Exhibit 10.2
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL FOR THE
COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND LAWS IS
AVAILABLE.
VOID AFTER 5:00 P.M. NEW YORK TIME,
ON AUGUST 15, 2002
KTI, INC.
WARRANT CERTIFICATE
No. F-1 KTI 95,750 Warrants
Dated as of August 15, 1997
Warrants to Purchase Common Stock
KTI, Inc., a corporation duly organized and existing under the laws of the
State of New Jersey (the "Company"), hereby certifies that, for value received,
Credit Research & Trading, LLC, or its registered assigns, is the registered
owner of NINETY-FIVE THOUSAND SEVEN HUNDRED AND FIFTY (95,750) Warrants (the
"Warrants," and each individually, a "Warrant"), each of which will entitle the
registered holder thereof to purchase one share, as adjusted from time to time
as provided in Section 7 hereof, of the Common Stock, no par value, of the
Company (the "Common Stock," each such share being a "Warrant Share," and all
such shares being the "Warrant Shares") at the exercise price of $9.875 per
share (such exercise price, as adjusted from time to time as provided in Section
7 hereof, the "Exercise Price"), at any time and from time to time on or before
August 15, 2002 (the "Expiration Date"). All Warrants are subject to the
following terms and conditions:
Section 1 Registration of Holder of Warrants. The Company shall register
each Warrant, upon records to be maintained by the Company for that purpose, in
the name of the record holder of such Warrant from time to time. The Company
may deem and treat the registered holder of each Warrant as the absolute owner
thereof for the purpose of any exercise thereof or any distribution to the
holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary. In addition, and without limiting the
foregoing, the Company shall not be bound to recognize any equitable or other
claim to or interest in such Warrant on the part of any person other than the
record holder of the Warrant, and shall not be liable for the registration of
transfer of Warrants, as provided in Section 2(a) hereof, which are registered
or are to be registered in the name of a fiduciary or the nominee of the
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.
Section 2 Registration of Transfers and Exchanges.
(a) Provided that any transfer of Warrants complies with all the terms and
conditions of this Warrant Certificate, the Company shall register the transfer
of any Warrants upon records to be maintained by the Company for that purpose,
upon surrender of this Warrant Certificate, with the Form of Assignment attached
hereto duly completed and signed, to the Company at the office specified in or
pursuant to Section 3(c) hereof. Upon any such registration of transfer, a new
Warrant Certificate, in substantially the form of this Warrant Certificate,
evidencing the Warrants so transferred shall be issued to the transferee and a
new Warrant Certificate, in similar form, evidencing the remaining Warrants not
so transferred, if any, shall be issued to the then registered holder thereof.
(b) Warrant Certificates Exchangeable for Different Denominations. This
Warrant Certificate is exchangeable, upon the surrender hereof by the holder
hereof at the office of the Company specified in or pursuant to Section 3(c)
hereof, for new Warrant Certificates, in substantially the form of this Warrant
Certificate, evidencing in the aggregate the right to purchase the number of
Warrant Shares which may then be purchased hereunder, each of such new Warrant
Certificates to be dated the date of such exchange and to represent the right to
purchase such number of Warrant Shares as shall be designated by such holder
hereof at the time of such surrender.
Section 3 Duration and Exercise of Warrants.
(a) Warrants shall be exercisable by the registered holder thereof on any
business day before 5:00 p.m., Eastern time, on or before the Expiration Date;
provided, however, that any such exercise shall be in respect of an aggregate of
at least 100 (one hundred) Warrants (or such lesser number of Warrants as shall
at the time be outstanding). At 5:00 p.m., Eastern time, on the Expiration
Date, each Warrant not exercised prior thereto shall be and become void and of
no value. The Warrants cannot be called or redeemed by the Company prior to the
Expiration Date.
(b) Subject to the provisions of this Warrant Certificate, including
adjustments to the number of Warrant Shares issuable on the exercise of each
Warrant and to the Exercise Price pursuant to Section 7 hereof, the holder of
each Warrant on or prior to the Expiration Date shall have the right to purchase
from the Company (and the Company shall be obligated to issue and sell to such
holder of a Warrant) at the Exercise Price one Warrant Share which, when issued,
shall be validly issued, fully paid and non-assessable.
(c) (i) Subject to Sections 4 and 9 hereof, upon surrender of this
Warrant Certificate, with the Form of Election to Purchase attached hereto duly
completed and signed, to the Company at its principal place of business at 7000
Boulevard East, Guttenberg, New Jersey 07093, Attention: President, or at such
other address as the Company may specify in writing to the then registered
holder of the Warrants, and upon payment of the Exercise Price multiplied by the
number of Warrant Shares then issuable upon exercise of the Warrants being
exercised, in lawful money of the United States of America, all as specified by
the holder of this Warrant Certificate in the Form of Election to Purchase, the
Company shall promptly, and in no event later than ten (10) days following the
Date of Exercise (as defined below), issue and cause to be delivered to or upon
the written order of the registered holder of such Warrants, and in such name or
names as such registered holder may designate, a certificate for the Warrant
Shares issued upon such exercise of such Warrants; provided that such exercise
is in compliance with the Securities Act and the rules and regulations
promulgated thereunder. Any person so designated to be named therein shall be
deemed to have become the holder of record of such Warrant Shares as of the Date
of Exercise of such Warrants.
(ii) The holder of this Warrant Certificate may pay the applicable
Exercise Price pursuant to this Section 3(c), at the option of such holder:
(A) by certified check made payable to the Company and issued by a bank
organized in the United States of America;
(B) by wire transfer of immediately available funds to the account
which shall be indicated in writing by the Company to the holder;
(C) by any combination of the methods described in (A) or (B) above.
(iii) The "Date of Exercise" of any Warrant means the date on which the
Company shall have received (i) this Warrant Certificate, with the Form of
Election to Purchase attached hereto duly completed and signed, and (ii)
payment of the Exercise Price for each such Warrant.
(d) In lieu of any holder of this Warrant Certificate exercising any or all
of the Warrants for cash, such holder may, in connection with such exercise,
elect to satisfy the Exercise Price with respect to the Warrants being exercised
by exchanging solely such Warrants being exercised for a number of Warrant
Shares equal to the product of (i) the number of Warrant Shares issuable upon
exercise of the portion of the Warrants being converted, multiplied by (ii) a
fraction, the numerator of which is the Market Price (as defined in Section
7(f)) per share of Common Stock at the time of such exercise minus the Exercise
Price per share of Common Stock at the time of such exercise, and the
denominator of which is the Market Price per share of Common Stock at the time
of such exercise.
(e) The Warrants evidenced by this Warrant Certificate shall be exercisable,
either as an entirety or, from time to time, only for part of the number of
Warrants evidenced by this Warrant Certificate. If fewer than all of the
Warrants evidenced by this Warrant Certificate are exercised at any time, the
Company shall issue, at its expense, a new Warrant Certificate, in substantially
the form of this Warrant Certificate, for the remaining number of Warrants
evidenced by this Warrant Certificate.
Section 4 Payment of Taxes and Expenses. The Company shall pay all expenses
and taxes and other governmental charges attributable to the preparation,
execution, issuance and delivery of any new Warrant Certificate and the Warrant
Shares; provided, however, that the Company shall not be required to pay any tax
in respect of the transfer of the Warrants, or the issuance or delivery of
certificates for the Warrant Shares or other securities in respect of the
Warrant Shares upon the exercise of the Warrants, to a person or entity other
than a then existing registered holder of the Warrants or an Affiliate of such
registered holder. An "Affiliate" of any person or entity means any other
person or entity directly or indirectly controlling, controlled by, or under
direct or indirect common control with such person or entity.
