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EXHIBIT 10.3
THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES REPRESENTED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE
SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
Date: December 2, 1997 WARRANT NO. CWT-1
PACKAGED ICE, INC.
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CULLIGAN WATER TECHNOLOGIES, INC., a
Delaware corporation (the "Investor"), or its registered assigns, is entitled
to purchase from PACKAGED ICE, INC., a Texas corporation (the "Company"), at
any time or from time to time during the period specified in Section 2 hereof,
One Million Eight Hundred Seven Thousand Six Hundred Ninety Two (1,807,692)
fully paid and nonassessable shares of the Company's Common Stock, $.01 par
value (the "Common Stock"), at an exercise price (the "Exercise Price") of
$13.00 per share. The number of shares of Common Stock purchasable hereunder
(the "Warrant Shares") and the Exercise Price are subject to adjustment as
provided in Section 4 hereof. The term "Warrant" means this Warrant of the
Company issued pursuant to the Securities Purchase Agreement (as hereinafter
defined). The term "Warrant Period" as used herein means the period commencing
on the date this Warrant is issued and delivered pursuant to the terms of that
certain Securities Purchase Agreement, dated as of December , 1997, by and
between the Company and the Investor (the "Securities Purchase Agreement") and
ending on the Expiration Date (as defined below).
This Warrant is subject to the following terms, provisions, and conditions:
1. MANNER OF EXERCISE, ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES. Subject
to the provisions hereof, this Warrant may be exercised by the holder, in whole
at any time, or in part from time to time, prior to
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the Expiration Date, by the surrender of this Warrant, together with a
completed exercise agreement in the form attached hereto (the "Exercise
Agreement"), to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of
the Company as it may designate by notice to the holder hereof), and upon (i)
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company, of the Exercise Price for the Warrant
Shares specified in the Exercise Agreement or (ii) delivery to the Company of a
written notice of an election to effect a Cashless Exercise (as defined in
Section 11(c) below) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been delivered, and
payment shall have been made for such shares as set forth above. Certificates
for the Warrant Shares so purchased, representing the aggregate number of
shares specified in the Exercise Agreement, shall be delivered to the holder
hereof within a reasonable time, not exceeding five (5) business days, after
this Warrant shall have been so exercised. The certificates so delivered shall
be in such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised. Notwithstanding the foregoing, if any such exercise
is in connection with a registered public offering of Warrant Shares to be
received upon exercise, then the Exercise Agreement to be delivered in
connection with such exercise need not contain the agreement with respect to
the restrictive legend contained in the form of Exercise Agreement attached
hereto.
2. PERIOD OF EXERCISE. This Warrant may be exercised at any time on or after
the date hereof (the "Effective Date") and ending on the Expiration Date. As
used herein, "Expiration Date" means 5:00 p.m., New York time, on the earlier
to occur of (a) April 15, 2005 and (b) the first anniversary of the last day of
the first period of twenty (20) consecutive Trading Days following a Qualifying
IPO during which there is a Closing Price on each such Trading Day and the
Closing Price on each such Trading Day equals or exceeds the Threshold Price.
"Qualifying IPO" means an underwritten public offering of Common Stock at an
aggregate price to the public of at least $40,000,000 and after which the
Common Stock is listed on a national securities exchange or automated quotation
system.
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"Closing Price" means, with respect to any Trading Day, the last reported sale
price per share on such day of the Common Stock on the principal national
securities exchange or automated quotation system on which the Common Stock is
then listed. "Threshold Price" means, initially, $26.00, subject to adjustment
as provided in Section 4 hereof. "Trading Day" means any day on which the
principal national securities exchange or automated quotation system on which
the Common Stock is listed is open for business.
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
nonassessable and free from all taxes, liens, claims and encumbrances.
(b) RESERVATION OF SHARES. During the Warrant Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of the
shares of Common Stock issuable upon exercise of this Warrant upon each
national securities exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed or become listed (subject to official
notice of issuance upon exercise of this Warrant) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all
shares of Common Stock from time to time issuable upon the exercise of this
Warrant; and the Company shall so list on each national securities exchange or
automated quotation system, as the case may be, and shall maintain such listing
of, any other shares of capital stock of the Company issuable upon the exercise
of this Warrant if and so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its charter 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
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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 Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect 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.
