WARRANT AGREEMENT
METRIS COMPANIES INC.
DATED AS OF DECEMBER 9, 1998
WARRANT AGREEMENT
Table of Contents
Section Page
1. Issue of Warrant to Purchasers; Form of Warrants - 1 -
2. ▇▇▇▇▇▇▇▇▇▇▇▇ - ▇ -
▇. ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ - ▇ -
▇. Term; Exercise - 2 -
5. Surrender of Warrant Certificates - 3 -
6. Mutilated or Missing Warrant Certificate - 3 -
7. Reservation of Common Stock, etc. - 4 -
8. Anti-dilution Adjustments - 4 -
8.1 Exercise Price Adjustment - 4 -
8.2 Special Rules for Adjusting the Exercise Price - 4 -
8.3 Extraordinary Distributions - 6 -
8.4 Equitable Adjustments - 7 -
8.5 Certain Readjustments - 7 -
8.6 Adjustment in Shares Purchasable - 8 -
8.7 Notice of Adjustment - 8 -
8.8 Reflection of Adjustments on Certificates - 8 -
8.9 De Minimis Adjustments - 8 -
8.10 Exemptions - 9 -
9. Constraints - 9 -
10. Consolidation or ▇▇▇▇▇▇ - ▇ -
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇ -
▇▇. Absence of Registration - 11 -
13. Information Covenants - 11 -
13.1 Notice of Stockholder Meetings - 11-
13.2 Notice of Distributions - 12 -
13.3 Financial Statements, etc. - 12-
13.4 Proper Books and Records; Inspection - 12-
14. Notices - 12 -
15. Warrant Obligations Independent of Debt Obligations - 13 -
16. Fractional Interests - ▇▇-
▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇ - ▇▇ -
▇▇. Binding Effect; ▇▇▇▇▇▇▇▇ - ▇▇ -
▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇ - ▇▇ -
▇▇. Governing Law - 13 -
EXHIBITS
A Warrant Certificate
WARRANT AGREEMENT dated as of December 9, 1998 between
Metris Companies Inc., a Delaware corporation (the "Company"),
and the purchasers set forth on Schedule I attached hereto (each
individually a Purchaser and collectively the "Purchasers"). The
Purchasers, so long as they are holders of any warrants
hereunder, together with any permitted transferees or assignees
who are registered holders of any warrant issued hereunder or a
like warrant or warrants issued upon the transfer of such warrant
(each individually a "Warrant" and collectively the "Warrants"),
are referred to collectively as the "Holders" and individually as
a "Holder."
WHEREAS, pursuant to the terms of a Securities Purchase
Agreement dated as of November 13, 1998 among the Company, and
the Purchasers (the "Purchase Agreement"), the Company has agreed
to issue to each Purchaser a Warrant as hereinafter described to
purchase shares of the Company's Common Stock, par value $.01 per
share (together with any other or additional classes of the
Company's capital stock for which the Warrants may become
exercisable in accordance with Section 8.4 of this Agreement, the
"Common Stock"), upon the terms and subject to the conditions set
forth in the Purchase Agreement; and
WHEREAS, the Company wishes to set forth, among other
things, the provisions of such Warrants and the terms and
conditions on which such Warrants may be issued, exchanged,
exercised and replaced;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as
follows:
1. Issue of Warrant to Purchasers; Form of Warrants. The
Company shall on the date hereof issue and deliver to the
Purchasers for no additional consideration Warrants to purchase
an aggregate of Three Million Seven Hundred Fifty Thousand
(3,750,000) shares of Common Stock, subject to adjustment
pursuant to Section 8 hereof. Each Purchaser shall receive a
Warrant to purchase that number of shares of Common Stock set
forth opposite such Purchaser's name on Schedule I attached
hereto. Each Warrant, and any additional Warrants which may be
issued upon partial exercise, replacement or transfer of such
Warrant or Warrants, shall be evidenced by, and subject to the
terms of, a Warrant Certificate (including the Forms of Election
to Purchase and Assignment attached thereto, a "Warrant
Certificate") in the form of Exhibit A attached hereto, in each
case executed on behalf of the Company by the manual or facsimile
signature of the President or Vice President of the Company,
under its corporate seal affixed or in facsimile, and attested by
the Secretary or an Assistant Secretary of the Company. A
Warrant Certificate evidencing the original Warrant issued to
each Purchaser shall be executed and delivered to such Purchaser
simultaneously with the execution of this Agreement. The Company
will pay any documentary stamp taxes attributable to the initial
issuance of Warrants and the issuance of Common Stock upon the
exercise of Warrants.
2. Registration. All Warrant Certificates shall be
numbered and shall be registered in a warrant register (the
"Warrant Register") as they are issued. Subject to its
compliance with the foregoing, the Company shall be entitled to
treat the registered Holder of any Warrant on the Warrant
Register as the owner in fact of such Warrant for all purposes
and shall not be bound to recognize any equitable or other claim
to or interest in such Warrant on the part of any other person or
entity, and shall not be liable for any registration or transfer
of Warrants which are registered or to be registered in the name
of a fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein
amounts to bad faith.
