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EXHIBIT 10.42
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement") dated as of July 9, 1999, among
WATERLINK, INC., a Delaware corporation (the "Company"), and each of the
Warrantholders named on the execution page hereof (the "Warrantholders").
R E C I T A L S:
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This Agreement is entered into in connection with assistance provided
by the Warrantholders to the Company in improving its capital structure,
including that certain Fifth Amendment to the Credit Agreement dated as of June
27, 1997, and as amended and restated as of May 19, 1998, among the Company, the
financial institutions from time to time party thereto, and Bank of America
National Trust and Savings Association, as Agent, as from time to time restated,
amended or modified (the "Fifth Amendment"). At the time the Company is entering
into the Fifth Amendment, each of the Warrantholders has agreed to provide a
guaranty of the Company's repayment of part of the Company's bank debt. In order
to induce the Warrantholders to make their commitments, the Warrantholders have
required the Company, and the Company has agreed, to issue certain warrants to
purchase shares of the Company's common stock, $.01 par value per share ("Common
Stock").
NOW, THEREFORE, for good and valuable consideration the receipt of
which is hereby acknowledged and the promises and the mutual agreements set
forth herein, the parties hereto agree as follows:
1. ISSUANCE OF WARRANTS; FORM OF WARRANTS.
1.1 GENERAL. The Company hereby agrees to issue (pro rata in
proportion to the amount of the Warrantholder's guaranty of the
Company's obligations under the Credit Agreement) to the
Warrantholders, at the times and upon the conditions specified below,
(i) warrants (the "Base Warrants") to purchase, in the aggregate, up to
125,000 shares of the Common Stock, $.01 par value per share (the
"Common Stock"), and (ii) warrants (the "Additional Warrants") to
purchase, in the aggregate, up to 158,637 shares of Common Stock, in
the case of (i) and (ii) above, subject to the terms and on the
conditions set forth in this Agreement. The Base Warrants and the
Additional Warrants are referred to herein together as the "Warrants".
Each Warrant, once issued, will initially entitle the holder thereof to
purchase one share of Common Stock for the purchase price set forth in
Section 5 below, as adjusted from time to time pursuant to the
provisions of Section 9 below.
1.2 ISSUANCE OF BASE WARRANTS. Base Warrants shall be issued
on the terms and upon the satisfaction of the following conditions, in
all cases in the amounts set forth on Schedule 1 hereto:
(a) All of the Base Warrants shall be issued to the
Warrantholders on the date hereof.
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(b) The ▇▇▇▇▇▇▇▇ Guaranty (as defined in the Fifth
Amendment) and each of the three management guaranties to be
executed in connection with the Fifth Amendment shall have been
executed and delivered by the parties thereto.
(c) The Fifth Amendment shall have become effective.
1.3 ISSUANCE OF ADDITIONAL WARRANTS. Additional Warrants shall
be issued on the terms and upon satisfaction of the following
conditions, in all cases in the amounts set forth on Schedule 1 hereto:
(a) Each of the conditions set forth in Section 1.2 shall
have been satisfied.
(b) All requisite consents and approvals to the issuance
of the Additional Warrants shall have been obtained, including,
without limitation, any required shareholder approval, in
accordance with the requirements established by the New York
Stock Exchange. The Company hereby agrees to use all reasonable
efforts, from time to time, to obtain the approval of the
Company's shareholders necessary to issue the Additional Warrants
as soon as reasonably practicable. Each of the Warrantholders
agrees to provide all necessary information and assistance to the
Company in its efforts to obtain such shareholder approval and to
vote all share of Common Stock held it or him in favor of such
approval.
2. FORM OF WARRANTS. The text of the Warrants and of the form of
election to purchase Common Stock underlying the Warrants (the "Warrant Stock")
to be set forth on the reverse thereof shall be substantially as set forth in
the Warrant Certificate ("Warrant Certificate"), attached as Exhibit A to this
Agreement. Each Warrant Certificate shall be executed on behalf of the Company
by the President or Vice President of the Company and attested by the Secretary
or an Assistant Secretary of the Company. Warrant Certificates shall be dated as
of the date of the execution thereof by the Company either upon initial issuance
or upon division, exchange, substitution or transfer as may be permitted
hereunder, provided that all such issuances of Warrants shall be deemed
effective upon the date that the conditions to their issuance are satisfied.
