Exhibit 10.12
WARRANT AGREEMENT
between
COMFORCE CORPORATION
and
THE BANK OF NEW YORK
as
Warrant Agent
----------
Dated as of November 26, 1997
WARRANT AGREEMENT (the "Agreement"), dated as of November 26, 1997, between
COMFORCE Corporation, a Delaware corporation (together with any successors and
assigns, the "Company"), and The Bank of New York, a New York banking
corporation, as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes, among other things, to issue and sell
pursuant to a Purchase Agreement, dated as of November 19, 1997, among the
Company and NatWest Capital Markets Limited, as Initial Purchaser (the "Purchase
Agreement"), 25,000 Units (the "Units") representing $20,000,000 principal
amount of 15% Senior Secured PIK Debentures due 2009 (the "Debentures") with
8.45 Warrants (the "Warrants") to purchase one share of common stock of the
Company, par value $0.01 per share (the "Common Stock"), to be issued upon
exercise of the Warrants (the "Warrant Shares") representing approximately 1% of
the outstanding Common Stock of the Company on a fully diluted basis;
WHEREAS, the Company wishes the Warrant Agent to act on behalf of the
Company and the Warrant Agent is willing to act in connection with the issuance,
division, transfer, exchange and exercise of Warrants as provided herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the Company and the Warrant Agent hereby agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The Warrants will initially be issued
either in global form (the "Global Warrants") or in registered form as physical
Warrant certificates (the "Physical Warrants"). Any certificates (the "Warrant
Certificates") evidencing the Global Warrants or the Physical Warrants to be
delivered pursuant to this Agreement shall be substantially in the form set
forth in Exhibit A attached hereto. Warrant Certificates representing Physical
Warrants shall represent such of the outstanding Warrants as shall be specified
therein and each shall provide that it shall represent the aggregate amount of
outstanding Warrants from time to time endorsed thereon and that the aggregate
amount of outstanding Warrants represented thereby may from time to time be
reduced or increased, as appropriate. Any endorsement of a Warrant Certificate
to reflect the amount of any increase or decrease in the amount of outstanding
Warrants represented thereby shall be made by the Warrant Agent in accordance
with instructions given by the Holder (as defined below) thereof. Warrant
Certificates representing Global Warrants shall represent such of the
outstanding Warrants as shall be specified therein and each shall provide that
it shall represent the aggregate amount of outstanding Warrants from time to
time endorsed thereon and that the aggregate amount of outstanding Warrants
represented thereby may from time to time be reduced or increased, as
appropriate. Any endorsement of a Global Warrant to reflect the amount of any
increase or
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decrease in the amount of outstanding Warrants represented thereby shall be made
by the Warrant Agent and Depositary (as defined below) in accordance with
instructions given by the Holder thereof. The Depository Trust Company shall act
as the Depositary with respect to the Global Warrants until a successor shall be
appointed by the Company and the Warrant Agent. Upon written request, a Holder
may receive from the Depositary and Warrant Agent Physical Warrants as set forth
in Section 6 below.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates shall be
signed on behalf of the Company by its Chairman of the Board, Vice Chairman of
the Board, Chief Executive Officer, President or a Vice President and by its
Treasurer, Secretary or an Assistant Secretary. Each such signature upon the
Warrant Certificates may be in the form of a facsimile signature of the present
or any future Chairman of the Board, Vice Chairman of the Board, President,
Chief Executive Officer, Vice President, Treasurer, Secretary or Assistant
Secretary and may be imprinted or otherwise reproduced on the Warrant
Certificates and for that purpose the Company may adopt and use the facsimile
signature of any person who shall have been Chairman of the Board, Vice Chairman
of the Board, President, Chief Executive Officer, Vice President, Treasurer,
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Warrant Certificates shall be countersigned and delivered or disposed of he
shall have ceased to hold such office. The seal of the Company may be in the
form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by the
Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrants shall be
numbered and shall be registered on the books of the Company maintained at the
principal corporate trust office of the Warrant Agent in ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Warrant Register") as they are issued.
Warrant Certificates shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent shall, upon written instructions of the Chairman of the Board, Vice
Chairman of the Board, the President, Chief Executive Officer, a Vice President,
the Treasurer, Secretary or an Assistant Secretary of the Company, initially
countersign and deliver Warrants entitling the Holders thereof to purchase not
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more than the number of Warrant Shares referred to above in the first recital
hereof and shall thereafter countersign and deliver Warrants as otherwise
provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered Holders
(the "Holders") of the Warrant Certificates as the absolute owners thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
SECTION 5. Transfer and Exchange of Warrants. The Warrant Agent shall from
time to time, subject to the limitations of Section 6, register the transfer of
any outstanding Warrants upon the records to be maintained by it for that
purpose, upon surrender thereof duly endorsed or accompanied (if so required by
it) by a written instrument or instruments of transfer in form satisfactory to
the Warrant Agent, duly executed by the registered Holder or Holders thereof or
by the duly appointed legal representative thereof or by a duly authorized
attorney. Subject to the terms of this Agreement, each Warrant Certificate may
be exchanged for another certificate or certificates entitling the Holder
thereof to purchase a like aggregate number of Warrant Shares as the certificate
or certificates surrendered then entitle each Holder to purchase. Any Holder
desiring to exchange a Warrant Certificate or Certificates shall make such
request in writing delivered to the Warrant Agent, and shall surrender, duly
endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent,
the Warrant Certificate or Certificates to be so exchanged.
Upon registration of transfer, the Warrant Agent shall countersign and
deliver by mail a new Warrant Certificate or Certificates to the persons
entitled thereto. The Warrant Certificates may be exchanged at the option of the
Holder thereof, when surrendered at the office or agency of the Company
maintained for such purpose, which initially will be the principal corporate
trust office of the Warrant Agent in New York, New York for another Warrant
Certificate, or other Warrant Certificates of different denominations, of like
tenor and representing in the aggregate the right to purchase a like number of
Warrant Shares.
No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that is
imposed in connection with any such exchange or registration of transfer.