3. Transfer of Warrants. Any Warrant may be transferred
or endorsed to another party in whole or in part by giving
written notice thereof to the Company at its principal office.
If a new Warrant Certificate is requested in connection with such
transfer, shall be surrendered for cancellation, endorsed or
accompanied by a written instrument of transfer, in form
satisfactory to the Company, duly executed by the Holder thereof
in person or by a duly authorized representative, agent or
attorney-in-fact appointed in writing. Upon receipt thereof, the
Company shall issue and deliver, in the name of the transferee, a
new Warrant Certificate containing the same terms as the
surrendered Warrant Certificate. In the case of the transfer of
fewer than all of the rights evidenced by the surrendered Warrant
Certificate, the Company shall issue a new Warrant Certificate to
the Holder thereof for the remaining number of shares specified
in the Warrant Certificate so surrendered.
4. Term; Exercise. A Warrant entitles the Holder thereof
to purchase the number of shares of Common Stock specified in the
Warrant Certificate held by such Holder at a purchase price of
Thirty ($30.00) Dollars per share (the "Exercise Price") at any
time on or after the Initial Date (as herein defined) and on or
before 5:00 p.m. Eastern Time on December 31, 2008 (the
"Expiration Date"). The Initial Date shall be the first to occur
of (i) the date on which the shareholders of the Company vote to
disapprove the Exchange (as defined in the Purchase Agreement)
and (ii) June 30, 1999, subject to the termination of any
applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 and as prescribed by the Office of the
Comptroller of the Currency. The Exercise Price and the number
of shares issuable upon exercise of any Warrant are subject to
adjustment upon the occurrence of certain events, pursuant to the
provisions of Section 8 of this Agreement. Subject to the
provisions of this Agreement, the Holder of a Warrant shall have
the right, which may be exercised in whole or in part, to
purchase from the Company, and the Company shall issue and sell
to such Holder, the number of fully paid and non-assessable
shares of Common Stock (together with any other shares of the
Company's Common Stock issuable upon exercise of Warrants, the
"Shares") specified in the Warrant Certificate held by such
Holder. Such right shall be exercised by surrender to the
Company, or its duly authorized agent, of such Warrant
Certificate, with the Form of Election to Purchase attached
thereto duly completed and signed, and upon payment to the
Company of the Exercise Price, as adjusted in accordance with the
provisions of Section 8, for the number of Shares in respect of
which the Warrant is then exercised. Payment of such Exercise
Price may be made in cash, by certified check or bank draft
payable to the order of the Company, by wire transfer of
immediately available funds or by tender of an equivalent face
amount of the Company's 12% Senior Notes due November 1, 2006
(the "Senior Notes"). Upon such surrender of the Warrant
Certificate and payment of the Exercise Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Holder of such
Warrant, in such name or names as such Holder may designate, a
certificate or certificates for the number of full Shares so
purchased, together with cash, as provided in Section 16 of this
Agreement, in respect of any fraction of a Share otherwise
issuable upon such surrender. Such certificate or certificates
shall be deemed to have been issued and any person or entity so
designated to be named therein shall be deemed to have become a
holder of record of such Shares as of the date of the surrender
of the Warrant Certificate and payment of the Exercise Price as
aforesaid; provided, however, that if, at the date of surrender
of a Warrant Certificate and payment of such Exercise Price the
transfer books for the Common Stock (or, upon adjustment, such
other class of stock as may be purchasable upon the exercise of
the Warrant) shall be closed, the certificates for the Shares in
respect of which such Warrant is then exercised shall be issued
as of the date on which such books shall next be opened (whether
before, on or after the Expiration Date) and until such date the
Company shall be under no duty to deliver any certificate for
such Shares; provided further, however, that the transfer books
shall not be closed at any time for a period longer than
forty-eight (48) hours unless otherwise required by law. A
Warrant shall be exercisable, at the election of the Holder
thereof, either for all or for part only of the Shares specified
in the Warrant Certificate and if any Warrant is exercised in
part prior to the Expiration Date, the Company shall issue a new
Warrant Certificate for the remaining number of Shares specified
in the Warrant Certificate so surrendered. The Company covenants
that if any Shares issuable upon the exercise of Warrants require
(under any federal or state law or applicable governing rule or
regulation of any national securities exchange) registration with
or approval of any governmental authority before such Shares may
be issued upon exercise, the Company, upon receipt from any
Purchaser of notice of intent to exercise, will in good faith and
as expeditiously as possible endeavor to cause such Share to be
duly registered, approved or listed on the relevant national
securities exchange, as the case may be.
5. Surrender of Warrant Certificates. Any surrender of a
Warrant Certificate for transfer pursuant to Section 3 above or
upon exercise pursuant to Section 4 above shall be made (a) to
the Company at its principal office or (b) to the Company at such
other place or to such agent of the Company as the Company shall
hereafter notify the Holders.
