WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of August 13, 1999 (amended,
supplemented or modified from time to time, the "Warrant Agreement") by and
between OPTICARE HEALTH SYSTEMS, INC. f/k/a SARATOGA RESOURCES, INC., a Delaware
corporation (the "Issuer"), and BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE,
INC., a Delaware corporation ("BACCFI").
W I T N E S S E T H:
WHEREAS, pursuant to the Amended and Restated Loan and Security
Agreement dated as of the date hereof (as the same may be amended, supplemented
or otherwise modified from time to time, the "Loan Agreement") between
Consolidated Eye Care, Inc., OptiCare Eye Health Centers, Inc., and PrimeVision
Health, Inc., as Borrowers, and the Issuer, as Parent, the lenders named
therein, Bank Austria AG as the LC Issuer and BACCFI as the Agent, agreed to
make certain loans (the "Loans") to the Borrowers upon the terms, and subject to
the conditions, set forth in the Loan Agreement; and
WHEREAS, in order to induce the Lenders and BACCFI to enter into the
Loan Agreement, the Issuer has agreed to execute and deliver to BACCFI or an
Affiliate (as hereinafter defined) thereof the Warrants hereinafter described;
NOW, THEREFORE, in consideration of the premises the parties hereto
agree as follows:
Section 1. Definitions.
(a) As used in this Warrant Agreement, unless otherwise defined herein,
terms defined in the Loan Agreement (as in effect on the date hereof, whether or
not the Loan Agreement is thereafter terminated or expires according to its
terms) shall have such defined meanings when used herein and the following terms
shall have the following meanings, unless the context otherwise requires:
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. For purposes of this definition, a Person shall be deemed to
control another Person if such first Person possesses directly or indirectly the
power to (i) vote 10% or more of the securities having ordinary voting power for
the selection of directors of such Person or (ii) direct, or cause the direction
of, the management and policies of the second Person, whether through the
ownership of voting securities, by contract or otherwise. In addition, as to
BACCFI, "Affiliate" shall include any partnership a majority of the partners of
which are officers, directors, employees or Affiliates of BACCFI, and as to the
Issuer, "Affiliate" shall not include BACCFI or any Affiliate of BACCFI which is
a holder of any Warrants.
"Capital Stock" shall mean, as to any Person, any and all shares,
interests, warrants, participants or other equivalents (however designated) of
corporate stock of such Person.
"Closing Date" shall mean August 13, 1999, the date of the closing of
the Loan Agreement.
"Commission" shall mean the Securities and Exchange Commission or any
entity succeeding to any or all of its functions under the Securities Act and
the Exchange Act.
"Common Stock" shall mean the Common Stock, par value $0.001 per share,
of the Issuer, and shall include any stock into which such Common Stock shall
have been changed or any stock resulting from any reclassification of such
Common Stock and all other stock of any class or classes (however designated) of
the Issuer the registered holders of which have the right, without limitation as
to amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference.
"Composite Transactions Tape" shall mean a security price reporting
service that includes all transactions in a security on each of the exchanges
and in the over-the-counter market.
"Convertible Preferred Stock" shall mean the Series A Convertible
Preferred Stock, par value $0.001 per share, of the Issuer which is convertible
into Common Stock of the Issuer, and shall include any stock into which such
Convertible Preferred Stock shall have been changed or any stock resulting from
any reclassification of such Convertible Preferred Stock.
"Current Market Price Per Share" shall mean, with respect to any share
of the Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite
Transactions Tape, the average of the daily closing prices for the 30
consecutive trading days immediately prior to such date as reported on
the Composite Transactions Tape (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-day
period); or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a
national securities exchange, the average of the daily last sale prices
regular way of the Common Stock, for the 30 consecutive trading days
immediately prior to such date (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-day
period), on the principal national securities exchange on which the
Common Stock is traded or, in case no such sale takes place on any such
day, the average of the closing bid and asked prices regular way, in
either case on such national securities exchange; or
(iii) if the Common Stock is not then reported on the
Composite Transaction Tape but is then traded in the over-the-counter
market, the average of the daily closing sales prices, or, if there is
no closing sales price, the average of the closing bid and asked
prices, in the over-the-counter market, for the 30 consecutive trading
days immediately prior to such date (as adjusted for any stock
dividend, split, combination or reclassification that occurred during
such 30-day period), as reported by the National Association of
Securities Dealers' Automated Quotation System, or, if not so reported,
as reported by the National Quotation Bureau, Incorporated or any
successor thereof, or, if not so reported the average of the closing
bid and asked prices as furnished by any member of the National
Association of Securities Dealers, Inc. selected from time to time by
the Board of Directors of the Issuer for that purpose; or
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(iv) if no such prices are then furnished, the higher of (x)
the Exercise Price and (y) the fair market value of a share of Common
Stock as determined by agreement between the holders of a majority of
the Warrants and the Issuer or, in the absence of such an agreement, by
an independent investment banking firm or an independent appraiser
engaged by the Issuer (in either case the cost of which engagement will
be borne by the Issuer) and reasonably acceptable to the holders of a
majority of the Warrants.
"Equity of the Issuer" shall mean the total shareholders' equity of the
Issuer, determined in accordance with generally accepted accounting principles.
The amount of Equity of the Issuer represented by any Warrant Shares shall be
determined by subtracting from total Equity of the Issuer the aggregate amount
distributable as a preference upon dissolution of the Issuer to the holders of
any then outstanding shares of any class or series of preferred stock (other
than the Convertible Preferred Stock), dividing the balance obtained by the
number of shares of Common Stock then outstanding or issuable upon conversion of
any Convertible Preferred Stock then outstanding, and multiplying that per share
amount by the aggregate number of Warrant Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute.
"Exchange Right" shall have the meaning given to such term in
subsection 16(d).
"Exempted Securities" shall mean (A) Warrant Shares, (B) shares of the
Issuer's capital stock issued as a stock dividend described in subsection 12(b),
(C) up to an aggregate of 450,000 shares of Common Stock issued to Issuer's
employees under the Issuer's 1999 Employee Stock Purchase Plan, (D) up to an
aggregate of 3,000,000 options, shares of restricted stock, performance share
units and performance cash units issued under the Issuer's Performance Stock
Program and shares of Common Stock issuable upon exercise of options and
performance share units issued thereunder and (E) warrant to purchase up to an
aggregate of ____ shares of common stock which result from Issuer's assumption
of, or re-issuance of substitute warrants for, warrants of OptiCare Eye Health
Centers, Inc. pursuant to the Merger Agreement and shares of Common Stock
issuable upon exercise of such warrants.. The limits in clauses (C), (D) and (E)
shall be proportionately adjusted for dividends and other distributions payable
in and for subdivisions and combinations of shares of Common Stock.
"Exercise Price" shall mean the exercise price of a Warrant, which
shall be $5.85 per Warrant.
"Expiration Date" shall mean 5 years after the Closing Date.
"Merger Agreement" shall mean the Agreement and Plan of Merger, dated
as of April 12, 1999, by and among the Issuer, OptiCare Shellco Merger
Corporation, Primevision Shellco Merger Corporation, OptiCare Eye Health
Centers, Inc. and Primevision Health, Inc.
"Mergers" shall mean the mergers contemplated under the Merger
Agreement.
"Non-Attributable Stock" shall mean shares of Common Stock or
Convertible Preferred Stock which have been previously sold, or were issued
pursuant to the exercise of Warrants which were
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previously sold, either (a) in a widely dispersed public offering; (b) in a
private placement in which no purchaser, individually or in concert with others,
acquired Warrants, Common Stock, Convertible Preferred Stock or any combination
thereof, representing (upon conversion, in the case of the Convertible Preferred
Stock, and upon exercise for Common Stock, in the case of the Warrants) more
than 2% of the outstanding Common Stock; (c) in compliance with Rule 144 (or any
rule which is a successor thereto) of the Securities Act or (d) into the
secondary market in a market transaction executed through a registered
broker-dealer in blocks of no more than 2.0% of the shares outstanding of the
Issuer in any six-month period.