SECTION 6. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Warrants. When Physical Warrants are
presented to the Warrant Agent with a request, and after the Warrant Agent has
had adequate time to confer and receive written instructions from the Company:
(i) to register the transfer of the Physical Warrants; or
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(ii) to exchange such Physical Warrants for an equal number of
Physical Warrants of other authorized denominations, the Warrant Agent
shall register the transfer or make the exchange as requested if the
requirements under this Agreement as set forth in this Section 6 for such
transactions are met; provided, however, that the Physical Warrants
presented or surrendered for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written instrument
of transfer in form satisfactory to the Warrant Agent, duly executed
by the Holder thereof or his attorney duly authorized in writing; and
(II) in the case of Physical Warrants the offer and sale of which
have not been registered under the Securities Act of 1933, as amended
(the "Security Act"), such Physical Warrants shall be accompanied, in
the sole discretion of the Company, by the following additional
information and documents, as applicable:
(A) if such Physical Warrants are being delivered to the Warrant
Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect
(in substantially the form of Exhibit B hereto); or
(B) if such Physical Warrants are being transferred to a "qualified
Institutional buyer" (as defined in Rule 144A under the
Securities Act (a "Qualified Institutional Buyer")) in accordance
with Rule 144A under the Securities Act, a certification to that
effect (in substantially the form of Exhibit B hereto); or
(C) if such Physical Warrants are being transferred to an
institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act (an
"Institutional Accredited Investor")) delivery of a certification
to that effect (in substantially the form of Exhibit B hereto)
and a Transferee Certificate for Institutional Accredited
Investors in substantially the form of Exhibit C hereto; or
(D) if such Physical Warrants are being transferred in reliance on
Regulation S under the Securities Act ("Regulation S"), delivery
of a certification to that effect (in substantially the form of
Exhibit B hereto) and a Transferee Certificate for Regulation S
Transfers in substantially the form of Exhibit D hereto and an
Opinion of Counsel reasonably satisfactory to the Company to the
effect that such transfer is in compliance with the Securities
Act; or
(E) if such Physical Warrants are being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to
that effect (in substantially the form of Exhibit B hereto) and
an opinion of counsel reasonably satisfactory
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to the Company to the effect that such transfer is in compliance
with the Securities Act; or
(F) if such Physical Warrants are being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of Physical Warrants for a Beneficial Interest
in a Global Warrant. A Physical Warrant may not be exchanged for a beneficial
interest in a Global Warrant except upon satisfaction of the requirements set
forth below. Upon receipt by the Warrant Agent of a Physical Warrant, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Warrant Agent, together with:
(A) a certification, in substantially the form of Exhibit B hereto,
that such Physical Warrant is being transferred to a Qualified
Institutional Buyer; and
(B) written instructions directing the Warrant Agent to make, or to
direct the Depositary to make, an endorsement on the Global
Warrant to reflect an increase in the aggregate amount of the
Warrants represented by the Global Warrant,
then the Warrant Agent shall cancel such Physical Warrant and cause, or direct
the Depositary to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Warrant Agent, the number of
Warrants represented by the Global Warrant to be increased accordingly. If no
Global Warrant is then outstanding, the Company shall issue and the Warrant
Agent shall upon written instructions from the Company authenticate a new Global
Warrant in the appropriate amount.
(c) Transfer and Exchange of Global Warrants. The transfer and exchange of
Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Agreement (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Warrant for a Physical
Warrant.
(i) Any person having a beneficial interest in a Global Warrant may
upon request exchange such beneficial interest for a Physical Warrant. Upon
receipt by the Warrant Agent of written instructions or such other form of
instructions as is customary for the Depositary from the Depositary or its
nominee on behalf of any person having a beneficial interest in a Global
Warrant and upon receipt by the Warrant Agent of a written order or such
other form
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of instructions as is customary for the Depositary or the person designated
by the Depositary as having such a beneficial interest containing
registration instructions and, in the case of any such transfer or exchange
of a beneficial interest in a Global Warrant the offer and sale of which
have not been registered under the Securities Act, the following additional
information and documents:
(A) if such beneficial interest is being transferred to the person
designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially
the form of Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a Qualified
Institutional Buyer in accordance with Rule 144A under the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred to an
Institutional Accredited Investor, delivery of a certification to
that effect (in substantially the form of Exhibit B hereto) and a
Certificate for Institutional Accredited Investors in
substantially the form of Exhibit C hereto; or
(D) if such beneficial interest is being transferred in reliance on
Regulation S, delivery of a certification to that effect (in
substantially the form of Exhibit B hereto) and a Transferee
Certificate for Regulation S Transfers in substantially the form
of Exhibit D hereto and an opinion of counsel reasonably
satisfactory to the Company to the effect that such transfer is
in compliance with the Securities Act; or
(E) if such beneficial interest is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification to
that effect (in substantially the form of Exhibit B hereto) and
an opinion of counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or
(F) if such beneficial interest is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially
the form of Exhibit B hereto) and an opinion of counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act,
then the Warrant Agent will cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Warrant
Agent, the aggregate amount of the Global Warrant to be reduced and, following
such reduction, the Company will execute and, upon receipt of a written
instruction in the form of an Officers' Certificate, the Warrant Agent will
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countersign and make available for delivery to the transferee a Physical
Warrant.
(ii) Physical Warrants issued in exchange for a beneficial interest in
a Global Warrant pursuant to this Section 6(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Warrant Agent in writing. The Warrant Agent shall make
available for delivery such Physical Warrants to the persons in whose names
such Physical Warrants are so registered.
(e) Restrictions on Transfer and Exchange of Global Warrants.
Notwithstanding any other provisions of this Agreement, a Global Warrant may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Warrants in Absence of Depositary. If at
any time:
(i) the Depositary for the Warrants notifies the Company that the
Depositor is unwilling or unable to continue as Depositary for the Global
Warrants and a successor Depositary for the Global Warrants is not
appointed by the Company within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Warrant Agent
in writing that it elects to cause the issuance of Physical Warrants under
this Warrant Agreement,
then the Company will execute, and the Warrant Agent, upon written instructions
from the Company requesting the Warrant Agent to countersign and make available
for delivery Physical Warrants, will countersign and make available for delivery
Physical Warrants, in an aggregate number equal to the aggregate number of
Warrants represented by the Global Warrants, in exchange for such holder's
beneficial interest in Global Warrants.
(g) Legends.
(i) For so long as transfer of a Warrant is not permitted without
registration under the Securities Act, each Warrant Certificate evidencing
such Warrant (and all Warrants issued in exchange therefor or substitution
thereof) shall bear a legend substantially to the following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE
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ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR) OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2)
AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER, RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE WARRANT AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE WARRANT AGENT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREED THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT AN INITIAL
INVESTOR THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR PURCHASING AS
DESCRIBED IN CLAUSE (1)(B) ABOVE SHALL NOT BE PERMITTED TO TRANSFER THIS
SECURITY TO AN INSTITUTIONAL ACCREDITED INVESTOR. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
WARRANT AGENT. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR PURCHASING PURSUANT TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE WARRANT AGENT AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT
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TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "UNITED STATES
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE
FOREGOING RESTRICTIONS.
(h) Cancellation and/or Adjustment of a Global Warrant. At such time as all
beneficial interests in a Global Warrant have either been exchanged for Physical
Warrants, redeemed, repurchased or cancelled, such Global Warrant shall be
returned to or retained and cancelled by the Warrant Agent. At any time prior to
such cancellation, if any beneficial interest in a Global Warrant is exchanged
for Physical Warrants, redeemed, repurchased or cancelled, the number of
Warrants represented by such Global Warrant shall be reduced and an endorsement
shall be made on such Global Warrant, by the Warrant Agent to reflect such
reduction.
(i) Obligations with Respect to Transfers and Exchanges of Physical
Warrants.
(i) To permit registrations of transfers and exchanges, the Company
shall execute, at the Warrant Agent's request, and the Warrant Agent shall
countersign Physical Warrants.
(ii) All Physical Warrants issued upon any registration, transfer or
exchange of Physical Warrants shall be the valid obligations of the
Company, entitled to the same benefits under this Agreement as the Physical
Warrants surrendered upon the registration of transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the person in
whose name any Warrant is registered as the absolute owner of such Warrant,
and neither the Warrant Agent nor the Company shall be affected by notice
to the contrary.
