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Exhibit 4.2
WARRANT AGREEMENT
Dated as of July 23, 2003
between
ROCKWOOD HOLDINGS, INC.
and
KKR MILLENNIUM FUND L.P.
WARRANT
AGREEMENT, dated as of July 23, 2003 between ROCKWOOD
HOLDINGS, INC., a Delaware corporation (the "Company"), and
KKR MILLENNIUM FUND L.P. (the "Initial Holder").
NOW, THEREFORE,
the parties hereto hereby agree as follows:
1.
Grant.
The Company hereby grants to
the Initial Holder warrants ("Warrants") which shall entitle the
registered holder thereof to purchase from the Company, at any time
or from time to time hereafter until 5:00 P.M., New York time,
on July 23, 2013 (the "Expiration Date"), up to 28,000 shares
(the "Warrant Shares") of Common Stock, par value $.01 per share,
of the Company ("Common Stock"), subject to adjustment as provided
in Section 6, at the exercise price of $500.00 per share,
subject to adjustment as provided in Section 6 (the "Exercise
Price"), all subject to the terms and upon the conditions set forth
herein. Each Warrant not exercised or deemed exercised on or prior
to the Expiration Date shall become invalid and all rights
thereunder, and all rights in respect thereof under this Agreement,
shall cease as of that time.
2.
Warrant
Certificates. The
Warrants shall be evidenced by certificates issued pursuant to this
Agreement (the "Warrant Certificates") in the form set forth in
Exhibit A hereto, with such appropriate insertions, omissions,
substitutions, and other variations as are required or permitted by
this Agreement.
3.
Exercise of
Warrant.
-
(a)
General.
Subject to the provisions of
this Agreement, upon surrender to the Company at its principal
office of a Warrant Certificate with the annexed Form of Election
to Purchase duly executed, together with payment in accordance with
Section 3(b) of the Exercise Price then in effect, the Company
shall issue and deliver promptly to the registered holder of such
Warrant Certificate, a certificate or certificates for the Warrant
Shares or other securities or property to which the registered
holder is entitled, registered in the name of such registered
holder or, upon the written order of such registered holder, in
such name or names as such registered holder may designate;
provided, however ,
that if such exercise would result in the Initial Holder acquiring
beneficial ownership of Common Stock (together with all other
Common Stock owned by the Initial Holder at such time) with a value
in excess of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), notification threshold (the "HSR
Threshold"), then only the exercise of those Warrants which when
exercised do not exceed the HSR Threshold shall be exercised and
the Form of Election to Purchase shall be deemed to relate only to
such Warrants. The exercise of additional Warrants in excess of the
HSR Threshold shall not occur until the Initial Holder has received
approval of such exercise under the HSR Act or the time for such
approval has passed. In the case of an exercise of Warrants, any
certificate or certificates representing Warrant Shares shall be
deemed to have been issued and any person so designated to be named
therein shall be deemed to have become the holder of record of the
Warrant Shares as of the date of the surrender of such Warrant
Certificate (together with such duly executed Form of Election to
Purchase) and payment of the Exercise Price.
(b)
Payment.
Payment of the Exercise
Price shall be made, at the option of the registered holder of the
Warrants, (i) in cash, (ii) by wire transfer payable to
the order of the Company, or (iii) on a net basis, such that
without the exchange of any funds, such holder receives that number
of Warrant Shares that would otherwise be issuable upon a cash
exercise of such Warrants less that number of Warrant Shares having
a current market price equal to the aggregate Exercise Price that
would otherwise have been paid by such holder for the number of
Warrant Shares with respect to which such Warrant is being
exercised in which case, such exchange shall be treated as a
recapitalization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). For the purpose of any
computation under this paragraph 3(b), the current market
price per share of Common Stock on any day shall be deemed to be
the average of the Closing Prices of
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the Common Stock for the ten
(10) consecutive trading days ending on the day before the day
the Warrant Certificate (together with a duly executed Form of
Election to Purchase) is delivered to the Company. The term
"Closing Price" shall mean, for each trading day, the last reported
sale price regular way on the principal national securities
exchange on which the Common Stock is then listed or admitted for
trading or, if the Common Stock is not listed on a national
securities exchange, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the
Company for that purpose. If for any reason the current market
price per share cannot be determined pursuant to the foregoing
provisions of this paragraph, the current market price per share
shall be the fair market value thereof as determined in good faith
by the Board of Directors of the Company (the "Board").
(c)
Exercise in Whole or in
Part. The
purchase rights evidenced by a Warrant Certificate shall be
exercisable, at the election of the registered holder thereof, in
whole or in part, but only for lots of 100 Warrant Shares or
integral multiples thereof if less than all the Warrants then held
by such registered holder are being exercised. If less than all of
the Warrant Shares purchasable under any Warrant Certificate are
purchased, the Company shall cancel such Warrant Certificate upon
the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the remaining number of Warrant
Shares purchasable thereunder.
(d)
Fractional
Shares. No
fractional shares of Common Stock shall be issued upon exercise of
any Warrants. Instead the Company shall round the results of an
exercise up to the nearest full share of Common Stock.