6. Mutilated or Missing Warrant Certificate. If a Warrant
Certificate is mutilated, lost, stolen or destroyed, the Company
shall issue and deliver (a) in exchange and substitution for and
upon cancellation of any mutilated Warrant Certificate or (b) in
lieu of and in substitution for any Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor
representing an equivalent right or interest.
7. Reservation of Common Stock, etc. The Company shall
reserve for so long as any Warrant remains outstanding a number
of authorized and unissued Shares sufficient to provide for the
exercise of all such Warrants, and the transfer agent for the
Common Stock, which may be the Company (the "Transfer Agent"), is
hereby irrevocably authorized and directed at all times until the
Expiration Date to reserve such number of authorized and unissued
Shares as necessary for such purpose. The Company shall keep
copies of this Agreement on file with the Transfer Agent and
shall supply the Transfer Agent with duly executed stock
certificates for such purpose and will itself provide or
otherwise make available any cash payable as provided in Section
16 of this Agreement. All Warrant Certificates surrendered upon
the exercise of Warrants shall be cancelled, and such cancelled
Warrant Certificates shall constitute sufficient evidence of the
number of Shares which have been issued upon the exercise of
Warrants. The Company shall furnish to the Transfer Agent a copy
of all notices of adjustment, and certificates related thereto,
required to be transmitted to each Holder pursuant to Section 8.7
hereof.
8. Anti-dilution Adjustments. The Exercise Price in
effect at any time and the number and kind of Shares purchasable
upon exercise of the Warrants shall be subject to adjustments
from time to time upon the happening of the events hereinafter
specified. No adjustment shall be made for any cash dividends or
any Shares issued or issuable upon exercise of the Warrants, and
if any adjustment results in an Exercise Price which is less that
the stated par value per share of the Shares issuable upon such
exercise, the Company agrees that such stated par value shall
also be adjusted such that the Exercise Price shall at no time be
less than the par value of such Shares. Notwithstanding any
other provision hereof or of any Warrant, the Exercise Price, as
adjusted from time to time shall not in any event be less than
the par value (if any) of the Common Stock. The Company hereby
covenants that, to the extent permitted by law, the par value of
each share of Common Stock shall not be more than $.01 and the
Company will not increase such par value so long as any Warrant
is outstanding.
8.1 Exercise Price Adjustment. (a) At any time the
Company issues or sells any shares of Common Stock (except as
provided in Section 8.10 and except for issuances subject to
Section 8.4) for a consideration per share less than the Exercise
Price in effect immediately prior to such issue or sale, the
Exercise Price in effect immediately prior to such issue or sale
shall thereupon be reduced to the price (calculated to the
nearest cent) determined as follows:
(1) by dividing (x) the sum of (i) the number of
shares of Common Stock outstanding immediately prior to such
issue or sale multiplied by the then existing Exercise
Price, and (ii) the consideration, if any, received by the
Company upon such issue or sale, by (y) the total number of
shares of Common Stock outstanding immediately after such
issue or sale of Securities.
(b) In addition to the foregoing adjustments in
paragraph (a) above, the Corporation will be permitted to make
such reductions in the Exercise Price as it considers to be
advisable in order that any event treated for Federal income tax
purposes as a dividend of stock or stock rights will not be
taxable to the holders of the shares of Common Stock.
8.2 Special Rules for Adjusting the Exercise Price. For
the purposes of Section 8.1 above, the following paragraphs (a)
to (d), inclusive, shall also be applicable:
(a) Treatment of Options, Rights, etc. At any time
the Company grants any rights to subscribe for, or any
rights or options to purchase, Common Stock or any
securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable securities being herein
called "Convertible Securities"), whether or not such rights
or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the
exercise of such rights or options or upon conversion or
exchange of such Convertible Securities (determined by
dividing (1) the total amount, if any, received or
receivable by the Company as consideration for the granting
of such rights or options, plus the minimum aggregate amount
of additional consideration payable to the Company upon the
exercise of such rights or options, plus, in the case of any
such rights or options which relate to such Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of
such Convertible Securities and upon the conversion or
exchange thereof, by (2) the total maximum number of shares
of Common Stock issuable upon the exercise of such rights or
options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
rights or options) is less than the Exercise Price in effect
immediately prior to the granting of such rights or options,
then the maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon
conversion or exchange of the maximum number of such
Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such
rights or options) be deemed to be outstanding and to have
been issued for such price per share. Except as provided in
Section 8.5, no further adjustments of the Exercise Price
shall be made upon the actual issue of such Common Stock or
of such Convertible Securities upon exercise of such rights
or options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
(b) Treatment of Convertible Securities. At any time
the Company issues or sells any Convertible Securities,
whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or
exchange (determined by dividing (1) the total amount
received or receivable by the Company as consideration for
the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange
thereof, by (2) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such
Convertible Securities) is less than the Exercise Price in
effect immediately prior to the time of such issue or sale,
then the maximum number of shares of Common Stock issuable
upon conversion or exchange of all such Convertible
Securities shall (as of the date of the issue or sale of
such Convertible Securities) be deemed to be outstanding and
to have been issued for such price per share, provided that
(i) except as provided in Section 8.5, no further
adjustments of the Exercise Price shall be made upon the
actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities and (ii) if any such
issue or sale of such Convertible Securities is made upon
exercise of any rights to subscribe for or to purchase or
any option to purchase any such Convertible Securities for
which adjustments of the Exercise Price have been or are to
be made pursuant to other provisions of this Section 8.2, no
further adjustment of the Exercise Price shall be made by
reason of such issue or sale.