SECTION 7. Separation of Warrants: Terms of Warrants, Exercise of Warrants.
The Debentures and Warrants will be separately transferable, subject to
compliance with applicable securities laws, on the earliest to occur of (i)
February 24, 1998, (ii) such earlier date as may be determined by NatWest
Capital Markets Limited as Initial Purchaser with the consent of the Company,
(iii) upon the occurrence of a Change of Control of the Company (as defined in
that certain Indenture, dated as of November 26, 1997, between the Company and
The Bank of New York, as Trustee), and (iv) the effective date of a registration
statement for a registered exchange offer for the Debentures (the "Separability
Date").
Subject to the terms of this Agreement, each Warrant Holder shall have the
right,
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which may be exercised commencing on or after the date of issuance and until
5:00 p.m., New York City time, on December 1, 2009 (the "Expiration Date"), to
receive from the Company upon the exercise of each warrant the number of fully
paid and nonassessable Warrant Shares which the Holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price (as defined) then in effect for such Warrant Shares. Each Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and an rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
The initial price per share at which Warrant Shares shall be purchasable
upon exercise of Warrants (the "Exercise Price") shall be $7.55 subject to
adjustment, provided, that in no event shall the Exercise Price be less than
$.01 per share. A Warrant may be exercised upon surrender at the office or
agency of the Company maintained for such purpose, which initially will be the
principal corporate trust office of the Warrant Agent in New York, New York, of
the certificate or certificates evidencing the Warrants to be exercised with the
form of election to purchase on the reverse thereof duly filled in and signed,
which signature shall be guaranteed by a participant in a recognized Signature
Guarantee Medallion Program, and upon payment to the Warrant Agent for the
account of the Company of the Exercise Price, as adjusted as herein provided,
for the number of Warrant Shares in respect of which such Warrants are then
exercised. Payment of the aggregate Exercise Price shall be made in cash or by
certified or official bank check to the order of the Warrant Agent on behalf of
the Company in Immediately Available Funds.
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
Holder and in such name or names as the Warrant Holder may designate a
certificate or certificates for the number of Warrant Shares issuable upon the
exercise of such Warrants together with cash as provided in Section 12;
provided, however, that if any consolidation, merger or sale of assets is
proposed to be effected by the Company as described in subsection (d) of Section
12 hereof, or a tender offer or an exchange offer for shares of Common Stock of
the Company shall be made, upon such surrender of Warrants and payment of the
Exercise Price as aforesaid, the Company shall, as soon as possible, but in any
event not later than 10 days, other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are not open for business
("Business Day") thereafter, issue and cause to be mailed the number of Warrant
Shares issuable upon the exercise of such Warrants in the manner described in
this sentence together with cash as provided in Section 12. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a Holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
The Warrants shall be exercisable, at the election of the Holders thereof,
either in full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date
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of expiration of the Warrants, a new certificate evidencing the remaining
Warrant or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to make the required new Warrant Certificate or
Certificates available for delivery pursuant to the provisions of this Section
and of Section 3 hereof, and the Company, whenever required by the Warrant
Agent, will promptly supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall then
be disposed of by the Warrant Agent in a manner consistent with the Warrant
Agent's customary procedure for such disposal and in a manner reasonably
satisfactory to the Company. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.
The Company shall keep copies of this Agreement and any notices given or
received hereunder available for inspection by the Holders during normal
business hours at its office. The Company shall supply the Warrant Agent from
time to time with such numbers of copies of this Agreement as the Warrant Agent
may request.
SECTION 8. Payment of Taxes. The Company will pay all documentary stamp
taxes attributable to the initial issuance of Warrant Shares 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 transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered Holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 9. Mutilated or Missing Warrant Certificates. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may at its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity in the sole discretion of the Warrant Agent.
Applicants for such substitute Warrant Certificates shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.
SECTION 10. Reservation of Warrant Shares. The Company will at all times
reserve
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and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock or its authorized and issued Common Stock
held in its treasury, for the purpose of enabling it to satisfy an obligation to
issue Warrant Shares upon exercise of Warrants, the maximum number of shares of
Common Stock which may then be deliverable upon the exercise of all outstanding
Warrants.
The Company or the transfer agent for the Common Stock (the "Transfer
Agent") and every subsequent transfer agent for any shares of the Company's
capital stock issuable upon the exercise of any of the rights of purchase
aforesaid will be irrevocably authorized and directed at all times to reserve
such number of authorized shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 12. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto transmitted to each Holder pursuant to Section 14 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants made in accordance with the terms of this Agreement will,
upon payment of the Exercise Price therefor and issue thereof, be validly
authorized and issued, fully paid, nonassessable, free of preemptive rights and
free from all taxes, liens, charges and security interests with respect to the
issuance thereof. The Company will take no action to increase the par value of
the Common Stock to an amount in excess of the Exercise Price, and the Company
will not enter into any agreements inconsistent with the rights of Holders
hereunder. The Company will use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Agreement. The Company shall not take any action
reasonably within its control, including the hiring of a broker to solicit
exercises, which would render unavailable an exemption from registration under
the Securities Act which might otherwise be available with respect to the
issuance of Warrant Shares upon exercise of any Warrants, unless there is an
effective registration statement with respect to such issuance.
SECTION 11. Obtaining Stock Exchange Listings. The Company will from time
to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the American Stock Exchange or such other of the principal securities exchanges,
markets and automated quotation systems within the United States of America, if
any, on which other shares of Common Stock are then listed. In the event that,
at any time during the period in which the Warrants are exercisable, the Common
Stock is not listed on any principal securities or exchanges or markets within
the United States of America, the
-12-
Company will use its best efforts to permit the Warrant Shares to be designated
PORTAL securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
Private Offering, Resales and Trading through Automated Linkages market.
SECTION 12. Adjustment of Number of Warrant Shares Issuable. The number of
shares of Common Stock issuable upon the exercise of each Warrant (the "Exercise
Rate") is subject to adjustment from time to time upon the occurrence of the
events enumerated in this Section 12. The Exercise Rate shall initially be 1.00.
(a) Adjustment for Change in Capital Stock. If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock or other capital stock of the Company;
(2) subdivides, combines or reclassifies its outstanding shares of
Common Stock;
(3) makes a distribution to all Holders of its Common Stock of rights,
warrants or options to purchase Common Stock of the Company at a price per
share less than the Current Market Value (as defined in Section 12(d)) at
the Time of Determination (as defined below); and
(4) makes distributions to stockholders of Common Stock of the Company
or rights, warrants or options to purchase Common Stock of the Company;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted so that the Holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action; provided, however,
that notwithstanding the foregoing, upon the occurrence of an event described in
any of paragraphs (1), (3) or (4) above, which otherwise would have given rise
to an adjustment, no adjustment shall be made if the Company includes the
Holders of Warrants in such distribution pro rata to the number of shares of
Common Stock issued and outstanding (after giving effect to the Warrant Shares
as if they were issued and outstanding).
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution (the "Time of Determination") and
immediately after the effective date in the case of a subdivision, combination
or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors of the Company shall determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After
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such allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section.