"Non-Public Warrant Shares" shall mean Warrant Shares that have not
been sold to the public and bear the legend set forth in subsection 14(b).
"Non-Surviving Combination" shall mean any merger, consolidation or
other business combination by the Issuer with one or more Persons in which the
Issuer is not the survivor, or a sale of all or substantially all of the assets
of the Issuer to one or more such other Persons.
"Person" shall mean and include any individual, sole proprietorship,
partnership, joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity, party or government
(whether national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentalities, division, agency, body or
department thereof).
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Warrant
Agreement shall refer to a Subsidiary or Subsidiaries of the Issuer.
"Warrant Certificate" shall mean a certificate(s) evidencing one or
more Warrants, substantially in the form of Exhibit A-1 attached hereto, with
such changes therein as may be required to reflect any adjustments made pursuant
to Section 12.
"Warrant Holders" shall mean BACCFI or an Affiliate thereof and such
other Persons to whom BACCFI or an Affiliate thereof transfers Warrants in
compliance with the terms of this Warrant Agreement, and for purposes of Section
15 shall include holders of Non-Public Warrant Shares, provided, however, that
no Warrant Holder may transfer Warrants to any competitor of Issuer unless and
until there exists an Event of Default under the Loan Agreement.
"Warrant Office" shall mean the office or agency of the Issuer at which
the Warrant Register shall be maintained and where the Warrants may be presented
for exercise, exchange, substitution and transfer, which office or agency will
be the office of the Issuer at 00 Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
0
XX 00000, which office or agency may be changed by the Issuer pursuant to notice
in writing to the Persons named in the Warrant Register as the holders of the
Warrants.
"Warrant Register" shall mean the register, substantially in the form
of Exhibit B attached hereto, maintained by the Issuer at the Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock or Convertible
Preferred Stock issued or issuable upon exercise of the Warrants, or Common
Stock issued or issuable upon conversion of the Convertible Preferred Stock, in
each case as the number of such shares may be adjusted from time to time
pursuant to Section 12.
"Warrants" shall mean the stock purchase warrants issued pursuant to
this Warrant Agreement entitling the record holder thereof to purchase from the
Issuer at the Warrant Office an aggregate of 100,000 shares of Common Stock or
Convertible Preferred Stock (in the percentages to the extent provided in
subsections 6(e) and 6(f) hereof and subject in each case to adjustment as
provided in Section 12) at the Exercise Price at any time after the issuance of
such Warrant and before 5:00 p.m., New York time, on the Warrant Expiration
Date.
(b) For all purposes of this Warrant Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(i) "Herein," "hereof" and "hereunder" and other words of
similar import refer to this Warrant Agreement as a whole and not to
any particular Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender
shall also be deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement
shall be deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation,
each of the representations and warranties of the Issuer in Section 3
hereof is separate and is not limited, qualified or modified by the
existence, wording or satisfaction of any other representation of the
Issuer in Section 3 or otherwise;
(v) All references herein (in covenants or otherwise) to any
action(s) which are to be taken (or which are prohibited from being
taken) by any Person, the Issuer or any Subsidiary shall apply to such
Person, the Issuer or such Subsidiary, as the case may be, whether such
action is taken directly or indirectly; and
(vi) All references herein to actions by the Issuer or any
Subsidiary (including, without limitation, actions denoted by terms
such as "create," "sell," "transfer" or "dispose of") mean such action
whether voluntary or involuntary, by operation of law or otherwise.
Section 2. Issuance of Warrants. The Issuer hereby agrees to issue and
deliver to BACCFI or, at the option of BACCFI, an Affiliate thereof, on the
Closing Date, the Warrants and Warrant
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Certificates evidencing the Warrants. No payment shall be required from BACCFI
or its Affiliate in consideration of its receipt of the Warrants.
Section 3. Representations and Warranties. The Issuer hereby represents
and warrants to BACCFI, for the benefit of BACCFI and any other Warrant Holder,
as follows:
(a) The Issuer is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, has the corporate
power and authority to conduct its business as presently conducted and as
intended to be conducted, has the corporate power and authority to execute and
deliver this Warrant Agreement and the Warrant Certificates, to issue the
Warrants and to perform its obligations under this Warrant Agreement and the
Warrant Certificates, has the corporate power and authority and legal right to
own and lease its properties and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which it owns or leases real
property or in which the conduct of its business requires such qualification,
except where failure to be so qualified could not be reasonably expected to have
a material adverse effect on the business, properties, financial condition or
results of operations of the Issuer and its Subsidiaries taken as a whole.
(b) The execution, delivery and performance by the Issuer of this
Warrant Agreement and the Warrant Certificates, the issuance of the Warrants and
the issuance of the Warrant Shares upon the exercise of the Warrants and the
issuance of Common Stock upon conversion of the Convertible Preferred Stock have
been duly authorized by all necessary corporate action and do not and will not
violate, or result in a breach of, or constitute a default under, or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
the assets of the Issuer pursuant to, any law, statute, ordinance, rule,
regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Issuer or its
Subsidiaries or the Issuer's Certificate of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Issuer or its Subsidiaries or by which their properties are bound.
(c) This Warrant Agreement has been duly executed and delivered by the
Issuer and constitutes a legal, valid, binding and enforceable obligation of the
Issuer. When the Warrants represented by the Warrant Certificates have been
issued as contemplated hereby, (i) the Warrants represented by the Warrant
Certificates will constitute legal, valid, binding and enforceable obligations
of the Issuer and (ii) the Warrant Shares, when issued upon exercise of the
Warrants in accordance with the terms hereof, and the Common Stock, when issued
upon conversion of the Convertible Preferred Stock in accordance with the terms
of the Certificate of Designation relating to the Convertible Preferred Stock,
will be duly authorized, validly issued, fully paid and nonassessable shares of
the Common Stock and Convertible Preferred Stock, as applicable, with no
personal liability attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 50,000,000
shares of Common Stock, par value $0.001 per share, immediately following the
effectiveness of the mergers, there will be 9,000,000 shares are issued and
outstanding and 5,000,000 shares of preferred stock, par value $0.001 per share,
550,000 of which have been designated Convertible Preferred Stock and none of
which are issued and outstanding. Except as set forth on SCHEDULE I hereto,
there are no outstanding options, warrants, subscriptions, rights, convertible
or exchangeable securities or other agreements or plans under which the Issuer
may be or become obligated to issue, sell or transfer shares of its capital
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stock or other securities. The Convertible Preferred Stock has no voting rights,
except as required by law, and is convertible on a share-for-share basis into
Common Stock of the Issuer. To the Issuer's best knowledge, there are no voting
agreements, voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock of the Issuer or any Subsidiary.
(e) Except as set forth on SCHEDULE II hereto, no holder of securities
of the Issuer has any right to the registration of such securities under the
Securities Act and any applicable state securities law.
(f) The Issuer has filed all proxy statements, reports and other
documents required to be filed by it under the Exchange Act. The Issuer has
furnished Lender with copies of Form 10-K for the year ended December 31, 1998,
Form 10-Q for the quarter ended March 31, 1999, and Amendment No. 3 to its
Registration Statement on Form S-4, as filed with the SEC on July 29, 1999
(collectively, the "SEC Reports"). Each SEC Report was in substantial compliance
with the requirements of its respective form and none of the SEC Reports, as of
their respective dates, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements (and notes thereto) included in
the SEC Reports fairly present the financial condition of the Issuer as of the
dates thereof and have been prepared in accordance with generally accepted
accounting principles consistently applied.
(g) Each of the Subsidiaries of the Issuer is listed on SCHEDULE III to
this Warrant Agreement. All outstanding shares of capital stock of such
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable and are owned beneficially and of record by the Issuer free and
clear of all Liens, options or claims of any kind. There are no outstanding
options, warrants, subscriptions, rights, convertible securities or other
agreements or plans under which Subsidiary of the Issuer may become obligated to
issue, sell or transfer shares of its capital stock or other securities.
