EXHIBIT 10.4
WARRANT AGENT AGREEMENT
This Warrant Agent
Agreement (this “Agreement” ) is made as of
February 16, 2007, between CHARYS HOLDING COMPANY, INC., a Delaware
corporation (the “Company” ), and THE BANK OF
NEW YORK TRUST COMPANY, N.A. (the “Warrant
Agent” ).
WHEREAS,
pursuant to a Purchase
Agreement, dated as of February 14, 2007 (the “Purchase
Agreement” ), the Company is selling to the initial
purchaser named therein (the “Initial
Purchaser”) up to 201,250 units (the
“Units” ) of the Company’s securities,
each Unit consisting of $1,000 principal amount of the
Company’s 8.75% Senior Convertible Notes due 2012 (the
“Notes” ), a warrant to purchase up to 333.333
shares of the Company’s common stock, par value $0.001 per
share ( “Common Stock” ), at an initial exercise
price of $4.00 per share (a “$4.00 Warrant” )
and a warrant to purchase up to 333.333 shares of Common Stock, at
an initial exercise price of $5.00 per share (a “$5.00
Warrant” ); the $4.00 Warrants and the $5.00 Warrants are
collectively referred to as the “Warrants ;
”
WHEREAS , the Notes will be issued pursuant
to the provisions of an Indenture, dated as of the date hereof,
between the Company and The Bank of New York Trust Company, N.A.,
as trustee (the “Indenture” );
WHEREAS , the Company desires to engage the
Warrant Agent to act on the Company’s behalf, and the Warrant
Agent desires to act on behalf of the Company, in connection with
the issuance of the Warrant Certificates (as defined below) and the
other matters as provided herein; and
WHEREAS,
the Company desires to
provide for the form and provisions of the Warrants, the terms upon
which they shall be issued and exercised, and the respective rights
and obligations of the Company, the Warrant Agent and the holders
of the Warrants (the “Holders” );
NOW, THEREFORE,
in consideration of the
mutual agreements herein contained, the parties hereto agree as
follows:
1.
Certain Definitions.
“Affiliate”
of any Person means any Person directly or indirectly controlling
or controlled by or under direct or indirect common control with
such first Person. For this purpose, “control” shall
mean the power to direct the management and policies of a Person
through the ownership of securities, by contract or otherwise.
“Capital
Stock” of any Person means any and all shares,
interests, participations or other equivalents (however designated)
of capital stock of such Person and all warrants, options or rights
to acquire such capital stock.
“Common Stock
Equivalents” means rights, options, warrants or
other securities to, directly or indirectly, subscribe for or
purchase Common Stock, or securities, directly or indirectly,
convertible or exercisable into or exchangeable for Common
Stock.
“Current Market
Price” means (a) if the Common Stock is listed or
quoted on a Trading Market, the Volume Weighted Average Price for
the 20 consecutive Trading Days ending on, and including, the
Trading Day immediately preceding the applicable Date of
Determination; and (b) if not so listed or quoted, such price as
the Board of Directors of the Company shall determine, in good
faith.
“Date of
Determination” means (a) with respect to Section
4.3.1, the Date of Exercise, (b) with respect to Sections 5.1, 5.2
and 5.3, the date fixed for determination of the holders of Common
Stock entitled to receive the subject dividend, issuance or
distribution, and (c) with respect to Section 5.4, the Trading Day
immediately preceding the date on which the Common Stock or Common
Stock Equivalents are issued or sold.
“Depositary”
means The Depositary Trust Company, its nominees and their
respective successors.
“Excluded
Securities” means shares, rights, options,
warrants and convertible or exchangeable securities, issued or
issuable (a) in any of the transactions with respect to which an
adjustment of the Warrant Price is provided pursuant to Sections
5.1 through 5.3 hereof, (b) pursuant to the Purchase Agreement or
in connection therewith, including, the Units, the Notes (the
guarantees endorsed thereon), the Warrants and the Initial
Purchaser’s Warrants, (c) upon conversion of the Notes or
exercise of the Warrants or the Initial Purchaser’s Warrants,
and (d) to directors and employees (including officers) pursuant to
stock option and incentive plans of the Company existing as of the
Issue Date.
