NEW WORLD COFFEE--MANHATTAN BAGEL, INC.
-------------------------------------------------------------------------------
WARRANT AGREEMENT
-------------------------------------------------------------------------------
Dated as of June 19, 2001
Warrants to Purchase Shares of Common Stock
Par Value $0.001 Per Share
TABLE OF CONTENTS
Page
ARTICLE I ISSUANCE, FORM, EXECUTION, DELIVERY AND REGISTRATION OF WARRANT CERTIFICATES...............2
SECTION 1.1. Issuance of Warrants.........................................................2
SECTION 1.2. Form of Warrant Certificates.................................................2
SECTION 1.3. Execution of Warrant Certificates............................................2
SECTION 1.4. Appointment of Warrant Agent.................................................3
SECTION 1.5. Authentications and Delivery.................................................3
SECTION 1.6. Temporary Warrant Certificates...............................................3
SECTION 1.7. Separation of Warrants and Notes.............................................4
SECTION 1.8. Registrar and Warrant Register...............................................4
SECTION 1.9. Registration of Transfers and Exchanges......................................4
SECTION 1.10. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant Certificates...........8
SECTION 1.11. Offices for Exercise, etc....................................................8
ARTICLE II DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE..........................................9
SECTION 2.1. Duration of Warrants.........................................................9
SECTION 2.2. Exercise, Exercise Price, Settlement and Delivery............................9
SECTION 2.3. Cancellation of Warrant Certificates........................................11
ARTICLE III OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS................................12
SECTION 3.1. Enforcement of Rights.......................................................12
SECTION 3.2. Repurchase Right............................................................12
ARTICLE IV CERTAIN COVENANTS OF THE COMPANY..........................................................14
SECTION 4.1. Payment of Taxes............................................................14
SECTION 4.2. Reservation of Common Stock; Shareholder Approval...........................14
SECTION 4.3. Warrant Shares to be Duly Authorized and Issued, Fully Paid and
Nonassessable...............................................................15
SECTION 4.4. Reports.....................................................................15
SECTION 4.5. Private Placement Numbers...................................................16
SECTION 4.6. Right of Action.............................................................16
SECTION 4.7. Survival....................................................................16
ARTICLE V ADJUSTMENTS...............................................................................16
SECTION 5.1. Adjustment of Exercise Price and Number of Warrant Shares Issuable..........16
SECTION 5.2. Fractional Interest.........................................................24
SECTION 5.3. When Adjustment Not Required................................................24
SECTION 5.4. Treasury Stock..............................................................25
SECTION 5.5. Notices to Warrant Agent and Holders........................................25
ARTICLE VI CONCERNING THE WARRANT AGENT..............................................................26
SECTION 6.1. Warrant Agent...............................................................26
SECTION 6.2. Conditions of Warrant Agent's Obligations...................................26
SECTION 6.3. Resignation and Appointment of Successor....................................30
ARTICLE VII MISCELLANEOUS.............................................................................31
SECTION 7.1. Defined Terms...............................................................31
SECTION 7.2. Amendment...................................................................33
SECTION 7.3. Notices and Demands to the Company and Warrant Agent........................34
SECTION 7.4. Address for Notices to the Company and for Transmission of Documents........34
SECTION 7.5. Notices to Holders..........................................................35
SECTION 7.6. Applicable Law..............................................................35
SECTION 7.7. Obtaining of Governmental Approvals.........................................35
SECTION 7.8. Persons Having Rights Under Agreement.......................................35
SECTION 7.9. Headings....................................................................36
SECTION 7.10. Counterparts................................................................36
SECTION 7.11. Inspection of Warrant Agreement.............................................36
SECTION 7.12. Successors..................................................................36
EXHIBITS
EXHIBIT A - FORM OF WARRANT CERTIFICATE........................................................................A-1
EXHIBIT B - CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS......................................................B-1
EXHIBIT C - TRANSFEREE LETTER OF REPRESENTATION................................................................C-1
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Warrant Agreement"), dated as of June 19, 2001 is
executed and delivered by New World Coffee--Manhattan Bagel, Inc., a Delaware
corporation (together with any successor thereto, the "Company") and United
States Trust Company of New York as warrant agent (together with any successor
warrant agent, the "Warrant Agent"), for the benefit of the holders (the
"Holders") from time to time of the Warrant Certificates (as hereinafter
defined).
WHEREAS, the Company has entered into a purchase agreement dated as of even
date herewith (the "Purchase Agreement") with ▇▇▇▇▇▇▇▇▇ & Company, Inc. (the
"Initial Purchaser"), pursuant to which the Company has agreed, among other
things, to sell to the Initial Purchaser 140,000 units (the "Units"), each
consisting of (i) $1,000 principal amount of Senior Secured Increasing Rate
Notes due 2003 (each a "Note" and, collectively, the "Notes") to be issued under
an indenture dated as of even date herewith (the "Indenture"), between the
Company and United States Trust Company of New York, as trustee (the "Trustee"),
and (ii) one warrant (each an "Initial Warrant" and, collectively, the "Initial
Warrants" and the certificates evidencing the Warrants being hereinafter
referred to as the "Warrant Certificates") to initially purchase 98 shares
(representing in the aggregate 18% of the fully-diluted common stock, assuming
the exercise or conversion of all outstanding Rights (as defined in Section 7.1
hereof)) of the Company's common stock, $.001 par value per share (the "Common
Stock"), at an initial exercise price of $.01 per share, subject to adjustment
in accordance with the terms hereof;
WHEREAS, pursuant to Section 4.28 of the Indenture, the Company will issue
additional warrants (each an "Additional Warrant," and collectively, the
"Additional Warrants" and, together with the Initial Warrants, the "Warrants")
as follows: (i) if the Notes remain outstanding on March 15, 2002, the Company
will issue Additional Warrants representing 1% of the fully-diluted Common Stock
(calculated on the same basis set forth above), (ii) if the Notes remain
outstanding on June 15, 2002, the Company will issue Additional Warrants
representing 1% of the fully diluted Common Stock and (iii) if the Notes remain
outstanding after June 15, 2002, the Company will issue additional warrants
representing 1% of the fully-diluted Common Stock on a monthly basis; and
NOW, THEREFORE, in consideration of the purchase of the Units by the
Initial Purchaser and other valuable consideration, the adequacy and receipt of
which is hereby acknowledged, and for the purpose of defining the respective
rights and obligations of the Company, the Warrant Agent and the Holders, the
parties hereto agree as follows:
ARTICLE I
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.1. Issuance of Warrants. Initial Warrants comprising part of the
Units shall be originally issued in connection with the issuance of the Units.
Additional Warrants shall be issued as required by Section 4.28 of the
Indenture. Each Warrant Certificate shall, when countersigned by the Warrant
Agent, 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 from the Company (and the Company shall issue
and sell to such Holder) 98 fully paid and non-assessable shares of Common Stock
(the shares of Common Stock purchasable upon exercise of a Warrant being
hereinafter referred to as the "Warrant Shares" and, where appropriate, such
term shall also mean the other securities or property purchasable and
deliverable upon exercise of a Warrant as provided in Article V) at the price
specified herein and therein, in each case subject to adjustment as provided
herein and therein.
SECTION 1.2. Form of Warrant Certificates. The Warrant Certificates will
only be issued in registered form as definitive Warrant Certificates (the
"Definitive Warrants"). The Warrant Certificates evidencing the Definitive
Warrants to be delivered pursuant to this Warrant Agreement shall be
substantially in the form set forth in Exhibit A attached hereto, dated the date
on which countersigned.
SECTION 1.3. Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by its President or any Vice
President. Such signatures may be the manual or facsimile signatures of the
present or any future such officers. Typographical and other minor errors or
defects in any such reproduction or any such signature shall not affect the
validity or enforceability of any Warrant Certificate that has been duly
countersigned and delivered by the Warrant Agent.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificate so
signed shall be countersigned and delivered by the Warrant Agent or disposed of
by the Company, such Warrant Certificate nevertheless may be countersigned and
delivered or disposed of as though the person who signed such Warrant
Certificate had not ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution and delivery of
this Warrant Agreement any such person was not such an officer.
SECTION 1.4. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the terms and
conditions set forth in this Agreement, and the Warrant Agent hereby accepts
such appointment.
SECTION 1.5. Authentications and Delivery. Subject to the immediately
following paragraph of this Section 1.5, Warrant Certificates shall be
authenticated by manual signature and dated the date of authentication by the
Warrant Agent and shall not be valid for any purpose unless so authenticated and
dated. The Warrant Certificates shall be numbered and shall be registered in the
Warrant Register (as defined in Section 1.8 hereof).
Upon the receipt by the Warrant Agent of a written order of the Company,
which order shall be signed by its President or any Vice President and attested
to by its Secretary or Assistant Secretary and shall specify the amount of
Warrants to be authenticated, the date of such Warrants and such other
information as the Warrant Agent may reasonably request, without any further
action by the Company, the Warrant Agent is authorized, upon receipt from the
Company at any time and from time to time of the Warrant Certificates, duly
executed as provided in Section 1.3 hereof, to authenticate the Warrant
Certificates and deliver them. Such authentication shall be by a duly authorized
signatory of the Warrant Agent (although it shall not be necessary for the same
signatory to sign all Warrant Certificates).
In case any authorized signatory of the Warrant Agent who shall have
authenticated any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company,
such Warrant Certificate nevertheless may be delivered or disposed of as though
the person who authenticated such Warrant Certificate had not ceased to be such
authorized signatory of the Warrant Agent; and any Warrant Certificate may be
authenticated on behalf of the Warrant Agent by such persons as, at the actual
time of authentication of such Warrant Certificates, shall be the duly
authorized signatories of the Warrant Agent, although at the time of the
execution and delivery of this Warrant Agreement any such person is not an
authorized signatory.
The Warrant Agent's authentication on all Warrant Certificates shall be in
substantially the form set forth in Exhibit A hereto.
SECTION 1.6. Temporary Warrant Certificates. Pending the preparation of the
definitive Warrant Certificates, the Company may execute, and the Warrant Agent
shall authenticate and deliver, temporary Warrant Certificates, which are
printed, lithographed, typewritten or otherwise produced, substantially of the
tenor of the definitive Warrant Certificates in lieu of which they are issued
and with such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Warrant Certificates may determine, as
evidenced by their execution of such Warrant Certificates.
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 upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for the purpose pursuant to Section 1.11 hereof.
Subject to the provisions of Section 4.1 hereof, such exchange shall be without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Warrant Certificates, the Company shall execute, and the Warrant Agent
shall authenticate and deliver in exchange therefor, one or more definitive
Warrant Certificates representing in the aggregate a like number of Warrants.
Until so exchanged, the Holder of a temporary Warrant Certificate shall in all
respects be entitled to the same benefits under this Warrant Agreement as a
Holder of a definitive Warrant Certificate.
