EXHIBIT 10.45
Execution Copy
================================================================================
SMTC CORPORATION
and
MELLON INVESTOR SERVICES LLC
----------------------------
WARRANT AGREEMENT
Dated as of February 8, 2002
WARRANT AGREEMENT
TABLE OF CONTENTS/1/
Page
----
Section 1. Appointment of Warrant Agent...........................................................1
Section 2. Warrant Certificates...................................................................1
Section 3. Execution of Warrant Certificates......................................................1
Section 4. Registration and Countersignature......................................................2
Section 5. Registration of Transfers and Exchanges................................................2
Section 6. Issuance of Warrants; Terms of Warrants: Exercise of Warrants..........................4
Section 7. Payment of Taxes.......................................................................7
Section 8. Mutilated or Missing Warrant Certificates..............................................7
Section 9. Reservation of Warrant Shares..........................................................7
Section 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable.....................8
Section 11. Fractional Interests..................................................................14
Section 12. Notices to Warrant holders............................................................15
Section 13. Merger, Consolidation or Change of Name of Warrant Agent..............................16
Section 14. Warrant Agent.........................................................................17
Section 15. Change of Warrant Agent...............................................................20
Section 16. Notices to Company and Warrant Agent..................................................20
Section 17. Supplements and Amendments............................................................21
Section 18. Successors............................................................................22
Section 19. Termination...........................................................................22
Section 20. Governing Law; Submission to Jurisdiction: Waiver of Jury Trial.......................22
- --------------------
/1/ This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
i
Section 21. Benefits of This Agreement............................................................22
Section 22. Counterparts..........................................................................22
ii
WARRANT AGREEMENT dated as of February 8, 2002 between SMTC
Corporation, a Delaware corporation (the "Company"), and Mellon Investor
Services LLC, a New Jersey limited liability company, as Warrant Agent (the
"Warrant Agent").
WHEREAS, the Company proposes to issue Series A, Series B and Series C
Common Stock Purchase Warrants, as hereinafter described (respectively, the
"Series A Warrants, Series B Warrants and Series C Warrants" and together, the
"Warrants"), which in the aggregate initially entitle the holders of each of the
Series A Warrants, Series B Warrants and Series C Warrants to purchase up to
1.5%, 0.5% and 1%, respectively, on the date such Warrants are issued, of the
Common Stock par value $0.01 per share (the "Common Stock"), of the Company
outstanding on a diluted basis (determined in accordance with GAAP, but after
giving effect to the exercise of such Warrants and any outstanding Warrants) on
the date such Warrants are issued (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "Warrant Shares"), in connection with
the Fourth Amendment and First Waiver, dated February 8, 2002, to and under the
Amended and Restated Credit and Guarantee Agreement, dated as of July 27, 2000
(as amended, supplemented and otherwise modified from time to time, the "Credit
Agreement"), among the Company, HTM Holdings, Inc., SMTC Manufacturing
Corporation of Canada, the several banks and other financial institutions or
entities from time to time parties thereto (the "Lenders"), Lehman Brothers
Inc., as advisor, lead arranger and book manager, The Bank of Nova Scotia, as
syndication agent, Lehman Commercial Paper Inc., as general administrative
agent, The Bank of Nova Scotia, as Canadian administrative agent, Lehman
Commercial Paper Inc., as collateral monitoring agent and General Electric
Capital Corporation, as documentation agent.
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and exercise of Warrants and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
----------------------------
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The certificates evidencing the
--------------------
Warrants (the "Warrant Certificates") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the forms set
forth in Exhibit A, Exhibit B or Exhibit C attached hereto, as applicable.
--------- --------- ---------
SECTION 3. Execution of Warrant Certificates. Warrant Certificates
---------------------------------
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board,
President, Vice President, Secretary or Assistant Secretary and may be imprinted
or otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall have
been Chairman of the Board,
1
President, Vice President, Secretary or Assistant Secretary, notwithstanding the
fact that at the time the Warrant Certificates shall be countersigned and
delivered or disposed of he or she shall have ceased to hold such office.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 4. Registration and Countersignature. Warrant Certificates
---------------------------------
shall be manually countersigned by the Warrant Agent and shall not be valid for
any purpose unless so countersigned. The Warrant Agent shall, upon written
instructions of the Chairman of the Board, the President, a Vice President, the
Treasurer or the Chief Financial Officer of the Company, initially countersign,
issue and deliver such number of Warrants as are set forth in such written
instructions, and the Warrant Agent shall be fully protected in conclusively
relying on such written instructions. Such written instructions shall not
instruct the Warrant Agent to countersign Warrants entitling the holders thereof
to purchase more than the number of Warrant Shares referred to above in the
first recital hereof. The Warrant Agent shall also countersign and deliver
Warrants as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 5. Registration of Transfers and Exchanges. The Warrant Agent
---------------------------------------
shall from time to time, subject to the limitations set forth in this Section 5
---------
and in Section 6 hereof, register the transfer of any outstanding Warrant
---------
Certificates upon the records to be maintained by it for that purpose, upon
surrender thereof duly endorsed or accompanied (if so required by it) by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, duly executed by the registered holder or holders thereof or by
the duly appointed legal representative thereof or by a duly authorized
attorney. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee(s) and the surrendered Warrant Certificate
shall be cancelled by the Warrant Agent. Cancelled Warrant Certificates shall
thereafter be disposed of by the Warrant Agent in its customary manner.
No Warrant holder will be permitted to transfer an interest in its
Warrants separately from any loans made by it to the Company under the Credit
Agreement with respect to which it received such Warrants prior to the later of
December 31, 2002 or nine months after the
2
issuance of the series of Warrants being transferred. The Warrant Agent will not
have any duty or obligation to monitor a Warrant holder's compliance with this
paragraph, and the Warrant Agent shall be fully protected and shall incur no
liability for any transfer effected by it in violation of this paragraph.