“Indebtedness”
of a Person means the principal of, premium, if any, and interest
on, and all other obligations in respect of (a) all indebtedness of
such Person for borrowed money (including all indebtedness
evidenced by notes, bonds, debentures or other securities), (b) all
obligations (other than trade payables) incurred by such Person in
the acquisition (whether by way of purchase, merger, consolidation
or otherwise and whether by such Person or another Person) of any
business, real property or other assets, (c) all reimbursement
obligations of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the
account of such Person, (d) all capital lease obligations of such
Person, (e) all net obligations of such Person under interest rate
swap, currency exchange or similar agreements of such Person, (f)
all obligations and other liabilities, contingent or otherwise,
under any lease or related document, including a purchase
agreement, conditional sale or other title retention agreement, in
connection with the lease of real property or improvements thereon
(or any personal property included as part of any such lease) which
provides that such Person is contractually obligated to purchase or
cause a third party to purchase the leased property or pay an
agreed-upon residual value of the leased property, including such
Person’s obligations under such lease or related document to
purchase or cause a third party to purchase such leased property or
pay an agreed-upon residual value of the leased property to the
lessor, (g) guarantees by such Person of indebtedness described in
clauses (a) though (f) of another Person, and (h) all renewals,
extensions, refundings, deferrals, restructurings, amendments and
modifications of any indebtedness, obligation, guarantee or
liability of the kind described in clauses (a) though (g).
“Initial
Purchaser’s Warrants” means the warrants
issued or issuable to the Initial Purchaser and/or one or more of
its Affiliates in connection with the transactions contemplated
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by the Purchase
Agreement.
“Issue
Date” means February 16, 2007.
“Lien”
means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind.
“Person”
means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust,
unincorporated organization or government or other agency or
political subdivision thereof.
“Registration Rights
Agreement” means the Registration Rights
Agreement, dated as of February 16, 2007, by and between the
Company and the Initial Purchaser.
“Registration
Statement” has the meaning ascribed thereto in the
Registration Rights Agreement.
“Restricted
Security” means a Warrant that constitutes a
“restricted security” within the meaning of Rule
144(a)(3) under the Securities Act; provided, however, that the
Warrant Agent shall be entitled to request and conclusively rely on
a written opinion of counsel to the Company with respect to whether
any Warrant constitutes a Restricted Security.
“Securities
Act” means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder.
“Trading
Day” means a day during which trading in
securities generally occurs on the principal Trading Market on
which the Common Stock is then listed or quoted.
“Trading
Market” means whichever of the New York Stock
Exchange, the American Stock Exchange, the Boston Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market, NASDAQ
Capital Market or the Over-The-Counter Bulletin Board on which the
Common Stock is listed or quoted for trading on the date in
question.
“Volume Weighted Average
Price” means (a) with respect to a specified
Trading Day, the quotient obtained by dividing (i) the sum of the
Volume Weighted Transaction Price for each trade of Common Stock
made during such Trading Day by (ii) the total number of shares of
Common Stock traded on such Trading Day, and (b) with respect to a
specified number of Trading Days, the average Volume Weighted
Average Price for such Trading Days, determined by dividing the sum
of the Volume Weighted Average Price for each such Trading Day
(determined in accordance with the foregoing clause (a)) by the
number of Trading Days during such period.
“Volume Weighted
Transaction Price” means, with respect to a
particular trade of Common Stock, the quotient obtained by dividing
(a) the product of the number of shares bought and sold in such
transaction, multiplied by the price at which such shares are
bought and sold, divided by (b) the number of shares bought and
sold in such transaction.
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2.
Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company for the
Warrants, and the Warrant Agent hereby accepts such appointment and
agrees to perform the same in accordance with the terms and
conditions set forth in this Agreement.
3.
Issuance; Registration; Transfer; Exchange; Replacement;
Cancellation; etc.
3.1
Original Issue of Warrants; Form of Warrant
Certificates.
