Section 6 hereof, upon such
surrender of Warrants and payment of the Exercise Price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the holder and in such name or names as the Warrant holder may
designate a certificate or certificates for the number of Warrant Shares
issuable upon the exercise of such Warrants together with cash as provided in
Section 12; provided, however, that if any consolidation, merger or lease or
sale of assets is proposed to be effected by the Company as described in
subsection (j) of Section 12 hereof, or a tender offer or an exchange offer for
shares of Common Stock of the Company shall be made, upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Company shall, as
soon as possible, but in any event not later than 2 days, other than a Saturday
or Sunday or a day on which banking institutions in the State of New York are
not open for business ("Business Day") thereafter, issue and cause to be
delivered the number of Warrant Shares issuable upon the exercise of such
Warrants in the manner described in this sentence together with cash as provided
in Section 12. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be 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 Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the
holders thereof, either in full or from time to time in part and, in the event
that a certificate evidencing Warrants is exercised in respect of fewer than all
of the Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this
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Section and of Section 3 hereof, and the Company, whenever required by the
Warrant Agent, will promptly supply the Warrant Agent with Warrant Certificates
duly executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants
shall be cancelled by the Warrant Agent. Such cancelled Warrant Certificates
shall then be disposed of by the Warrant Agent in a manner consistent with the
Warrant Agent's customary procedure for such disposal and in a manner reasonably
satisfactory to the Company. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the holders
during normal business hours at its office. The Company shall supply the Warrant
Agent from time to time with such numbers of copies of this Agreement as the
Warrant Agent may request.
SECTION 8. Payment of Taxes. The Company will pay all
documentary stamp taxes attributable to the initial issuance of Warrant Shares
upon the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue of any Warrant Certificates or any certificates for
Warrant Shares in a name other than that of the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant, and the Company shall
not be required to issue or deliver such Warrant Certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case
any of the Warrant Certificates shall be mutilated, lost, stolen or destroyed,
the Company may at its discretion issue and the Warrant Agent may countersign,
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
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity also satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
SECTION 10. Reservation of Warrant Shares. The Company will at
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all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy an obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or, if appointed, the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid 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
represented by the Warrants. The Warrant Agent is hereby irrevocably authorized
to requisition from time to time from such Transfer Agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed certificates for such purposes and will provide or otherwise make
available any cash which may be payable as provided in Section 12. 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 14
hereof.
The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants made in accordance with the terms of this
Agreement will, upon payment of the Exercise Price therefor and issue, be
validly authorized and issued, fully paid, nonassessable, free of preemptive
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof. The Company will take no action to increase the
par value of the Common Stock to an amount in excess of the Exercise Price, and
the Company will not enter into any agreements inconsistent with the rights of
Holders hereunder. The Company will use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Agreement. The Company shall not take any action
reasonably within its control, including the hiring of a broker to solicit
exercises, which would render unavailable an exemption from registration under
the Securities Act which might otherwise be available with respect to the
issuance of Warrant Shares upon exercise of any Warrants.
SECTION 11. Obtaining Stock Exchange Listings. The Company
will from time to time take all action which may be necessary so that the
Warrant Shares, immediately upon their issuance upon the exercise of Warrants,
will be listed on the
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principal securities exchanges and markets within the United States of America
(including the NASDAQ National Market System), if any, on which other shares of
Common Stock are then listed. In the event that, at any time during the period
in which the Warrants are exercisable, the Common Stock is not listed on any
principal securities or exchanges or markets within the United States of
America, the Company will use its best efforts to permit the Warrant Shares to
be designated PORTAL securities in accordance with the rules and regulations
adopted by the National Association of Securities Dealers, Inc. relating to
trading in the Private Offering, Resales and Trading through Automated Linkages
market.
SECTION 12. Adjustment of Number of Warrant Shares Issuable.
The number of shares of Common Stock issuable upon the exercise of each Warrant
(the "Exercise Rate") is subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 12. The Exercise Rate shall
initially be 32.6765.