(e) SUCCESSORS AND ASSIGNS. This Warrant will be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES ISSUABLE. The number
and kind of Warrant Shares purchasable upon the exercise of this Warrant, the
Exercise Price and the Threshold Price shall be subject to adjustment, from
time to time as follows:
(a) STOCK SPLITS, COMBINATIONS, ETC. In case the Company shall
hereafter (i) pay a dividend or make a distribution on its Common Stock in
shares of its capital stock (whether shares of Common Stock or of capital stock
of any other class), (ii) subdivide its outstanding shares of Common Stock or
(iii) combine its outstanding shares of Common Stock into a smaller number of
shares, then (1) the number of Warrant Shares purchasable upon exercise of this
Warrant immediately prior thereto shall be adjusted so that the holder of this
Warrant thereafter exercised shall be entitled to receive the number of Warrant
Shares (and/or other capital stock referred to in clause (i) above) that such
holder would have owned immediately following such action had this Warrant been
exercised immediately prior thereto, (2) the Exercise Price shall be adjusted
to the product obtained by multiplying the Exercise Price in effect immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares immediately prior to the adjustment required pursuant
to clause (1) above and the denominator of which shall be the number of Warrant
Shares immediately thereafter and (3) the Threshold Price shall be adjusted to
the product obtained by multiplying the Threshold Price in effect immediately
prior to such adjustment by the fraction referred to in clause (2) above. An
adjustment made pursuant to this paragraph shall become effective immediately
after the record date in the case of a dividend and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification. If as a result of an adjustment made pursuant to this
paragraph, the holder of this Warrant
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thereafter exercised shall become entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors of the Company
shall in good faith determine the allocation of the adjusted Exercise Price
between or among shares of such classes of capital stock.
(b) RECLASSIFICATION, COMBINATIONS, MERGERS, ETC. In case of any
reclassification or change of outstanding shares of Common Stock (other than as
set forth in Section 4(a) above and other than a change in par value, or from
par value to no par value, or from no par value to par value), or in case of
any consolidation or merger of the Company with or into another corporation
(other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of the then outstanding
shares of Common Stock or other capital stock of the Company (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination)) or in case of any
sale or conveyance to another corporation of all or substantially all of the
assets of the Company, then, as a condition of such reclassification, change,
consolidation, merger, sale or conveyance, the Company or such a successor or
purchasing corporation, as the case may be, shall forthwith make lawful and
adequate provision whereby the holder of such Warrant then outstanding shall
have the right thereafter to receive on exercise of such Warrant the kind and
amount of shares of stock and other securities and property receivable upon
such reclassification, change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock issuable upon exercise of such
Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance and enter into a supplemental warrant agreement so
providing. Such provisions shall include provision for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 4. If the issuer of securities deliverable upon exercise of
Warrants under the supplemental warrant agreement is an affiliate of the
formed, surviving or transferee corporation, that issuer shall join in the
supplemental warrant agreement. The above provisions of this paragraph (b)
shall similarly apply to successive reclassifications and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances.
In case of any such reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Warrant to be performed and observed
by the Company and all the obligations and liabilities hereunder, subject to
such
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modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of
shares of the Common Stock for which this Warrant is exercisable that shall be
as nearly equivalent as practicable to the adjustments provided for in this
Section 4. The foregoing provisions of this Section 4(b) shall similarly apply
to successive reorganizations, reclassifications, mergers, consolidations or
dispositions of assets.
(c) ISSUANCE OF COMMON STOCK, OPTIONS OR CONVERTIBLE SECURITIES. For
the purposes of this Warrant, "Additional Shares Of Common Stock" shall mean
all shares of Common Stock issued or deemed to be issued by the Company after
the Effective Date, other than Excluded Shares (as defined below).
In the event the Company shall, at any time or from time to time after the
Effective Date, issue, sell, distribute or otherwise grant in any manner
(including by assumption) (i) shares of Common Stock or (ii) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants or options being herein called
"Options" and any such convertible or exchangeable stock or securities being
herein called "Convertible Securities") or (iii) any Convertible Securities,
whether or not such Options or the rights to convert or exchange such
Convertible Securities are immediately exercisable, then the maximum number of
shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise and/or conversion of such Options or
Convertible Securities, shall be deemed to be Additional Shares of Common
Stock.