3.1.1
Certificates representing the $4.00 Warrants and the $5.00 Warrants
(the “Warrant Certificates” ) shall be
substantially in the forms of Exhibit A-1 or Exhibit
A-2 , respectively, the provisions of which are incorporated
herein, and shall be signed by, or bear the facsimile signature of,
the Chief Executive Officer or the President, and the Treasurer,
Secretary or Assistant Secretary of the Company, and shall bear
such other insertions, letters, numbers, legends or marks of
identification as the Company and the Warrant Agent deem
appropriate, required or permitted by this Agreement. In the
event the person whose facsimile signature has been placed upon any
Warrant shall have ceased to serve in the capacity in which such
person signed the Warrant before such Warrant is issued, it may be
issued with the same effect as if he or she had not ceased to be
such at the date of issuance. 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. Typographical and other minor errors or defects
in any such facsimile signature shall not effect the validity or
enforceability of any Warrant which has been countersigned and
delivered by the Warrant Agent. Warrant Certificates shall be
countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. Warrant Certificates shall
be dated the date of countersignature by the Warrant Agent.
3.1.2
Contemporaneously with the Closing Date (as such term is defined in
the Purchase Agreement), upon written instruction by the Company to
the Warrant Agent, the Warrant Agent will countersign for original
issue $4.00 Warrants to purchase up to an aggregate of 58,333,275
shares of Common Stock and $5.00 Warrants to purchase up to an
aggregate of 58,333,275 shares of Common Stock.
Contemporaneously with the Additional Closing Date (as such term is
defined in the Purchase Agreement), upon written instruction by the
Company to the Warrant Agent, the Warrant Agent will countersign
for original issue $4.00 Warrants to purchase up to an aggregate of
8,749,992 shares of Common Stock and $5.00 Warrants to purchase up
to an aggregate of 8,749,992 shares of Common Stock.
3.1.3
The $4.00 Warrants and the $5.00 Warrants offered and sold in
reliance on Rule 144A shall be issued initially in the form of one
or more permanent global Warrant Certificates in definitive, fully
registered form, substantially in the forms set forth in Exhibit
A-1 and Exhibit A-2 , respectively (the “$4.00
Global Warrant” and “$5.00 Global Warrant
,” respectively, and collectively, the “Global
Warrants” ), deposited with the Warrant Agent, as
custodian for, and registered in the name of the nominee for, the
Depositary, duly executed by the Company and countersigned by the
Warrant Agent as provided herein. The aggregate number of
Warrants represented by each Global Warrant may from time to time
be increased or decreased by adjustments made on the records of the
Warrant Agent, as custodian for the Depositary, or its nominee, as
provided in this Agreement; provided, that in no event shall
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the
$4.00 Global Warrant represent the right to acquire more than
67,083,267 shares of Common Stock and in no event shall the $5.00
Global Warrant represent the right to acquire more than 67,083,267
shares of Common Stock, in each case, assuming subject to
adjustment as provided in Section 5 below and assuming the maximum
number of Units are purchased by the Initial Purchaser pursuant to
the Purchase Agreement. Beneficial owners of
interests in a Global Warrant may receive a permanent Warrant
Certificate in registered form substantially in the form set forth
in Exhibit A-1 or Exhibit A-2 , as applicable (the
“Physical Warrant” ), in accordance with the
procedures of the Warrant Agent and the Depositary.
3.1.4
All Warrant Certificates shall bear the legend set forth in
Exhibit B-1 . Each Global Warrant and Physical Warrant
that constitutes a Restricted Security shall bear the legend (the
“Private Placement Legend” ) set forth in
Exhibit B-2 on the face thereof until after the second
anniversary of the later of (a) the Issue Date, and (b) the last
date on which the Company or any Affiliate thereof was the owner of
such Warrant (or any predecessor security), or such shorter period
of time as permitted by Rule 144(k) under the Securities Act or any
successor provision thereunder or such longer period of time as may
be required under the Securities Act or applicable state securities
laws, as set forth in an opinion of counsel to the Company, unless
otherwise agreed between the Company and the Holder thereof (such
date, the “Resale Restriction Termination Date”
). Each Global Warrant shall also bear the legend set forth
in Exhibit B-3 .
3.2
Registration.
3.2.1
Warrant Register. The Warrant Agent shall maintain
books ( “Warrant Register” ) for the
registration of the original issuance and transfers or exchanges of
Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue and register the Warrants in the name of
the Initial Purchaser in accordance Section 3.1.2 above and
instructions delivered to the Warrant Agent by the Company.