(a) Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes a distribution on its
Common Stock in shares of its Common Stock or other capital
stock of the Company;
(2) subdivides, combines or reclassifies its
outstanding shares of Common Stock;
(3) makes a distribution to all holders of its Common
Stock of rights, warrants or options to purchase Common Stock
of the Company at a price per share less than the Current
Market Value (as defined in Section 12(d)) at the Time of
Determination (as defined below); and
(4) makes distributions to stockholders of Common
Stock of the Company or rights, warrants or options to
purchase Common Stock of the Company;
then the Exercise Rate 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 he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action; provided, however,
that notwithstanding the foregoing, upon the occurrence of an event described in
any of paragraphs (1), (3) or (4) above, which otherwise would have given rise
to an adjustment, no adjustment shall be made if the Company includes the
holders of Warrants in such distribution pro rata to the number of shares of
Common Stock issued and outstanding (after
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giving effect to the Warrant Shares as if they were issued and outstanding).
The adjustment shall become effective immediately after the
record date in the case of a dividend or distribution (the "Time of
Determination") and immediately after the effective date in the case of a
subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise of
it may receive shares of two or more classes of capital stock of the Company,
the Board of Directors of the Company shall determine 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 applicable to Common Stock in this Section.
Such adjustment shall be made successively whenever any event
listed above shall occur.
(b) Adjustment for Certain Issuances of Common Stock.
Subject to Section 12(a), if the Company issues or sells
shares of its Common Stock or distributes any rights, options or warrants to all
holders of its Common Stock entitling them to purchase shares of Common Stock,
or securities convertible into or exchangeable for Common Stock (other than
pursuant to (1) the exercise of and the Warrants, (2) any options, warrants or
rights outstanding as of the date of this Agreement, (3) without limiting any
options, warrants or rights outstanding pursuant to the immediately preceding
clause (2), any directors, plans and employee stock option or purchase plans to
the extent that the aggregate number of shares of Common Stock of the Company
(or securities convertible into or exchangeable or exercisable for the Common
Stock of the Company) distributed under all such directors, plans and employee
stock option and purchase plans does not exceed 61,856 shares of the Company's
Common Stock at any time (of which options to purchase 30,928 shares are
currently outstanding)), at a price per share less than the Current Market Value
at the Time of Determination, the Exercise Rate shall be adjusted in accordance
with the formula:
(0 + N)
-----
El = E x 0 + (N x P)
-----
M
where:
El = the adjusted Exercise Rate.
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E = the Exercise Rate immediately prior to the Time of
Determination for any such distribution.
0 = the number of Fully Diluted Shares (as defined in
Section 12(i)) outstanding on the Time of
Determination for any such issuance, sale or
distribution.
N = the number of additional shares of Common Stock
issued, sold or issuable upon exercise of such
rights, options or warrants.
P = the price received in the case of any issuance or
sale of Common Stock or exercise price per share of
such rights, options or warrants.
M = the Current Market Value per share of Common Stock
on the Time of Determination for any such issuance,
sale or distribution.
The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which any
such rights, options or warrants are exercisable, not all rights, options or
warrants shall have been exercised, the Warrant shall be immediately readjusted
to what it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distribution.
Subject to Section 12(a), if the Company distributes to all
holders of its Common Stock (i) any evidences of indebtedness of the Company or
any of its subsidiaries, (ii) any assets of the Company or any of its
subsidiaries (other than cash dividends or other cash distributions or
distributions from current or retained earnings other than any Extraordinary
Cash Dividend), or (iii) any rights, options or warrants to acquire any of the
foregoing or to acquire any other securities of the Company, the Exercise Rate
shall be adjusted in accordance with the formula:
El = E x M
-----
M - F
where:
El = the adjusted Exercise Rate.
-17-
E = the current Exercise Rate on the record date mentioned
below.
M = the Current Market Value per share of Common Stock
on the record date mentioned below.
F = the fair market value on the record date mentioned
below of the indebtedness, assets, rights, options or
warrants distributable to one share of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
If an adjustment is made pursuant to clause (iii) above of this subsection (c)
as a result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually
distributed upon exercise of such rights, options or warrants divided by the
number of shares of Common Stock outstanding on the record date. Notwithstanding
the foregoing, provisions of this Section 12(c), (x) an event which would
otherwise give rise to an adjustment pursuant to this Section 12(c) shall not
give rise to such an adjustment if the Company includes the holders of the
Warrants in such distribution pro rata to the number of shares of Common Stock
issued and outstanding after giving effect to the Warrant Shares as if they were
issued and outstanding and (y) no adjustment shall be made pursuant to this
Section 12(c) with respect to cash dividends other than Extraordinary Cash
Dividends.