SECTION 1.7. Separation of Warrants and Notes. The Notes and Initial
Warrants will be separated immediately upon issuance of the Units.
SECTION 1.8. Registrar and Warrant Register. The Company will keep, at the
office or agency maintained by the Company for such purpose, a register or
registers in which, subject to such reasonable regulations as it may prescribe,
the Company shall provide for the registration of, and registration of transfer
and exchange of, Warrants as provided in this Article. Each Person designated by
the Company from time to time as a Person authorized to register the transfer
and exchange of the Warrants is hereinafter called, individually and
collectively, the "Registrar". Initially, United States Trust Company shall act
as Registrar. Upon written notice to the Warrant Agent and any acting Registrar,
the Company may appoint a successor Registrar for such purposes.
The Company will at all times designate one Person (who may be the Company
and who need not be a Registrar) to act as repository of a master list of names
and addresses of the Holders (the "Warrant Register"). The Company will act as
such repository unless and until some other Person is, by written notice from
the Company to the Warrant Agent and the Registrar, designated by the Company to
act as such. The Company shall cause each Registrar to furnish to such
repository, on a current basis, such information as to all registrations of
transfer and exchanges effected by such Registrar, as may be necessary to enable
such repository to maintain the Warrant Register on as current a basis as is
practicable.
SECTION 1.9. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Definitive Warrants. When Definitive Warrants
are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of Definitive
Warrants, the Warrant Agent shall register the transfer or make the
exchange as requested if the requirements under this Warrant Agreement
as set forth in this Section 1.9 for such transactions are met;
provided, however, that the Definitive Warrants presented or
surrendered for registration of transfer or exchange:
(x) shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Company and the Warrant
Agent, duly executed by the Holder thereof or by its attorney,
duly authorized in writing, and
(y) in the case of Warrants the offer and sale of which has not been
registered under the Securities Act, and are presented for
transfer or exchange prior to (x) the date which is two years
after the later of the date of original issue (the "Issue Date")
and the last date on which the Company or any affiliate of the
Company was the owner of such Warrant, or any predecessor thereto
and (y) such later date, if any, as may be required by any
subsequent change in applicable law (the "Resale Restriction
Termination Date"), such Warrants shall be accompanied, in the
sole discretion of the Company, by the following additional
information and documents, as applicable:
(A) if such Warrant is being delivered to the Warrant Agent by a
Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect
(in substantially the form of Exhibit B hereto); or
(B) if such Warrant is being transferred pursuant to an
exemption from registration in accordance with Rule 144 or
Regulation S under the Securities Act, a certification to
that effect (in substantially the form of Exhibit B hereto);
or
(C) if such Warrant is being transferred to an institutional
"accredited investor" within the meaning of subparagraph
(a)(1), (a)(2), (a)(3) or (a)(7) of Rule 501 under the
Securities Act, delivery of a certification to that effect
(in substantially the form of Exhibit B hereto) and a letter
of representation from the transferee in substantially the
form of Exhibit C hereto; or
(D) if such Warrant is being transferred in reliance on another
exemption from the registration requirements of the
Securities Act, a certification to that effect (in
substantially the form of Exhibit B hereto) and an opinion
of counsel reasonably acceptable to the Company to the
effect that such transfer is in compliance with the
Securities Act.
(b) Legends. Each Warrant Certificate evidencing the Definitive Warrants
(and all Warrants issued in exchange therefor or substitution thereof) shall
bear a legend substantially to the following effect:
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT CERTIFICATE NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION. THE HOLDER OF THE WARRANTS REPRESENTED BY THIS WARRANT
CERTIFICATE, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE
TRANSFER THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE PRIOR TO THE
DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THE
WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE LAST DATE ON WHICH
NEW WORLD COFFEE--MANHATTAN BAGEL, INC. ("THE COMPANY") OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF THE WARRANTS REPRESENTED BY THIS WARRANT
CERTIFICATE (OR ANY PREDECESSOR OF SUCH WARRANTS OR WARRANT CERTIFICATE)
(THE "RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF
RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE WARRANTS
REPRESENTED BY THIS WARRANT CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH,
ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE WARRANT AGENT'S, AS
APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, AN ASSIGNMENT IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS WARRANT CERTIFICATE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE WARRANT AGENT. THIS LEGEND SHALL BE REMOVED UPON THE
REQUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THIS SECURITY IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT DATED AS OF
JUNE 19, 2001 BETWEEN THE COMPANY AND ▇▇▇▇▇▇▇▇▇ & COMPANY, INC. (THE
"INITIAL PURCHASER"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY.
(c) Obligations with Respect to Transfers and Exchanges of Definitive
Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute, at the Warrant Agent's request, and the Warrant
Agent shall authenticate, Definitive Warrants.
(ii) All Definitive Warrants issued upon any registration of transfer
or exchange of Definitive Warrants shall be the valid obligations
of the Company, entitled to the same benefits under this Warrant
Agreement as the Definitive Warrants surrendered upon the
registration of transfer or exchange.
(iii)Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
Person in whose name any Warrant is registered as the absolute
owner of such Warrant, and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
(d) Payment of Taxes. The Company or the Warrant Agent may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchange or transfer pursuant to this Section
1.9.
SECTION 1.10. Lost, Stolen, Destroyed, Defaced or Mutilated Warrant
Certificates. Upon receipt by the Company and the Warrant Agent (or any agent of
the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement, or mutilation
of any Warrant Certificate and of indemnity reasonably satisfactory to them and,
in the case of mutilation or defacement, upon surrender thereof to the Warrant
Agent for cancellation, then, in the absence of notice to the Company or the
Warrant Agent that such Warrant Certificate has been acquired by a bona fide
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually authenticate and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding. Upon the issuance of any new Warrant Certificate under this Section
1.10, the Company may require the payment from the Holder of such Warrant
Certificate of a sum sufficient to cover any tax, stamp tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Warrant Agent and the
Registrar) in connection therewith. Every substitute Warrant Certificate
executed and delivered pursuant to this Section 1.10 in lieu of any lost, stolen
or destroyed Warrant Certificate shall constitute an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled to
the benefits of (but shall be subject to all the limitations of rights set forth
in) this Warrant Agreement equally and proportionately with any and all other
Warrant Certificates duly executed and delivered hereunder. The provisions of
this Section 1.10 are exclusive with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates and shall preclude (to the
extent lawful) any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement of lost, stolen, destroyed, defaced or mutilated Warrant
Certificates.
The Warrant Agent is hereby authorized to authenticate and deliver the new
Warrant Certificates required pursuant to the provisions of this Section 1.10.
SECTION 1.11. Offices for Exercise, etc. So long as any of the Warrants
remain outstanding, the Company will designate and maintain in the continental
United States: (a) an office or agency where the Warrant Certificates may be
presented for exercise, (b) an office or agency where the Warrant Certificates
may be presented for registration of transfer and for exchange (including the
exchange of temporary Warrant Certificates for definitive Warrant Certificates
pursuant to Section 1.6 hereof), and (c) an office or agency where notices and
demands to or upon the Company in respect of the Warrants or of this Warrant
Agreement may be served. The Company may from time to time change or rescind
such designation, as it may deem desirable or expedient. The Company will give
to the Warrant Agent written notice of the location of any such office or agency
and of any change of location thereof. The Company hereby designates the
corporate trust office of the Warrant Agent in New York, New York (the "Warrant
Agent Office"), as the initial agency maintained for each such purpose.
ARTICLE II
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
SECTION 2.1. Duration of Warrants. Subject to the terms and conditions
established herein, the Warrants shall expire at 5:00 p.m., New York City time
on June 20, 2006 (the "Expiration Date"). Each Warrant may be exercised on any
Business Day (as hereinafter defined) on or after the Exercisability Date (as
hereinafter defined) and on or prior to the Expiration Date.
Any Warrant not exercised before the close of business on the Expiration
Date relating to such Warrant shall become void, and all rights of the Holder
under the Warrant Certificate evidencing such Warrant and under this Warrant
Agreement shall cease.
SECTION 2.2. Exercise, Exercise Price, Settlement and Delivery.
(a) Subject to the provisions of this Warrant Agreement, each Holder shall
have the right to purchase from the Company, on or after the date hereof (the
"Exercisability Date") and on or prior to the Expiration Date, 98 fully paid and
non-assessable Warrant Shares per each Warrant such Holder owns, subject to
adjustment in accordance with Article V hereof, at the initial purchase price of
$0.01 for each Warrant Share purchased, subject to adjustment in accordance with
Article V hereof (the "Exercise Price").
(b) Warrants may be exercised, in whole or in part, on or after the
Exercisability Date by (i) surrendering at any Warrant Agent office the Warrant
Certificate evidencing such Warrants with the form of election to purchase
Warrant Shares set forth on the reverse side of the Warrant Certificate (the
"Election to Exercise") duly completed and signed by the registered Holder or
Holders thereof or by the duly appointed legal representative thereof or by a
duly authorized attorney, and (ii) paying in full the Exercise Price for each
such Warrant Share purchased and any other amounts required to be paid pursuant
to Section 4.1 hereof.
(c) Simultaneously with the exercise of each Warrant, payment in full of
the Exercise Price shall be made (i) in cash or by certified or official bank
check payable to the order of the Company, delivered to the office or agency
where the Warrant Certificate is being surrendered, or by wire transfer of such
amount in immediately available funds to such account as the Warrant Agent may
specify; or (ii) by delivery of Warrant Certificates pursuant to Section 2.2(d).
Warrant Agent shall not be required to forward any payments to the Company until
clearance of such checks.
(d) In the event that any Holder of Warrant Certificates delivers such
Warrant Certificates to the Company and indicates on the Election to Exercise
that such Holder intends to exercise all, or any portion of, the Warrants
represented by such Warrant Certificate to satisfy its obligation to pay the
Exercise Price in respect thereof by virtue of the provisions of this Section
2.2(d), such Holder shall become entitled to receive, instead of the number of
Warrant Shares such Holder would have received had the Exercise Price been paid
in cash pursuant to Section 2.2, a number of Warrant Shares in respect of the
exercises of such Warrants equal to the product of:
(A) the number of Warrant Shares issuable upon such exercise of such
Warrant Certificates (or, if only a portion of such Warrant
Certificates are being exercised, issuable upon the exercise of
such portion) multiplied by
(B) the quotient of:
(i) the difference of:
(X) the per share Fair Market Value of the Common Stock at
the time of such exercise; minus
(Y) the Exercise Price at the time of such exercise;
divided by
(ii) the per share Fair Market Value of the Common Stock at the
time of such exercise.
For purposes of Rule 144 under the Securities Act, the Company and the
Warrant Agent, on behalf of the Holders, hereby agree that the exercise of any
Warrants in accordance with this Section 2.2(d) shall be deemed to be a
conversion of such Warrants, pursuant to the terms of this Warrant Agreement and
the Warrants, into Warrant Shares.