(c) Computation of Consideration. For purposes of
this Section 8: (1) the consideration received for any
shares of Common Stock or Convertible Securities or any
rights or options to purchase any such Common Stock or
Convertible Securities issued or sold for cash shall be
deemed to be the amount received by the Company therefor,
without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith; (2) if any
shares of Common Stock or Convertible Securities or any
rights or options to purchase any such Common Stock or
Convertible Securities are issued or sold for a
consideration other than cash, the amount of the
consideration other than cash received by the Company shall
be deemed to be the fair value of such consideration as
reasonably determined in good faith by the board of
directors of the Company, without deduction therefrom of any
expenses incurred or any underwriting commissions or
concessions or discounts paid or allowed by the Company in
connection therewith; and (3) the consideration for any
shares of Common Stock or Convertible Securities issued by
the Company in connection with any merger or consolidation
of another corporation into the Company shall be deemed to
be the fair value of the assets of such merged or
consolidated corporation as reasonably determined in good
faith by the board of directors of the Company after
deducting therefrom all cash and other consideration (if
any) paid by the Company in connection with such merger.
(d) Record Date. At any time the Company takes a
record of the holders of Common Stock for the purpose of
entitling them (1) to receive a dividend or other
distribution payable in Convertible Securities, or (2) to
subscribe for or purchase Common Stock or Convertible
Securities, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of
such dividend or the making of such other distribution or
the date of the granting of such right or subscription or
purchase, as the case may be.
8.3 Extraordinary Distributions. If the Company makes
any distribution of its assets upon or with respect to its Common
Stock, as a liquidating or partial liquidating dividend, or other
than as a dividend payable out of earnings or any surplus legally
available for dividends under the laws of the jurisdiction of
incorporation of the Company, each Holder of a Warrant shall,
upon the exercise of such Warrant after the record date for such
distribution or, in the absence of a record date, after the date
of such distribution, receive, in addition to the shares
subscribed for, the amount of such assets (or, at the option of
the Company, a sum equal to the value thereof at the time of
distribution as reasonably determined in good faith by the board
of directors of the Company) which would have been distributed to
such Holder if such Holder had exercised such Holder's Warrant
immediately prior to the record date for such distribution or, in
the absence of a record date, immediately prior to the date of
such distribution.
8.4 Equitable Adjustments. If the Company (i)
declares or pays a dividend on its Common Stock in shares of its
capital stock or makes a distribution in shares of Common Stock,
(ii) subdivides its outstanding Common Stock, (iii) combines its
outstanding Common Stock into a smaller number of shares of
Common Stock or (iv) issues any shares of its capital stock in a
reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in
which the Company is the continuing entity), the number of Shares
of Common Stock for which Warrants are exercisable in effect at
the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification shall
be proportionately adjusted so that the Holder of any Warrant
exercised after such date shall be entitled to receive the
aggregate number and kind of shares which, if such Warrant had
been exercised immediately prior to such time, it would have
owned upon such exercise and been entitled to receive upon such
dividend, subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed
above shall occur, but no duplicative adjustment shall be made
hereunder.
8.5 Certain Readjustments. If the purchase price
provided for in any right or option referred to in Section
8.2(a), or the rate at which any Convertible Securities referred
to in Section 8.2(a) or 8.2(b) are convertible into or
exchangeable for Common Stock, shall change or a different
purchase price or rate shall become effective at any time or from
time to time (other than under or by reason of provisions
designed to protect against dilution), then, upon such change
becoming effective, the Exercise Price then in effect hereunder
shall thereupon be increased or decreased to such Exercise Price
as would have obtained had the adjustments made upon the granting
or issuance of such rights or options or Convertible Securities
been made upon the basis of (1) the issuance of the number of
shares of Common Stock theretofore actually delivered upon the
exercise of such options or rights or upon the conversion or
exchange of such Convertible Securities, and the total
consideration received therefor, and (2) the granting or issuance
at the time of such change of any such options, rights, or
Convertible Securities then still outstanding for the
consideration, if any, received by the Company therefor and to be
received on the basis of such changed price. On the expiration
of any right or option referred to in Section 8.2(a), or on the
termination of any right to convert or exchange any Convertible
Securities referred to in Section 8.2(a) or 8.2(b), the Exercise
Price shall thereupon be readjusted to such amount as would have
obtained had the adjustment made upon the granting or issuance of
such rights or options or Convertible Securities been made upon
the basis of the issuance or sale of only the number of shares of
Common Stock actually issued upon the exercise of such options or
rights or upon the conversion or exchange of such Convertible
Securities. If the purchase price provided for in any such right
or option, or the rate at which any such Convertible Securities
are convertible into or exchangeable for Common Stock, shall
change at any time under or by reason of provisions with respect
thereto designed to protect against dilution, then in case of the
delivery of Common Stock upon the exercise of any such right or
option or upon conversion or exchange of any such Convertible
Security, the Exercise Price then in effect hereunder shall
forthwith be decreased to such Exercise Price as would have
obtained had the adjustments made upon the issuance of such right
or option or Convertible Security been made upon the basis of the
issuance of (and the total consideration received for) the shares
of Common Stock delivered as aforesaid.
