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WARRANT AGREEMENT
Dated as of
May 29, 0000
xxxxxxx
XXXXX XXXXXXXXXXXX
xxx
XXXXXX XXXXXX TRUST COMPANY OF NEW YORK,
as Warrant Agent
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Warrants for
Common Stock of
MEDIQ Incorporated
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Definitions................................................... 1
SECTION 1.02. Other Definitions............................................. 5
SECTION 1.03. Rules of Construction......................................... 6
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating............................................... 6
SECTION 2.02. Execution and Countersignature................................ 8
SECTION 2.03. Certificate Register.......................................... 9
SECTION 2.04. Transfer and Exchange.........................................10
SECTION 2.05. Certificated Warrants.........................................17
SECTION 2.06. Replacement Certificates......................................17
SECTION 2.07. Outstanding Warrants..........................................18
SECTION 2.08. Temporary Certificates........................................18
SECTION 2.09. Cancelation...................................................18
SECTION 2.10. CUSIP Numbers.................................................19
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise......................................................19
SECTION 3.02. Exercise Periods..............................................19
SECTION 3.03. Expiration....................................................19
SECTION 3.04. Manner of Exercise............................................20
SECTION 3.05. Issuance of Warrant Shares....................................20
SECTION 3.06. Fractional Warrant Shares.....................................21
SECTION 3.07. Reservation of Warrant Shares.................................21
SECTION 3.08. Compliance with Law...........................................22
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock.......................................23
SECTION 4.02. Cash Dividends and Other Distributions........................23
SECTION 4.03. Common Stock Issue............................................24
SECTION 4.04. Issuance of Rights or Options.................................25
SECTION 4.05. Combination; Liquidation......................................26
SECTION 4.06. Other Events..................................................27
SECTION 4.07. Superseding Adjustment........................................27
SECTION 4.08. Minimum Adjustment............................................28
SECTION 4.09. Notice of Adjustment..........................................28
SECTION 4.10. Notice of Certain Transactions................................29
SECTION 4.11. Adjustment to Warrant Certificate.............................30
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement.......................30
SECTION 5.02. Suspension....................................................32
SECTION 5.03. Blue Sky......................................................32
SECTION 5.04. Accuracy of Disclosure........................................33
SECTION 5.05. Indemnification...............................................33
SECTION 5.06. Additional Acts...............................................37
SECTION 5.07. Expenses......................................................38
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent..................................38
SECTION 6.02. Rights and Duties of Warrant Agent............................38
SECTION 6.03. Individual Rights of Warrant Agent............................40
SECTION 6.04. Warrant Agent's Disclaimer....................................40
SECTION 6.05. Compensation and Indemnity....................................40
SECTION 6.06. Successor Warrant Agent.......................................41
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports...................................................42
SECTION 7.02. Persons Benefitting...........................................43
SECTION 7.03. Rights of Holders.............................................43
SECTION 7.04. Amendment.....................................................42
SECTION 7.05. Notices.......................................................44
SECTION 7.06. Governing Law.................................................45
SECTION 7.07. Successors....................................................45
SECTION 7.08. Multiple Originals............................................45
SECTION 7.09. Table of Contents.............................................45
SECTION 7.10. Severability..................................................45
EXHIBIT A Form of Face of Warrant Certificate
WARRANT AGREEMENT dated as of May 29, 1998 (this "Agreement"),
between MEDIQ INCORPORATED, a Delaware corporation (the "Company"),
and UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking
corporation, as Warrant Agent (the "Warrant Agent").
The Company desires to issue the warrants (the "Warrants") described
herein. The Warrants will initially entitle the holders thereof (the "Holders")
to purchase, in the aggregate, 91,209 shares of Common Stock, par value $.01 per
share, of the Company ("Common Stock") in connection with an offering (the
"Offering") by the Company of 140,885 units (the "Units"). Each Unit consists of
(i) one 13% Senior Discount Debenture Due 2009 with a principal amount at
maturity of $1,000 (a "Debenture") and (ii) one warrant (each, a "Warrant") to
purchase .6474 shares of Common Stock.
The Warrants will not trade separately from the Debentures until the
earliest date (the "Separation Date") to occur of: (i) the commencement of a
registered exchange offer for the Debentures, (ii) the effective date of a shelf
registration statement with respect to the Debentures and (iii) such earlier
date after July 28, 1998, as may be determined by the Initial Purchasers (as
defined herein).
The Company further desires the Warrant Agent to act on behalf of the
Company in connection with the issuance of the Warrants as provided herein and
the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of Warrants:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means (i) any other Person which, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (ii) any other Person who is a director or executive officer
(A) of such Person, (B) of any subsidiary of such Person or (C) of any Person
described in clause (i) above.
For purposes hereof, (a) "control" of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise and (b) beneficial ownership of 5%
or more of the voting common equity (on a fully diluted basis) or warrants to
purchase such equity (whether or not currently exercisable) of a Person shall be
deemed to be in control of such Person; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Cashless Exercise Ratio" means a fraction, the numerator of which is the
excess of the Current Market Value per share of Common Stock on the Exercise
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Certificated Warrants" means certificated Warrants in fully registered
definitive form.
"Combination" means an event in which the Company consolidates with, merges
with or into, or sells all or substantially all of its assets to, another
Person.
"Current Market Value" per share of Common Stock or any other security at
any date means (i) if the security is not registered under the Exchange Act, (a)
the value of the security, determined in good faith by the Board 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 and the closing of which occurs on such date or shall have occurred
within the six-month period preceding such date, or (b) if no such transaction
shall have occurred on such date or within such six-month period, the value of
the security as determined by an independent financial expert or (ii) if the
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security is registered under the Exchange Act, the average of the daily closing
bid prices (or the equivalent in an over-the-counter market) 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, the average of the daily closing bid prices (or such equivalent) for all
of the Business Days before such date for which daily closing bid prices are
available; provided, however, that if the closing bid price is not determinable
for at least ten Business Days in such period, the "Current Market Value" of the
security shall be determined as if the security were not registered under the
Exchange Act.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which such Warrant
is exercised pursuant to Section 3.04.
"Extraordinary Cash Dividend" means that portion, if any, of the aggregate
amount of all dividends paid by the Company on the Common Stock in any fiscal
year that exceeds $10 million.
"Indenture" means the Indenture dated as of May 15, 1998, among the
Company, the Subsidiary Guarantors named therein and the Trustee, with respect
to the Debentures, as it may be amended or supplemented from time to time.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
NationsBanc Xxxxxxxxxx Securities LLC and Banque Nationale de Paris.
"Issue Date" means the date on which the Warrants are initially issued.
"MEDIQ/PRN" means MEDIQ/PRN Life Support Services, Inc., a Delaware
corporation and wholly owned subsidiary of the Company.
"Merger" means the merger of MQ Acquisition Corporation with and into the
Company pursuant to the Agreement and Plan of Merger dated as of January 14,
1998 (as amended as of April 27, 1998).
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"Offering Circular" means the Confidential Offering Circular dated May 21,
1998, of the Company and MEDIQ/PRN.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Warrant Agent. Such counsel may be an employee of
or counsel to the Company or the Warrant Agent.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the payment of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Purchase Agreement" means the Purchase Agreement dated May 21, 1998 among
the Company, MEDIQ/PRN, the Subsidiary Guarantors named therein and the Initial
Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Warrants and the Warrant Shares.
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"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Transfer Restricted Securities" means the Warrants and the Common Stock
which may be issued to Holders upon exercise of the Warrants, whether or not
such exercise has been effected. Each such security shall cease to be a Transfer
Restricted Security when (i) it has been disposed of pursuant to a registration
statement of the Company filed with the SEC and declared effective by the SEC
that covers the disposition of such Transfer Restricted Security, (ii) it has
been distributed pursuant to Rule 144 promulgated under the Securities Act (or
any similar provisions under the Securities Act then in effect) or (iii) it may
be resold without registration under the Securities Act, whether pursuant to
Rule 144(k) under the Securities Act or otherwise.
"Trustee" means United States Trust Company of New York, or any successor
trustee under the Indenture.
"Warrant Certificates" mean the registered certificates (including the
Global Warrants) issued by the Company under this Agreement representing the
Warrants.
"Warrant Custodian" means the custodian with respect to a Global Warrant
(as appointed by the Depositary) or any successor person thereto and shall
initially be the Warrant Agent.
"Warrant Shares" mean the shares of Common Stock (and any other securities)
for which the Warrants are exercisable or which have been issued upon exercise
of Warrants.
SECTION 1.02. Other Definitions.