Section 4. Registration, Transfer and Exchange of Certificates.
(a) The Issuer shall maintain, at the Warrant Office, the Warrant
Register for registration of the Warrants represented by the Warrant
Certificates and transfers thereof. On the Closing Date, the Issuer shall
register the Warrants represented by Warrant Certificates in the Warrant
Register in the name of BACCFI or an Affiliate thereof, as the case may be. The
Issuer may deem and treat the registered holders of the Warrant Certificates as
the absolute owners thereof and 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 holders thereof, and for all other purposes, and the Issuer
shall not be affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of
any outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon any
such registration of transfer, new Warrant
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Certificates evidencing such transferred Warrants shall be issued to the
transferee and the surrendered Warrant Certificates shall be canceled. If less
than all the Warrants evidenced by Warrant Certificates surrendered for transfer
are to be transferred, new Warrant Certificates shall be issued to the holder
surrendering such Warrant Certificates evidencing such remaining number of
Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except
for any tax or other governmental charge imposed in connection therewith. Except
as provided in subsection 14(b) each Warrant Certificate issued upon transfer or
exchange shall bear the legend set forth in subsection 14(b) if the Warrant
Certificate presented for transfer or exchange bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, 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 Issuer of such loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity satisfactory to it. The Issuer
acknowledges that a written indemnity by BACCFI or, if an Affiliate of BACCFI is
the holder of such lost, stolen or destroyed Warrant Certificate, by such
Affiliate, shall be satisfactory to the Issuer for such purpose. No service
charge shall be made for any such substitution, but all expenses and reasonable
charges associated with procuring such indemnity and all stamp, tax and other
governmental duties that may be imposed in relation thereto shall be borne by
the holder of such Warrant Certificate. Each Warrant Certificate issued in any
such substitution shall bear the legend set forth in subsection 14(b) if the
Warrant Certificate for which such substitution was made bore such legend.
Section 6. Duration and Exercise of Warrants.
(a) A Warrant evidenced by a Warrant Certificate shall be exercisable
in whole or in part by the registered holder thereof on any Business Day after
the Closing Date and on or before 5:00 p.m., New York time, on the Warrant
Expiration Date with respect to such Warrant, provided that, at any given time,
the registered holder(s) of the Warrants shall be required to exercise the
Warrants in an aggregate amount of at least 20,000 Warrants (or if less than an
aggregate of 20,000 Warrants are outstanding, the remainder of the Warrants then
outstanding).
(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer at the Warrant Office,
and upon payment of the aggregate Exercise Price for the number of Warrant
Shares in respect of which such Warrants are being exercised in lawful money of
the United States of America and/or by surrender to the Issuer of shares of
Common Stock then owned by the Warrant Holder and valued for
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purposes hereof at their Current Market Price Per Share at the time of exercise.
In lieu of exercising Warrants pursuant to the immediately preceding sentence,
the Warrant Holder shall have the right to require the Issuer to convert the
Warrants, in whole or in part and at any time or times (the "Conversion Right"),
into Warrant Shares, by surrendering to the Issuer the Warrant Certificate
evidencing the Warrants to be converted, accompanied by the form of conversion
notice on the reverse thereof or attached thereto which has been duly completed
and signed. Upon exercise of the Conversion Right, the Issuer shall deliver to
the Warrant Holder (without payment by the Warrant Holder of any Exercise Price)
that number of Warrant Shares which is equal to the quotient obtained by
dividing (x) the value of the number of Warrants being converted at the time the
Conversion Right is exercised (determined by subtracting the aggregate Exercise
Price for all such Warrants immediately prior to the exercise of the Conversion
Right from the aggregate current market price (determined on the basis of the
Current Market Price Per Share) of that number of Warrant Shares purchasable
upon exercise of such Warrants immediately prior to the exercise of the
Conversion Right (taking into account all applicable adjustments pursuant to
Section 12, including without limitation any adjustments which would be made
pursuant to subdivision (7) of subsection 12(c) upon exercise of the Warrants
being converted) by (y) the Current Market Price Per Share of one share of
Common Stock (or the number of shares of Common Stock into which one share of
Convertible Preferred Stock can be converted if the Warrants are being converted
into Convertible Preferred Stock) immediately prior to the exercise of the
Conversion Right. Any references in this Warrant Agreement to the "exercise" of
any Warrants, and the use of the term "exercise" herein, shall be deemed to
include (without limitation) any exercise of the Conversion Right. Any exercise
of a Warrant hereunder may be made subject to the satisfaction of one or more
conditions (including, without limitation, the consummation of a sale of the
capital stock of the Issuer or a merger or other business combination involving
the Issuer) which are set forth in a writing which is made a part of or is
appended to the aforementioned form of election to purchase or conversion notice
(as the case may be) by the Warrant Holder.
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue and
cause to be delivered to or upon the written order of the registered holders of
such Warrants and in such name or names as such registered holders may
designate, a certificate for the Warrant Share or Warrant Shares issued upon
such exercise of such Warrants. Any Persons so designated to be named therein
shall be deemed to have become holders of record of such Warrant Share or
Warrant Shares as of the date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant Certificate
are exercised at any time, a new Warrant Certificate or Certificates shall be
issued for the remaining number of Warrants evidenced by such Warrant
Certificate. Each new Warrant Certificate so issued shall bear the legend set
forth in subsection 14(b) if the Warrant Certificate presented in connection
with partial exercise thereof bore such legend unless the transfer restrictions
referred to in such legend are no longer applicable pursuant to subsection
14(d). All Warrant Certificates surrendered upon exercise of Warrants shall be
canceled.
(e) At the election of a Warrant Holder made at the time of exercise,
the Warrant Shares to be issued upon such exercise may be either Common Stock or
Convertible Preferred Stock (or a combination thereof), provided that the
Warrant Holder shall not have the right to have issued to it upon exercise
Common Stock which, when aggregated with all other shares of Common Stock (other
than shares of Non-Attributable Stock) currently or previously held by or
currently issuable without
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restriction to the Warrant Holder, will exceed 4.99% of the then outstanding
Common Stock unless such Warrant Holder certifies that such Warrants have
previously been transferred either (i) in a widely dispersed public offering of
the Warrants, or (ii) in a private placement in which no purchaser, individually
or in concert with others, would have acquired more than 2% of the outstanding
Common Stock if the Warrants so transferred had been exercised for Common Stock,
or (iii) in compliance with Rule 144 (or any rule which is a successor thereto)
of the Securities Act, or (iv) into the secondary market in a market transaction
executed through a registered broker-dealer in blocks of no more than 2.0% of
the shares outstanding of the Issuer in any six-month period; provided further
that if the Warrant Holder is a bank or an Affiliate of a bank subject to the
provisions of the Bank Holding Company Act of 1956, as amended, such Common
Stock, together with all other shares of Common Stock currently or previously
held by or current issuable without restriction to such Warrant Holder and its
Affiliates (not including Non-Attributable Stock), will not exceed 4.99% of the
then outstanding Common Stock. In the event two or more Warrant Holders attempt
to exercise Warrants for Common Stock simultaneously and, if permitted, such
exercises would cause the 4.99% limitation to be exceeded, then the Issuer shall
notify the Warrant Holders who had attempted to exercise Warrants for Common
Stock and each such Warrant Holder shall be entitled to exercise for Common
Stock only such number of Warrants as shall equal the product of (i) the number
of Warrants the Warrant Holder sought to exercise for Common Stock times (ii) a
fraction, the numerator of which is the maximum number of Warrants which may be
exercised for Common Stock without exceeding the 4.99% limitation and the
denominator of which is the maximum number of Warrants sought to be exercised
for Common Stock by such Warrant Holders.