The Warrant holders agree that prior to any proposed transfer of the
Warrants or of the Warrant Shares, if such transfer is not made pursuant to an
effective Registration Statement under the Securities Act of 1933, as amended
(the "Act"), the Warrant holder will deliver to the Company:
(1) an opinion of counsel that the Warrant or Warrant Shares may be
transferred without registration under the Act
(2) an investment covenant reasonably satisfactory to the Company
signed by the proposed transferee;
(3) an agreement by such transferee to the impression of the
restrictive investment legend set forth below on the Warrant or the Warrant
Shares; and
(4) an agreement by such transferee to be bound by the provisions of
this Agreement.
The Warrant holders agree that each certificate representing Warrant
Shares will bear a legend in substantially the following form:
"The securities evidenced or constituted hereby have been acquired for
investment and have not been registered under the Securities Act of
1933, as amended. Such securities may not be sold, transferred,
pledged or hypothecated unless the registration provisions of said Act
have been complied with or unless the Company has received an opinion
of counsel that such registration is not required."
The Warrant holders agree that each certificate representing Series A
Warrant Shares will bear a legend in substantially the following form:
"The securities evidenced or constituted hereby are subject to a right
of repurchase by SMTC Corporation until March 31, 2003 for an amount
equal to three times the exercise price of the warrants exercised for
the securities evidenced or constituted hereby."
The Warrant holders agree that each certificate representing Series B
or Series C Warrant Shares will bear a legend in substantially the following
form:
"The securities evidenced or constituted hereby are subject to right
of repurchase by SMTC Corporation until March 31, 2003 for an amount
equal to the exercise price of the warrants exercised for the
securities evidenced or constituted hereby."
3
Subject to the terms of this Agreement, Warrant Certificates may be
exchanged at the option of the holder(s) thereof, when surrendered to the
Warrant Agent at its office designated for such purpose, which is currently
located at the address listed in Section 16 hereof, for another Warrant
----------
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Any holder desiring to exchange a Warrant
Certificate shall deliver a written request to the Warrant Agent, and shall
surrender, duly endorsed or accompanied (if so required by the Warrant Agent) by
a written instrument or instruments of transfer in form satisfactory to the
Warrant Agent, the Warrant Certificate or Certificates to be so exchanged.
Warrant Certificates surrendered for exchange shall be cancelled by the Warrant
Agent. Such cancelled Warrant Certificates shall then be disposed of by such
Warrant Agent in its customary manner.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 5 and of Section 4 hereof, the new Warrant
--------- ---------
Certificates required pursuant to the provisions of this Section 5.
---------
SECTION 6. Issuance of Warrants; Terms of Warrants: Exercise of
----------------------------------------------------
Warrants
- --------
The Company shall issue the Warrants to the Lenders in proportion to
their interests in the Loans and Commitments under the Credit Agreement on the
following dates (in each case, an "Issue Date") (a) in the case of the Series A
Warrants, February 11, 2002; and (b) so long as any Loans or Letters of Credit
are outstanding under the Credit Agreement, (i) the Series B Warrants shall be
issued on December 31, 2002 and (ii) the Series C Warrants, if any, shall be
issued once on the first date after the date hereof an Event of Default under
and as defined in the Credit Agreement has occurred and has been continuing for
more than 30 days or, in the case of an Event of Default related to a financial
covenant that is to be complied with on a monthly basis, on the first date after
the date hereof as of which such Event of Default has occurred in two
consecutive months; provided that a default under Section 11.1(e) of the Credit
Agreement shall be deemed not to have occurred during any fiscal quarter of the
Company if the Company is in compliance with such covenant at the end of such
quarter (regardless of any continuing default of such covenant earlier in such
quarter) and issuance of Warrants related to a default of Section 11.1(e) shall
not occur until non-compliance with such covenant at the end of such quarter has
been determined. The initial exercise price per share at which Warrant Shares
shall be purchasable upon the exercise of Warrants (the "Exercise Price") shall
be the fair market value (as defined below) of one share of Common Stock as of
the Issue Date for such Warrant. On its respective Issue Date, each Warrant
shall be initially exercisable for one share of Common Stock and each series of
Warrants shall initially consist of a number of Warrants equal to 1.5% (in the
case of Series A Warrants), 0.5% (in the case of Series B Warrants) or 1.0% (in
the case of Series C Warrants) of the number of shares of Common Stock
outstanding on such date on a diluted basis (determined in accordance with GAAP,
but after giving effect to the exercise of such Warrants and any outstanding
Warrants). For purposes of this paragraph of Section 6, "fair market value" on
any date shall be the average of the Quoted Prices of the Common Stock for 20
consecutive trading days commencing 22 trading days before the date in question.
The "Quoted Price" of the Common Stock is the last reported sales price of the
Common Stock as reported by the Nasdaq, National Market System, or if the Common
Stock is listed on a securities exchange, the last reported sales price of the
Common Stock on such exchange which shall be for consolidated trading if
applicable to such exchange, or if neither so
4
reported or listed, the mean of the last reported bid and asked price of the
Common Stock or if the Common Stock is not so reported or listed, as reasonably
determined by the Company's Board of Directors, as supported by an opinion of a
nationally recognized investment banking firm.
The Company shall immediately notify the Warrant Agent as to its
determination of the number of shares for which any series of Warrants is
initially exercisable (which shall be determined as specified in this Section
-------
6), which number shall be binding upon the Company and all Warrant holders,
- -
absent manifest error.