(e) Upon such surrender of a Warrant Certificate and payment and collection
of the Exercise Price at any Warrant Agent Office, such Warrant Certificate and
payment shall be promptly delivered to the Warrant Agent. The "Exercise Date"
for a Warrant shall be the date when all of the items referred to in the first
sentence of paragraphs (b) and (c) of this Section 2.2 are received by the
Warrant Agent at or prior to 2:00 p.m., New York City time, on a Business Day
and the exercise of the Warrants will be effective as of such Exercise Date. If
any items referred to in the first sentence of paragraphs (b) and (c) of this
Section 2.2 are received after 2:00 p.m., New York City time, on a Business Day,
the exercise of the Warrants to which such item relates will be effective on the
next succeeding Business Day. Notwithstanding the foregoing, in the case of an
exercise of Warrants on the Expiration Date, if all of the items referred to in
the first sentence of paragraphs (b) and (c) of this Section 2.2 are received by
the Warrant Agent at or prior to 5:00 p.m., New York City time, on such
Expiration Date, the exercise of the Warrants to which such items relate will be
effective on the Expiration Date.
(f) Upon the exercise of a Warrant in accordance with the terms hereof, the
receipt of a Warrant Certificate and payment of the Exercise Price, the Warrant
Agent shall: (i) cause an amount equal to the Exercise Price, whether in cash or
Warrant Certificates, to be delivered or paid to the Company by crediting the
same to the account designated by the Company in writing to the Warrant Agent
for that purpose; (ii) in the case of a payment of the Exercise Price in cash,
advise the Company immediately by telephone of the amount so deposited to the
Company's account and promptly confirm such telephonic advice in writing; and
(iii) as soon as practicable, advise the Company in writing of the number of
Warrants exercised in accordance with the terms and conditions of this Warrant
Agreement and the Warrant Certificates, the instructions of each exercising
Holder with respect to delivery of the Warrant Shares to which such Holder is
entitled upon such exercise, and such other information as the Company shall
reasonably request.
(g) Subject to Section 5.2 hereof, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
registered Holder evidencing such exercised Warrant or Warrants, a certificate
or certificates evidencing the Warrant Shares to which such Holder is entitled,
in fully registered form, registered in such name or names as may be directed by
such Holder pursuant to the Election to Exercise, as set forth on the reverse of
the Warrant Certificate. The Warrant Agent shall have no obligation to ascertain
the number of Warrant Shares to be issued with respect to the exercised Warrant
or Warrants. Such certificate or certificates evidencing the Warrant Shares
shall be deemed to have been issued and any Persons who are designated to be
named therein shall be deemed to have become the Holder of record of such
Warrant Shares as of the close of business on the Exercise Date. After such
exercise of any Warrant or Warrants, the Company shall also issue or cause to be
issued to or upon the written order of the registered holder of such Warrant
Certificate, a new Warrant Certificate, countersigned by the Warrant Agent
pursuant to the Company's written instruction, evidencing the number of
Warrants, if any, remaining unexercised (unless such Warrants shall have
expired).
SECTION 2.3. Cancellation of Warrant Certificates. In the event the Company
shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall be canceled by it and retired. The Warrant Agent shall
cancel all Warrant Certificates properly surrendered for exchange, substitution,
transfer or exercise. The Warrant Agent shall destroy canceled Warrant
Certificates held by it and deliver a certificate of destruction to the Company.
The Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all money received by the Warrant
Agent for the purchase of Warrant Shares through the exercise of such Warrants.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANTS
SECTION 3.1. Enforcement of Rights.
(a) Notwithstanding any of the other provisions of this Warrant Agreement,
any Holder of Warrant Certificates or holder of Warrant Shares, without the
consent of the Warrant Agent, may, in and for its own behalf, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, its right to exercise the Warrant or Warrants evidenced by
its Warrant Certificate as provided in such Warrant Certificate and in this
Warrant Agreement. (b) Neither the Warrants nor any Warrant Certificate shall
entitle the Holders thereof to any of the rights of a holder of Common Stock,
including, without limitation, the right to vote or to receive any dividends or
other payments or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or for the election of directors of the Company or
to share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs or any other matter, or any
rights whatsoever as stockholders of the Company.
SECTION 3.2. Repurchase Right.
(a) If (A) the Company, in a single transaction or series of related
transactions, (i) sells, assigns, transfers, leases, conveys or otherwise
disposes of all or substantially all of the assets of the Company to any Person
that does not have publicly traded common equity for which the Warrants become
exercisable; (ii) consolidates or merges with or into another Person that does
not have publicly traded common equity for which the Warrants become exercisable
and the Company is not the surviving entity; or (iii) consolidates or merges
with or into another Person and the Company is the surviving entity (a "Forward
Merger") and (w) the shareholders of the Company immediately preceding such
Forward Merger will not continue to own at least a majority of the outstanding
shares of capital stock of the Company on a fully diluted basis following the
consummation of such Forward Merger, (x) as a direct or indirect result of such
Forward Merger, a Change of Control (as defined in the Indenture) shall have
occurred, or (y) the net worth of the Company following the consummation of such
Forward Merger shall not at least equal the net worth of the Company immediately
preceding such Forward Merger, and (B) the consideration payable in respect of
any event described in the immediately preceding clause (i), (ii) or (iii) does
not consist solely of cash (any such event, hereinafter, a "Repurchase Event"),
then the Company shall offer to repurchase (a "Repurchase Offer"), in accordance
with the procedures set forth in this Section 3.2, all Warrants at the per share
Fair Market Value of the Common Stock issuable upon exercise thereof, less the
Exercise Price (the "Repurchase Price"). The Company shall, subject to the
provisions described in this Section 3.2, be required to purchase all Warrants
properly tendered pursuant to a Repurchase Offer and not withdrawn.
Notwithstanding the foregoing, the provisions of this Section 3.2(a) shall not
apply in the event of an internal reorganization involving only the Company and
its wholly-owned subsidiaries pursuant to which the Company is the surviving
entity.
(b) The Repurchase Offer shall remain open for at least 20 Business Days
and until the close of business on the fifth Business Day prior to the
Repurchase Date (as hereinafter defined).
(c) Not later than the 30th day following the occurrence of the Repurchase
Event, the Company (or any successor entity) shall mail to the Warrant Agent and
to each Holder a notice (the "Repurchase Notice") stating, among other things:
(1) that a Repurchase Event has occurred and that such Holder has the
right to require the Company to repurchase such holder's Warrants, or
portion thereof, at the Repurchase Price;
(2) any information regarding such Repurchase Event required to be
furnished under applicable federal and State securities laws, rules and
regulations;
(3) a purchase date (the "Repurchase Date"), which shall be on a
Business Day and no earlier than 30 days nor later than 60 days after the
occurrence of a Repurchase Event;
(4) that any Warrant, or portion thereof, not tendered or accepted for
payment shall be subject to appropriate adjustment as required by Section 5
of this Warrant Agreement, and continue in full force and effect in
accordance with this Warrant Agreement; and
(5) the instructions a Holder must follow in order to have Warrants
repurchased in accordance with this Section 3.2.
No failure of the Company to give the foregoing notice shall limit any
right to any Holder to exercise a repurchase right hereunder.
(d) To exercise the repurchase right, the Holder must deliver, on or before
the fifth calendar day prior to the Repurchase Date, written notice of the
Company (or an agent designated by the Company for such purpose) of the exercise
of such repurchase right, together with the Warrant Certificates with respect to
which the right is being exercised, duly endorsed for transfer.
(e) On the Repurchase Date, the Company shall (i) accept for payment
Warrants or portions thereof tendered pursuant to the Repurchase Notice, (ii) if
the Company appoints a depository or Paying Agent, deposit with such depository
or Paying Agent money sufficient to pay the Repurchase Price of all Warrants or
portions thereof so tendered and (iii) deliver to the Warrant Agent Warrants so
accepted together with an Officers' Certificate stating the Warrants or portions
thereof tendered to the Company. The Company or the Paying Agent, as the case
may be, shall promptly mail to the Holders whose Warrants are so accepted
payment in an amount equal to the Repurchase Price, and the Warrant Agent shall
promptly authenticate and mail to Holders of Warrants new Warrants for any
unpurchased portion of the Warrants surrendered. The Company will notify the
Holders of the results of the Repurchase Offer on or as soon as practicable
after the Repurchase Date. For purposes of this Section 3.2, the Warrant Agent
shall act as the Paying Agent.
(f) The Company, to the extent applicable and if required by law, will
comply with the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and any other federal and state securities laws, rules and regulations that may
then be applicable to any offer by the Company to purchase the Warrants pursuant
to the provisions of this Section 3.2.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
SECTION 4.1. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrants and of the Warrant Shares
upon the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax or other governmental charge which may be payable in
respect of any transfer involved in the issue of any Warrant Certificates or any
certificates for Warrant Shares in a name other than the registered Holder
surrendered upon the exercise of a Warrant. In any such case, the Company shall
not be required to issue or deliver such Warrant Certificate or certificate for
Warrant Shares unless or until the Person or Persons requesting issuance thereof
shall have paid to the Company the amount of such tax or other governmental
charge or shall have established to the satisfaction of the Company that such
tax or other governmental charge has been paid or an exemption is available
therefrom.
SECTION 4.2. Reservation of Common Stock; Shareholder Approval. The Company
covenants and agrees that it will at all times cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock such number
of shares of Common Stock as will be sufficient to permit the exercise in full
of all Warrants issued hereunder and all other rights, warrants or options
exercisable into, and the conversion of all securities convertible into, Common
Stock. The Company will, prior to October 17, 2001, (i) obtain shareholder
approval for the issuance of the Warrants and (ii) the amendment of the
Certificate of Incorporation increasing the number of authorized and unissued
shares of Common Stock pursuant to this Section 4.3.
SECTION 4.3. Warrant Shares to be Duly Authorized and Issued, Fully Paid
and Nonassessable. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Warrant Shares delivered upon the
exercise in full of any Warrants, at the time of delivery of the certificates
representing such shares, shall be duly and validly authorized and issued and
fully paid and nonassessable, free of any preemptive rights in favor of any
Person in respect of such issuance and free of any security interest, lien or
other encumbrance of any kind or nature created by, arising out of actions of,
the Company, any subsidiary or any affiliate of the Company.
SECTION 4.4. Reports.
(a) For so long as any Warrants are outstanding, the Company shall deliver
to the Warrant Agent and mail to each Holder, within 15 days after the filing of
the same with the Securities and Exchange Commission ("SEC"), copies of its
quarterly and annual reports and of the information, documents and other
reports, if any, which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act.