Defined in
Term Section
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"Agreement"............................................ Recitals
"Agent Members"........................................ 2.01(b)
"Cashless Exercise".................................... 3.04
"Certificate Register"................................. 2.03
"Common Shelf Registration Statement".................. 5.01
"Common Stock"......................................... Recitals
"Company............................................... Recitals
"Exercise Price"....................................... 3.01
"Expiration Date"...................................... 3.02(b)
"Global Warrant"....................................... 2.01(a)
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"Holders".............................................. Recitals
"Indemnified Parties".................................. 5.05(a)
"Offering"............................................. Recitals
"Registration Statement"............................... 5.01
"Separability Legend".................................. 2.04(e)
"Separation Date"...................................... Recitals
"Stock Transfer Agent"................................. 3.05
"Successor Company".................................... 4.05(a)
"Units"................................................ Recitals
"Warrant".............................................. Recitals
"Warrant Agent"........................................ Recitals
"Warrant Shelf Registration Statement"................. 5.01
SECTION 1.03. Rules of Construction. Unless the text otherwise requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
Warrant Certificates
SECTION 2.01. Form an Dating. The Warrants shall be offered and sold by the
Company pursuant to the Purchase Agreement. Each Warrant shall initially be
issued as part of a Unit consisting of one Debenture and one Warrant. Prior to
the Separation Date, the Warrants may not be transferred or exchanged separately
from, but may be transferred or exchanged only together with, the Debentures
attached to such Warrants. Prior to the Separation Date, the transfer agent for
the Debentures shall act as transfer agent ("Debenture Transfer Agent") for both
the Warrants and the Debentures. Any request for transfer of a Warrant prior to
the Separation Date made to the Debenture Transfer Agent shall be accompanied by
the Debenture attached thereto and
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the Debenture Transfer Agent will not execute any such transfer without such
Debenture attached thereto. Such Debenture will be duly endorsed and accompanied
by a written instrument of transfer in form satisfactory to the Company, duly
executed by the Holder thereof or the Holder's attorneys duly authorized in
writing. In the event of the commencement of a registered exchange offer for the
Debentures or the effectiveness of a shelf registration statement with respect
to the Debentures, the Company shall provide notice to the Debenture Transfer
Agent and the Warrant Agent of the Separation Date not less than two Business
Days prior to such date and the Company will cause the Debenture Transfer Agent
to notify the Depositary of such date. In the event of a determination by the
Initial Purchasers to separate the Warrants and the Debentures, the Company
shall promptly, but in no event later than the next following Business Day after
receiving notice of such determination, provide notice to the Debenture Transfer
Agent and the Warrant Agent of the Separation Date and cause the Debenture
Transfer Agent to notify the Depositary of such date. In acting as the transfer
agent for the Warrants prior to the Separation Date, the Debenture Transfer
Agent shall be entitled to all the rights, privileges and immunities to which
the Warrant Agent is entitled in performing such role pursuant to the terms of
this Agreement.
(a) Global Warrants. Warrants offered and sold to a QIB in reliance on Rule
144A, as provided in the Purchase Agreement, shall be issued initially in the
form of one or more permanent global Warrants in definitive, fully registered
form with the global securities legend and restricted securities legend set
forth in Exhibit A hereto (each, a "Global Warrant"), which shall be deposited
on behalf of the Initial Purchasers with, subject to the first paragraph of this
Section 2.01, the Warrant Agent, as custodian for the Depositary (or with such
other custodian as the Depositary may direct), and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
countersigned by the Warrant Agent as hereinafter provided. The number of
Warrants represented by the Global Warrant may from time to time be increased or
decreased by adjustments made on the records of the Warrant Agent and the
Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. (i) This Section 2.01(b) shall apply only to a
Global Warrant deposited with or on behalf of the Depositary.
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The Company shall execute and the Warrant Agent shall, in accordance with
Section 2.02, countersign and deliver initially one or more Global Warrants that
(a) shall be registered in the name of the Depositary for such Global Warrant or
Global Warrants or the nominee of the Depositary and (b) shall be delivered by
the Warrant Agent to the Depositary or pursuant to the Depositary's instructions
or held by the Warrant Agent as custodian for the Depositary.
(ii) Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Agreement with respect to any Global Warrant held on
their behalf by the Depositary or by the Warrant Agent as the custodian of the
Depositary or under such Global Warrant, and the Depositary may be treated by
the Company, the Warrant Agent and any agent of the Company or the Warrant Agent
as the absolute owner of such Global Warrant for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Warrant.
(c) Certificated Securities. Except as provided in this Section 2.01 or
Section 2.03 or 2.04, owners of beneficial interests in Global Warrants will not
be entitled to receive physical delivery of certificated Warrants. Warrants
offered and sold in reliance on Regulation S under the Securities Act
("Regulation S"), as provided in the Purchase Agreement, will be issued
initially in the form of individual certificates in definitive, fully registered
form and with the restricted securities legend set forth in Exhibit A hereto
(each, a "Definitive Warrant"); provided, however, that upon transfer of any
such Definitive Warrant to a QIB in accordance with the provisions of this
Agreement, such Definitive Warrant will, unless the Global Warrant has
previously been exchanged, be exchanged for an interest in a Global Warrant
pursuant to the provisions of Section 2.04.
SECTION 2.02. Execution and Countersignature. Two Officers shall sign the
Warrant Certificates for the Company by manual or facsimile signature.
If an Officer whose signature is on a Warrant Certificate no longer holds
that office at the time the Warrant Agent countersigns the Warrant Certificate,
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the Warrants evidenced by such Warrant Certificate shall be valid nevertheless.
The Warrant Agent shall initially countersign and deliver Warrant
Certificates entitling the Holders thereof to purchase in the aggregate not more
than 91,209 Warrant Shares upon a written order of the Company signed by two
Officers of the Company.
The Warrant Agent may appoint an agent reasonably acceptable to the Company
to countersign the Warrant Certificates. Unless limited by the terms of such
appointment, such agent may countersign Warrant Certificates whenever the
Warrant Agent may do so. Each reference in this Agreement to countersignature by
the Warrant Agent includes countersignature by such agent. Such agent will have
the same rights as the Warrant Agent for service of notices and demands.
At any time and from time to time after the execution of this Agreement,
the Warrant Agent or an agent reasonably acceptable to the Company shall upon
receipt of a written order of the Company signed by two Officers of the Company
manually countersign for original issue a Warrant Certificate evidencing the
number of Warrants specified in such order; provided that the Warrant Agent
shall be entitled to receive an Officers' Certificate and an Opinion of Counsel
of the Company that it may reasonably request in connection with such
countersignature of Warrants. Such order shall specify the number of Warrants to
be evidenced on the Warrant Certificate to be countersigned, the date on which
such Warrant Certificate is to be countersigned and the number of Warrants then
authorized.
The Warrants evidenced by a Warrant Certificate shall not be valid until an
authorized signatory of the Warrant Agent or its agent as provided above
manually countersigns the Warrant Certificate. The signature shall be conclusive
evidence that the Warrant Certificate has been countersigned under this
Agreement.
SECTION 2.03. Certificate Register. The Warrant Agent shall keep a register
("Certificate Register") of the Warrant Certificates and of their transfer and
exchange. The Certificate Register shall show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates. The Company and the Warrant Agent may deem and
treat the Person in whose name a Warrant Certificate is registered as the
absolute owner of such Warrant Certificate
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for all purposes whatsoever and neither the Company nor the Warrant Agent shall
be affected by notice to the contrary.
SECTION 2.04. Transfer and Exchange. (a) Transfer and Exchange of
Definitive Warrants. When Definitive Warrants are presented to the Warrant Agent
with a request:
(x) to register the transfer of such Definitive Warrants; or
(y) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations;
the Warrant Agent shall register the transfer or make the exchange as requested
if its reasonable requirements for such transaction are met; provided, however,
that the Definitive Warrants surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Warrant
Agent, duly executed by the Holder thereof or his attorney duly authorized
in writing; and
(ii) if being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section
2.04(b) or pursuant to clause (A), (B) or (C) below, shall be accompanied
by the following additional information and documents, as applicable:
(A) if such Definitive 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
the form set forth on the reverse of the Warrant); or
(B) if such Definitive Warrants are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse of the Warrant); or
(C) if such Definitive Warrants are being transferred (w)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (x) in
reliance on another exemption from the registration requirements of
the Securities Act:
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(1) a certification to that effect (in the form set forth on
the reverse of the Warrant) and (2) if the Company or Warrant
Agent so requests, an opinion of counsel or other evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section
2.04(e)(i).