Subject to the terms of this Agreement, each Warrant holder shall have
the right, which may be exercised commencing at the opening of business on the
Issue Date of such Warrant and until 5:00 p.m., New York City time on the date
(the "Expiration Date") that is the fifth anniversary of the date hereof (or, if
such date is not a business day, on the next succeeding business day), to
receive from the Company the number of fully paid and nonassessable Warrant
Shares which the holder may at the time be entitled to receive on exercise of
such Warrants and payment of the Exercise Price then in effect for such Warrant
Shares. In the alternative, each Warrant holder may exercise its right, during
the Exercise Period, to receive Warrant Shares on a net basis, such that,
without the exchange of any funds, the holder receives that number of Warrant
Shares otherwise issuable (or payable) upon exercise of its Warrants less that
number of Warrant Shares having an aggregate fair market value (as defined
above) at the time of exercise equal to the aggregate Exercise Price that would
otherwise have been paid by the holder of the Warrant Shares. Each Warrant of
any series not exercised prior to 5:00 p.m., New York City time, on the
Expiration Date for such Series shall become null and void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
On or before March 31, 2003, if all outstanding obligations under the
Credit Agreement are paid in full and all commitments thereunder are terminated,
all Series B Warrants and Series C Warrants shall be returned to the Company
without consideration and all Warrant Shares that have been obtained upon
exercise of the Series B Warrants and Series C Warrants shall be sold back to
the Company at the Exercise Price of the Series B Warrants or Series C Warrants
exercised to obtain such Warrant Shares.
On or before March 31, 2003, if all outstanding obligations under the
Credit Agreement have been paid in full and all commitments thereunder are
terminated, the Company may repurchase any outstanding Series A Warrants at a
price equal to twice their Exercise Price and may purchase any shares of Common
Stock issued upon exercise of the Series A Warrants at a price equal to three
times their Exercise Price.
A Warrant may be exercised upon surrender to the Company at the office
of the Warrant Agent designated for such purpose, which is currently located at
the address listed in Section 16 hereof, of (i) the certificate or certificates
----------
evidencing the Warrants to be exercised with the form of election to purchase on
the reverse thereof duly and properly filled in and signed and such other
documentation as the Warrant Agent or the Company may reasonably request, and
(ii) payment to the Warrant Agent for the account of the Company of the Exercise
Price as adjusted as herein provided, for the number of Warrant Shares in
respect of which such
5
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made (i) in cash or by certified or official bank check payable to the order of
the Company in New York Clearing House Funds, (ii) through the surrender of debt
or preferred equity securities of the Company having a principal amount or
liquidation preference, as the case may be, equal to the aggregate Exercise
Price to be paid (the Company will pay the accrued interest or dividends on such
surrendered debt or preferred equity securities in cash at the time of surrender
notwithstanding the stated terms thereof), or (iii) in the manner provided in
the third paragraph of this Section 6. The Warrant Agent shall have no duty (i)
---------
to determine or calculate the Exercise Price, (ii) confirm or verify the
accuracy or correctness of the Exercise Price or (iii) confirm or verify the
correctness or sufficiency of any payment of the Exercise Price made in
accordance with items (ii) and (iii) of the preceding sentence; the Warrant
Agent's sole duty under this paragraph being the acceptance of the certificates
evidencing the Warrants and taking possession for the benefit of the Company of
the Exercise Price delivered to it by a Warrant holder.
Subject to the provisions of Section 7 hereof, upon such surrender of
---------
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to and in such name or names as the
Warrant holder may designate, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants together with
cash as provided in Section 11 hereof; provided, however, that if any
----------
consolidation, merger or lease or sale of assets is proposed to be effected by
the Company as described in subsection (m) of Section 10 hereof, or a tender
----------
offer or an exchange offer for shares of Common Stock of the Company shall be
made, upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall, as soon as possible, but in any event not later
than two business days thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence together with cash as provided in Section 11
----------
hereof. Such certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to have become a
holder of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section 6 and of Section 3
--------- ---------
hereof, and the Company, whenever required by the Warrant Agent, shall supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose. The Warrant Agent may assume that any Warrant
presented for exercise is permitted to be so exercised under applicable law and
shall have no liability for acting in reliance on such assumption.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in its customary manner. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies
6
received by the Warrant Agent for the purchase of the Warrant Shares through the
exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders with
reasonable prior written notice during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
SECTION 7. Payment of Taxes. The Company will pay all documentary
----------------
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or governmental charge which may be payable in respect of any
transfer involved in the issue of any Warrant Certificates or any certificates
for Warrant Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant, and the Company
shall not be required to issue or deliver such Warrant Certificates unless or
until the person or persons requesting the issuance thereof shall have paid to
the Company the amount of such tax or charge or shall have established to the
satisfaction of the Company that such tax or charge has been paid. The Warrant
Agent shall have no duty or obligation to take any action under any Section of
this Agreement which requires the payment by a Warrant holder of applicable
taxes and governmental charges unless and until the Warrant Agent is satisfied
that all such taxes and/or charges have been paid.
SECTION 8. Mutilated or Missing Warrant Certificates. In case any of
-----------------------------------------
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company, at its expense, shall issue and the Warrant Agent shall countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and indemnity, if requested,
satisfactory to the Company and the Warrant Agent; provided that if the owner of
the same is Lehman Brothers Inc. or any affiliate thereof or an institutional
lender or investor with consolidated net worth of at least $100 million, its own
agreement of indemnity shall be deemed to be satisfactory.
SECTION 9. Reservation of Warrant Shares. The Company will at all
-----------------------------
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants. The Warrant Agent shall have no duty to
verify availability of such shares set aside by the Company.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be
7
required for such purpose. The Company will keep a copy of this Agreement on
file with the Transfer Agent and with every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time from such Transfer Agent the stock
certificates required to honor outstanding Warrants upon exercise thereof in
accordance with the terms of this Agreement. The Company will supply such
Transfer Agent with duly executed certificates for such purposes and will
provide or otherwise make available any cash which may be payable as provided in
Section 11 hereof. The Company will furnish such Transfer Agent a copy of all
- ----------
notices of adjustments and certificates related thereto, transmitted to each
holder pursuant to Section 12 hereof.