8.6 Adjustment in Shares Purchasable. Whenever the
Exercise Price is adjusted pursuant to Section 8.1 above, each
Warrant outstanding at the time of such adjustment shall become
the right to purchase that number of Shares obtained by
multiplying the number of Shares into which such Warrant is
exercisable immediately prior to such adjustment by the Exercise
Price in effect immediately prior to the adjustment, and dividing
the product so obtained by the Exercise Price in effect
immediately after such adjustment, so that upon exercise of such
Warrant with respect to all the Shares purchasable thereby the
Company shall receive the same amount of consideration it would
have received if the event occasioning the adjustment had not
occurred and such Warrant were exercised with respect to all the
Shares purchasable thereby.
8.7 Notice of Adjustment. Whenever an adjustment is
made pursuant to this Section 8, the Company shall promptly cause
a notice setting forth the adjusted Exercise Price and adjusted
number of Shares issuable upon exercise of each Warrant to be
mailed to each Holder at such Holder's last address appearing on
the Warrant Register and shall cause a certified copy thereof to
be mailed to the Transfer Agent, if such Transfer Agent is not
the Company. The Company shall, upon the request in writing of
the Holders of a majority of the Warrants, retain a nationally
recognized firm of independent public accountants of recognized
standing selected by the board of directors of the Company to
make any computation required by this Section 8, and a
certificate signed by such firm shall be conclusive evidence of
the correctness of such adjustment, which shall be binding on the
Holders and the Company.
8.8 Reflection of Adjustments on Certificates.
Notwithstanding any adjustments in the Exercise Price or the
number or kind of Shares purchasable upon exercise of Warrants,
any Warrant Certificate theretofore or thereafter issued may
continue to express the same price and number and kind of Shares
as are stated in the Warrant Certificate initially issuable
pursuant to this Agreement.
8.9 De Minimis Adjustments. Anything in this Section
8 to the contrary notwithstanding, the Company shall not be
required to make any adjustments of the Exercise Price in any
case in which the amount by which such Exercise Price would be
reduced in accordance with the foregoing provisions would be less
than ten cents ($.10), but in such case any adjustment that would
otherwise be made shall be carried forward and made at the time
and together with the next subsequent adjustment which, together
with any and all such adjustments so carried forward, shall
amount to not less than ten cents ($.10).
8.10 Exemptions. The Company shall not be required to
make any adjustment of the Exercise Price in the case of
(a) the granting by the Company of stock
options to its employees so long as the shares of
Common Stock covered by all such options do not in the
aggregate exceed on a cumulative basis 10% of the
shares of Common Stock issued and outstanding at the
time of the latest granting of any such option, or
(b) the issuance of shares of Common Stock
pursuant to the exercise of such options, whether
granted prior to or subsequent to the date hereof, or
(c) the issuance of such additional shares
of Common Stock as may be issuable upon the exercise of
such options as a result of adjustment in the number of
shares covered by such options for stock dividends,
stock splits or other changes in the capitalization of
the Company, or
(d) the issuance or sale of shares of Common
Stock to the Company's employees pursuant to any stock
purchase plan in effect on the date hereof (except to
the extent such plan is subsequently amended), or
(e) the granting by the Company of any
options or warrants, on the issuance of shares upon
exercise thereof, to the extent the same are disclosed
in the disclosure schedule to the Purchase Agreement.
9. Constraints. Notwithstanding the other provisions of
this Agreement, in no event may a Warrant be exercised prior to
receipt by the holder of all approvals from, or the expiration of
all waiting or notice periods imposed by, applicable governmental
authorities which are entitled to approve or review issuances of
securities of the Company.