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. A Definitive 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 Definitive
Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Warrant Agent, together with:
(i) certification, in the form set forth on the reverse of the
Warrant, that such Definitive Warrant is being transferred to a QIB in
accordance with Rule 144A; and
(ii) written instructions directing the Warrant Agent to make an
adjustment on its books and records with respect to such Global Warrant to
reflect an increase in the aggregate number of the Warrants represented by
the Global Warrant, such instructions to contain information regarding the
Depositary account to be credited with such increase;
then the Warrant Agent shall cancel such Definitive Warrant and cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Warrant Agent, the aggregate number of Warrants represented
by the Global Warrant to be increased by the aggregate number of Definitive
Warrants to be exchanged and shall credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in the Global
Warrant equal to the number of Definitive Warrants so canceled. If no Global
Warrants are then outstanding, the Company shall execute and the Warrant Agent
shall countersign and deliver, upon written order of the Company in the form of
an Officers' Certificate, a new Global Warrant in the appropriate number.
(c) Transfer and Exchange of Global Warrants. (i) The transfer and exchange
of Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Agreement (including applicable restrictions
on transfer set forth herein) and the procedures of the Depositary therefor. A
transferor of
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a beneficial interest in a Global Warrant shall deliver to the Warrant Agent a
written order given in accordance with the Depositary's procedures containing
information regarding the participant account of the Depositary to be credited
with a beneficial interest in the Global Warrant. The Warrant Agent shall, in
accordance with such instructions instruct the Depositary to credit to the
account of the Person specified in such instructions a beneficial interest in
the Global Warrant and to debit the account of the Person making the transfer
the beneficial interest in the Global Warrant being transferred.
(ii) Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in Section 2.05), 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 nominee
of such successor Depositary.
(iii) In the event that a Global Warrant is exchanged for Warrants in
definitive registered form pursuant to Section 2.05 or Section 2.08, prior to
the effectiveness of a Shelf Registration Statement with respect to such
Warrants, such Warrants may be exchanged only in accordance with such procedures
as are substantially consistent with the provisions of this Section 2.04
(including the certification requirements set forth on the reverse of the
Warrants intended to ensure that such transfers comply with Rule 144A or
Regulation S, as the case may be) and such other procedures as may from time to
time be adopted by the Company.
(d) Transfer of a Beneficial Interest in a Global Warrant for a Definitive
Warrant. (i) Upon the transfer of a beneficial interest in a Global Warrant
pursuant to Regulation S, subject to Section 2.04(e)(iii), the interest being
transferred in the Global Warrant may not continue to be held in book-entry form
through the Depositary, will be exchanged for a Definitive Warrant only and will
require the delivery by the transferee of a transfer certificate substantially
in the form of the certifications set forth on the reverse of the Warrants.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 2.04(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its participants or indirect participants or otherwise, shall
instruct the Warrant Agent. The Warrant
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Agent shall deliver such Warrants to the persons in whose names such Warrants
are so registered in accordance with the instructions of the Depositary.
(e) Legend. (i) Except as permitted by the following paragraphs (ii) and
(iii), and to the extent permitted by applicable law, each Warrant certificate
evidencing the Global Warrants and Definitive Warrants (and all Warrants and
Warrant Shares issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. HEDGING TRANSACTIONS INVOLVING THE UNITS OR THE WARRANTS
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE WARRANT EVIDENCED BY THIS
CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND THE
13
WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE."
Each Definitive Warrant will also bear the following legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH WARRANT AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
Each Warrant Certificate issued prior to the Separation Date will also bear
the following legend (the "Separability Legend"):
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13% SENIOR DISCOUNT
DEBENTURE DUE 2009 OF MEDIQ INCORPORATED WITH A PRINCIPAL AMOUNT AT
MATURITY OF $1,000 (A "DEBENTURE") AND ONE WARRANT. THE DEBENTURES AND
WARRANTS WILL NOT TRADE SEPARATELY UNTIL THE EARLIEST OF (I) THE
COMMENCEMENT OF A REGISTERED EXCHANGE OFFER FOR THE DEBENTURES, (II) THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE
DEBENTURES AND (III) SUCH EARLIER DATE AFTER JULY 28, 1998, AS THE INITIAL
PURCHASERS MAY DETERMINE."
(ii) Upon any sale or transfer of a Transfer Restricted Security (including
any Transfer Restricted Security represented by a Global Warrant) pursuant to
Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Warrant, the Warrant Agent shall permit the Holder thereof to
exchange such Transfer Restricted Security for a certificated Warrant that
does not bear the legends set forth above (other than the Separability
Legend) and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Warrant, the Warrant Agent shall permit the Holder
thereof to exchange such Transfer Restricted Security for a certificated
Warrant that does not bear the legends set
14
forth above (other than the Separability Legend) and rescind any
restriction on the transfer of such Transfer Restricted Security, if
the Holder certifies in writing to the Warrant Agent that its request
for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Warrant).
(iii) After a transfer of any Warrants during the period of the
effectiveness of a Shelf Registration Statement with respect to such Warrants,
all requirements pertaining to legends on such Warrant (other than the
Separability Legend) will cease to apply, the requirements requiring any such
Warrant issued to certain Holders to be issued in global form will cease to
apply, and a certificated Warrant without legends (other than the Separability
Legend) will be available to the transferee of the Holder of such Warrants upon
exchange of such transferring Holder's certificated Warrant or directions to
transfer such Holder's interest in the Global Warrant, as applicable.
(iv) On or after the Separation Date, the Holder of a Warrant Certificate
containing a Separability Legend may surrender such Warrant Certificate
accompanied by a written application to the Warrant Agent, duly executed by the
Holder thereof, for a new Warrant Certificate or certificates not containing the
Separability Legend.
(f) Cancelation or Adjustment of Global Warrant. At such time as all
beneficial interests in a Global Warrant have been exchanged for certificated
Warrants, redeemed, repurchased or canceled, such Global Warrant shall be
returned to the Depositary for cancelation or retained and canceled by the
Warrant Agent. At any time prior to such cancelation, if any beneficial interest
in a Global Warrant is exchanged for certificated Xxxxxxxx, xxxxxxxx, xxxxx
chased or canceled, the number of Warrants represented by such Global Warrant
shall be reduced and an adjustment shall be made on the books and records of the
Warrant Agent (if it is then the Warrant Custodian for such Global Warrant) with
respect to such Global Warrant, by the Warrant Agent, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Warrants. (i) To
permit registrations of transfers and exchanges, the Company shall execute and
the Warrant Agent shall countersign certificated Warrants, Definitive Warrants
and Global Warrants as required pursuant to the provisions of Section 2.02 and
this Section 2.04.
15
(ii) No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith.
(iii) Prior to the due presentation for registration of transfer of any
Warrant, the Company and the Warrant Agent may deem and treat the Person in
whose name a Warrant is registered as the absolute owner of such Warrant, and
neither the Company nor the Warrant Agent shall be affected by notice to the
contrary.
(iv) All Warrants issued upon any transfer or exchange pursuant to the
terms of this Agreement shall be the valid obligations of the Company, entitled
to the same benefits under this Agreement as the Warrants surrendered upon such
transfer or exchange.
(h) No Obligation of the Warrant Agent. (i) The Warrant Agent shall have no
responsibility or obligation to any beneficial owner of a Global Warrant, a
member of, or a participant in the Depositary or other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Warrants or with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depositary) of any notice or the payment
of any amount, under or with respect to such Warrants. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Warrants shall be given or made only to or upon the order of the
registered Holders (which shall be the Depositary or its nominee in the case of
a Global Warrant). The rights of beneficial owners in any Global Warrant shall
be exercised only through the Depositary subject to the applicable rules and
procedures of the Depositary. The Warrant Agent may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Warrant Agent shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Agreement or under applicable law with respect to any transfer of any
interest in any Warrant (including any transfers between or among the Depositary
participants, members or beneficial owners in any Global Warrant) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when
16
expressly required by, the terms of this Agreement, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
(i) No Registration of Transfer. The Company shall not, and shall cause the
Warrant Agent not to, register any transfer of Warrants or Warrant Shares not
made in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act or pursuant to an available exemption from
registration.
SECTION 2.05. Certificated Warrants. (a) A Global Warrant deposited with
the Depositary or with the Warrant Agent as custodian for the Depositary
pursuant to Section 2.01 shall be transferred to the beneficial owners thereof
in the form of certificated Warrants in a number equal to the number of Warrants
represented by such Global Warrant, in exchange for such Global Warrant, only if
such transfer complies with Section 2.04 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for such Global
Warrant or if at any time the Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) the Company, in its sole
discretion, notifies the Warrant Agent in writing that it elects to cause the
issuance of Certificated Warrants under this Agreement.