The Company shall, upon reasonable advance notice to the Warrant
Agent, have access to the Warrant Register during the Warrant
Agent’s regular business hours. All Warrant
Certificates issued upon any registration of transfer or exchange
of Warrant Certificates shall be the valid obligations of the
Company, evidencing the same obligations, and entitled to the same
benefits under this Agreement, as the Warrant Certificates
surrendered for such registration of transfer or exchange.
3.2.2
Registered Holder. Prior to due presentment for
registration of transfer or exchange of any Warrant, the Company
and the Warrant Agent may deem and treat the person in whose name
such Warrant shall be registered upon the Warrant Register (
“registered holder” ) as the absolute owner of
such Warrant and of each Warrant represented thereby
(notwithstanding any notation of ownership or other writing on the
Warrant Certificate made by anyone other than the Company or the
Warrant Agent) for the purpose of any exercise thereof and for all
other purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
3.3
Transfer and Exchange.
3.3.1
The Warrants shall initially be issued as part of the issuance of
the Units. With respect to each Unit, the Note and Warrants
included therein will become separately
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transferable immediately following the sale by
the Initial Purchaser of such Unit to a Person whom the Initial
Purchaser reasonably believes to be a QIB in a transaction under
Rule 144A.
3.3.2
A Holder may transfer or exchange Warrants for an equal number of
Warrants in other denominations, only by surrendering to the
Warrant Agent the Warrant Certificate therefor, properly endorsed
with signatures properly guaranteed and accompanied by appropriate
instructions for transfer or exchange, as applicable.
Thereupon, the Warrant Agent shall issue in exchange therefore one
or more new Warrant Certificates as requested by the registered
holder of the Warrants so surrendered, representing an equal
aggregate number of Warrants; provided, however, that, in the event
a Warrant Certificate surrendered for transfer bears a restrictive
legend, the Warrant Agent may require a written opinion of counsel
for the Company stating that such transfer may be made and
indicating whether the new Warrant Certificate(s) must also bear a
restrictive legend. No such transfer shall be effected until,
and such transferee shall succeed to the rights of a Holder only
upon, final acceptance and registration of the transfer by the
Warrant Agent in the Warrant Register. Prior to the
registration of the transfer by the Warrant Agent as provided
herein, the Company, the Warrant Agent, and any agent of the
Company or the Warrant Agent may treat the Person in whose name the
Warrants are registered as the owner thereof for all purposes and
as the Person entitled to exercise the rights represented thereby,
any notice to the contrary notwithstanding. Upon any such transfer
or exchange, a new Warrant Certificate(s), representing an equal
aggregate number of Warrants shall be issued and the old Warrant
Certificates shall be cancelled by the Warrant Agent. Warrant
Certificates so cancelled shall be delivered by the Warrant Agent
to the Company from time to time upon the Company’s
request. All Warrants issued upon any registration of
transfer or exchange shall be the valid obligations of the Company,
entitled to the same benefits under this Agreement as the Warrants
surrendered upon such registration of transfer or exchange.
The Warrant Agent shall not be required to effect any registration
of transfer or exchange which will result in the issuance of a
Warrant Certificate for a fraction of a warrant.
3.3.3
No service charge shall be made for any transfer or exchange of
Warrants, but the Company or the Warrant Agent may require payment
of a sum sufficient to cover any transfer tax or similar
governmental charge that may be imposed in connection with any
transfer exchange of Warrants to a name other than that of the
registered holder.
3.3.4
The Warrant Agent is authorized to countersign and to deliver, in
accordance with the terms of this Agreement, the Warrant
Certificates required to be issued pursuant to the provisions of
this Section 3.3, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant
Certificates duly executed on behalf of the Company for such
purpose.
