Exhibit 2.3
WARRANT AGREEMENT
BETWEEN
METALS USA, INC.
AND
EQUISERVE TRUST COMPANY, N.A., AS WARRANT AGENT
DATED AS OF OCTOBER 31, 2002
WARRANTS TO PURCHASE COMMON STOCK
TABLE OF CONTENTS
1. DEFINITIONS............................................................1
2. WARRANT CERTIFICATES...................................................7
2.1. ISSUANCE OF WARRANTS.............................................7
2.2. FORM OF WARRANT CERTIFICATES.....................................7
2.3. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES...................8
3. EXERCISE AND EXPIRATION OF WARRANTS....................................8
3.1. RIGHT TO ACQUIRE COMMON STOCK UPON EXERCISE......................8
3.2. EXERCISE AND EXPIRATION OF WARRANTS..............................8
(A) EXERCISE OF WARRANTS.......................................8
(B) EXPIRATION OF WARRANTS.....................................9
(C) METHOD OF EXERCISE.........................................9
(D) PARTIAL EXERCISE..........................................10
(E) ISSUANCE OF UNDERLYING COMMON STOCK.......................10
(F) TIME OF EXERCISE..........................................10
3.3. APPLICATION OF FUNDS UPON EXERCISE OF WARRANTS..................10
3.4. PAYMENT OF TAXES................................................11
3.5. SURRENDER OF CERTIFICATES.......................................11
3.6. SHARES ISSUABLE.................................................11
4. DISSOLUTION, LIQUIDATION OR WINDING UP................................11
5. ADJUSTMENTS...........................................................12
5.1. ADJUSTMENTS.....................................................12
(A) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS............12
(B) CERTAIN OTHER DIVIDENDS AND DISTRIBUTIONS.................13
(C) RECLASSIFICATIONS.........................................13
(D) DISTRIBUTION OF WARRANTS OR OTHER RIGHTS TO HOLDERS
OF COMMON STOCK...........................................13
(E) SUPERSEDING ADJUSTMENT OF NUMBER OF SHARES OF COMMON
STOCK INTO WHICH EACH WARRANT IS EXERCISABLE..............14
(F) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS
SECTION...................................................14
(G) WARRANT PRICE ADJUSTMENT..................................15
(H) CHANGES IN COMMON STOCK...................................15
(I) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS.................16
(J) OPTIONAL TAX ADJUSTMENT...................................16
(K) WARRANTS DEEMED EXERCISABLE...............................16
5.2. NOTICE OF ADJUSTMENT............................................17
5.3. STATEMENT ON WARRANT CERTIFICATES...............................17
5.4. FRACTIONAL INTEREST.............................................17
6. LOSS OR MUTILATION....................................................17
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK.........................18
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8. WARRANT TRANSFER BOOKS................................................19
9. WARRANT HOLDERS.......................................................20
9.1. NO VOTING OR DIVIDEND RIGHTS....................................20
9.2. RIGHTS OF ACTION................................................20
9.3. TREATMENT OF HOLDERS OF WARRANT CERTIFICATES....................20
9.4. COMMUNICATIONS TO HOLDERS.......................................20
10. CONCERNING THE WARRANT AGENT..........................................21
10.1. NATURE OF DUTIES AND RESPONSIBILITIES ASSUMED...................21
10.2. RIGHT TO CONSULT COUNSEL........................................22
10.3. COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION.................22
10.4. WARRANT AGENT MAY HOLD COMPANY SECURITIES.......................23
10.5. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...............23
10.6. APPOINTMENT OF COUNTERSIGNING AGENT.............................24
11. REPORTS TO HOLDERS....................................................25
12. NOTICES...............................................................25
12.1. NOTICES GENERALLY...............................................25
12.2. REQUIRED NOTICES TO HOLDERS.....................................26
13. APPLICABLE LAW........................................................27
14. PERSONS BENEFITING....................................................27
15. COUNTERPARTS..........................................................27
16. AMENDMENTS............................................................27
17. WAIVERS...............................................................28
18. INSPECTION............................................................28
19. SUCCESSOR TO THE COMPANY..............................................28
20. ENTIRE AGREEMENT......................................................29
21. HEADINGS..............................................................29
Exhibit A...Form of Warrant Certificate
ii
WARRANT AGREEMENT
AGREEMENT dated as of October 31, 2002 between Metals USA, Inc., a
Delaware corporation (referred to herein as the "COMPANY"), and Equiserve Trust
Company, N.A., as warrant agent (referred to herein as the "WARRANT AGENT").
As contemplated by the Plan of Reorganization (as defined below), the
Company proposes to issue and deliver to the holders of Existing Common Stock
(as defined in the Plan of Reorganization) its Warrant Certificates (as defined
below) evidencing Warrants (as defined below) to purchase, under certain
circumstances, up to an aggregate of 3,555,795 shares of its Common Stock (as
defined below), subject to adjustment as provided herein. Each such Warrant
shall entitle the registered owner thereof to purchase one share of the
Underlying Common Stock (as defined below), subject to adjustment as provided
herein.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder of the Company, the Warrant Agent and the record holders of the
Warrants, the Company and the Warrant Agent each hereby agree as follows:
1. DEFINITIONS
"AFFILIATE" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, (a) "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing and (b) a subsidiary of
a Person is an Affiliate of such Person and of each other subsidiary of that
Person.
"AGREEMENT" shall mean this agreement as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of 1978, as
amended, and codified at title 11 of the United States Code.
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a legal holiday in the State of New York or a day on which
banking institutions and trust companies in the state in which the Corporate
Agency Office is located are authorized or obligated by law, regulation or
executive order to close; PROVIDED; HOWEVER; that for the purposes of SECTION
3.2, a "Business Day" shall also be a Trading Day.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMISSION" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act or the
Exchange Act, whichever is the relevant statute for the particular purpose.
"COMMON STOCK" shall mean any capital stock of any class or series of the
Company (including, on the Effective Date, the Common Stock, par value $.01 per
share, of the Company) which has no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which is not subject to redemption
by the Company. However, subject to the provisions of SECTION 5.1(H), shares
into which Warrants are exercisable shall include only shares of the class of
capital stock of the Company designated as Common Stock, par value $.0l per
share, of the Company on the Effective Date or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to redemption by the Company; PROVIDED, HOWEVER, that
if at any time there shall be more than one such resulting class, the shares of
each such class into which Warrants are then exercisable shall be substantially
in the proportion which the total number of shares of such class resulting from
all such reclassifications bears to the total number of shares of all such
classes resulting from all such reclassifications.
"COMPANY ORDER" shall mean a written request or order signed in the name
of the Company by its Chairman or any Co-Chairman of the Board, its Chief
Executive Officer, its President, any Vice President, its Treasurer, any
Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to
the Warrant Agent.
"CONSTITUENT PERSON" shall have the meaning set forth in SECTION 5.1(H).
"CORPORATE AGENCY OFFICE" shall have the meaning set forth in SECTION 8.
"COUNTERSIGNING AGENT" means any Person authorized by the Warrant Agent to
act on behalf of the Warrant Agent to countersign Warrant Certificates.
"CURRENT MARKET PRICE" shall mean on any date:
(i) if the reference is to the per share price of Common Stock on
any date herein specified and if on such date the Common Stock is listed
or admitted to trading on any national securities exchange or quoted on
the National Association of Securities Dealers, Inc. National Market
System or otherwise traded in the over-the-counter market in the United
States, the average of the Quoted Prices for the five consecutive Trading
Days ending on the earlier of (x) the date in question and (y) in the case
of any computation under SECTION 5.1(B) or 5.1(D), the day before the "ex"
date for the issuance or distribution requiring such computation; or
(ii) if the reference is to the per share price of Common Stock on
any date herein specified and if on such date the Common Stock is not
listed or admitted to trading on any national securities exchange or
quoted on the National Association of Securities Dealers, Inc. National
Market System or otherwise traded in the over-the-counter market in the
United States, the amount which a willing buyer would pay a willing seller
in an arm's length transaction on such date (neither being under any
compulsion to buy or sell) for one share of the Common Stock as determined
as of such date, as set forth in a value report by an Independent
Financial Expert using one or more valuation methods that such
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Independent Financial Expert, in its best professional judgment,
determines to be most appropriate.
"DISBURSING AGENT" shall mean Equiserve Trust Company, N.A., as disbursing
agent for the Allowed Existing Common Stock, which, shall be the initial Holder
of Warrant Certificates evidencing all the Warrants issued upon original
issuance.
"EFFECTIVE DATE" shall mean October 31, 2002, the effective date of the
Plan of Reorganization.
"`EX' DATE" shall mean, when used with respect to any issuance or
distribution, the first date on which the Common Stock trades regular way on the
relevant exchange or in the relevant market from which the Quoted Price was
obtained without the right to receive such issuance or distribution.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXPIRATION DATE" shall mean October 31, 2007, the fifth anniversary of
the Effective Date, or such earlier date as the Company shall have designated
pursuant to and in accordance with SECTION 3.2(B).
"FINANCIAL EXPERT" shall mean any broker or dealer registered as such
under the Exchange Act that conducts an investment banking business of
nationally recognized standing.
"HOLDER" shall mean any Person in whose name at the time any Warrant
Certificate is registered upon the Warrant Register and, when used with respect
to any Warrant Certificate, the Person in whose name such Warrant Certificate is
registered in the Warrant Register.
"INDEPENDENT FINANCIAL EXPERT" shall mean any Financial Expert selected by
the Company that either (i) is reasonably acceptable to the Holders of Warrant
Certificates evidencing a majority of the outstanding Warrants or (ii) is a firm
(x) which does not (and whose directors, officers, employees and affiliates, to
the knowledge of the Company, do not) have a material direct or indirect
financial interest in the Company or any of its Affiliates (other than by virtue
of compensation paid for advice or opinions referred to in the exception to
clause (z)), as determined by the Board of Directors of the Company in its
reasonable good faith judgment, (y) which has not been, within the last two
years, and, at the time it is called upon to give independent financial advice
to the Company or any of its Affiliates, is not (and none of whose directors,
officers, employees or affiliates, to the knowledge of the Company, is) a
promoter, director or officer of the Company or any of its Affiliates or an
underwriter with respect to any of the securities of the Company or any of its
Affiliates and (z) which does not provide any advice or opinions to the Company
or Affiliates except as an independent financial expert in connection with this
Agreement or any other warrant agreement executed pursuant to the Plan of
Reorganization.
"NON-ELECTING SHARE" shall have the meaning set forth in SECTION 5.1(H).