(b) For so long as any Warrants are outstanding, if at any time the Company
is not subject to the requirements of such Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC, to the extent permitted, and
distribute to the Warrant Agent and to each Holder copies of the quarterly and
annual financial information that would have been required to be contained in a
filing with the SEC on Forms 10-Q and 10-K and all current reports that would be
required to be filed with the SEC on Form 8-K had the Company been subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act. All such
financial information shall include consolidated financial statements (including
footnotes) prepared in accordance with generally accepted accounting principles.
Such annual financial information shall also include an opinion thereon
expressed by an independent accounting firm of established national reputation.
All such consolidated financial statements shall be accompanied by a
"Management's Discussion and Analysis of Financial Condition and Results of
Operation." The financial and other information to be distributed to Holders
shall be filed with the Warrant Agent and mailed to the Holders at their
respective addresses appearing in the Warrant Register maintained by the Warrant
Agent, within 120 days after the end of the Company's fiscal year and within 60
days after the end of each of the first three quarters of each such fiscal year.
From and after the date of effectiveness of any registration statement filed
with the SEC with respect to the Warrants, the Company will file with the SEC
such Forms 10-Q and 10-K and any other information required to be filed by it.
SECTION 4.5. Private Placement Numbers. The Company covenants and agrees to
obtain, and thereafter maintain, a private placement number in respect of the
Warrants and a private placement number or CUSIP number, as appropriate, in
respect of the Warrant Shares from the CUSIP Service Bureau of Standard &
Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc.
SECTION 4.6. Right of Action. All rights of action in respect of the
Warrants are vested in the respective registered Holders of the Warrant
Certificates, and any registered Holder of any Warrant Certificate, without the
consent of the Holder of any other Warrant Certificate, may, on its own behalf
and for its own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, its right to exercise the Warrants evidenced by such Warrant Certificate in
the manner provided in such Warrant Certificate and in this Warrant Agreement.
SECTION 4.7. Survival. The agreements of the Company contained in Section
4.1 and Section 4.7 shall survive the exercise of and the expiration of the
Warrants.
ARTICLE V
ADJUSTMENTS
SECTION 5.1. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number and kind of Warrant Shares
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(a) Stock Dividends, Subdivisions and Combinations. In case the Company
shall hereafter (A) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock or other shares of its capital stock, (B)
subdivide its outstanding shares of Common Stock into a greater number of shares
or (C) combine its outstanding shares of Common Stock into a smaller number of
shares, (i) the number of Warrant Shares purchasable upon exercise of each
Warrant immediately prior thereto shall be adjusted so that the Holder of any
Warrant Certificate thereafter exercised shall be entitled to receive the number
of Warrant Shares which such Holder would have owned immediately following such
action had such Warrant been exercised immediately prior thereto, and (ii) the
Exercise Price shall be adjusted by multiplying such Exercise Price immediately
prior to such adjustment by a fraction, the numerator of which shall be the
number of Warrant Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and the denominator of which shall be the
number of Warrant Shares purchasable immediately thereafter. An adjustment made
pursuant to this Section 5.1 (a) shall become effective immediately after the
record date, in the case of a dividend or distribution, 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 Section 5.1(a), the Holder of any Warrant Certificate 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
determine, in its reasonable discretion, the allocation of the adjusted Exercise
Price between or among shares of such classes of capital stock.
(b) Reclassification, Combinations, Mergers, etc. Subject to Section 3.2,
if (A) any capital reorganization, reclassification or change of outstanding
shares of Common Stock (other than as set forth in Section 5.1 (a) 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 (B) in case of any consolidation or merger of the
Company with or into another corporation or other entity (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 (C) in case of any sale or other conveyance to
another corporation or other entity of all or substantially all of the assets of
the Company shall be effected in such a way that the holders of Common Stock
shall be entitled to receive shares of common stock, other securities or assets
(whether such stock, other securities or assets are issued or distributed by the
Company or another Person) with respect to or in exchange for Common Stock,
then, as a condition of such reclassification, reorganization, change,
consolidation, merger, sale or conveyance, the Company or such a successor or
purchasing corporation or other entity, as the case may be, shall forthwith make
lawful and adequate provision whereby the Holder of such Warrant Certificate
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 assets
receivable upon such reclassification, reorganization, change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
that such holders would have been entitled to receive upon exercise of such
Warrant had such Warrant been exercised immediately before such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article V and enter into a supplemental warrant
agreement so providing.
For purposes of this Section 5.1(b), "shares of common stock, other
securities or assets" receivable upon a reclassification, reorganization,
change, consolidation, merger, sale or conveyance shall include securities of
any successor or acquiring corporation of any class which is not subject to
redemption and shall also include any evidence of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
securities, either immediately or upon the arrival of a specified date or the
happening of a specified event, or any warrants or other rights to subscribe for
or purchase any such securities. 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 or other entity, such issuer
shall join in the supplemental warrant agreement.
In case of any such reclassification, reorganization, change, merger,
consolidation or sale or other conveyance of assets, any successor or acquiring
corporation or other entity shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant Agreement to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
into which each Warrant is exercisable, which shall be as nearly equivalent as
practicable to the adjustments provided for in this Article V.
(c) Issuances of Common Stock or Rights. In the event that the Company
shall, at any time or from time to time after the date hereof, issue, sell,
distribute or otherwise grant (in any such case, a "Distribution") shares of
Common Stock or Rights, whether or not such Rights are immediately exercisable,
convertible or exchangeable, at a Consideration Per Share lower than the per
share Fair Market Value of the Common Stock on the date of such issuance, sale,
grant or distribution or if the Company shall amend any of the provisions of any
Rights, including, without limitation, a change in the purchase, conversion,
exchange or exercise price per share of underlying Common Stock, as the case may
be, of each such Right, or the Aggregate Consideration Receivable applicable to
any such Right (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant to
this Article V), then, immediately after the date of such issuance or sale,
(A) the number of Warrant Shares purchasable upon exercise of each Warrant
shall be increased so that the Holders thereafter will be entitled to
receive the number of Warrant Shares determined by multiplying:
(i) the number of shares of Common Stock such Holders would have been
entitled to receive immediately before the date of such issuance or
sale had such Holders exercised their Warrants immediately prior
thereto; by
(ii) a fraction, the numerator of which shall be the sum of: (X) the number
of shares of Common Stock outstanding on such date plus (Y) the number
of additional shares of Common Stock offered for subscription or
purchase (or into which the Rights so offered are initially
convertible or exchangeable or exercisable, as the case may be), and
the denominator of which shall be the sum of: (X) the number of shares
of Common Stock outstanding on such date plus (Y) the number of shares
of Common Stock that the Aggregate Consideration Receivable would
purchase at a price per share equal to the Fair Market Value of the
Common Stock on the date of such issuance or sale, and
(B) the Exercise Price in effect immediately after such Distribution shall be
adjusted by multiplying the Exercise Price in effect immediately prior to
such Distribution by the quotient of:
(i) the sum of: (A) the number of shares of Common Stock outstanding
immediately prior to such Distribution; plus (B) the quotient of: (X)
the Aggregate Consideration Receivable; divided by (Y) the per share
Fair Market Value of the Common Stock; in each case immediately prior
to such Distribution; divided by
(ii) the sum of: (A) the number of shares of Common Stock outstanding
immediately prior to such Distribution; plus (B) the number of shares
of Common Stock so issued or sold (or initially issuable pursuant to
any Rights).
For purposes of the foregoing calculation, the total maximum number of
shares of Common Stock issuable upon exercise, conversion or exchange, as
applicable, of all Rights shall be deemed to have been issued as of the date of
such Distribution and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration therefor the Aggregate
Consideration Receivable applicable thereto after giving effect to such
exercise, conversion or exchange. Except as provided in Section 5.1(g), no
additional adjustments of the Exercise Price shall be made upon the actual
exercise, exchange or conversion, as applicable, of such Rights.
(d) Dividends and Distributions. In the event the Company shall, at any
time or from time to time after the date hereof, make or pay any dividend of, or
distribute to holders of Common Stock (in any such case, a "Dividend"), shares
of capital stock, any of its property or assets, including, without limitation,
cash, evidences of its indebtedness, Rights or other securities (in each case,
other than dividends payable in Common Stock) (collectively, "Dividend
Securities"), then, in each such case, unless the Company elects to reserve
shares or other units of such Dividend Securities for distribution to the
Holders upon exercise of their Warrants so that, in addition to the Warrant
Shares issuable upon exercise thereof, such Holders will receive upon such
exercise the amount and kind of such Dividend Securities that such Holders would
have received if the Holders had, immediately prior to the record date for the
distribution of the Dividend Securities, exercised the Warrants:
(A) the Exercise Price in effect after the record date in respect of which
Dividend Securities are distributed or issued shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such record
date by the quotient of:
(i) the difference of (A) the per share Fair Market Value of the Common
Stock on such record date; minus (B) the quotient of:
(X) in the case of a Dividend made in cash, the aggregate amount of
cash so dividend or distributed and, in the case of a Dividend
made other than in cash, the then Fair Market Value of the
Dividend Securities so distributed or issued; divided by
(Y) the number of shares of Common Stock outstanding on the record
date; divided by
(ii) the per share Fair Market Value of the Common Stock on such record
date, and
(B) the number of Warrant Shares purchasable upon the exercise of each Warrant
shall be increased to a number determined by multiplying the number of
Warrant Shares such Holders would have been entitled to receive immediately
before the record date for such Dividend, had the Holders exercised their
Warrants immediately prior thereto, by a fraction, the numerator of which
shall be the Exercise Price in effect immediately prior to the adjustment
required by clause (A) of this sentence, and the denominator of which shall
be the Exercise Price in effect immediately after such adjustment.
The adjustments required by this Section 5.1(d) shall be made whenever any
such Dividend is made retroactive to the record date for the determination
of stockholders entitled to receive such Dividend and shall be effective on
the date of such Dividend.
(e) Self-Tenders. If, at any time or from time to time after the date
hereof, the Company or any subsidiary of the Company shall repurchase, by
self-tender offer or otherwise, any shares of Common Stock of the Company or any
Right at a weighted average purchase price in excess of the per share Fair
Market Value of the Common Stock on the Business Day immediately prior to the
earliest of (i) the date of such repurchase, (ii) the commencement of an offer
to repurchase or (iii) the public announcement of either (such date being
referred to as the "Determination Date"), the number of Warrant Shares
purchasable upon exercise of the Warrants shall be increased so that the Holders
thereafter will be entitled to receive the number of Warrant Shares determined
by multiplying the number of Warrant Shares such Holders would have been
entitled to receive before the Determination Date, had the Holders exercised
their Warrant Shares immediately prior thereto, by a fraction,
the numerator of which shall be the product of:
(A) the difference between (X) the number of shares of Common Stock outstanding
immediately prior to such Determination Date minus (Y) the number of shares
of Common Stock (or shares of Common Stock into which the Rights are
convertible or exchangeable or exercisable, as the case may be) represented
by the Common Stock or Rights repurchased or to be purchased by the Company
or any subsidiary of the Company in such repurchase, multiplied by
(B) the per share Fair Market Value of the Common Stock immediately prior to
such Determination Date, and
the denominator of which shall be the difference between:
(A) the product of (X) the number of shares of Common Stock outstanding
immediately prior to the Determination Date multiplied by (Y) the per
share Fair Market Value of the Common Stock immediately prior to such
Determination Date minus
(B) the sum of (X) the aggregate consideration paid by the Company or any
of subsidiary of the Company in connection with such repurchase plus
(Y) in the case of Rights, the additional consideration required to be
received by the Company or any subsidiary of the Company upon the
conversion, exchange or exercise of such Rights, and
the Exercise Price shall be adjusted by multiplying such Exercise Price
immediately prior to such repurchase by a fraction, the numerator of which shall
be the number of Warrant Shares purchasable upon exercise of the Warrants prior
to such repurchase, and the denominator of which shall be the number of Warrant
Shares purchasable upon exercise of the Warrants immediately thereafter.
