Exhibit 4.7
THIS WARRANT AND ANY SHARES OF STOCK PURCHASABLE UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE'S SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION UNDER THE SECURITIES
ACT OR PURSUANT TO AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER OF SUCH
SECURITIES (THE "COMPANY"), TO THE EFFECT THAT AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
THE SHARES OF STOCK PURCHASABLE UPON EXERCISE OF THIS WARRANT ARE ALSO SUBJECT
TO CERTAIN TRANSFER RESTRICTIONS PURSUANT TO A STOCKHOLDERS AGREEMENT DATED AS
OF AUGUST 7, 1998, AMONG THE COMPANY AND CERTAIN PARTIES SIGNATORIES THERETO (AS
AMENDED AND MODIFIED FROM TIME TO TIME, THE "AGREEMENT"). A COPY OF THE
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF
UPON WRITTEN REQUEST.
▇▇▇▇▇ EQUIPMENT COMPANY
CONTINGENT STOCK PURCHASE WARRANT
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Date of Issuance: August 7, 1998 Certificate No. W-1
FOR VALUE RECEIVED, ▇▇▇▇▇ Equipment Company, a Delaware corporation
(the "Company"), hereby grants to Code, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.C., as Trustee on
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behalf of certain parties pursuant to that certain Trust Agreement dated as of
August __, 1998 (the "Registered Holder") the right to purchase from the
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Company, during the period specified in this Warrant, the Warrant Shares, at a
price per share of $0.01 (as adjusted from time to time in accordance herewith,
the "Exercise Price"). The Common Stock issued upon exercise of this Warrant is
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subject to the terms and provisions contained in the Agreement. Certain
capitalized terms used herein are defined in Section 3 hereof. The amount and
kind of securities obtainable pursuant to the rights granted hereunder and the
Exercise Price for such securities are subject to adjustment pursuant to the
provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
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1A. Exercise Period. The Registered Holder may exercise, in whole,
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the purchase rights represented by this Warrant at any time and from time to
time after the Exercise Event and prior to the earlier of (i) the tenth
anniversary of the date hereof, (ii) a Public Offering or (iii) a Sale of the
Company (the "Exercise Period"). The Company shall give the Registered Holder
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written notice of the expiration of the Exercise Period at least 30 days but not
more than 90 days prior to the end of the Exercise Period.
1B. Exercise Procedure.
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(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the "Exercise Time"):
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(a) a completed Exercise Agreement, as described in paragraph 1C
below, executed by the Person exercising all of the purchase rights
represented by this Warrant (the "Purchaser");
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(b) this Warrant;
(c) if this Warrant is not registered in the name of the Purchaser, an
Assignment or Assignments in the form set forth in Exhibit II hereto
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evidencing the assignment of this Warrant to the Purchaser, in which case
the Registered Holder shall have complied with the provisions set forth in
Section 7 hereof; and
(d) either (1) a check payable to the Company in an amount equal to
the product of the Exercise Price multiplied by the number of shares of
Common Stock being purchased upon such exercise (the "Aggregate Exercise
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Price"), (2) the surrender to the Company of debt or equity securities of
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the Company having a Market Value equal to the Aggregate Exercise Price of
the Common Stock being purchased upon such exercise (provided that for
purposes of this subparagraph, the Market Value of any note or other debt
security or any preferred stock shall be deemed to be equal to the
aggregate outstanding principal amount or liquidation value thereof plus
all accrued and unpaid interest thereon or accrued or declared and unpaid
dividends thereon) or (3) a written notice to the Company that the
Purchaser is exercising the Warrant by authorizing the Company to withhold
from issuance a number of shares of Common Stock issuable upon such
exercise of the Warrant which when multiplied by the Market Value of the
Common Stock is equal to the Aggregate Exercise Price (and such withheld
shares shall no longer be issuable under this Warrant).
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(ii) Certificates for shares of Common Stock purchased upon exercise
of this Warrant (plus cash, in lieu of any fractional share pursuant to Section
14 hereof) shall be delivered by the Company to the Purchaser within seven (7)
business days after the date of the Exercise Time.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be deemed for all purposes to have become the record holder
of such Common Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock. Each share of Common Stock issuable upon exercise of
this Warrant shall, upon payment of the Exercise Price therefor, be fully paid
and nonassessable and free from all liens and charges with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant.