"NON-STOCK DIVIDEND" shall mean any payment by the Company to all holders
of its Common Stock of any dividend, or any other distribution by the Company to
such holders, of
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any shares of capital stock of the Company, evidences of indebtedness of the
Company, cash or other assets (including rights, warrants, convertible
securities or other securities (of the Company or any other Person)), other than
any dividend or distribution (i) upon a merger or consolidation or sale to which
Section 5.1(h) applies, (ii) of any Common Stock referred to in SECTION 5.1(A)
or (iii) pursuant to the Plan of Reorganization.
"NON-SURVIVING TRANSACTION" shall have the meaning set forth in SECTION
5.1(H).
"OUTSTANDING" shall, when used with respect to any Warrants, mean, as of
the time of determination, all Warrants theretofore originally issued under this
Agreement except (i) Warrants that have been exercised pursuant to SECTION
3.2(A), (ii) Warrants that have expired pursuant to SECTION 3.2(B) or 4 and
(iii) Warrants that have otherwise been acquired by the Company; PROVIDED,
HOWEVER, that in determining whether the Holders of the requisite amount of the
outstanding Warrants have given any request, demand, authorization, direction,
notice, consent or waiver under the provisions of this Agreement, Warrants owned
by the Company or any Subsidiary or Affiliate of the Company or any Person that
is at such time a party to a merger or acquisition agreement with the Company
shall be disregarded and deemed not to be outstanding.
"PERMITTED DIVIDEND" shall mean such portion, if any, of any Non-Stock
Dividend that is paid in cash out of (i) surplus (as defined in and computed in
accordance with Section 154 and 244 of the Delaware General Corporation Law) of
the Company or (ii) the net profits of the Company for the fiscal years in which
the Non-Stock Dividend is declared or the preceding fiscal year.
"PERSON" shall mean any individual, corporation (including a business
trust), partnership, joint venture, association, joint-stock company, trust,
estate, limited liability company, unincorporated association, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.
"PLAN OF REORGANIZATION" shall mean that certain Plan of Reorganization
under Chapter 11 for Metals USA, Inc. and its affiliates, which was jointly
administered under Case Nos. 01-42530-H4-11 through 01-42573-H4-11 under Chapter
11 of the United States Bankruptcy Code and which was confirmed by the United
States Bankruptcy Court for the Southern District of Texas, Houston Division, on
October 18, 2002.
"QUOTED PRICE" shall mean on any Trading Day, with respect to any
security, the last reported sales price regular way or, in case no such reported
sale takes place on such Trading Day, the average of the reported closing bid
and asked prices regular way, in either case on the New York Stock Exchange or,
if such security is not listed or admitted to trading on such exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if such security is not listed or admitted
to trading on any national securities exchange or quoted on such National Market
System, the average of the closing bid and asked prices in the over-the-counter
market in the United States as furnished by any New York Stock Exchange member
firm that shall be selected from time to time by the Company for that purpose.
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"RECEIVABLE DIVIDEND" means any Non-Stock Dividend if:
(i) on a date at least 30 days prior to the date for the
determination of holders entitled to receive such distribution the Company
has given notice in accordance with SECTION 12.1 to all holders of Warrant
Certificates and the Warrant Agent stating:
(A) the date for such determination;
(B) the amount of securities, cash or other assets so to be
distributed applicable to one share of Common Stock;
(C) the Warrant Price then in effect;
(D) that the Warrants will be exercisable at all times during
the period (the "EXERCISE PERIOD") from the opening of business on
the date such notice is given to the close of business on such date
for determination;
(E) the number of shares of Underlying Common Stock into which
one Warrant is exercisable;
(F) that the Company intends to treat such distribution as a
"Receivable Dividend" hereunder and, therefore, that no adjustment
to the Warrant Price or the shares of Common Stock into which the
Warrants are exercisable will be made as a result of such
distribution; and
(G) the rights thereafter generally available to a Holder if
such Holder's Warrants are not exercised during the Exercise Period;
(ii) the Exercise Period is at least 30 days long;
(iii) the Quoted Price of the Common Stock has been at least 115% of
the then effective Warrant Price on each of the 30 successive Trading Days
in the period ending on the earlier of (A) the date the Company gives the
notice pursuant to clause (i) above and (B) the first public announcement
of such distribution;
(iv) at all times during the Exercise Period, all Warrants
outstanding at any time during such period have been exercisable; and
(v) the fair market value (as determined in good faith by the Board
of Directors of the Company) of the securities, cash or other assets so to
be distributed applicable to one share of Common Stock exceeds 35% of the
average of the Quoted Prices of the Common Stock on the 30 successive
Trading Days referred to in clause (iii) above.
"RECEIVED DIVIDEND" means any Non-Stock Dividend if (i) prior to the date
for determination of holders of shares of Common Stock entitled to receive such
distribution the Company shall have delivered a written notice to the Warrant
Agent that the Company intends to treat such distribution as a "Received
Dividend" hereunder and (ii) at the same time the
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Company makes such distribution to holders of Common Stock, the Company
distributes, to each Person who was the Holder of a Warrant Certificate
evidencing a Warrant that was outstanding immediately after the close of
business on such date for determination (whether or not such Warrant is
outstanding on the date of such distribution), an amount equal to the amount of
securities, cash or other assets that would have been receivable upon such
distribution by a holder of the number of shares of Common Stock into which all
Warrants evidenced by such Warrant Certificate are exercisable if such Warrants
had been exercised in full immediately prior to such date for determination,
assuming that the Warrants were exercisable at the time of such date for
determination into the initial number of shares of Common Stock into which a
Warrant is exercisable, as adjusted from the date of this Warrant Agreement to
such date for determination pursuant to SECTION 5 (other than any adjustment in
respect of which the deferral provisions of SECTION 5.1(F)(IV) are then
applicable).
"RECIPIENT" shall have the meaning set forth in SECTION 3.2(E).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SUBSIDIARY" shall mean a corporation, association, company, joint-stock
company or business trust more than 50% of the outstanding voting stock of which
is owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes
of this definition, "voting stock" means stock which ordinarily has voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"SUBSTITUTED PROPERTY" shall have the meaning set forth in SECTION 5.1(H).
"TRADING DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"TRANSACTION" shall have the meaning set forth in SECTION 5.1(H).
"UNDERLYING COMMON STOCK" shall mean the shares of Common Stock issuable
to the Holders of Warrant Certificates upon exercise of the Warrants, the number
of which is subject to adjustment from time to time as provided in SECTION 5.
"WARRANT AGENT" shall mean the warrant agent set forth in the preamble
hereof or the successor or successors of such Warrant Agent appointed in
accordance with the terms hereof.
"WARRANT CERTIFICATES" shall mean those certain warrant certificates
evidencing the Warrants, substantially in the form of EXHIBIT A attached hereto.
"WARRANT PRICE" shall mean the exercise price per share of Underlying
Common Stock, initially set at the Determined Amount, subject to adjustment as
provided in SECTION 5.1(G). For the purposes of this definition, the "Determined
Amount" means the amount determined by the Board of Directors of the Company and
set forth in a written notice delivered by the Company to the Warrant Agent and
the Disbursing Agent no later than the six month anniversary of the
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Effective Date equal to (i) the Final Allowed Claim Amount (as defined in the
Plan) divided by (ii) 20,000,000.
"WARRANT REGISTER" shall have the meaning set forth in SECTION 8.
"WARRANTS" shall mean those certain warrants to purchase initially up to
an aggregate of 3,555,795 shares of Common Stock at the Warrant Price, subject
to adjustment pursuant to SECTION 5, issued hereunder.
2. WARRANT CERTIFICATES
2.1. ISSUANCE OF WARRANTS. Each Warrant Certificate shall evidence the number of
Warrants specified therein, and each Warrant evidenced thereby shall represent
the right, subject to the provisions contained herein and therein, to purchase
one share of Common Stock, subject to adjustment as provided in SECTION 5.
2.2. FORM OF WARRANT CERTIFICATES.
(a) The Warrant Certificates evidencing the Warrants shall be in
registered form only and substantially in the form attached hereto as EXHIBIT A,
shall be dated the date on which countersigned by the Warrant Agent, shall have
such insertions as are appropriate or required or permitted by this Agreement
and may have such letters, numbers or other marks of identification and such
legends and endorsements typed, stamped, printed, lithographed or engraved
thereon as the officers of the Company executing the same may approve (execution
thereof to be conclusive evidence of such approval) and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation pursuant thereto or with any rule or
regulation of any securities exchange on which the Warrants may be listed, or to
conform to usage.
(b) Pending the preparation of definitive Warrant Certificates,
temporary Warrant Certificates may be issued, which may be printed,
lithographed, typewritten, mimeographed or otherwise produced, and which will be
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued.
If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay. After
the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates
evidencing Warrants of the same number and tenor upon surrender by the Holder of
the temporary Warrant Certificates to the Warrant Agent at its Corporate Agency
Office, without charge to such Holder. Upon surrender for cancellation of any
one or more temporary Warrant Certificates the Company shall execute and the
Warrant Agent shall countersign and deliver in exchange therefor Warrant
Certificates of the same tenor and for a like aggregate number of Warrants.
Until so exchanged the temporary Warrant Certificates shall in all respects be
entitled to the same benefits under this Agreement as definitive Warrant
Certificates.
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2.3. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES.
(a) Warrant Certificates evidencing the Warrants which may be
countersigned and delivered under this Agreement are limited to Warrant
Certificates evidencing 3,555,795 Warrants except for Warrant Certificates
countersigned and delivered upon registration of transfer of, or in exchange
for, or in lieu of, one or more previously countersigned Warrant Certificates
pursuant to SECTIONS 2.2(B), 3.2(D), 6 and 8.
(b) At any time and from time to time on or after the date of this
Agreement, Warrant Certificates evidencing the Warrants may be executed by the
Company and delivered to the Warrant Agent for countersignature, and the Warrant
Agent shall, upon receipt of a Company Order and at the direction of the Company
set forth therein, countersign and deliver such Warrant Certificates to the
Company for original issuance to the respective Persons entitled thereto
pursuant to Section 8.9 of the Plan of Reorganization. The Warrant Agent is
further hereby authorized to countersign and deliver Warrant Certificates as
required by this SECTION 2.3 or by SECTIONS 2.2, 3.2(D), 6 and 8.
(c) The Warrant Certificates shall be executed in the corporate name
and on behalf of the Company by the Chairman (or any Co-Chairman) of the Board,
the Chief Executive Officer, the President or any one of the Vice Presidents of
the Company under corporate seal reproduced thereon and attested to by the
Secretary or one of the Assistant Secretaries of the Company, either manually or
by facsimile signature printed thereon. The Warrant Certificates shall be
manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall
cease to be such officer of the Company before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates may,
nevertheless, be countersigned by the Warrant Agent and issued and delivered
with the same force and effect as though such person had not ceased to be such
officer of the Company, and any Warrant Certificate may be signed on behalf of
the Company by such person as, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company, although at the
date of the execution of this Warrant Agreement any such person was not such
officer.