For purposes of this Warrant Agreement, "Issuance Date" shall mean (i) with
respect to Additional Shares of Common Stock deemed to have been issued in
connection with the issuance of an Option or Convertible Security, the date
such Option or Convertible Security is issued and (ii) in all other cases, the
actual date Additional Shares of Common Stock are issued.
For the purposes of this Warrant Agreement, "Excluded Shares" shall mean:
(i) shares for which the consideration per share as determined pursuant to
paragraph (d) below would be equal to or more than the Current Market Value
determined on the day prior to the Issuance Date; (ii) shares of Common Stock
issuable upon the exercise of Options or conversion of Convertible Securities
existing as of the Effective Date; and (iii) shares of Common Stock
(appropriately
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adjusted to reflect stock splits, stock dividends, reorganizations,
consolidations and similar changes) issued pursuant to any stock options
granted or obtained after the Effective Date pursuant to the Company's Stock
Option Plan adopted July 26, 1994, as may be amended from time to time by the
Company's Board of Directors. The issuance of Excluded Shares shall not be an
issuance of Additional Shares of Common Stock, and shall not give rise to a
right to purchase the securities pursuant to paragraph (d) below.
In any such case in which the Additional Shares of Common Stock are deemed to
be issued, no right to purchase securities under Section 4(d) below will accrue
upon the subsequent issue of shares of Common Stock upon the exercise and/or
conversion or exchange of such Option or Convertible Security unless such
Option or Convertible Security shall have been amended or modified prior to
exercise or conversion or exchange so as to increase the number of Additional
Shares of Common Stock deemed to have been issued thereunder or decrease the
exercise and/or conversion or exchange price payable thereunder to an amount
less than Current Market Value as of the Issuance Date thereof.
(d) If the price per share at which Common Stock is issued or Common
Stock is issuable upon the exercise of any Options or upon the conversion or
exchange of any Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as
consideration for the issuance, sale, distribution or granting of such Common
Stock or Options or any such Convertible Security, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
issuance of Common Stock or the exercise of all such Options or upon conversion
or exchange of all such Convertible Securities, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issued, sold, distributed or granted or to be issued or issuable upon the
exercise of all such Options or upon the conversion or exchange of all such
Convertible Securities or upon the conversion or exchange of all Convertible
Securities issuable upon the exercise of all Options) shall be less than the
Current Market Value per share of Common Stock (determined pursuant to Section
4(f)) on the record date for the issuance, sale, distribution or granting of
such Common Stock, Convertible Securities or Options then, the Company shall
offer to sell to each holder of Warrants, at the same price and on the same
terms offered to all other prospective buyers (provided that the holders of
Warrants shall not be required to buy any other securities in order to buy such
Common Stock, Options or Convertible Securities), a portion of
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such Common Stock, Options or Convertible Securities that is equal to such
holder's portion of the Common Stock then outstanding if immediately prior
thereto all the Warrants had been exercised. Each such holder may elect to buy
all or any portion of the Common Stock or Convertible Securities offered or may
decline to purchase any such securities. The purchase price of such Common
Stock or Convertible Securities may be payable, at the option of such holder,
(w) in cash, (x) by delivering to the Company a number of shares of 10%
Exchangeable Preferred Stock of the Company with an aggregate liquidation
preference (plus accumulated and unpaid dividends thereon) equal to the
purchase price, (y) by surrendering the right to exercise this Warrant with
respect to such number of shares of Common Stock in respect of which such right
has an "in-the-money" value equal to the purchase price (for purposes of this
clause (y) the "in-the-money" value of the right to exercise this Warrant shall
be deemed to equal the number of shares of Common Stock in respect of which
such right is exercisable multiplied by the difference between the then Current
Market Value per share of the Common Stock and the per share Exercise Price) or
(z) any combination of the foregoing.