----------
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if any)
- ----------
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon payment of the Exercise Price therefor and
issue, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares
---------------------------------------------------------
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
- --------
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 10. With respect to any
----------
Warrant, no adjustment to the Exercise Price or to the number of Warrant Shares
issuable upon exercise shall be made for any event enumerated in this Section 10
----------
if the date as to which the Company committed to undertake such event was prior
to such Warrant's respective Issue Date. For purposes of this Section 10,
----------
"Common Stock" means shares now or hereafter authorized of any class of common
stock of the Company and any other stock of the Company, however designated,
that has the right (subject to any prior rights of any class or series of
preferred stock) to participate in any distribution of the assets or earnings of
the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
--------------------------------------
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
8
(4) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
capital stock,
then the Warrant in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall reasonably determine the allocation of the adjusted Exercise Price
between the classes of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class of capital stock shall thereafter
be subject to adjustment on terms comparable to those applicable to Common Stock
in this Section 10.
----------
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
---------------------------
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to purchase shares of Common Stock at a
price per share less than the current market price per share on that record
date, the Exercise Price shall be adjusted in accordance with the formula:
N x P
-----
E' = E x O + M
------------------
O+N
where:
E'= the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the
record date.
N = the number of additional shares of Common Stock offered.
9
P = the purchase price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
(1) The adjustment shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
the rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(c) Adjustment for Other Distributions.
----------------------------------
If the Company distributes to all holders of its Common Stock any of
its assets (including cash) or debt securities or any rights or warrants to
purchase debt securities, assets or other securities of the Company, the
Exercise Price shall be adjusted in accordance with the formula:
E' = E x M - F
-------------
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants distributable to one share of
Common Stock. The Board of Directors shall reasonably
determine the fair market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection (c) does not apply to regular quarterly cash dividends
or rights, options or warrants referred to in subsection (b) of this Section 10.
----------
If any adjustment is made pursuant to this subsection (c) as a result of the
issuance of rights, options or warrants and at the end of the period during
which any such rights, options or warrants are exercisable, not all such rights,
options or warrants shall have been exercised, the Warrant shall be immediately
readjusted as if "F" in the above formula was the fair market value on the
record date of the indebtedness or assets actually distributed upon exercise of
such rights, options or warrants divided by the number of shares of Common Stock
outstanding on the record date. Notwithstanding anything to the contrary
contained in this subsection (c), if "M-F" in the above
10
formula is less than $1.00 (or is a negative number) then in lieu of the
adjustment otherwise required by this subsection (c), the Company shall
distribute to the holders of the Warrants, upon exercise thereof, the evidences
of indebtedness, assets, rights, options or warrants (or the proceeds thereof)
which would have been distributed to such holders had such Warrants been
exercised immediately prior to the record date for such distribution.
(d) Current Market Price.
--------------------
In subsections (b) and (c) of this Section 10, the current market
----------
price per share of Common Stock on any date is the average of the Quoted Prices
of the Common Stock for 30 consecutive trading days commencing 45 trading days
before the date in question. In the absence of one or more quotations, the Board
of Directors of the Company shall determine the current market price on the
basis of such quotations as it reasonably considers appropriate.
(e) When De Minimis Adjustment May Be Deferred.
------------------------------------------
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be earned forward and taken into account in
any subsequent adjustment.
All calculations under this Section 10 shall be made to the nearest
----------
cent or to the nearest 1/100th of a share, as the case may be.
(f) When No Adjustment Required.
---------------------------
No adjustment need be made for a transaction referred to in
subsections (b) and (c) of this Section 10 if Warrant holders are to
----------
participate, without requiring the Warrants to be exercised, in the transaction
on a basis and with notice that the Board of Directors of the Company reasonably
determines to be fair and appropriate in light of the basis and notice on which
holders of Common Stock participate in the transaction.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the amount of cash into which such Warrants are
exercisable. Interest will not accrue on the cash.
(g) Notice of Adjustment.
--------------------
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 12 hereof.
----------
(h) Voluntary Reduction.
-------------------
The Company from time to time may reduce the Exercise Price by any
amount for any period of time (including, without limitation, permanently) if
such period is at least 20 days;
11
provided, however, that in no event may the Exercise Price be less than the par
value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders and the Warrant Agent a notice of the reduction. The Company
shall mail the notice at least 15 days before the date the reduced Exercise
Price takes effect. The notice shall state the reduced Exercise Price and the
period it will be in effect.
A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of this Section 10.
----------
(i) Notice of Certain Transactions.
------------------------------
If:
(1) the Company takes any action that would require an adjustment
in the Exercise Price pursuant to subsections (a) of this Section 10;
----------
(2) the Company proposes to fix a record date for a dividend or
distribution on the Common Stock to which subsection (b) of this Section 10
----------
does not apply;
(3) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (g) of this Section
-------
10; or
--
(4) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the
proposed record date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least 15 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
(j) Reorganization of Company.