3.4
Replacement of Warrants. If the Holder of a
Warrant claims that his, her or its Warrant Certificate has been
mutilated, lost, destroyed or wrongfully taken, the Company shall
issue and the Warrant Agent shall countersign a replacement
Warrant, upon surrender to the Warrant Agent of the mutilated
Warrant Certificate, or upon delivery to the Warrant Agent of
evidence of the loss, destruction or theft of the Warrant
Certificate satisfactory to the Warrant Agent and the Company. In
the case of lost, destroyed or wrongfully taken Warrant
Certificates, if required by the Warrant Agent or the Company, an
indemnity bond must
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be
provided by the Holder that is reasonably satisfactory to the
Warrant Agent and the Company to protect the Company and the
Warrant Agent from any loss which either of them may suffer if a
Warrant Certificate is replaced. The Warrant Agent may charge the
Holder for its expenses in replacing a Warrant Certificate.
The Warrant Agent is authorized to countersign and to deliver, in
accordance with the terms of this Agreement, the Warrant
Certificates required to be issued pursuant to the provisions of
this Section 3.4, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant
Certificates duly executed on behalf of the Company for such
purpose. If a Warrant Certificate is replaced pursuant to
this Section 3.3, it ceases to be outstanding unless the Warrant
Agent receives proof satisfactory to it, or a court holds, that the
replaced Warrant Certificate is held by a bona fide
purchaser.
3.5
Cancellation of Warrants. The Company at any time
may deliver Warrant Certificates to the Warrant Agent for
cancellation. The Warrant Agent shall promptly cancel all Warrant
Certificates surrendered for transfer, exchange, exercise or
cancellation in accordance with its customary procedures. The
Company may not issue new Warrants to replace Warrants delivered to
the Warrant Agent for cancellation or that any Holder has
exercised.
3.6
CUSIP Numbers. The Company in issuing the Warrants
may use one or more “CUSIP” numbers, and, if so, the
Warrant Agent shall use the CUSIP numbers in notices relating to
the Warrants as a convenience to Holders; provided, however, that
no representation is hereby deemed to be made by the Warrant Agent
as to the correctness or accuracy of the CUSIP numbers printed on
any notice or on any Warrant Certificate; provided, further, that
reliance may be placed only on the other identification numbers
printed on the Warrant Certificates, and the effectiveness of any
such notice shall not be affected by any defect in, or omission of,
such CUSIP numbers. The Company shall promptly notify the Warrant
Agent in writing of any change in the CUSIP numbers.
3.7
Book-Entry Provisions for Global Warrants.
3.7.1
The Global Warrants initially shall (a) be registered in the name
of the Depositary or the nominee of such Depositary, (b) be
delivered to the Warrant Agent as custodian for such Depositary,
and (iii) bear legends required by Section 3.1.4. Members of,
or participants in, the Depositary (
“Participants” ) shall have no rights under this
Agreement with respect to any Global Warrant held on their behalf
by the Depositary, or the Warrant Agent as its custodian, or under
the Global Warrant, and the Depositary may be treated by the
Company, the Warrant Agent and any agent of the Company or the
Warrant Agent as the absolute owner of the Global Warrant for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Warrant Agent or any agent of the
Company or the Warrant Agent from giving effect to any written
certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and Participants,
the operation of customary practices governing the exercise of the
rights of a Holder of any Warrant.
3.7.2
Transfers of Global Warrants shall be limited to transfers in
whole, but not in part, to the Depositary, its successors or their
respective nominees. In addition, Physical Warrants shall be
transferred to all beneficial owners, as identified by the
Depositary, in exchange for their beneficial interests in Global
Warrants only if the Depositary notifies the Company that the
Depositary is unwilling or unable to continue as depositary for any
Global
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Warrant (or the Depositary ceases to be a
“clearing agency” registered under Section 17A of the
Exchange Act) and a successor Depositary is not appointed by the
Company within 90 days of such notice or cessation, or upon the
request of the beneficial owners in accordance with the rules and
procedures of the Depositary and the provisions of this
Agreement.
3.7.3
In connection with the transfer of a Global Warrant in its entirety
to beneficial owners pursuant to Section 3.7.2, such Global Warrant
shall be deemed to be surrendered to the Warrant Agent for
cancellation, and the Company shall execute, and the Warrant Agent
shall upon written instructions from the Company countersign and
deliver, to each beneficial owner identified by the Depositary in
exchange for its beneficial interest in such Global Warrant, an
equal number of Physical Warrants of authorized denominations.
