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Exhibit 1
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement") dated as of March 6, 1997, among
WATERLINK, INC., a Delaware corporation (the "Company"), and each of the
Purchasers named on the execution page hereof (the "Purchasers").
R E C I T A L S:
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This Agreement is entered into in connection with that certain
Subordinated Note Purchase Agreement and Credit Facility dated concurrently
herewith among the Company and the Purchasers (the "Note Purchase Agreement"),
pursuant to which the Company will be issuing and the Purchasers will be
purchasing the Company's Subordinated Notes due 2002 (the "Notes"). Capitalized
terms not otherwise defined herein shall have the meanings given to them in the
Note Purchase Agreement.
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.
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1.1 GENERAL. The Company hereby agrees to issue (pro rata in
proportion to the principal amount of Notes issued to or for which each
Purchaser is then committed) to the Purchasers, at the times and upon
the conditions specified below, (i) warrants (the "Base Warrants") to
purchase, in the aggregate, up to 1,525,000 shares of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), and (ii)
warrants (the "Additional Warrants") to purchase, in the aggregate, up
to 512,500 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". The Base Warrants consist of up to five (5)
tranches of Base Warrants as set forth below (in the case of each
tranche, to be allocated pro rata in proportion to the principal amount
of Notes issued to or for which each Purchaser is then committed).
Number of
Tranche Base Warrants
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Tranche 1 125,000
Tranche 2 up to 300,000
Tranche 3 up to 300,000
Tranche 4 up to 300,000
Tranche 5 up to 500,000
Notwithstanding the foregoing, Tranche 1 Base Warrants to be issued hereunder to
▇▇▇▇▇▇▇▇ Capital Corporation shall instead be issued to ▇▇▇▇▇▇▇▇ Venture
Partners III, L.P.
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The Additional Warrants consist of two (2) tranches of Additional
Warrants as set forth below (in the case of each tranche to be allocated pro
rata in proportion to the principal amount of Note issued to or for which each
Purchaser is then committed):
Number of
Tranche Additional Warrants
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Tranche 1 25% of the Warrants (other than
Tranche 5 Base Warrants) outstanding
at the Tranche 1 Additional Warrant
Date (defined below)
Tranche 2 50% of the Warrants (other than
Tranche 5 Base Warrants) outstanding
at the Tranche 2 Additional Warrant
Date (defined below)
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 10 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 on a pro rata basis in proportion to the principal amount of
Note issued to or for which each Purchaser or its assignee is then
committed.
(a) All of the Tranche 1 Base Warrants shall be
issued to the Purchasers on the date hereof.
(b) Tranche 2 Base Warrants shall be issued from time
to time by the Company to Purchasers or their assignees on or
prior to the earlier of a Prepayment Event or December 31,
1997 on the basis of 3,000 Tranche 2 Base Warrants for each
$100,000 of Advances (as defined in the Note Purchase
Agreement) under the Notes made on or prior to the earlier of
a Prepayment Event (as defined in the Note Purchase Agreement)
or December 31, 1997.
(c) Tranche 3 Base Warrants shall be issued from time
to time by the Company to Purchasers or their assignees prior
to a Prepayment Event on the basis of 3,000 Tranche 3 Base
Warrants for each $100,000 of Advances under the Notes
outstanding in excess of One Hundred Eighty (180) days.
(d) Tranche 4 Base Warrants shall be issued from time
to time by the Company to Purchasers or their assignees prior
to a Prepayment Event on the basis of 3,000 Tranche 4 Base
Warrants for each $100,000 of Advances under the Notes
outstanding in excess of two (2) years.
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(e) Tranche 5 Base Warrants shall be issued as of the
date forty-two (42) months after the date hereof by the
Company to Purchasers or their assignees if a Prepayment Event
has not then occurred on the basis of 5,000 Tranche 5 Base
Warrants for each $100,000 of Advances under the Notes
outstanding as of such date.