3. REGISTRATION. The Warrant Certificates shall be numbered and shall
be registered on the books of the Company (the "Warrant Register") as they are
issued. The Company shall be entitled to treat the registered holder of any
Warrant Certificate on the Warrant Register (the "Holder") as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant Certificate, or the Warrants'
represented thereby, on the part of any other person, and shall not be liable
for any registration or transfer of Warrant Certificates which are registered or
to be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with knowledge
of such facts that the Company's participation therein amounts to bad faith.
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4. TRANSFER OF WARRANT CERTIFICATE. The Warrant Certificate shall be
transferable only on the Warrant Register upon delivery of the Warrant
Certificate duly endorsed by the Holder or by its duly authorized attorney or
representative (with evidence reasonably satisfactory to the Company of such
authorization), or accompanied by evidence reasonably satisfactory to the
Company of succession, assignment or authority to transfer. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrant Certificates to
be transferred on the Warrant Register to any person, unless the Holder of such
Warrants shall furnish to the Company evidence satisfactory to the Company of
(i) compliance with the registration provisions of Section 5 of the Securities
Act of 1933, as amended (the "Act"), or (ii) the availability of an exemption
from compliance with the registration provisions of Section 5 of the Act.
5. TERM OF WARRANTS; EXERCISE OF WARRANTS.
5.1 TERM AND EXERCISE PRICE. Each outstanding Base Warrant and
each Additional Warrant entitles the registered owner thereof to
purchase one (1) share of Warrant Stock at any time prior to the close
of business on the fifth (5th) anniversary of the date hereof (the
"Expiration Date") at an initial purchase price per share of Warrant
Stock of $0.01, subject to adjustment pursuant to the provisions of
Section 9 of this Agreement (the "Warrant Price").
5.2 GENERAL.
(a) Subject to the provisions of this Agreement, each
Holder shall have the right to purchase from the Company (and
the Company shall issue and sell to such Holder) the number of
fully paid and nonassessable shares of Warrant Stock specified
in such Holder's Warrant Certificate(s) (as adjusted from time
to time in accordance with the provisions of Section 9 of this
Agreement), upon surrender of such Warrant Certificate(s) to
the Company or its duly authorized agent, and upon payment to
the Company of the Warrant Price, or, at the option of the
Holder, by conversion of unpaid principal and accrued interest
on the Notes, if then outstanding, in an amount equal to the
Warrant Price, as adjusted in accordance with the provisions
of Section 9 of this Agreement, for the number of shares of
Warrant Stock in respect of which such Warrants are then
exercised. The date of exercise (the "Exercise Date") of any
Warrant shall be deemed to be the date of receipt by the
Company of the Warrant Certificate duly filled in and signed
and accompanied by proper payment as hereinafter provided.
Payment of the Warrant Price shall be made as set forth in the
Warrant Certificate.
(b) Subject to Section 6 of this Agreement, upon such
exercise of Warrants, and payment of the Warrant Price as
aforesaid, the Company shall issue and cause to be delivered
with all reasonable dispatch (but in any event within twenty
(20) business days) to or (subject to the provisions of
Section 4 of this Agreement) upon the written order of the
Holder, a certificate for the number of full shares of Warrant
Stock so purchased upon the exercise of such Warrants,
together with cash, as provided in Section 9 of this
Agreement, in respect of any fraction of a share of such
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stock otherwise issuable upon such exercise. Except under
circumstances described in the following sentence, the shares
of Warrant Stock purchased pursuant to the immediately
preceding sentence shall be deemed to be issued to the Holder
as the record owner of such shares as of the close of business
on the Exercise Date. Notwithstanding the foregoing, if the
Company determines, on or after the date of exercise of any
Warrant, that issuance of the Warrant Stock represented
thereby would violate an applicable order, law, rule, or
regulation, including federal or state securities laws, the
Company shall so notify immediately the exercising Holder and
shall in good faith, and as expeditiously as possible,
endeavor to issue the Warrant Stock without such violation.
The right of purchase represented by the Warrants shall be
exercisable, at the election of the Holder thereof, either in
full or from time to time in part and, in the event that any
Warrant is exercised in respect of less than all of the shares
of Warrant Stock purchasable on such exercise at any time
prior to the Expiration Date, a new Warrant Certificate
evidencing the remaining Warrants shall be issued.