3. EXERCISE AND EXPIRATION OF WARRANTS
3.1. RIGHT TO ACQUIRE COMMON STOCK UPON EXERCISE. Each Warrant Certificate
shall, when countersigned by the Warrant Agent, entitle the Holder thereof,
subject to the provisions thereof and of this Agreement, to acquire from the
Company, for each Warrant evidenced thereby one share of Common Stock at the
Warrant Price, subject to adjustment as provided in this Agreement. The Warrant
Price shall be adjusted from time to time as required by SECTION 5.1.
3.2. EXERCISE AND EXPIRATION OF WARRANTS.
(a) EXERCISE OF WARRANTS. Subject to the terms and conditions set
forth herein, a Holder of a Warrant Certificate may exercise all or any whole
number of the Warrants evidenced thereby, on any Business Day from and after the
six month anniversary of the
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Effective Date until 5:00 p.m., New York time, on the Expiration Date, for the
shares of Underlying Common Stock purchasable thereunder;
(b) EXPIRATION OF WARRANTS. The Warrants shall terminate and become
void as of 5:00 p.m., New York time on the Expiration Date.
The Company shall have the right to accelerate the date of
expiration of the Warrants to any date after the six month anniversary of the
Effective Date and prior to the fifth anniversary of the Effective Date, if
either:
(i) (A) the Quoted Price of the Common Stock has been at least 150%
of the then effective Warrant Price on at least 20 of 30 successive
Trading Days in a period ending not more than 15 days prior to the date
notice of such acceleration is given, and (B) on each date in such period
the Current Market Price shall be capable of determination in accordance
with clause (i) (rather than clause (ii)) of the definition of "Current
Market Price";
(ii) a Transaction has occurred on or prior to the date notice of
such acceleration is given and as a result thereof the Substituted
Property receivable upon exercise of Warrants does not include equity
securities (as defined in Rule 3a11-1 under the Exchange Act or any
successor provision); or
(iii) less than 10% of the Warrants issued on the Effective Date
remain outstanding on the date such notice of acceleration is given.
In the event the date of expiration is accelerated by the Company
pursuant to this SECTION 3.2(B), the term "Expiration Date" shall mean such
accelerated date for all purposes of this Agreement.
If the Company elects to accelerate the date of expiration of the
Warrants pursuant to this SECTION 3.2(B), the Company shall, on a date at least
60 days prior to the designated date of expiration, give notice of such
designated date to the Warrant Agent and the Holders in accordance with the
provisions of SECTION 12.1.
(c) METHOD OF EXERCISE. In order to exercise all or any of the
Warrants represented by a Warrant Certificate, the Holder thereof must (i) at
the Corporate Agency Office (x) surrender to the Warrant Agent the Warrant
Certificate evidencing such Warrants and (y) deliver to the Warrant Agent a
written notice of the Holder's election to exercise the number of the Warrants
specified therein, duly executed by such Holder, which notice shall be in the
form of the notice on the reverse of, or attached to, such Warrant Certificate
and (ii) pay to the Warrant Agent an amount, equal to the aggregate of the
Warrant Price in respect of each share of Underlying Common Stock into which
such Warrants are exercisable, in any combination of the following elected by
such Holder: (1) cash delivered to the' Warrant Agent at the Corporate Agency
Office, (2) certified bank check or official bank check in New York Clearing
House funds payable to the order of the Company and delivered to the Warrant
Agent at the Corporate Agency Office, or (3) wire transfer in immediately
available funds, to the account (No. 3752134454; ABA No. 000000000; Reference:
Metals USA Master Depository Account) of the Company at Bank of America, N.A.,
Dallas, TX or such other account of the Company at such
9
banking institution as the Company shall have given notice to the Warrant Agent
and such Holder in accordance with SECTION 12.1(B).
(d) PARTIAL EXERCISE. If fewer than all the Warrants represented by
a Warrant Certificate are exercised, such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the number
of Warrants which were not exercised shall be executed by the Company. The
Warrant Agent shall countersign the new Warrant Certificate, registered in such
name or names, subject to the provisions of SECTION 8 regarding registration of
transfer and payment of governmental charges in respect thereof, as may be
directed in writing by the Holder, and shall deliver the new Warrant Certificate
to the Person or Persons in whose name such new Warrant Certificate is so
registered. The Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrant certificates duly executed on behalf of the Company
for such purpose.
(e) ISSUANCE OF UNDERLYING COMMON STOCK. Upon surrender of a Warrant
Certificate evidencing Warrants in conformity with the foregoing provisions and
payment of the Warrant Price in respect of the exercise of one or more Warrants
evidenced thereby, the Warrant Agent shall when such payment is received,
deliver to the Company the notice of exercise received pursuant to SECTION
3.2(C), deliver or deposit all funds received as instructed in writing by the
Company and advise the Company by telephone at the end of such day of the amount
of funds so deposited to its account. The Company shall thereupon, as promptly
as practicable, and in any event within five Business Days after receipt by the
Company of such notice of exercise, execute or cause to be executed and deliver
or cause to be delivered to the Recipient (as defined below) a certificate or
certificates representing the aggregate number of shares of Underlying Common
Stock issuable upon such exercise (based upon the aggregate number of Warrants
so exercised), determined in accordance with SECTION 3.6, together with an
amount in cash in lieu of any fractional share(s), if the Company so elects
pursuant to SECTION 5.4. The certificate or certificates so delivered shall be,
to the extent possible, in such denomination or denominations as such Holder
shall request in such notice of exercise and shall be registered or otherwise
placed in the name of, and delivered to, the Holder or, subject to SECTION 3.4,
such other Person as shall be designated by the Holder in such notice (the
Holder or such other Person being referred to herein as the "RECIPIENT").
(f) TIME OF EXERCISE. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date the Warrant
Certificate representing such Warrant is surrendered for exercise as provided
above, together with the applicable Warrant Price, and all taxes required to be
paid by Holder, if any, pursuant to SECTION 3.4 prior to the exercise of such
Warrant have been paid. Subject to SECTION 5.1(F)(IV), certificate(s) evidencing
the Underlying Common Stock issued upon the exercise of such Warrant shall be
deemed to have been issued and, for all purposes of this Agreement, the
Recipient shall, as between such Person and the Company, be deemed to be and
entitled to all rights of the holder or record of such Common Stock as of such
time.
3.3. APPLICATION OF FUNDS UPON EXERCISE OF WARRANTS. Any funds delivered
to the Warrant Agent upon exercise of any Warrant(s) shall be held by the
Warrant Agent in trust for the Company. The Warrant Agent shall promptly deliver
and pay to or upon the written order of the Company all funds received by it
upon the exercise of any Warrants by bank wire transfer to
10
an account designated by the Company or as the Warrant Agent otherwise may be
directed in writing by the Company.
3.4. PAYMENT OF TAXES. The Company shall pay any and all taxes (other than
income taxes) that may be payable in respect of the issue or delivery of shares
of Common Stock on exercise of Warrants pursuant hereto. The Company shall not
be required, however, to pay any tax or other charge imposed in respect of any
transfer involved in the issue and delivery of any certificates for shares of
Common Stock or payment of cash to any Recipient other than the Holder of the
Warrant Certificate surrendered upon the exercise of a Warrant, and in case of
such transfer or payment, the Warrant Agent and the Company shall not be
required to issue or deliver any certificate or pay any cash until (a) such tax
or charge has been paid or an amount sufficient for the payment thereof has been
delivered to the Warrant Agent or the Company or (b) it has been established to
the Company's satisfaction that any such tax or other charge that is or may
become due has been paid.
3.5. SURRENDER OF CERTIFICATES. Any Warrant Certificate surrendered for
exercise shall, if surrendered to the Company, be delivered to the Warrant
Agent, and all Warrant Certificates surrendered or so delivered to the Warrant
Agent shall be promptly cancelled by such Warrant Agent and shall not be
reissued by the Company. The Warrant Agent shall destroy such cancelled Warrant
Certificates and deliver its certificate of destruction to the Company, unless
the Company shall otherwise direct.
3.6. SHARES ISSUABLE. The number of shares of Common Stock "issuable upon
exercise" of Warrants at any time shall be the number of shares of Common Stock
into which such Warrants are then exercisable. The number of shares of Common
Stock "into which each Warrant is exercisable" shall be one share, subject to
adjustment as provided in SECTION 5.1.
4. DISSOLUTION, LIQUIDATION OR WINDING UP
If, on or prior to the Expiration Date, the Company (or any other Person
controlling the Company) shall propose a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, the Company shall give
written notice thereof to the Warrant Agent and all Holders of Warrant
Certificates in the manner provided in SECTION 12.2 prior to the date on which
such transaction is expected to become effective or, if earlier, the record date
for such transaction. Such notice shall also specify the date as of which the
holders of record of the shares of Underlying Common Stock shall be entitled to
exchange their shares for securities, money or other property deliverable upon
such dissolution, liquidation or winding up, as the case may be, on which date
each Holder of Warrant Certificates shall receive the securities, money or other
property which such Holder would have been entitled to receive had such Holder
been the holder of record of the shares of Underlying Common Stock into which
the Warrants were exercisable immediately prior to such dissolution, liquidation
or winding up (net of the then applicable Warrant Price) and the rights to
exercise the Warrants shall terminate.
In case of any such voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall deposit with the Warrant Agent any
funds or other property which the Holders are entitled to receive under this
Agreement, together with a Company Order as to the distribution thereof. After
receipt of
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such deposit from the Company and after receipt of surrendered Warrant
Certificates evidencing Warrants, the Warrant Agent shall make payment in
appropriate amount to such Person or Persons as it may be directed in writing by
the Holder surrendering such Warrant Certificate. The Warrant Agent shall not be
required to pay interest on any money deposited pursuant to the provisions of
this SECTION 4 except such as it shall agree with the Company to pay thereon.
Any moneys, securities or other property which at any time shall be deposited by
the Company or on its behalf with the Warrant Agent pursuant to this SECTION 4
shall be, and are hereby, assigned, transferred and set over to the Warrant
Agent in trust for the purpose for which such moneys, securities or other
property shall have been deposited; PROVIDED THAT moneys, securities or other
property need not be segregated from other funds, securities or other property
held by the Warrant Agent except to the extent required by law.
