Exhibit 10.4
NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAS BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, NOR THE
SECURITIES LAWS OF ANY STATE. NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
AT ANY TIME, EXCEPT UPON (1) SUCH REGISTRATION, OR (2) DELIVERY TO THE ISSUER OF
THIS WARRANT OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER, OR (3) THE SUBMISSION TO THE
ISSUER OF THIS WARRANT OF OTHER EVIDENCE, REASONABLY ACCEPTABLE TO THE ISSUER,
TO THE EFFECT THAT ANY SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER WILL NOT BE
IN VIOLATION OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR OTHER
APPLICABLE SECURITIES LAWS OF ANY STATE, OR ANY RULES OR REGULATIONS PROMULGATED
THEREUNDER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN A STOCKHOLDERS AGREEMENT, DATED AS OF JULY 19, 2002. A
COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.
CASTLE DENTAL CENTERS, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.:__________________ Number of Shares: ____
Date of Issuance: July 19, 2002
Castle Dental Centers, Inc., a Delaware corporation (the "Company"), hereby
certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, ____________________, the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 11:59 P.M. New York Time on the
Expiration Date (as defined herein) ________________ (_______) fully paid
nonassessable shares of the Company's common stock (the "Common Stock"), $.001
par value per share (the "Warrant Shares") at the purchase price per share
provided in Section 1(b) below.
Section 1.
(a) Purchase Agreement. This Warrant is one of the warrants (the
"Share Warrants") issued pursuant to Section 2.01(b) of that certain Senior
Subordinated Note and
Warrant Purchase Agreement dated as of July 19, 2002, among the Company and the
Persons (as defined below) referred to therein (as such agreement may be amended
from time to time as provided in such agreement, the "Purchase Agreement").
(b) Definitions. The following words and terms as used in this
Warrant shall have the following meanings:
(i) "Affiliate" means, with respect to any Person, (i) any
Person directly or indirectly controlled by, controlling or under common
control with such first Person, (ii) any director or officer of such first
Person or of any Person referred to in clause (i) above and (iii) if any
Person in clause (i) above is an individual, any member of the immediate
family (including parents, spouse and children) of such individual or any
trust whose principal beneficiary is such individual or one (1) or more
members of such immediate family and any Person who is controlled by any
such member or trust. For purposes of this definition, any Person which
owns directly or indirectly ten percent (10%) or more of the securities
having ordinary voting power for the election of directors or other
governing body of a corporation or ten percent (10%) or more of the
partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed to "control"
(including, with its correlative meanings, "controlled by" and "under
common control with") such corporation or other Person.
(ii) "Business Day" means any day other than Saturday, Sunday
or other day on which commercial banks in the City of New York are
authorized or required by law to remain closed.
(iii) "Capital Stock" or "capital stock" means (i) with respect
to any Person that is a corporation, any and all shares, interests,
participations, rights in, or other equivalents (however designated and
whether voting and/or non-voting) of corporate stock, and (ii) with respect
to any other Person, any and all partnership, limited partnership, limited
liability company or other equity interest of such Person, whether
outstanding on the date of the Warrant or issued after the date of the
Warrant, and any and all rights or warrants exercisable or exchangeable for
or convertible into such capital stock.
(iv) "Closing Bid Price" means, for any security as of any
date, the last closing bid price for such security on the Principal Market
as reported by Bloomberg Financial Markets ("Bloomberg"), or, if the
Principal Market begins to operate on an extended hours basis and does not
designate the closing bid price, then the last bid price of such security
at 4:00 p.m. New York Time (or such other time as the Principal Market
publicly announces is the official close of trading) as reported by
Bloomberg, or, if the foregoing do not apply, the last closing bid price of
such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing bid
price is reported for such security by Bloomberg, the last closing trade
price for such security as reported by Bloomberg, or, if no last closing
trade price is reported for such security by Bloomberg, the average of the
bid prices of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price
cannot be calculated for such security on such date
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on any of the foregoing bases, the Closing Bid Price of such security on
such date shall be the fair market value (the "Fair Market Value") as
mutually determined by the Company and the holders of the Share Warrants
representing a majority of the shares of Common Stock issuable upon
exercise of the Share Warrants then outstanding. If the Company and the
holders of the majority of the shares of Common Stock issuable upon
exercise of the Share Warrants then outstanding are unable to agree upon
the Fair Market Value, then such dispute shall be resolved pursuant to
Section 2(a) below. All such determinations to be appropriately adjusted
for any stock dividend, stock split or other similar transaction during
such period.