(f) Notwithstanding the foregoing provisions of this Section 6, in no
event shall any Warrant be exercisable for shares of Common Stock or Convertible
Preferred Stock which, when aggregated with all other capital stock of the
Issuer (other than shares of Non-Attributable Stock) currently held or
previously held by or currently issuable without restriction to Lender or its
Affiliates, would, upon issuance, represent in excess of 24.99% of the Equity of
the Issuer unless such shares, when issued, would constitute Non-Attributable
Stock.
Section 7. Fractional Shares. The Issuer shall not be required to issue
fractional shares of Common Stock or Convertible Preferred Stock upon exercise
of the Warrants but shall pay for any such fraction of a share an amount in cash
equal to the then Current Market Price Per Share of one share of Common Stock
multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes attributable
to the initial issuance of Warrant Shares upon the exercise of the Warrants,
provided that the Issuer shall not be required to pay (i) any income tax
incurred by the holder of the Warrant Certificate or the Warrant Shares upon
exercise of the Warrants or the issuance of the Warrant Shares, or (ii) any tax
which may be payable in respect of any transfer involved in the issue of any
Warrant Certificate or any certificate 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 Issuer shall not be required to issue or deliver
such certificate unless or until the person or persons requesting the issuance
thereof shall have paid to the Issuer the amount of such tax or shall have
established to the satisfaction of the Issuer that such tax has been paid.
Section 9. Stockholder Rights.
10
(a) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the holders thereof
the right to vote or to consent or to receive notice as a stockholder in respect
of the meetings of stockholders or the election of directors of the Issuer or
any other matter, or any rights whatsoever as a stockholder of the Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as imposing any obligation on the
registered holders thereof to purchase any securities or as imposing any
liabilities on such holders as stockholders of the Issuer, whether such
obligation or liabilities are asserted by the Issuer or by creditors of the
Issuer.
Section 10. Reservation and Issuance of Warrant Shares; Certain
Corporate Actions.
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the Warrants
and conversion of the Convertible Preferred Stock the number of shares of Common
Stock and Convertible Preferred Stock deliverable upon exercise of all
outstanding Warrants and conversion of Convertible Preferred Stock.
(b) The Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement and the Issuer's Certificate
of Incorporation, be fully paid and nonassessable and free from all taxes
(except as otherwise contemplated in Section 8 hereof) with respect to the
issuance thereof and from all liens, charges and security interests (other than
any created by or on behalf of any Warrant Holder).
(c) So long as any Warrants are outstanding, the Issuer shall make no
amendment of its Certificate of Incorporation which would affect the
authorization, dividend voting, liquidation, conversion, exchange or notice
rights or additional remedies provisions of the Convertible Preferred Stock
without the written consent of the holders of a majority of the Warrants.
(d) The Issuer will not, by amendment of its Certificate of
Incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant Agreement or the Warrant Certificates. Without limiting the generality
of the foregoing, the Issuer (i) will not permit the par value or the determined
or stated value of any shares of the Issuer's Common Stock or Convertible
Preferred Stock receivable upon the exercise of the Warrants to exceed the
amount payable therefor upon such exercise, (ii) will take all such action as
may be necessary or appropriate in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of the Issuer's Common Stock or
Convertible Preferred Stock (as the case may be), upon the exercise of the
Warrants from time to time outstanding, including, without limitation, amending
its Certificate of Incorporation to reduce or eliminate the par value of the
Common Stock, and (iii) will not take any action which results in an adjustment
in the number of Warrant Shares obtainable upon the exercise of any Warrants if
the total number of shares of the Issuer's Common Stock (or other securities)
issuable after such action upon the exercise of all of the then-outstanding
Warrants would exceed the total number of shares of the Issuer's Common Stock
(or other securities) then authorized by the Issuer's Certificate of
Incorporation and available for purpose of issuance upon such exercise.
11
(e) If the Issuer proposes, prior to the Expiration Date, to enter into
a transaction that would constitute a Non-Surviving Combination, if consummated,
the Issuer shall give written notice thereof to each of the Warrant Holders
promptly after an agreement is reached with respect to the Non-Surviving
Combination but in any event no less than thirty (30) days prior to the
consummation thereof. Such notice shall describe the proposed transaction in
reasonable detail and specify the consideration to be received by the Warrant
Holders in respect thereto and/or any adjustment to be made to the number of
Warrant Shares obtainable upon the exercise of the Warrants as a result of such
Non-Surviving Combination. The Issuer shall also furnish to each Warrant Holder
all notices and materials furnished to its stockholders in connection with such
transaction as and when such notices and materials are furnished to its
stockholders. The Issuer agrees that it will not enter into an agreement
providing for a Non-Surviving Combination or effect any such Non-Surviving
Combination unless the party to such transaction that is the surviving entity
thereof (the "Survivor") (i) shall be obligated to distribute or pay to each
Warrant Holder, upon payment of the Exercise Price prior to the Expiration Date,
the number of shares of stock or other securities or other property (including
any cash) of the Survivor that would have been distributable or payable on
account of the Warrant Shares if such Warrant Holder's Warrants had been
exercised immediately prior to such Non-Surviving Combination (or, if
applicable, the record date therefor), as such number of shares or other
securities or other property may thereafter be adjusted pursuant to Section 12
of this Warrant Agreement or (ii) shall assume by written instrument all of the
obligations of the Issuer under this Warrant Agreement.
Section 11. Obtaining of Governmental Approvals and Stock Exchange
Listings. Subject, in the case of any registration under the Securities Act, to
the limitations set forth in Section 15, the Issuer will, at its own expense,
from time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities which are or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares and
all action which may be necessary so that such Warrant Shares, immediately upon
their issuance upon the exercise of the Warrants and conversion of the
Convertible Preferred Stock, will be listed on such securities exchange, if any,
on which the Common Stock and/or the Convertible Preferred Stock is then listed.
Section 12. Adjustment of Number of Warrant Shares Purchasable.
(a) The number of shares of Common Stock purchasable upon the exercise
of each Warrant is subject to adjustment from time to time upon the occurrence
of any of the events enumerated in this Section 12 at any time or from time to
time after the date hereof and prior to the Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common Stock or
Convertible Preferred Stock in shares of its capital stock (whether shares of
Common Stock, Convertible Preferred Stock or of capital stock of any other
class), (ii) split or subdivide the outstanding Common Stock or Convertible
Preferred Stock or (iii) combine the outstanding Common Stock into a smaller
number of shares, each Warrant outstanding at the time of the record date for
such dividend or of the effective date of such split, subdivision or combination
shall thereafter entitle the holder of such Warrant to receive the aggregate
number and kind of shares which, if such Warrant had been exercised
12
immediately prior to such time, such holder would have owned or have become
entitled to receive by virtue of such dividend, subdivision or combination. Such
adjustment shall be made successively whenever any event listed above shall
occur and, if a dividend which is declared is not paid, each Warrant outstanding
shall again entitle the holder thereof to receive the number of shares of Common
Stock or Convertible Preferred Stock as would have been the case had such
dividend not been declared. If at any time, as a result of an adjustment made
pursuant to this subsection 12(b), the holder of any Warrant thereafter
exercised shall become entitled to receive any shares of capital stock of the
Issuer other than shares of Common Stock and Convertible Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
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 this Section 12, and the provisions of this Warrant
Agreement with respect to the Warrant Shares shall apply on like terms to such
other shares.
(c) If the Issuer shall issue any shares of Common Stock without
consideration or at a price per share less than the Current Market Price Per
Share of such class of Common Stock as at the date of such issuance, including
any shares of Common Stock deemed to have been issued pursuant to this
subsection 12(c) but excluding any Exempted Securities, each Warrant outstanding
on the date of such issuance shall thereafter entitle the holder of such Warrant
to receive a number of shares of Common Stock or Convertible Preferred Stock
equal to the product of (i) the number of shares of Common Stock or Convertible
Preferred Stock to which the holder of such Warrant was entitled immediately
prior to such issuance and (ii) the quotient that is obtained by dividing:
(X) the total number of shares of Common Stock
outstanding immediately after such issuance
(including any shares of Common Stock deemed to have
been issued pursuant to this subsection 12(c))
by
(Y) the sum of
(i) the number of shares of Common Stock outstanding
immediately prior to such issuance plus
(ii) the number of shares of Common Stock which the
aggregate consideration received (or deemed to be
received) by the Issuer upon such issuance would
purchase at such Current Market Price Per Share.