5. ADJUSTMENTS
5.1. ADJUSTMENTS. The number of shares of Common Stock into which each
Warrant is exercisable and the Warrant Price shall be subject to adjustment from
time to time after the Effective Date in accordance (and only in accordance)
with the provisions of this SECTION 5:
(a) STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In case at any
time or from time to time after the Effective Date the Company shall:
(i) pay to the holders of its Common Stock a dividend payable in, or
make any other distribution on any class of its capital stock in, shares
of Common Stock (other than a dividend or distribution upon a merger or
consolidation or sale to which SECTION 5.1(H) applies);
(ii) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock (other than a subdivision upon a merger
or consolidation or sale to which SECTION 5.1(H) applies); or
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock (other than a combination upon a merger
or consolidation or sale to which SECTION 5.1(H) applies);
then, (x) in the case of any such dividend or distribution, effective
immediately after the opening of business on the day after the date for the
determination of the holders of shares of Common Stock entitled to receive such
dividend or distribution or (y) in the case of any subdivision or combination,
effective immediately after the opening of business on the day after the day
upon which such subdivision or combination becomes effective, the number of
shares of Common Stock into which each Warrant is exercisable shall be adjusted
to that number of shares of Common Stock determined by (A) in the case of any
such dividend or distribution, multiplying the number of shares of Common Stock
into which each Warrant is exercisable at the opening of business on the day
after the day for determination by a fraction (not to be less than one), (1) the
numerator of which shall be equal to the sum of the number of shares of Common
Stock outstanding at the close of business on such date for determination and
the total number of shares constituting such dividend or distribution and (2)
the denominator of which shall be equal to the number of shares of Common Stock
outstanding at the close of business on such date for
12
determination, or (B) in the case of any such combination, by proportionately
reducing, or, in the case of any such subdivision, by proportionately
increasing, the number of shares of Common Stock into which each Warrant is
exercisable at the opening of business on the day after the day upon which such
subdivision or combination becomes effective.
(b) CERTAIN OTHER DIVIDENDS AND DISTRIBUTIONS. In case at any time
or from time to time after the Effective Date the Company shall effect a
Non-Stock Dividend (other than (x) a Receivable Dividend, a Received Dividend or
a Permitted Dividend or (y) any dividend or distribution of any rights or
warrants referred to in SECTION 5.1(D)), then, and in each such case, effective
immediately prior to the opening of business on the day after the date for the
determination of the holders of Common Stock entitled to receive such
distribution, the number of shares of Common Stock into which each Warrant is
exercisable shall be adjusted to that number determined by multiplying the
number of shares of Common Stock into which each Warrant is exercisable
immediately prior to the close of business on such date of determination by a
fraction, (i) the numerator of which shall be the Current Market Price per share
of Common Stock on such date for determination and (ii) the denominator of which
shall be such Current Market Price per share of Common Stock minus the portion
applicable to one share of Common Stock of the fair market value (as determined
in good faith by the Board of Directors of the Company) of such securities, cash
or other assets so distributed.
(c) RECLASSIFICATIONS. A reclassification of the Common Stock (other
than any such reclassification in connection with a merger or consolidation or
sale to which SECTION 5.1(H) applies) into shares of Common Stock and shares of
any other class of stock shall be deemed a distribution by the Company to the
holders of its Common Stock of such shares of such other class of stock for the
purposes and within the meaning of SECTION 5.1(B) (and the effective date of
such reclassification shall be deemed to be "the date for the determination of
the holders of Common Stock entitled to receive such distribution" for the
purposes and within the meaning of SECTION 5.1(B)) and, if the outstanding
shares of Common Stock shall be changed into a larger or smaller number of
shares of Common Stock as a part of such reclassification, such change shall be
deemed a subdivision or combination, as the case may be, of the outstanding
shares of Common Stock for the purposes and within the meaning of SECTION 5.1(A)
(and the effective date of such reclassification shall be deemed to be "the day
upon which such subdivision or combination becomes effective" for the purposes
and within the meaning of SECTION 5.1(A)).
(d) DISTRIBUTION OF WARRANTS OR OTHER RIGHTS TO HOLDERS OF COMMON
STOCK. In case at any time or from time to time after the Effective Date the
Company shall make a distribution to all holders of its Common Stock of any
warrants or other rights to subscribe for or purchase any shares of Common Stock
(other than (x) a Received Dividend or a Receivable Dividend, (y) a distribution
of such warrants or rights upon a merger or consolidation or sale to which
SECTION 5.1(H) applies or (z) any distribution pursuant to the Plan of
Reorganization), whether or not the rights to subscribe or purchase thereunder
are immediately exercisable, and the consideration per share for which shares of
Common Stock may at any time thereafter be issuable pursuant to such warrants or
other rights shall be less than the Current Market Price per share of Common
Stock on the date fixed for determination of the holders of Common Stock
entitled to receive such distribution, then, and in each such case, effective
immediately after the opening of business on the day after such date for
determination, the number of shares of Common Stock into which each Warrant is
exercisable shall be adjusted to that number
13
determined by multiplying the number of shares of Common Stock into which each
Warrant is exercisable at the opening of business on the day after such date for
determination by a fraction (not less than one), (i) the numerator of which
shall be the number of shares of Common Stock outstanding at the close
of-business on such date for determination plus the maximum number of shares of
Common Stock issuable pursuant to all such warrants or other rights and (ii) the
denominator of which shall be the number of shares of Common Stock outstanding
at the close of business on such date for determination plus the number of
shares of Common Stock that the minimum consideration received and receivable by
the Company for the issuance of such maximum number of shares of Common Stock
pursuant to the terms of such warrants or other rights would purchase at such
Current Market Price.
(e) SUPERSEDING ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK INTO
WHICH EACH WARRANT IS EXERCISABLE. In case at any time after any adjustment of
the number of shares of Common Stock into which each Warrant is exercisable
shall have been made pursuant to SECTION 5.1(D) on the basis of the distribution
of warrants or other rights or after any new adjustment of the number of shares
of Common Stock into which each Warrant is exercisable shall have been made
pursuant to this SECTION 5.1(E), such warrants or rights shall expire, and all
or a portion of such warrants or rights shall not have been exercised, then, and
in each such case, upon the election of the Company by written notice to the
Warrant Agent, such previous adjustment in respect of such warrants or rights
which have expired without exercise shall be rescinded and annulled as to any
then outstanding Warrants, and the shares of Common Stock that were deemed for
purposes of the computations set forth in SECTION 5.1(D) to have been issued or
sold by virtue of such adjustment in respect of such warrants or rights shall no
longer be deemed to have been distributed.
(f) OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock into which each Warrant is exercisable and to
the Warrant Price under this SECTION 5.1:
(i) TREASURY STOCK. The dividend or distribution of any issued
shares of Common Stock owned or held by or for the account of the Company
shall be deemed a dividend or distribution of shares of Common Stock for
purposes of this SECTION 5. The Company shall not pay any dividend on or
make any distribution on shares of Common Stock held in the treasury of
the Company. For the purposes of this SECTION 5.1, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common Stock.
(ii) WHEN ADJUSTMENTS ARE TO BE MADE. The adjustments required by
SECTIONS 5.1(A), 5.1(B), 5.1(C) and 5.1(D) shall be made whenever and as
often as any specified event requiring an adjustment shall occur, except
that no adjustment of the number of shares of Common Stock into which each
Warrant is exercisable 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 the number of
shares of Common Stock into which each Warrant is exercisable immediately
prior to the making of such adjustment by at least 1%. Any adjustment
representing a change of less than such
14
minimum amount (except as aforesaid) shall be carried forward and made as
soon as such adjustment, together with other adjustments required by
SECTIONS 5.1(a), 5.1(B), 5.1(C) and 5.1(D) and not previously made, would
result in such minimum adjustment.
(iii) FRACTIONAL INTERESTS. In computing adjustments under this
SECTION 5, fractional interests in Common Stock shall be taken into
account to the nearest one-thousandth of a share.
(iv) DEFERRAL OF ISSUANCE UPON EXERCISE. In any case in which this
SECTION 5 shall require that an adjustment to the number of shares of
Common Stock into which each Warrant is exercisable be made effective
pursuant to SECTION 5.1(A)(I), 5.1(B) or 5.1(D) prior to the occurrence of
a specified event and any Warrant is exercised after the time at which the
adjustment became effective but prior to the occurrence of such specified
event, the Company may elect to defer until the occurrence of such
specified event the issuing to the Holder of the Warrant Certificate
evidencing such Warrant (or other Person entitled thereto) of, and may
delay registering such Holder or other Person as the record holder of, the
Common Stock over and above the Common Stock issuable upon such exercise
determined in accordance with SECTION 3.6 on the basis of the number of
shares of Common Stock into which each Warrant is exercisable prior to
such adjustment determined in accordance with SECTION 3.6; PROVIDED,
HOWEVER, that the Company shall deliver to such Holder or other person a
due xxxx or other appropriate instrument evidencing the right of such
Holder or other Person to receive, and to become the record holder of,
such additional shares of Common Stock, upon the occurrence of the event
requiring such adjustment.
(g) WARRANT PRICE ADJUSTMENT. Whenever the number of shares of
Common Stock into which a Warrant is exercisable is adjusted as provided in this
SECTION 5.1, the Warrant Price payable upon exercise of the Warrant shall
simultaneously be adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
shares of Common Stock into which such Warrant was exercisable immediately prior
to such adjustment, and the denominator of which shall be the number of shares
of Common Stock into which such Warrant was exercisable immediately thereafter.
(h) CHANGES IN COMMON STOCK. In case at any time or from time to
time the Company shall be a party to or shall otherwise engage in any
transaction or series of related transactions constituting (i) a merger of the
Company into, a consolidation of the Company with, or a sale of all or
substantially all of the Company's assets to, any other Person (a "NON-SURVIVING
TRANSACTION") or (ii) any merger of another Person into the Company in which the
previously outstanding shares of Common Stock shall be cancelled, reclassified,
converted or changed into or exchanged for securities of the Company or other
property (including cash) or any combination of the foregoing (a "SURVIVING
TRANSACTION"; any Non-Surviving Transaction or Surviving Transaction being
herein called a "TRANSACTION"), then, as a condition to the consummation of such
Transaction, the Company shall (or, in the case of any Non-Surviving
Transaction, the Company shall cause such other Person to) execute and deliver
to the Warrant Agent a written instrument providing that (x) during the period
any Warrant is exercisable as specified in SECTION 3.2(B), on such terms and
subject to such conditions as shall be as nearly equivalent as may be
practicable to the provisions set forth in this Agreement, each Warrant,
15
upon the exercise thereof at any time on or after the consummation of such
Transaction, shall be exercisable into, and the Warrant Certificate evidencing
such Warrant shall thereafter represent the right to exercise such Warrant into,
in lieu of the Common Stock issuable upon such exercise prior to such
consummation, only the securities or other property ("SUBSTITUTED PROPERTY")
that would have been receivable upon such Transaction by a holder of the number
of shares of Common Stock into which such Warrant was exercisable immediately
prior to such Transaction, assuming such holder of Common Stock (A) is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or to which such sale or transfer was made, as the
case may be ("CONSTITUENT PERSON"), or an Affiliate of a Constituent Person and
(B) failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash and other property receivable upon such Transaction
(provided that if the kind or amount of securities, cash and other property
receivable upon such Transaction is not the same for each share of Common Stock
held immediately prior to such Transaction by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("NON-ELECTING SHARE"), then, for the purposes of this
SECTION 5.1(H), the kind and amount of securities, cash and other property
receivable upon such Transaction by each Non-Electing Share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
Non-Electing Shares), and (y) the rights and obligations of the Company (or, in
the event of a Non-Surviving Transaction, such other Person) and the Holders in
respect of Substituted Property shall be as nearly equivalent as may be
practicable to the rights and obligations of the Company and Holders in respect
of Underlying Common Stock hereunder as set forth in SECTION 3.1 hereof and
elsewhere herein. Such written instrument shall provide for adjustments which,
for events subsequent to the effective date of such written instrument, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this SECTION 5. The above provisions of this SECTION 5.1(H) shall similarly
apply to successive Transactions.