3.7.4
Any Physical Warrant constituting a Restricted Security delivered
in exchange for an interest in a Global Warrant pursuant to 3.7.2
shall, except as otherwise provided by Section 3.8, bear the
Private Placement Legend.
3.7.5
The Holder of any Global Warrant may grant proxies and otherwise
authorize any Person, including Participants and Persons that may
hold interests through Participants, to take any action which a
Holder is entitled to take under this Agreement or the
Warrants.
3.8
Special Transfer Provisions.
3.8.1
Notwithstanding any other provisions of this Agreement, but except
as provided in 3.7.2, a Global Warrant may not be transferred
except as a whole 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.
3.8.2
Upon the transfer, exchange or replacement of Warrant Certificates
not bearing the Private Placement Legend, the Warrant Agent shall
deliver Warrant Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Warrant
Certificates bearing the Private Placement Legend, the Warrant
Agent shall deliver only Warrant Certificates that bear the Private
Placement Legend unless (a) the requested transfer is after the
Resale Restriction Termination Date, (b) there is delivered to the
Warrant Agent and the Company an opinion of counsel reasonably
satisfactory to the Company and addressed to the Company to the
effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the
provisions of the Securities Act, or (c) such Warrant has been sold
pursuant to an effective registration statement under the
Securities Act and the Holder that sold such Warrants has delivered
to the Warrant Agent a notice in the form of Exhibit C
hereto. Upon the effectiveness, under the Securities Act, of a
Registration Statement relating to the sale of Warrants, the
Company shall deliver to the Warrant Agent a notice of
effectiveness, a Global Warrant or Global Warrants representing the
number of Warrants covered by such effective Registration Statement
which do not bear the Private Placement Legend, a written opinion
of counsel for the Company in customary form, and, if required by
the Depositary, the Company shall deliver to the Depositary a
letter of representations in a form reasonably acceptable to the
Depositary. Upon the effectiveness of any
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post-effective amendment to the Registration
Statement and upon the effectiveness, under the Securities Act, of
any subsequent Registration Statement, the Company shall deliver to
the Warrant Agent a notice of effectiveness and a written opion of
counsel for the Company in customary form and, if such
post-effective amendment or subsequent Registration Statement
covers the sale of Warrants not covered by the initial Registration
Statement, one or more Global Warrants relating to such additional
Warrants. Upon any sale, pursuant to a Registration
Statement, of a beneficial interest in a Global Warrant that
theretofore constituted a Restricted Security and delivery of
appropriate evidence thereof to the Warrant Agent, and upon any
sale or transfer of a beneficial interest in connection with which
the Private Placement Legend will be removed in accordance with
this Agreement, the Warrant Agent shall increase the portion of the
Global Warrant that does not constitute a Restricted Security by
the portion of such sale or transfer and likewise reduce the
portion of the Global Warrant that does constitute a Restricted
Warrant.
3.8.3
By its acceptance of any Warrant bearing the Private Placement
Legend, each Holder of such a Warrant acknowledges the restrictions
on transfer of such Warrant set forth in this Agreement and in the
Private Placement Legend and agrees that it will transfer such
Warrant only as provided in this Agreement and the Private
Placement Legend.
3.8.4
The Warrant Agent shall retain copies of all letters, notices and
other written communications received pursuant to Section 3.7 or
this Section 3.8. The Company shall have the right to inspect and
make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable
written notice to the Warrant Agent.
4.
Terms and Exercise of Warrants.
4.1
Warrant Price. Each Warrant shall, when
countersigned by the Warrant Agent, entitle the registered holder
thereof, subject to the provisions of such Warrant and of this
Agreement, to purchase from the Company the number of shares of
Common Stock stated therein, with respect to the $4.00 Warrants, at
the price of $4.00 per whole share, and with respect to the $5.00
Warrants, at the price of $5.00 per whole share, in each case,
subject to the adjustments provided in Section 5 hereof.
As used in this Agreement, the term “ Warrant Price
” refers to the price per share at which Common Stock may be
purchased at the time a Warrant is exercised.
4.2
Duration of Warrants. A Warrant may be exercised
only during the period (“ Exercise Period ”)
commencing on the date of issuance thereof and terminating at 5:00
p.m., New York City time, on the fifth year anniversary of the
Issue Date (“ Expiration Date ”). Each
Warrant not exercised on or before the Expiration Date shall become
void, and all rights thereunder and all rights in respect thereof
under this Agreement shall cease at the close of business on the
Expiration Date.