Section 5 Mutilated or Missing Warrant Certificate. If this Warrant
Certificate shall be mutilated, lost, stolen or destroyed, upon request by the
registered holder hereof, the Company shall, at its expense, issue, in exchange
for and upon cancellation of the mutilated Warrant Certificate, or in
substitution for the lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate, in substantially the form of this Warrant Certificate, of
like tenor and representing the equivalent number of Warrants, but, in the case
of loss, theft or destruction, only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of this Warrant
Certificate and, if requested by the Company, indemnity also reasonably
satisfactory to it.
Section 6 Reservation, Listing and Issuance of Warrant Shares.
(a) The Company shall at all times have authorized, and reserve and keep
available for the purpose of enabling it to satisfy any obligation to issue the
Warrant Shares upon the exercise of the Warrants, the number of Warrant Shares
deliverable upon exercise of the Warrants. After such Warrant Shares have been
issued upon exercise of the Warrants pursuant to the terms and conditions of
this Warrant Certificate and such Warrant Shares have been registered pursuant
to all applicable federal and state securities laws, the Company will, at its
expense, use its commercially reasonable efforts to cause such Warrant Shares to
be listed or quoted, as applicable, on any stock exchange or automated quotation
systems on which the Common Stock is so listed or quoted not later than the date
on which the Common Stock is first listed or quoted on any such exchange or
automated quotation system, as the case may be, and will thereafter maintain
such listing or quotation of all Warrant Shares from time to time issued upon
exercise of the Warrants.
(b) The Company covenants that all Warrant Shares, upon issuance in
accordance with the terms of this Warrant Certificate and assuming that the
Exercise Price for each Warrant has been paid, will be (i) duly authorized,
fully paid and non-assessable, and (ii) free from all taxes with respect to the
issuance thereof and from all liens, charges and security interests.
Section 7 Adjustments of Exercise Price and Number of Warrant Shares.
(a) The Exercise Price of each Warrant shall be subject to adjustment from
time to time as hereinafter provided. Upon each adjustment of such Exercise
Price pursuant to this Section 7, the holder of such Warrant shall thereafter
prior to the Expiration Date thereof be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of such Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(b) Adjustment of Exercise Price upon Issuance of Common Stock. If and
whenever after the date hereof, the Company shall issue or sell any shares of
Common Stock for a consideration per share less than the Market Price (as
defined below) at the time of such issue or sale, then forthwith upon such issue
or sale, the Exercise Price shall be reduced to the price (calculated to the
nearest full cent) equal to the Exercise Price in effect immediately prior to
the time of such issuance or sale multiplied by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance or sale multiplied by the Market Price
immediately prior to such issuance or sale, plus (B) the consideration received
by the Company upon such issuance or sale, and the denominator of which shall be
the product of (C) the total number of shares of Common Stock outstanding
immediately after such issuance or sale, multiplied by (D) the Market Price
immediately prior to such issuance or sale.
No adjustment of any Exercise Price, however, shall be made in an amount less
than one cent per share, but any such lesser adjustment shall be carried forward
and shall be taken into account in any subsequent adjustment.
(c) For the purposes of any computation to be made in accordance with Section
7(b), the following clauses shall also be applicable:
(i) Stock Dividends. In case the Company shall declare a dividend or make
any other distribution upon any stock of the Company payable in Common
Stock or Convertible Securities, any Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued immediately after the
opening of business on the day following the record date for the
determination of stockholders entitled to receive such dividends or other
distribution and shall have been deemed to have been issued without
consideration.
(ii) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights or options or warrants to purchase any
such Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of
Common Stock or Convertible Securities or any rights or options or warrants
to purchase any such Common Stock or Convertible Securities shall be 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 determined, in good faith and in
the exercise of reasonable business judgment, by the board of directors of
the Company (the "Board"), without deduction of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Company
in connection therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options or warrants to purchase such shares of
Common Stock or Convertible Securities shall be issued in connection with
any merger or consolidation in which the Company is the surviving
corporation (other than any consolidation or merger in which the previously
outstanding shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another corporation), the
amount of consideration therefor shall be deemed to be the fair value, as
determined, in good faith and in the exercise of reasonable business
judgment, by the Board, of such portion of the assets and business of the
non-surviving corporation as such Board may determine to be attributable to
such shares of Common Stock, Convertible Securities, rights or options or
warrants, as the case may be.
(iii) Record Date. In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock or in Convertible
Securities, or (B) 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 of subscription or
purchase, as the case may be.
(d) Issuance of Rights, Options or Warrants and Convertible Securities. (A)
In case at any time after the date hereof the Company shall (A) grant (whether
directly or by assumption in a merger or otherwise) any rights to subscribe for
or to purchase, or any options or warrants for the purchase of, Common Stock or
any stock or securities convertible into or exchangeable for Common Stock (such
convertible or exchangeable stock or securities being herein called "Convertible
Securities") or (B) issue or sell (whether directly or by assumption in a merger
or otherwise) any Convertible Securities (other than Convertible Securities
issuable upon exercises of options or warrants referred to above to purchase
Convertible Securities), whether or not such rights or options or warrants 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 right or options or warrants or upon conversion or exchange of
such Convertible Securities (determined as provided below) shall be less than
the Market Price determined as of the date of granting such rights or options or
warrants or the issue or sale of such Convertible Securities, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or warrants or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon the exercise of such
rights or options or warrants (as of the date of granting of such rights or
options or warrants or the issue or sale of such Convertible Securities) shall
be deemed to be outstanding and to have been issued, (X) in the case of any such
rights, options or warrants, for a consideration equal to the minimum purchase
price per share provided for in such rights, options or warrants (to the extent
that such minimum purchase price can be reasonably determined at the time of
such grant), plus the consideration (determined in the same manner as
consideration received upon the issue or sale of shares of Common Stock in
accordance with the terms of this Warrant Certificate), if any, received by the
Company for the granting of such rights, options or warrants, and, (Y) in the
case of Convertible Securities, for a consideration equal to the consideration
(determined in the same manner as consideration received upon the issue or sale
of shares of Common Stock in accordance with the terms of this Warrant
Certificate) received by the Company for such Convertible Securities, plus the
minimum consideration, if any, receivable by the Company upon the conversion or
exchange thereof (to the extent that any such minimum purchase price can
reasonably be determined at the time of issuance). Except as provided in
Section 7(d)(ii), no further adjustments of any Exercise Price shall be made
upon the actual issue of such Common Stock or of such Convertible Securities
upon the exercise of such rights or options or warrants or upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) Change in Option Price or Conversion Rate. If the purchase price
provided for in any rights or options or warrants referred to in Section
7(d)(i), or the additional consideration, if any, payable upon the
conversion or exchange of Convertible Securities referred to in Section
7(d)(i), or the rate at which any Convertible Securities referred to in
Section 7(d)(i) are convertible into or exchangeable for Common Stock,
shall change (other than under or by reason of provisions designed to
protect against dilution), then the Exercise Price in effect at the time of
such change shall forthwith be readjusted to the Exercise Price which would
have been in effect at such time had such rights or options or warrants or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold; and on the expiration of any
such right or option or warrant or the termination of any such right to
convert or exchange such Convertible Securities, the Exercise Price then in
effect hereunder shall forthwith be readjusted to the Exercise Price which
would have been in effect at the time of such expiration or termination had
such right, option, warrant or Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never been
issued, and the Common Stock issuable thereunder shall no longer be deemed
to be outstanding.