(e)
Reservation of
Shares. The
Company will at all times reserve and keep available out of its
authorized Common Stock solely for the purpose of issuance upon
exercise of the Warrants as herein provided, such number of shares
of Common Stock as shall from time to time be issuable upon the
exercise of all outstanding Warrants. All shares of Common Stock
that may be issued upon exercise of the Warrants will, upon
issuance, be validly issued, fully paid and nonassessable and not
subject to preemptive rights of any stockholder.
4.
Restrictions on
Transfer.
-
(a)
Warrant
Register. The
Company shall maintain at its principal office a Warrant Register
for registration of Warrant Certificates and transfers thereof. The
Company shall initially register the outstanding Warrants in the
name of the Initial Holder. The Company may deem and treat the
registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof and of the Warrants represented thereby
(notwithstanding any notation of ownership or other writing on the
Warrant Certificates made by any person) for the purpose of any
exercise thereof or any distribution to the holder(s) thereof, and
for all other purposes, and the Company shall not be affected by
any notice to the contrary. For the purpose of this Agreement, all
references to a holder herein shall refer to a registered holder of
Warrants.
(b)
Warrants and Warrant
Shares Not Registered. Each registered holder of the Warrants,
by acceptance thereof, represents and acknowledges that the
Warrants and the Warrant Shares which may be purchased upon
exercise of a Warrant are not registered under the Securities Act
of 1933, as amended (the "Securities Act"), that the issuance of
the Warrants and the offering and sale of such Warrant Shares are
being made in reliance on the exemption from registration under
Section 4(2) of the Securities Act as not involving any public
offering and that the Company's reliance on such exemption is
predicated in part on the representations made by the Initial
Holder of the Warrants to and with the Company that such holder
(1) is acquiring the Warrants for investment for its own
account, with no present intention of reselling or otherwise
distributing the same, (2) is an "accredited investor" as
defined in Regulation D under the Securities Act, and
(3) has such knowledge and experience in financial and
business matters that it is capable of
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evaluating the merits and risks of the
investments made or to be made in connection with the acquisition
and exercise of the Warrants. Neither the Warrants nor the related
Warrant Shares may be transferred except (i) pursuant to an
effective registration statement under the Securities Act,
(ii) pursuant to Rule 144 under the Securities Act if the
transferor delivers a certificate, in form and substance reasonably
satisfactory to the Company, that such transfer complies with the
requirements of Rule 144, or (iii) pursuant to any other
available exemption from registration if such transferee makes the
representations set forth in the preceding sentence in writing to
the Company.
(c)
Notice and Registration
of Transfer. Each
registered holder of the Warrants, by acceptance thereof, agrees
that prior to any disposition by such holder of the Warrants or of
any Warrant Shares, such holder will give written notice to the
Company expressing such holder's intention to effect such
disposition and describing briefly such holder's intention as to
the manner in which the Warrants or the Warrant Shares theretofore
issued or thereafter issuable upon exercise hereof, are to be
disposed of, whereupon, but only if such transfer is permitted
pursuant to paragraph 4(b) above, such transferring holder
shall be entitled to dispose of the Warrants and/or the Warrant
Shares theretofore issued upon the exercise thereof, all in
accordance with the terms of the notice delivered by such holder to
the Company. In the event of such transfer, the Company shall
register the transfer of any outstanding Warrants in the Warrant
Register upon surrender of the Warrant Certificate(s) evidencing
such Warrants to the Company at its principal office, accompanied
by a written instrument of transfer in form reasonably satisfactory
to it, duly executed by the registered holder thereof. Upon any
such registration or transfer, new Warrant Certificate(s)
evidencing such transferred Warrants shall be issued to the
transferee(s) and the surrendered Warrant Certificate(s) shall be
canceled.
5.
Special Agreements of the
Company. The
Company covenants and agrees as follows:
-
(a)
Listing on Securities
Exchanges. If the
Common Stock is listed on a stock exchange or quoted on the Nasdaq
National Market, the Company will use its reasonable best efforts
to procure at its sole expense the listing of all Warrant Shares
(subject to issuance or notice of issuance) on all stock exchanges
on which the Common Stock is then listed, or the quotation of the
Warrant Shares on the Nasdaq National Market, as the case may be,
and maintain the listing or quotation of such shares and other
securities after issuance.
(b)
Actions in Avoidance;
Non-Dilution. The
Company will not, by amendment of its Certificate of Incorporation,
as amended, or through any reorganization, transfer of assets,
consolidation, merger, issue or sale of securities or otherwise,
avoid or take any action which would have the effect of avoiding
the observance or performance of any of the terms to be observed or
performed hereunder by the Company but will at all times in good
faith assist in carrying out all of the provisions of the Warrants
and in taking all of such action as may be necessary or appropriate
in order to protect the rights of the registered holders of the
Warrants against impairment. Without limiting the generality of the
foregoing, the Company will (a) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant, and (b) 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 Warrant.