For purposes of any adjustment of the number of shares of Common Stock or
Convertible Preferred Stock obtainable upon the exercise of any Warrants
pursuant to this subsection 12(c), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
consideration therefor shall be deemed to be the amount of cash paid therefor,
without deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Issuer in connection with the issuance or sale
thereof.
13
(2) In the case of the issuance of Common Stock for a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined by agreement between the holders of a
majority of the Warrants outstanding and the Issuer or, in the absence of such
an agreement, by an independent investment banking firm or an independent
appraiser engaged by the Issuer and reasonably acceptable to the holders of a
majority of the Warrants outstanding (in either case the cost of which
engagement will be borne by the Issuer). In the case of any issuance of Common
Stock upon the exercise of any warrants, options or other rights or the
conversion or exchange of any convertible or exchangeable securities, the
aggregate consideration received by the Issuer upon such issuance shall be
deemed to include the consideration, if any, received by the Issuer as
consideration for the issuance of such warrants, options or rights or such
convertible or exchangeable securities (excluding any cash received on account
of accrued interest or accrued dividends) and, in the case of any conversion or
exchange of securities, shall not include any amount attributable to the
converted or exchanged securities. If any warrant, option or right to purchase
or subscribe for any Common Stock or convertible securities is issued in
connection with the issuance or sale of other securities by the Issuer, together
comprising one integrated transaction in which no specific consideration is
allocated to such warrant, option or right, such warrant, option or right shall
be deemed to have been issued for no consideration.
(3) If (a) the Issuer shall issue warrants or options to purchase or
rights to subscribe for Common Stock other than Exempted Securities, and (b) the
consideration, if any, received by the Issuer as consideration for the issuance
of such warrants, options or rights plus the minimum aggregate consideration
required to be paid upon exercise of such warrants, options or rights (the
amount of such consideration to be determined in each case as set forth above)
shall be less than the product of the Current Market Price Per Share on the date
of such issuance multiplied by the maximum number of shares of Common Stock
deliverable upon such exercise, then such aggregate maximum number of shares
shall be deemed to have been issued at the time such warrants, options or rights
were issued, for a consideration equal to such minimum aggregate consideration.
(4) If (a) the Issuer shall issue (i) securities (other than Exempted
Securities) which are by their terms convertible into or exchangeable for Common
Stock or (ii) warrants or options to purchase or rights to subscribe for any
such convertible or exchangeable securities, and (b) the consideration received
by the Issuer for any such securities or any such warrants, options or rights
(excluding any cash received on account of accrued interest or accrued
dividends) plus the minimum aggregate consideration (not including any amount
attributed to the converted or exchanged securities), if any, to be received by
the Issuer upon the conversion or exchange of such securities or upon the
exercise of such warrants, options or rights and the conversion or exchange of
the securities received upon such exercise, as the case may be (the amount of
such consideration to be determined in each case as set forth above) shall be
less than the product of the Current Market Price Per Share on the date of such
issuance multiplied by the maximum number of shares deliverable upon conversion
of or in exchange for such convertible or exchangeable securities or upon the
exercise of any such warrants, options or rights and subsequent conversion or
exchanges thereof, then such securities, warrants, options or rights shall be
deemed to have been exercised and/or converted or exchanged, and the aggregate
maximum number of shares of Common Stock shall be deemed to have been issued at
the time such securities, warrants, options or rights were issued, for a
consideration equal to such minimum aggregate consideration.
14
(5) Upon any reduction in the exercise price of Common Stock
deliverable upon exercise of any of such warrants, options or rights as are
referred to in this subsection 12(c) or any reduction in the amount of
consideration required to be paid or the conversion or exchange price or ratio
payable upon conversion or exchange of any of such convertible or exchangeable
securities, in each case other than a change resulting from any antidilution
provisions thereof which are no more favorable in such instance to the holder
thereof than the provisions of this Section 12 are to the Warrant Holders, (i)
if an adjustment shall previously have been made pursuant to this subsection
12(c) in respect of such warrants, options or rights or such securities, the
number of shares of Common Stock or Convertible Preferred Stock obtainable upon
the exercise of the Warrants shall forthwith be readjusted to such number of
shares as would have obtained had the adjustment made upon the issuance of such
warrants, options, rights or securities as have not been exercised, converted or
exchanged prior to such change (or any prior adjustment made pursuant to this
subdivision (5)) been made upon the basis of such change, and (ii) if an
adjustment has not previously been made pursuant to this subsection 12(c) in
respect of such options or rights or such securities, then such warrants,
options or rights or such securities shall be deemed to have been granted or
issued (as the case may be) for purposes of this subsection 12(c) as of the date
of such reduction, and any adjustments required to be made pursuant to this
subsection 12(c) as a result of such deemed grant or issuance shall forthwith be
made effective as of such date.
(6) All grants or issuances of options or other rights to acquire
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) (other than Exempted Securities) issued to any officer,
director or employee of the Issuer or of any Subsidiary of the Issuer or to
members of the immediate family of any of them ("Management Options"), and all
issuances of shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) under or pursuant to such Management
Options shall, for purposes of subsection 12(c), be deemed to be granted and
issued for no consideration except to the extent cash or notes are paid or
payable therefor.
(7) If and when any Warrants shall be exercised as set forth herein,
(i) if there shall be any outstanding warrants or options to purchase or rights
to subscribe for shares of Common Stock or any outstanding warrants or options
to purchase or rights to subscribe for or securities which are by their terms
convertible into or exchangeable for Common Stock (in each case, other than
Exempted Securities) which in each case would, if issued on the date of such
Warrant exercise, result in an adjustment pursuant to either of subdivisions (3)
or (4) of this subsection 12(c), then such warrants or options shall be deemed
to have been exercised in full immediately prior to the exercise of such
Warrants for a consideration equal to the aggregate consideration, if any,
received by the Issuer upon the issuance of such warrants, options or rights
plus the minimum aggregate consideration required to be paid upon exercise of
such warrants, options or rights (the amount of such consideration to be
determined in each case as set forth above), and (ii) if there shall be any
outstanding securities which are by their terms convertible into or exchangeable
for Common Stock at the time of such Warrant exercise or at any time thereafter
which in each case would, if issued on the date of such Warrant exercise, result
in an adjustment pursuant to subdivision (4) of this subsection, then such
securities shall be deemed to have been converted or exchanged in full
immediately prior to the exercise of such Warrants for a consideration equal to
the aggregate consideration received by the Issuer for any such securities plus
the minimum aggregate consideration (not including any amount attributed to the
converted or exchanged securities), if any, required to be paid upon the
conversion or exchange of
15
such securities (the amount of such consideration to be determined in each case
as set forth above); provided that any adjustment made pursuant to this
subdivision (7) of subsection 12(c) shall only be made with respect to such
Warrants as are then being exercised.
(8) Shares of Common Stock owned by or held for the account of the
Issuer or any majority-owned Subsidiary shall not be deemed outstanding for the
purpose of any computation made pursuant to this subsection 12(c). Any
adjustment required to be made pursuant to this subsection 12(c) shall be made
successively whenever the date of issuance or deemed issuance of any such Common
Stock or any such options, rights or convertible or exchangeable securities is
fixed (which date of issuance shall be the record date for such issuance if a
record date therefor is fixed) and, in the event that (A) such shares or
options, rights, warrants or convertible or exchangeable securities are not so
issued, or (B) any such option, right, warrant or convertible or exchangeable
security (or the conversion or exchange right thereunder) expires according to
its terms without having been exercised, converted or exchanged, each Warrant
outstanding shall, as of the date of cancellation of such issuance in the case
of clause (A) above and the date of such expiration in the case of clause (B)
above, entitle the holder thereof to receive the number of shares of Common
Stock or Convertible Preferred Stock as would have been the case had the date of
such issuance of such unissued options, rights, warrants or convertible or
exchangeable securities not been fixed or such expired options, rights, warrants
or convertible or exchangeable securities not been issued, as the case may be.