Such adjustment shall be made successively whenever any event listed above
shall occur.
(b) Adjustment for Certain Issuances of Common Stock.
Subject to Section 12(a), if the Company issues or sells shares of its
Common Stock or distributes any rights, options or warrants to all Holders of
its Common Stock entitling them to purchase shares of Common Stock, or
securities convertible into or exchangeable for Common Stock (other than
pursuant to (1) the exercise of the Warrants, (2) any options, warrants or
rights outstanding as of the date of this Agreement, (3) without limiting any
options, warrants or rights outstanding pursuant to the immediately preceding
clause (2), any director's plans and employee stock option or purchase plans to
the extent that the aggregate number of shares of Common Stock of the Company
(or securities convertible into or exchangeable or exercisable for the Common
Stock of the Company) distributed under all such director's plans and employee
stock option and purchase plans does not exceed 4,000,000 shares of the
Company's Common Stock at any time (of which options to purchase 2,069,030
shares are currently outstanding)), at a price per share less than the Current
Market Value at the Time of Determination, the Exercise Rate shall be adjusted
in accordance with the formula:
E(1) = E x (O + N)
--------
O + (N x P)
--------
M
where:
E(1) = the adjusted Exercise Rate.
E = the Exercise Rate immediately prior to the Time of
Determination for any such distribution.
O = the number of Fully Diluted Shares (as defined in
Section 12(m)) outstanding on the Time of Determination
for any such issuance, sale or distribution.
N = the number of additional shares of Common Stock issued,
sold or issuable upon exercise of such rights, options
or warrants.
P = the price received in the case of any issuance or sale
of Common Stock or exercise price per share of such
rights, options or warrants.
M = the Current Market Value per share of Common Stock on
the Time of
-14-
Determination for any such issuance, sale or distribution.
The adjustment shall be made successively whenever any such rights, options
or warrants are issued and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the rights,
options or warrants. If at the end of the period during which any such rights,
options or warrants are exercisable, not all rights, options or warrants shall
have been exercised, the Warrant shall be immediately readjusted to what it
would have been if "N" in the above formula had been the number of shares
actually issued.
(c) Adjustment for Other Distribution.
Subject to Section 12(a), if the Company distributes to all Holders of its
Common Stock (i) any evidences of indebtedness of the Company or any of its
subsidiaries, (ii) any assets of the Company or any of its subsidiaries (other
than cash dividends or other cash distributions or distributions from current or
retained earnings other than any Extraordinary Cash Dividend), or (iii) any
rights, options or warrants to acquire any of the foregoing or to acquire any
other securities of the Company, the Exercise Rate shall be adjusted in
accordance with the formula:
E(1) = E x M
--------
M - F
where:
E1 = the adjusted Exercise Rate.
E = the current Exercise Rate on the record date mentioned
below.
M = the Current Market Value per share of Common Stock on
the record date mentioned below.
F = the fair market value on the record date mentioned below
of the indebtedness, assets, rights, options or warrants
distributable to one share of Common Stock.
The adjustment shall be made successively whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive the distribution. If an
adjustment is made pursuant to clause (iii) above of this subsection (c) as a
result of the issuance of rights, options or warrants and at the end of the
period during which any such rights, options or warrants are exercisable, not
all such rights, options or warrants shall have been exercised, the Warrant
shall be immediately readjusted as if "F" in the above formula was the fair
market value on the record date of the indebtedness or assets actually dis
tributed upon exercise of such rights, options or warrants divided by the number
of shares of Common Stock outstanding on the record date. Notwithstanding the
foregoing, provisions of this
-15-
Section 12(c), (x) an event which would otherwise give rise to an adjustment
pursuant to this Section 12(c) shall not give rise to such an adjustment if the
Company includes the Holders of the Warrants in such distribution pro rata to
the number of shares of Common Stock issued and outstanding after giving effect
to the Warrant Shares as if they were issued and outstanding and (y) no
adjustment shall be made pursuant to this Section 12(c) with respect to cash
dividends other than Extraordinary Cash Dividends.
This subsection does not apply to rights, options or warrants referred to
in subsection (b) of this Section 12.
(d) Merger, Consolidation, Etc. If (x) the Company merges or consolidates
with, or sells all or substantially all of its property and assets to, another
person (other than an Affiliate of the Company) and consideration is payable to
Holders of Common Stock in exchange for their Common Stock in connection with
such merger, consolidation or sale which consists solely of cash, or (y) in the
event of the dissolution, liquidation or winding up of the Company, then the
Holders of Warrants shall be entitled to receive distributions on the date of
such event on an equal basis with Holders of Common Stock (or other securities
issuable upon exercise of the Warrants) as if the Warrants had been exercised
immediately prior to such event, less the Exercise Price. Upon receipt of such
payment, if any, the rights, of a Holder shall terminate and cease and his or
her Warrants shall expire. In case of any such merger, consolidation or sale of
assets, the surviving or acquiring Person and, in the event of any dissolution,
liquidation or winding up of the Company, the Company shall deposit promptly
with the Warrant Agent the funds, if any, necessary to pay the Holders of the
Warrants. After receipt of such deposit from such Person or the Company and
after receipt of surrendered Warrant Certificates, the Warrant Agent shall make
payment by delivering a check in such amount as is appropriate (or, in the case
of consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holder
surrendering such Warrants.
(e) Current Market Value.
"Current Market Value" per share of Common Stock or of any other security
(herein collectively referred to as a "Security") at any date shall be:
(1) if the Security is not registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), (i) the value of the Security
determined in good faith by the Board of Directors of the Company and
certified in a board resolution, based on the most recently completed arm's
length transaction between the Company and a person other than an Affiliate
of the Company in which such determination is necessary and the closing of
which occurs on such date or shall have occurred within the six months
preceding such date, (ii) if no such transaction shall have occurred on
such date or within such six-month period, the value of the Security most
recently determined as of a date within the six months preceding such date
by an Independent Financial Expert or (iii) if neither clause (i) nor (ii)
-16-
is applicable, the value of the Security determined as of such date by an
Independent Financial Expert, or
(2) if the Security is registered under the Exchange Act, the average
of the daily market prices for each business day during the period
commencing 15 business days before such date and ending on the date one day
prior to such date or, if the Security has been registered under the
Exchange Act for less than 15 consecutive business days before such date,
then the average of the daily market prices for all of the business days
before such date for which daily market prices are available. If the market
price is not determinable for at least 10 business days in such period, the
Current Market Value of the Security shall be determined as if the Security
was not registered under the Exchange Act.
The "market price" for any Security on each business day means: (A) if such
Security is listed or admitted to trading on any securities exchange, the
closing price, regular way, on such day on the principal exchange on which such
Security is traded, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day, (B) if such Security is not then
listed or admitted to trading on any securities exchange, the last reported sale
price on such day, or if there is no such last reported sale price on such day,
the average of the closing bid and the asked prices on such day, as reported by
a reputable quotation source designated by the Company, or (C) if neither clause
(A) nor (B) is applicable, the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service, or a newspaper
of general circulation in the Borough of Manhattan, City of New York,
customarily published on each business day, designated by the Company. If there
are no such prices on a business day, then the market price shall not be
determinable for such business day.