(v) "Convertible Securities" means any stock or securities
(other than Options) directly or indirectly convertible into or
exchangeable or exercisable for Common Stock.
(vi) "Expiration Date" means July 18, 2012 or, if such date
does not fall on a Business Day or on a day on which trading takes place on
the Principal Market, then the next date Business Day.
(vii) "Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.
(viii) "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.
(ix) "Principal Market" means the principal securities
exchange or trading market for the Common Stock.
(x) "Securities Act" means the Securities Act of 1933, as
amended.
(xi) "Stockholders Agreement" means that certain Stockholders
Agreement, dated as of July 19, 2002, among the Company and each of the
stockholders a party thereto.
(xii) "Warrant" means this Warrant and all warrants issued upon
partial exercise, assignment, transfer, sale, exchange or replacement
thereof.
(xiii) "Warrant Date" has the meaning ascribed to it in Section
13.
(xiv) "Warrant Exercise Price" shall be equal to $.001, subject
to adjustment as hereinafter provided.
Section 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, this Warrant may
be exercised by the holder hereof then registered on the books of the Company,
in whole or in part, at any time on any Business Day on or after the opening of
business on the date hereof and prior to 11:59 P.M. New York Time on the
Expiration Date by (i) delivery of a written notice, in the
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form of the subscription form attached as Exhibit A hereto (the "Exercise
Notice"), of such holder's election to exercise this Warrant, which notice shall
specify the number of Warrant Shares to be purchased, (ii) (A) payment to the
Company of an amount equal to the Warrant Exercise Price multiplied by the
number of Warrant Shares as to which this Warrant is being exercised (the
"Aggregate Exercise Price") or (B) by notifying the Company that this Warrant is
being exercised pursuant to a Cashless Exercise (as defined in Section 2(e), and
(iii) if this Warrant is being exercised with respect to all of the Warrant
Shares for which it can then be exercised, the surrender to a common carrier for
overnight delivery to the Company as soon as practicable following such date,
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction). In the event of any exercise of the
rights represented by this Warrant in compliance with this Section 2(a), the
Company shall on the second (2nd) Business Day (the "Warrant Share Delivery
Date") following the date of its receipt of the Exercise Notice, the Aggregate
Exercise Price (or notice of Cashless Exercise) and this Warrant (or an
indemnification undertaking with respect to this Warrant in the case of its
loss, theft or destruction) (the "Exercise Delivery Documents") (A), provided
that the transfer agent is participating in The Depository Trust Company ("DTC")
Fast Automated Securities Transfer Program and provided that the holder is
eligible to receive shares through DTC, upon the request of the holder of this
Warrant, credit the number of shares of Common Stock to which the holder is
entitled to the holder's balance account with DTC through its Deposit Withdrawal
Agent Commission system or (B) issue and deliver to the address specified in the
Exercise Notice, a certificate, registered in the name of the holder, for the
number of shares of Common Stock to which the holder is entitled. Upon delivery
of the Exercise Notice and Aggregate Exercise Price referred to in clause
(ii)(A) above or notification to the Company of a Cashless Exercise referred to
in Section 2(e), the holder of this Warrant shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date of delivery
of this Warrant as required by clause (iii) above or the certificates evidencing
such Warrant Shares. In the case of a dispute as to the determination of the
arithmetic calculation of the Warrant Exercise Price and the arithmetic
calculation of the number of Warrant Shares, the Company shall instruct the
Transfer Agent to issue to the holder the number of shares of Common Stock that
is not disputed and shall transmit an explanation of the disputed arithmetic
calculations to the holder via facsimile within one (1) Business Day of receipt
of such holder's Exercise Notice or other date of determination. If such holder
and the Company are unable to agree upon the determination of the arithmetic
calculation of the Warrant Exercise Price and the arithmetic calculation of the
number of Warrant Shares within two (2) Business Days of such disputed
arithmetic calculation being transmitted to the holder, then the Company shall
within one (1) Business Day submit via facsimile the disputed arithmetic
calculations to the Company's independent, outside accountant. Furthermore, in
the event the holders of a majority of the Share Warrants then outstanding, on
the one hand, and the Company, on the other hand, are unable to agree on the
Fair Market Value in accordance with the definition of Closing Bid Price, then
the Company shall submit as soon as reasonably practicable after it becomes
apparent that the parties do not agree as to the Fair Market Value, the disputed
determination of the Fair Market Value to an independent, reputable investment
bank selected by the Company and approved by the holders of a majority of the
Share Warrants then outstanding. The Company shall cause the investment bank or
the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the holders of the Share Warrants of the
results no later than two (2) Business Days from the time it
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receives the disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be, shall be binding
upon all parties. Within one (1) Business Day of the accountant's determination
of the calculation of arithmetic calculation of the Warrant Exercise Price and
the arithmetic calculation of the number of Warrant Shares, the Company shall
deliver to the holder the balance of Common Stock that such holder is entitled
to as provided herein (such date also deemed to be a Warrant Share Delivery
Date) and any failure to do so will subject the Company to the provisions of
this Section 2(a).