This subsection does not apply to rights, options or warrants
referred to in subsection (b) of this Section 11.
(d) If (x) the Company merges or consolidates with, or sells
all or substantially all of its property and assets to, another person (other
than an Affiliate of the Company) and consideration is payable to holders of
Common Stock in exchange for their Common Stock in connection with such merger,
consolidation or sale which consists solely of cash, or (y) in the event of the
dissolution, liquidation or winding up of the Company, then the holders of
Warrants shall be entitled to receive distributions on the date of such event on
an equal basis with holders of Common Stock (or other securities issuable upon
exercise of the Warrants) as if the Warrants had been exercised immediately
prior to such event, less the Exercise Price. Upon receipt of such payment, if
any, the rights, of a holder shall terminate and cease and his or her Warrants
shall expire. In case of any such merger, consolidation or sale of assets, the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding up of the Company, the Company shall deposit promptly with the
Warrant
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Agent the funds, if any, necessary to pay the Holders of the Warrants. After
receipt of such deposit from such Person or the Company and after receipt of
surrendered Warrant Certificates, the Warrant Agent shall make payment by
delivering a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the holder
surrendering such Warrants.
(e) Current Market Value.
"Current Market Value" per share of Common Stock or of any
other security (herein collectively referred to as a "Security") at any date
shall be:
(1) if the Security is not registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (i)
the value of the Security determined in good faith by the Board of
Directors of the Company and certified in a board resolution, based on
the most recently completed arm's length transaction between the
Company and a person other than an Affiliate of the Company in which
such determination is necessary and the closing of which occurs on such
date or shall have occurred within the six months preceding such date,
(ii) if no such transaction shall have occurred on such date or within
such six-month period, the value of the Security most recently
determined as of a date within the six months preceding such date by an
Independent Financial Expert or (iii) if neither clause (i) nor (ii) is
applicable, the value of the Security determined as of such date by an
Independent Financial Expert, or
(2) if the Security is registered under the Exchange
Act, the average of the daily market prices for each business day
during the period commencing 15 business days before such date and
ending on the date one day prior to such date or, if the Security has
been registered under the Exchange Act for less than 15 consecutive
business days before such date, then the average of the daily market
prices for all of the business days before such date for which daily
market prices are available. If the market price is not determinable
for at least 10 business days in such period, the Current Market Value
of the Security shall be determined as if the Security was not
registered under the Exchange Act.
The "market price" for any Security on each business day
means: (A) if such Security is listed or admitted to trading on any securities
exchange, the closing price, regular way, on such day on the principal exchange
on which such Security is traded, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) if such Security is
not then listed or admitted to trading on any securities exchange, the last
reported sale price on such day, or if there is no such last
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reported sale price on such day, the average of the closing bid and the asked
prices on such day, as reported by a reputable quotation source designated by
the Company, or (C) if neither clause (A) nor (B) is applicable, the average of
the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City of New York, customarily published on each business
day, designated by the Company. If there are no such prices on a business day,
then the market price shall not be determinable for such business day.
"Independent Financial Expert" shall mean (a) NatWest (or any
successor) or (b) another nationally recognized investment banking firm, a
nationally recognized regional investment banking firm or a "big six" accounting
firm selected by the Company reasonably acceptable to the Warrant Agent (i) that
does not (and whose directors, officers, employees and Affiliates do not) have a
direct or indirect material financial interest in the Company, (ii) that has not
been, and, at the time it is called upon to serve as an Independent Financial
Expert under this Agreement is not (and none of whose directors, officers,
employees or Affiliates is) a promoter, director or officer of the Company,
(iii) that has not been retained by the Company for any purpose, other than to
perform an equity valuation, within the preceding twelve months, and (iv) that,
in the reasonable judgement of the Board of Directors of the Company (certified
by a board resolution), is otherwise qualified to serve as an independent
financial advisor. Any such person may receive customary compensation and
indemnification by the Company for opinions or services it provides as an
Independent Financial Expert.
"Affiliate" shall mean, with respect to any person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such person. For the purposes of this definition,
"control" when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Extraordinary Cash Dividend" means cash dividends, subject to
the sentence below, with respect to the Common Stock the aggregate amount of
which in any fiscal year exceeds the lesser of (i) 25% of the net income of the
Company and its subsidiaries for the fiscal year immediately preceding the
payment of such dividend or (ii) $1,500,000.