"Independent Financial Expert" shall mean (a) NatWest (or any successor) or
(b) another nationally recognized investment banking firm, a nationally
recognized regional investment banking firm or an internationally reputable
accounting firm selected by the Company reasonably acceptable to the Warrant
Agent (i) that does not (and whose directors, officers, employees and Affiliates
do not) have a direct or indirect material financial interest in the Company,
(ii) that has not been, and, at the time it is called upon to serve as an
Independent Financial Expert under this Agreement is not (and none of whose
directors, officers, employees or Affiliates is) a promoter, director or officer
of the Company, (iii) that has not been retained by the Company for any purpose,
other than to perform an equity valuation, within the preceding twelve months,
and (iv) that, in the reasonable judgement of the Board of Directors of the
Company (certified by a board resolution), is otherwise qualified to serve as an
independent financial advisor. Any such person may receive customary
compensation and indemnification by the Company for opinions or services it
provides as an Independent Financial Expert.
"Affiliate" shall mean, with respect to any person, any other person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such person. For the purposes of this definition, "control"
when used with respect to any person, means the power
-17-
to direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Extraordinary Cash Dividend" means cash dividends, subject to the sentence
below, with respect to the Common Stock the aggregate amount of which in any
fiscal year exceeds the lesser of (i) 10% of the net income of the Company and
its subsidiaries for the fiscal year immediately preceding the payment of such
dividend or (ii) $1,500,000.
(f) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Rate need be made unless the adjustment would
require an increase or decrease of at least 1.00% in the Exercise Rate.
Notwithstanding the foregoing, any adjustments that are not made shall be
carried forward and taken into account in any subsequent adjustment, provided
that no such adjustment shall be deferred beyond the date on which a Warrant is
exercised.
All calculations under this Section 12 shall be made to the nearest cent or
to the nearest 1/100th of a share, as the case may be.
(g) When No Adjustment Required.
If an adjustment is made upon the establishment of a record date for a
distribution subject to subsections (a), (b) or (c) hereof and such distribution
is subsequently cancelled, the Exercise Rate then in effect shall be readjusted,
effective as of the date when the Board of Directors determines to cancel such
distribution, to that which would have been in effect if such record date had
not been fixed.
To the extent the Warrants become convertible into cash, no adjustment need
be made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(h) Notice of Adjustment.
Whenever the Exercise Rate or Exercise Price is adjusted, the Company shall
provide the notices required by Section 14 hereof.
(i) Voluntary Reduction.
The Company from time to time may increase the Exercise Rate by any amount
for any period of time (including, without limitation, permanently) if the
period is at least 20 business days.
-18-
An increase of the Exercise Rate under this Subsection (i) (other than a
permanent increase) does not change or adjust the Exercise Rate otherwise in
effect for purposes of subsections (a), (b) or (c) of this Section 12.
(j) When Issuance or Payment May Be Deferred.
In any case in which this Section 12 shall require that an adjustment in
the Exercise Rate be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing to
the Holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Rate prior to such
adjustment, and (ii) paying to such Holder any amount in cash in lieu of a
fractional share pursuant to Section 13; provided, however, that the Company
shall deliver to the Warrant Agent and shall cause the Warrant Agent, on behalf
of and at the expense of the Company, to deliver to such Holder a due ▇▇▇▇ or
other appropriate instrument evidencing such Holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence of
the event requiring such adjustment.
-19-
(k) Reorganizations.
In case of any capital reorganization, other than in the cases referred to
in Sections 12(a), (b), (c) or (d) hereof, or the consolidation or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the continuing corporation and which does not result in
any reclassification of the outstanding shares of Common Stock into shares of
other stock or other securities or property), or the sale of the property of the
Company as an entirety or substantially as an entirety (collectively such
actions being hereinafter referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise of any Warrant (in lieu of the number of
shares of Common Stock theretofore deliverable) the number of shares of stock or
other securities or property to which a Holder of the number of shares of Common
Stock that would otherwise have been deliverable upon the exercise of such
Warrant would have been entitled upon such Reorganization if such Warrant had
been exercised in full immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a duly
adopted resolution certified by the Company's Secretary or Assistant Secretary,
shall be made in the application of the provisions herein set forth with respect
to the rights and interests of Holders so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to any shares
or other property thereafter deliverable upon exercise of Warrants.
The Company shall not effect any such Reorganization unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Reorganization or the corporation
purchasing or leasing such assets or other appropriate corporation or entity
shall (i) expressly assume, by a supplemental Warrant Agreement or other
acknowledgment executed and delivered to the Warrant Agent the obligation to
deliver to the Warrant Agent and to cause the Warrant Agent to deliver to each
such Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such Holder maybe entitled to purchase, and all other
obligations and liabilities under this Agreement and (ii) enter into an
agreement providing to the Holders rights and benefits substantially similar to
those enjoyed by the Holders under the Registration Rights Agreement of even
date herewith.
The foregoing provisions of this Section 12(k) shall apply to successive
Reorganization transactions.
(l) Form of Warrants.
Irrespective of any adjustments in the number or kind of shares purchasable
upon the exercise of the Warrants, Warrants theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Warrants initially issuable pursuant to this Agreement.
-20-
(m) Miscellaneous.
For purposes of this Section 12 the term "Fully Diluted Shares" shall mean
(i) the shares of Common Stock outstanding as of a specified date, and (ii)
shares of Common Stock into or for which rights, options, warrants or other
securities outstanding as of such date are exercisable or convertible (other
than the Warrants). In the event that at any time, as a result of an adjustment
made pursuant to this Section 12, the Holders of Warrants shall become entitled
to purchase any securities of the Company other than, or in addition to, shares
of Common Stock, thereafter the number or amount of such other securities so
purchasable upon exercise of each Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in subsections (a)
through (1) of this Section 12, inclusive, and the provisions of Sections 7, 8,
10 and 13 with respect to the Warrant Shares or the Common Stock shall apply on
like terms to any such other securities.
SECTION 13. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 13,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Value on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction.
SECTION 14. Notices to Warrant Holders. Upon any adjustment pursuant to
Section 12 hereof, the Company shall give prompt written notice of such
adjustment to the Warrant Agent and shall cause the Warrant Agent, on behalf of
and at the expense of the Company, within 10 days after such adjustment, to mail
by first class mail, postage prepaid, to each Holder a notice of such
adjustment(s) and shall deliver to the Warrant Agent a certificate of the Chief
Financial Officer of the Company, setting forth in reasonable detail (i) the
number of Warrant Shares purchasable upon the exercise of each Warrant and the
Exercise Price of such Warrant after such adjustment(s), (ii) a brief statement
of the facts requiring such adjustment(s) and (iii) the computation by which
such adjustment(s) was made. Where appropriate, such notice may be given in
advance and included as a part of the notice required under the other provisions
of this Section 14.