10. Consolidation or Merger. If the Company shall at any
time prior to the Expiration Date consolidate with or merge with
or into another entity, each Holder of a Warrant shall thereafter
be entitled to receive, upon the exercise thereof and payment of
the Exercise Price in accordance with the terms of this
Agreement, the aggregate number and kind of securities and
property (including any cash), if any, which if such Warrant had
been exercised immediately prior to such consolidation or merger
and at a time when the transfer books of the Company were open,
it would have owned upon such exercise and been entitled to
receive upon such merger or consolidation. The Company shall
take such steps in connection with such consolidation or merger
as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property (including any cash)
thereafter deliverable upon the exercise of the Warrants;
provided, however, that if upon such consolidation or merger
different holders of Common Stock shall be entitled to receive
different forms of consideration for their Common Stock, the form
of such consideration thereafter deliverable upon the exercise of
the Warrants shall be as determined in good faith by the board of
directors of the Company, whose determination shall be
conclusive. A sale of all or substantially all the assets of the
Company for a consideration (apart from the assumption of
obligations) consisting primarily of securities shall be deemed a
consolidation or merger for the purposes of this Section 9. The
Company shall not effect any such consolidation, merger or sale
of all or substantially all of its assets (in one or more
transactions) unless prior to or simultaneously with the
consummation thereof, the successor or surviving corporation or
entity (if other than the Company) resulting from such
consolidation or merger, or the corporation or other entity to
which such assets are transferred, shall assume, by written
agreement duly executed and mailed to the Holders or delivered in
accordance with Section 14 hereof, the obligation to deliver to
each Holder the Shares of stock, securities or assets which such
Holder is entitled to purchase in accordance with the foregoing
provisions. The provisions of this Section 10 shall also apply
to successive mergers or consolidations.
11. Certain Events. If any of the following occurs on or
before the Expiration Date:
(a) a consolidation or merger of the Company with or
into another entity (other than any merger as to which the
Company is the surviving corporation and there is no change
in the Common Stock in connection therewith),
(b) a liquidating dividend with respect to the Common
Stock, or
(c) a tender offer or exchange offer with respect to
the Common Stock (other than a tender offer opposed by the
Company's board of directors),
(each, an "Event"), then, in connection with any such Event, each
Holder of a Warrant shall have the right, in lieu of exercising
such Warrant in advance of such Event and receiving the
consideration which a Holder of the Shares issuable upon exercise
of such Warrant would receive in connection with such
consolidation or merger, liquidating dividend or tender offer
(the "Event Consideration"), upon surrender of the Warrant
Certificate evidencing such Warrant to the Company or its duly
authorized agent or to the depositary or exchange agent, as the
case may be, to receive the Event Consideration with respect to
the Shares for which such Warrant is exercisable reduced by the
Exercise Price. Such reduction in the Event Consideration shall
first be applied to any cash included in the Event Consideration
and, to the extent that such cash is less than the Exercise
Price, the amount of the securities or other property to be
received by such Holder shall be reduced by an amount that,
together with any such cash, is (in the reasonable judgment of
the Company's board of directors) equal to the Exercise Price.
The Company hereby covenants
(A) to give notice of any Event specified in (a) or
(b) above to each Holder of Warrants at least fifteen (15)
business days in advance of the record date for determining
stockholders' rights with respect to such Event, and
(B) that any agreements, resolutions, offers or other
documents with respect to any Event shall contain terms
consistent with the provisions of this Section 10 and, in
the case of any Event specified in (c) above, shall be
forwarded to each Holder of Warrants.
The provisions of this Section 11 shall also apply to successive
Events.
12. Absence of Registration. By acceptance of a Warrant
Certificate evidencing the Warrant, each Holder represents and
agrees that such Holder is acquiring the Warrant, and that upon
exercise thereof it will acquire the Shares, with its own funds
for its own account for investment, and not with a view to any
sale, distribution or transfer thereof in violation of the
Securities Act of 1933 (the "Securities Act").
Each Holder acknowledges that such Holder has been informed by
the Company or by the previous Holder of the Warrant that the
Warrant may not, under the Securities Act and applicable
regulations thereunder, be re-sold, transferred or otherwise
disposed of without registration under the Securities Act or an
applicable exemption from the registration requirements of the
Securities Act.
Warrant Certificates shall bear the following legend:
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). IT MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
13. Information Covenants.
13.1 Notice of Stockholder Meetings. Nothing
contained in this Agreement shall be construed as conferring upon
any Holder the right to vote or to consent to or receive notice
as a stockholder in respect of the meetings of stockholders or
the election of directors of the Company or any other matter, or
any rights whatsoever as a stockholder of the Company; provided,
however, that if a meeting of the stockholders of the Company is
called or if consents of the Company's stockholders are solicited
to consider and take action on a proposal for (i) the declaration
of a dividend with respect to Shares, other than in cash, (ii)
the redemption or repurchase of any Shares, other than pursuant
to repurchase agreements with employees, (iii) the voluntary
dissolution of the Company or (iv) any consolidation, merger or
sale of all or substantially all of its property, assets,
business and good will as an entirety, then the Company shall
cause a notice thereof to be sent by first class mail, postage
prepaid, at least twenty (20) business days prior to the record
date for determining stockholders entitled to vote at such
meeting or to take action with respect to such consent, to each
Holder of Warrants at such Holder's address appearing on the
Warrant Register; but failure to mail or to receive such notice
or any defect therein or in the mailing thereof shall not affect
the validity of any action taken at such meeting or by such
consent.