(i) COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Before taking any
action that would cause an adjustment reducing the Warrant Price below the then
par value of any of the shares of Common Stock into which the Warrants are
exercisable, the Company will take any corporate action that may be necessary in
order that the Company may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Warrant Price.
(j) OPTIONAL TAX ADJUSTMENT. The Company may at its option, at any
time during the term of the Warrants, increase the number of shares of
Underlying Common Stock into which each Warrant is exercisable, or decrease the
Warrant Price, in addition to those changes required by Section 5.1(A), 5.1(B),
5.1(c), 5.1(D) or 5.1(G), as deemed advisable by the Board of Directors of the
Company, in order that any event treated for Federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the recipients.
(k) WARRANTS DEEMED EXERCISABLE. For purposes solely of this SECTION
5, the number of shares of Underlying Common Stock which the holder of any
Warrant would have been entitled to receive had such Warrant been exercised in
full at any time or into which any Warrant was exercisable at any time shall be
determined assuming such Warrant was exercisable in full at such time, although
such Warrant may not be exercisable in full at such time pursuant to SECTION
3.2(A).
16
5.2. NOTICE OF ADJUSTMENT. Whenever the number of shares of Common Stock
into which a Warrant is exercisable is to be adjusted, or the Warrant Price is
to be adjusted, in either case as herein provided, the Company shall compute the
adjustment in accordance with SECTION 5.1, shall, promptly after such adjustment
becomes effective, cause a notice of such adjustment or adjustments to be given
to all Holders in accordance with SECTION 12.1(B) and shall deliver to the
Warrant Agent a certificate of the Treasurer of the Company setting forth the
number of shares of Common Stock into which each Warrant is exercisable after
such adjustment, or the adjusted Warrant Price, as the case may be, and setting
forth a brief statement of the facts requiring such adjustment and the
computation by which such adjustment was made. As provided in SECTION 10.1, 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.
5.3. STATEMENT ON WARRANT CERTIFICATES. Irrespective of any adjustment in
the number or kind of shares into which the Warrants are exercisable, Warrant
Certificates theretofore or thereafter issued may continue to express the same
price and number and kind of shares initially issuable pursuant to this
Agreement.
5.4. FRACTIONAL INTEREST. The Company may, but shall not be required to,
issue fractional shares of Common Stock on the exercise of Warrants. If Warrant
Certificates evidencing, more than one Warrant shall be presented for exercise
at the same time by the same Holder, the number of full shares of Common Stock
which shall be issuable upon such exercise thereof shall be computed on the
basis of the aggregate number of Warrants so to be exercised. If any fraction of
a share of Common Stock would, except for the provisions of this SECTION 5.4 be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company may, in lieu of issuing any fractional shares of Common Stock, pay an
amount in cash calculated by it to be equal to the then Current Market Price per
share of Common Stock on the date of such exercise multiplied by such fraction
computed to the nearest whole cent. The Holders, by their acceptance of the
Warrant Certificates, expressly waive their right to receive any fraction of a
share of Common Stock or a stock certificate representing a fraction of a share
of Common Stock if such amount of cash is paid in lieu thereof.
6. LOSS OR MUTILATION
Upon (i) receipt by the Company and the Warrant Agent of evidence
satisfactory to them (in the exercise of reasonable discretion) of the ownership
of and the loss, theft, destruction or mutilation of any Warrant Certificate and
such security or indemnity as may be required by them to save each of them
harmless and (ii) surrender, in the case of mutilation, of the mutilated Warrant
Certificate to the Warrant Agent and cancellation thereof, then, in the absence
of notice to the Company or the Warrant Agent that the Warrants evidenced
thereby have been acquired by a bona fide purchaser, the Company shall execute
and upon its written request the Warrant Agent shall countersign and deliver to
the registered Holder of the lost, stolen, destroyed or mutilated Warrant
Certificate, in exchange therefor or in lieu thereof, a new Warrant Certificate
of the same tenor and for a like aggregate number of Warrants. At the written
request of such registered Holder, the new Warrant Certificate so issued shall
be retained by the Warrant Agent as having been surrendered for exercise, in
lieu of delivery thereof to such Holder, and shall be
17
deemed for purposes of SECTION 3.2 to have been surrendered for exercise on the
date the conditions specified in clauses (i) and (ii) of the preceding sentence
were first satisfied.
Upon the issuance of any new Warrant Certificate under this SECTION 6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and other expenses
(including the fees and expenses of the Warrant Agent and of counsel to the
Company) in connection therewith.
Every new Warrant Certificate executed and delivered pursuant to this
SECTION 6 in lieu of any lost, stolen or destroyed Warrant Certificate shall
constitute an additional contractual obligation of the Company, whether or not
the allegedly lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of this Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder.
The provisions of this SECTION 6 are exclusive and shall preclude (to the
extent lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrant Certificates.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
The Company shall at all times reserve and keep available, free from
preemptive rights, solely for issue upon the exercise of Warrants as herein
provided, such number of its authorized but unissued shares of Common Stock
deliverable upon the exercise of Warrants as will be sufficient to permit the
exercise in full of all outstanding Warrants. The Company covenants that all
shares of Common Stock will, at all times that Warrants are exercisable, be duly
approved for listing subject to official notice of issuance on each securities
exchange, if any, on which the Common Stock is then listed. The Company
covenants that (i) all shares of Common Stock that may be issued upon exercise
of Warrants shall upon issuance be duly and validly issued and fully paid and
nonassessable and (ii) the stock certificates issued to evidence any such shares
of Common Stock will comply with the Delaware General Corporation Law and any
other applicable law.
The Company hereby authorizes and directs its current and future transfer
agents for the Common Stock at all times to reserve stock certificates for such
number of authorized shares as shall be requisite for such purpose. The Warrant
Agent is hereby authorized to requisition from time to time from any such
transfer agents stock certificates required to honor outstanding Warrants upon
exercise thereof in accordance with the terms of this Agreement, and the Company
hereby authorizes and directs such transfer agents to comply with all such
requests of the Warrant Agent. The Company will supply such transfer agents with
duly executed stock certificates for such purposes. Promptly after the date of
expiration of all of the Warrants in accordance with SECTION 3.2(B), the Warrant
Agent shall certify to the Company the aggregate number of Warrants then
outstanding, and thereafter no shares of Common Stock shall be reserved in
respect of such Warrants.
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8. WARRANT TRANSFER BOOKS
The Warrant Agent will maintain an office (the "CORPORATE AGENCY Office")
in the United States of America, where Warrant Certificates may be surrendered
for registration of transfer or exchange and where Warrant Certificates may be
surrendered for exercise of Warrants evidenced thereby, which office is on the
date hereof. The Warrant Agent will give prompt written notice to all Holders of
Warrant Certificates of any change in the location of such office.
The Warrant Certificates evidencing the Warrants shall be issued in
registered form only. The Company shall cause to be kept at the office of the
Warrant Agent designated for such purpose a warrant register (the "WARRANT
REGISTER") in which, subject to such reasonable regulations as the Warrant Agent
may prescribe and such regulations as may be prescribed by law, the Company
shall provide for the registration of Warrant Certificates and of transfers or
exchanges of Warrant Certificates as herein provided.
Upon surrender for registration of transfer of any Warrant Certificate at
the Corporate Agency Office, the Company shall execute, and the Warrant Agent
shall countersign and deliver, in the name of the designated transferee or
transferees, one or more new Warrant Certificates evidencing a like aggregate
number of Warrants.
At the option of the Holder, Warrant Certificates may be exchanged at the
office of the Warrant Agent upon payment of the charges hereinafter provided for
other Warrant Certificates evidencing a like aggregate number of Warrants.
Whenever any Warrant Certificates are so surrendered for exchange, the Company
shall execute, and the Warrant Agent shall countersign and deliver, the Warrant
Certificates of the same tenor and evidencing the same number of Warrants as
evidenced by the Warrant Certificates surrendered by the Holder making the
exchange.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificates surrendered for such registration of
transfer or exchange.
Every Warrant Certificate surrendered for registration of transfer or
exchange shall (if so required by the Company or the Warrant Agent) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Warrant Agent, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Warrant Certificates; PROVIDED, HOWEVER, the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Warrant Certificates.
The Warrant Agent shall, upon request of the Company from time to time,
deliver to the Company such reports of registered ownership of the Warrants and
such records of transactions with respect to the Warrants and the shares of
Common Stock as the Company may request. The Warrant Agent shall also make
available to the Company for inspection by the Company's
19
agents or employees, from time to time as the Company may request, such original
books of accounts and records maintained by the Warrant Agent in connection with
the issuance and exercise of Warrants hereunder, such inspections to occur at
the Corporate Agency Office during normal business hours.
The Warrant Agent shall keep copies of this Agreement and any notices
given to Holders hereunder available for inspection by the Holders during normal
business hours at the Corporate Agency Office. The Company shall supply the
Warrant Agent from time to time with such numbers of copies of this Agreement as
the Warrant Agency may request.
9. warrant holders
9.1. NO VOTING OR DIVIDEND RIGHTS. Prior to the exercise of the Warrants,
except as may be specifically provided for herein, (i) no Holder of a Warrant
Certificate, as such, shall be entitled to any of the rights of a holder of
Common Stock of the Company, including without limitation, the right to vote at
or to receive any notice of any meetings of stockholders; (ii) the consent of
any such Holder shall not be required with respect to any action or proceeding
of the Company; (iii) except with respect to any Received Dividend or as
provided in SECTION 4, no such Holder, by reason of the ownership or possession
of a Warrant or the Warrant Certificate representing the same, shall have any
right to receive any cash dividends, stock dividends, allotments or rights or
other distributions paid, allotted or distributed or distributable to the
stockholders of the Company prior to, or for which the relevant record date
preceded, the date of the exercise of such Warrant; and (iv) no such Holder
shall have any right not expressly conferred by the Warrant or Warrant
Certificate held by such Holder.