-------------------------
If the Company consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if such holder had exercised the Warrant immediately before the
effective date of the transaction; provided that (i) if the holders of Common
Stock were entitled to exercise a right of election as to the kind or amount of
securities, cash or other assets receivable upon such consolidation or merger,
then the kind and amount of securities, cash or other assets for which each
Warrant shall become exercisable shall be deemed to be the kind and amount so
receivable per share by a plurality of the holders of Common Stock in such
consolidation or merger or (ii) if a tender or exchange offer shall have been
made to and accepted by the holders of Common Stock under circumstances in
which, upon completion of such tender or exchange offer, the maker thereof,
together with members of any group (within the meaning of Rule 13d-5(b)(l)
12
under the Exchange Act) of which such maker is a part, and together with any
affiliate or associate of such maker (within the meaning of Rule 12b-2 under the
Exchange Act) and any members of any such group of which any such affiliate or
associate is a part, own beneficially (within the meaning of Rule l3d-3 under
the Exchange Act) more than 50% of the outstanding shares of Common Stock, the
holder of a Warrant shall be entitled to receive the highest amount of cash,
securities or other property to which such holder would actually have been
entitled as a shareholder if such Warrant holder had exercised the Warrant prior
to the expiration of such tender or exchange offer, accepted such offer and all
of the Common Stock held by such holder had been purchased pursuant to such
tender or exchange offer, subject to adjustments (from and after the
consummation of such tender or exchange offer) as nearly equivalent as possible
to the adjustments provided for in this Section 10. Concurrently with the
----------
consummation of any such transaction, the person formed by or surviving any such
consolidation or merger if other than the Company, or the person to which such
sale or conveyance shall have been made, shall enter into a supplemental Warrant
Agreement so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Section. The successor Company shall mail to Warrant holders a notice describing
the supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee person, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (j) applies, subsections (a) and (b) of this
Section 10 do not apply.
- ----------
(k) Warrant Agent's Disclaimer.
--------------------------
The Warrant Agent shall have no duties or responsibilities under this
Section 10, including, but not limited to, determining when an adjustment under
- ----------
this Section 10 should be made, how such adjustment should be made or what the
----------
adjustment should be. The Warrant Agent has no duty to determine whether any
provisions of a supplemental Warrant Agreement under subsection (j) of this
Section 10 are correct. The Warrant Agent makes no representation as to the
- ----------
validity or value of any securities or assets issued upon exercise of Warrants.
The Warrant Agent shall not be responsible for the Company's failure to comply
with this Section.
(l) When Issuance or Payment May Be Deferred.
----------------------------------------
In any case in which this Section 10 shall require that an adjustment
----------
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer (with prompt written notice of such
election to the Warrant Agent) until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price and (ii) paying
to such holder any amount in cash in lieu of a fractional share pursuant to
Section 11 hereof; provided, however, that the Company shall deliver to such
- ----------
holder a due bill or other appropriate instrument evidencing such holder's
13
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(m) Adjustment in Number of Shares.
------------------------------
Upon each event that provides for an adjustment of the Exercise Price
pursuant to this Section 10, each Warrant outstanding prior to the making of the
----------
adjustment shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest ten millionth) obtained from the following formula:
N' = N x E
-
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(n) Form of Warrants.
----------------
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
(o) Other Dilutive Events.
---------------------
In case any event shall occur affecting the Company, or any entity in
which the Company has a direct or indirect investment, as to which the
provisions of this Section 10 are not strictly applicable, but the failure to
----------
make any adjustment would not fairly protect the purchase rights represented by
the Warrants in accordance with the essential intent and principles of this
Section then, in each such case, the Company shall appoint a firm of independent
public accountants of recognized national standing which shall give their
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 10, necessary to preserve,
----------
without dilution, the purchase rights represented by the Warrants.
SECTION 11. Fractional Interests.
--------------------
(a) The Company shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. 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
14
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 11,
----------
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the fair market value of such
fractional Warrant Share as of the day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
(b) Warrants may be issued in fractional interests. Holders of
fractional interests in Warrants will be entitled to purchase a number of
Warrant Shares equal to the product obtained by multiplying the number of
Warrant Shares issuable with respect to a full Warrant multiplied by the
fractional interest owned by such holder in the Warrant.
(c) Whenever a payment for fractional Warrant Shares is to be made by
the Warrant Agent, the Company shall (i) promptly prepare and deliver to the
Warrant Agent a certificate setting forth in reasonable detail the facts related
to such payment and the prices and/or formulas utilized in calculating such
payments, and (ii) provide sufficient monies to the Warrant Agent in the form of
fully collected funds to make such payments. The Warrant Agent shall be fully
protected in relying upon such a certificate and shall have no duty with respect
to, and shall not be deemed to have knowledge of any payment for fractional
Warrant Shares under any Section of this Agreement relating to the payment of
fractional Warrant Shares unless and until the Warrant Agent shall have received
such a certificate and sufficient monies.
SECTION 12. Notices to Warrant holders. Upon any adjustment of the
--------------------------
Exercise Price pursuant to Section 10, the Company shall promptly thereafter,
----------
and in any event within five days, (i) cause to be filed with the Warrant Agent
a certificate executed by the Chief Financial Officer of the Company setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or portion thereof)
issuable after such adjustment in the Exercise Price, upon exercise of a Warrant
and payment of the adjusted Exercise Price, and (ii) cause to be given to each
of the registered holders of the Warrant Certificates at his address appearing
on the Warrant register written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Section 12. The Warrant Agent shall be fully protected in
----------
relying on any such certificate and on any adjustment therein contained and
shall have no duty with respect to and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
regular cash dividends or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 10 hereof); or
----------
15
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action (other than actions of the
character described in Section 10(a) hereof) which would require an adjustment
----------
of the Exercise Price pursuant to Section 10 hereof;
----------
then the Company shall cause to be filed with the Warrant Agent and shall cause
to be given to each of the registered holders of the Warrant Certificates at his
address appearing on the Warrant register, at least 20 calendar days (or 10
calendar days in any case specified in clauses (a),(b) or (e) above) prior to
the applicable record date hereinafter specified, or promptly in the case of
events for which there is no record date, by first-class mail, postage prepaid,
a written notice stating (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock,
or (iii) the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Section 12 or any defect
----------
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. Merger, Consolidation or Change of Name of Warrant Agent.