(f) Fair Market Value of Consideration Received. Notwithstanding any
provision to the contrary herein, for purposes of this Article V, if any Rights
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 Rights by the parties thereto, such Rights
shall be deemed to have been issued without consideration, provided, however,
that if any such Rights have an exercise price (to the extent applicable) equal
to or greater than the per share Fair Market Value of the Common Stock on the
date of issuance of such Rights, then such Rights shall be deemed to have been
issued for consideration equal to such exercise price.
(g) Deferral of Certain Adjustments. No adjustment to the Exercise Price
(including the related adjustment to the number of Warrant Shares purchasable
upon the exercise of each Warrant) shall be required hereunder unless such
adjustment, together with other adjustments carried forward as provided below,
would result in an increase or decrease of at least one percent (1%) of the
Exercise Price; provided, however, that any adjustments which by reason of this
5.1(g) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. No adjustment need be made for a change in
the par value of the Common Stock; provided, however, the Company shall not
increase the par value of the Common Stock to exceed the Exercise Price. All
calculations under this Section 5.1 shall be made to the nearest 1/1,000 of one
cent or to the nearest 1/1,000th of a Warrant Share, as the case may be.
(h) Other Adjustments. In the event that at any time, as a result of an
adjustment made pursuant to this Article V, Holders shall become entitled to
receive any securities of the Company other than shares of Common Stock,
thereafter the number of such other securities so receivable upon exercise of
each Warrant and the Exercise Price applicable to such exercise shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares and the
Exercise Price contained in this Article V, and all other relevant provisions of
this Article V that are applicable to shares of Common Stock shall be applicable
to such other securities. In case at any time or from time to time the Company
shall take any action in respect of its outstanding shares of Common Stock,
other than any action described in this Article V, or any event occurs as to
which the provisions of this Article V are not strictly applicable, then the
number of Warrant Shares for which each Warrant is exercisable shall be adjusted
in such manner as may be equitable in the circumstances and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
and the Exercise Price contained in this Article V and as shall be reasonably
necessary, in the good faith opinion of the Board of Directors of the Company,
to protect the exercise rights of the Holders, but in no event shall any such
adjustment have the effect of adversely affecting the Holders. If the Company
shall at any time or from time to time issue, sell or distribute any shares of
capital stock (other than Common Stock), any evidences of indebtedness, any
property or assets, Rights or other securities, then, in each such case, such
issuance, sale or distribution shall be deemed to be of, or in respect of,
Common Stock for purposes of this Article V.
(i) Statement of Warrant Certificates. Irrespective of any adjustment in
the number of kind of Warrant Shares issuable upon the exercise of each Warrant
or the Exercise Price, Warrant Certificates theretofore or thereafter issued
shall continue to express the same number and kind of Warrant Shares and
Exercise Price as are stated in the Warrant Certificates initially issuable
pursuant to this Warrant Agreement.
(j) Increased Warrant Shares or Reduced Exercise Price. From time to time,
the Company may, for a period of not less than 20 Business Days, in its
discretion, increase the number of Warrant Shares purchasable upon the exercise
of each Warrant, without making any adjustment to the Exercise Price, or reduce
the Exercise Price, without making any adjustment to the number of Warrant
Shares purchasable upon the exercise of each Warrant.
(k) No Adjustments for Certain Incentive Compensation or Issuance of
Warrant Shares. Notwithstanding any other provision hereof, it is expressly
understood that the Warrants shall not be adjusted with respect to (a) Common
Stock or Rights, in any case, that may be issued to any of the Company's
officers or employees pursuant to the stock option plans or similar plans of the
Company, (collectively, the "Plans"), to the extent that shares of Common Stock
or other securities issued or granted under such Plans are issued or granted at
a price, or with an exercise price, that is no less than the per share Fair
Market Value of the Common Stock at the date of grant or issuance and such grant
or issuance, together with all previous grants and issuances under all such
Plans, represent not more than 10% of the fully diluted Common Stock at the time
of such grant or issuance, (b) the conversion or exchange (other than pursuant
to a reclassification), in any case on a share-for-share basis, of Common Stock
for non-voting common stock of the Company or (c) the issuance of any Warrant
Shares.
(l) No Impairment. The Company will not, by amendment of its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, liquidation, 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 hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 5.1 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holders against impairment.
(m) Further Equitable Adjustments. If, after one or more adjustments to the
Exercise Price pursuant to this Section 5.1, the Exercise Price cannot be
reduced further without falling below the greater of (i) $0.01 or (ii) the
lowest positive exercise price legally permissible for warrants to acquire
shares of common stock, the Company shall make further adjustments to compensate
the Holders, consistent with the foregoing principles, as the Board of Directors
of the Company, acting in good faith, deems necessary, including an, increase in
the number of Warrant Shares issuable upon exercise of outstanding Warrants
and/or a cash payment to the Holders.
(n) Other Adjustments.
(i) Adjustments shall be made pursuant to this Section 5.1
successively whenever any of the events referred to in Section
5.1(a) through Section 5.1(e), inclusive, and Section 5.1(p)
shall occur.
(ii) If any Warrant shall be exercised subsequent to the record date
for any of the events referred to in this Section 5.1, but prior
to the effective date thereof, appropriate adjustments shall be
made immediately after such effective date so that the Holder of
such Warrant on such record date shall have received, in the
aggregate, the kind and number of shares of Common Stock or other
securities or property or assets that it would have owned or been
entitled to receive on such effective date had such Warrant been
exercised prior to such record date.
(iii)Shares of Common Stock owned by or held for the account of the
Company shall not, for purposes of the adjustments set forth in
this Section 5.1 be deemed outstanding.
(o) Expiration of Rights. Upon the expiration of any Rights referred to in
this Section 5.1, without the exercise, exchange or conversion, as applicable,
thereof, the Exercise Price and the number of Warrant Shares shall, upon such
expiration, be readjusted and shall thereafter be such Exercise Price and such
number of Warrant Shares as would have been had such Exercise Price and such
number of Warrant Shares been originally adjusted (or had the original
adjustment not been required, as the case may be) as if:
(i) the only shares of Common Stock so issued were the shares of Common
Stock, if any, actually issued or sold upon the exercise of such
Rights; and
(ii) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus
the aggregate consideration, if any, actually received by the Company
for the issuance, sale or grant of all such Rights, whether or not
exercised; provided, however, that no such readjustment shall have the
effect of increasing the Exercise Price by an amount in excess of the
amount of the reduction initially made in respect of the issuance,
sale, or grant of such Rights.
SECTION 5.2. Fractional Interest. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon such exercise shall be computed on the basis of the aggregate number of
shares of Common Stock acquirable on exercise of the Warrants so presented. If
any fraction of a share of Common Stock would, except for the provisions of this
Section 5.2, be issuable on the exercise of any Warrant, the Company shall
either (i) pay an amount in cash calculated by the Company to equal the per
share Fair Market Value of the Common Stock multiplied by such fraction of a
share of Common Stock computed to the nearest whole cent or (ii) aggregate all
such fractional shares of Common Stock into a whole number of shares and sell
such aggregated fractional shares on behalf of the Holders entitled thereto in a
public or private sale and distribute, on a pro rata basis, the net cash
proceeds therefrom to such Holders. While the Company will use its best efforts
to secure the best available sale price for such aggregated fractional shares,
such price shall not necessarily be the highest price obtainable for such
shares. By their acceptances of the Warrant Certificates, Holders expressly
waive any and all rights to receive any fraction of a share of Common Stock or a
stock certificate or scrip representing a fraction of a share of Common Stock.
SECTION 5.3. 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.
SECTION 5.4. 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, except for a voluntary tender or exchange
offer made by the Company or any subsidiary of the Company subject to Section
13(e) of the Exchange Act, a repurchase thereof and designation of such shares
as treasury stock shall not be deemed to be a redemption thereof for the
purposes of this Warrant Agreement.
SECTION 5.5. Notices to Warrant Agent and Holders. Whenever the number of
Warrant Shares is adjusted or the Exercise Price in respect thereof is adjusted,
as herein provided, the Company shall promptly or, if notice of such adjustment
is required to be given to DTC, at least five (5) days prior to the date on
which notice of such adjustment is given to DTC, give to each Holder notice of
such adjustment or adjustments and shall promptly deliver to each Holder and the
Warrant Agent an Officer's Certificate (confirmed by a certificate from the
Company's independent certified public accountants) setting forth: (i) the
number of Warrant Shares issuable upon the exercise of each Warrant and the
Purchase Price of such shares after such adjustment; (ii) a brief statement of
the facts requiring such adjustment; and (iii) the computation by which such
adjustment was made.
So long as any Warrant is outstanding, within ninety (90) days of the end
of each fiscal year of the Company, the Company shall deliver to each Holder an
Officer's Certificate setting forth: (i) the number of Warrant Shares issuable
upon the exercise of each Warrant and the Exercise Price of such shares as of
the end of such fiscal year; (ii) a brief statement of the facts requiring each
adjustment, if any, required to be made in such fiscal year; and (iii) the
computation by which each such adjustment was made.
In the event that the Holders of at least 25% of the outstanding Warrants
shall challenge any of the calculations set forth in such notice within 20
Business Days after the Company's delivery thereof, the Company shall retain an
Independent Financial Advisor to prepare and execute a certificate verifying
that no adjustment is required. The Company shall promptly cause a signed copy
of any certificate prepared pursuant to this Section 5.5 to be delivered to each
Holder. The Company shall keep at the Warrant Agent Office copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours upon reasonable notice by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.