9.2. RIGHTS OF ACTION All rights of action against the Company in respect
of this Agreement, except rights of action vested in the Warrant Agent, are
vested in the Holders of the Warrant Certificates, and any Holder of any Warrant
Certificate, without the consent of the Warrant Agent or the Holder of any other
Warrant Certificate, may, in such Holder's own behalf and for such Holder's own
benefit, enforce and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, such
Holder's right to exercise, exchange or tender for purchase such Holder's
Warrants in the manner provided in this Agreement.
9.3. TREATMENT OF HOLDERS OF WARRANT CERTIFICATES Every Holder of a
Warrant Certificate, by accepting the same, consents and agrees with the
Company, with the Warrant Agent and with every subsequent holder of such Warrant
Certificate that, prior to due presentment of such Warrant Certificate for
registration of transfer, the Company and the Warrant Agent may treat the Person
in whose name the Warrant Certificate is registered as the owner thereof for all
purposes and as the Person entitled to exercise the rights granted under the
Warrants, and neither the Company, the Warrant Agent nor any agent thereof shall
be affected by any notice to the contrary.
9.4. COMMUNICATIONS TO HOLDERS.
(a) If any Holder of a Warrant Certificate applies in writing to the
Warrant Agent and such application states that the applicant desires to
communicate with other Holders
20
with respect to its rights under this Warrant Agreement or under the Warrants,
then the Warrant Agent shall, within five Business Days after the receipt of
such application, and upon payment to the Warrant Agent by such applicant of the
reasonable expenses of preparing such list, provide to such applicant a list of
the names and addresses of all Holders of Warrant Certificates as of the most
recent practicable date.
(b) Every Holder of Warrant Certificates, by receiving and holding
the same, agrees with the Company and the Warrant Agent that neither the Company
nor the Warrant Agent nor any agent of either of them shall be held accountable
by reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with SECTION 9.4(A).
10. CONCERNING THE WARRANT AGENT
10.1. NATURE OF DUTIES AND RESPONSIBILITIES ASSUMED. The Company hereby
appoints the Warrant Agent to act as agent of the Company as set forth in this
Agreement. The Warrant Agent hereby accepts the appointment as agent of the
Company and agrees to perform that agency upon the terms and conditions set
forth in this Agreement and in the Warrant Certificates or as the Company and
the Warrant Agent may hereafter agree, by all of which the Company and the
Holders of Warrant Certificates, by their acceptance thereof, shall be bound;
PROVIDED, HOWEVER, that the terms and conditions contained in the Warrant
Certificates are subject to and governed by this Agreement or any other terms
and conditions hereafter agreed to by the Company and the Warrant Agent.
The Warrant Agent shall not, by countersigning Warrant Certificates or by
any other act hereunder, be deemed to make any representations as to validity or
authorization of (i) the Warrants or the Warrant Certificates (except as to its
countersignature thereon), (ii) any securities or other property delivered upon
exercise of any Warrant, (iii) the accuracy of the computation of the number or
kind or amount of stock or other securities or other property deliverable upon
exercise of any Warrant, (iv) the independence of any Independent Financial
Expert or (v) the correctness of any of the representations of the Company made
in such certificates that the Warrant Agent receives. The Warrant Agent shall
not at any time have any duty to calculate or determine whether any facts exist
that may require any adjustments pursuant to SECTION 5 hereof with respect to
the kind and amount of shares or other securities or any property issuable to
Holders upon the exercise of Warrants required from time to time. The Warrant
Agent shall have no duty or responsibility to determine the accuracy or
correctness of such calculation or with respect to the methods employed in
making the same. The Warrant Agent shall not be accountable with respect to the
validity or value (or the kind or amount) 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 SECTION 5 hereof, 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 or other
securities or property upon the surrender of any Warrant Certificate for the
purpose of exercise or upon any adjustment pursuant to SECTION 5 hereof or to
comply with any of the covenants of the Company contained in SECTION 5 hereof.
21
The Warrant Agent shall not (i) be liable for any recital or statement of
fact contained herein or in the Warrant Certificates or for any action taken,
suffered or omitted by it in good faith on the belief that any Warrant
Certificate or any other documents or any signatures are genuine or properly
authorized, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates or (iii) be liable for any act or omission in
connection with this Agreement except for its own gross negligence, bad faith or
willful misconduct.
The Warrant Agent is hereby authorized to accept and protected in
accepting instructions with respect to the performance of its duties hereunder
by Company Order and to apply to any such officer named in such Company Order
for instructions (which instructions will be promptly given in writing when
requested), and the Warrant Agent shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with the instructions in
any Company Order.
The Warrant Agent may execute and exercise any of the rights and powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys, agents or employees, PROVIDED, HOWEVER, reasonable care has been
exercised in the selection and in the continued employment of any such attorney,
agent or employee. The Warrant Agent shall not be under any obligation or duty
to institute, appear in or defend any action, suit or legal proceeding in
respect hereof, unless first indemnified to its satisfaction, but this provision
shall not affect the power of the Warrant Agent to take such action as the
Warrant Agent may consider proper, whether with or without such indemnity. The
Warrant Agent shall promptly notify the Company in writing of any claim made or
action, suit or proceeding instituted against it arising out of or in connection
with this Agreement.
The Company shall perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Warrant Agent in
order to enable it to carry out or perform its duties under this Agreement.
The Warrant Agent shall act solely as agent of the Company hereunder and
does not assume any obligation or relationship of agency or trust for or with
any of the Holders or any beneficial owners of Warrants. The Warrant Agent shall
not be liable except for the failure to perform such duties as are specifically
set forth herein or specifically set forth in the Warrant Certificates, and no
implied covenants or obligations shall be read into this Agreement against the
Warrant Agent whose duties and obligations shall be determined solely by the
express provisions hereof or the express provisions of the Warrant Certificates.
10.2. RIGHT TO CONSULT COUNSEL. The Warrant Agent may at any time consult
with legal counsel satisfactory to it (who may be legal counsel for the
Company), and the Warrant Agent shall incur no liability or responsibility to
the Company or to any Holder for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
10.3. COMPENSATION, REIMBURSEMENT AND INDEMNIFICATION. The Company agrees
to pay the Warrant Agent from time to time compensation for all fees and
expenses relating to its services hereunder as the Company and the Warrant Agent
may agree from time to time and to
22
reimburse the Warrant Agent for reasonable expenses and disbursements, including
reasonable counsel fees incurred in connection with the execution and
administration of this Agreement. The Company further agrees to indemnify the
Warrant Agent for and save it harmless against any losses, liabilities or
reasonable expenses arising out of or in connection with the acceptance and
administration of this Agreement, including the reasonable costs, legal fees and
expenses of investigating or defending any claim of such liability, except that
the Company shall have no liability hereunder to the extent that any such loss,
liability or expense results from the Warrant Agent's own gross negligence, bad
faith or willful misconduct.
10.4. WARRANT AGENT MAY HOLD COMPANY SECURITIES. The Warrant Agent, any
Countersigning Agent and any stockholder, director, officer or employee of the
Warrant Agent or any Countersigning Agent may buy, sell or deal in any of the
warrants or other securities of the Company or its Affiliates, become
pecuniarily interested in transactions in which the Company or its Affiliates
may be interested, contract with or lend money to the Company or its Affiliates
or otherwise act as fully and freely as though it were not the Warrant Agent or
the Countersigning Agent, respectively, under this Agreement. Nothing herein
shall preclude the Warrant Agent or any Countersigning Agent from acting in any
other capacity for the Company or for any other legal entity.
10.5. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Warrant Agent may resign its duties and be discharged from
all further duties and liability hereunder (except liability arising as a result
of the Warrant Agent's own gross negligence or willful misconduct) after giving
30 days' prior written notice to the Company. The Company may remove the Warrant
Agent upon 30 days' written notice, and the Warrant Agent shall thereupon in
like manner be discharged from all further duties and liabilities hereunder,
except as aforesaid. The Warrant Agent shall, at the expense of the Company,
cause notice to be given in accordance with SECTION 12.1(B) to each Holder of a
Warrant Certificate of said notice of resignation or notice of removal, as the
case may be. Upon such resignation or removal, the Company shall appoint in
writing a new Warrant Agent. If the Company shall fail to make such appointment
within a period of 30 calendar days after it has been notified in writing of
such resignation by the resigning Warrant Agent or after such removal, then the
Holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent,
whether appointed by the Company or by such a court, shall be a corporation
doing business under the laws of the United States or any state thereof in good
standing, authorized under such laws to act as Warrant Agent, and having a
combined capital and surplus of not less than $25,000,000. The combined capital
and surplus of any such new Warrant Agent shall be deemed to be the combined
capital and surplus as set forth in the most recent annual report of its
condition published by such Warrant Agent prior to its appointment, PROVIDED,
HOWEVER, such reports are published at least annually pursuant to law or to the
requirements of a Federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new Warrant Agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be reasonably
necessary or expedient to execute and deliver any further assurance, conveyance,
act or deed, the same shall be done at the reasonable expense of the Company and
shall be legally and validly executed and delivered by the resigning or removed
Warrant Agent.
23
Not later than the effective date of any such appointment, the Company shall
file notice thereof with the resigning or removed Warrant Agent. Failure to give
any notice provided for in this SECTION 10.5(A), however, or any defect therein,
shall not affect the legality or validity of the resignation of the Warrant
Agent or the appointment of a new Warrant Agent as the case may be.
(b) Any corporation into which the Warrant Agent or any new Warrant
Agent may be merged, or any corporation resulting from any consolidation to
which the Warrant Agent or any new Warrant Agent shall be a party, shall be a
successor Warrant Agent under this Agreement without any further act, provided
that such corporation would be eligible for appointment as successor to the
Warrant Agent under the provisions of SECTION 10.5(A). Any such successor
Warrant Agent shall promptly cause notice of its succession as Warrant Agent to
be given in accordance with SECTION 12.1(B) to each Holder of a Warrant
Certificate at such Holder's last address as shown on the Warrant Register.