(vi) The Company shall assist and cooperate with any Registered
Holder or Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant (including, without limitation, making any filings required to be made
by the Company).
(vii) Notwithstanding any other provision hereof, if an exercise of
any portion of this Warrant is to be made in connection with a registered public
offering or the sale of the Company, the exercise of any portion of this Warrant
may, at the election of the holder hereof, be conditioned upon the consummation
of the public offering or sale of the Company, in which case such exercise shall
not be deemed to be effective until the consummation of such transaction.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the exercise of the Warrants, such number of shares of Common
Stock as is issuable upon the exercise of all outstanding Warrants. All shares
of Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
The Company shall take all such actions as may be reasonably necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation (including registration of the
issuance of such shares under the Securities Act, but only to the extent that a
short form of registration is available) or any requirements of any domestic
securities exchange upon which shares of Common Stock may be listed (except for
official notice of issuance which
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shall be immediately delivered by the Company upon each such issuance);
provided, however, that this Warrant shall not be exercised if and to the extent
the Company reasonably determines that the exercise of this Warrant may violate
the Securities Act or any other law or requirement of any governmental
authority. The Company shall not take any action which would cause the number of
authorized but unissued shares of Common Stock to be less than the number of
such shares required to be reserved hereunder for issuance upon exercise of the
Warrant.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
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Exercise Agreement shall be substantially in the form set forth in Exhibit I
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hereto, except that if the shares of Common Stock are not to be issued in the
name of the Person in whose name this Warrant is registered, (i) the Exercise
Agreement shall also state the name of the Person to whom the certificates for
the shares of Common Stock are to be issued and (ii) such Person shall execute
and deliver to the Company a counterpart to the Agreement. Such Exercise
Agreement shall be dated the actual date of execution thereof.
Section 2. Adjustment of Exercise Price and Number of Shares. In
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order to prevent dilution of the rights granted under this Warrant, the Exercise
Price and the number of shares of Common Stock obtainable upon exercise of this
Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Subdivision or Combination of Common Stock. If the Company at
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any time after the Effective Time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect immediately prior to
such subdivision shall be proportionately reduced and the number of Warrant
Shares obtainable upon exercise of this Warrant shall be proportionately
increased. If the Company at any time after the Effective Time combines (by
reverse stock split or otherwise) its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased and the number of Warrant Shares
obtainable upon exercise of this Warrant shall be proportionately decreased.
2B. Reorganization, Reclassification, Consolidation, Merger or Sale.
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Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a way that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change." Prior to the consummation of any Organic
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Change, whether or not the Exercise Event has occurred prior to such Organic
Change, the Company shall make appropriate provision to insure that the
Registered Holder of the Warrants shall thereafter have the right to acquire and
receive, in lieu of or in addition to (as the case may be) the shares of Common
Stock immediately theretofore acquirable and receivable upon the exercise of
such holder's Warrant (or the shares of Common Stock that would have been
acquirable and receivable at the time of the Organic
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Change had an Exercise Event occurred), such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore acquirable and receivable upon
exercise of such holder's Warrant had such Organic Change not taken place. In
any such case, the Company shall make appropriate provision with respect to such
holders' rights and interests to insure that the provisions of this Section 2
shall thereafter be applicable to the Warrants. The Company shall not effect any
such consolidation, merger or sale, unless prior to the consummation thereof,
the successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to acquire.
2C. Notices.
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(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holder
at least 20 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock (provided that notice shall not be required for regular cash dividends),
(B) with respect to any pro rata subscription offer to holders of Common Stock
or (C) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 20 days prior to the date on which any Organic Change,
dissolution or liquidation shall take place.
Section 3. Definitions. The following terms have the meanings set
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forth below:
"Affiliates" means, with respect to any Person, any other Person
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controlling, controlled by or under common control with such Person.
"Alamo Transaction" means any form of transaction (or series of
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transactions) resulting in the combination of the businesses, operations or
assets of the Company (or any of its subsidiaries, whether now existing or
hereafter created) and Alamo Group, Inc. ("Alamo"), including without limitation
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any transaction whereby the Company directly or indirectly (i) acquires capital
stock of Alamo possessing the voting power under normal circumstances to elect a
majority of Alamo's board of directors (whether by merger, consolidation or sale
or transfer of Alamo's capital stock) or (ii) acquires all or substantially all
of the assets of Alamo and its subsidiaries.