(e) If the Company shall declare or pay a dividend or make a
distribution to all or substantially all holders of outstanding Common Stock,
in either case, of evidences of its indebtedness, cash or other property or
securities (excluding dividends and distributions referred to in paragraph (a)
above) or shall issue to all or substantially all holders of outstanding Common
Stock rights or warrants to subscribe for or purchase any of its securities
(other than Options or Convertible Securities in respect of which the holder of
this Warrant becomes entitled to purchase Common Stock or Convertible
Securities pursuant to paragraph (d) above), then in each such case, the
Exercise Price and the Threshold Price shall be adjusted so that the same shall
equal the price determined by multiplying each of the Exercise Price and
Threshold Price, respectively, in effect immediately prior to the close of
business on the date (the "Record Date") fixed for the determination of holders
of Common Stock entitled to receive such dividend or distribution by a
fraction, of which the numerator shall be the Current Market Value of the
Common Stock as of the business day next preceding the Record Date less the
fair market value (as determined by the Board of Directors of the Company), as
of the Record Date, of the portion of the evidences of indebtedness, cash or
other property or securities so distributed, or of such rights or warrants, in
each case, applicable to one share of Common Stock, and of which the
denominator shall be such Current Market Value, such adjustment to become
effective immediately prior to the opening of business on the day following the
Record Date. In addition, the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted to
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the product obtained by multiplying the number of Warrant Shares by a fraction,
of which the numerator shall be the Exercise Price in effect immediately prior
to the adjustment referred to in the preceding sentence, and of which the
denominator shall be the Exercise Price immediately following the adjustment
referred to in the preceding sentence. Notwithstanding the foregoing, in the
event that, with respect to any dividend or distribution to which this
paragraph (e) would otherwise apply, the numerator in the fraction referred to
in the first sentence of this paragraph (e) is zero (or is a negative number),
then the Company may, at its option, elect to have the adjustment provided by
this paragraph (e) not be made and in lieu of such adjustment, the Company
shall deliver to the Investor on the date fixed for payment to stockholders of
such dividend or distribution, the evidences of indebtedness, assets, other
property or securities, rights, or warrants so distributed in respect of the
number of Warrant Shares (determined as of the close of business on the Record
Date).
(f) CURRENT MARKET VALUE. As used herein, the term "Current Market
Value" per share of Common Stock or any other security at any date means, on
any date of determination (a) the average of the daily closing sale prices for
each of the fifteen (15) business days immediately preceding such date (or such
shorter number of days during which such security has been listed or traded),
if the security has been listed on the New York Stock Exchange, the American
Stock Exchange, or other national securities exchanges or the NASDAQ National
Market for at least ten (10) business days prior to such date, (b) if such
security is not so listed or traded, the average of the daily closing bid
prices for each of the fifteen (15) business days immediately preceding such
date (or such shorter number of days during which such security had been
quoted), if the security has been quoted on a national over-the-counter market
for at least ten (10) business days, and (e) otherwise, the fair value of the
security most recently determined as of a date within the six months preceding
such day by the Board of Directors of the Company.
(g) CONSIDERATION RECEIVED. If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for a consideration
other than cash, the amount of the consideration other than cash received by
the Company in respect thereof shall be deemed to be the then fair market value
of such consideration (as determined by the Board of Directors of the Company).
If any Options shall be issued in connection with the issuance and sale of
other securities of the Company, together comprising one integral transaction
in which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued without
consideration; provided,
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however, that if such Options have an exercise price equal to or greater than
the Current Market Value of the Common Stock on the date of issuance of such
Options, then such Options shall be deemed to have been issued for
consideration equal to such exercise price.
(h) CHANGES IN OPTIONS AND CONVERTIBLE SECURITIES. If (1) the issue,
sale or ▇▇▇▇▇ ▇▇▇▇▇ of any Common Stock referred to in Section 4(d), (2) the
exercise price provided for in any Options referred to in Section 4(d) or 4(g)
above, (3) the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in Section 4(d) above, or
(4) the rate at which any Convertible Securities referred to in Section 4(d)
above are convertible into or exchangeable for Common Stock, shall change at
any time to a price that is less than the Current Market Value thereof as of
the Issuance Date thereof, then the Company shall make the offer to holders of
the Warrants as required by Section 4(d) above promptly following such change.