In case:
(a) the Company shall authorize the issuance to all Holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all Holders of
shares of
-21-
Common Stock of evidences of its indebtedness or assets; or
(c) of any consolidation or merger to which the Company is a part and
for which approval of any shareholders of the Company is required, or of
the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of
Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or a tender offer
or exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action that would require an
adjustment to the Exercise Rate or the Exercise Price pursuant to Section
12 hereof;
then the Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each of the registered Holders of the Warrant Certificates at his or its
address appearing on the Warrant register, at least 30 days (or 20 days in any
case specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or the date of the event in the case of events for which
there is no record date, by first-class mail, postage prepaid, a written notice
stating (i) the date as of which the Holders of record of shares of Common Stock
to be entitled to receive any such rights, options, warrants or distribution are
to be determined, or (ii) the initial expiration date set forth in any tender
offer or exchange offer for shares of Common Stock, or (iii) the date on which
any such consolidation, merger, conveyance, transfer, dissolution, liquidation
or winding up is expected to become effective or consummated, and the date as of
which it is expected that Holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure by the Company or
the Warrant Agent to give such notice or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant, consolidation,
merger, conveyance, transfer, dissolution, liquidation or winding up, or the
vote upon any action.
The Company shall give prompt written notice to the Warrant Agent and shall
cause the Warrant Agent, on behalf of and at the expense of the Company to give
to each Holder written notice of any determination to make a distribution to the
Holders of its Common Stock of any cash dividends, assets, debt securities,
preferred stock, or any rights or warrants to purchase debt securities,
preferred stock, assets or other securities (other than Common Stock, or rights,
options, or warrants to purchase Common Stock) of the Company, which notice
shall state the nature and amount of such planned dividend or distribution and
the record date therefor, and shall be received by the Holders at least 30 days
prior to such record date therefor.
-22-
Nothing contained in this Agreement or in any Warrant Certificate shall be
construed as conferring upon the Holders the right to vote or to consent or to
receive notice as shareholders in respect of the meetings of shareholders or the
election of Directors of the Company or any other matter, or any rights
whatsoever as shareholders of the Company.
SECTION 15. Notices to the Company and Warrant Agent. Any notice or demand
authorized by this Agreement to be given or made by the Warrant Agent or by any
Holder to or on the Company shall be sufficiently given or made when received at
the office of the Company expressly designated by the Company as its office for
purposes of this Agreement (until the Warrant Agent is otherwise notified in
accordance with this Section 15 by the Company), as follows:
COMFORCE Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Doepken, Keevican & ▇▇▇▇▇
58th Floor, USX Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice pursuant to this Agreement to be given by the Company or by any
Holder(s) to the Warrant Agent shall be sufficiently given when received by the
Warrant Agent at the address appearing below (until the Company is otherwise
notified in accordance with this Section by the Warrant Agent).
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 16. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement without the approval of
any Holders of Warrants in order to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision herein, or to make any other provisions in regard to
matters or questions arising hereunder which the Company and the Warrant Agent
may deem necessary or desirable and which shall not in any way adversely affect
the interests of any Holder of Warrants. Any Amendment or supplement to this
Agreement that has a material
-23-
adverse effect on the interests of the Holders shall require the written consent
of the Holders of a majority of the then outstanding Warrants. The consent of
each Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the Exercise Rate decreased (other than
pursuant to adjustments provided in Section 12). In determining whether the
Holders of the required number of Warrants have concurred in any direction,
waiver or consent, Warrants owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company shall be disregarded and deemed not to be outstanding,
except that, for the purpose of determining whether the Warrant Agent shall be
protected in relying on any such direction, waiver or consent, only Warrants
which the Warrant Agent knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Warrants outstanding at the time shall be
considered in any such determination.
SECTION 17. Concerning the Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders, by their acceptance of
Warrants, shall be bound:
(a) The statements contained herein and in the Warrant Certificate
shall be taken as statements of the Company, and the Warrant Agent assumes
no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or any action taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrants
except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for and shall incur no
liability to the Company or any Holder for any failure of the Company to
comply with the covenants contained in this Agreement or in the Warrants to
be complied with by the Company.
(c) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself
(through its employees) or by or through its attorneys or agents (which
shall not include its employees) and shall not be responsible for the
misconduct of any agent appointed with due care.
(d) The Warrant Agent may consult at any time with legal counsel
satisfactory to it (who may be counsel for the Company), and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
Holder in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such
counsel.
(e) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless such evidence in respect
thereof be herein specifically prescribed) may be deemed conclusively to be
proved and established by a certificate signed by the Chairman of the
-24-
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, one of the Vice Presidents, the Treasurer or the Secretary of the
Company and delivered to the Warrant Agent; and such certificate shall be
full authorization to the Warrant Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate. Without limiting the foregoing, the Company shall notify
the Warrant Agent in writing of the occurrence of the Separability Date on
the Date it occurs, and until receipt of such notice the Warrant Agent may
(but need not) be entitled to assume that any such date has not occurred.
(f) The Company agrees to pay the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the Warrant
Agent for all expenses, taxes and governmental charges and other charges of
any kind and nature incurred by the Warrant Agent in the performance of its
duties under this Agreement (including, without limitation, reasonable fees
and expenses of counsel), and to indemnify the Warrant Agent and its
agents, employees, directors, officers and affiliates and save it and them
harmless against any and all liabilities, losses and expenses, including,
without limitation, judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent in the performance of its duties under this
Agreement, except as a result of the Warrant Agent's negligence or bad
faith.
(g) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Holders shall furnish the
Warrant Agent with reasonable security and indemnity for any costs and
expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may
consider proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may
be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent, and any
recovery of judgment shall be for the ratable benefit of the Holders, as
their respective rights or interests may appear.
(h) The Warrant Agent and any stockholder, director, officer or
employee ("Related Parties") of the Warrant Agent may buy, sell or deal in
any of the Warrants or other securities of the Company or become
pecuniarily interested in any transactions in which the Company may be
interested, or contract with or lend money to the Company or otherwise act
as fully and freely as though it were not Warrant Agent under this
Agreement or such director, officer or employee. Nothing herein shall
preclude the Warrant Agent or any Related Party from acting in any other
capacity for the Company or for any other legal entity including, without
limitation, acting as Transfer Agent or as a lender to the Company or an
affiliate thereof.
-25-
(i) The Warrant Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions thereof. The Warrant
Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own negligence or
bad faith.
(j) The Warrant Agent will not incur any liability or responsibility
to the Company or to any Holder for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument reasonably believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(k) The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant (except its countersignature thereof);
nor shall the Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Warrant Shares (or other stock) to be issued pursuant to this Agreement or
any Warrant, or as to whether any Warrant Shares (or other stock) will,
when issued, be validly issued, fully paid and nonassessable, or as to the
Exercise Price or the number or amount of Warrant Shares or other
securities or other property issuable upon exercise of any Warrant.
(l) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, the
Chief Operating Officer, the Chief Financial Officer, any Vice President or
the Secretary of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and shall not be liable for any
action taken or suffered to be taken by it in good faith and without
negligence in accordance with instructions of any such officer or officers.