(b) Any Global Warrant that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Warrant Agent, to be so transferred, in whole or from time to time in part,
without charge, and the Warrant Agent shall countersign and deliver, upon such
transfer of each portion of such Global Warrant, an equal number of Certificated
Warrants. Any certificated Warrant delivered in exchange for an interest in the
Global Warrant shall, except as otherwise provided by Section 2.04(g), bear the
restricted securities legend set forth in Section 2.04(e) hereto.
(c) Subject to the provisions of Section 2.05(b), the registered Holder of
a Global Warrant may grant proxies and otherwise authorize any Person, including
Agent Members and Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Agreement or the
Warrants.
(d) In the event of the occurrence of either of the events specified in
Section 2.05(a), the Company will promptly make available to the Warrant Agent a
reasonable
17
supply of Certificated Warrants in definitive, fully registered form Warrants.
SECTION 2.06. Replacement Certificates. If a mutilated Warrant Certificate
is surrendered to the Warrant Agent or if the Holder of a Warrant Certificate
claims that the Warrant Certificate has been lost, destroyed or wrongfully
taken, the Company shall issue and the Warrant Agent shall countersign a
replacement Warrant Certificate if the reasonable requirements of the Warrant
Agent and of Section 8-405 of the Uniform Commercial Code as in effect in the
State of New York are met. If required by the Warrant Agent or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Warrant Agent to protect the Company and the Warrant Agent from any loss
which either of them may suffer if a Warrant Certificate is replaced. The
Company and the Warrant Agent may charge the Holder for their expenses in
replacing a Warrant Certificate. Every replacement Warrant Certificate evidences
an additional obligation of the Company.
SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time are
all Warrants evidenced on all Warrant Certificates authenticated by the Warrant
Agent except for those canceled by it and those delivered to it for cancelation.
A Warrant does not cease to be outstanding because an Affiliate of the Company
holds the Warrant. A Warrant ceases to be outstanding if the Company holds the
Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.06, the Warrants
evidenced thereby cease to be outstanding unless the Warrant Agent and the
Company receive proof satisfactory to them that the replaced Warrant Certificate
is held by a bona fide purchaser.
SECTION 2.08. Temporary Certificates. Until definitive Warrant Certificates
are ready for delivery, the Company may prepare and the Warrant Agent shall
countersign temporary Warrant Certificates. Temporary Warrant Certificates shall
be substantially in the form of definitive Warrant Certificates but may have
variations that the Company considers appropriate for temporary Warrant
Certificates. Without unreasonable delay following the occurrence of either of
the events specified in Section 2.05(a), the Company shall prepare and the
Warrant Agent shall countersign definitive Warrant Certificates and deliver them
in exchange for temporary Warrant Certificates.
SECTION 2.09. Cancelation. (a) In the event the Company shall purchase or
otherwise acquire Certificated
18
Warrants, the same shall thereupon be delivered to the Warrant Agent for
cancelation.
(b) The Warrant Agent and no one else shall cancel and destroy all Warrant
Certificates surrendered for transfer, exchange, replacement, exercise or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Warrant Agent to deliver canceled Warrant Certificates
to the Company. The Company may not issue new Warrant Certificates to replace
Warrant Certificates to the extent they evidence Warrants which have been
exercised or Warrants which the Company has purchased or otherwise acquired.
SECTION 2.10. CUSIP Numbers. The Company in issuing the Warrants may use
"CUSIP" numbers (if then generally in use) and, if so, the Warrant Agent shall
use "CUSIP" numbers in notices as a convenience to Holders; provided, however,
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Warrant Certificates or as
contained in any notice and that reliance may be placed only on the other
identification numbers printed on the Warrant Certificates.
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise. Each Warrant shall initially entitle the Holder
thereof, subject to adjustment pursuant to the terms of this Agreement, to
purchase .6474 shares of Common Stock. The exercise price (the "Exercise Price")
of each Warrant is $.01 per share.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and conditions set
forth herein, the Warrants shall be exercisable at any time and from time to
time on any Business Day after the first anniversary of the Issue Date;
provided, however, that holders of Warrants will be able to exercise their
Warrants only if (i) the Common Shelf Registration Statement relating to the
Warrant Shares is effective or (ii) the exercise of such Warrants is exempt from
the registration requirements of the Securities Act, and the Warrant Shares are
qualified for sale or exempt from qualification under the applicable securities
laws of the states or other jurisdictions in which such holders reside.
(b) No Warrant shall be exercisable after June 1, 2009 (the "Expiration
Date").
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SECTION 3.03. Expiration. A Warrant shall terminate and become void as of
the earlier of (i) the close of business on the Expiration Date or (ii) the date
such Warrant is exercised. The Company shall give notice not less than 90, and
not more than 120, days prior to the Expiration Date to the Holders of all then
outstanding Warrants to the effect that the Warrants will terminate and become
void as of the close of business on the Expiration Date; provided, however, that
if the Company fails to give notice as provided in this Section 3.03, the
Warrants will nevertheless expire and become void on the Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent at the office of the Warrant Agent of the related
Warrant Certificate, together with the form of election attached thereto to
purchase Common Stock on the reverse thereof duly filled in and signed by the
Holder thereof and (ii) payment to the Warrant Agent, for the account of the
Company, of the Exercise Price for each Warrant Share or other security issuable
upon the exercise of such Warrants then exercised. Such payment shall be made
(i) in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose or (ii) without the payment of cash, by reducing the number of
shares of Common Stock obtainable upon the exercise of a Warrant and payment of
the Exercise Price in cash so as to yield a number of shares of Common Stock
upon the exercise of such Warrant equal to the product of (a) the number of
shares of Common Stock issuable as of the Exercise Date upon the exercise of
such Warrant (if payment of the Exercise Price were being made in cash) and (b)
the Cashless Exercise Ratio. An exercise of a Warrant in accordance with the
immediately preceding sentence is herein called a "Cashless Exercise". Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the number of
shares of Common Stock deliverable upon a Cashless Exercise shall be equal to
the number of shares of Common Stock issuable upon the exercise of Warrants that
the holder specifies are to be exercised pursuant to a Cashless Exercise
multiplied by the Cashless Exercise Ratio. All provisions of this Agreement
shall be applicable with respect to a surrender of a Warrant Certificate
pursuant to a Cashless Exercise for less than the full number of Warrants
represented thereby. Subject to Section 3.02, the rights represented by the
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or from time to time in part and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant
20
Certificate at any time prior to the Expiration Date, a new Warrant Certificate
representing the remaining Warrants shall be issued. The Warrant Agent shall
countersign and deliver the required new Warrant Certificates, and the Company,
at the Warrant Agent's request, shall supply the Warrant Agent with Warrant
Certificates duly signed on behalf of the Company for such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06, upon the
surrender of Warrant Certificates and payment of the per share Exercise Price,
as set forth in Section 3.04, the Company shall issue and cause the Warrant
Agent or, if appointed, a transfer agent for the Common Stock ("Stock Transfer
Agent") to countersign and deliver to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same (including any depositary institution so designated by a Holder),
together with cash as provided in Section 3.06 in respect of any fractional
Warrant Shares otherwise issuable upon such exercise. 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 Warrant Certificates and
payment of the per share Exercise Price, as aforesaid; provided, however, that
if, at such date, the transfer books for the Warrant Shares shall be closed, the
certificates for the Warrant Shares in respect of which such Warrants are then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificates for such Warrant Shares; provided further, however, that such
transfer books, unless otherwise required by law, shall not be closed at any one
time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares which may be
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.06, be issuable upon the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
21
equal to the Current Market Value per Warrant Share, as determined on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall at all times
keep reserved out of its authorized shares of Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of all outstanding Warrants.
The registrar for the Common Stock (the "Registrar") shall at all times until
the Expiration Date 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 Stock Transfer Agent. The Company will supply such Stock Transfer
Agent with duly executed stock certificates for such purpose and will itself
provide or otherwise make available any cash which may be payable as provided in
Section 3.06. The Company will furnish to such Stock Transfer Agent a copy of
all notices of adjustments (and certificates related thereto) transmitted to
each Holder.
Before taking any action which would cause an adjustment pursuant to
Article IV to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights, free from all taxes and free from all liens, charges and
security interests with respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (ii) in the
opinion of counsel to the Company addressed to the Warrant Agent the exercise of
such Warrants is exempt from the registration requirements of the Securities Act
and such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the states or other jurisdictions in which
such Holders reside.