(i) OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than any action described in this Section 4, then the number of Warrant
Shares for which this Warrant is exercisable, shall be adjusted in such manner
as may be equitable in the circumstances. If the Company shall at any time and
from time to time issue or sell (i) any shares of any class of common stock
other than Common Stock, (ii) any evidences of its indebtedness, shares of
stock or other securities which are convertible into or exchangeable for such
shares of common stock, with or without the payment of additional consideration
in cash or property or (iii) any warrants or other rights to subscribe for or
purchase any such shares of common stock or any such evidences, shares of stock
or other securities, then in each such case (other than an issuance to which
Section 4(e) applies) such issuance shall be deemed to be of, or in respect of,
Common Stock for purposes of this Section 4; provided, however, that, without
limiting the generality of the foregoing, if the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them to receive a
dividend payable in, or other distribution of, common stock other than Common
Stock, including shares of non-voting common stock, then the number of Warrant
Shares for which this Warrant is exercisable immediately after the occurrence
of any such event shall be adjusted to equal the aggregate number of shares of
such common stock and of Common Stock that a record holder of the same number
of Warrant Shares for which this Warrant is exercisable immediately prior to
the occurrence of such event would own or be entitled to receive after the
happening of such event.
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(j) FRACTIONAL INTEREST. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section, be issuable on the exercise of this Warrant (or specified portion
thereof), the Company shall direct the transfer agent for the Common Stock to
pay an amount in cash calculated by the Company to equal the then Current
Market Value per share (determined pursuant to Section 4(e)) multiplied by such
fraction computed to the nearest whole cent. The holder of this Warrant hereby
expressly waives any and all rights to receive any fraction of a share of
Common Stock or a stock certificate representing a fraction of a share of
Common Stock.
(k) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or
purchase rights, then thereafter no adjustment shall be required by reason of
the taking of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
(l) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of
Directors of the Company shall be required to make a determination of the fair
value of any item under this Section 4, such determination may be challenged in
good faith by the holder hereof, and any dispute shall be resolved by an
independent investment banking firm of national standing retained by the
Company and acceptable to the holder of this Warrant. The fee of such
investment banking firm shall be paid by the Company, unless such fair market
value as determined by the investment banking firm differs by less than 5% from
the fair market value determined by the Board of Directors of the Company, in
which case the challenging holders shall be jointly and severally liable for
such fee.
(m) TREASURY STOCK. The sale or other disposition of any issued
shares of Common Stock owned or held by or for the account of the Company shall
be deemed an issuance thereof and a repurchase thereof and designation of such
shares as treasury stock shall be deemed to be a redemption thereof for the
purposes of this Agreement.
(n) NOTICES TO HOLDERS. Upon the occurrence of any event which
requires any adjustment of the Warrant Shares or the Exercise Price, then, and
in each such case, the Company shall give written notice thereof to the
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holder of this Warrant, which written notice shall state the Exercise Price and
the Threshold Price resulting from such adjustment and the increase or decrease
in the number of Warrant Shares purchasable at such price upon exercise,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Such calculation shall be certified by the
chief financial officer of the Company.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the holder of this
Warrant or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.
6. NO LIABILITIES AS A SHAREHOLDER. No provision of this Warrant, in the
absence of affirmative action by the holder hereof to purchase Warrant Shares,
and no mere enumeration herein of the rights or privileges of the holder
hereof, shall give rise to any liability of such holder for the Exercise Price
or as a shareholder of the Company, whether such liability is asserted by the
Company or a creditor of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted to the
holder hereof are transferable, in whole or in part, upon surrender of this
Warrant together with a properly executed assignment in the form attached
hereto, at the office or agency of the Company referred to in Section 7(e)
below, provided, however, that any transfer or assignment shall be subject to
the conditions set forth in Section 7(f) hereof. Until due presentment for
registration of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all purposes, and
the Company shall not be affected by any notice to the contrary.
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 7(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right
to purchase the number of shares of Common Stock that may be purchased
hereunder, each of such new Warrants to represent the right to
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purchase such number of shares as shall be designated by the holder hereof at
the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided
in this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all taxes (other than securities transfer taxes) and all
other expenses (other then legal expenses, if any, incurred by the holder or
transferees) and charges payable in connection with the preparation, execution,
and delivery of Warrants pursuant to this Section 7.
(e) 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 and each prior owner of this Warrant.