ARTICLE VI
CONCERNING THE WARRANT AGENT
SECTION 6.1. Warrant Agent. At no time when the Company may be acting as
its own Warrant Agent shall any of its obligations to the Holders be in any
respect reduced as a result thereof. The Warrant Agent shall have the powers and
authority specifically granted to and conferred upon it in the Warrant
Certificates and this Warrant Agreement and such further powers and authority to
act on behalf of the Company as the Company may hereafter grant to or confer
upon it and it shall accept in writing. All of the terms and provisions with
respect to such powers and authority contained in the Warrant Certificates are
subject to and governed by the terms and provisions hereof.
SECTION 6.2. Conditions of Warrant Agent's Obligations. The Warrant Agent
accepts its obligations herein set forth upon the terms and conditions hereof
and in the Warrant Certificates, including the following, to all of which the
Company agrees and to all of which the rights hereunder of the Holders from time
to time of the Warrant Certificates shall be subject:
(a) The Warrant Agent shall be entitled to compensation to be agreed upon
with the Company in writing for all services rendered by it and the Company
agrees promptly to pay such compensation and to reimburse the Warrant Agent for
its reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred without gross negligence, bad faith or willful misconduct on
its part in connection with the services rendered by it hereunder. The Company
also agrees to indemnify the Warrant Agent, each predecessor Warrant Agent, and
their respective directors, officers, affiliates, agents and employees for, and
to hold it and its directors, officers, affiliates, agents and employees
harmless against, any loss, liability or expense of any nature whatsoever
(including, without limitation, fees and expenses of counsel) incurred without
gross negligence, bad faith or willful misconduct on the part of the Warrant
Agent or predecessor Warrant Agent, arising out of or in connection with its
acting as such Warrant Agent hereunder and its exercise or failure to exercise
of its rights and performance of its obligations hereunder. The obligations of
the Company under this Section 6.2 shall survive the exercise and the expiration
of the Warrant Certificates and the resignation and removal of the Warrant
Agent.
(b) In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship of agency or trust for or
with any of the owners or Holders of the Warrant Certificates.
(c) The Warrant Agent may consult with counsel and any advice or written
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion.
(d) The Warrant Agent shall be fully protected and shall incur no liability
for or in respect of any action taken or omitted to be taken or thing suffered
by it in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, opinion of counsel, instruction, statement or other
paper or document reasonably believed by it to be genuine and to have been
presented or signed by the proper parties.
(e) The Warrant Agent and its Related Parties may become the owners of, or
acquire any interest in, Warrant Certificates, shares or other obligations of
the Company with the same rights that it or they would have it if were not the
Warrant Agent hereunder and, to the extent permitted by applicable law, it or
they may engage or be interested in any financial or other transaction with the
Company and may act on, or as depositary, trustee or agent for, any committee or
body of holders of shares or other obligations of the Company as freely as if it
were not the Warrant Agent hereunder. Nothing in this Warrant Agreement shall be
deemed to prevent the Warrant Agent or such Related Parties from acting in any
other capacity for the Company.
(f) The Warrant Agent shall not be under any liability for interest on, and
shall not be required to invest, any money at any time received by it pursuant
to any of the provisions of this Warrant Agreement or of the Warrant
Certificates.
(g) The Warrant Agent shall not be under any responsibility in respect of
the validity of this Warrant Agreement (or any term or provision hereof) or the
execution and delivery hereof or in respect of the validity or execution of any
Warrant Certificate (except its authentication thereof).
(h) The recitals and other statements contained herein and in the Warrant
Certificates (except as to the Warrant Agent's authentication thereon) shall be
taken as the statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of such recitals or other statements. The
Warrant Agent does not make any representation as to the validity or sufficiency
of this Warrant Agreement or the Warrant Certificates; provided, however, that
the Warrant Agent shall not be relieved of its duty to authenticate the Warrant
Certificates as authorized by this Warrant Agreement. The Warrant Agent shall
not be accountable for the use or application by the Company of the proceeds of
the exercise of any Warrant.
(i) Before the Warrant Agent acts or refrain from acting with respect to
any matter contemplated by this Warrant Agreement, it may require:
(A) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Warrant
Agreement relating to the proposed action have been complied with; and
(B) if reasonably necessary in the sole judgment of the Warrant Agent, an
opinion of counsel for the Company stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each Officers' Certificate or, if requested, an opinion of counsel (with
respect to which such counsel may rely, as to matters of fact, on a certificate
or certificates of Officers of the Company) with respect to compliance with a
condition or covenant provided for in this Warrant Agreement shall include:
(2) a statement that the Person making such certificate or opinion has read
such covenant or condition;
(3) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(4) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(5) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been complied with.
(j) The Warrant Agent shall be obligated to perform such duties as are
herein and in the Warrant Certificates specifically set forth and no implied
duties or obligations shall be read into this Warrant Agreement or the Warrant
Certificates against the Warrant Agent. The Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the Company of
any of the Warrant Certificates authenticated by the Warrant Agent and delivered
by it to the Company pursuant to this Warrant Agreement. The Warrant Agent shall
have no duty or responsibility in case of any default by the Company in the
performance of its covenants or agreements contained in the Warrant Certificates
or in the case of the receipt of any written demand from a Holder with respect
to such default, including, without limiting the generality of the foregoing,
any duty or responsibility to initiate or attempt to initiate any proceedings at
law or otherwise or, except as provided in Section 7.2 hereof, to make any
demand upon the Company. The Warrant Agent shall not be obligated to perform any
duty to the extent prohibited by law.
(k) Unless otherwise specifically provided herein, any order, certificate,
notice, request, direction or other communication from the Company made or given
under any provision of this Warrant Agreement shall be sufficient if signed by
its Chief Executive Officer, President, or Vice President and attested by its
Treasurer, Controller, Secretary or any Assistant Secretary.
(l) The Warrant Agent shall have no responsibility in respect of any
adjustment pursuant to Article V hereof.
(m) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing by the Warrant
Agent of the provisions of this Warrant Agreement.
(n) The Warrant Agent is hereby authorized and directed to accept written
instructions with respect to the performance of its duties hereunder from any
one of the Chief Executive Officer, President, the Treasurer, the Controller,
any Vice President or the Secretary of the Company or any other officer or
official of the Company reasonably believed to be authorized to give such
instructions and to apply to such officers or officials for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions with respect to any matter arising in connection with the Warrant
Agent's duties and obligations arising under this Warrant Agreement. Such
application by the Warrant Agent for written instructions from the Company may,
at the option of the Warrant Agent, set forth in writing any action proposed to
be taken or omitted by the Warrant Agent with respect to its duties or
obligations under this Warrant Agreement and the date on or after which such
action shall be taken, and the Warrant Agent shall not be liable for any action
taken or omitted to be taken in accordance with a proposal included in any such
application on or after the date specified therein (which date shall be not less
than 10 Business Days after the Company receives such application unless the
Company consents to a shorter period), provided that (i) such application
includes a statement to the effect that it is being made pursuant to this
Section 6.2(n) and that unless objected to prior to such date specified in the
application, the Warrant Agent will not be liable for any such action or
omission to the extent set forth in such application and (ii) prior to taking or
omitting any such action, the Warrant Agent has not received written
instructions objecting to such proposed action or omission.
(o) Whenever in the performance of its duties under this Warrant Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the President, the Treasurer,
the Controller, any Vice President or the Secretary of the Company or any other
officer or official of the Company reasonably believed by the Warrant Agent to
be authorized to give such instructions and delivered to the Warrant Agent and
such certificate shall grant full authorization to the Warrant Agent for any
action taken or suffered in good faith by it under the provisions of this
Warrant Agreement in reliance upon such certificate.
(p) The Warrant Agent shall not be required to risk or expend its own funds
in the performance of its obligations and duties hereunder.
SECTION 6.3. Resignation and Appointment of Successor.
(a) The Company agrees, for the benefit of the Holders, that there shall at
all times be a Warrant Agent hereunder.
(b) The Warrant Agent may at any time resign as Warrant Agent by giving
written notice to the Company of such intention on its part, specifying the date
on which its desired resignation shall become effective, provided that such date
shall be at least 30 days after the date on which such notice is given unless
the Company agrees to accept less notice. Upon receiving such notice of
resignation, or in the event the Company shall determine not to continue to act
as its own Warrant Agent, the Company shall promptly appoint a successor Warrant
Agent, qualified as provided in Section 6.3(d) hereof, by written instrument in
duplicate signed on behalf of the Company, one copy of which shall be delivered
to the resigning Warrant Agent and one copy to the successor Warrant Agent. As
provided in Section 6.3(d) hereof, such resignation shall become effective upon
the earlier of (x) the acceptance of the appointment by the successor Warrant
Agent or (y) 30 days after receipt by the Company of notice of such resignation.
The Company may, at any time and for any reason, and shall, upon any event set
forth in the next succeeding sentence, remove the Warrant Agent and appoint a
successor Warrant Agent by written instrument in duplicate, specifying such
removal and the date on which it is intended to become effective, signed on
behalf of the Company, one copy of which shall be delivered to the Warrant Agent
being removed and one copy to the successor Warrant Agent. The Warrant Agent
shall be removed as aforesaid if it shall become incapable of acting, or shall
be adjudged a bankrupt or insolvent, or a receiver of the Warrant Agent or of
its property shall be appointed, or any public officer shall take charge or
control of it or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation. Any removal of the Warrant Agent and any
appointment of a successor Warrant Agent shall become effective upon acceptance
of appointment by the successor Warrant Agent as provided in Section 6.3(d). As
soon as practicable after appointment of the successor Warrant Agent, the
Company shall cause written notice of the change in the Warrant Agent to be
given to each of the registered Holders in the manner provided for in Section
7.4 hereof.
(c) Upon resignation or removal of the Warrant Agent, if the Company shall
fail to appoint a successor Warrant Agent within a period of 30 days after
receipt of such notice of resignation or removal, then the Holders or the
Warrant Agent may apply to a court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Pending appointment of a successor to the
Warrant Agent, either by the Company or by such a court, the duties of the
Warrant Agent shall be carried out by the Company.
(d) Any successor Warrant Agent, whether appointed by the Company or by a
court, shall be a bank or trust company in good standing, incorporated under the
laws of the United States of America or any State thereof and having, at the
time of its appointment, a combined capital surplus of at least $50 million.
Such successor Warrant Agent shall execute and deliver to its predecessor and to
the Company an instrument accepting such appointment hereunder and all the
provisions of this Warrant Agreement, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as Warrant Agent hereunder, and such
predecessor shall thereupon become obligated to (i) transfer and deliver, and
such successor Warrant Agent shall be entitled to receive, all securities,
records or other property on deposit with or held by such predecessor as Warrant
Agent hereunder and (ii) upon payment of the amounts then due it pursuant to
Section 6.2(a) hereof, pay over, and such successor Warrant Agent shall be
entitled to receive, all money deposited with or held by any predecessor Warrant
Agent hereunder.