If any adjustment is made pursuant to either of subdivisions (3) or (4) of this
subsection 12(c) upon the granting or issuance of any warrants, options or other
rights or any convertible or exchangeable securities or any adjustment or
readjustment is made pursuant to subdivision (5) of this subsection 12(c), then
any adjustment required to be made hereunder upon the exercise of any such
warrants, options or other rights or upon the exchange or conversion of any such
convertible or exchangeable securities (including any deemed exercise,
conversion or exchange pursuant to subdivision (7) of this subsection 12(c))
shall be made only to the extent that the number of shares of Common Stock or
Convertible Preferred Stock purchasable upon the exercise of a Warrant shall not
previously have been increased pursuant to this subsection 12(c) upon such grant
or issuance (or upon such adjustment or readjustment made pursuant to
subdivision (5) of this subsection 12(c), if applicable).
(d) In case the Issuer shall make a distribution to all holders of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Issuer is the continuing corporation) of
evidences of its indebtedness, cash or other assets, each Warrant outstanding on
the date of such distribution shall thereafter entitle the holder of such
Warrant to receive a number of shares of Common Stock and Convertible Preferred
Stock equal to the product of (i) the number of shares of Common Stock and
Convertible Preferred Stock which the holder of such Warrant was entitled
immediately prior to such date of distribution and (ii) a fraction of which the
numerator shall be the then Current Market Price Per Share of Common Stock on
such date and of which the denominator shall be the then Current Market Price
Per Share of Common Stock on such date less the fair market value, as determined
by agreement between the holders of a majority of the Warrants and the Issuer
or, in the absence of such an agreement, by an independent investment banking
firm or an independent appraiser engaged by the Issuer and reasonably acceptable
to the holders of a majority of the Warrants (in either case the cost of which
engagement will be borne by the Issuer) of the portion of the assets or
evidences of indebtedness, or the portion of the cash, so to be distributed
applicable to one share of then-outstanding Common Stock. Such adjustment shall
be made successively whenever a date for such distribution is fixed (which date
of distribution shall be
16
the record date for such distribution if a record date therefor is fixed) and,
if such distribution is not so made, each Warrant outstanding shall again
entitle the holder thereof to receive the number of shares of Common Stock as
would have been the case had such date of distribution not been fixed.
(e) In the event of any capital reorganization of the Issuer, or of any
reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the consolidation of the
Issuer with or the merger of the Issuer with or into any other corporation or of
the sale of the properties and assets of the Issuer as, or substantially as, an
entirety to any other corporation, each Warrant shall after such capital
reorganization, reclassification of Common Stock, consolidation, merger or sale
be exercisable upon the terms and conditions specified in this Warrant
Agreement, for the number of shares of stock or other securities or assets to
which a holder of the number of Warrant Shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale) upon exercise of such Warrant would have been entitled upon such
capital reorganization, reclassification of Common Stock, consolidation, merger
or sale; and in any such case, if necessary, the provisions set forth in this
Section 12 with respect to the rights thereafter of the holders of the Warrants
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any shares of stock or other securities or assets thereafter
deliverable on the exercise of the Warrants.
(f) If any event occurs, as to which, in the good faith opinion of the
Board of Directors of the Issuer, the other provisions of this Section 12 are
not strictly applicable or (if strictly applicable) would not fairly protect the
purchase rights of the Warrants in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
decreasing the number of shares of Common Stock or Convertible Preferred Stock
purchasable upon the exercise of each Warrant from that which would otherwise be
determined pursuant to this Section 12.
(g) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that any
adjustments which by reason of this subsection 12(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(h) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of shares
as are stated on the Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
(i) If any question shall at any time arise with respect to the number
of Warrant Shares purchasable following any adjustment pursuant to this Section
12, such question shall be determined by agreement between the holders of a
majority of the Warrants and the Issuer or, in the absence of such an agreement,
by an independent investment banking firm or an independent appraiser (which may
be the Issuer's regularly engaged accounting firm, provided that such accounting
firm is a "big five" accounting firm) engaged by the Issuer (in either case the
cost of which engagement will be borne
17
by the Issuer) and reasonably acceptable to the Issuer and the holders of a
majority of Warrants and such determination shall be binding upon the Issuer and
the holders of the Warrants.
(j) Anything in this Section 12 to the contrary notwithstanding:
(1) the Issuer shall be entitled to make such increases in the
number of Warrant Shares purchasable upon the exercise of each Warrant,
in addition to those adjustments required by this Section 12, as it in
its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, or any issuance
wholly for cash or any shares of Common Stock at less than the Current
Market Price Per Share, or any issuance wholly for cash or shares of
Common Stock or securities which by their terms are convertible into or
exchangeable for shares of Common Stock or any stock dividend, or any
issuance of rights, options or warrants referred to hereinabove in this
Section 12, hereinafter made by the Issuer to the holders of its Common
Stock shall not be taxable to them; and
(2) no adjustment in the number of Warrant Shares purchasable
shall be required in the event the Issuer pays a cash dividend to
holders of Common Stock and/or Convertible Preferred Stock; provided
that the Issuer also pays a cash dividend to all holders of Warrants
which dividend shall be calculated as if the Warrants had been
exercised.
Section 13. Notices to Warrant Holders; Notices of Issuances and
Dividends.
(a) Upon any adjustment of the number of Warrant Shares purchasable
upon exercise of a Warrant pursuant to Section 12, the Issuer shall promptly but
in any event within 20 days thereafter, cause to be given to each of the
registered holders of the Warrants at its address appearing on the Warrant
Register by registered mail, postage prepaid, return receipt requested a
certificate signed by its chairman, president or chief financial officer setting
forth the number of Warrant Shares purchasable upon exercise of a Warrant as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as a part of the notice
required to be mailed under the other provisions of this Section 13.
(b) In the event:
(i) that the Issuer shall authorize the issuance to all
holders of Common Stock or Convertible Preferred Stock of rights or
warrants to subscribe for or purchase capital stock of the Issuer or of
any other subscription rights or warrants; or
(ii) that the Issuer shall authorize the distribution to all
holders of Common Stock or Convertible Preferred Stock of evidences of
its indebtedness or assets (including, without limitation cash
dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in Common Stock or Convertible
Preferred Stock); or
(iii) of any consolidation or merger to which the Issuer is a
party and for which approval of any stockholders of the Issuer is
required, or of the conveyance or transfer of the properties and assets
of the Issuer substantially as an entirety, or of any capital
reorganization
18
or reclassification or change of the Common Stock (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
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Issuer; or
(v) that the Issuer proposes to take any other action which
would require an adjustment in the number of Warrant Shares or other
securities or assets to which each Warrant Holder is entitled pursuant
to Section 12;
then the Issuer shall cause to be given to each of the registered holders of the
Warrants at its address appearing on the Warrant Register at least 20 calendar
days prior to the applicable record date, if any, hereinafter specified, or, if
no such record date is specified, 20 calendar days prior to the taking of any
action referred to in clauses (i) through (v) above, by registered mail, postage
prepaid, return receipt requested, a written notice stating (i) the date as of
which the holders of record of Common Stock or Convertible Preferred Stock to be
entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, or (iii) the date on which such other action is to be
effected, and the date as of which it is expected that holders of record of
Common Stock or Convertible Preferred Stock shall be entitled to exchange their
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or other action. The failure to give the notice
required by this Section 13 or any defect therein shall not affect the legality
or validity of any distribution, right, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up or other action
referred to above, or the vote upon any such action.