(f) EXERCISE OR TRANSFER WITHOUT REGISTRATION. If, at the time of the
surrender of this Warrant in connection with any transfer or exchange of this
Warrant, this Warrant shall not be registered under the Securities Act of 1933,
as amended (the "Securities Act"), and under applicable state securities or
blue sky laws, the Company may require, as a condition of allowing such
transfer or exchange, (i) that the transferee of this Warrant, as the case may
be, furnish to the Company a written opinion of counsel (which opinion and
counsel shall be reasonably acceptable to the Company) to the effect that such
transfer or exchange may be made without registration under the Securities Act
and under applicable state securities or blue sky laws; provided that this
clause (i) shall not apply to any transfer to an affiliate of a holder, (ii)
that the transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company, and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act; provided that no such
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opinion, letter, or status as an "accredited investor" shall be required in
connection with a transfer pursuant to Rule 144 under the Securities Act.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and certain
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, dated as of December 2, 1997, by and among the Company, the Investor
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
9. NOTICES. Any notices required or permitted to be given under the terms of
this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed facsimile, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company: Packaged Ice, Inc.
Attention: Chief Executive Officer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With copy to: Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and if to the holder, at such address as such holder shall have provided in
writing to the Company, or at such other address as each such party furnishes
by written notice given in accordance with this Section 9.
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW. THE UNITED STATES
FEDERAL COURTS LOCATED IN CHICAGO, ILLINOIS SHALL HAVE EXCLUSIVE JURISDICTION
WITH RESPECT TO ANY DISPUTE
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ARISING UNDER THIS WARRANT.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the holder
hereof.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections of this Warrant are inserted for purposes of reference only and shall
not affect the meaning or construction of any of the provisions hereof.
(c) CASHLESS EXERCISE. Notwithstanding anything to the contrary
contained in this Warrant, this Warrant may be exercised in whole at any time
or in part from time to time by presentation and surrender of this Warrant to
the Company at its principal executive offices with a written notice of the
holder's intention to effect a cashless exercise, including a calculation of
the number of shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "Cashless Exercise"). In the event of a
Cashless Exercise, in lieu of paying the Exercise Price in cash, the holder may
either (x) deliver to the Company a number of shares of 10% Exchangeable
Preferred Stock of the Company with an aggregate liquidation preference (plus
accumulated and unpaid dividends thereon) equal to the aggregate Exercise
Price, (y) if the Common Stock is listed on a national securities exchange or
quoted in the NASDAQ system or in the over-the-counter market at the time, by
surrendering this Warrant (or portion hereof in respect of which is being
exercised) in exchange for that number of shares of Common Stock determined by
multiplying the number of Warrant Shares to which it would otherwise be
entitled if this Warrant were exercised by paying the exercise price in cash by
a fraction, the numerator of which shall be the difference between the then
Current Market Value per share of the Common Stock and the per share purchase
Exercise Price, and the denominator of which shall be the then Current Market
Value per share of Common Stock or (z) any combination of the foregoing.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
PACKAGED ICE, INC.
By:
----------------------------------
Name: ▇.▇. ▇▇▇▇▇ III
Title: President
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FORM OF EXERCISE AGREEMENT
(TO BE EXECUTED BY THE HOLDER IN ORDER TO
EXERCISE THE WARRANT)
The undersigned hereby irrevocably exercises the right to purchase
_____________ of the shares of Common Stock of Packaged Ice, Inc., a Texas
corporation (the "Company"), evidenced by the attached Warrant, and herewith
makes payment of the Exercise Price with respect to such shares in full, all in
accordance with the conditions and provisions of said Warrant.
i. The undersigned agrees not to offer, sell, transfer or otherwise dispose
of any Common Stock obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws, and agrees that the following
legend may be affixed to the stock certificate for the Common Stock if not
registered or if Rule 144(k) is unavailable.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE
REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144(K) UNDER SAID ACT.
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ii. The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the holder and delivered to the
undersigned at the address set forth below.
Dated:
------------------------- --------------------------------
Signature of Holder
--------------------------------
Name of Holder (Print)
Address:
--------------------------------
--------------------------------
--------------------------------
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers all
the rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth herein below, to:
Name of Assignee Address Number of Shares
, and hereby irrevocably constitutes and appoints __________________________ as
agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated:
-------------------
In the presence of
--------------------------
Name:
---------------------------------------
Signature:
----------------------------------
Title of Signing Officer or Agent (if any):
--------------------------------------------
Address:
------------------------------------
------------------------------------
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
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