(e) Any corporation or bank into which the Warrant Agent hereunder may be
merged or converted, or any corporation or bank with which the Warrant Agent may
be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Warrant Agent shall be a party, or any
corporation or bank to which the Warrant Agent shall sell or otherwise transfer
all or substantially all of its corporate trust business or assets, shall be the
successor to the Warrant Agent under this Warrant Agreement (provided that such
corporation or bank shall be qualified as aforesaid) without the execution or
filing of any document or any further act on the part of any of the parties
hereto.
(f) No Warrant Agent under this Warrant Agreement shall be personally
liable for any action or omission of any successor Warrant Agent or of the
Company.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Defined Terms. Unless otherwise defined in this Warrant
Agreement, the capitalized terms set forth below and used in this Warrant
Agreement shall have the meanings given to such terms below:
"Aggregate Consideration Receivable" means, in the case of a sale, issuance
or other distribution of shares of Common Stock, the aggregate amount paid to
the Company in connection therewith and, in the case of an issuance, sale or
other distribution of Rights, or any amendment thereto, the sum of: (a) the
aggregate amount paid to the Company for such Rights; plus (b) the aggregate
consideration or premium stated in such Rights to be payable for the shares of
Common Stock covered thereby, in each case, without deduction for any fees,
expenses or underwriters discounts; provided, further, that if all or any
portion of the aggregate amount paid to the Company for such Rights was not paid
in cash, the amount of such consideration other than cash received by the
Company shall be deemed to be the then Fair Market Value of such consideration.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday and Friday on
which (i) banks in New York City or the city in which the principal corporate
trust office of the Warrant Agent is located, (ii) the principal national
securities exchange or market, if any, on which the Common Stock or the Warrants
are listed or admitted to trading, in each case, are not obligated or permitted
by law or executive order to be closed.
"Closing Prices" means, per share of Common Stock or any other security, on
any date specified herein:
(i) the last sale price, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid and asked prices on
such date, in each case as officially reported on the principal national
securities exchange on which the Common Stock or other security is then listed
or admitted to trading; and
(ii) if the Common Stock or other security is not then listed or admitted
to trading on any national securities exchange, but is designated as a national
market system security by the National Association of Securities Dealers, Inc.
("NASD"), the last trading price of the Common Stock or such other security on
such date, or if there shall have been no trading on such date or if the Common
Stock or such other security is not so designated, the average of the reported
closing bid and asked prices on such date as shown by the National Association
of Securities Dealers Annotated Quotation System ("NASDAQ").
"Consideration Per Share" means, with respect to shares of Common Stock or
Rights, the quotient of: (a) the Aggregate Consideration Receivable in respect
of such shares of Common Stock or such Rights, divided by (b) the total number
of such shares of Common Stock or, in the case of Rights, the total number of
shares of Common Stock into which such Rights are exercisable or convertible.
"Fair Market Value" means, per share of Common Stock or any other security,
the fair market value of one share of Common Stock or such other security as
determined by the Board of Directors of the Company in their good faith
reasonable judgment as of the date of determination.
"Independent Financial Advisor" means ▇▇▇▇▇▇▇▇▇ & Company, Inc. or any of
its successors. If and only to the extent ▇▇▇▇▇▇▇▇▇ & Company, Inc. or any such
successor shall resign from acting as such, such other firm of independent
certified public accountants, an investment banking or appraisal firm (which
firm shall own no equity interest of, and shall not be an affiliate, subsidiary
or Related Party of the Company) of recognized national standing to be retained
by the Company and acceptable to ▇▇▇▇▇▇▇▇▇ & Company, Inc. and the Warrant
Agent.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Related Party" means, with respect to any Person: (A) any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person, (B) any spouse or immediate family member of
such Person or (C) a trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons holding a 75% or more
controlling interest of which consist of such Person and/or such other Persons
or entities referred to in the immediately preceding clause (A). A Person shall
be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Right" means and includes:
(a) any warrant (including, without limitation, any Warrant) or any option
(including, without limitation, employee stock options) to acquire Common Stock;
(b) any right issued to holders of the Common Stock, or any class thereof,
permitting the holders thereof to subscribe to shares of Additional Common Stock
(pursuant to a rights offering or otherwise);
any right to acquire Common Stock pursuant to the provisions of any
security convertible or exchangeable into Common Stock; and
(d) any similar right permitting the holder thereof to subscribe for or
purchase shares of Common Stock.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
SECTION 7.2. Amendment. This Warrant Agreement and the terms of the
Warrants may be amended by the Company and the Warrant Agent, without the
consent of any Holder, for the purpose of curing any ambiguity, or for curing,
correcting or supplementing any defective or inconsistent provision contained
herein or therein or in any other manner which the Company may deem necessary or
desirable and which shall not adversely affect in any respect the interests of
the Holders.
The Company and the Warrant Agent may modify this Warrant Agreement and the
terms of the Warrants with the consent of not less than a majority in number of
the then outstanding Warrants for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of this Warrant
Agreement or modifying in any manner the rights of the Holders; provided,
however, that no such modification that increases the Exercise Price, reduces
the period of time during which the Warrants are exercisable hereunder,
otherwise adversely affects the exercise rights of the Holders, reduces the
percentage required for modification, or effects any change to this Section 7.1,
may be made with respect to an outstanding Warrant without the consent of the
Holder of such Warrant.
Any modification or amendment made in accordance with this Warrant
Agreement will be conclusive and binding on all present and future Holders
whether or not they have consented to such modification or amendment or waiver
and whether or not notation of such modification or amendment is made upon such
Warrant Certificates. Any instrument given by or on behalf of any Holder in
connection with any consent to any modification or amendment will be conclusive
and binding on all subsequent Holders.
SECTION 7.3. Notices and Demands to the Company and Warrant Agent. If the
Warrant Agent shall receive any notice or demand addressed to the Company by the
Holder of a Warrant Certificate pursuant to the provisions hereof or of the
Warrant Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company. SECTION 7.4. Address for Notices to the Company and for
Transmission of Documents. All notices hereunder to the Company and the Warrant
Agent shall be deemed to have been given when received at the following
addresses:
To the Company:
New World Coffee--Manhattan Bagel, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇▇
To the Warrant Agent:
United States Trust Company of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:Corporate Trust Administration-New World Coffee
Telephone Number:▇▇▇-▇▇▇-▇▇▇▇
Telecopy Number:▇▇▇-▇▇▇-▇▇▇▇
SECTION 7.5. Notices to Holders. Notices to Holders shall be mailed to such
Holders at the addresses of such Holders as they appear in the Warrant Register.
Any such notice shall be sufficiently given if sent by first-class mail, postage
prepaid.
SECTION 7.6. Applicable Law. THE VALIDITY, INTERPRETATION AND PERFORMANCE
OF THIS WARRANT AGREEMENT AND EACH WARRANT ISSUED HEREUNDER AND OF THE
RESPECTIVE TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
SECTION 7.7. Obtaining of Governmental Approvals. The Company will from
time to time take all action required to be taken by it which may be necessary
to obtain and keep effective any and all permits, consents and approvals of
governmental agencies and authorities and securities laws filings under United
States Federal and State laws, and the rules and regulations of all stock
exchanges or markets on which the Warrants may be listed, which may be or become
requisite in connection with the issuance, sale, transfer, and delivery of the
Warrant Certificates, the exercise of the Warrants or the issuance, sale,
transfer and delivery of the Warrant Shares, it being understood, however, that
the only contractual registration rights of the Holders are those set forth in
the Registration Rights Agreement, dated of even date herewith (the
"Registration Rights Agreement"), between the Company and the Initial Purchaser.
SECTION 7.8. Persons Having Rights Under Agreement. Nothing in this Warrant
Agreement expressed or implied and nothing that may be inferred from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any Person other than the Company, the Warrant Agent and the Holders from
time to time of the Warrant Certificates any right, remedy or claim under or by
reason of this Warrant Agreement or of any covenant, condition, stipulation,
promise or agreement hereof and all covenants, conditions, stipulations,
promises and agreements in this Warrant Agreement contained shall be for the
sole and exclusive benefit of the Company and the Warrant Agent and their
successors and of the Holders from time to time of the Warrant Certificates.
SECTION 7.9. Headings. The descriptive headings of the several Articles and
Sections of this Warrant Agreement are inserted for convenience of reference
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 7.10. Counterparts. This Warrant Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such Counterparts shall together constitute but one and the same
instrument.
SECTION 7.11. Inspection of Warrant Agreement. A copy of this Warrant
Agreement shall be available at all reasonable times at the Warrant Agent
Office, 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.
SECTION 7.12. Successors. All the covenants and provisions of this Warrant
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
Company and the Warrant Agent as of the day and year first above written.
NEW WORLD COFFEE--MANHATTAN BAGEL, INC.
By: /s/__________________________
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/__________________________
Name:
Title:
EXHIBIT A
{FORM OF WARRANT CERTIFICATE}
{FACE}
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS. NEITHER THIS WARRANT CERTIFICATE NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE, BY ITS
ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THE WARRANTS
REPRESENTED BY THIS WARRANT CERTIFICATE PRIOR TO THE DATE WHICH IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THE WARRANTS REPRESENTED BY THIS
WARRANT CERTIFICATE AND THE LAST DATE ON WHICH NEW WORLD COFFEE--MANHATTAN
BAGEL, INC. ("THE COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THE
WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE (OR ANY PREDECESSOR OF SUCH
WARRANTS OR WARRANT CERTIFICATE) (THE "RESALE RESTRICTION TERMINATION DATE"),
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE WARRANTS REPRESENTED BY THIS
WARRANT CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE WARRANT AGENT'S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSE (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, AN ASSIGNMENT IN THE FORM APPEARING
ON THE OTHER SIDE OF THIS WARRANT CERTIFICATE IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE WARRANT AGENT. THIS LEGEND SHALL BE REMOVED UPON THE REQUEST
OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THIS SECURITY IS SUBJECT TO A REGISTRATION RIGHTS AGREEMENT DATED AS OF
JUNE 19, 2001 BETWEEN THE COMPANY AND ▇▇▇▇▇▇▇▇▇ & COMPANY, INC. (THE "INITIAL
PURCHASER"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
No. [ ] [ ] Warrants
WARRANT CERTIFICATE
NEW WORLD COFFEE--MANHATTAN BAGEL, INC.
This Warrant Certificate certifies that [ ], or its registered assigns, is
the registered holder of [ ] Warrants (the "Warrants") to purchase shares of
Common Stock, par value $.001 per share (the "Common Stock"), of New World
Coffee--Manhattan Bagel, Inc., a Delaware corporation (the "Company"). Each
Warrant entitles the holder to purchase from the Company at any time on or after
the date hereof and until 5:00 p.m., New York City time, on June 19, 2006 (the
"Expiration Date"), [ ] fully paid and non-assessable shares of Common Stock (as
such number may be adjusted from time to time, the "Warrant Shares", which may
also include any other securities or property issuable upon exercise of a
Warrant, such adjustment and inclusion each as provided in the Warrant
Agreement) at the initial exercise price (the "Exercise Price") of $.01 per
Warrant Share upon surrender of this Warrant Certificate and payment of the
Exercise Price at any office or agency maintained for that purpose by the
Company (the "Warrant Agent Office"), subject to the conditions set forth herein
and in the Warrant Agreement.