6. PAYMENT OF TAXES. The Company shall pay all documentary stamp taxes,
if any, attributable to the initial issuance of Warrant Stock upon the exercise
of Warrants PROVIDED, HOWEVER, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any permitted transfer involved
in the issue or delivery of any Warrant Certificates or Warrant Stock in a name
other than that of the registered Holder of such Warrants.
7. MUTILATED OR MISSING WARRANTS. Upon (i) receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of a Warrant Certificate, (ii) if requested by the Company, the
posting of a bond in an amount equal to the value of the lost, stolen or
destroyed Warrant Certificate, (iii) reimbursement to the Company of all
reasonable expenses incident thereto, and (iv) surrender and cancellation of
such Warrant Certificate, if mutilated, the Company will make and deliver in
lieu of such Warrant Certificate a new Warrant Certificate of like tenor and
representing an equivalent right or interest. The term "outstanding" when used
herein with reference to the Warrant Certificate as of any particular time shall
not include any Warrant Certificate in lieu of which a new Warrant Certificate
has been made and delivered by the Company in accordance with the provisions
hereof.
8. RESERVATION OF WARRANT STOCK.
(a) The Company represents that there has been
reserved out of the authorized and unissued shares of Common
Stock, a number of shares sufficient to provide for the
exercise of the right of purchase represented by the Warrant
Certificates as initially issued, and the Company, which
currently acts as the transfer agent for its Common Stock
("Transfer Agent") and every subsequent Transfer Agent for any
shares of the Company's capital stock issuable upon the
exercise of any of the Warrants are hereby irrevocably
authorized and directed at all times until the Expiration Date
or earlier termination of this Agreement to reserve such
number of authorized and unissued shares of Common Stock as
shall be required for such purpose. The Company will keep a
copy of this Agreement on file with every
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subsequent Transfer Agent for any shares of the Company's
capital stock issuable upon the exercise of the Warrants. The
Company will supply any such subsequent Transfer Agent with
duly executed stock certificates for issuance on exercise of
Warrants and will itself provide or make available any cash
which may be required by Section 10 of this Agreement. The
Company will furnish to any such subsequent Transfer Agent a
copy of all notices of adjustments, and certificates related
thereto, transmitted to each Holder pursuant to Section 9.3 of
this Agreement. All Warrant Certificates surrendered in the
exercise of the rights thereby evidenced shall be canceled.
(b) The Company covenants that it shall endeavor to
comply with all securities laws regulating the offer and
delivery of shares of Common Stock upon exercise of the
Warrants; and that if any shares of Common Stock required to
be reserved for purposes of exercising the Warrants hereunder
require registration with or approval of any governmental
authority under any Federal or state law before such shares
may be validly issued or delivered upon exercise of the
Warrants, the Company shall, in good faith and as
expeditiously as possible, endeavor to secure such
registration or approval, as the case may be. The Company
covenants that all shares of Common Stock which shall be
issued upon exercise of the Warrants shall upon issue and
payment therefor be validly issued, fully paid and
nonassessable.
9. ADJUSTMENTS OF WARRANT PRICE, PREPAYMENT EVENT PRICE AND NUMBER OF
SHARES OF WARRANT STOCK. The number and kind of securities purchasable upon the
exercise of each Warrant and the Warrant Price related thereto shall be subject
to adjustment from time to time upon the happening of certain events, as
hereinafter defined, but (with respect to Warrants) only as to Warrants
outstanding at the time of such adjustment. Upon each adjustment of the Warrant
Price pursuant to the provisions of Section 9.1(b), the Holder of such Warrant
shall thereafter, prior to the Expiration Date thereof, be entitled to purchase
at the Warrant Price resulting from such adjustment, the number of shares of
Warrant Stock obtained by multiplying the Warrant Price in effect immediately
prior to such adjustment by the number of shares of Warrant Stock issuable upon
exercise of such Warrant immediately prior to such adjustment and dividing the
product thereof by the Warrant Price resulting from such adjustment.