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4.3
Exercise of Warrants.
4.3.1
Manner of Exercise; Payment of Warrant Price.
Subject to the provisions of the Warrant and this Agreement,
a Warrant, when countersigned by the Warrant Agent, may be
exercised by the registered holder thereof by:
(a)
surrendering the Warrant Certificate, at the principal office of
the Warrant Agent, with the completed subscription form set forth
in the Warrant Certificate duly executed; and
(b)
with respect to each full share of Common Stock as to which the
Warrant is exercised, by paying in full (i) any and all applicable
taxes due in connection with the exercise of the Warrant, the
exchange of the Warrant for the Common Stock and the issuance of
the Common Stock, and (ii) the Warrant Price, in lawful money of
the United States, in cash, certified check or bank draft payable
to the order of the Company; provided, that, if the registered
holder so elects, he, she or it may satisfy the obligation to pay
the Warrant Price through a “cashless exercise,” in
which event the Company shall issue to the registered holder the
number of shares of Common Stock determined as follows:
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X =
Y((A-B)/A)
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where:
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X = the number of
shares of Common Stock to be issued to the registered
holder
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Y = the number of
shares of Common Stock with respect to which this Warrant is being
exercised
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A = the Current Market
Price of the Common Stock
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B = the Warrant
Price
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All
cash payments received upon exercise of Warrants shall be delivered
to the Company by the Warrant Agent as instructed in writing by the
Company.
4.3.2
Limitation on Exercise.
(a)
Notwithstanding anything to the contrary contained herein, at any
time that any of the Company’s equity securities are
registered under Section 12 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act” ), the number of shares of Common Stock that
may be acquired by a Holder upon exercise of any Warrant (or
otherwise in respect thereof) shall be limited to the extent
necessary to ensure that, following such exercise (or other
issuance), the total number of shares of Common Stock then
beneficially owned by such Holder and its Affiliates and any other
individuals or entities whose beneficial ownership of Common Stock
would be aggregated with the Holder’s for purposes of Section
13(d) of the Exchange Act, does not exceed 4.999% (the “
5% Maximum Percentage ”) of the total number of issued and
outstanding shares of Common Stock (including for such purpose the
shares of
10
Common Stock issuable
upon such exercise). For such purposes, beneficial ownership
shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
The Company shall, instead of issuing shares of Common Stock in
excess of the 5% Maximum Percentage, suspend its obligation to
issue shares in excess of the foregoing limitation until such time,
if any, as such shares of Common Stock may be issued in compliance
with such limitation. Additionally, by written notice to the Company and the Warrant
Agent, a Holder may waive the provisions of this Section 4.3.2(a)
or increase or decrease the 5% Maximum Percentage to any other
percentage specified in such notice; provided, that (i) any such
waiver or increase or decrease will not be effective until the
61 st day
after such notice is delivered to the Company and the Warrant
Agent, and (ii) any such waiver or increase or decrease will apply
only to such Holder and not to any other Holders of
Warrants.
(b)
Notwithstanding anything to the
contrary contained herein and regardless of whether the
restrictions contained in Section 4.3.2(a) are waived as provided
therein, the number of shares of Common Stock that may be acquired
by a Holder upon exercise of any Warrant (or otherwise in respect
thereof) shall be limited to the extent necessary to ensure that,
following such exercise (or other issuance), the total number of
shares of Common Stock then beneficially owned by such Holder and
its Affiliates and any other Persons whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for
purposes of Section 13(d) of the Exchange Act, does not exceed
9.999% (the “10% Maximum Percentage” ) of the
total number of issued and outstanding shares of Common Stock
(including for such purpose the shares of Common Stock issuable
upon such exercise). For such purposes, beneficial ownership
shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
The Company shall, instead of issuing shares of Common Stock in
excess of the 10% Maximum Percentage, suspend its obligation to
issue shares in excess of the foregoing limitation until such time,
if any, as such shares of Common Stock may be issued in compliance
with such limitation. The provisions of this Section 4.3.2(b)
may not be waived.