(e) Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an issue or
sale of Common Stock for the purposes of Sections 7(b) and (d).
(f) Definition of Market Price. (B) As used in this Warrant Certificate,
the term "Market Price" shall mean the average of the daily closing prices per
share of the Common Stock for the ten consecutive trading days on which the
Common Stock was traded immediately preceding the day as of which Market Price
is being determined. If shares of the Common Stock are not quoted through
Nasdaq or any similar organization, or listed or admitted for trading on any
national securities exchange (in which case the Market Price shall be the last
reported sales price on such exchange) the Market Price shall be deemed to be
the fair value of a share of Common Stock as determined, in good faith and in
the exercise of reasonable business judgment, by the Board.
(ii) Determination of Market Price under Certain Circumstances. Anything
herein to the contrary notwithstanding, in case the Company shall issue any
shares of Common Stock or Convertible Securities in connection with the
acquisition by the Company of the stock or assets of any other corporation
or the merger of any other corporation into the Company, the Market Price
shall be determined as of the date the number of shares of Common Stock or
Convertible Securities to be issued (or in the case of Convertible
Securities other than stock, the aggregate principal amount of Convertible
Securities) was determined (as set forth in a written agreement between the
Company and the other party to the transaction) rather than on the date of
issuance of such shares of Common Stock or Convertible Securities.
(g) Adjustment for Certain Special Dividends. In case the Company shall
declare a dividend upon the Common Stock payable otherwise than out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles, and otherwise than in Common Stock or Convertible Securities, the
Exercise Price in effect immediately prior to the declaration of such dividend
shall be reduced by an amount equal, in the case of a dividend in cash, to the
amount per share of the Common Stock so declared as payable otherwise than out
of earnings or earned surplus or, in the case of any other dividend, to the fair
value per share of the Common Stock of the property so declared as payable
otherwise than out of earnings or earned surplus, as determined, in good faith
and in the exercise of reasonable business judgment, by the Board. For the
purposes of the foregoing, a dividend other than in cash shall be considered
payable out of earnings or earned surplus only to the extent that such earnings
or earned surplus are charged an amount equal to the fair value of such dividend
as determined, reasonably and in good faith, by the Board. Such reductions
shall take effect as of the date on which a record is taken for the purpose of
such dividend, or, if a record is not taken, the date as of which the holders of
Common Stock of record entitled to such dividend are determined.
(h) Subdivisions or Combinations of Stock. In case the Company shall at any
time subdivide the 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 conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.
(i) Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
etc. In case the Company (i) consolidates with or merges into any other
corporation and is not the continuing or surviving corporation of such
consolidation or merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock is changed into or exchanged for stock or other securities of any other
corporation or cash or any other assets, or (iii) transfers all or substantially
all of its properties and assets to any other corporation, or (iv) effects a
capital reorganization or reclassification of the capital stock of the Company
in such a way that holders of the Common Stock shall be entitled to receive
stock, securities, cash and/or assets with respect to or in exchange for the
Common Stock, then, and in each such case, proper provision shall be made so
that, upon the basis and upon the terms and in the manner provided in this
subsection (i), the holder of this Warrant Certificate, upon the exercise of
each Warrant at any time after the consummation of such consolidation, merger,
transfer, reorganization or reclassification, shall be entitled to receive (at
the aggregate Exercise Price in effect for all shares of Common Stock issuable
upon such exercise immediately prior to such consummation as adjusted to the
time of such transaction), in lieu of shares of Common Stock issuable upon such
exercise prior to such consummation, the stock and other securities, cash and/or
assets to which such holder would have been entitled upon such consummation if
such holder had so exercised such Warrant immediately prior thereto (subject to
adjustments subsequent to such corporate action as nearly equivalent as possible
to the adjustments provided for in this Section 7).
(j) Notice of Adjustment. The Company shall deliver on or before each
January 15 prior to the Expiration Date to the registered holder of the Warrants
written notice of any adjustments of any Exercise Price during the previous
calendar year. Such notice shall consist of a certificate of a duly authorized
officer of the Company, and shall state the Exercise Price resulting from such
adjustment, and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of each Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(k) Other Notices. In case at any time:
(i) the Company shall declare any cash dividend on its Common Stock;
(ii) the Company shall pay any dividend payable in stock upon its Common
Stock or make any distribution (other than regular cash dividends) to the
holders of its Common Stock;
(iii) the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other rights;
(iv) the Company shall authorize the distribution to all holders of its
Common Stock of evidences of its indebtedness or assets (other than cash
dividends or cash distributions payable out of earnings or earned surplus or
dividends payable in Common Stock);
(v) there shall be any capital reorganization, or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation (other than a subsidiary of the Company in which the
Company is the surviving or continuing corporation and no change occurs in the
Company's Common Stock), or sale of all or substantially all of its assets to
another corporation;
(vi) there shall be a voluntary or involuntary dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, or winding up of the
Company; or
(vii) the Company proposes to take any other action or an event occurs
which would require an adjustment of the Exercise Price pursuant to subsection
(i) of this Section 7;
then, the Company shall give written notice (except in the case of a proposed
action referred to in subclause (vii) hereof if the giving of such notice would
violate federal or state securities law), addressed to the registered holder of
this Warrant Certificate at the address of such holder as shown on the books of
the Company, with respect to any event specified in clauses (i) through (iv), at
least fifteen (15) days prior to the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, subscription rights
or distribution, or entitled to vote on such proposed reorganization,
reclassification, consolidation or merger, and with respect to any event
specified in clauses (v) through (vii), as soon as commercially reasonable after
the occurrence of such event. Such notice, with respect to any event specified
in clauses (i) through (iv), shall specify such record date or the date of
closing the transfer books, as the case may be, and with respect to any event
specified in clauses (v) through (vii), shall specify the nature of the event
and on which date such event occurred. Failure to give the notice specified in
this Section 7(k) or any defect therein shall not affect the validity of any
action taken in connection with the declaration or payment of any such dividend,
or the issuance of any such subscription rights, or any proposed reorganization,
reclassification, consolidation or merger.
(l) Certain Events. If any event occurs as to which in the reasonable
opinion of the holder hereof, in good faith, the other provisions of this
Section 7 are not strictly applicable but the lack of any adjustment would not
in the opinion of the holder hereof fairly protect the purchase rights of the
holder of this Warrant Certificate in accordance with the basic intent and
principles of such provisions, or if strictly applicable would not fairly
protect the purchase rights of the holder of this Warrant Certificate in
accordance with the basic intent and principles of such provisions, then the
holder hereof shall give written notice thereof to the Company. If the Company
and the holder hereof cannot agree with respect to an adjustment to the Exercise
Price hereof within fifteen (15) days of the delivery of such notice by the
holder hereof to the Company, then the Company shall appoint a firm of
independent certified public accountants (which may be the regular auditors of
the Company) of recognized national standing, which shall give their opinion
upon the adjustment, if any, on a basis consistent with the basic intent and
principles established in the other provisions of this Section 7, necessary to
preserve, without dilution, the exercise rights of the registered holder of this
Warrant Certificate. Upon receipt of such opinion, the Company shall forthwith
make the adjustments described therein. The costs of obtaining such opinion
shall be shared equally between the Company and the holder seeking the
adjustment.