9.1 ADJUSTMENT OF THE NUMBER OF SHARES OF WARRANT STOCK AND
THE WARRANT PRICE. The number of shares of Warrant Stock and the
Warrant Price shall be subject to adjustment as follows:
(a) In case the Company shall at any time after the
date of issuance of a Warrant (A) pay a dividend or make a
distribution on its Common Stock in shares of its capital
stock (whether in shares of Common Stock or of capital stock
of any other class), (B) subdivide its outstanding shares of
Common Stock into a greater number of shares, (C) combine its
outstanding shares of Common Stock into a smaller number of
shares, or (D) reclassify, reorganize or effect any similar
transaction with respect to any of its shares of Common Stock,
or in substitution or exchange therefor (other than a change
in par value, or from par value to no par value, or from no
par value to
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par value), then the number and, if applicable, kind of shares
of Warrant Stock to be received by any Holder shall be
adjusted so that the Holder will be entitled to receive on
exercise the number and kind of shares of capital stock which
it would have owned immediately following such action had its
Warrants been exercised immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become
effective immediately after the payment 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, reclassification, reorganization or
similar transaction. If, as a result of an adjustment made
pursuant to this subsection (a), a Holder shall become
entitled to receive shares of two or more classes of capital
stock of the Company, the Board of Directors or a duly
authorized committee thereof shall in good faith determine
(which determination shall be conclusive and binding) the
allocation of the Warrant Price between or among shares of
such classes of capital stock. After such allocation, the
Warrant Price and number of shares of each class of capital
stock that is part of the Warrant Stock shall thereafter be
subject to adjustment in a manner and on terms determined by
the Board of Directors (which determination shall be
conclusive and binding) to be as nearly equivalent as
practicable to those applicable to Common Stock under this
Section 9.
(b) If the Company shall issue any shares of Common
Stock other than Excluded Shares (as hereinafter defined) for
consideration per share less than the Warrant Price per share
in effect immediately prior to such issuance, the Warrant
Price in effect immediately prior to such issuance shall be
reduced (but shall not be increased) to the price (calculated
to the nearest cent) determined: by dividing (A) an amount
equal to the sum of (1) the number of shares of Common Stock
outstanding on a fully diluted basis immediately prior to such
issuance multiplied by the Warrant Price per share in effect
immediately prior to such issuance and (2) the consideration,
if any, received by the Company upon such issuance by (B) the
number of shares of Common Stock outstanding on a fully
diluted basis immediately after such issuance.
(c) CERTAIN ADJUSTMENT FACTORS. For the purposes of
any adjustment of the Warrant Price pursuant to paragraph (b)
above, the following provisions shall be applicable:
(x) CASH. In the case of the issuance of
shares of Common Stock for cash, the amount of the
consideration received by the Company shall be deemed
to be the amount of the cash proceeds received by the
Company for such shares of Common Stock before
deducting therefrom any discounts, commissions, taxes
or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in
connection with the issuance and sale thereof; and
(y) CONSIDERATION OTHER THAN CASH. In the
case of the issuance of shares of Common Stock
(other than upon the conversion of shares of capital
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stock or other securities of the Company) for
consideration in whole or in part other than cash,
including securities acquired in exchange therefor
(other than securities by their terms so
exchangeable), the consideration other than cash
shall be deemed to be the fair value thereof (as
determined by the Board of Directors of the Company
based on an opinion of an outside financial advisor
of recognized regional or national standing, which
may, but need not, be the independent public
accountants who serve as the regular auditors of the
Company (the "Financial Advisor"), whose
determination shall be conclusive and binding),
irrespective of any accounting treatment; and
(z) OPTIONS AND CONVERTIBLE SECURITIES. In
the case of the issuance of (i) options, warrants or
other rights to purchase or acquire shares of Common
Stock (whether or not exercisable immediately
following such issuance), (ii) securities by their
terms convertible into or exchangeable for shares
Common Stock (whether or not so convertible or
exchangeable immediately following such issuance), or
(iii) options, warrants or rights to purchase such
convertible or exchangeable securities (whether or
not exercisable immediately following such issuance):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon
exercise of such options, warrants or other
rights to purchase or acquire shares of
Common Stock shall be deemed to have been
issued at the time such options, warrants or