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"Common Stock" means shares of the Company's Common Stock, par value
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$.01 per share.
"Continuing Stockholders" has the meaning set forth in the
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Recapitalization Agreement.
"Effective Time" means the time immediately after the closing of the
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Alamo Transaction.
"Executives" means the employees of the Company and its Subsidiaries.
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"Exercise Event" means the closing of an Alamo Transaction within two
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(2) years of the Date of Issuance (the "Two-Year Period"), provided that if an
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agreement is executed for an Alamo Transaction prior to the end of the Two-Year
Period, and the closing contemplated by such transaction occurs, then the
closing of such transaction shall be deemed to be within the Two-Year Period for
purposes hereof.
"Independent Third Party" means any Person who, immediately prior to
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the contemplated transaction, does not own in excess of 15%, on a fully-diluted
basis, of the Company's voting capital stock (a "15% Owner"), who is not
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controlling, controlled by or under common control with any such 15% Owner and
who is not the spouse or descendent (by birth or adoption) of any such 15% Owner
or a trust for the benefit of such 15% Owner and/or such other Persons.
"Market Value" as to any security means the fair market value of such
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security as determined by the board of directors of the Company in its
reasonable good faith judgment.
"MDP" means Madison Dearborn Capital Partners II, L.P., a Delaware
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limited partnership and its Affiliates.
"Original Cost" means the consideration paid to the Company for a
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share of Common Stock and a share of Preferred Stock (each as adjusted for stock
splits, stock combinations or other similar events); provided that for purposes
hereof, the "Original Cost" of the Common Stock (i) issued pursuant to the
Recapitalization Agreement, (ii) retained by the executives in connection with
the Recapitalization Agreement and (iii) issued pursuant to the Management Stock
Agreements executed as of the date hereof by and between the Company and certain
of its employees, in each case shall mean $16.10 per share.
"Person" means an individual, a partnership, a corporation, a limited
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liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
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"Preferred Stock" means shares of the Company's Preferred Stock, par
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value $.01 per share.
"Public Offering" means the sale in an underwritten public offering
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registered under the Securities Act of 1933, as amended, of shares of the
Company's Common Stock.
"Recapitalization Agreement" has the meaning set forth in the
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preamble.
"Sale of the Company" means the sale of the Company to an Independent
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Third Party or group of Independent Third Parties pursuant to which such party
or parties acquire (i) capital stock of the Company possessing the voting power
under normal circumstances to elect a majority of the Company's board of
directors (whether by merger, consolidation or sale or transfer of the Company's
capital stock) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended.
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"Sellers" has the meaning set forth in the Recapitalization Agreement.
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"Warrant Shares" means the following number of shares of Common Stock
--------------
as adjusted from time to time after the Effective Time pursuant to Section 2
hereof: (1) the number of shares of Common Stock of the Company on a Fully-
Diluted Basis as of the Effective Time multiplied by (2) 3.0% multiplied by (A-
B)/(X + Y - Z)
where:
A = $38,757,451.86 + $361,564.87
B = A dollar amount equal to the aggregate repurchases of Common Stock
and/or Preferred Stock by the Company from the Date of Issuance to the
Effective Time
X = A dollar amount equal to all Common Stock issued and outstanding held
by all shareholders at the Effective Time multiplied, in the case of
each such share of Common Stock, by the Original Cost of such share
Y = A dollar amount equal to all Preferred Stock issued and outstanding
held by MDP and the Executives at the Effective Time multiplied, in
the case of each such share of Preferred Stock, by the Original Cost
of such share
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Z = A dollar amount equal to all Common Stock and Preferred Stock of the
Company issued or issuable to MDP and the Executives in connection
with the Alamo Transaction multiplied by the Original Cost of each
such share
For purposes hereof, "Fully-Diluted Basis" includes, without duplication, (i)
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all shares of Common Stock issued and outstanding at the time of determination,
(ii) all shares of Common Stock issuable upon the exercise or conversion of all
warrants, options or other rights to subscribe for or to acquire, directly or
indirectly, Common Stock, whether or not then exercisable or convertible at such
time of determination, (iii) all shares of Common Stock issuable upon the
conversion or exchange of all stock or other securities which are convertible
into or exchangeable for, directly or indirectly, Common Stock, whether or not
then convertible or exchangeable as of such time of determination, and (iv) all
shares of Common Stock issued or issuable in connection with the Alamo
Transaction; provided, however, that (i) Common Stock (whether in the form of
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stock, options, warrants or other similar rights) issued or issuable to
employees of the Company and its Subsidiaries and (ii) shares issuable upon
exercise of this Warrant, shall not be included for determining "Fully-Diluted
Basis".