--------------------------------------------------------
Any person into which the Warrant Agent may be merged or with which it may be
consolidated, or any person resulting from any merger or consolidation to which
the Warrant Agent shall be a party, or any person succeeding to the business of
the Warrant Agent, shall be the successor to the Warrant Agent hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided that such person would be eligible for appointment
as a successor warrant agent under the provisions of Section 15. In case at the
----------
time such successor to the Warrant Agent shall succeed to the agency created by
this Agreement, and in case at that time any of the Warrant Certificates shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent; and in case
at that time any of the Warrant Certificates shall not have been countersigned,
16
any successor to the Warrant Agent may countersign such Warrant Certificates
either in the name of the predecessor Warrant Agent or in the name of the
successor to the Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force and effect provided in the Warrant Certificates and in
this Agreement.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrant Certificates shall have been countersigned but
not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 14. Warrant Agent. The Warrant Agent undertakes the duties and
-------------
obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the holders of Warrants,
by their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of its own
selection (who may be counsel for the Company) and the Warrant Agent shall incur
no liability or responsibility to the Company or to any holder of any Warrant
Certificate in respect of any action taken, suffered or omitted to be taken by
it hereunder accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate, certificate of shares, notice, resolution,
waiver, consent, order, certificate, or other paper, document or instrument
(whether in its original or facsimile form) believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
(e) The Company agrees (i) to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent (including fees and
expenses of its counsel) and to reimburse the Warrant Agent for all expenses,
taxes and governmental charges and other charges and disbursements of any kind
and nature incurred by the Warrant Agent in the preparation, delivery,
execution, administration and amendment of this Agreement and the exercise and
performance of its duties hereunder and (ii) to indemnify the Warrant Agent (and
any predecessor Warrant Agent) and save it harmless against any and all claims
(whether asserted by
17
the Company, a holder or any other person), damages, losses, fines, penalties,
settlements, expenses (including taxes other than taxes based on the income of
the Warrant Agent), liabilities, including judgments, costs and counsel fees and
expenses, for any action taken, suffered or omitted to be taken by the Warrant
Agent in connection with the execution of this Agreement and the acceptance and
administration of this Agreement, except as a result of its gross negligence or
willful misconduct (each as finally determined by a court of competent
jurisdiction). The costs and expenses incurred in enforcing this right of
indemnification shall be paid by the Company. The provisions of this Section 14
----------
shall survive the expiration of the Warrants, the termination of this Agreement
and the resignation or removal of the Warrant Agent.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity satisfactory to it for any costs and expenses which may be incurred,
but this provision shall not limit the power of the Warrant Agent to take such
action as it may consider proper, whether with or without any such security or
indemnity. All rights of action under this Agreement or under any of the
Warrants may be enforced by the Warrant Agent without the possession of any of
the Warrant Certificates or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding instituted
by the Warrant Agent shall be brought in its name as Warrant Agent and any
recovery of judgment shall be for the ratable benefit of the registered holders
of the Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, affiliate, director,
officer or employee of it, may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for any action taken, suffered or omitted to
be taken by it in connection with this Agreement except for its own gross
negligence or willful misconduct, each as finally determined by a court of
competent jurisdiction. Anything to the contrary notwithstanding, in no event
shall the Warrant Agent be liable for special, punitive, indirect, consequential
or incidental loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Warrant Agent has been advised of the likelihood
of such loss or damage. Any liability of the Warrant Agent under this Agreement
will be limited to the amount of fees paid by the Company to the Warrant Agent.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or
18
with respect to the method employed in making the same. The Warrant Agent shall
not be accountable with respect to the validity or value or the kind or amount
of any Warrant Shares or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or with respect to whether
any such Warrant Shares or other securities will when issued be validly issued
and fully paid and nonassessable, and makes no representation with respect
thereto.
(j) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Warrant Agent shall have any liability to any holder
of a Warrant or other person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided that the Company must use its
reasonable best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
(k) With respect to the exercise by a holder of any Warrants in
accordance with the terms of this Agreement and with respect to any other
actions or omissions that may arise as a result of or under this Agreement, to
the extent the Warrant Agent has any questions or uncertainties as to what
actions it should take with respect thereto, the Warrant Agent may seek written
direction from the Company as to what course of action the Warrant Agent should
take and the Warrant Agent shall be fully protected and incur no liability in
refraining from taking any action thereunder unless and until the Warrant Agent
has received such written direction from the Company. Any application by the
Warrant Agent for such written instructions from the Company may, at the option
of the Warrant Agent, set forth in writing any action proposed to be taken or
omitted by the Warrant Agent under this Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. The
Warrant Agent shall not be liable for any action taken by, or omission of, the
Warrant Agent in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Company actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Warrant Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(l) No provision of this Agreement shall require the Warrant Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) Whenever in the performance of its duties under this Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking , suffering or omitting to
take any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of the
19
Board, the President, a Vice President, the Treasurer or the Secretary of the
Company and delivered to the Warrant Agent; and such certificate shall be full
authorization and protection to the Warrant Agent for any action taken or
suffered by it under the provisions of this Agreement in reliance upon such
certificate.
(n) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, a Vice President, the Secretary
or the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and such instructions shall be full
authorization and protection to the Warrant Agent, and the Warrant Agent shall
not be liable for any action taken, suffered or omitted to be taken by it in
accordance with instructions of any such officer.
(o) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Warrant Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, absent gross negligence or willful misconduct (each as
finally determined by a court of competent jurisdiction) in the selection and
continued employment thereof.
SECTION 15. Change of Warrant Agent. The Warrant Agent or any
-----------------------
successor Warrant Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company. Upon such
resignation or if the Warrant Agent shall become incapable of acting as Warrant
Agent, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such resignation or incapacity by the Warrant
Agent or by the registered holder of a Warrant Certificate, then the registered
holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to such Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company. The holders of a majority of the unexercised Warrants shall be entitled
at any time to remove the Warrant Agent and appoint a successor to such Warrant
Agent. Such successor to the Warrant Agent must be approved by the Company,
which shall not unreasonably withhold such approval. After appointment the
successor to the Warrant Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as Warrant Agent
without further act or deed; but the former Warrant Agent upon payment of all
fees and expenses due it and its agents and counsel shall deliver and transfer
to the successor to the Warrant Agent any property at the time held by it
hereunder and execute and deliver any further assurance, conveyance, act or deed
necessary for the purpose. Failure to give any notice provided for in this
Section 15, however, or any defect therein, shall not affect the legality or
- ----------
validity of the appointment of a successor to the Warrant Agent.