other rights are first issued and for a
consideration equal to the consideration
(determined in the manner provided in
clauses (x) and (y) above), if any, received
by the Company upon the issuance of such
options, warrants or other rights plus the
purchase price provided in such options,
warrants or other rights for the shares of
Common Stock covered thereby (if the
purchase price per share of Common Stock is
expressed as a range, the purchase price per
share for purposes of this subparagraph
(z)(1) shall be the average of such range of
prices);
(2) the aggregate maximum number of
shares of Common Stock deliverable upon
conversion of or in exchange for any such
convertible or exchangeable securities, or
upon the exercise of options, warrants or
other rights to purchase or acquire such
convertible or exchangeable securities and
the subsequent conversion or exchange
thereto shall be deemed to have been issued
at the time such convertible or exchangeable
securities or such options, warrants or
other rights are first issued and for a
consideration equal to the consideration, if
any, received by the Company for any such
convertible or exchangeable securities or
options, warrants or other rights (excluding
any cash received on account of accrued
interest or accumulated dividends), plus the
additional consideration, if any, to be
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received by the Company upon the conversion
or exchange of such securities and the
exercise of any options, warrants or other
rights (the consideration in each case to be
determined in the manner provided in clauses
(x) and (y) above);
(3) on any change in the number of
shares of Common Stock deliverable upon
exercise of any such options, warrants or
other rights which have become exercisable
or conversion of or exchange of such
convertible or exchangeable securities which
have become convertible or exchangeable, or
any change in the consideration to be
received by the Company upon such exercise,
conversion or exchange, the Warrant Price as
then in effect shall forthwith be readjusted
to such Warrant Price as would have been
obtained had such adjustment been made upon
the original issuance of such options,
warrants or other rights; provided, however,
no adjustment shall be made with respect to
such options, warrants or other rights
exercised prior to such change, or
securities converted or exchanged prior to
such change;
(4) on the expiration or
cancellation of any such options, warrants
or other rights, or the termination of the
right to convert or exchange such
convertible or exchangeable securities, if
the Warrant Price shall have been adjusted
upon such securities being issued or
becoming exercisable, convertible or
exchangeable, such Warrant Price shall
forthwith be readjusted to such Warrant
Price as would have been obtained had an
adjustment been made on the basis of the
issuance of only the number of shares of
Common Stock actually issued upon the
exercise of such options, warrants or other
rights, or upon the conversion or exchange
of such securities; and
(5) if the Warrant Price shall have
been adjusted when such options, warrants or
other rights were first issued or such
convertible or exchangeable securities were
first issued, no further adjustment of the
Warrant Price shall be made for the actual
issuance of shares of Common Stock upon the
exercise, conversion or exchange thereof.
(d) EXCLUDED SHARES. "Excluded Shares" shall mean (i)
any shares of Common Stock issued in a transaction described
in Section 9.1(a) of this Agreement; and (ii) issuances of
shares of Common Stock from time to time pursuant to stock
option or bonus plans authorized by the Board of Directors of
the Company as of the date hereof; (iii) issuances of Common
Stock, or warrants, options or rights to acquire shares of
Common Stock, or securities convertible into or exchangeable
for Common Stock pursuant to the terms of any acquisition by
the Company of all or substantially all of the operating
assets, or more than fifty percent (50%) of the voting
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capital stock or other management interest of any business
entity in a transaction negotiated on an arms'-length basis
and expressly approved in advance by the Board of Directors of
the Company; (iv) issuances of shares of Common Stock from
time to time upon the exercise, exchange or conversion of
warrants, options, convertible securities, the Notes (whether
or not outstanding as of the date hereof) or other securities
outstanding as of the date hereof; and (v) issuances of shares
of Common Stock from time to time pursuant to the
anti-dilution provisions of other securities.
(e) No adjustment in the Warrant Price shall be
required unless such adjustment would require an increase or
decrease of at least 2.2% in such price; PROVIDED, HOWEVER,
that any adjustments which by reason of this subsection (f)
are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations
under this Section 9.1 shall be made to the nearest tenth of a
cent or to the nearest one-hundredth of a share, as the case
may be.
(f) The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any
such shares shall be considered an issuance of Common Stock
for the purposes of this Section 9.