(m) Excluded Securities. Notwithstanding anything herein to the contrary,
the Exercise Price shall not be adjusted pursuant to this Section 7 by virtue of
the issuance and/or sale of "Excluded Securities", which means the following:
(a) shares of Common Stock issuable upon the exercise of the Warrants; (b)
shares of Common Stock, options, warrants, rights or Convertible Securities to
be issued and/or sold to employees, advisors (including, without limitation,
financial, technical and legal advisers), directors, or officers of, or
consultants to, the Company or any of its subsidiaries pursuant to a share
grant, share option plan, share purchase plan, pension or profit sharing plan or
other share agreement or arrangement existing as of the date hereof and which
has been approved by the Board of Directors of the Company; (c) the reissuance
of any expired and unexercised, canceled or forfeited options, warrants, rights
or convertible securities under any plan referred to in the preceding clause;
(d) the issuance of shares of Common Stock, options, warrants, rights and/or
Convertible Securities pursuant to options, warrants, rights and Convertible
Securities outstanding as of the date of this Agreement; or (e) the issuance of
shares of Common Stock issuable upon conversion of the Company's Series B
Convertible Exchangeable Preferred Stock. For all purposes of this Section 7,
all shares of Common Stock which are Excluded Shares shall be deemed to have
been issued for an amount of consideration per share equal to the Market Price
in effect at the time of such issuance.
Section 8 No Rights or Liabilities as a Stockholder. No holder of this
Warrant Certificate, as such, shall be entitled to vote 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, nor shall anything contained herein be
construed to confer upon the holder of this Warrant Certificate, as such, the
rights of a stockholder of the Company or the right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or give or withhold consent to any corporate action or to receive notice of
meetings or other actions affecting stockholders (except as provided herein), or
to receive dividends or subscription rights or otherwise, until the Date of
Exercise of the Warrants shall have occurred. No provision of this Warrant
Certificate, in the absence of affirmative action by the registered holder
hereof to purchase shares of Common Stock, and no mere enumeration herein of the
rights and privileges of the holder hereof, shall give rise to any liability of
such holder for the Exercise Price or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
Section 9 Fractional Warrants and Fractional Warrant Shares.
(a) The Company shall not be required to issue fractions of Warrants or to
distribute Warrant Certificates which evidence fractional Warrants. If any
fraction of a Warrant would, except for the provisions of this Section 9(a), be
issuable, the Company shall pay to the holder an amount in cash equal to (i) the
current Market Price for one share of Common Stock, as defined in Section 7(f),
on the trading day immediately preceding the date the fractional Warrant would
have been issued less the Exercise Price multiplied by (ii) the amount of the
fractional share.
(b) The Company shall not be required to issue fractions of Warrant Shares
upon exercise of the Warrants or to distribute certificates which evidence
fractional Warrant Shares. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 9(b), be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall pay to the holder an amount in
cash equal to the current Market Price for one share of Common Stock, as defined
in Section 7(f), on the trading day immediately preceding the date the Warrant
is presented for exercise, multiplied by the amount of the fractional share.
Section 10 Registration of Warrants and Warrant Shares.
(c) No Registration under Securities Act. Neither the Warrants nor the
Warrant Shares have been registered under the Securities Act.
The holder of this Warrant Certificate by acceptance hereof, represents
that it is acquiring the Warrants to be issued to it for its own account and not
with a view to the distribution thereof, and agrees not to sell, transfer,
pledge or hypothecate any Warrants or any Warrant Shares unless a registration
statement is effective for such Warrants or Warrant Shares under the Securities
Act or in the opinion of such holder's counsel (which counsel shall be
reasonably acceptable to the Company), a copy of which opinion shall be
delivered to the Company, such transaction is exempt from the registration
requirements of the Securities Act; provided that Warrants and Warrant Shares
issued to such holder may be transferred to any Affiliate of such holder,
without any such registration or opinion, subject to the foregoing restriction
on any further sale, transfer, pledge or hypothecation by such Affiliate.
Subject to the provisions of the following paragraph of this Section 10(a),
each Certificate for Warrant Shares shall be stamped or otherwise imprinted with
a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE OFFERED OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. SUCH SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
CONDITIONS SPECIFIED IN THE WARRANT CERTIFICATE, DATED AUGUST 15, 1997
BETWEEN THE COMPANY AND THE INITIAL HOLDER OF THE WARRANTS NAMED THEREIN, A
COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER OF THIS
SHARE WITHOUT CHARGE UPON WRITTEN REQUEST.
The restrictions and requirements set forth in the foregoing paragraph
shall apply only with respect to any Warrant Shares unless and until such
Warrant Shares are sold or otherwise transferred pursuant to an effective
registration statement under the Securities Act or are otherwise no longer
subject to the restrictions of the Securities Act, at which time the Company
agrees to promptly cause such restrictive legends to be removed and such stop
transfer restrictions to be rescinded.
The Company will use its commercially reasonable efforts to comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act (whether or
not it shall be required to do so pursuant to such sections) and will use its
best efforts to comply with all other public information reporting requirements
of the Securities and Exchange Commission (such Commission or any successor to
any or all of its functions being hereinafter referred to as the "Commission")
(including, without limitation, Rule 144 promulgated by the Commission under the
Securities Act) from time to time in effect and relating to the availability of
an exemption from the Securities Act for sale of restricted securities. The
Company also will cooperate with the holder of this Warrant Certificate and with
each holder of any Warrant Shares in supplying such information as may be
necessary for any such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of restricted
securities.
(b) "Piggyback" Registration. Whenever the Company proposes to file under
the Securities Act a registration statement relating to the sale of any of its
Common Stock for cash (other than a registration statement required to be filed
in respect of employee benefit plans of the Company on Form S-8 or any similar
form from time to time in effect) the Company shall at least fifteen days prior
to such filing give effective written notice of such proposed filing to the
registered holder of each Warrant or Warrant Share. Upon receipt by the Company
not more than fifteen days after such effective notice of a written request or
written requests from one or more of such holders for registration of Warrant
Shares under such registration statement, the Company shall (A) include in such
registration statement or, at the option of the Company, in a separate
registration statement concurrently filed, and shall use its commercially
reasonable efforts to cause such registration statement to become effective with
respect to, the Warrant Shares as to which such holder or holders request
registration and (B) if such proposed registration is in connection with an
underwritten offering of Common Stock, upon request of such holder or holders
use its commercially reasonable efforts to cause the managing underwriter
therefor to include in such offering the Warrant Shares as to which such holder
or holders request such inclusion, on terms and conditions comparable to those
of the securities offered on behalf of the Company, provided that, in the case
of an underwritten public offering, the representative of the underwriters
participating in the sale and distribution of the Company's securities covered
by such registration statement agrees that a number of Warrant Shares may be
included in the registration statement without materially adversely affecting
the distribution of securities being registered solely for the account of the
Company. Notwithstanding anything to the contrary contained herein, if the
Company, whether before or after the holder of Warrant Shares has made a written
request for registration of such Warrant Share, reasonably determines that the
participation of such holder in such registration would adversely affect the
distribution of the securities to be registered, the Company may decline to
include such securities in any registration statement.