(f) For purposes of the determinations in subsections
1.2(c) and (d) above, prepayments of Notes shall be applied in
inverse order to Advances made (i.e. last in, first out).
1.3 ISSUANCE OF ADDITIONAL WARRANTS. Additional Warrants shall
be issued on the terms and upon satisfaction of the following
conditions, in all cases on a pro rata basis in proportion to the
principal amount of Notes issued to or for which each Purchaser is then
committed:
(a) If (i) (x) a Prepayment Event occurs prior to the
first anniversary of this Agreement and (y) the Prepayment
Event Price (defined below) is less than $9.00 per share of
Common Stock (subject to adjustment in the event of a stock
split, combination or similar event), or (ii) (x) a Prepayment
Event occurs on or after the first anniversary of this
Agreement but prior to the second anniversary thereof and (y)
the Prepayment Event Price is less than $12.00 per share of
Common Stock (subject to adjustment in the event of a stock
split, combination or similar event), then the Tranche 1
Additional Warrants shall be issued by the Company to
Purchasers or their assignees, as the case may be. The date
the foregoing conditions are met shall be referred to herein
as the "Tranche 1 Additional Warrant Date."
(b) (I) Upon the occurrence of a Prepayment Event, if
any, if (i) such Prepayment Event does not occur prior to the
second anniversary hereof, and (ii) (x) if prior the third
anniversary hereof, the Prepayment Event Price is then less
than $14.00 per share of Common Stock (subject to adjustment
in the event of a stock split, combination or similar event),
or (y) if on or following the third anniversary hereof but
prior to the fourth anniversary hereof, the Prepayment Event
Price is less than $16.00 per share of Common Stock (subject
to adjustment in the event of a stock split, combination or
similar event), then the Tranche 2 Additional Warrants shall
be issued by the Company to Purchasers or their assignees, as
the case may be, or (II) if a Prepayment Event has not
occurred prior to the fourth anniversary hereof, then the
Tranche 2 Additional Warrants shall be issued by the Company
to Purchasers or their assignees, as the case may be. The date
either of the foregoing conditions are met shall be referred
to herein as the "Tranche 2 Additional Warrant Date."
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
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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.
4. Transfer of Warrant Certificate.
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(a) Prior to a Prepayment Event, outstanding Warrants
and any rights to the further issuance of Warrants pursuant
hereto may only be transferred together with the Notes on a
pro rata basis (as to each tranche of Base Warrants and
Additional Warrants issued or issuable) in proportion to the
principal amount of Notes issued to each Purchaser. After the
earlier of a Prepayment Event or the fourth (4th) anniversary
of the date hereof, the Warrants may be transferred
independent of the Notes, provided such transfer is in
accordance with the terms hereof. 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) (x)
compliance with the registration provisions of Section 5 of
the Securities Act of 1933, as amended (the "Act"), or (y) the
availability of an exemption from compliance with the
registration provisions of Section 5 of the Act; and (ii)
compliance with that certain Amended and Restated
Stockholders' Agreement to be executed by or on behalf of the
parties hereto on the Closing Date (the "Amended and Restated
Stockholders' Agreement").
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(b) The parties hereto acknowledge and agree,
notwithstanding subsection (a) above, that this Agreement does
not restrict transfers of Warrants among the Purchasers to the
extent otherwise permitted under the Indemnification and
Contribution Agreement dated the date hereof among the
Purchasers.
5. Term of Warrants; Exercise of Warrants.
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5.1 BASE WARRANTS: TERM AND EXERCISE PRICE. Each outstanding
Base 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 $4.50,
subject to adjustment pursuant to the provisions of Section 10 of this
Agreement (the "Base Warrant Price"; the Base Warrant Price and the
Additional Warrant Price (defined below) shall be referred to jointly
herein as the "Warrant Price.").