13.2 Notice of Distributions. If the Company
determines to make any distribution on its Common Stock, then the
Company shall deliver a notice of its intention to make such
distribution by first class mail, postage prepaid, at least
twenty (20) business days prior to the record date for such
distribution to each registered Holder of Warrants at such
Holder's address appearing on the Warrant Register, but failure
to mail or to receive such notice or any defect therein or in the
mailing thereof shall not affect the validity of any action taken
in connection with such distribution.
13.3 Financial Statements, etc. Notwithstanding
Section 13.1 above, the Company shall promptly deliver to each
Holder copies of all regular and periodic financial information,
proxy materials and other information and reports, if any, which
the Company or any of its subsidiaries shall file with the
Securities and Exchange Commission. In addition, the Company
shall deliver to each Holder all financial statements and other
reports required to be delivered to holders of Senior Notes
pursuant to paragraph 6.1 of the Purchase Agreement.
13.4 Proper Books and Records; Inspection. The
Company covenants that it will keep proper books and records in
which full, true and correct entries in conformity with generally
accepted accounting principles shall be made of all dealings and
transactions in relation to its business and activities. The
Company further covenants that it will permit, and will cause
each of its subsidiaries to permit, any person designated in
writing by any Holder to visit and inspect any of its properties,
to examine its corporate, financial and operating records and to
make copies thereof or extracts therefrom, and to discuss its
affairs, finances and accounts with its directors, officers,
employees and independent accountants, all at such times, upon
reasonable notice, as may reasonably be desired.
14. Notices. Any notice pursuant to this Agreement to be
given or made by any Holder to or on the Company shall be made by
hand delivery, prepaid first-class mail (registered or certified,
return receipt requested), telegraph, facsimile transmission
(receipt confirmed), or overnight air courier guaranteeing next
day delivery, addressed to: the Company at: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Z. ▇▇▇▇
▇▇▇▇▇▇▇▇, Esquire (facsimile transmission number: (▇▇▇) ▇▇▇-▇▇▇▇,
with a copy to, Sidley & Austin, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esquire
(facsimile transmission number: (▇▇▇) ▇▇▇-▇▇▇▇.
Any notice or demand authorized by this Agreement to be given or
made by the Company to any Holder shall be sufficiently given or
made (except as otherwise provided in this Agreement) if sent as
provided above, addressed to such Holder's address appearing on
the Warrant Register, with a copy, in the case of a Purchaser, to
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ (facsimile
transmission number: (▇▇▇) ▇▇▇-▇▇▇▇).
15. Warrant Obligations Independent of Debt Obligations.
Pursuant to the Purchase Agreement, the Company has issued Senior
Notes to the Purchasers. The obligations of the Company or its
affiliates with respect to the Warrants, including, without
limitation, the obligations set forth in this Agreement, are
independent of any obligations of the Company under the Senior
Notes, and such obligations with respect to the Warrants shall
remain valid and binding notwithstanding the performance of, or
any breach by the Company or its affiliates with respect to,
their obligations under the Senior Notes.
16. Fractional Interests. The Company shall not be
required to issue fractions of Shares on the exercise of
Warrants. If the Company elects not to issue fractions of
Shares, then with respect to any fraction of a Share that would
otherwise have been issuable on the exercise of a Warrant, the
Company shall purchase such fraction for an amount in cash equal
to the fraction of the then current Exercise Price attributable
to such fractional share.
17. Cancellation. The Warrants shall be automatically
cancelled, without further notice to or action on the part of,
the Holder thereof upon consummation of the Exchange (as defined
in the Purchase Agreement).
18. Binding Effect; Survival. This Agreement shall survive
the exercise of the Warrants and shall be binding upon the
Company and its successors and assigns and shall be binding upon
and inure to the benefit of the Holders of the Warrants and each
holder of Shares issued upon exercise of the Warrants.
19. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed
to be an original; but such counterparts together shall
constitute but one and the same instrument.
20. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
Delaware.
[The rest of this page intentionally left blank]
IN WITNESS WHEREOF, each of the parties hereto has caused this
Warrant Agreement to be duly executed as a sealed instrument as
of the day, month and year first above written.
THE COMPANY:
METRIS COMPANIES INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive Officer
INVESTORS:
▇▇▇▇▇▇ ▇. ▇▇▇ EQUITY FUND IV, L.P.
By: THL Equity Advisors IV, LLC, its General Partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND IV,
L.P., 1997 ▇▇▇▇▇▇ ▇. ▇▇▇ NOMINEE TRUST, ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, THE 1995 HARKINS GIFT TRUST,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ 1998 IRREVOCABLE
TRUST, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AS CUSTODIAN FOR ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. LEECHARITABLE
INVESTMENT L. P., THL-CCI INVESTORS LIMITED
PARTNERSHIP
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Attorney-in-fact
EXHIBIT A
WARRANT CERTIFICATE
THE WARRANT REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). IT MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
THE TRANSFER OR EXCHANGE OF THIS WARRANT MUST BE REGISTERED IN
ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
NO. , 1998
VOID AFTER 5:00 P.M. EASTERN TIME
TIME ON DECEMBER 31, 2008
Metris Companies Inc.