Section 4. Information Rights. So long as this Warrant remains
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outstanding and unexercised, the Registered Holder will promptly be provided the
same information as that provided by the Company to the Securities and Exchange
Commission in connection with an offering by the Company of its debt securities.
Notwithstanding the foregoing, the Registered Holder is entitled to receive (i)
annually, within ninety (90) days following the end of each fiscal year of the
Company, audited financial statements of the Company prepared in accordance with
generally accepted accounting principles and containing a balance sheet,
statement of operations, statement of cash flows and statement of changes in
stockholders' equity, and (ii) quarterly, within forty-five (45) days following
the end of each of the first three fiscal quarters of the Company, unaudited
financial statements of the Company containing a balance sheet and statement of
operations.
Section 5. Cancellation of Warrant. If there is not an Exercise
-----------------------
Event, the right to purchase shares of Common Stock hereby will automatically
terminate, and this Warrant will automatically be canceled and will become null
and void.
Section 6. No Voting Rights; Limitations of Liability. This Warrant
------------------------------------------
shall not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability of such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 7. Warrant Not Transferable. This Warrant is not
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transferable without the prior written consent of the Company. With prior
written consent of the Company, this Warrant and all rights hereunder may be
transferred upon surrender of this Warrant with a properly executed
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Assignment (in the form of Exhibit II hereto) at the principal office of the
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Company. Any permitted transferee hereof shall be a "Registered Holder"
hereunder.
Section 8. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Registered Holder at
the principal office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new Warrants
shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issued
this Warrant shall be deemed to be the "Date of Issuance" hereof regardless of
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the number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
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Section 9. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Company, or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Section 10. Notices. Except as otherwise expressly provided herein,
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all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent via nationally recognized overnight courier or sent
by registered or certified mail, return receipt requested, postage prepaid and
shall be deemed to have been given when so delivered or sent (i) to the Company,
at its principal executive offices and (ii) to the Registered Holder of this
Warrant, at such holder's address as it appears in the records of the Company
(unless otherwise indicated by such holder).
Section 11. Amendment and Waiver. Except as otherwise provided
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herein, the provisions of the Warrants may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
Registered Holders of Warrants representing a majority of the shares of Common
Stock obtainable upon exercise of the Warrants.
Section 12. Descriptive Headings. The descriptive headings of the
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several Sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant.
Section 13. Governing Law. All issues and questions concerning the
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construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto
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shall be governed by, and construed in accordance with, the laws of the State of
Illinois, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Illinois.
Section 14. Fractions of Shares. The Company may, but shall not be
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required to, issue a fraction of a share of Common Stock upon the exercise of
this Warrant. As to any fraction of a share which the Company elects not to
issue, the Company shall make a cash payment in respect of such fraction in an
amount equal to the same fraction of the Market Value of a share of Common Stock
on the date of such exercise.
* * * *
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IN WITNESS WHEREOF, the Company has caused this Contingent Stock Purchase
Warrant to be signed and attested by its duly authorized officers under its
corporate seal and to be dated the Date of Issuance hereof.
▇▇▇▇▇ EQUIPMENT COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: President and CEO
Attest:
▇▇▇▇▇ Equipment Company
By: /s/ D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Secretary
EXHIBIT I
▇▇▇▇▇ EQUIPMENT COMPANY
WARRANT EXERCISE AGREEMENT
--------------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-1) hereby agrees to subscribe for the purchase of
______ shares of the Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant in
accordance with the terms of such Warrant. [A new Warrant for the unexercised
portion of the attached Warrant (Certificate No. W-1) should be delivered to the
following: ________________________.]
Signature
Address
EXHIBIT II
ASSIGNMENT
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FOR VALUE RECEIVED, _____________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W-1) with respect to the number of shares of the Common
Stock covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
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Dated: Signature
Witness