If any shares
of Common Stock required to be reserved for purposes of exercise of
Warrants would require, under any federal or state law (other than
the Securities Act or any state "blue sky" statutes), registration
with or approval of any governmental authority, before such shares
may be issued upon exercise, the Company will cause such shares to
be duly registered or approved by such governmental authority, at
its expense.
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6.
Adjustment of Exercise
Price and Number of Warrant Shares Issuable. The number and kind of shares
purchasable upon the exercise of Warrants and the Exercise Price
shall be subject to adjustment from time to time as
follows:
-
(a) In
case the Company shall pay or make a dividend or other distribution
on any class of capital stock of the Company in Common Stock other
than the payment of regularly scheduled dividends on any series of
preferred stock, the Exercise Price in effect at the opening of
business on the day following the date fixed for the determination
of stockholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Exercise Price by
a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator of which shall be the
sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to
become effective immediately after the opening of business on the
day following the date fixed for such determination of the holders
entitled to such dividends and distributions. For the purposes of
this paragraph 6(a), the number of shares of Common Stock at
any time outstanding shall not include shares held in the treasury
of the Company. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(b) In
case the Company shall issue rights, options or warrants to all
holders of its Common Stock entitling them to subscribe for,
purchase or acquire shares of Common Stock at a price per share
less than the current market price per share (determined as
provided in paragraph 6(h) below) of the Common Stock on the
date fixed for the determination of stockholders entitled to
receive such rights, options or warrants, the Exercise Price in
effect at the opening of business on the day following the date
fixed for such determination shall be reduced by multiplying such
Exercise Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock which the aggregate offering price for
the total number of shares of Common Stock so offered for
subscription, purchase or acquisition would purchase at such
current market price per share and the denominator of which shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number
of shares of Common Stock so offered for subscription, purchase or
acquisition, such reduction to become effective immediately after
the opening of business on the day following the date fixed for
such determination of the holders entitled to such rights, options
or warrants. However, upon the expiration of any right, option or
warrant to purchase Common Stock, the issuance of which resulted in
an adjustment in the Exercise Price pursuant to this
paragraph 6(b), if any such right, option or warrant shall
expire and shall not have been exercised, the Exercise Price shall
be recomputed immediately upon such expiration and effective
immediately upon such expiration shall be increased to the price it
would have been (but reflecting any other adjustments to the
Exercise Price made pursuant to the provisions of this
paragraph 6 after the issuance of such rights, options or
warrants) had the adjustment of the Exercise Price made upon the
issuance of such rights, options or warrants been made on the basis
of offering for subscription or purchase only that number of shares
of Common Stock actually purchased upon the exercise of such
rights, options or warrants. No further adjustment shall be made
upon exercise of any right, option or warrant if any adjustment
shall have been made upon the issuance of such security. For the
purposes of this paragraph 6(b), the number of shares of
Common Stock at any time outstanding shall not include shares held
in the treasury of the Company. The Company will not issue any
rights, options or warrants in respect of shares of Common Stock
held in the treasury of the Company.
(c) In
case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Exercise Price
in effect at the opening of business on the
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day following the day upon which such subdivision
becomes effective shall be reduced, and, conversely, in case the
outstanding shares of Common Stock shall each be combined into a
smaller number of shares of Common Stock, the Exercise Price in
effect at the opening of business on the day following the day upon
which such combination becomes effective shall be increased to
equal the product of the Exercise Price in effect on such date and
a fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall
be the number of shares of Common Stock outstanding immediately
after such subdivision or combination, as the case may be. Such
reduction or increase, as the case may be, shall become effective
immediately after the opening of business on the day following the
day upon which such subdivision or combination becomes
effective.
(d) In
case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock (A) evidences of its indebtedness
or (B) shares of any class of capital stock, cash or other
property or assets (including securities, but excluding
(x) any rights, options or warrants referred to in
paragraph 6(b) above and (y) any dividend or distribution
referred to in paragraph 6(a) or 6(c) above), then in each
case, the Exercise Price in effect at the opening of business on
the day following the date fixed for the determination of holders
of Common Stock entitled to receive such distribution shall be
adjusted by multiplying such Exercise Price by a fraction of which
the numerator shall be the current market price per share
(determined as provided in paragraph 6(h) below) of the Common
Stock on such date of determination less the then fair market value
as determined by the Board (whose determination shall be
conclusive) of the portion of the capital stock, cash or other
assets or evidences of indebtedness so distributed (and for which
an adjustment to the Exercise Price has not previously been made
pursuant to the terms of this paragraph 6) applicable to one
share of Common Stock, and the denominator shall be such current
market price per share of the Common Stock, such adjustment to
become effective immediately after the opening of business on the
day following such date of determination of the holders entitled to
such distribution.
(e) The
reclassification or change of Common Stock into securities,
including securities other than Common Stock, (other than any
reclassification upon a consolidation or merger to which
paragraph 6(o) below shall apply) shall be deemed to involve
(A) a distribution of such securities other than Common Stock
to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of holders of Common Stock entitled to receive such
distribution" withi
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