4.3.3
Issuance of Certificates.
(a)
As soon as practicable (and, in any event, within three Trading
Days) after the exercise of any Warrant and, if applicable, the
clearance of the funds in payment of the Warrant Price, the Company
shall issue (or cause its transfer agent to issue) to the
registered holder of such Warrant a certificate or certificates
representing the number of full shares of Common Stock to which he,
she or it is entitled, registered in such name or names as may be
directed by him, her or it, and, if such Warrant shall not have
been exercised in full, a new countersigned Warrant Certificate for
the number of shares as to which such Warrant shall not have been
exercised. Notwithstanding the foregoing, the Company shall
not be obligated to deliver any securities pursuant to the exercise
of a Warrant unless (i) a registration statement under the
Securities Act with respect to the Common Stock issuable upon
exercise of such Warrants is effective and a current prospectus
relating to the shares of Common Stock issuable upon exercise of
the Warrants is available for delivery to the registered holders,
or (ii) the exercise of the Warrants is exempt from the
registration requirements of the Securities Act and such securities
are qualified for sale or exempt from qualification under
applicable securities laws of the states or other jurisdictions in
which the registered holder resides. Warrants may not
11
be
exercised by, or securities issued to, any registered holder in any
state in which such exercise or issuance would be
unlawful.
(b)
Subject to the last two sentences of Section 4.3.3(a), if the
Company fails to issue and deliver, or cause to be issued and
delivered though the Warrant Agent, to a Holder (or such
Holder’s nominee or nominee), certificates for the number of
shares of Common Stock to which such Holder shall be entitled upon
exercise of any Warrant on or prior to the date which is three
Trading Days after the Date of Exercise (as defined below), and if
on or after such date such Holder is required by its broker to
purchase (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by such Holder of
the shares of Common Stock which such Holder anticipated receiving
upon exercise, then the Company shall, within three Trading Days
after such Holder’s request therefore, (i) pay in cash to
such Holder the amount by which (A) the Holder’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (B) the amount obtained
by multiplying (x) the number of shares of Common Stock required to
be issued and delivered upon such exercise, by (y) the price at
which the sell order giving rise to such purchase obligation was
executed, and (ii) at the option of such Holder, either reinstate
the Warrant (or portion thereof) and equivalent number of shares of
Common Stock for which such exercise was not timely honored, or
deliver to the Holder the number of shares of Common Stock that
should have been issued and delivered upon exercise of the Warrant
in accordance with the terms hereof.
4.3.4
Valid Issuance. All shares of Common Stock issued
upon the proper exercise or surrender of a Warrant in conformity
with this Agreement shall be validly issued, fully paid and
nonassessable and shall be free from preemptive rights and free of
any Lien or adverse claim.
4.3.5
Date of Issuance. Each person or entity in whose
name any such certificate for shares of Common Stock is issued
shall, for all purposes, be deemed to have become the holder of
record of such shares on the date on which the Warrant Certificate
(together with the executed and completed subscription form) was
surrendered and payment of the Warrant Price was made (including by
way of cashless exercise, if applicable) (the “Date of
Exercise” ), except that, if the date of such surrender
and payment is a date when the stock transfer books of the Company
are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date
on which the stock transfer books are open.
4.3.6
Taxes on Exercise. If a Holder exercises a
Warrant, the Company shall pay any documentary, stamp or similar
issue or transfer tax or duty due on the issue, if any, of shares
of Common Stock upon the exercise. However, such Holder shall pay
any such tax or duty which is due because such shares are issued in
a name other than such Holder’s name. The Company may refuse
to deliver (or may refuse to cause its transfer agent to deliver) a
certificate representing the shares of Common Stock to be issued in
a name other than such Holder’s name until the Company (or
its transfer agent) receives a sum sufficient to pay any tax or
duty which will be due because such shares are to be issued in a
name other than such Holder’s name. Nothing herein shall
preclude any tax withholding required by law or regulation.
12
4.3.7
No Fractional Shares. Notwithstanding any
provision contained in this Agreement to the contrary, the Company
shall not issue fractional shares upon exercise of Warrants.
If, by reason of any adjustment made pursuant to this
Section 5, the holder of any Warrant woul
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