Warrant Certificate
THIS CERTIFIES THAT for value received,
, or its registered assigns, is the owner of a Warrant which
entitles it to purchase at any time on or after the first to
occur of (i) the date on which the shareholders of the Company
vote to disapprove the Exchange (as defined in the Purchase
Agreement dated as of November 13, 1998) and (ii) June 30, 1999,
subject to the termination of any applicable waiting periods
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976
and as prescribed by the Office of the Comptroller of the
Currency, and on or before 5:00 p.m. Eastern Time on December 31,
2008 or on such later date, if any, as provided in the Warrant
Agreement (as hereinafter defined) (the "Expiration Date"),
fully paid and nonassessable Shares of the Common Stock, $.01 par
value (the "Common Stock") of the Company, at the purchase price
of $30.00 per share (the "Exercise Price") upon presentation and
surrender of this Warrant Certificate with the Form of Election
to Purchase attached hereto duly executed. The Expiration Date
is subject to extension as provided in said Warrant Agreement.
The number of Shares which may be purchased upon exercise of the
Warrant evidenced by this Warrant Certificate is the number as of
the date of the original issue of such Warrant, based on the
Shares of Common Stock of the Company as constituted at such
date. As provided in the Warrant Agreement, the number and kind
of Shares which may be purchased upon the exercise of the Warrant
evidenced by this Warrant Certificate, and the Exercise Price at
which such shares are purchasable, are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate and the Warrant it represents are
subject to, and entitled to the benefits of, all of the terms,
provisions and conditions of a certain Warrant Agreement dated as
of December 9, 1998 (the "Warrant Agreement") between the Company
and the original holder hereof, which Warrant Agreement is hereby
incorporated herein by reference and made a part hereof and to
which Warrant Agreement reference is hereby made for a full
description of the rights, limitation of rights, obligations,
duties and immunities hereunder of the Company and the holder of
this Warrant Certificate. Copies of the Warrant Agreement are on
file at the principal office of the Company.
Subject to the terms of the Warrant Agreement, this Warrant
Certificate, upon surrender at the principal office of the
Company, may be exchanged for another Warrant Certificate or
Warrant Certificates of like tenor and date evidencing a Warrant
or Warrants entitling the holder to purchase a like aggregate
number of Shares of Common Stock as the Warrant evidenced by the
Warrant Certificate surrendered entitled such holder to purchase.
No fractional Shares of Common Stock need be issued upon the
exercise of any Warrant evidenced hereby, but in lieu thereof a
cash payment may be made, as provided in the Warrant Agreement.
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall
anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold consent
to any corporate action (whether upon any recapitalization, issue
of stock, reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger,
conveyance or otherwise), to receive notice of meetings (except
as provided in the Warrant Agreement), or to receive dividends or
subscription rights or otherwise, until the Warrant evidenced by
this Warrant Certificate shall have been exercised and the Common
Stock purchasable upon the exercise thereof shall have become
deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for
exercise within any period during which the transfer books for
the Company's Common Stock are closed for any purpose, the
Company shall not be required to make delivery of certificates
for Shares purchasable upon such exercise until the date of the
reopening of said transfer books.
IN WITNESS WHEREOF, the Company has caused the signature (or
facsimile signature) of its President and Secretary to be printed
herein and its corporate seal (or facsimile) to be printed
herein.
Attest: METRIS COMPANIES INC.
By: By:
Z. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary President and Chief Executive Officer
FORM OF ELECTION TO PURCHASE
To be executed if the Holder desires to exercise the Warrant.
TO METRIS COMPANIES INC.:
The undersigned hereby irrevocably elects to exercise the
Warrant evidenced by this Warrant Certificate No. to purchase
Shares of Common Stock issuable upon the exercise of such Warrant
and requests that certificates for such Shares be issued in the
name of:
Name
Address
Social Security Number
If such number of Shares shall not be all the Shares with
respect to which this Warrant is exercisable, a new Warrant for
the balance remaining of such Shares will be registered in the
name of and delivered to:
Name
Address
Social Security Number
Date:
Signature
(Signature must conform in all
respects to name of
holder as specified on the face of
this Warrant Certificate)
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificates)
For value received, hereby sells, assigns and transfers unto ___________
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
attorney, to transfer said Warrant Certificate on the books of
the within-named Company, with full power of substitution in the
premises.
Dated: ,
NOTE: The above signature
should correspond
exactly with the name on the face
of this Warrant Certificate.
SCHEDULE I
Warrant Purchasers Number Purchased
Warrant Agreement