SECTION 16. Notices to Company and Warrant Agent. Any notice or demand
------------------------------------
authorized by this Agreement to be given or made by the Warrant Agent or by the
registered holder of any Warrant Certificate to or on the Company shall be
sufficiently given or made when and if delivered by facsimile transmission
(provided confirmation of receipt is received
20
immediately thereafter) or deposited in the mail, first class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:
SMTC Corporation
635 Hood Road
Markham, Ontario, Canada L3R 4N6
Attention: President
Facsimile No.: (905) 479-5326
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
office of the Warrant Agent designated for such purpose.
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder(s) of any Warrant Certificate to the Warrant Agent shall
be sufficiently given when and if delivered by facsimile transmission (provided
confirmation of receipt is received immediately thereafter) or deposited in the
mail, first-class or registered, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) to the
Warrant Agent as follows:
Mellon Investor Services LLC
500 Grant Street, Room 2122
Pittsburgh, PA 15258
Attention: Relationship Manager
Facsimile No.: (412) 236-8157
with a copy to:
Mellon Investor Services LLC
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: General Counsel
Facsimile No.: (201) 296-4004
SECTION 17. Supplements and Amendments. The Company and the Warrant
--------------------------
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrant Certificates in order to cure any ambiguity
or to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Warrant Agent may deem necessary or desirable and which shall not in any
way adversely affect the interests of the holders of Warrant Certificates. Prior
to executing any such supplement or amendment, the Warrant Agent shall be
entitled to rely on an officer's certificate of the Company to the effect that
such amendment or supplement complies with the
21
terms of this Section. Notwithstanding anything in this Agreement to the
contrary, the prior written consent of the Warrant Agent must be obtained in
connection with any supplement or amendment which alters the rights or duties of
the Warrant Agent.
SECTION 18. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 19. Termination. This Agreement will terminate on any earlier
-----------
date if all Warrants have been exercised or expired without exercise. The
provisions of Section 14 hereof shall survive such termination.
SECTION 20. Governing Law; Submission to Jurisdiction: Waiver of Jury
---------------------------------------------------------
Trial. This Agreement and each Warrant Certificate issued hereunder shall be
- -----
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the internal laws of said State.
Each party hereto hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for purposes of all legal proceedings
arising out of or relating to this agreement or the transactions contemplated
hereby. Each party hereto irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Each party hereto irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this agreement or the
transactions contemplated hereby.
SECTION 21. Benefits of This Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement, and this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 22. Counterparts. This Agreement may be executed in any number
------------
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
[Signature Page Follows]
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
SMTC Corporation
By /s/ Paul Walker
-----------------------------------
Name: Paul Walker
Title: President and CEO
MELLON INVESTOR SERVICES LLC
By /s/ Cynthia Pacolay
-----------------------------------
Name: Cynthia Pacolay
Title: Vice President
23
EXHIBIT A
[Form of Series A Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON FEBRUARY 11, 2007.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED SEPARATE
FROM THE WARRANT HOLDER'S INTERESTS IN LOANS MADE BY WARRANT HOLDER UNDER THE
AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT, DATED AS OF JULY 27, 2000
(AS AMENDED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO TIME), AMONG THE
SMTC CORPORATION, HTM HOLDINGS, INC., SMTC MANUFACTURING CORPORATION OF CANADA,
AND THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS OR ENTITIES FROM TIME TO
TIME PARTIES THERETO UNTIL AFTER DECEMBER 31, 2002.
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY ARE SUBJECT TO A RIGHT OF
REPURCHASE BY SMTC CORPORATION UNTIL MARCH 31, 2003 FOR AN AMOUNT EQUAL TO TWICE
THEIR EXERCISE PRICE.
A-1
No. Warrants
---- ----
Warrant Certificate
SMTC CORPORATION
This Warrant Certificate certifies that , or
-------------------------
registered assigns, is the registered holder of Series A Common
-------------
Stock Purchase Warrants expiring February 11, 2007 (the "Warrants") to purchase
Common Stock, par value $0.01 per share (the "Common Stock"), of SMTC
Corporation, a Delaware corporation (the "Company"). Each Warrant entitles the
holder upon exercise to receive from the Company on or before 5:00 p.m. New York
City Time on February 11, 2007, that number of fully paid and nonassessable
shares of Common Stock (each, a "Warrant Share") as set forth below at the
exercise price (the "Exercise Price") as determined pursuant to the Warrant
Agreement referenced below payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. Notwithstanding the foregoing, Warrants may be exercised without
the exchange of funds pursuant to the net exercise provisions of Section 6 of
the Warrant Agreement.
Each Warrant is initially exercisable for one share of Common Stock,
and the initial Exercise Price per share of Common Stock for any Warrant is
equal to $ per share. The Exercise Price and number of Warrant Shares
--------
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City Time on February 11, 2007 and to the extent not exercised by such time such
warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
A-2
IN WITNESS WHEREOF, SMTC Corporation has caused this Warrant
Certificate to be signed by its President and by its Chief Financial Officer.
SMTC Corporation
By
-----------------------------
[Name]
President
By
-----------------------------
[Name]
Chief Financial Officer
Countersigned:
Dated:
Mellon Investor Services LLC,
as Warrant Agent
By
------------------------------------
Authorized Signatory
A-3
[Form of Series A Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring February 11, 2007 entitling the holder on
exercise to receive shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of February 8, 2002 (the "Warrant Agreement"), duly
executed and delivered by the Company to Mellon Investor Services LLC, a New
Jersey limited liability company, as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City time on February 11, 2007. The holder of Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price as specified in the Warrant
Agreement at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof and the number of shares
of Common Stock issuable upon exercise may be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of February 8, 2002, among the Company and certain investors named
therein. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company.