5.2 ADDITIONAL WARRANTS: TERM AND EXERCISE PRICE. Each
outstanding Additional Warrant entitles the registered owner thereof to
purchase one (1) share of Warrant Stock at any time prior to the
Expiration Date at the price determined as follows (the "Additional
Warrant Price."
(a) In the event a Prepayment Event occurs (i) prior
to the first anniversary of the date hereof and the Prepayment
Event Price is at that time less than $9.00 per share (subject
to adjustment pursuant to Section 10 hereof) or (ii) after the
first anniversary of the date hereof and prior to the second
anniversary of the date hereof and the Prepayment Event Price
is at that time less than $12.00 per share (subject to
adjustment pursuant to Section 10 hereof), the Additional
Warrant Price shall be the lesser of $4.50 per share (subject
to adjustment pursuant to Section 10 hereof) or the applicable
Prepayment Event Price.
(b) In the event a Prepayment Event does not occur
prior to the second anniversary of the date hereof, the
Additional Warrant Price shall be $4.50 per share (subject to
adjustment pursuant to Section 10 hereof).
(c) "Prepayment Event Price" shall mean the price per
share of Common Stock determined by the Board of Directors as
provided below within ten (10) days prior to the occurrence of
a Prepayment Event, subject to subsection (d) below. In the
event of an IPO (as defined in the Note Purchase Agreement),
the Prepayment Event Price shall be the price per share of
Common Stock offered pursuant to the IPO. In the event of a
Change in Control (as defined in the Note Purchase Agreement),
the Prepayment Event Price shall be the price reasonably and
in good faith determined by the Board of Directors as the per
share valuation of the Company based on arms length
negotiations with the acquiring entity (determined on a basis
taking into account all options, warrants, convertible
securities and similar securities then exercisable or
exercisable upon such Prepayment Event) and, if the Board so
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desires, the opinion of a financial advisor (which financial
advisor may be the Company's independent public accountant) (a
"Financial Advisor"), subject to subsection (d) below. In the
event of an Asset Sale (as defined in the Note Purchase
Agreement), the Prepayment Event Price shall be the price
reasonably and in good faith determined by the Board of
Directors as the per share valuation of the company based on
the arms length negotiations with the acquiring entity
(determined on a basis taking into account all options,
warrants, convertible securities and similar securities then
exercisable or exercisable upon such Prepayment Event) and, if
the Board so desires, the opinion of a Financial Advisor,
subject to subsection (d) below.
(d) In the event the Holders of a majority of the
then outstanding Warrants (the "Requisite Holders") provide
written notice to the Company within ten (10) days of receipt
of written notice of the Prepayment Event Price set by the
Company of their objection to such price, the Prepayment Event
Price shall be determined as follows: (i) by agreement among
the Company and the Requisite Holders within ten (10) days
following the event requiring such determination or (ii) in
the absence of such an agreement, by an Independent Financial
Expert selected in accordance with the further provisions of
this definition. If required, an Independent Financial Expert
shall be selected within five (5) days following the
expiration of the ten (10) day period referred to above,
either by agreement among the Company and the Requisite
Holders or, in the absence of such agreement, by lot from a
list of four potential Independent Financial Experts remaining
after the Company nominates three, the Requisite Holders
nominate three, and each side eliminates one potential
Independent Financial Expert. The Independent Financial Expert
shall be instructed by the Company and the Requisite Holders
to make its determination within 20 days of its selection. The
fees and expenses of an Independent Financial Expert selected
hereunder shall be borne equally by the Company and by the
Holders (on a PRO RATA basis based on the number of Warrants
held by each Holder) participating in the transaction to which
the determination relates.
5.3 General.
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(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 10 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
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"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 10 of this
Agreement, in respect of any fraction of a share of such 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.
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8. CAPITALIZATION OF THE COMPANY. Without giving effect to the Warrants
contemplated herein, the authorized capital stock of the Company is as set forth
in Schedule 3.1 to the Note Purchase Agreement.