22
(b) If any shares of Common Stock required to be reserved for purposes of
the exercise of Warrants require, under any other Federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange before such shares may be issued upon
exercise, the Company will cause such shares to be duly registered or approved
by such governmental authority or listed on the relevant national securities
exchange, as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at any time and
from time to time the Company shall (i) pay a dividend or make a distribution on
the Common Stock in shares of Common Stock or other shares of Capital Stock,
(ii) subdivide its outstanding shares of Common Stock into a larger number of
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) increase or decrease the
number of shares of Common Stock outstanding by reclassification of its Common
Stock, then the number of shares of Common Stock issuable upon exercise of each
Warrant immediately after the happening of such event shall be adjusted so that,
after giving effect to such adjustment, the Holder of each Warrant shall be
entitled to receive the number of shares of Common Stock upon exercise of such
Warrant that such Holder would have owned or have been entitled to receive had
such Warrants been exercised immediately prior to the happening of the events
described above (or, in the case of a dividend or distribution of Common Stock,
immediately prior to the record date therefor). An adjustment made pursuant to
this Section 4.01 shall become effective immediately after the distribution
date, retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of Capital Stock, and
shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In the event that at
any time and from time to time the Company shall distribute to all holders of
Common Stock (i) any dividend or other distribution (including any dividend or
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of cash, evidences of its
23
indebtedness, shares of its Capital Stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for or purchase any
of the foregoing (other than, in the case of clause (i) and (ii) above, (A) any
dividend or distribution described in Section 4.01, (B) any rights, options,
warrants or securities described in Section 4.03 or Section 4.04 and (C) any
cash dividends or other cash distributions from current or retained earnings
other than Extraordinary Cash Dividends), then the number of shares of Common
Stock issuable upon the exercise of each Warrant immediately prior to such
record date for any such dividend or distribution shall be increased to a number
determined by multiplying the number of shares of Common Stock issuable upon the
exercise of such Warrant immediately prior to such record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
dividend or distribution, and the denominator of which shall be such Current
Market Value per share of Common Stock less the sum of (x) the amount of cash,
if any, distributed per share of Common Stock and (y) the then fair value (as
determined in good faith by the Board, whose determination shall be evidenced by
a board resolution filed with the Warrant Agent, a copy of which will be sent to
Holders upon request) of the portion, if any, of the distribution applicable to
one share of Common Stock consisting of evidences of indebtedness, shares of
stock, securities, other property, warrants, options or subscription or purchase
rights; and subject to Section 4.08, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
record date by the above fraction. Such adjustments shall be made, and shall
only become effective, whenever any dividend or distribution is made; provided,
however, that the Company is not required to make an adjustment pursuant to this
Section 4.02 if at the time of such distribution the Company makes the same
distribution to Holders of Warrants as it makes to holders of Common Stock pro
rata based on the number of shares of Common Stock for which such Warrants are
exercisable (whether or not currently exercisable). No adjustment shall be made
pursuant to this Section 4.02 which shall have the effect of decreasing the
number of shares of Common Stock issuable upon exercise of each Warrant or
increasing the Exercise Price.
SECTION 4.03. Common Stock Issue. In the event that at any time or from
time to time the Company shall issue shares of Common Stock for a consideration
per share that is less than the Current Market Value per share of Common Stock
as of the issuance date of such shares, the
24
number of shares of Common Stock issuable upon the exercise of each Warrant
immediately after such issuance date shall be determined by multiplying the
number of shares of Common Stock issuable upon exercise of each Warrant
immediately prior to such issuance date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately preceding
the issuance of such shares plus the number of additional shares of Common Stock
to be issued in such transaction, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately preceding the date for
the issuance of such shares plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company upon
the issuance of such shares (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) would purchase at
the Current Market Value per share of Common Stock as of the date of such
issuance; and, subject to Section 4.08, in the event of any such adjustment, the
Exercise Price shall be adjusted to a number determined by dividing the Exercise
Price immediately prior to such date of issuance by the aforementioned fraction;
provided, however, that no adjustment to the number of Warrant Shares issuable
upon the exercise of the Warrants or to the Exercise Price shall be made as a
result of (i) the issuance of shares of Common Stock in bona fide public
offerings that are underwritten or in which a placement agent is retained by the
Company, (ii) the issuance of shares of Common Stock (including upon exercise of
options) (A) pursuant to the terms of and in order to give effect to the
Management Investment Agreement (as defined in the Offering Circular) and (B) in
the amounts and on the terms contemplated under the heading "Certain
Relationships and Related Transactions--Additional Purchases of Common Stock" in
the Offering Circular or (iii) the issuance of shares of Common Stock in
connection with acquisitions of products and businesses other than to Affiliates
of the Company. Such adjustment shall be made, and shall only become effective,
whenever such shares are issued. No adjustment shall be made pursuant to this
Section 4.03 which shall have the effect of decreasing the number of shares of
Common Stock issuable upon exercise of each Warrant or increasing the Exercise
Price.
SECTION 4.04. Issuance of Rights or Options. In the event that at any time
or from time to time the Company shall issue to all holders of Common Stock (i)
rights, options or warrants to acquire (provided, however, that no adjustment
shall be made under Section 4.03 or 4.04 upon the exercise of such rights,
options or warrants), or
25
(ii) securities convertible or exchangeable into (provided, however, that no
adjustment shall be made under Section 4.03 or 4.04 upon the conversion or
exchange of such securities (other than issuances specified in (i) or (ii) which
are made as the result of anti-dilution adjustments in such securities)), Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share that is less than the Current Market Value per
share of Common Stock in effect immediately prior to such issuance other than in
connection with the adoption of a shareholder rights plan by the Company, the
number of shares of Common Stock issuable upon the exercise of each Warrant
immediately after such issuance shall be determined by multiplying the number of
shares of Common Stock issuable upon exercise of each Warrant immediately prior
to such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or securities plus the number of additional shares of
Common Stock offered for subscription or purchase or into which such securities
are convertible or exchangeable, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of such rights, options, warrants or securities plus the total number of shares
of Common Stock which the aggregate consideration expected to be received by
the Company upon the exercise, conversion or exchange of such rights, options,
warrants or securities (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) would purchase at
the Current Market Value per share of Common Stock as of the record date; and,
subject to Section 4.08, in the event of any such adjustment, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the aforementioned fraction;
provided, however, that no adjustment to the number of Warrant Shares issuable
upon exercise of the Warrants or to the Exercise Price shall be made as a result
of the issuance of options in the amounts and on the terms contemplated under
the heading "Certain Relationships and Related Transactions--Additional
Purchases of Common Stock" in the Offering Circular. Such adjustment shall be
made, and shall only become effective, whenever such rights, options, warrants
or securities are issued. No adjustment shall be made pursuant to this Section
4.04 which shall have the effect of decreasing the number of shares of Common
Stock issuable upon exercise of each Warrant or increasing the Exercise Price.
26
SECTION 4.05. Combination; Liquidation. (a) Except as provided in Section
4.05(b), in the event of a Combination, each Holder shall have the right to
receive upon exercise of the Warrants the kind and amount of shares of Capital
Stock or other securities or property which such Holder would have been entitled
to receive upon completion of or as a result of such Combination had such
Warrant been exercised immediately prior to such event or to the relevant record
date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Warrant Agent confirming the Holders' rights pursuant to this Section
4.05(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article IV. The
provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to the holders of
Common Stock in exchange for their shares is payable solely in cash or (ii) the
dissolution, liquidation or winding-up of the Company, the Holders of the
Warrants shall be entitled to receive, upon surrender of their Warrant
Certificates, such cash distributions on an equal basis with the 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.
In the event of any Combination described in this Section 4.05(b), 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 Agent the funds, if any, necessary to pay the Holders of the Warrants
the amounts to which they are entitled as described above. After such funds and
the surrendered Warrant Certificates are received, the Warrant Agent shall make
payment to the Holders 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 Holders surrendering such Warrants.
(c) The Warrants are being issued by the Company as the surviving
corporation in the Merger, and the provisions of this Section 4.05 shall not
apply to the Merger.