(c) Prior to the expiration or exercise of all outstanding Warrants,
the Issuer shall furnish to each Warrant Holder:
(i) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Issuer, either (A) a copy of
the Issuer's Annual Report on Form 10-K (or any successor form) and any
documents incorporated by reference into such form for the prior fiscal
year, as filed with the Commission under the Exchange Act, or (B) a
copy of the consolidated balance sheet of the Issuer and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statement of income and retained earnings and of cash flow
for such year, setting forth in each case in comparative form the
figures for the previous year certified by certified independent public
accountants not unacceptable to BACCFI, and the consolidated balance
sheet of the Issuer and its consolidated Subsidiaries as at the end of
such fiscal year;
(ii) as soon as available but in any event not later than 45
days after the end of each of the first three quarterly periods of each
fiscal year of the Issuer, either (A) a copy of the Issuer's Quarterly
Report on Form 10-Q (or any successor form) for the preceding fiscal
quarter, as filed with the Commission under the Exchange Act, or (B)
the unaudited consolidated balance sheet of the Issuer and its
consolidated Subsidiaries as at the end of each
19
such quarter and the related unaudited consolidated statements of
income and retained earnings and of cash flow of the Issuer and its
consolidated Subsidiaries for such quarter and the portion of the
fiscal year through such date setting forth in each case in comparative
form the figures for the same period of the previous fiscal year,
certified by the chief financial or accounting officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments); and
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any reports, certificates, budgets, definitive
proxy statements or financial statements which Issuer sends to its
shareholders and copies of any reports on Form 8-K which the Issuer
files with the Commission;
(iv) no later than April 30 of each year, a certificate of the
chairman, president or chief financial officer of the Issuer setting
forth the number of Warrant Shares purchasable upon exercise of a
Warrant as of the end of the preceding fiscal year and a description in
reasonable detail of any adjustments in such number during the
preceding fiscal year;
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied consistently
throughout the periods reflected therein (except as approved by such accountants
and officer and disclosed therein). So long as the Loan Agreement remains in
effect, compliance by the Issuer with the provisions of Section 7.2 thereof
shall be deemed to be compliance with subsections 13(c)(i) and 13(c)(ii).
Section 14. Restrictions on Transfer.
(a) Each of BACCFI and its Affiliates who are issued Warrants pursuant
to this Agreement (i) represents that it is an "accredited investor" within the
meaning of the Securities Act and the rules and regulations thereunder, (ii)
represents that it has received adequate information about the Issuer to
determine the advisability of a purchase of the Issuer's securities, (iii)
represents that it is acquiring the Warrants for its own account for investment
and not with a view to any distribution or public offering within the meaning of
the Securities Act, except in any case pursuant to the registration of such
Warrants or Warrant Shares under the Securities Act or pursuant to a valid
exemption from such registration requirement, (iv) acknowledges that the
Warrants and the Warrant Shares issuable upon exercise thereof have not been
registered under the Securities Act, and (v) agrees that it will not sell or
otherwise transfer any of its Warrants or Warrant Shares except upon the terms
and conditions specified herein and that it will cause any transferee thereof to
agree to take and hold the same subject to the terms and conditions specified
herein, provided that the Warrant Holders may sell the Warrants or the Warrant
Shares purchased upon exercise of the Warrants and issued on conversion of the
Convertible Preferred Stock in one or more private transactions not requiring
registration under the Securities Act, as provided in Section 14(c) below.
(b) Except as provided in subsection 14(d) hereof each Warrant
Certificate and each certificate for the Warrant Shares issued to BACCFI or an
Affiliate thereof or to a subsequent transferee thereof pursuant to subsection
14(c) shall include a legend in substantially the following form (with such
changes therein as may be appropriate to reflect whether such legend refers to
Warrants or Warrant Shares), provided that such legend shall not be required if
such transfer is being
20
made in connection with a sale which is exempt from registration pursuant to
Rule 144 under the Securities Act or if the opinion of counsel referred to in
subsection 14(c) is to the further effect that neither such legend nor the
restrictions on transfer in this Section 14 are required in order to ensure
compliance with the Securities Act:
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH
ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER
PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF AUGUST 13, 1999,
BETWEEN THE ISSUER AND BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE,
INC., A COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF THE ISSUER AND WILL BE FURNISHED TO THE
HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
(c) Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among BACCFI and/or its
Affiliates), the holder thereof shall give written notice to the Issuer of such
holder's intention to effect such assignment, transfer or sale, which notice
shall set forth the date of such proposed assignment, transfer or sale and the
identity of the proposed transferee. Each holder wishing to effect such a
transfer of any Warrant or Warrant Shares shall also furnish to the Issuer an
agreement by the transferee thereof that it is taking and holding the same
subject to the terms and conditions specified herein and, unless the transferee
is an Affiliate of such holder, a written opinion of such holder's counsel, in
form reasonably satisfactory to the Issuer, to the effect that the proposed
transfer may be effected without registration under the Securities Act.
(d) The restrictions set forth in this Section 14 shall terminate and
cease to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an opinion
of counsel, in form reasonably satisfactory to the Issuer, to the effect that
compliance with such restrictions is not necessary in order to comply with the
Securities Act with respect to the transfer of the Warrants and the Warrant
Shares; provided, however, that after two (2) years from the date of issuance of
any Warrants (or such shorter period as may be provided by Rule 144(k)
promulgated under the Securities Act), such restrictions will automatically
terminate (without the necessity of any opinion of counsel) as to such Warrants
and as to any Warrant Shares issued in respect of such Warrants upon exercise of
the Conversion Right set forth in subsection 6(b) above. Whenever such
restrictions shall so terminate the holder of such Warrants and/or Warrant
Shares shall be entitled to receive from the Issuer, without expense (other than
transfer taxes, if any), Warrant Certificates or certificates for such Warrant
Shares not bearing the legend set forth in subsection 14(b) at which time the
Issuer will rescind any transfer restrictions relating thereto.
(e) With a view to making available to BACCFI and its Affiliates and
subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Securities and Exchange Commission (including, without
limitation, Rules 144 and 144A under the Securities Act) which may
21
permit the sale of Warrants and Warrant Shares to the public or certain other
institutions without registration, the Issuer agrees to take any and all such
actions as may be required of it to make available to BACCFI and its Affiliates
and such subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act or any
successor provision thereto from and after the date the Issuer first
becomes subject to the provisions of Section 13 or 15(d) of the
Exchange Act;
(ii) file with the Commission in a timely manner all reports
and other documents required of the Issuer under the Securities Act and
the Exchange Act from and after the date the Issuer first becomes
subject to the provisions of Section 13 or 15(d) of the Exchange Act;
and
(iii) so long as BACCFI or an Affiliate thereof owns any
Warrants or Warrant Shares, furnish to BACCFI forthwith upon request a
written statement by the Issuer as to its compliance with the reporting
requirements of Rule 144 or any successor provision thereto, and of the
Securities Act and the Exchange Act, (to the extent not previously
furnished to BACCFI under subsection 13(d)) a copy of the most recent
annual or quarterly report of the Issuer filed with the Commission, in
each case from and after the date the Issuer first becomes subject to
the provisions of Section 13 or 15(d) of the Exchange Act, and such
other reports and documents of the Issuer and other information in the
possession of or reasonably obtainable by the Issuer as BACCFI and its
Affiliates and subsequent holders of the Warrants may reasonably
request in availing itself of any rule or regulation of the Commission
allowing BACCFI and its Affiliates and subsequent holders of the
Warrants to sell any such securities without registration.
Section 15. [Intentionally Omitted].
Section 16. Mandatory Redemption, Put Rights and Mandatory Exchange.