9. Reservation Of Warrant Stock.
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(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 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 11 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 10.3 of this
Agreement. All Warrant Certificates surrendered in the
exercise of the rights thereby evidenced shall be cancelled.
(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.
10. 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 10.1(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
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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.
10.1 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 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 10.
(b) (i) From the date hereof to and including the
second anniversary of the date hereof, if the Company
shall issue any shares of Common Stock other than
Excluded Shares (as hereinafter defined) for
consideration per share (the "Issuance Price") less
than the Warrant Price (as hereinafter defined) 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 Issuance Price.
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(ii) After the second anniversary of the date
hereof, if the Company shall issue any shares of
Common Stock other than Excluded Shares 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 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):
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(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 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
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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 10.1(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 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 10.1 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 10.
10.2 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
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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 10.2 shall similarly apply to successive
consolidations, mergers, sales or transfers.
10.3 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 adjustment setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which
such adjustment was made.
10.4 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.
10.5 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.
11. Redemption of Warrants.
----------------------
(a) Upon ten (10) days prior notice (a "Redemption
Notice") to the Holders, prior to the fourth anniversary of
the date hereof, the Company may redeem
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all Warrants then outstanding for no consideration upon the
occurrence of the following events (provided the Company has
issued a notice of redemption, each a "Redemption Event"):
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(i) The offering price in a Qualified IPO
(defined below), or the average daily Closing Price
(defined below) for twenty (20) consecutive trading
days on a rolling basis exceeds 125% of the then
applicable Target Price (defined below); and
(ii) Either (x) registration statement which
is effective covering the issuance or resale of the
Warrant Stock or (y) each Holder otherwise is
certified to sell the Warrant Stock under Rule 144 of
the Securities Act of 1933, as amended (subject only
to volume limitations).
(b) For purposes of this Section 11, "Qualified IPO"
shall mean an underwritten public offering of shares of Common
Stock, the gross proceeds of which to the Company and/or the
selling stockholders (if any) are of at least $15,000,000.
(c) For purposes of this Section 11, "Closing Price"
for each day shall mean the last reported sales price of the
Common Stock (trading regular way) or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either
case as reported on the New York Stock Exchange or, if such
security is not listed or admitted for trading on the New York
Stock Exchange or, if such security is not listed or admitted
for trading on the New York Stock Exchange, on NASDAQ NMS, or
if such security is not quoted on such NASDAQ NMS, the average
of the closing bid and asked prices on such day in the
over-the-counter market as reported by NASDAQ or, if bid and
asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked
prices on such day, as furnished by any New York Stock
Exchange member firm making a market in the Common Stock
selected from time to time by the Board of Directors of the
Company for that purpose.
(d) For purposes of this Section 11, "Target Price"
shall mean: (i) at all times prior to the first anniversary of
the date hereof, $9.00 per share of Common Stock; (ii) on or
after the first anniversary of the date hereof but prior to
the second anniversary of the date hereof, $12.00 per share of
Common Stock; (iii) on or after the second anniversary of the
date hereof but prior to the third anniversary of the date
hereof, $14.00 per share of Common Stock; and (iv) on or after
the third anniversary of the date hereof and thereafter,
$16.00 per share of Common Stock. "Target Price" shall be
determined before deducting any underwriting fee or selling
commissions but adjusted equitably for any stock split,
combination, reclassification or similar event involving the
Common Stock.
(e) Upon receipt of a Redemption Notice, each Holder
may exercise part or all of the Warrants then outstanding and
registered in its name in accordance with the provisions of
Section 5 hereof within ten (10) days of receipt of the
Redemption Notice. Warrants not exercised within this period
following the Redemption Notice
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shall be deemed terminated. All Warrants not previously issued
as of a Redemption Event shall not subsequently be issued by
the Company and Purchasers shall have no rights to such
Warrants. In all events, prior to issuing a Redemption Notice,
the Company shall issue to the Purchasers all Warrants to
which the Purchasers are then entitled under Section 1 of this
Agreement.