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SECTION 4.06. Other Events. If any event occurs as to which the foregoing
provisions of this Article IV are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board, fairly and
adequately protect the purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then such Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of such Board, to protect such purchase rights as aforesaid, but
in no event shall any such adjustment have the effect of increasing the Exercise
Price or decreasing the number of shares of Common Stock issuable upon exercise
of the Warrants.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article IV, if any thereof shall not have been
exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of Article IV as
if (i) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment (except by reason of an intervening
adjustment under Section 4.01) shall have the effect of decreasing the number of
Warrant Shares issuable upon the exercise of each Warrant or increasing the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding sections of this Article IV shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of the Warrants that would otherwise be required shall be made unless
and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% the
28
Exercise Price or the number of shares of Common Stock issuable upon exercise of
the Warrants immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment, together with other adjustments required by
this Article IV and not previously made, would result in a minimum adjustment.
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. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrants is adjusted, as herein provided, the Company shall
deliver to the Warrant Agent a certificate of a firm of independent accountants
selected by the Board (who may be the regular accountants employed by the
Company) setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which (i) the Board determined the then fair value of any
evidences of indebtedness, other securities or property or warrants, options or
other subscription or purchase rights and (ii) the Current Market Value of the
Common Stock was determined, if either of such determinations were required),
and specifying the Exercise Price and the number of shares of Common Stock
issuable upon exercise of the Warrants after giving effect to such adjustment.
The Company shall promptly cause the Warrant Agent to mail a copy of such
certificate to each Holder in accordance with Section 7.05. The Warrant Agent
shall be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Exercise Price or the number of shares of
Common Stock or other stock or property issuable on exercise of the Warrants, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value of any shares of Common Stock, evidences of indebtedness, warrants,
options, or other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event that the Company
shall propose to (a) pay any
29
dividend payable in securities of any class to the holders of its Common Stock
or to make any other non-cash dividend or distribution to the holders of its
Common Stock, (b) offer the holders of its Common Stock rights to subscribe for
or to purchase any securities convertible into shares of Common Stock or shares
of stock of any class or any other securities, rights or options, (c) issue any
(i) shares of Common Stock, (ii) rights, options or warrants entitling the
holders thereof to subscribe for shares of Common Stock or (iii) securities
convertible into or exchangeable or exercisable for Common Stock (in the case of
(i), (ii) and (iii), if such issuance or adjustment would result in an
adjustment hereunder), (d) effect any capital reorganization, reclassification,
consolidation or merger, (e) effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company or (f) make a tender offer or exchange
offer with respect to the Common Stock, the Company shall within five days after
any such action or offer send to the Warrant Agent a notice and the Warrant
Agent shall within five days after receipt thereof send the Holders a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer. Such notice shall be mailed by the Warrant Agent to
the Holders at their addresses as they appear in the Certificate Register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect, if any, of such action on the
Common Stock and on the number and kind of any other shares of stock and on
other property, if any, and the number of shares of Common Stock and other
property, if any, issuable upon exercise of each Warrant and the Exercise Price
after giving effect to any adjustment pursuant to Article IV which will be
required as a result of such action. Such notice shall be given as promptly as
possible and (x) in the case of any action covered by clause (a) or (b) above,
at least 10 days prior to the record date for determining holders of the Common
Stock for purposes of such action or (y) in the case of any other such action,
at least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Common Stock, whichever shall be
the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are
30
stated in the Warrant Certificates initially issued pursuant to this Agreement.
The Company, however, may at any time in its sole discretion make any change in
the form of Warrant Certificate that it may deem appropriate to give effect to
such adjustments and that does not affect the substance of the Warrant
Certificate, and any Warrant Certificate thereafter issued or countersigned,
whether in exchange or substitution for an outstanding Warrant Certificate or
otherwise, may be in the form as so changed.
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement. Subject to Section
5.02, the Company shall cause to be filed pursuant to Rule 415 (or any successor
provision) of the Securities Act not later than 45 days after the Issue Date, a
shelf registration statement relating to the offer and sale of the Warrants by
the Holders from time to time in accordance with the methods of distribution
elected by such holders and set forth in such registration statement (the
"Warrant Shelf Registration Statement"), and shall use its best efforts to cause
the Warrant Shelf Registration Statement to be declared effective under the
Securities Act on or before 150 days after the Issue Date and a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof (the "Common Shelf
Registration Statement", and together with the Warrant Shelf Registration
Statement, the "Registration Statements") and shall use its best efforts to
cause the Common Shelf Registration Statement to be declared effective on or
before 365 days after the Issue Date. The Company shall use its best efforts to
cause (a) the Warrant Shelf Registration Statement to remain effective until the
earliest of (i) such time as all Warrants have been sold thereunder, (ii) two
years after its effective date and (iii) until all Warrants can be sold without
restriction under the Securities Act and (b) the Common Shelf Registration
Statement to remain effective until the earlier of (i) such time as all Warrants
have been exercised and (ii) the Expiration Date. In connection with any
Registration Statement, (i) the Company shall furnish to the Warrant Agent,
prior to the filing with the Commission, a copy of any Registration Statement,
and each amendment thereof and each amendment or supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to reflect
in each such document, when filed with the Commission, such comments as the
Warrant Agent may reasonably propose, (ii) the Company shall furnish
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to each Holder, without charge, at least one copy of any Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits thereto
(including those incorporated by reference), (iii) the Company shall, for so
long as any Registration Statement is effective, deliver to each Holder, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in such Registration Statement and any amendment or supplement thereto
as such Holder may reasonably request, and the Company consents to the proper
use of the prospectus therein and any amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the Warrants or
the Warrant Shares, as the case may be, covered by such prospectus and any
amendment or supplement thereto, (iv) the Company may require each Holder of
Warrants to be sold pursuant to the Warrant Shelf Registration Statement or to
be exercised in connection with the Common Shelf Registration Statement to
furnish to the Company such information regarding the Holder and the
distribution of such Warrants or Warrant Shares as the Company may from time to
time reasonably request for inclusion in such Registration Statement, (v) the
Company shall, if requested, promptly incorporate in a prospectus supplement or
post-effective amendment to such Registration Statement such information as a
majority in interest of the Holders reasonably agree should be included therein
and shall make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment, (vi) the Company
shall enter into such agreements (including underwriting agreements) as are
appropriate, customary and reasonably necessary in connection with any such
Registration Statement and (vii) the Company shall (A) make available all
material customary for reasonable due diligence examinations in connection with
such Registration Statements, (B) make such representations and warranties to
the Holders of Warrants and the underwriters, if any, as are customary and
reasonable in connection with such Registration Statements, (C) obtain such
opinions of counsel to the Company addressed to and reasonably satisfactory to
the Holders as are customary and reasonable in connection with such Registration
Statements and (D) obtain such "comfort" letters and updates thereof from the
independent certified public accountants of the Company addressed to the Holders
as are customary and reasonable in connection with such Registration Statements.
The Company will furnish the Warrant Agent with current prospectuses meeting the
requirements of the Securities Act in sufficient quantity to permit the Warrant
Agent to deliver, at the Company's
32
expense, a prospectus to each holder of a Warrant upon the exercise thereof. The
Company shall promptly inform the Warrant Agent of any change in the status of
the effectiveness or availability of any Registration Statement.
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of each of the Warrant
Shelf Registration Statement and the Common Shelf Registration Statement for up
to two 45 consecutive-day periods (except for the 45 consecutive-day period
immediately prior to the Expiration Date) if the Company's Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides notice that such determination was made to the
Holders of the Warrants; provided, however, that in no event shall the Company
be required to disclose the business purpose for such suspension if the Company
determines in good faith that such business purpose must remain confidential.
SECTION 5.03. Blue Sky. The Company shall use its best efforts to register
or qualify the Warrants and the Warrant Shares under all applicable securities
laws, blue sky laws or similar laws of all jurisdictions in the United States
and Canada in which any holder of Warrants may or may be deemed to purchase
Warrants or Warrant Shares upon the exercise of Warrants and shall use its best
efforts to maintain such registration or qualification for so long as it is
required to cause the Warrant Shelf Registration Statement (in the case of the
Warrants) and the Common Shelf Registration Statement (in the case of the
Warrant Shares) to remain effective under the Securities Act pursuant to Section
5.01; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 5.03 or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents and warrants
to each Holder and agrees for the benefit of each Holder that (i) each of the
Warrant Shelf Registration Statement and the Common Shelf Registration Statement
and any amendment thereto will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading and (ii) each of the
prospectus furnished to such Holder for delivery in connection with the sale of
Warrants and the prospectus delivered to such Holder upon the
33
exercise of Warrants and the documents incorporated by reference therein will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall have no liability under
clauses (i) or (ii) of this Section 5.04 with respect to any such untrue
statement or omission made in any Registration Statement in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Holders specifically for inclusion therein.