In the event that (i) the representative of the participating underwriters
determines that, taken together with the Warrant Shares sought to be registered
in such registration, the inclusion of the shares of Common Stock of selling
stockholders requesting inclusion in the registration statement would materially
adversely affect the distribution of the securities being registered for the
account of the Company or (ii) the Company determines that the participation of
such Warrant Shares in such registration would adversely affect the distribution
of the securities to be registered (each a "Cut-Back Notice"), the holders of
the Warrant, with respect to the first such registration as to which a Cut-Back
Notice has been given, shall be included in such registration to the extent
practicable. If as a result of a Cut-Back Notice the holders of the Warrants
shall not be able to include all of their Warrant Shares sought by them to be
registered in such registration (such Warrant Shares not included being called
the "Excluded Warrant Shares"), then as to each subsequent registration the
holders of the Warrants shall, subject to any Cut-Back Notice in any such
subsequent registration statement, have priority for inclusion in such
registration such Excluded Warrant Shares until such time as all of their
Warrant Shares as to which a Cut-Back Notice has been given have been included
in a registration. Notwithstanding the foregoing, if a holder of the Warrants
shall decline to include all or any portion of its Warrant Shares in a
registration as to which effective notice of filing has been given then as to
any subsequent registration such holder shall no longer be entitled to priority
of inclusion in the registration for its Warrant Shares.
If at 5:00 p.m., Eastern time, on the Expiration Date, any or all of the
Warrants have not been exercised and, during the preceding five years, the
holders of the Warrants have not had an opportunity to sell all of their Warrant
Shares in a registration statement (including as a result of a Cut-Back Notice),
the Expiration Date of the Warrants represented by this Certificate shall
automatically and successively be extended for each Warrant as to which such
opportunity has not been granted until the date on which the holders of the
Warrants shall decline to include their Warrant Shares in a registration.
All fees, disbursements and expenses incurred by the Company in connection
with the registration (except for underwriting discounts and commissions
attributable to the Warrants and Warrants Shares, which shall be borne by the
holders thereof), and all reasonable fees and disbursements of one counsel for
the holders of Warrants or Warrant Shares, shall, except to the extent
prohibited by applicable law, be borne by the Company, including, without
limitation, all registration and filing fees, all costs of preparation and
printing (in such quantities as the holders of Warrants or Warrant Shares may
reasonably request) of any registration statement and related prospectus and any
amendments or supplements thereto, all fees and disbursements of counsel for the
Company, the expenses of complying with applicable securities or blue sky laws,
and all costs in connection with the preparation and delivery of such legal
opinions, auditors' comfort letters or other closing documents as the holders of
Warrants or Warrant Shares shall reasonably request.
The Company will indemnify and hold harmless each holder of Warrants or
Warrant Shares and each person or entity, if any, who controls such holder
within the meaning of the Securities Act, against any losses, claims, damages,
liabilities, costs or expenses, joint or several, or actions in respect thereof
to which such holder or controlling person or entity may become subject under
the Securities Act, or otherwise, insofar as such losses, claims, damages,
liabilities, costs, expenses or actions in respect thereof arise out of, or are
based upon, or are related to, any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which Warrant
Shares of or pertaining to such holder were registered under the Securities Act,
any preliminary prospectus, amended preliminary prospectus, or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of, or
are based upon, or are related to, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder or controlling
person or entity for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided that to the extent that any such loss, claim,
damage or liability arises out of, or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, preliminary prospectus, amended preliminary prospectus
or final prospectus or any amendment or supplement in reliance upon, and in
conformity with, written information furnished to the Company in an instrument
duly executed by any authorized representative of such holder, specifically for
use therein, the Company will not be so liable to such holder.
Section 11 Notices. All notices, requests, demands and other communications
relating to this Warrant Certificate shall (a) be in writing (which shall
include communications by telecopy); (b) be (i) sent by registered or certified
mail, postage prepaid, return receipt requested, by telecopier or by a
nationally recognized overnight courier service, or (ii) delivered by hand; (c)
be given at the following respective addresses and telecopier numbers and to the
attention of the following persons:
(i) if to the registered holder hereof, to it at the address or telecopier
number furnished by such registered holder to the Company.
(ii) if to the Company, to it at:
KTI, Inc.
7000 Boulevard East
Guttenberg, New Jersey 07093
Telecopier No.:
Telephone No.:
Attention:
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify in a
notice to the other party specifically captioned "Notice of Change of Address";
and (d) be effective or deemed delivered or furnished (i) if given by mail, on
the third business day after such communication is deposited in the mail,
addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 11 and the appropriate confirmation is received or
receipt is otherwise acknowledged, (iii) if given by overnight courier, on the
day after deposit with such overnight courier, and (iv) if given by hand
delivery, when left at the address of the addressee addressed as above provided.
Section 12 Reports. The Company shall furnish to the registered holder of
this Warrant Certificate and the holders of Warrant Shares issued upon exercise
of the Warrants the financial and operating performance data as is provided to
the holders of the Company's Common Stock.
Section 13 Binding Effect. This Warrant Certificate shall be binding upon
and inure to the sole and exclusive benefit of the Company, its successors and
assigns, and the registered holder or holders from time to time of the Warrants
and the Warrant Shares.
Section 14 Survival of Rights and Duties. This Warrant Certificate shall
terminate and be of no further force and effect on the earlier of 5:00 p.m.,
Eastern time, on the Expiration Date (as it may be extended hereunder) or on the
date on which all of the Warrants have been exercised, except that the
provisions of Section 10(a) hereof shall continue in full force and effect after
such termination date.
SECTION 15 GOVERNING LAW. THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
Section 16 Section Headings. The Section headings in this Warrant
Certificate are for purposes of convenience only and shall not constitute a part
hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed under its corporate seal by its officers thereunto duly authorized
as of the date hereof.
KTI, INC.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President
ATTEST:
Name:
Title:
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if the holder desires to exercise
Warrants evidenced by the foregoing Warrant Certificate)
To: [ ]
The undersigned hereby irrevocably elects to exercise _________ Warrants
evidenced by the foregoing Warrant Certificate for, and to purchase thereunder,
_________ full shares of Common Stock issuable upon satisfaction by the
undersigned of both (a) either (i) the exercise of such Warrants and the
delivery of $__________ pursuant to Subsection 3(c)(ii) of the Warrant
Certificate or (ii) the exercise of such Warrants and the exchange therefor of
_______________ Warrants pursuant to Section 3(d) of the Warrant Certificate,
and (b) the delivery of any applicable taxes payable by the undersigned pursuant
to such Warrant Certificate.
The undersigned requests that certificates for such shares be issued in the
name of:
TAX IDENTIFICATION NUMBER
If such number of Warrants shall not be all the Warrants evidenced by the
foregoing Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so exercised be issued in the name of
and delivered to:
(Please print name and address)
Dated:
By ________________________
Name:
Title:
FORM OF ASSIGNMENT
FOR VALUE RECEIVED,
hereby sells, assigns and transfers to each assignee set forth below all of the
rights of the undersigned in and to the number of Warrants (as defined in and
evidenced by the foregoing Warrant Certificate) set opposite the name of such
assignee below and in and to the foregoing Warrant Certificate with respect to
such Warrants and the shares of Common Stock issuable upon exercise of such
Warrants:
Number of
Name of Assignee Address Warrants
If the total of such Warrants shall not be all the Warrants evidenced by the
foregoing Warrant Certificate, the undersigned requests that a new Warrant
Certificate evidencing the Warrants not so assigned be issued in the name of and
delivered to the undersigned.