(e) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Rate need be made unless the
adjustment would require an increase or decrease of at least .5% in the Exercise
Rate. Not-
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withstanding the foregoing, any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment, provided
that no such adjustment shall be deferred beyond the date on which a Warrant is
exercised.
All calculations under this Section 12 shall be made to the
nearest cent or to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required.
If an adjustment is made upon the establishment of a record
date for a distribution subject to subsections (a), (b) or (c) hereof and such
distribution is subsequently cancelled, the Exercise Rate then in effect shall
be readjusted, effective as of the date when the Board of Directors determines
to cancel such distribution, to that which would have been in effect if such
record date had not been fixed.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(g) Notice of Adjustment.
Whenever the Exercise Rate or Exercise Price is adjusted, the
Company shall provide the notices required by Section 14 hereof.
(h) Voluntary Reduction.
The Company from time to time may increase the Exercise Rate
by any amount for any period of time (including, without limitation,
permanently) if the period is at least 20 business days.
An increase of the Exercise Rate under this Subsection (h)
(other than a permanent increase) does not change or adjust the Exercise Rate
otherwise in effect for purposes of subsections (a), (b) or (c) of this Section
12.
-21-
(i) When Issuance or Payment May Be Deferred.
In any case in which this Section 12 shall require that an
adjustment in the Exercise Rate be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the Holder of any Warrant exercised after such record date
the Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Rate
prior to such adjustment, and (ii) paying to such Holder any amount in cash in
lieu of a fractional share pursuant to Section 13; provided, however, that the
Company shall deliver to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, to deliver to such Holder a due
xxxx or other appropriate instrument evidencing such Holder's right to receive
such additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(j) Reorganizations.
In case of any capital reorganization, other than in the cases
referred to in Sections 12(a), (b), (c) or (d) hereof, or the consolidation or
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the continuing corporation and which does
not result in any reclassification of the outstanding shares of Common Stock
into shares of other stock or other securities or property), or the sale of the
property of the Company as an entirety or substantially as an entirety
(collectively such actions being hereinafter referred to as "Reorganizations"),
there shall thereafter be deliverable upon exercise of any Warrant (in lieu of
the number of shares of Common Stock theretofore deliverable) the number of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock that would otherwise have been deliverable upon the
exercise of such Warrant would have been entitled upon such Reorganization if
such Warrant had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a duly adopted resolution certified by the
Company's Secretary or Assistant Secretary, shall be made in the application of
the provisions herein set forth with respect to the rights and interests of
Holders so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other property thereafter
deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such Reorganization or
the corporation purchasing
-22-
or leasing such assets or other appropriate corporation or entity
shall (i) expressly assume, by a supplemental Warrant Agreement or other
acknowledgment executed and delivered to the Warrant Agent the obligation to
deliver to the Warrant Agent and to cause the Warrant Agent to deliver to each
such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder may be entitled to purchase, and all other
obligations and liabilities under this Agreement and (ii) enter into an
agreement providing to the Holders rights and benefits substantially similar to
those enjoyed by the Holders under the Registration Rights and Stockholders
Agreement of even date herewith.
The foregoing provisions of this Section 12(j) shall apply to
successive Reorganization transactions.
(k) Form of Warrants.
Irrespective of any adjustments in the number or kind of
shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
(l) Miscellaneous.
For purposes of this Section 12 the term "Fully Diluted
Shares" shall mean (i) the shares of Common Stock outstanding as of a specified
date, and (ii) shares of Common Stock into or for which rights, options,
warrants or other securities outstanding as of such date are exercisable or
convertible (other than the Warrants). In the event that at any time, as a
result of an adjustment made pursuant to this Section 12, the holders of
Warrants shall become entitled to purchase any securities of the Company other
than, or in addition to, shares of Common Stock, thereafter the number or amount
of such other securities so purchasable upon exercise of each Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in subsections (a) through (l) of this Section 12, inclusive, and the
provisions of Sections 7, 8, 10 and 13 with respect to the Warrant Shares or the
Common Stock shall apply on like terms to any such other securities.