SECTION 5.05. Indemnification. (a) In connection with any Registration
Statement, the Company agrees to indemnify and hold harmless each Holder of the
Securities, and each person, if any, who controls such Holder within the meaning
of the Securities Act or the Exchange Act (each Holder and such controlling
persons being referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement, or arise
out of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse, as incurred, the Indemnified Parties for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement or prospectus or
in any amendment or supplement thereto or in any preliminary prospectus relating
to a Registration Statement in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein and (ii) with
34
respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to a Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus if the Company had previously furnished copies thereof
to such Holder; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, selling
brokers, dealer-managers and similar securities industry professionals
participating in the distribution (in each case as described in the Registration
Statement), their officers and directors and each person who controls such
persons within the meaning of the Securities Act or the Exchange Act to the same
extent as provided above with respect to the indemnification of the Holders of
the Securities if requested by such Holders.
(b) In connection with any Registration Statement, each Holder of the
Securities, severally and not jointly, will indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (and the directors, officers, agents and
employees of the Company and any such controlling person) from and against any
losses, claims, damages or liabilities or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which the Company
or any such controlling person (or the directors, officers, agents and employees
of the Company and any such controlling person) may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of
35
the circumstances under which they were made, not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person (or the directors, officers, agents and
employees of the Company and any such controlling person) in connection with
investigating or defending any loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have to the Company or any of its controlling
persons.
(c) Promptly after receipt by an indemnified party under this Section 5.05
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5.05,
notify the indemnifying party of the commencement thereof; but the failure to so
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above (except to the
extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice). In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, act as both counsel to the indemnified and indemnifying
parties in such action if, in the reasonable opinion of both counsel to the
indemnified party and the indemnifying party, a conflict exists which makes such
joint representation not advisable), and after notice from the indemnifying
party to such indemnified party of its election to so assume the defense thereof
the indemnifying party will not be liable to such indemnified party under this
Section 5.05 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified
36
party, not to be unreasonably withheld, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. No indemnifying party shall be liable for any amounts paid in
settlement of any action or claim without its written consent, which consent
shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 5.05 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the Registration Statement, or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holder or such other indemnified person, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5.05(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the
37
Warrants pursuant to the Warrant Shelf Registration Statement or the Warrant
Shares pursuant to the Common Shelf Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Company.
(e) The agreements contained in this Section 5.05 shall survive the sale of
the Securities pursuant to the Registration Statements and shall remain in full
force and effect, regardless of any termination or cancelation of this Agreement
or any investigation made by or on behalf of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the issuance or
sale of any Common Stock or other securities issuable upon the exercise of the
Warrants requires registration or approval of any governmental authority (other
than the registration requirements under the Securities Act), or the taking of
any other action under the laws of the United States or any political
subdivision thereof before such securities may be validly offered or sold in
compliance with such laws, then the Company covenants that it will, in good
faith and as expeditiously as reasonably possible, use its reasonable best
efforts to secure and maintain such registration or approval or to take such
other action, as the case may be. The Company shall promptly notify the Warrant
Agent in writing when (i) the Company has obtained all such governmental
approvals and authorizations and (ii) such approvals and authorizations
thereafter cease to be in effect.
SECTION 5.07. Expenses. All expenses incident to the Company's performance
of or compliance with its obligations under this Article V will be borne by the
Company, including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
reasonable fees and expenses incurred in connection with the compliance with
state securities or blue sky laws, (iii) all expenses of any Persons incurred by
or on behalf of the Company in preparing
38
or assisting in preparing, printing and distributing the Warrant Shelf
Registration Statement, the Common Shelf Registration Statement or any other
registration statement, prospectus, any amendments or supplements thereto and
other documents relating to the performance of and compliance with this Article
V, (iv) the fees and disbursements of the Warrant Agent as agreed, (v) the fees
and disbursements of counsel for the Company and the Warrant Agent as agreed and
(vi) the fees and disbursements of the independent public accountants of the
Company, including the expenses of any special audits or comfort letters
required by or incident to such performance and compliance.
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the provisions
of this Agreement and the Warrant Agent hereby accepts such appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent for the
Company. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship or agency or trust for or
with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel to the Company), and the advice of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably believed by it to be
genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be obligated to perform
only such duties as are specifically set forth herein and in the Warrant
Certificates, and no implied duties or obligations of the
39
Warrant Agent shall be read into this Agreement or the Warrant Certificates
against the Warrant Agent. The Warrant Agent shall not be under any obligation
to take any action hereunder which may tend to involve it in any expense or
liability for which it does not receive indemnity if such indemnity is
reasonably requested. The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of any of the Warrant
Certificates countersigned by the Warrant Agent and delivered by it to the
Holders or on behalf of the Holders pursuant to this Agreement or for the
application by the Company of the proceeds of the Warrants. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The Warrant Agent
shall not at any time be under any duty or responsibility to any Holder to
determine whether any facts exist that may require an adjustment of the number
of shares of Common Stock issuable upon exercise of each Warrant or the Exercise
Price, or with respect to the nature or extent of any adjustment when made, or
with respect to the method employed, or herein or in any supplemental agreement
provided to be employed, in making the same. The Warrant Agent shall not be
accountable with respect to the validity or value of any shares of Common Stock
or of any securities or property which may at any time be issued or delivered
upon the exercise of any Warrant or upon any adjustment pursuant to Article IV,
and it makes no representation with respect thereto. The Warrant Agent shall not
be responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Common Stock or stock certificates upon
the surrender of any Warrant Certificate for the purpose of exercise or upon any
adjustment pursuant to Article IV, or to comply with any of the covenants of the
Company contained in Article IV.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or its affiliates
or become pecuniarily interested in transactions in which the Company or its
affiliates may be interested, or contract with or lend money to the Company or
its affiliates or otherwise act as fully and freely as though it were not
40
the Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent shall not be
responsible for and makes no representation as to the validity or adequacy of
this Agreement or the Warrant Certificates and it shall not be responsible for
any statement in this Agreement or the Warrant Certificates other than its
countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company agrees to pay the
Warrant Agent from time to time reasonable compensation for its services as
agreed and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel as agreed. The Company shall
indemnify the Warrant Agent against any loss, liability or expense (including
reasonable agents' and attorneys' fees and expenses) incurred by it without
negligence or bad faith on its part arising out of or in connection with the
acceptance or performance of its duties under this Agreement. The Warrant Agent
shall notify the Company promptly of any claim for which it may seek indemnity.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Warrant Agent through wilful misconduct, negligence or
bad faith. The Company's payment obligations pursuant to this Section 6.05 shall
survive the termination of this Agreement.
To secure the Company's payment obligations under this Agreement, the
Warrant Agent shall have a lien prior to the Holders on all money or property
held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company To Provide and
Maintain Warrant Agent. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time resign by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; provided,
however, that such date shall not be less than 60 days after the date on which
such notice is given unless the Company otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an
41
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
(c) The Company To Appoint Successor. In the event that at any time the
Warrant Agent shall resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable U.S. Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or similar law, or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar
official) of the Warrant Agent or of its property or affairs, or any public
officer shall take charge or control of the Warrant Agent or of its property or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent
and acceptance by the successor Warrant Agent of such appointment, the Warrant
Agent shall cease to be Warrant Agent hereunder; provided, however, that in the
event of the resignation of the Warrant Agent under this subsection (c), such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant Agent's notice of resignation and (ii) the appointment and acceptance of
a successor Warrant Agent hereunder.
42
(d) Successor To Expressly Assume Duties. Any successor Warrant Agent
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and to the Company an instrument accepting such appointment hereunder, and
thereupon such successor Warrant Agent, without any further act, deed or
conveyance, shall become vested with all the rights and obligations of such
predecessor with like effect as if originally named as Warrant Agent hereunder,
and such predecessor, upon payment of its charges and disbursements then unpaid,
shall thereupon become obligated to transfer, deliver and pay over, and such
successor Warrant Agent shall be entitled to receive, all monies, securities and
other property on deposit with or held by such predecessor, as Warrant Agent
hereunder.
(e) Successor by Merger. Any corporation into which the Warrant Agent
hereunder may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all or
substantially all of its assets and business; provided, however, that it shall
be qualified as aforesaid, shall be the successor Warrant Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports. The Company shall file with the Warrant Agent
for the benefit of the Holders of Warrants, within 15 days after it files them
with the SEC, copies of its annual and quarterly reports and other information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC (to the extent the SEC will accept such filings) and provide the
Warrant Agent and Holders with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections.
43
SECTION 7.02. Persons Benefitting. Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the Company, the Warrant
Agent and the Holders any right, remedy or claim under or by reason of this
Agreement or any part hereof.