9.2 RIGHTS TO PURCHASE OTHER SECURITIES. If any of the
following shall occur:
(a) any consolidation or merger to which the Company
is a party, other than a consolidation or a merger in which
the Company is the continuing or surviving Company and which
does not result in any reclassification of, or change (other
than as a result of a subdivision or combination) in,
outstanding shares of the Common Stock, or
(b) any sale or transfer to another corporation or
entity of all or substantially all of the assets of the
Company;
then, and in either such case, the Holder of each Warrant then
outstanding shall have the right to purchase the kind and amount of
shares of stock and/or other securities and property receivable upon
such consolidation, merger, sale or transfer by a holder of the number
of shares of Common Stock issuable upon exercise of such Warrant
immediately prior to such consolidation, merger, sale, or transfer. The
provisions of this Section 9.2 shall similarly apply to successive
consolidations, mergers, sales or transfers.
9.3 NOTICE OF ADJUSTMENT. Whenever the number of shares of
Warrant Stock purchasable upon the exercise of each Warrant or the
Warrant Price of such Warrant Stock is adjusted or reduced, as herein
provided, the Company shall mail by first class, postage prepaid, to
each Holder (a) notice of any reduction on or before the day the
reduction takes effect, which shall state the reduced Warrant Price and
the period during which it will be in effect and/or (b) a certificate
setting forth the number of shares of Warrant Stock purchasable upon
the exercise of each Warrant and the Warrant Price on such Warrant
Stock after
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adjustment setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment
was made.
9.4 NO ADJUSTMENT FOR DIVIDENDS. No adjustment in respect of
any cash dividends shall be made during the term of a Warrant or upon
the exercise or conversion of a Warrant.
9.5 CERTAIN EVENTS. If any event occurs as to which in the
reasonable judgment of the Board of Directors of the Company, in good
faith, the other provisions of this Section 9 are not strictly
applicable but the lack of any adjustment would not in the opinion of
the Board of Directors of the Company fairly reflect the purchase
rights of the Holders of the Warrants in accordance with the basic
intent and principles of the provisions of this Agreement then the
Board of Directors of the Company shall appoint a Financial Advisor
which shall give its opinion upon the adjustment, if any, on a basis
consistent with the basic intent and principles established and the
other provisions of this Section 9, necessary to preserve, without
dilution, the exercise rights of the Holders. Upon receipt of such
opinion, the Company shall forthwith make the adjustments described
therein which adjustments shall be conclusive and binding.
10. ELIMINATION OF FRACTIONS. The Company shall not be required to
issue certificates representing fractional shares of Common Stock upon any
exercise of Warrants, but will make a payment in cash, in lieu of issuing such
fractional shares, based on the Current Market Price per share at the time.
11. CERTIFICATES TO BEAR LEGENDS. The Warrant Certificates and
certificates representing shares of Warrant Stock shall be subject to a
stop-transfer order and each such certificate shall bear the following legends
by which each Holder shall be found:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. THESE SECURITIES HAVE BEEN
ISSUED UNDER AND ARE GOVERNED BY AND ARE SUBJECT TO THAT
CERTAIN WARRANT AGREEMENT DATED AS OF JULY 9, 1999 (THE
WARRANT AGREEMENT). A COPY OF THE WARRANT AGREEMENT CAN BE
OBTAINED FROM THE SECRETARY OF THE COMPANY.
12. NO RIGHTS AS STOCKHOLDERS; NOTICES TO HOLDERS; UNISSUED WARRANTS.
Nothing contained in this Agreement or in any of the Warrant Certificates shall
be construed conferring upon the Holders or their transferees the right to vote
or to receive dividends or to consent to or receive notice as stockholders in
respect of any meeting of stockholders for the election of directors of the
Company or on any other matter, or any rights whatsoever as stockholders of the
Company.
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Warrants as to which the conditions precedent to issuance are not satisfied
shall be void and of no effect, and no Purchaser or other party shall have any
rights with respect thereto.
13. INVESTMENT INTENT. The Warrants to be purchased pursuant to this
Agreement are being purchased for each Purchaser's own account and with no
intention of distributing or reselling the Warrants. The Holder understands that
neither the Warrants nor the Common Stock have been registered under the Act or
any applicable state securities laws and that neither the Warrants nor the
Common Stock can be sold, transferred or otherwise disposed of without
registration under the Act and applicable state securities laws, unless it has
been established to the satisfaction of the Company that they may be sold,
transferred or otherwise disposed of without such registration.