SECTION 13. 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 the
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 a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise
-23-
of any Warrants (or specified portion thereof), the Company shall pay an amount
in cash equal to the Current Market Value on the day immediately preceding the
date the Warrant is presented for exercise, multiplied by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment
pursuant to Section 12 hereof, the Company shall give prompt written notice of
such adjustment to the Warrant Agent and shall cause the Warrant Agent, on
behalf of and at the expense of the Company, within 10 days after such
adjustment, to mail by first class mail, postage prepaid, to each Holder a
notice of such adjustment(s) and shall deliver to the Warrant Agent a
certificate of the Chief Financial Officer of the Company, accompanied by the
report thereon by a firm of independent public accountants selected by the Board
of Directors of the Company (who may be the regular accountants for the
Company), setting forth in reasonable detail (i) the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Exercise Price of such
Warrant after such adjustment(s), (ii) a brief statement of the facts requiring
such adjustment(s) and (iii) the computation by which such adjustment(s) was
made. Where appropriate, such notice may be given in advance and included as a
part of the notice required under the other provisions of this Section 14.
In case:
(a) the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants; or
(b) the Company shall authorize the distribution to
all holders of shares of Common Stock of evidences of its indebtedness
or assets; or
(c) of any consolidation or merger to which the
Company is a part and for which approval of any shareholders of the
Company is required, or of the conveyance or transfer of the properties
and assets of the Company substantially as an entirety, or of any
reclassification or change of Common Stock issuable upon exercise of
the Warrants (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company; or
(e) the Company proposes to take any action that
would
-24-
require an adjustment to the Exercise Rate or the Exercise Price
pursuant to Section 12 hereof;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered holders of the Warrant Certificates at his or its
address appearing on the Warrant register, at least 30 days (or 20 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company or
the Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any action.
The Company shall give prompt written notice to the Warrant
Agent and shall cause the Warrant Agent, on behalf of and at the expense of the
Company to give to each Holder written notice of any determination to make a
distribution to the holders of its Common Stock of any cash dividends, assets,
debt securities, preferred stock, or any rights or warrants to purchase debt
securities, preferred stock, assets or other securities (other than Common
Stock, or rights, options, or warrants to purchase Common Stock) of the Company,
which notice shall state the nature and amount of such planned dividend or
distribution and the record date therefor, and shall be received by the Holders
at least 30 days prior to such record date therefor.
Nothing contained in this Agreement or in any Warrant
Certificate shall be construed as conferring upon the Holders the right to vote
or to consent or to receive notice as shareholders in respect of the meetings of
shareholders or the election of Directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company.
-25-
SECTION 15. Notices to the Company and Warrant Agent. Any
notice or demand authorized by this Agreement to be given or made by the Warrant
Agent or by any Holder to or on the Company shall be sufficiently given or made
when received at the office of the Company expressly designated by the Company
as its office for purposes of this Agreement (until the Warrant Agent is
otherwise notified in accordance with this Section 15 by the Company), as
follows:
North Atlantic Trading Acquisition Company, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Weil, Gotshal and Xxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
Any notice pursuant to this Agreement to be given by the
Company or by any Holder(s) to the Warrant Agent shall be sufficiently given
when received by the Warrant Agent at the address appearing below (until the
Company is otherwise notified in accordance with this Section by the Warrant
Agent).
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Facsimile: (000) 000-0000
SECTION 16. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of Warrants in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not in any way
adversely affect the interests of any holder of Warrants.
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SECTION 17. Concerning the Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the Holders, by
their acceptance of Warrants, shall be bound:
(a) The statements contained herein and in the
Warrant Certificate shall be taken as statements of the Company, and
the Warrant Agent assumes no responsibility for the correctness of any
of the same except such as describe the Warrant Agent or any action
taken by it. The Warrant Agent assumes no responsibility with respect
to the distribution of the Warrants except as herein otherwise
provided.
(b) The Warrant Agent shall not be responsible for
and shall incur no liability to the Company or any Holder for any
failure of the Company to comply with the covenants contained in this
Agreement or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder
either itself (through its employees) or by or through its attorneys or
agents (which shall not include its employees) and shall not be
responsible for the misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with
legal counsel satisfactory to it (who may be counsel for the Company),
and the Warrant Agent shall incur no liability or responsibility to the
Company or to any Holder in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the
opinion or the advice of such counsel.