SECTION 7.03. Rights of Holders. Holders of unexercised Warrants are not
entitled to (i) receive dividends or other distributions, (ii) receive notice of
or vote at any meeting of the stockholders, (iii) consent to any action of the
stockholders, (iv) receive notice of any other proceedings of the Company, (v)
exercise any preemptive right or (vi) exercise any other rights whatsoever as
stockholders of the Company.
SECTION 7.04. Amendment. This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including without limitation any addition
or modification to provide for compliance with the transfer restrictions set
forth herein); provided, however, that such action shall not adversely affect
the rights of any of the Holders. Any amendment or supplement to this Agreement
that has an adverse effect on the interests of the Holders shall require the
written consent of the Holders of a majority of the then outstanding Warrants.
The consent of each Holder affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant Shares
issuable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein). In determining whether the Holders of the required
number of Warrants have concurred in any direction, waiver or consent, Warrants
owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
be disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Warrant Agent shall be protected in relying on any such
direction, waiver or consent, only Warrants which the Warrant Agent knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
SECTION 7.05. Notices. Any notice or communication shall be in writing and
delivered in Person or mailed by first-class mail addressed as follows:
44
if to the Company:
MEDIQ Incorporated
Xxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
with a copy to:
Dechert Price & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
if to the Warrant Agent:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Corporate Trust Department
The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
SECTION 7.06. Governing Law. The laws of the State of New York shall govern
this Agreement and the Warrant Certificates.
45
SECTION 7.07. Successors. All agreements of the Company in this Agreement
and the Warrant Certificates shall bind its successors. All agreements of the
Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Agreement.
SECTION 7.09. Table of Contents. The table of contents and headings of the
Articles and Sections of this Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
SECTION 7.10. Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
MEDIQ INCORPORATED,
By
--------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent,
By
--------------------------------
Name:
Title:
46
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[Separability Legend]
THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF
AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13% SENIOR DISCOUNT
DEBENTURE DUE 2009 OF MEDIQ INCORPORATED WITH A PRINCIPAL AMOUNT AT MATURITY OF
$1,000 (A "DEBENTURE") AND ONE WARRANT. THE DEBENTURES AND WARRANTS WILL NOT
TRADE SEPARATELY UNTIL THE EARLIEST OF (I) THE COMMENCEMENT OF A REGISTERED
EXCHANGE OFFER FOR THE DEBENTURES, (II) THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT WITH RESPECT TO THE DEBENTURES AND (III) SUCH DATE AFTER
JULY 28, 1998, AS THE INITIAL PURCHASERS MAY DETERMINE.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. HEDGING
TRANSACTIONS INVOLVING THE UNITS OR THE WARRANTS MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE WARRANT
EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
[Definitive Warrants Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH WARRANT AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.](1)
[Global Securities Legend]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("THE DEPOSITARY"), NEW
YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
--------
(1) To be included only if the Warrant is in definitive form.
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE &
CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITARY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.](2)
--------
(2) To be included only if the Warrant is in global form.
2
No. [ ] Certificate for [ ] Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
MEDIQ INCORPORATED
THIS CERTIFIES THAT [ ],
or its registered assigns, is the registered holder of the number of Warrants
set forth above (the "Warrants"). Each Warrant entitles the holder thereof (the
"Holder"), at its option and subject to the provisions contained herein and in
the Warrant Agreement referred to below, to purchase from MEDIQ INCORPORATED, a
Delaware corporation ("the Company"), .6474 shares of Common Stock, par value of
$0.01 per share, of the Company (the "Common Stock") at the per share exercise
price of $.01 (the "Exercise Price"), or by Cashless Exercise referred to below.
This Warrant Certificate shall terminate and become void as of the close of
business on June 1, 2009 (the "Expiration Date") or upon the exercise hereof as
to all the shares of Common Stock subject hereto. The number of shares issuable
upon exercise of the Warrants and the Exercise Price per share shall be subject
to adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of May 29, 1998 (the "Warrant Agreement"), between the
Company and United States Trust Company of New York (the "Warrant Agent", which
term includes any successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company, the Warrant Agent and the Holders of the
Warrants. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may
be obtained for inspection by the Holder hereof upon written request to the
Warrant Agent at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made without the payment of cash
by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Current
Market Value per share of Common Stock on the Exercise Date over the Exercise
Price per share as of the Exercise Date and the denominator of which is the
Current Market Value per share of the Common Stock on the Exercise Date.
3
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the first anniversary of the Issue
Date; provided, however, that Holders of Warrants will be able to exercise their
Warrants only if the Common Shelf Registration Statement relating to the Common
Stock underlying the Warrants is effective or the exercise of such Warrants is
exempt from the registration requirements of the Securities Act of 1933 and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holders reside; provided further, however, that no Warrant shall be exercisable
after June 1, 2009.
In the event of a Combination, the Holder hereof will be entitled to
receive upon exercise of the Warrants the kind and amount of shares of capital
stock or other securities or other property as the Holder would have received
had the Holder exercised its Warrants immediately prior to such Combination;
provided, however, that in the event that, in connection with such Combination,
consideration to holders of Common Stock in exchange for their shares is payable
solely in cash or in the event of the dissolution, liquidation or winding-up of
the Company, the Holder hereof will be entitled to receive such cash
distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of Common Stock
issuable upon the exercise of the Warrants and the Exercise Price are subject to
adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.04 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be countersigned and
issued to the Holder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged at
the office of the Warrant Agent by presenting this Warrant Certificate properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value per Warrant Share on the
day immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.
The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
the Warrant Certificate for all purposes
4
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
The Warrants do not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
MEDIQ INCORPORATED,
By
--------------------------------
Name:
Title:
Attest:
----------------------------------
Name:
Title:
DATED:
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent,
By
-------------------------------
Authorized Signatory
5
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
MEDIQ INCORPORATED
The undersigned hereby irrevocably elects to exercise __________________
Warrants to acquire shares of Common Stock, par value $.01 per share, of MEDIQ
Incorporated, at an exercise price per share of Common Stock of $.01, and
otherwise on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to, surrenders this
Warrant Certificate and all right, title and interest therein to MEDIQ
Incorporated and directs that the shares of Common Stock deliverable upon the
exercise of such Warrants be registered or placed in the name and at the address
specified below and delivered thereto.
Date: __________________, __
________________________________(3)
(Signature of Owner)
___________________________________
(Xxxxxx Xxxxxxx)
___________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
___________________________________
--------
(3) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
6
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
7
In connection with any transfer of any of the Warrants evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Warrants and the last date, if any, on which such Warrants were owned by
the Company or any Affiliate of the Company, the undersigned certifies that such
Warrants are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) / / outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of
1933; or
(4) / / pursuant to Rule 144A under the Securities Act of 1933; or
(5) / / pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
If such transfer is being made pursuant to an offshore transaction in
accordance with Rule 904 under the Securities Act, the undersigned further
certifies that:
(i) the offer of the Warrants was not made to a person in the United
States;
(ii) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(iii) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903 or Rule 904 of Regulation
S, as applicable;
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(v) we have advised the transferee of the transfer restrictions
applicable to the Warrants;
(vi) if the circumstances set forth in Rule 904(b)(1) under the
Securities Act are applicable, either (a) neither we nor any person acting
on our behalf knows that the transferee is a U.S. person or (b) we have
complied with the additional conditions therein, including (if applicable)
sending a confirmation or other notice stating that the Warrants may be
offered and sold during the distribution compliance period specified in
Rule 903 of Regulation S only in accordance with Regulation S; pursuant to
registration of the Warrants under the Securities Act; or pursuant to an
available
8
exemption from the registration requirements under the Securities Act; and
(vii) we have advised the transferee that hedging transactions
involving the Units or the Warrants may not be conducted unless in
compliance with the Securities Act.
Unless one of the boxes is checked, the Warrant Agent will refuse to
register any of the Warrants evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if box
(3) or (4) is checked, the Warrant Agent may require, prior to registering any
such transfer of the Warrants, such legal opinions, additional certifications
and other information as the Company has reasonably requested 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 of 1933,
such as the exemption provided by Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
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Signature must be guaranteed Signature
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9
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(4)
The following exchanges of a part of this Global Warrant Certificate for
definitive Warrants have been made:
Amount of change Number of
in Number of Warrants in this
Warrants in Global Warrant Signature of
this Global Certificate authorized
Date of Warrant following officer of
Exchange Certificate such change Warrant Agent
-------- ---------------- ---------------- -------------
--------
(4) To be included only if the Warrant is in global form.