(b) Notwithstanding anything to the contrary set forth herein,
upon exercise of any portion of this Warrant in accordance with the terms
hereof, the holder shall not be required to physically surrender this Warrant to
the Company unless the full amount of Warrant Shares then represented by the
Warrant have been exercised. The Company shall maintain records showing the
Warrant Shares so exercised and the dates of such exercise or shall use such
other method, reasonably satisfactory to the holder, so as to account for the
number of Warrant Shares that are represented by the Warrant where the exercise
of the Warrant has occurred without the physical surrender of this Warrant.
Notwithstanding the foregoing, if any portion of this Warrant is converted as
aforesaid, thereafter, the holder may not transfer this Warrant unless the
holder first physically surrenders this Warrant to the Company, whereupon the
Company will forthwith issue and deliver to the holder a new Warrant of like
tenor, registered as the holder may request, representing in the aggregate the
remaining Warrant Shares represented by this Warrant. The holder, by acceptance
of this Warrant or such new Warrant, acknowledges and agrees that, by reason of
the provisions of this paragraph, following exercise of any portion of this
Warrant, the number of Warrant Shares represented by this Warrant may be less
than the number of Warrant Shares set forth on the face hereof. If a Warrant is
delivered to the Company by a holder and the number of Warrant Shares
represented by the Warrant submitted for exercise is greater than the number of
Warrant Shares that have been exercised, then the Company shall, as soon as
practicable and in no event later than three (3) Business Days after receipt of
the Warrant (the "Warrant Delivery Date") and at its own expense, issue and
deliver to the holder a new Warrant representing the number of Warrant Shares
not converted.
(c) In the event the Company receives an Exercise Notice from
more than one holder of a Share Warrant and the Company can, after fully
complying with Section 3(c), issue some, but not all, of such Common Stock
issuable upon exercise of such notices, the Company shall issue to each holder
of such Share Warrants a pro rata amount of such holder's Warrant Shares
submitted for exercise based on the amount of the Warrant Shares being exercised
by such holder relative to the aggregate amount of Warrant Shares being
exercised. No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock issued
upon exercise of this Warrant shall be rounded up or down to the nearest whole
number.
(d) If the Company shall fail for any reason or for no reason to
issue and deliver to the holder within three (3) Business Days of receipt of the
Exercise Delivery Documents a certificate for the number of shares of Common
Stock to which the holder is entitled or to credit, at the holder's request, the
holder's balance account with DTC for such number of shares of Common Stock to
which the holder is entitled upon the holder's exercise of this Warrant or to
issue a new Warrant for the number of shares of Common Stock to which such
holder is entitled pursuant to Section 2(b) hereof, then the Company shall, in
addition to any
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other remedies under this Warrant or the Purchase Agreement or otherwise
available to such holder (including any indemnification under the Purchase
Agreement), pay as additional damages in cash to such holder on each day after
the Warrant Share Delivery Date that such exercise is not timely effected and/or
each day after the Warrant Delivery Date that such Warrant is not delivered, as
the case may be, in an amount equal to 0.5% of the sum of (i) the product of (A)
the number of shares of Common Stock not issued to the holder on or prior to the
Warrant Share Delivery Date and (B) the Closing Bid Price of the Common Stock on
the Warrant Share Delivery Date, in the case of the failure to deliver Common
Stock, and (ii) if the Company has failed to deliver a Warrant to the holder on
or prior to the Warrant Delivery Date, the product of (x) the number of shares
of Common Stock issuable upon exercise of the Warrant (without regard to any
limitations on conversions herein or elsewhere, including, but not limited to,
any limitations as a result of the actual number of shares of Common Stock
authorized for issuance by the Company) as of the Warrant Delivery Date, and (y)
the Closing Bid Price of the Common Stock on the Warrant Delivery Date, in the
case of the failure to deliver a Warrant. If for any reason the holder has not
received all of the shares of Common Stock to which it is entitled to prior to
the tenth (10th) Business Day after the expiration of the Warrant Share Delivery
Date, then the holder, upon written notice to the Company, may void its Exercise
Notice with respect to, and retain or have returned or restored as of the date
of the Exercise Notice, as the case may be, any Warrant Shares pursuant to such
holder's Exercise Notice; provided that the voiding of a holder's Exercise
Notice shall not effect the Company's obligations to make any payments which
have accrued prior to the date of such notice pursuant to this Section 2(d).