10.6. APPOINTMENT OF COUNTERSIGNING AGENT.
(a) The Warrant Agent may appoint a Countersigning Agent or Agents
which shall be authorized to act on behalf of the Warrant Agent to countersign
Warrant Certificates issued upon original issue and upon exchange, registration
of transfer or pursuant to SECTION 6, and Warrant Certificates so countersigned
shall be entitled to the benefits of this Warrant Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder. Wherever reference is made in this Warrant Agreement to the
countersignature and delivery of Warrant Certificates by the Warrant Agent or to
Warrant Certificates countersigned by the Warrant Agent, such reference shall be
deemed to include countersignature and delivery on behalf of the Warrant Agent
by a Countersigning Agent and Warrant Certificates countersigned by a
Countersigning Agent. Each Countersigning Agent shall be acceptable to the
Company and shall at the time of appointment be a corporation doing business
under the laws of the United States of America or any State thereof in good
standing, authorized under such laws to act as Countersigning Agent, and having
a combined capital and surplus of not less than $25,000,000. The combined
capital and surplus of any such new Countersigning Agent shall be deemed to be
the combined capital and surplus as set forth in the most recent annual report
of its condition published by such Countersigning Agent prior to its
appointment, PROVIDED, HOWEVER, such reports are published at least annually
pursuant to law or to the requirements of a Federal or state supervising or
examining authority.
(b) Any corporation into which a Countersigning Agent may be merged
or any corporation resulting from any consolidation to which such Countersigning
Agent shall be a party, shall be a successor Countersigning Agent without any
further act, provided that such corporation would be eligible for appointment as
a new Countersigning Agent under the provisions of SECTION 10.6(A), without the
execution or filing of any paper or any further act on the part of the Warrant
Agent or the Countersigning Agent. Any such successor Countersigning Agent shall
promptly cause notice of its succession as Countersigning Agent to be given in
accordance with SECTION 12.1(B) to each Holder of a Warrant Certificate at such
Holder's last address as shown on the Warrant Register.
(c) A Countersigning Agent may resign at any time by giving 30 days'
prior written notice thereof to the Warrant Agent and to the Company. The
Warrant Agent may at any
24
time terminate the agency of a Countersigning Agent by giving 30 days' prior
written notice thereof to such Countersigning Agent and to the Company.
(d) The Warrant Agent agrees to pay to each Countersigning Agent
from time to time reasonable compensation for its services under this SECTION
10.6 and the Warrant Agent shall be entitled to be reimbursed for such payments,
subject to the provisions of SECTION 10.3.
(e) Any Countersigning Agent shall have the same rights and
immunities as those of the Warrant Agent set forth in SECTION 10.1.
11. REPORTS TO HOLDERS
(a) So long as 10% of the Warrants issued on the Effective Date
remain outstanding, the Company shall file with the Warrant Agent, within 15
days after the Company is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from time
to time by rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act.
(b) So long as 10% of the Warrants issued on the Effective Date
remain outstanding, if the Company is not required to file information,
documents or reports pursuant to either of said Sections of the Exchange Act,
the Company shall cause quarterly reports (containing unaudited financial
statements) for the first three quarters of each fiscal year and annual reports
(containing audited financial statements and an opinion thereon by the Company's
independent certified public accountants) which the Company would be required to
file under Section 13 of the Exchange Act if it had a class of securities listed
on a national securities exchange to be mailed to the Holders in accordance with
SECTION 12.1 within 15 days after the date when such report would have been
required to be filed under Section 13 of the Exchange Act.
12. NOTICES
12.1. NOTICES GENERALLY.
(a) Any request, notice, direction, authorization, consent, waiver,
demand or other communication permitted or authorized by this Agreement to be
made upon, given or furnished to or filed with the Company or the Warrant Agent
by the other party hereto or by any Holder shall be sufficient for every purpose
hereunder if in writing (including telecopy communication) and telecopied or
delivered by hand (including by courier service) as follows:
If to the Company, to it at:
Metals USA, Inc.
Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopy no.: (000) 000-0000
25
or
If to the Warrant Agent, to it at:
Equiserve Trust Company, N.A.
000 Xxxxxxxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy no.: (000) 000-0000
or, in either case, such other address as shall have been set forth in a notice
delivered in accordance with this SECTION 12.1(A).
All such communications shall, when so telecopied or delivered by hand, be
effective when telecopied with confirmation of receipt or received by the
addressee, respectively.
Any Person that telecopies any communication hereunder to any Person
shall, on the same date as such telecopy is transmitted, also send, by first
class mail, postage prepaid and addressed to such Person as specified above, an
original copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at the address of such Holder as it appears
in the Warrant Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Agreement
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made by a method approved by the Warrant Agent as
one which would be most reliable under the circumstances for successfully
delivering the notice to the addressees shall constitute a sufficient
notification for every purpose hereunder.
12.2. REQUIRED NOTICES TO HOLDERS. In case the Company shall propose (i)
to pay any dividend payable in stock of any class to the holders of its Common
Stock or to make any other distribution to the holders of its Common Stock for
which an adjustment is required to be made pursuant to SECTION 5, (ii) to
distribute to the holders of its Common Stock rights to subscribe for or to
purchase any Additional Shares of Common Stock or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its Common Stock, (iv) to effect any Transaction (as defined in SECTION
5.1(H)) or (v) to effect the liquidation, dissolution or winding up of the
Company, then, and in each such case, the Company shall cause to be filed with
the Warrant Agent and shall give to each Holder of a Warrant Certificate, in
accordance with SECTION 12.1(B), a notice of such proposed action. Such notice
shall specify (x) the date on
26
which a record is to be taken for the purposes of such dividend or distribution;
(y) the date on which such reclassification, Transaction, liquidation,
dissolution or winding up is expected to become effective and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, Transaction, liquidation, dissolution or
winding up; or (z) the date on which such tender offer commenced the date on
which such tender offer is scheduled to expire unless extended, the
consideration offered and the other material terms thereof (or the material
terms of any amendment thereto). Such notice shall be given, in the case of any
action covered by clause (i) or (ii) above, at least 10 days prior to the record
date for determining holders of the Common Stock for purposes of much action or,
in the case of any action covered by clauses (iii) through (vi), at least 20
days prior to the applicable effective or expiration date specified above or, in
any such case, prior to such earlier time as notice thereof shall be required to
be given pursuant to Rule l0b-17 under the Exchange Act.
If at any time the Company shall cancel any of the proposed transactions
for which notice has been given under this SECTION 12.2 prior to the
consummation thereof, the Company shall give each Holder prompt notice of such
cancellation in accordance with SECTION 12.1(B) hereof.
13. APPLICABLE LAW
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT
EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAWS RULES THEREOF, AND THE PERFORMANCE THEREOF SHALL BE
GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.
14. PERSONS BENEFITING
This Agreement shall be binding upon and inure to the benefit of the
Company and the Warrant Agent, and their respective successors and assigns and
the Holders from time to time of the Warrant Certificates. 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 of the Warrant Certificates,
any right, remedy or claim under or by reason of this Agreement or any part
hereof. Each Holder, by acceptance of a Warrant Certificate, agrees to all of
the terms and provisions of this Agreement applicable thereto.
15. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
16. AMENDMENTS
The Company and the Warrant Agent may, without the consent or concurrence
of the Holders of the Warrant Certificates, by supplemental agreement or
otherwise, amend this Agreement for the purpose of making any changes or
corrections in this Agreement that (i) are
27
required to cure any ambiguity or to correct or supplement any defective or
inconsistent provision or clerical omission or mistake or manifest error herein
contained or (ii) add to the covenants and agreements of the Company in this
Agreement further covenants and agreements of the Company thereafter to be
observed, or surrender any rights or powers reserved to or conferred upon the
Company in this Agreement; PROVIDED, HOWEVER, that in either case such amendment
shall not adversely affect the rights or interests of the Holders of the Warrant
Certificates hereunder in any material respect. This Agreement may otherwise be
amended by the Company and the Warrant Agent only with the consent of the
Holders of Warrant Certificates evidencing a majority of the then outstanding
Warrants.
The Warrant Agent shall join with the Company in the execution and
delivery of any such amendment unless such amendment affects the Warrant Agent's
own rights, duties or immunities hereunder, in which case the Warrant Agent may,
but shall not be required to, join in such execution and delivery. Upon
execution and delivery of any amendment pursuant to this SECTION 16, such
amendment shall be considered a part of this Agreement for all purposes and
every Holder of a Warrant Certificate theretofore or thereafter countersigned
and delivered hereunder shall be bound thereby.
Promptly after the execution by the Company and the Warrant Agent of any
such amendment, the Company shall give notice to the Holders of Warrant
Certificates, setting forth in general terms the substance of such amendment, in
accordance with the provisions of SECTION 12.1(B). Any failure of the Company to
mail such notice or any defect therein, shall not, however, in any way impair or
affect the validity of any such amendment.
17. WAIVERS
The Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if (i) the Company has obtained
the written consent of Holders of Warrant Certificates evidencing a majority of
the then outstanding Warrants, and (ii) any consent required pursuant to SECTION
16 has been obtained.
18. INSPECTION
The Warrant Agent shall cause a copy of this Agreement to be available at
all reasonable times at the office of the Warrant Agent for inspection by the
Holder of any Warrant Certificate. The Warrant Agent may require such Holder to
submit his Warrant Certificate for inspection by it.
19. SUCCESSOR TO THE COMPANY
So long as Warrants remain outstanding, the Company will not enter into
any Non-Surviving Transaction (as defined in SECTION 5.1(H)) unless the acquirer
shall expressly assume by a supplemental agreement, executed and delivered to
the Warrant Agent, in form reasonably satisfactory to the Warrant Agent, the due
and punctual performance of every covenant of this Agreement on the part of the
Company to be performed and observed and shall have provided for exercise rights
in accordance with SECTION 5.1(H). Upon the consummation of such Non-Surviving
Transaction, the acquirer shall succeed to, and be substituted for, and may
exercise
28
every right and power of, the Company under this Agreement with the same effect
as if such acquirer had been named as the Company herein.
20. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the parties hereto as to
the subject matter hereof and supersedes all previous, agreements among all or
some of the parties hereto with respect thereto, whether written, oral or
otherwise.
21. HEADINGS
The descriptive headings of the several Sections of this Agreement are
inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.
[Remainder of page intentionally left blank.]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
METALS USA, INC., a Delaware corporation
By: /s/ XXXX XXXXXXX
-----------------------------------
Name: XXXX XXXXXXX
-----------------------------------
Title: SENIOR VICE PRESIDENT & SECRETARY
-----------------------------------
EQUISERVE TRUST COMPANY, N.A., as Warrant
Agent
By: /s/ XXXXXX X. FERRARI
-----------------------------------
Name: XXXXXX X. FERRARI
-----------------------------------
Title: SENIOR MANAGING DIRECTOR
-----------------------------------
EXHIBIT A
METALS USA, INC.