(e) Whenever in the performance of its duties under
this Agreement the Warrant Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter
(unless such evidence in respect thereof be herein specifically
prescribed) may be deemed conclusively to be proved and established by
a certificate signed by the Chairman of the Board, the President, one
of the Vice Presidents, the Treasurer or the Secretary of the Company
and delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate. Without limiting the foregoing, the Company
shall notify the Warrant Agent of the occurrence of the Separability
Date on the Date it occurs, and until receipt of such notice the
Warrant Agent may (but need not) be entitled to assume that any such
date has not occurred.
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(f) The Company agrees to pay the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent
in the performance of its duties under this Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and
other charges of any kind and nature incurred by the Warrant Agent in
the performance of its duties under this Agreement (including, without
limitation, reasonable fees and expenses of counsel), and to indemnify
the Warrant Agent and its agents, employees, directors, officers and
affiliates and save it and them harmless against any and all
liabilities, losses and expenses, including, without limitation,
judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the performance of its duties under this Agreement,
except as a result of the Warrant Agent's negligence or bad faith.
(g) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or
without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceeding relative thereto, and any such
action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment
shall be for the ratable benefit of the Holders, as their respective
rights or interests may appear.
(h) The Warrant Agent and any stockholder, director,
officer or employee ("Related Parties") of the Warrant Agent may buy,
sell or deal in any of the Warrants or other securities of the Company
or become pecuniarily interested in any transactions in which the
Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement or such director, officer or
employee. Nothing herein shall preclude the Warrant Agent or any
Related Party from acting in any other capacity for the Company or for
any other legal entity including, without limitation, acting as
Transfer Agent or as a lender to the Company or an affiliate thereof.
(i) The Warrant Agent shall act hereunder solely as
agent, and its duties shall be determined solely by the provisions
thereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except
for its own negligence or bad faith.
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(j) The Warrant Agent will not incur any liability or
responsibility to the Company or to any Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument reasonably believed
by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(k) The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Warrant Agent) or in respect of the validity or execution of any
Warrant (except its countersignature thereof); nor shall the Warrant
Agent by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Warrant Shares
(or other stock) to be issued pursuant to this Agreement or any
Warrant, or as to whether any Warrant Shares (or other stock) will,
when issued, be validly issued, fully paid and nonassessable, or as to
the Exercise Price or the number or amount of Warrant Shares or other
securities or other property issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and
directed to accept instructions with respect to the performance of its
duties hereunder from the Chairman of the Board, the President, any
Vice President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it
in good faith and without negligence in accordance with instructions of
any such officer or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to the
Company 30 days' notice in writing. The Warrant Agent may be removed by like
notice to the Warrant Agent from the Company. If the Warrant Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then any Holder may apply to any
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Pending appointment of a successor to the Warrant Agent, either
by the Company or by such court, the duties of the Warrant Agent shall be
carried out by the Company. Any successor warrant agent, whether appointed by
the Company or such a court, shall be a bank or trust company in good standing,
incorporated under the laws of the United States of America or any State thereof
or the District of Columbia and having at the time of its appointment as warrant
agent a combined capital and surplus of at least $50,000,000.
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After appointment, the successor warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor warrant agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for such purpose. Failure to file any notice provided for
in this Section 18, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor warrant agent, as the case may be. In the event of
such resignation or removal, the Company or the successor warrant agent shall
mail by first class mail, postage prepaid, to each Holder, written notice of
such removal or resignation and the name and address of such successor warrant
agent.
SECTION 19. Identity of Transfer Agent. Forthwith upon the
appointment of any Transfer Agent for the Common Stock, or any other shares of
the Company's capital stock issuable upon the exercise of the Warrants, the
Company shall file with the Warrant Agent a statement setting forth the name and
address of such Transfer Agent.
SECTION 20. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrant Agent or any
holder of Warrants shall bind and inure to the benefit of their respective
successors and assigns hereunder.
SECTION 21. Termination. This Agreement shall terminate on
the Expiration Date. Notwithstanding the foregoing, this Agreement will
terminate on any earlier date if all Warrants have been exercised or redeemed
pursuant to this Agreement.
SECTION 22. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and shall be governed by and construed in
accordance with the laws of said State, without regard to the conflict of law
rules thereof.
SECTION 23. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrant
Certificates 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,
the Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the
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same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
NORTH ATLANTIC TRADING
ACQUISITION COMPANY, INC.
By: /s/Xxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent
By: /s/Xxxxxxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: Assistant Vice President
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