(e) Notwithstanding anything contained herein to the contrary,
the holder of this Warrant may, at its election exercised in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula (a "Cashless Exercise"):
Net Number = (A X B) - (A X C) / B
For purposes of the foregoing formula:
A= the total number of shares with respect to which
this Warrant is then being exercised.
B= the Closing Bid Price of the Common Stock on the
trading day immediately preceding the date of the
Exercise Notice.
C= the Warrant Exercise Price then in effect for the
applicable Warrant Shares at the time of such
exercise.
Section 3. Covenants as to Common Stock. The Company hereby covenants
and
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agrees as follows:
(a) This Warrant is, and any Warrants issued in substitution for
or replacement of this Warrant will upon issuance be, duly authorized and
validly issued, not subject to any preemptive rights, and free from all taxes,
liens, security interests, charges, and other encumbrances with respect to the
issuance thereof, other than taxes in respect of any transfer occurring
contemporaneously with such issue.
(b) All Warrant Shares which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable, and not subject to any preemptive rights, and free
from all taxes, liens, security interests, charges, and other encumbrances with
respect to the issuance thereof, other than taxes in respect of any transfer
occurring contemporaneously with such issue.
(c) During the period within which the rights represented by
this Warrant may be exercised, (i) the Company will at all times have authorized
and reserved at least 100% of the number of shares of Common Stock needed to
provide for the exercise of the rights then represented by this Warrant (and if
there is ever an insufficient amount of shares of Common Stock to provide for
the exercise of the rights represented by this Warrant (an "Authorized Share
Failure"), the Company shall immediately take all action necessary to cause the
number of Company's authorized shares of Common Stock to be sufficient to
accomplish the holder's right of exercise hereunder) and, (ii) the Company will
ensure that the par value of said shares will at all times be less than or equal
to the applicable Warrant Exercise Price. Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the occurrence of
an Authorized Share Failure, but in no event later than 75 days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the authorization of either an increase in the number of
authorized shares of Common Stock or a reverse stock split with respect to the
Common Stock. In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its best efforts to solicit its
stockholders' approval of such increase in authorized shares of Common Stock or
reverse stock split and to cause its board of directors to recommend to the
stockholders that they approve such proposal. In addition, as soon as
practicable after the date the par value is greater than the Warrant Exercise
Price as a result of an adjustment provided for herein, but in no event later
than 75 days after the effective date of such adjustment, the Company shall hold
a meeting of its stockholders for the authorization of an decrease in the par
value of Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its best efforts
to solicit its stockholders' approval of such decrease and to cause its board of
directors to recommend to the stockholders that they approve such proposal.
(d) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the
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Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Warrant Exercise Price
then in effect (except as otherwise provided in Section 3(c) above, and (ii)
will take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
Section 4. Taxes. The Company shall pay any and all taxes which may
be payable with respect to the issuance and delivery of Warrant Shares upon
exercise of this Warrant.
Section 5. Warrant Holder Not Deemed a Stockholder; Notice of Corporate
Action. Except as otherwise specifically provided herein, no holder, as such, of
this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he, she, or it is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed
as imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders. Furthermore, so long as this Warrant has not been exercised
in full:
(a) Immediately upon any adjustment of the Exercise Price or the
number of shares of Common Stock issuable upon exercise of this Warrant, the
Company will give written notice thereof to the holder of such adjustment and a
certificate of a firm of independent public accountants of recognized national
standing selected by the Board of Directors of the Company (who shall be
appointed at the Company's expense and who may be the independent public
accountants regularly employed by the Company) setting forth the number of
shares of Common Stock and the Exercise Price of such shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.