SECTION 18. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company 30
days' notice in writing. The Warrant Agent may be removed by like notice to the
Warrant Agent from the Company. If the Warrant Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Warrant Agent. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Holder (who shall with such notice submit
his Warrant for inspection by the Company), then the Warrant Agent or any Holder
may apply to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Pending appointment of a successor to the
Warrant Agent, either by the Company or by such court, the duties of the Warrant
Agent shall be carried out by the Company. Any successor warrant agent, whether
appointed by the Company or such a court, shall be a suitable alternate,
experienced in these duties and in good standing, incorporated under the laws of
the United States of America or any State thereof or the District of
-26-
Columbia and having at the time of its appointment as warrant agent a combined
capital and surplus of at least $50,000,000. After appointment, the successor
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor warrant agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Failure to file any notice provided for in this Section 18,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
warrant agent, as the case may be. In the event of such resignation or removal,
the Company or the successor warrant agent shall mail by first class mail,
postage prepaid, to each Holder, written notice of such removal or resignation
and the name and address of such successor warrant agent.
SECTION 19. Identity of Transfer Agent. Forthwith upon the appointment of
any Transfer Agent for the Common Stock, or any other shares of the Company's
capital stock issuable upon the exercise of the Warrants, the Company shall file
with the Warrant Agent a statement setting forth the name and address of such
Transfer Agent. The current Transfer Agent is American Stock Transfer & Trust
Company with offices located at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
SECTION 20. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company, the Warrant Agent or any Holder of
Warrants shall bind and inure to the benefit of their respective successors and
assigns hereunder.
SECTION 21. Termination. This Agreement shall terminate on the Expiration
Date. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised or redeemed pursuant to this
Agreement.
SECTION 22. Governing Law. THIS AGREEMENT AND EACH WARRANT CERTIFICATE
ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SAID STATE, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
SECTION 23. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered Holders of the Warrant Certificates any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered Holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
-27-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
COMFORCE CORPORATION
By:_____________________________
Name:
Title:
THE BANK OF NEW YORK,
as Warrant Agent
By:_____________________________
Name:
Title:
EXHIBIT A
---------
[Form of Warrant Certificate]
[Face]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE WARRANT
AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
WARRANT AGREEMENT, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF
THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY
A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE WARRANT AGREEMENT. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.1
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED
STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR) OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k)
UNDER THE SECURITIES ACT AS IN EFFECT WITH
----------
1 This paragraph is to be included only if the Warrant is in global form.
Exhibit A
Page 2
RESPECT TO SUCH TRANSFER, RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A)
TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE WARRANT AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
WARRANT AGENT), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND (3) AGREED THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND; PROVIDED THAT
AN INITIAL INVESTOR THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR PURCHASING AS
DESCRIBED IN CLAUSE (1)(B) ABOVE SHALL NOT BE PERMITTED TO TRANSFER THIS
SECURITY TO AN INSTITUTIONAL ACCREDITED INVESTOR. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE WARRANT AGENT. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR PURCHASING PURSUANT
TO CLAUSE (2)(C) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
WARRANT AGENT AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "UNITED STATES PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING RESTRICTIONS.
THIS WARRANT MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON (AS SUCH TERM IS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) OR FOR THE ACCOUNT OR BENEFIT
OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD (AS DEFINED IN
THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF THIS WARRANT MAY BE MADE FOR AN
INTEREST IN A PHYSICAL WARRANT UNTIL AFTER THE LATER OF THE DATE OF EXPIRATION
OF THE
Exhibit A
Page 3
RESTRICTED PERIOD (AS DEFINED IN THAT CERTAIN INDENTURE DATED AS OF NOVEMBER 26,
1997 BETWEEN THE COMPANY AND THE WARRANT AGENT) AND THE DATE ON WHICH THE PROPER
REQUIRED CERTIFICATION RELATING TO SUCH INTEREST HAS BEEN PROVIDED IN ACCORDANCE
WITH THE TERMS OF THE WARRANT AGREEMENT, TO THE EFFECT THAT THE BENEFICIAL OWNER
OR OWNERS OF SUCH INTEREST ARE NOT U.S. PERSONS.2
----------
2 To be included only in a Reg. S Global Warrant.
Exhibit A
Page 4
EXERCISABLE ON OR AFTER THE DATE OF ISSUANCE
AND ON OR BEFORE DECEMBER 1, 2009
No. ______
Warrants
CUSIP No.:
Warrant Certificate
COMFORCE Corporation
This Warrant Certificate certifies that _____________________ or registered
assigns, is the registered Holder of Warrants expiring December 1, 2009 (the
"Warrants") to purchase shares of common stock $0.01 par value (the "Common
Stock") of COMFORCE Corporation, a Delaware corporation (the "Company"). Each
Warrant entitles the Holder upon exercise to receive from the Company on or
after the date hereof and on or before 5: 00 p.m. New York City Time on December
1, 2009 one fully paid and nonassessable share of Common Stock (each a "Warrant
Share") at the initial exercise price (the "Exercise Price") of $7.55 payable in
lawful money of the United States of America upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office or agency of the
Warrant Agent, but only subject to the conditions set forth herein and in the
Warrant Agreement referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time, on
December 1, 2009, and to the extent not exercised by such time such Warrants
shall become void.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance with
the internal laws of the State of New York.
Exhibit A
Page 5
IN WITNESS WHEREOF, COMFORCE Corporation has caused this Warrant
Certificate to be signed by its [________________] and by its
[________________].
Dated:
COMFORCE CORPORATION
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Countersigned:
The Bank of New York,
as Warrant Agent
By:_____________________________
Authorized Signatory
Exhibit A
Page 6
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring December 1, 2009, entitling the Holder on
exercise to receive shares of voting Common Stock, of the Company (the "Common
Stock"), $0.01 par value, and are issued or to be issued pursuant to a Warrant
Agreement dated as of November 26, 1997 (the "Warrant Agreement"), duly executed
and delivered by the Company to The Bank of New York, a bank organized under the
laws of the State of New York as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the Holders (the words "Holders" or "Holder" meaning the
registered Holders or registered Holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the Holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or after the date hereof and on or
before December 1, 2009, subject to extension as provided in the Warrant
Agreement. The Holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in cash at the office of the Warrant Agent.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the Holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the number of Warrants set forth on the face hereof may, subject to certain
conditions, be adjusted. No fractions of a share of Common Stock will be issued
upon the exercise of any Warrant, but the Company win pay the cash value thereof
determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant Agent
by the registered Holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees in exchange
Exhibit A
Page 7
for this Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
Holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
Holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any Holder hereof to any rights
of a stockholder of the Company.
Exhibit A
Page 8
ELECTION TO EXERCISE
(To be executed upon exercise of the Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ shares of Common
Stock of COMFORCE Corporation and herewith tenders in payment for such Shares
$___________ in lawful money of the United States of America. In accordance with
the terms hereof. The undersigned requests that a certificate representing such
Shares be registered and delivered as follows:
Name
Address
Delivery Address (if different)
If such number of Shares is less than the aggregate number of Shares purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the balance of such Shares be registered and delivered as follows:
Name
Address
Delivery Address (if different)
Social Security or Signature
Other Taxpayer Identification Number of Holder
Note: The above signature must
correspond with the name as
written upon the face of this
Warrant Certificate in every
particular, without alteration
or enlargement or any change
whatsoever. If the certificate
representing the Shares or any
Warrant Certificate representing
Warrants not exercised is to be
registered in a name other than
that in which this Warrant
Certificate is registered, the
signature of the holder hereof
must be guaranteed.