Name of Holder (print)
Dated: By:
Title:
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of August 7, 1997, between KTI, INC., a New Jersey corporation (the
"Company") and CREDIT RESEARCH & TRADING LLC (the "Placement Agent").
This Agreement is made pursuant to the Placement Agreement dated August 7,
1997, between the Company and the Placement Agent (the "Placement Agreement"),
which provides for (i) the Company to issue and sell in a non-public offering
and sale, pursuant to the exemption provided by Regulation D promulgated under
the 1933 Act (as defined below), up to 800,000 shares of the Company's Series B
Convertible Exchangeable Preferred Stock, no par value, which will be
mandatorily redeemable on the seventh anniversary of the issue date (the
"Shares"), as set forth in the Restated Certificate of Incorporation of the
Company, as amended, relating to the Shares (the "Certificate of
Incorporation"), and will be convertible, at the option of the holder, in whole
or in part, at any time, into shares of the Company's common stock, no par value
(the "Common Stock"), and (ii) the Placement Agent, as the Company's exclusive
agent, to offer and sell the Shares on its behalf, on a "best efforts" basis,
until the Shares have been sold or the termination of the Placement Agreement
and to provide advisory services with respect to the offering and sale of the
Shares. In order to induce the Placement Agent to enter into the Placement
Agreement, the Company has agreed to provide to the purchasers of the Shares
(the "Purchasers") and their direct and indirect transferees the registration
rights with respect to the Registrable Shares (as defined below) set forth in
this Agreement. The execution of this Agreement is a condition to the closing
under the Placement Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time to
time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Certificate of Incorporation" shall have the meaning set forth in the
preamble.
"Closing Date" shall mean the Closing Date as defined in the Placement
Agreement.
"Common Stock" shall have the meaning set forth in the preamble.
"Company" shall have the meaning set forth in the preamble and shall also
include the Company's successors.
"Holder" shall mean a holder of Registrable Shares.
"Interested Persons" shall mean Placement Agent and the Holders of Registrable
Shares included within the coverage of the Shelf Registration.
"Majority Holders" shall mean the Holders of a majority of the aggregate
liquidation preference of outstanding Registrable Shares; provided that whenever
the consent or approval of Holders of a specified percentage of Registrable
Shares is required hereunder, Registrable Shares held by the Company or any
Associated Entity (as defined in the Placement Agreement) shall not be counted
in determining whether such consent or approval was given by the Holders of such
required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Placement Agent" shall have the meaning set forth in the preamble.
"Placement Agreement" shall have the meaning set forth in the preamble.
"Prospectus" shall mean the prospectus included in a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement, including a prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Shares covered by a Shelf Registration Statement, and by all other amendments
and supplements to such prospectus, and in each case including all material
incorporated by reference therein.
"Registrable Shares" shall mean the Shares and the underlying Common Stock;
provided, however, that the Shares and the underlying Common Stock shall cease
to be Registrable Shares (i) when a Shelf Registration Statement with respect to
such Shares and the underlying Common Stock shall have been declared effective
under the 1933 Act and such Shares and the underlying Common Stock shall have
been disposed of pursuant to such Shelf Registration Statement, (ii) when such
Shares and such Common Stock have been sold to the public pursuant to Rule
144(k) (or any similar provision then in force, but not Rule 144A) under the
1933 Act or (iii) when such Shares and such underlying Common Stock shall have
ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel for any
Underwriters or Holders in connection with blue sky qualification of any of the
Registrable Shares), (iii) all expenses of any Persons retained by the Company
in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus, any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
and other documents relating to the performance of and compliance with this
Agreement, (iv) the fees and disbursements of counsel for the Company and, in
the case of a Shelf Registration Statement, the fees and disbursements of one
counsel for the Holders (which counsel shall be selected by the Majority Holders
and which counsel may also be counsel for the Placement Agent) and (v) the fees
and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, but excluding fees and
expenses of counsel to the Underwriters (other than fees and expenses set forth
in clause (ii) above) or the Holders and underwriting discounts and commissions
and transfer taxes, if any, relating to the sale or disposition of Registrable
Shares by a Holder.
"Registration Statement" shall mean any registration statement of the Company
that covers any of the Registrable Shares pursuant to the provisions of this
Agreement and all amendments and supplements to any such Registration Statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shares" shall have the meaning set forth in the preamble.
"Shelf Registration" shall mean a registration effected pursuant to Section
2(a) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration statement of
the Company pursuant to the provisions of Section 2(a) of this Agreement which
covers all of the Registrable Shares on an appropriate form under Rule 415 under
the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"Transfer Agents" shall mean American Stock Transfer Company, 40 Wall Street,
New York, New York 10005.
"Underwriters" shall have the meaning set forth in Section 3 hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean a registered
offering in which Registrable Shares are sold to an Underwriter for reoffering
to the public.
2. Registration Under the 1933 Act.
(a) As promptly as possible, but in no event later than 180 days after the
Closing Date, the Company shall prepare and file with the SEC the Shelf
Registration Statement. The Company shall use its commercially reasonable
efforts to (i) cause such Shelf Registration Statement to be declared effective
by the SEC on or prior to the 90th day following such filing and (ii) keep such
Shelf Registration Statement effective until the earlier of (A) the sale by the
Holders of all the Registrable Shares relating to such Shelf Registration
Statement or (B) two years after the Closing Date; provided, however, that no
Holders shall be entitled to have Registrable Shares held by such Holder covered
by such Shelf Registration Statement unless the Holder agrees to be bound by all
of the provisions of this Agreement applicable to such Holder.
The Company further agrees to supplement or amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement
or by the 1933 Act or by any other rules and regulations thereunder for shelf
registration or if reasonably requested by a Holder with respect to information
relating to such Holder, and to use its commercially reasonable efforts to cause
any such amendment to become effective and such Shelf Registration Statement to
become usable as soon as practicable thereafter. The Company agrees to furnish
to the Holders of Registrable Shares copies of any such supplement or amendment
promptly after its being used or filed with the SEC.
(b) The Company shall pay all
Registration Expenses in connection with the registration pursuant to Section
2(a). Each Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Shares pursuant to the Shelf Registration Statement.
(c) A Shelf Registration Statement
pursuant to Section 2(a) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Shares
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference until the offering of
Registrable Shares pursuant to such Registration Statement may legally resume.
If the Shelf Registration Statement is not filed on or prior to 180 days
following the Closing Date or declared effective on or prior to 90 days
following such filing the dividend rate on the Shares will increase 0.5% per
annum for each period during which such registration statement is not so filed
or declared effective.
(d) Without limiting the remedies
available to the Interested Persons, the Company acknowledges that any failure
by the Company to comply with its obligations under Section 2(a) hereof may
result in material irreparable injury to the Interested Persons for which there
is no adequate remedy at law, that it will not be possible to measure damages
for such injuries precisely and that, in the event of any such failure, the
Interested Persons may obtain such relief as may be required to specifically
enforce the Company's obligations under Section 2(a).