(b) The Company will give written notice to the holder at least
twenty (20) Business Days prior to the date on which the Company closes its
books or takes a record (i) with respect to any dividend or distribution upon
the Common Stock, (ii) with respect to any pro rata subscription offer to
holders of Common Stock or (iii) for determining rights to vote with respect to
any Organic Change (as defined in Section 9 (b)), dissolution or liquidation,
provided that such information shall have been made known to the public prior to
or in conjunction with such notice being provided to such holder.
(c) The Company will also give written notice to holder at least
twenty (20) days prior to the date on which any Organic Change, dissolution or
liquidation will take place,
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provided that such information shall have been made known to the public prior to
or in conjunction with such notice being provided to such holder.
Section 6. Representations of Holder. The holder of this Warrant, by
the acceptance hereof, represents that it is acquiring this Warrant and the
Warrant Shares for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution of
this Warrant or the Warrant Shares, except pursuant to sales registered or
exempted under the Securities Act; provided, however, that by making the
representations herein, the holder does not agree to hold this Warrant or any of
the Warrant Shares for any minimum or other specific term and reserves the right
to dispose of this Warrant and the Warrant Shares at any time in accordance with
or pursuant to a registration statement or an exemption under the Securities
Act. The holder of this Warrant further represents, by acceptance hereof, that,
as of this date, such holder is an "accredited investor" as such term is defined
in Rule 501(a)(3) of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act (an "Accredited Investor").
Section 7. Ownership and Transfer.
(a) Warrant Register. The Company shall maintain at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee. The Company may treat the person in whose name any Warrant is
registered on the register as the owner and holder thereof for all purposes,
notwithstanding any notice to the contrary, but in all events recognizing any
transfers made in accordance with the terms of this Warrant.
(b) Transferability and Negotiability of Warrant. Title to this
Warrant may be transferred by endorsement (by the holder hereof executing the
Assignment Form attached hereto as Exhibit B) and delivery in the same manner as
negotiable instruments transferable by endorsement and delivery.
(c) Exchange of Warrant Upon a Transfer. This Warrant shall be
transferable by the holder hereof to any of its Affiliates or any other Person
subject only to the restrictions set forth in the legend on the first page of
this Warrant and the restrictions set forth in the Stockholders Agreement. On
surrender of this Warrant for exchange, properly endorsed on the Assignment Form
and subject to the provisions hereof with respect to compliance with the
Securities Act, the Company at its expense shall issue to or on the order of
such holder a new warrant or warrants of like tenor, in the name of such holder
or as such holders (on payment by the holder of any applicable transfer taxes)
may direct, exercisable for the number of shares of Common Stock issuable upon
the exercise hereof.
Section 8. Adjustment of Warrant Exercise Price and Number of Shares.
The Warrant Exercise Price and the number of shares of Common Stock issuable
upon exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment of Warrant Exercise Price upon Subdivision or
Combination
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of Common Stock. If the Company at any time after the date of issuance of this
Warrant subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Warrant Exercise Price in effect immediately prior
to such subdivision will be proportionately reduced and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, the
Warrant Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant will be proportionately decreased. If the Company
at any time after the date of issuance of this Warrant reduces the par value per
share of the Common Stock to an amount less than the Warrant Exercise Price in
effect immediately prior to such reduction, the Warrant Exercise Price shall be
reduced to the par value per share of the Common Stock. Any adjustment under
this Section 8(a) shall become effective at the close of business on the date
the subdivision, combination or reduction becomes effective.
(b) Certain Events. If any event occurs of the type contemplated
by the provisions of this Section 8 but not expressly provided for by such
provisions, then the Company's Board of Directors will make an appropriate
adjustment in the Warrant Exercise Price and the number of shares of Common
Stock obtainable upon exercise of this Warrant so as to protect the rights of
the holders of the Share Warrants.
(c) Distribution of Securities. If securities of the Company or
securities of any subsidiary of the Company are distributed pro rata to holders
of any or all of the Company's securities, such number of securities will be
distributed to the holder of this Warrant or its assignee upon exercise of its
rights hereunder as such Warrant holder or assignee would have been entitled to
if this Warrant had been exercised prior to such distribution, giving effect to
all adjustments called for by this Section 8. The provisions with respect to
adjustment of the Common Stock provided in this Section 8 will also apply to the
securities of the Company and securities of any subsidiary to which the Warrant
holder or its assignee is entitled under this Section 8 (c).