12. 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.
13. Certificates to Bear Legends.
----------------------------
(a) 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 MARCH 6, 1997 (THE WARRANT
AGREEMENT). A COPY OF THE WARRANT AGREEMENT CAN BE OBTAINED
FROM THE SECRETARY OF THE COMPANY.
(b) In addition, so long as the Security holders'
Agreement remains in effect all such certificates referred to
in paragraph (a) above shall also bear the following legend:
THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND OTHER TERMS SET FORTH IN THAT CERTAIN AMENDED AND
RESTATED STOCKHOLDERS' AGREEMENT DATED AS OF MARCH __, 1997,
AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH
AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF THE COMPANY.
14. 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
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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. 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.
15. 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.
16. 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.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
18. 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.
19. 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.
20. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day, month and year first above written.
WATERLINK, INC.
By:
---------------------------
Its:
--------------------------
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WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and agreed as of
the date first above written:
▇▇▇▇▇▇▇▇ Capital Corporation
By:_______________________________________
[Please Sign Above This Line]
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, Chief Executive Officer
and Treasurer
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (216)
Taxpayer Identification No.: __________________________
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21
WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and agreed as of
the date first above written:
River Cities Capital Fund Limited Partnership
By: RC Management Limited Partnership,
its General Partner
By: ▇▇▇▇▇▇, Inc., its General Partner
By:_______________________________________
[Please Sign Above This Line]
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ▇▇-▇▇▇▇▇▇▇
21
22
WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and agreed as of
the date first above written:
Environmental Opportunities Fund, L.P.
By: Environmental Opportunities Management
Co., LLC, its General Partner
By:_______________________________________
[Please Sign Above This Line]
Name: ▇▇▇▇▇▇▇ Ch'uan-k'▇▇ ▇▇▇▇▇
Title: Manager
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ▇▇-▇▇▇▇▇▇▇
22
23
WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and agreed as of
the date first above written:
Environmental Opportunities Fund (Cayman), L.P.
By: Environmental Opportunities Management
Co., LLC, its General Partner
By:_______________________________________
[Please Sign Above This Line]
Name: ▇▇▇▇▇▇▇ Ch'uan-k'▇▇ ▇▇▇▇▇
Title: Manager
Address: ▇/▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇) Limited
▇.▇. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, B.W.I.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: N/A
Copy of notices to:
Environmental Opportunities
Management Co., LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and agreed as of
the date first above written:
National City Capital Corporation
By:_______________________________________
[Please Sign Above This Line]
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Address: ▇▇▇▇ ▇.▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ▇▇-▇▇▇▇▇▇▇
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WARRANT PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and agreed as of
the date first above written:
IPP95, L.P.
By: WESINVEST, Inc., its General Partner
By:_______________________________________
[Please Sign Above This Line]
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Secretary
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Taxpayer Identification No.: ▇▇-▇▇▇▇▇▇▇
Copy of notices to:
IPP95, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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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 ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER TERMS
SET FORTH IN THAT CERTAIN AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT DATED AS
OF MARCH __, 1997, AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH
AGREEMENT CAN BE OBTAINED FROM THE SECRETARY OF THE COMPANY.
THESE SECURITIES HAVE BEEN ISSUED UNDER AND ARE GOVERNED BY AND ARE SUBJECT TO
THAT CERTAIN WARRANT AGREEMENT DATED MARCH 31, 1992 (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. _____
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 reduction as provided in
Section _____ 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 $_____________ per share (the "Purchase Price"), at any time
or from time to time up until 5:00 P.M. Cleveland, Ohio time on _______________,
2002.
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
1
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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.
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 and, if then applicable, the Amended and Restated
Stockholders' Agreement (as defined in 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
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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.
(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: _______________, 1997 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:_______________, 199__
(Signature must conform in all respects to
name of holder as specified on the face of
the attached Warrant)
-----------------------------------------
Signature
-----------------------------------------
Address
-----------------------------------------