3. Registration Procedures.
In connection with the obligations of the Company with respect to the Shelf
Registration Statement pursuant to Section 2(a) hereof, the Company shall as
expeditiously as possible:
(a) prepare and file with the SEC a Shelf Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall be available for the sale of the Registrable Shares by the
selling Holders thereof; and which Shelf Registration Statement shall comply as
to form in all material respects with the requirements of the applicable form
and include all financial statements required by the SEC to be filed therewith,
and the Company shall use commercially reasonable efforts to cause such Shelf
Registration Statement to become effective and remain effective in accordance
with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Shelf Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act and to keep
each Prospectus current during the period described under Section 4(3) and Rule
174 under the 1933 Act that is applicable to transactions by brokers or dealers
with respect to the Registrable Shares;
(c) furnish to the Interested Persons and their counsel, and to each
Underwriter of an Underwritten Offering of Registrable Shares, if any, without
charge, as many copies of each Prospectus, including each preliminary
Prospectus, and any amendment or supplement thereto and such other documents as
such Interested Persons or Underwriter may reasonably request, in order to
facilitate the public sale or other disposition of the Registrable Shares; and
the Company consents to the use of such Prospectus and any amendment or
supplement thereto in accordance with applicable law by each of the Interested
Persons and any such Underwriters in connection with the offering and sale of
the Registrable Shares covered by and in the manner described in such Prospectus
or any amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify, by the time the Shelf
Registration Statement is declared effective by the SEC, the Registrable Shares
under all applicable state securities or "blue sky" laws of such jurisdictions
as any Holder of Registrable Shares covered by the Shelf Registration Statement
shall reasonably request in writing, to cooperate with such Holder in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Shares owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (ii) file
any general consent to service of process or (iii) subject itself to taxation in
any such jurisdiction if it is not otherwise so subject;
(e) notify the Interested Persons and their counsel promptly and, if
requested by any of the Interested Persons or their counsel, confirm such advice
in writing (i) when a Shelf Registration Statement has become effective and when
any post-effective amendment thereto has been filed and becomes effective, (ii)
of any request by the SEC or any state securities authority for amendments and
supplements to the Shelf Registration Statement and Prospectus or for additional
information after the Shelf Registration Statement has become effective, (iii)
of the issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the effective
date of the Shelf Registration Statement and the closing of any sale of
Registrable Shares covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales agreement or
other similar agreement, if any, relating to the offering cease to be true and
correct in all material respects or if the Company receives any notification
with respect to the suspension of the qualification of the Registrable Shares
for sale in any jurisdiction or the initiation of any proceeding for such
purpose, (v) of the happening of any event during the period the Shelf
Registration Statement is effective which makes any statement made in such Shelf
Registration Statement or the related Prospectus untrue in any material respect
or which requires the making of any changes in such Shelf Registration Statement
or Prospectus in order to make the statements therein not misleading and (vi) of
any determination by the Company that a post-effective amendment to the Shelf
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement at the earliest
possible moment and provide immediate notice to the Interested Persons of the
withdrawal of any such order;
(g) furnish to the Interested Persons, without charge, at least one
conformed copy of the Shelf Registration Statement and any post-effective
amendment thereto (without documents incorporated therein by reference or
exhibits thereto, unless requested);
(h) cooperate with the Interested Persons to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to be
sold and not bearing any restrictive legends and enable such Registrable Shares
to be in such denominations (consistent with the provisions of the Certificate
of Incorporation) and registered in such names as the Holders may reasonably
request at least two business days prior to the closing of any sale of
Registrable Shares;
(i) upon the occurrence of any event contemplated by Section 3(e)(v) hereof,
use its best efforts to prepare a supplement or post-effective amendment to the
Shelf Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable Shares, such
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company agrees to
notify the Interested Persons to suspend use of the Prospectus as promptly as
practicable after the occurrence of such an event, and the Holders hereby agree
to suspend use of the Prospectus until the Company has amended or supplemented
the Prospectus to correct such misstatement or omission;
(j) within a reasonable time prior to the filing of the Shelf Registration
Statement, any Prospectus, any amendment to the Shelf Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into the Shelf Registration Statement (except the
Company's filings under the 1934 Act) or a Prospectus after initial filing of
the Shelf Registration Statement, provide copies of such document to the
Interested Persons and their counsel and make such representatives of the
Company as shall be reasonably requested by the Interested Persons and their
counsel available for discussion of such document, and shall not at any time
file or make any amendment to the Shelf Registration Statement, any Prospectus
or any amendment of or supplement to the Shelf Registration Statement or a
Prospectus or any document which is to be incorporated by reference into the
Shelf Registration Statement or a Prospectus, of which the Interested Persons
and their counsel, shall not have previously been advised and furnished a copy
or to which the Interested Persons and their counsel, shall reasonably object,
except for any amendment or supplement or document (a copy of which has been
previously furnished to the Interested Persons and their counsel) which counsel
to the Company shall advise the Company, in the form of a written legal opinion,
is required in order to comply with applicable law. The Interested Persons
agree that, if they receive timely notice and drafts under this clause (j), they
will not take actions or make objections pursuant to this clause (j) such that
the Company is unable to comply with its obligations under Section 2(a);
(k) obtain a CUSIP number and, if applicable, a CINS number, for all
Registrable Shares, not later than the first effective date of the Shelf
Registration Statement;
(l) make available for inspection by a representative of the Interested
Persons, any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and attorneys and accountants designated by the
Interested Persons, at reasonable times and in a reasonable manner, all
financial and other records, pertinent documents and properties of the Company
(collectively, "Records"), as shall be reasonably necessary to enable them to
exercise any applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company to supply all information reasonably
requested by any such representative, Underwriter, attorney or accountant in
connection with a Shelf Registration Statement. Records which the Company
determines, in good faith, to be confidential and any Records which it notifies
any representative of the Holders or any Underwriter are confidential shall not
be disclosed by such persons, unless (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such Shelf
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena from a court of competent jurisdiction or (iii) the information in
such Records has generally been made available to the public. Each Holder will
be required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company unless and
until such information is made generally available to the public. Each Holder
will be required to further agree that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company to undertake appropriate action to prevent
disclosure of the Records deemed confidential at its expense;
(m) if requested by the Majority Holders, use its commercially reasonably
efforts to cause all Registrable Shares to be listed or quoted, as applicable on
any securities exchange or any automated quotation system on which similar
securities issued by the Company are then listed or quoted to the extent such
Registrable Shares satisfy applicable listing or quotation requirements;
(n) if reasonably requested by any Holder of Registrable Shares covered by a
Registration Statement, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information with respect to such Holder as such
Holder reasonably requests to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as the Company has received notification of the matters to be incorporated in
such filing; and
(o) In connection with an Underwritten Offering pursuant to a Shelf
Registration Statement, take all actions as are reasonably requested by the
managing underwriter in order to facilitate the disposition of the Registrable
Shares, and in such connection, (i) to the extent possible, make such
representations and warranties to the Holders and any Underwriters of such
Registrable Shares with respect to the business of the Company and its
subsidiaries, the Registration Statement, Prospectus and documents incorporated
by reference or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company (which counsel and opinions, in form, scope
and substance, shall be reasonably satisfactory to the Holders and such
Underwriters and its counsel) addressed to each Holder and Underwriter of
Registrable Shares, covering the matters customarily covered in opinions
requested in underwritten offerings, (iii) obtain "cold comfort" letters from
the independent certified public accountants of the Company (and, if applicable,
any other certified public accountant of any business acquired by the Company
for which financial statements and financial data are or are required to be
included in the Registration Statement) addressed to each Holder and Underwriter
of Registrable Shares, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority in principal amount of the
Registrable Shares being sold or the Underwriters, and which are customarily
delivered in underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in an
underwriting agreement.