Section 9. Purchase Rights; Reorganization, Reclassification,
Consolidation, Merger or Sale. (a) In addition to any adjustments pursuant to
Section 8 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then the holder of this Warrant will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which such holder could have acquired if such holder had held the number of
shares of Common Stock acquirable upon complete exercise of this Warrant
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
(b) Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another Person, conveyance to
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another Person of the property of the Company as an entirety or substantially as
an entirety or other transaction which is effected in such a way that holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) Capital Stock, securities or assets with respect to or in exchange
for Common Stock is referred to herein as an "Organic Change." Prior to the
consummation of, and as a condition to, any (i) sale or other conveyance of all
or substantially all of the Company's assets to an acquiring Person or (ii)
other Organic Change, the Company, or such other successor or purchasing Person,
as the case may be, shall make lawful and adequate provision whereby the holder
of this Warrant shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
Organic Change by a holder of the number of securities issuable upon exercise of
such Warrant immediately prior to such Organic Change. The above provisions of
this Section 9(b) shall similarly apply to successive Organic Changes.
Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on
receipt of an indemnification undertaking (or in the case of a mutilated
Warrant, the Warrant), issue a new Warrant of like denomination and tenor as
this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice. Whenever notice is required to be given under this
Warrant, unless otherwise provided herein, such notice shall be given in
accordance with the notice provisions in the Purchase Agreement. Any party may
by notice given in accordance with this Section 11 designate an address or
Person for receipt of notices hereunder.
Section 12. Registration Rights. If the holder hereof is a party to, or
an assignee of rights under, that certain Registration Rights Agreement, dated
as of July 19, 2002, by and among the Company and the Persons who are
signatories thereto, such holder shall be entitled to include with such holder's
registrable securities any shares of Common Stock or other securities received
upon exercise of this Warrant, all on the terms and conditions as set forth in
such Registration Rights Agreement.
Section 13. Amendments. This Warrant and any term hereof may be changed,
waived, discharged, or terminated only by an instrument in writing signed by the
Company and the holders of the Share Warrants representing a majority of the
shares of Common Stock issuable upon exercise of the Share Warrants then
outstanding; provided, however, that no amendment, modification or waiver can be
effected if, by its terms, such amendment, modification or waiver adversely
affects one (1) holder without having the same adverse effect on all other
holders without the prior written consent of the adversely affected holder.
Section 14. Date. The date of this Warrant is July 19, 2002 (the
"Warrant Date"). This Warrant, in all events, shall be wholly void and of no
effect after the close of business on the Expiration Date, except that
notwithstanding any other provisions hereof, the provisions of Section 7 shall
continue in full force and effect after such date as to any Warrant Shares or
other securities issued upon the exercise of this Warrant.
Section 15. Descriptive Headings; Governing Law. The descriptive
headings of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
laws of the State of Delaware shall govern all
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issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Illinois.
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the
19th day of July, 2002.
CASTLE DENTAL CENTERS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT A TO WARRANT
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
CASTLE DENTAL CENTERS, INC.
The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of Castle
Dental Centers, Inc., a ___________ corporation (the "Company"), evidenced by
the attached Warrant (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Warrant Exercise Price. The Holder intends that payment of the
Warrant Exercise Price shall be made as:
____________ "Cash Exercise" with respect to _________________
Warrant Shares; and/or
____________ "Cashless Exercise" with respect to _________________
Warrant Shares (to the extent permitted by the terms of
the Warrant).
2. Payment of Warrant Exercise Price. In the event that the holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the
sum of $___________________ to the Company in accordance with the terms of the
Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
ACKNOWLEDGMENT
The Company hereby acknowledges this Subscription Form and hereby directs
[TRANSFER AGENT] to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated ________________, 200_
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
Castle Dental Centers, Inc.
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
EXHIBIT B TO WARRANT
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Preferred Stock
and does hereby irrevocably constitute and appoint _______________________
attorney-in-fact to register such transfer onto the books of Castle Dental
Centers, Inc. maintained for the purpose, with full power of substitution in the
premises.
Date: Print
Name:
--------------------------
Signature:
--------------------------
Witness:
--------------------------