FORM OF WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON STOCK
CUSIP No.: 591324 11 6
No.__ ________ Warrants
THIS CERTIFIES THAT, for value received, ________________ or registered
assigns, is the registered owner of __________ Warrants to Purchase Common Stock
of Metals USA, Inc., a Delaware corporation (the "COMPANY", which term includes
any successor thereto under the Warrant Agreement), and is entitled, subject to
and upon compliance with the provisions hereof and of the Warrant Agreement, at
such Holder's option, at any time when the Warrants evidenced hereby are
exercisable, to purchase from the Company one share of Common Stock of the
Company for each Warrant evidenced hereby, at the purchase price of [INSERT IF
WARRANT CERTIFICATE ISSUED PRIOR TO APRIL 30, 2003--the Determined Amount (as
defined in the Warrant Agreement)] [INSERT IF WARRANT CERTIFICATE ISSUED ON OR
AFTER APRIL 30, 2003--$[INSERT THE DETERMINED Amount]] per share (as adjusted
from time to time, the "WARRANT PRICE"), payable in full at the time of
purchase, the number of shares of Common Stock into which and the Warrant Price
at which each Warrant shall be exercisable each being subject to adjustment as
provided in Section 5 of the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
Warrants shall, upon such issuance, be duly and validly issued and fully paid
and nonassessable. The Company shall pay any and all taxes (other than income
taxes) that may be payable in respect of the issue or delivery of shares of
Common Stock on exercise of Warrants. The Company shall not be required,
however, to pay any tax or other charge imposed in respect of any transfer
involved in the issue and delivery of any certificates for shares of Common
Stock or payment of cash to any Person other than the Holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer or payment, the Warrant Agent and the Company shall not be required to
issue or deliver any certificate or pay any cash until (a) such tax or charge
has been paid or an amount sufficient for the payment thereof has been delivered
to the Warrant Agent or to the Company or (b) it has been established to the
Company's satisfaction that any such tax or other charge that is or may become
due has been paid.
Each Warrant evidenced hereby may be exercised by the Holder hereof at the
Warrant Price then in effect at any time during the period commencing on April
30, 2003 and ending on the Expiration Date, subject to any restrictions on
exercise set forth on the face of this Warrant Certificate or in the Warrant
Agreement.
Subject to the provisions hereof and of the Warrant Agreement, the Holder
of this Warrant Certificate may exercise all or any whole number of the Warrants
evidenced hereby by
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surrendering this Warrant Certificate to the Warrant Agent at its office
maintained for such purpose (the "CORPORATE AGENCY OFFICE") with the form of
exercise on the reverse hereof duly executed, together with payment in full of
the Warrant Price as then in effect for each share of Common Stock receivable
upon exercise of each Warrant being submitted for exercise. Any such payment of
the Warrant Price is to be, at the option of the Holder, in any combination of
(i) cash delivered to the Warrant Agent at the Corporate Agency Office, (ii)
certified bank check or official bank check in New York Clearing House funds
payable to the order of the Company and delivered to the Warrant Agent at the
Corporate Agency Office or (iii) wire transfer in immediately available funds to
such other account of the Company at such banking institution as the Company
shall have designated from time to time for such purpose.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
Unless this Warrant Certificate has been countersigned by the Warrant
Agent by manual signature of an authorized officer on behalf of the Warrant
Agent, this Warrant Certificate shall not be valid for any purpose and no
Warrant evidenced hereby shall be exercisable.
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IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed under its corporate seal.
Dated: October 31, 2002
METALS USA, INC
[SEAL]
By:_______________________________
____________
ATTEST:
___________________________________
Countersigned:
_________________, as Warrant Agent ________________, as Warrant Agent
OR
By:________________________________ By: ___________________________
Authorized Officer as Countersigning Agent
By: ___________________________
Authorized Officer
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[FORM OF REVERSE OF WARRANT CERTIFICATE]
METALS USA, INC.
FORM OF WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON STOCK
The Warrants evidenced hereby are one of a duly authorized issue of
Warrants of the Company designated as its Warrants to Purchase Common Stock,
("WARRANTS"), limited in aggregate number to 3,555,795, issued under and in
accordance with the Warrant Agreement, dated as of October 31, 2002 (the
"WARRANT AGREEMENT"), between the Company and [_________], as warrant agent (the
"WARRANT AGENT", which term includes any successor thereto permitted under the
Warrant Agreement), to which Warrant Agreement and all amendments thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Warrant Agent,
the Holders of Warrant Certificates and the owners of the Warrants evidenced
thereby and of the terms upon which the Warrant Certificates are, and are to be,
countersigned and delivered. A copy of the Warrant Agreement shall be available
at all reasonable times at the office of the Warrant Agent for inspection by the
Holder hereof.
The Warrant Agreement provides that, in addition to certain adjustments to
the number of shares of Common Stock into which a Warrant is exercisable and the
Warrant Price required to be made in certain circumstances, in the case of any
Transaction, the Company shall (or, in the case of any Non-Surviving
Transaction, the Company shall cause the other Person involved in such
Transaction to) execute and deliver to the Warrant Agent a written instrument
providing that (i) the Warrants evidenced hereby, if then outstanding, will be
exercisable thereafter, during the period the Warrants evidenced hereby shall be
exercisable as specified herein, only into the Substituted Property that would
have been receivable upon such Transaction by a holder of the number of shares
of Common Stock that would have been issued upon exercise of such Warrant if
such Warrant had been exercised in full immediately prior to such Transaction
(upon certain assumptions specified in the Warrant Agreement), assuming that the
Warrants evidenced hereby were exercisable at the time of such Transaction at
the Warrant Price as then in effect; and (ii) the rights and obligations of the
Company (or, in the case of any Non-Surviving Transaction, the other Person
involved in such Transaction) and the holders in respect of Substituted Property
shall be as nearly equivalent as may be practicable to the rights and
obligations of the Company and Holders in respect of Underlying Common Stock.
Except as provided in the Warrant Agreement, all outstanding Warrants
shall expire and all rights of the Holders of Warrant Certificates evidencing
such Warrants shall terminate and cease to exist, as of 5:00 p.m., New York
time, on the Expiration Date. "EXPIRATION DATE" shall mean October 31, 2007 or
such earlier date as the Company shall have designated pursuant to the Warrant
Agreement upon satisfaction of certain conditions set forth in the Warrant
Agreement.
In the event of the exercise of less than all of the Warrants evidenced
hereby, a new Warrant Certificate of the same tenor and for the number of
Warrants which are not exercised
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shall be issued by the Company in the name or upon the written order of the
Holder of this Warrant Certificate upon the cancellation hereof.
The Warrant Certificates are issuable only in registered form in
denominations of whole numbers of Warrants. Upon surrender at the office of the
Warrant Agent and payment of the charges specified herein and in the Warrant
Agreement, this Warrant Certificate may be exchanged for Warrant Certificates in
other authorized denominations or the transfer hereof may be registered in whole
or in part in authorized denominations to one or more designated transferees;
PROVIDED, HOWEVER, that such other Warrant Certificates issued upon exchange or
registration of transfer shall evidence the same aggregate number of Warrants as
this Warrant Certificate. The Company shall cause to be kept at the office of
the Warrant Agent the Warrant Register in which, subject to such reasonable
regulations as the Warrant Agent may prescribe and such regulations as may be
prescribed by law, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates. No service
charge shall be made for any registration of transfer or exchange of Warrant
Certificates; PROVIDED, HOWEVER, the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Warrant
Certificates.
Prior to due presentment of this Warrant Certificate for registration of
transfer, the Company, the Warrant Agent and any agent of the Company or the
Warrant Agent may treat the Person in whose name this Warrant Certificate is
registered as the owner hereof for all purposes, and neither the Company, the
Warrant Agent nor any such agent shall be affected by notice to the contrary.
The Warrant Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of Warrant Certificates
under the Warrant Agreement at any time by the Company and the Warrant Agent
with the consent of the Holders of Warrant Certificates evidencing a majority of
the then outstanding Warrants.
Prior to the exercise of the Warrants, except as may be specifically
provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate,
as such, shall be entitled to any of the rights of a holder of Common Stock of
the Company, including, without limitation, the right to vote at, or to receive
any notice of, any meetings of stockholders of the Company; (ii) the consent of
any such Holder shall not be required with respect to any action or proceeding
of the Company (iii) except with respect to any Received Dividend or as provided
with respect to the dissolution, liquidation or winding up of the Company, no
such Holder, by reason of the ownership or possession of a Warrant or the
Warrant Certificate representing the same, shall have any right to receive any
cash dividends, stock dividends, allotments or rights or other distributions
(except as specifically provided in the Warrant Agreement), paid, allotted or
distributed or distributable to the stockholders of the Company prior to or for
which the relevant record date preceded the date of the exercise of such
Warrant; and (iv) no such Holder shall have any right not expressly conferred by
the Warrant or Warrant Certificate held by such Holder.
This Warrant Certificate, each Warrant evidenced thereby and the Warrant
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
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All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
FORM OF EXERCISE
In accordance with and subject to the terms and conditions hereof and of
the Warrant Agreement, the undersigned registered Holder of this Warrant
Certificate hereby irrevocably elects to exercise _______________ Warrants
evidenced by this Warrant Certificate and represents that such Holder has
tendered the Warrant Price for each of the Warrants evidenced hereby being
exercised in the aggregate amount of $_________ in the indicated combination of:
cash ($___________);
certified bank check payable to the order of the Company ($___________);
official bank check in New York Clearing House funds payable to the
order of the Company ($___________); or
wire transfer in immediately available funds to the account designated
by the Company for such purpose ($___________).
The undersigned requests that the shares of Underlying Common Stock
issuable upon exercise be in fully registered form in such denominations and
registered in such names and delivered, together with any other property
receivable upon exercise, in such manner as is specified in the instructions set
forth below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
Dated:____________________________ Name: _________________________________
(Please Print)
__________________________________
(Insert Social
Security or Other Address: __________________________
Identifying Number
of Holder) __________________________
__________________________
Signature
(Signature must conform in all respects to
name of Holder as specified on the face of
this Warrant Certificate and must bear a
signature guarantee by a bank, trust company
or member firm of a national securities
exchange.)
Signature Guaranteed:
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Instructions (i) as to denominations and names of Underlying Common Stock
issuable upon exercise and as to delivery of such securities and any other
property issuable upon exercise and (ii) if applicable, as to Warrant
Certificates evidencing unexercised Warrants:
ASSIGNMENT
(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant
Certificate)
FOR VALUE RECEIVED _______________________________ hereby sells, assigns
and transfers unto
Please insert social security or
other identifying number
(Please print name and address including zip code)
the Warrants represented by the within Warrant. Certificate and does hereby
irrevocably constitute and appoint __________________ Attorney, to transfer said
Warrant Certificate on the books of the within-named Company with full power of
substitution in the premises.
Dated:
Signature
(Signature must conform in all
respects to name of Holder as
specified on the face of this
Warrant Certificate and must bear
a signature guarantee by a bank,
trust company or member firm of a
national securities exchange.)
Signature Guaranteed:
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