The Company may require each Holder of Registrable Shares to furnish to the
Company such information regarding the Holder and the proposed distribution by
such Holder of such Registrable Shares as the Company may from time to time
reasonably request in writing. The Company may exclude from a Registration
Statement the Registrable Shares of any Holder who fails to furnish such
information in writing to the Company within 20 business days (or such longer
period if the Company agrees in writing) after receiving such request. Each
Holder of Registrable Shares included within the coverage of any Registration
Statement agrees to furnish promptly to the Company all information required by
applicable law to be disclosed by such Holder in order to make the information
previously furnished to the Company not misleading.
Each Holder agrees that, upon receipt of any notice from the Company (a
"Suspension Notice") of the happening of any event of the kind described in
Section 3(e) (iii), (iv), (v) or (vi) hereof, such Holder will forthwith
discontinue disposition of Registrable Shares pursuant to the Shelf Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at its expense) all copies
in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Shares current at the
time of receipt of the Suspension Notice or until such Holder is advised in
writing (the "Advice") by the Company that the use of the applicable prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. If the Company shall give a Suspension Notice to suspend the
disposition of Registrable Shares pursuant to the Shelf Registration Statement,
the Company shall extend the period during which the Shelf Registration
Statement shall be maintained effective pursuant to this Agreement by the number
of days during the period from and including the date of the giving of the
Suspension Notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions or the Advice.
The Holders of Registrable Shares covered by a Shelf Registration Statement
who desire to do so may sell such Registrable Shares in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or
investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Shares included in such offering and shall be reasonably acceptable
to the Company.
No Holder may participate in an Underwritten Offering hereunder unless such
Holder (a) agrees to sell such Holder's Registrable Securities on the basis
provided in any underwriting arrangements approved by the persons or entities
entitled hereunder to approve such arrangements and (b) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
4. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement, the Company agrees to
indemnify and hold harmless each Holder of Registrable Shares included in such
Shelf Registration Statement, and each Person, if any, who controls any such
Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of
the 1934 Act, or is under common control with, or is controlled by any such
Holder (the "Indemnified Party"), from and against all losses, claims, damages
and liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Indemnified Party in connection with defending or
investigating any such action or claim), to which any Indemnified Party may
become subject, under the Securities Act or otherwise, insofar as any such loss,
claim, damage or liability is caused by (i) any untrue statement or alleged
untrue statement of a material fact contained in the Shelf Registration
Statement (or any amendment thereto) pursuant to which Registrable Shares were
registered under the 1933 Act, including all documents incorporated therein by
reference, (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or caused by any untrue statement or alleged untrue statement of
a material fact contained in any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or (iii)
any omission or alleged omission to state therein a material fact necessary to
make the statements therein in light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or alleged omission based upon information relating to the
Interested Persons furnished to the Company in writing by the Interested
Persons, expressly for use therein. In connection with any Underwritten
Offering permitted by Section 3 of this Agreement, the Company will also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of the 1933 Act and the 1934 Act) to the same extent as provided above
with respect to the indemnification of the Indemnified Party, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Interested Persons, and each of their directors,
officers and employees and each Person, if any, who controls the Company, or the
Interested Persons within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act, to the same extent as the foregoing indemnity from
the Company to the Interested Persons, but only with reference to information
relating to such Holder furnished to the Company in writing by such Holder
expressly for use in the Shelf Registration Statement (or any amendment thereto)
or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which indemnity may be sought
pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing; provided,
however, that the failure to notify the indemnifying party shall not relieve it
of any liability which it may have under this Section 4 except to the extent
that it has been materially prejudiced by such failure. The indemnifying party,
upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. If any such
claim or action shall be brought against an indemnified party, and it shall have
notified the indemnifying party, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similar notified indemnifying party, to assume the defense of thereof with
counsel reasonably satisfactory to be the indemnified party. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party has failed to assume
the defense on behalf of the indemnified party, (ii) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of such
counsel or (iii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate counsel (in addition to any local counsel)
designated in writing by each indemnified party, and that all such reasonable
fees and expenses shall be reimbursed as they are incurred. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party for such fees
and expenses of counsel in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph (b) of
this Section 4 is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Holders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
obligations to contribute pursuant to this Section 4(d) are several in
proportion to the principal amount of Registrable Shares of such Holder that
were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or equitable
if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4, no Holder shall be required to contribute any amount in excess of the
amount by which the total price at which Registrable Shares were sold by such
Holder exceeds the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 4 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
(f) Survival. The indemnity and contribution provisions contained in this
Section 4 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of the Interested Persons or any person controlling the Interested Persons, or
by or on behalf of the Company, its officers or directors or any Person
controlling the Company, and (iii) any sale of Registrable Shares pursuant to
the Shelf Registration Statement.
5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into, and on or
after the date of this Agreement will not enter into, any agreement which is
inconsistent with the rights granted to the Holders of Registrable Shares in
this Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's other
issued and outstanding securities under any such agreements.
(b) Numbers of Registrable Shares. All numbers of Registrable Shares set
forth herein refer to amounts as of the date hereof and shall be adjusted in the
event of any subsequent changes in the outstanding Common Stock of the Company
by reason of stock dividends, stock splits, recapitalizations, reorganizations,
mergers, consolidations, sales or exchanges of assets, combinations, or other
exchanges of shares or offerings of subscription rights so that the percentage
of shares held by each Holder after the subsequent change shall equal the
percentage of Shares held by such Holder as of the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of at least a
majority in aggregate liquidation preference of the outstanding Registrable
Shares affected by such amendment, modification, supplement, waiver or consent;
provided, however, that no amendment, modification, supplement, waiver or
consents to any departure from the provisions of Section 4 hereof shall be
effective as against any Holder of Registrable Shares unless consented to in
writing by such Holder.
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 5(d),
which address initially is, with respect to the Placement Agent, the address set
forth in the Placement Agreement, with a copy to Winthrop, Stimson, Putnam &
Roberts, Financial Centre, 695 Main Street, Stamford, Connecticut 06904-6760,
Attention: George P. Barbaresi, Esq.; (ii) if to the Company, initially at 7000
Boulevard East, Guttenberg, New Jersey 07093, Attention: Robert E. Wetzel, with
a copy to McDermott, Will & Emery, 50 Rockefeller Plaza, New York, New York
10020, Attention: Brian Hoffmann, and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 5(d).
All such notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and on the next business
day if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Transfer Agents, at
First City Transfer Company, 111 Wood Avenue South, Suite 206, Iselin, New
Jersey 08830.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be deemed to
permit any assignment, transfer or other disposition of Registrable Shares in
violation of the terms of the Placement Agreement. If any transferee of any
Holder shall acquire Registrable Shares, in any manner, whether by operation of
law or otherwise, such Registrable Shares shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Shares such
person shall be conclusively deemed to have agreed to be bound by and to perform
all of the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof. The Placement Agent (solely in its
capacity as Placement Agent) shall have no liability or obligation to the
Company with respect to any failure by a Holder to comply with, or any breach by
any Holder of, any of the obligations of such Holder under this Agreement.
(f) Third Party Beneficiary. The Holders shall be third party beneficiaries
to the agreements made hereunder between the Company, on the one hand, and the
Placement Agent, on the other hand, and each Holder shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed manually or by telecopier
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
KTI, INC.
By: /s/ Robert E. Wetzel
Name: Robert E. Wetzel
Title: Senior Vice President
Confirmed and accepted as of
the date first above written:
CREDIT RESEARCH & TRADING LLC
By: /s/ Jeremy Bloom
Name: Jeremy Bloom
Title: Managing Director