(a)(i) Subject to the limitations hereinafter set forth, (A)
if the Issuer takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any
combination of shares or reverse stock split and elimination of
fractional shares) which would cause the capital stock currently or
previously held by or currently issuable without restriction to BACCFI
and its Affiliates (not including Non-Attributable Stock) to exceed
24.99% of the Equity of the Issuer, then prior to or simultaneously
with such action, the Issuer shall purchase from BACCFI and/or its
Affiliates such number of Warrants, Warrant Shares or other shares of
capital stock (other than any shares purchased by BACCFI and/or its
Affiliates in the open market) as will reduce the shares of capital
stock currently or previously held by or currently issuable without
restriction to the BACCFI and its Affiliates (not including
Non-Attributable Stock) to 24.99% of the Equity of the Issuer (any such
mandatory purchase being herein called a "Mandatory Redemption"). In
the event of any Mandatory Redemption, the Issuer shall first purchase
any outstanding Warrants, and thereafter shall purchase Warrant Shares.
The price to be paid to the holder upon a Mandatory Redemption shall be
an amount equal to (A) the
22
Current Market Price Per Share at the date the event causing such
Mandatory Redemption occurs (the "Trigger Date"), multiplied by the
aggregate number of shares of Common Stock of the Issuer (x) issuable
upon exercise of the Warrants to be purchased by the Issuer and/or (y)
comprising the Warrant Shares to be purchased by the Issuer, minus (B)
the Exercise Price multiplied by the aggregate number of shares of
Common Stock issuable upon exercise of the Warrants being purchased
hereunder (collectively, the "Redemption Price").
(ii) The completion of all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall take place on
the thirtieth (30th) day following the Trigger Date, unless another
date is mutually agreed upon by the Issuer and the selling holder (the
"Redemption Closing Date")
(b) The Redemption Prices for all purchases and sales of Warrants and
Warrant Shares pursuant to a Mandatory Redemption shall be determined and
calculated in accordance with subsection 16(a) by the Issuer's regularly engaged
independent accountants. The Issuer shall cause such accountants to deliver to
the Issuer and the selling holder, not later than 15 days prior to the
completion of each purchase and sale under subsection 16(a), a written
statement, signed by such accountants, setting forth in reasonable detail the
respective purchase price and the calculation thereof and stating that such
calculation was based on the books and records of the Issuer and was made and
delivered pursuant to this Section 16.
(c) If the Issuer takes any action with respect to its capital stock
(including without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares) which would
cause the Common Stock currently or previously held by or currently issuable
without restriction to BACCFI and its Affiliates (other than shares of
Non-Attributable Stock) to exceed 4.99% of the aggregate number of issued and
outstanding shares of Common Stock, prior to or simultaneously with such action,
the Issuer shall exchange such portion of Common Stock for Convertible Preferred
Stock as will reduce the shares of Common Stock currently or previously held by
or currently issuable without registration to the BACCFI and its Affiliates (not
including "Non-Attributable Stock") to 4.99% of the aggregate number of issued
and outstanding shares of Common Stock (a "Mandatory Exchange").
(d) As used in this Section 16, "Warrant Shares" shall include all
shares of Common Stock and/or Convertible Preferred Stock and other securities
of the Issuer or its Affiliates issued to holders of the Issuer's Common Stock
and/or Convertible Preferred Stock in respect of stock dividends, stock splits
and other distributions and any recapitalizations, to the extent the same were
not included in any adjustment of the Warrant Shares issuable upon exercise of
Warrants pursuant to Section 12 hereof.
(e) Notwithstanding any provision of this Warrant Agreement to the
contrary, all Warrants and Warrant Shares which are sold pursuant to an
effective registration statement under the Securities Act or in accordance with
Rule 144 promulgated under the Securities Act shall, upon such sale, cease to be
subject to the provisions of this Section 16.
Section 17. Amendments and Waivers. Any provision of this Warrant
Agreement may be amended, supplemented, waived, discharged or terminated by a
written instrument signed by the Issuer and the holders of not less than a
majority of the outstanding Warrants (or in the case of Sections 14
23
and 16 the holders of a majority of the aggregate outstanding Warrants and
Non-Public Warrant Shares, voting as a single group), provided that (i) this
Agreement may not be amended, supplemented or waived so as to increase the
Exercise Price, reduce the number of Warrant Shares issuable upon exercise of
any Warrants, alter the period during which any Warrants may be exercised
(except to provide for a later Expiration Date), or reduce the Redemption
Amount, in each case without the consent of the holders of all outstanding
Warrants, and (ii) this Section 17 may not be amended or supplemented without
the consent of the holders of all outstanding Warrants and Non-Public Warrant
Shares, voting as a single group, and no waiver of the requirements of this
Section 16 shall be binding upon any such holder without its consent.
Section 18. Specific Performance. The parties agree that irreparable
damage will result in the event that the obligations of the Issuer under this
Warrant Agreement are not specifically enforced, and that any damages available
at law for a breach of any such obligations would be inadequate. Therefore, the
holders of the Warrants and/or Non-Public Warrant Shares shall have the right to
specific performance by the Issuer of the provisions of this Warrant Agreement,
and appropriate injunctive relief may be applied for and granted in connection
therewith. The Issuer hereby irrevocably waives, to the extent that it may do so
under applicable law, any defense based on the adequacy of a remedy at law which
may be asserted as a bar to the remedy of specific performance in any action
brought against the Issuer for specific performance of this Warrant Agreement by
the holders of the Warrants and/or Non-Public Warrant Shares. Such remedies and
all other remedies provided for in this Warrant Agreement shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which may be available under this Warrant Agreement.
Section 19. Notices.
(a) Any notice or demand to be given or made by the Warrant Holders or
the holders of Warrant Shares to or on the Issuer pursuant to this Warrant
Agreement shall be sufficiently given or made if sent by registered mail, return
receipt requested, postage prepaid, addressed to the Issuer at the Warrant
Office.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall appear on the Warrant Register or
the Common Stock or Convertible Preferred Stock registry of the Issuer, as the
case may be.
Section 20. Binding Effect. This Warrant Agreement shall be binding
upon and inure to the sole and exclusive benefit of the Issuer, its successors
and assigns, BACCFI, Affiliates of BACCFI and the registered holders from time
to time of the Warrants and the Warrant Shares.
Section 21. Continued Validity. A holder of Warrant Shares shall
continue to be entitled with respect to such Warrant Shares to all rights and
subject to all obligations to which it would have been entitled or subject as a
Warrant Holder under Sections 14 through 24 of this Warrant Agreement. The
Issuer will, at the time of each exercise of any Warrant, in whole or in part,
upon the request of the holder of the Warrant Shares issued upon such exercise
thereof, acknowledge in writing, in form reasonably satisfactory to such holder,
24
its continuing obligation to afford to such holder all such rights, provided,
however, that if such holder shall fail to make any such request, such failure
shall not affect the continuing obligation of the Issuer to afford to such
holder all such rights.
Section 22. Counterparts. This Warrant Agreement may be executed in one
or more separate counterparts and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
Section 23. New York Law. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 24. Benefits of This Warrant Agreement. Nothing in this Warrant
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares any legal or equitable
right, remedy or claim under this Warrant Agreement.
Section 25. Voting and Consents to be on a Fully Converted Basis.
Wherever this Warrant Agreement calls for the written consent or vote of any
combinations of the holders of the Warrants, any of the Warrant Shares, voting
as a single group, the Warrants shall be counted as if they had been exercised
for Common Stock and shares of Convertible Preferred Stock shall be counted as
if they had been converted to Common Stock.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF the parties hereto have caused this Warrant
Agreement to be duly executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.
OPTICARE HEALTH SYSTEMS, INC.
f/k/a SARATOGA RESOURCES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------------
Title: Chief Executive Officer
----------------------------
Attest: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Chief Financial Officer
---------------------------
BANK AUSTRIA CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Xxxxx Xxxx
--------------------------------
Name: Xxxxx Xxxx
-------------------------
Title: Vice President
-------------------------
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
--------------------------
Title: Executive Vice President
-------------------------