14. NOTICES. Any notice pursuant to this Agreement to be given or made
by the Holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made if delivered personally or sent by telecopier or by
certified mail, addressed to the Chief Financial Officer of the Company at the
Company's principal executive offices at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (unless notice has been given of a change of such address),
and shall be effective three (3) days after having been mailed or upon receipt
if delivered personally or sent by telecopier, with receipt confirmed by the
office of the President. Notices or demands authorized by this Agreement to be
given or made to the Holder of any Warrant Certificate shall be sufficiently
given or made if delivered personally or sent by certified mail or by
telecopier, addressed to such Holder at the address of such Holder as shown on
the Warrant Register, and shall be effective three (3) days after having been
mailed or upon receipt if delivered personally or sent by telecopier, with
receipt confirmed.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
16. SUPPLEMENTS, AMENDMENTS AND WAIVERS. Any supplement or amendment
to, or any waiver of any provision of, this Agreement shall be effective when
consented to in writing by the Holders of a majority of the Warrants then
outstanding (determined as though there were one Warrant for each share of
Common Stock issuable on the exercise of the then outstanding Warrants) and by
the Company.
17. SUCCESSORS. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day, month and year first above written.
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WATERLINK, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Its: Chief Financial Officer
-------------------------
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WARRANT AGREEMENT SIGNATURE PAGE
Accepted and agreed as of the date first above written:
▇▇▇▇▇▇▇▇ VENTURE PARTNERS III, L.P.
By: ▇▇▇▇▇▇▇▇ VENTURE MANAGEMENT III, L.P.,
as General Partner
By: PINKAS FAMILY PARTNERS, L.P.,
a General Partner
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
[Please Sign Above This Line]
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Partner
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ▇▇-▇▇▇▇▇▇▇
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WARRANT AGREEMENT SIGNATURE PAGE
Accepted and agreed as of the date first above written:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
[Please Sign Above This Line]
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ###-##-####
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WARRANT AGREEMENT SIGNATURE PAGE
Accepted and agreed as of the date first above written:
T. ▇▇▇▇▇ ▇▇▇▇
/s/T. ▇▇▇▇▇ ▇▇▇▇
-----------------------------------
[Please Sign Above This Line]
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Taxpayer Identification No.: ###-##-####
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WARRANT AGREEMENT SIGNATURE PAGE
Accepted and agreed as of the date first above written:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
[Please Sign Above This Line]
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ###-##-####
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T
SCHEDULE 1
Number of Number of
Warrantholder Base Warrants Additional Warrants
------------- ------------- -------------------
▇▇▇▇▇▇▇▇ Venture Partners III, L.P. 110,577 140,332
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 7,211 9,153
T. ▇▇▇▇▇ ▇▇▇▇ 4,808 6,101
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2,404 3,051
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EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
("ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
THESE SECURITIES HAVE BEEN ISSUED UNDER AND ARE GOVERNED BY AND ARE SUBJECT TO
THAT CERTAIN WARRANT AGREEMENT DATED AS OF JULY 9, 1999 (THE "WARRANT
AGREEMENT"). A COPY OF THE WARRANT AGREEMENT CAN BE OBTAINED FROM THE SECRETARY
OF THE COMPANY.
WARRANT TO PURCHASE COMMON STOCK OF
WATERLINK, INC.
WARRANT NO. G-_______________
This certifies that, for value received, ____________________, or its
permitted assigns, is entitled, subject to the terms set forth below, to
purchase from WATERLINK, INC., a Delaware corporation (the "Company"),
______________ shares (the "Shares") (subject to adjustment as provided in
Section 9 of the Warrant Agreement) of fully paid and nonassessable common
stock, $.01 par value per share, of the Company (the "Common Stock"), at the
purchase price of $0.01 per share (the "Purchase Price"), at any time or from
time to time up until 5:00 P.M. Cleveland, Ohio time on July 9, 2004.
1. EXERCISE PROVISIONS.
(a) MANNER OF EXERCISE. This Warrant may be exercised by the
holder of this Warrant surrendering to the Company at its principal
office at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or
such other address as to which the Company may hereafter give notice to
the holder, this Warrant, together with the exercise form attached to
this Warrant duly executed by the holder together with payment to the
Company in the amount obtained by multiplying the Purchase Price by the
number of shares of Common Stock designated in the exercise form.