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which
Exhibit A
Page 9
requirements include membership or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature guarantee program" as may
be determined by the [Registrar] in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
Exhibit A
Page 10
SCHEDULE OF EXCHANGES3
The following exchanges of a part of this Global Warrant for Physical
Warrants (or of Physical Warrants for an interest in the Global Warrant) have
been made:
Number of
Amount of Amount of Warrants of
decrease in increase in this Global
Number of Number of Warrant Signature of
Warrants of Warrants of following such authorized
Date of this Global this Global decrease (or officer of
Exchange Warrant Warrant increase) Warrant Agent
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
----------
3 This is to be included only if the Warrant is in global form.
Exhibit A
Page 11
ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Warrant Certificate)
For Value Received, the undersigned registered holder hereby sells, assigns and
transfers unto
Name of Assignee
Address of Assignee
this Warrant Certificate, together with all right, title and interest therein,
and does irrevocably constitute and appoint
_______________________________________________attorney, to transfer the within
Warrant Certificate on the books of the Warrant Agent, with full power of
substitution.
Date Signature
Note: The above signature must
correspond with the name as
written upon the face of this
Warrant Certificate in every
particular, without alteration
or enlargement or any change
whatsoever.
Social Security or Other
Taxpayer Identification Number of Assignee
Signature Guaranteed:
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
EXHIBIT B
---------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF WARRANTS
Re: Warrants to purchase
Common Stock (the "Securities"), of
COMFORCE Corporation
This Certificate relates to __________ Securities held in the form of*
___________ a beneficial interest in a Global Warrant or* ____________ Physical
Warrants by ____________ (the "Transferor").
The Transferor:*
/ / has requested by written order that the Warrant Agent deliver in
exchange for its beneficial interest in the Global Warrant held by the
Depositary a Physical Warrant or Physical Warrants in definitive, registered
form of authorized denominations and an aggregate number equal to its beneficial
interest in such Global Warrant (or the portion thereof indicated above); or
/ / has requested that the Warrant Agent by written order to exchange or
register the transfer of a Physical Warrant or Physical Warrants.
In connection with such request and in respect of each such Security, the
Transferor does hereby certify that the Transferor is familiar with the Warrant
Agreement relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 6 of such Warrant Agreement, and that
the transfer of these Securities does not require registration under the
Securities Act of 1933, as amended (the "Act") because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer.
/ / Such Security is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S under
the Act.
/ / Such Security is being transferred in reliance on Rule 144 under the
Act.
Exhibit B
Page 2
/ / Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Act other than Rule
144A or Rule 144 or Regulation S under the Act to a person other than an
institutional "accredited investor."
--------------------------------
(INSERT NAME OF TRANSFEROR)
By:_____________________________
(Authorized Signatory)
Date:
-------------------
*Check applicable box.
EXHIBIT C
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
[Date]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
Re: COMFORCE Corporation
(the "Company") Warrants to purchase Common
Stock (the "Securities")
Ladies and Gentlemen:
In connection with our proposed purchase of Securities, of the Company, we
confirm that:
1. We have received such information as we deem necessary in order to make
our investment decision.
2. We understand that any subsequent transfer of the Securities is subject
to certain restrictions and conditions set forth in the Warrant Agreement and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have not been
registered under the Securities Act, and that the Securities may not be offered
or sold within the United States or to, or for the account or benefit of, U.S.
persons except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as hereinafter
stated, that if we should sell any Securities, we will do so only (A) to the
Company or any subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes to the
Warrant Agent a signed letter substantially in the form hereof, (D) outside the
United States in accordance with Regulation S under the Securities Act, (E)
pursuant to the exemption from
Exhibit C
Page 2
registration provided by Rule 144 under the Securities Act (if available), or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing Securities from us a
notice advising such purchaser that resales of the Securities are restricted as
stated herein.
4. We understand that, on any proposed resale of Securities, we will be
required to furnish to the Warrant Agent and the Company, such certification,
legal opinions and other information as the Warrant Agent and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Securities, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account or for
one or more accounts (each of which is an institutional "accredited investor")
as to each of which we exercise sole investment discretion.
Exhibit C
Page 3
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
(Name of Transferor)
By:_____________________________
(Authorized Signatory)
EXHIBIT D
---------
Form of Certificate to Be
Delivered in Connection
with Regulation S Transfers
[Date]
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: COMFORCE Corporation
Re: Corporate Trust Trustee Administration
(the "Company") Warrants to purchase Common
Stock (the "Securities")
Dear Sirs:
In connection with our proposed sale of __________ of the Securities, we
confirm that such sale has been effected pursuant to and in accordance with
Regulation S under the Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States, or (b) the
transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been prearranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions applicable
to the Securities.
Exhibit D
Page 2
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
(Name of Transferor)
By:_____________________________
(Authorized Signatory)
EXHIBIT D
---------
TABLE OF CONTENTS
Page
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SECTION 1. Appointment of Warrant Agent......................................1
SECTION 2. Warrant Certificates..............................................1
SECTION 3. Execution of Warrant Certificates.................................2
SECTION 4. Registration and Countersignature.................................2
SECTION 5. Transfer and Exchange of Warrants.................................3
SECTION 6. Registration of Transfers and Exchanges...........................3
SECTION 7. Separation of Warrants: Terms of Warrants, Exercise
of Warrants....................................................9
SECTION 8. Payment of Taxes.................................................10
SECTION 9. Mutilated or Missing Warrant Certificates........................10
SECTION 10. Reservation of Warrant Shares...................................11
SECTION 11. Obtaining Stock Exchange Listings...............................11
SECTION 12. Adjustment of Number of Warrant Shares Issuable.................12
(a) Adjustment for Change in Capital Stock .........................12
(b) Adjustment for Certain Issuances of Common Stock ...............13
(c) Adjustment for Other Distribution ..............................14
(d) Merger, Consolidation, Etc. ....................................15
(e) Current Market Value ...........................................15
(f) When De Minimis Adjustment May Be Deferred .....................16
(g) When No Adjustment Required ....................................17
(h) Notice of Adjustment ...........................................17
(i) Voluntary Reduction ............................................17
(j) When Issuance or Payment May Be Deferred .......................17
(1)
Page
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(k) Reorganizations ................................................18
(l) Form of Warrants ...............................................18
(m) Miscellaneous ..................................................19
SECTION 13. Fractional Interests............................................19
SECTION 14. Notices to Warrant Holders......................................19
SECTION 15. Notices to the Company and Warrant Agent........................21
SECTION 16. Supplements and Amendments......................................21
SECTION 17. Concerning the Warrant Agent....................................22
SECTION 18. Change of Warrant Agent.........................................24
SECTION 19. Identity of Transfer Agent......................................25
SECTION 20. Successors......................................................25
SECTION 21. Termination.....................................................25
SECTION 22. Governing Law...................................................25
SECTION 23. Benefits of This Agreement......................................25
SECTION 24. Counterparts....................................................25
(2)