The Exercise Price shall be payable either (i) in cash or by certified or
official bank check in the lawful currency of the United States of America which
as of the time of payment is legal tender for payment of public or private debts
or (ii) by delivery of Warrant Certificates to the Company in accordance with
the Warrant Agreement. The Company has initially designated its principal
executive offices in New York, New York, as the initial Warrant Agent Office.
The number of Warrant Shares issuable upon exercise of the Warrants is subject
to adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City time, on
June 19, 2006 shall thereafter be void.
Reference is hereby made to the further provisions on the reverse hereof,
which provisions shall for all purposes have the same effect as though fully set
forth at this place.
All capitalized terms used in this Warrant Certificate and not otherwise
defined herein shall have the meanings ascribed thereto in the Warrant
Agreement.
This Warrant Certificate shall not be valid unless authenticated by the
Warrant Agent, as such term is used in the Warrant Agreement. Initially, the
Company shall act as its own Warrant Agent.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
WITNESS the signature of the Company's duly authorized officer. Dated: June
19, 2001
NEW WORLD COFFEE--MANHATTAN BAGEL, INC.
By: __________________________
Name: R. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
Certificate of Authentication:
This is one of the Warrants
referred to in the within-
mentioned Warrant Agreement:
UNITED STATES TRUST COMPANY OF NEW YORK
as Warrant Agent
By: __________________________
Name:
Title:
{FORM OF WARRANT CERTIFICATE}
{REVERSE}
NEW WORLD COFFEE - MANHATTAN BAGEL, INC.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, each of which represents the right to purchase at
any time on or after the date hereof and until 5:00 p.m., New York City time, on
June 19, 2006, 98 Warrant Shares, subject to adjustment as set forth in the
Warrant Agreement (as defined). The Warrants are issued pursuant to a Warrant
Agreement dated as of June 19, 2001 (the "Warrant Agreement"), duly executed and
delivered by the Company for the benefit of the holders from time to time of the
Warrant Certificates, and subject to the terms and provisions of the
Registration Rights Agreement, dated as of June 20, 2001, between ▇▇▇▇▇▇▇▇▇ &
Company, Inc. and the Company (the "Registration Rights Agreement"), which
Warrant Agreement and Registration Rights Agreement are hereby incorporated by
reference in and made a part of this instrument and are hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Warrant Agent, the Company and the holders (the
words "holders" or "holder" meaning the registered holders or registered holder)
of the Warrant Certificates. Warrants may be exercised by (i) surrendering at
any Warrant Agent Office this Warrant Certificate with the form of Election to
Exercise set forth hereon duly completed and executed and (ii) paying in full
the Warrant Exercise Price for each such Warrant exercised and any other amounts
required to be paid pursuant to the Warrant Agreement.
If all of the items referred to in the last sentence of the preceding
paragraph are received by the Warrant Agent at or prior to 2:00 p.m., New York
City time, on a Business Day, the exercise of the Warrant to which such items
relate will be effective on such Business Day. If any items referred to in the
last sentence of the preceding paragraph are received after 2:00 p.m., New York
City time, on a Business Day, the exercise of the Warrants to which such item
relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Warrants on the
Expiration Date, if all of the items referred to in the last sentence of the
preceding paragraph are received by the Warrant Agent at or prior to 5:00 p.m.,
New York City time, on such Expiration Date, the exercise of the Warrants to
which such items relate will be effective on the Expiration Date.
Subject to the terms of the Warrant Agreement, as soon as practicable after
the exercise of any Warrant or Warrants, the Company shall issue or cause to be
issued to or upon the written order of the registered holder of this Warrant
Certificate, a certificate or certificates evidencing the Warrant Share or
Warrant Shares to which such holder is entitled, in fully registered form,
registered in such name or names as may be directed by such holder pursuant to
the Election to Exercise, as set forth on the reverse of this Warrant
Certificate. Such certificate or certificates evidencing the Warrant Share or
Warrant Shares shall be deemed to have been issued and any Persons who are
designated to be named therein shall be deemed to have become the holder of
record of such Warrant Share or Warrant Shares as of the close of business on
the date upon which the exercise of this Warrant was deemed to be effective as
provided in the preceding paragraph.
The Company will not be required to issue fractional shares of Common Stock
upon exercise of the Warrants or distribute Warrant Certificates that evidence
fractional shares of Common Stock. In lieu of fractional shares of Common Stock,
there shall be paid to the registered Holder of this Warrant Certificate at the
time such Warrant Certificate is exercised an amount in cash equal to the same
fraction of the Fair Market Value per share of Common Stock as determined in
accordance with the Warrant Agreement.
Warrant Certificates, when surrendered at any Warrant Agent Office by the
holder thereof in person or by legal representative or attorney duly authorized
in writing, may be exchanged for a new Warrant Certificate or new Warrant
Certificates evidencing in the aggregate a like number of Warrants, in the
manner and subject to the limitations provided in the Warrant Agreement, without
charge except for any tax or other governmental charge imposed in connection
therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered holder
hereof as the absolute owner of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone) for the purpose of
any exercise hereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
All capitalized terms used in this Warrant Certificate and not otherwise
defined herein have the meanings given to such terms in the Warrant Agreement.
ELECTION TO EXERCISE
To be executed upon exercise of Warrants on the Exercise Date
The undersigned hereby irrevocably elects to exercise ____________ of the
Warrants represented by this Warrant Certificate and purchase the whole number
of Warrant Shares issuable upon the exercise of such Warrants and herewith
tenders payment for such Warrant Shares:*
(i) __ in the amount of $__________ in cash or by certified or official
bank check; and/or
(ii) __ in Warrant Certificates, in each case, pursuant to Section 2.1 of
the Warrant Agreement.
The undersigned requests that a certificate representing such Warrant
Shares be registered in the name of _____________________, whose address is
_____________________, and that such certificate be delivered to
_____________________, whose address is _____________________. Any cash payments
to be paid in lieu of a fractional Warrant Share should be made to
_____________________, whose address is _____________________, and the check
representing payment thereof should be delivered to _____________________, whose
address is ---------------------.
Name of holder of
Warrant Certificate:
------------------------------------------------
(Please Print)
Tax Identification or
Social Security Number:
---------------------------------------------
Signature:
----------------------------------------------------------
Note: The above signature must
correspond with the name as written upon
the face of this Warrant Certificate in
every particular, without alteration or
enlargement or any change whatever.
Dated:_______________, __
--------
* Indicate, as applicable, the form of consideration being provided.
ASSIGNMENT
For value received, _________ hereby sells, assigns and transfers unto
_________ the within Warrant Certificate, together with all right, title and
interest therein, 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:
--------------------------------------------------
Note: The above signature must
correspond with the name as written upon
the face of this Warrant Certificate in
every particular, without alteration or
enlargement or any change whatever.
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to Purchase Common Stock (the "Warrants") of New World
Coffee--Manhattan Bagel, Inc.
This Warrant Certificate relates to _____ Warrants held in certificated
form by ____________________ (the "Transferor").
The Transferor:*
has requested the Warrant Agent by written order to exchange or register
the transfer of a Warrant or Warrants.
In connection with such request and in respect of each such Warrant, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Warrants and the restrictions on
transfers thereof as provided in Section 1.9(b) of such Warrant Agreement, and
that the transfer of this Warrant does not require registration under the
Securities Act of 1933, as amended (the "Act") because(*):
Such Warrant is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 1.9(a)(ii)(y)(A) or Section 1.9 (d)(i)(A)
of the Warrant Agreement).
Such Warrant is being transferred in accordance with Rule 144 under the
Act.
Such Warrant is being transferred in accordance with Regulation S under the
Act. In connection with our proposed sale of Warrants, we confirm that such sale
has been effected pursuant to and in accordance with Regulation S under the Act,
and, accordingly, we represent that: (1) the offer of the Warrants was not made
to a person in the United States; (2) either (a) at the time the buy offer was
originated, the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor any
person acting on our behalf knows that the transaction has been pre-arranged
with a buyer in the United States; (3) no directed selling efforts have been
made in the United States in contravention of the requirements of Rule 903 or
Rule 904 of Regulation S under the Securities Act, as applicable; (4) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act; (5) we have advised the transferee of the
transfer restrictions applicable to the Warrants; and (6) if the circumstances
set forth in Rule 904(b) under the Securities Act are applicable, we have
complied with the additional conditions therein, including (if applicable)
sending a confirmation or other notice stating that the Warrants may only be
offered and sold during the restricted period specified in Rule 903(b)(2) or
(3), as applicable, in accordance with the provisions of Regulation S; pursuant
to registration of the Warrants under the Securities Act; or pursuant to an
available exemption from the registration requirements under the Act. You and
the Company are entitled to rely upon this letter and are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Such Warrant is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Act, other than Rule 144 or
Regulation S under the Act. An opinion of counsel to the effect that such
transfer does not require registration under the Act accompanies this
Certificate.
{INSERT NAME OF TRANSFEROR}
By:______________________________
Date: ____________________
* Check applicable box.
EXHIBIT C
Transferee Letter of Representation
New World Coffee--Manhattan Bagel, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
In connection with our proposed purchase of warrants ("Warrants") to
purchase Common Stock, par value $0.001 per share (the "Common Stock", together
with the Warrants, the "Securities"), of New World Coffee--Manhattan Bagel, Inc.
(the "Company"), we confirm that:
1. We understand that the Securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Securities to offer, sell or otherwise transfer such Securities prior
to the date which is two years after the later of the date of original issue and
the last date on which the Company or any affiliate of the Company was the owner
of such Securities, or any predecessor thereto (the "Resale Restriction
Termination Date") only (a) to the Company, (b) pursuant to a registration
statement which has been declared effective under the Securities Act, (c)
pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (d) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7)
of Rule 501 under the Securities Act that is purchasing for his own account or
for the account of such an institutional "accredited investor," or (e) pursuant
to any other available exemption from the registration requirements of the
Securities Act, subject in each of the foregoing cases to any requirement of law
that the disposition of our property or the property of such investor account or
accounts be at all times within our or their control and to compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Securities is proposed to be made pursuant to clause (e)
above prior to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this letter to
the warrant agent under the Warrant Agreement pursuant to which the Securities
were issued (the "Warrant Agent") which shall provide, among other things, that
the transferee is an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act and
that it is acquiring such Securities for investment purposes and not for
distribution in violation of the Securities Act. The Warrant Agent and the
Company reserve the right, prior to any offer, sale or other transfer prior to
the Resale Restriction Termination Date of the Securities.