Payment may be in cash or by cashier's or certified bank check payable
to the order of the Company, or by conversion of the unpaid principal
and accrued interest under the Notes in the manner set forth in the
Notes and the Warrant Agreement.
(b) PARTIAL EXERCISE. On any partial exercise, the Company
shall promptly issue and deliver to the holder of this Warrant a new
Warrant or Warrants of like tenor in the name of that holder providing
for the right to purchase that number of shares of Common Stock as to
which this Warrant has not been exercised.
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2. DELIVERY OF STOCK CERTIFICATES. Within a reasonable time after full
or partial exercise of this Warrant, the Company at its expense will cause to be
issued in the name of and delivered to the holder of this Warrant in accordance
with the requirements of the Warrant Agreement, a certificate or certificates
for the number of fully paid and nonassessable shares of Common Stock to which
that holder shall be entitled upon such exercise.
3. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR SHARES OF
COMMON STOCK. The holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the Shares of Common Stock to be issued upon exercise hereof are
being acquired for investment and that the holder will not offer, sell or
otherwise dispose of this Warrant or any Shares of Common Stock to be issued
upon exercise hereof, except under circumstances which will not result in a
violation of the Securities Act of 1933, as amended (the "Act") nor violate the
terms of the Warrant Agreement. In addition, any permitted Warrant transferee
will be required to agree to the provisions of this Section 3. The provisions of
this Section 3 shall not apply to any shares of Common Stock, the issuance or
resale of which is registered under the Act.
4. MISCELLANEOUS PROVISIONS.
(a) RESERVATION OF STOCK. The Company covenants that it will
at all times reserve and keep available, solely for issuance upon
exercise of this Warrant, all shares of Common Stock or other
securities from time to time issuable upon exercise of this Warrant.
(b) MODIFICATION. This Warrant and any of its terms may be
changed, waived, or terminated only by a written instrument signed by
the party against whom enforcement of that change, waiver or
termination is sought.
(c) REPLACEMENT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and subject to the requirements of the
Warrant Agreement, the Company will execute and deliver, in lieu of
this Warrant, a new Warrant of like tenor.
(d) WARRANT AGENT. The Company may, on written notice to the
holder of this Warrant, appoint an agent having an office in Cleveland,
Ohio, for the purposes of issuing Common Stock upon the exercise of
this Warrant and of replacing or exchanging this Warrant, and after
that appointment any such issuance, replacement, or exchange shall be
made at that office by that agent.
(e) NO RIGHTS AS STOCKHOLDER. No holder of this Warrant, as
such, shall, solely by holding this Warrant, be entitled to vote or
receive dividends or be considered a stockholder of the Company for any
purpose, nor shall anything in this Warrant be construed to confer on
any holder of this Warrant as such, any rights of a stockholder of the
Company or any right to vote, to give or withhold consent to any
corporate action, to receive notice of meeting of stockholders, to
receive dividends or subscription rights or otherwise.
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(f) ANTI-DILUTION RIGHTS. The holder hereof shall have certain
anti-dilution protection as to the Shares of Common Stock to be issued
upon exercise as specifically set forth in the Warrant Agreement which
may result in the adjustment from time to time of the Purchase Price
and/or the number of shares of Common Stock issuable upon the exercise
hereof.
(g) NOTICES. Notices hereunder to the holder of this Warrant
shall be sent as provided in the Warrant Agreement.
Dated: _______________, ______ WATERLINK, INC.
By:____________________________
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FORM OF EXERCISE
----------------
(To be signed only upon exercise of Warrant)
To: WATERLINK, INC.
The undersigned holder of the attached Warrant hereby irrevocably
elects to exercise the right to purchase _______________ shares of Common Stock
of WATERLINK, INC., and herewith makes payment of $___________________ for those
shares, and requests that the certificate for those shares be issued in the name
of the undersigned and delivered to the address below the signature of the
undersigned. The undersigned hereby affirms the statements and covenants all as
set forth in Section 3 of the Warrant.
Dated:_______________, _____
(Signature must conform in all respects to
name of holder as specified on the face
of the attached Warrant)
__________________________________________
Signature
__________________________________________
Address
__________________________________________