The holders of the Warrants have certain restrictions on transfer as
outlined in the Warrant Agreement.
On or prior to March 31, 2003, the Company may repurchase any
outstanding Warrants, as evidenced by this Warrant Certificate, at a price equal
to twice their Exercise Price, if all outstanding commitments under the Credit
Agreement have been paid in full and all commitments thereunder have been
terminated and may purchase any shares of Common Stock
A-4
issued upon exercise of the Warrants ("Warrant Shares") at a price equal to
three times their exercise price.
Warrant Certificates, when surrendered at the office of the Warrant
Agent designated for such purpose by the registered holder thereof in person or
by legal representative or attorney duly authorized in writing, may be
exchanged, in the manner and subject to the limitations provided in the Warrant
Agreement, but without payment of any service charge, for another Warrant
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
EXHIBIT B
[Form of Series B Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON DECEMBER 31, 2007.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED SEPARATE
FROM THE WARRANT HOLDER'S INTERESTS IN LOANS MADE BY WARRANT HOLDER UNDER THE
AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT, DATED AS OF JULY 27, 2000
(AS AMENDED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO TIME), AMONG THE
SMTC CORPORATION, HTM HOLDINGS, INC., SMTC MANUFACTURING CORPORATION OF CANADA,
AND THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS OR ENTITIES FROM TIME TO
TIME PARTIES THERETO UNTIL AFTER SEPTEMBER 30, 2003.
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY ARE SUBJECT TO FORFEITURE TO SMTC
CORPORATION UNTIL MARCH 31, 2003.
B-1
No. Warrants
---- ----
Warrant Certificate
SMTC CORPORATION
This Warrant Certificate certifies that , or
--------------------------
registered assigns, is the registered holder of Series B Common
-----------
Stock Purchase Warrants expiring December 31, 2007 (the "Warrants") to purchase
Common Stock, par value $0.01 per share (the "Common Stock"), of SMTC
Corporation, a Delaware corporation (the "Company"). Each Warrant entitles the
holder upon exercise to receive from the Company on or before 5:00 p.m. New York
City Time on December 31, 2007, that number of fully paid and nonassessable
shares of Common Stock (each, a "Warrant Share") as set forth below at the
exercise price (the "Exercise Price") as determined pursuant to the Warrant
Agreement referenced below payable in lawful money of the United States of
America upon surrender of this Warrant Certificate and payment of the Exercise
Price at the office or agency of the Warrant Agent, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. Notwithstanding the foregoing, Warrants may be exercised without
the exchange of funds pursuant to the net exercise provisions of Section 6 of
the Warrant Agreement.
Each Warrant is initially exercisable for one share of Common Stock,
and the initial Exercise Price per share of Common Stock for any Warrant is
equal to $ per share. The Exercise Price and number of Warrant Shares
--------
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City Time on December 31, 2007 and to the extent not exercised by such time such
warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
B-2
IN WITNESS WHEREOF, SMTC Corporation has caused this Warrant
Certificate to be signed by its President and by its Chief Financial Officer.
SMTC Corporation
By
--------------------------------
[Name]
President
By
--------------------------------
[Name]
Chief Financial Officer
Countersigned:
Dated:
Mellon Investor Services LLC
as Warrant Agent
By
---------------------------------
Authorized Signatory
B-3
[Form of Series B Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring December 31, 2007 entitling the holder on
exercise to receive shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of February 8, 2002 (the "Warrant Agreement"), duly
executed and delivered by the Company to Mellon Investor Services LLC, a New
Jersey limited liability company, as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City time on December 31, 2007. The holder of Warrants evidenced by this Warrant
Certificate may exercise them by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price as specified in the Warrant
Agreement at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof and the number of shares
of Common Stock issuable upon exercise may be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in an Registration Rights Agreement
dated as of February 8, 2002 among the Company and certain investors named
therein. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company.
The holders of the Warrants have certain restrictions on transfer as
outlined in the Warrant Agreement.
On or prior to March 31, 2003, the Company may repurchase any
outstanding Warrants, as evidenced by this Warrant Certificate, at a price equal
to twice their Exercise Price, if all outstanding commitments under the Credit
Agreement have been paid in full and all commitments thereunder have been
terminated and may purchase any shares of Common Stock
B-4
issued upon exercise of the Warrants ("Warrant Shares") at a price equal to
three times their exercise price.
The holders of the Warrants must surrender all outstanding Warrants to
the Company if all outstanding obligations under the Credit Agreement are paid
in full and all commitments thereunder are terminated on or before March 31,
2003.
Warrant Certificates, when surrendered at the office of the Warrant
Agent designated for such purpose by the registered holder thereof in person or
by legal representative or attorney duly authorized in writing, may be
exchanged, in the manner and subject to the limitations provided in the Warrant
Agreement, but without payment of any service charge, for another Warrant
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
B-5
EXHIBT C
[Form of Series C Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON FIFTH ANNIVERSARY OF
ISSUE DATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED SEPARATE
FROM THE WARRANT HOLDER'S INTERESTS IN LOANS MADE BY WARRANT HOLDER UNDER THE
AMENDED AND RESTATED CREDIT AND GUARANTEE AGREEMENT, DATED AS OF JULY 27, 2000
(AS AMENDED, SUPPLEMENTED AND OTHERWISE MODIFIED FROM TIME TO TIME), AMONG THE
SMTC CORPORATION, HTM HOLDINGS, INC., SMTC MANUFACTURING CORPORATION OF CANADA,
AND THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS OR ENTITIES FROM TIME TO
TIME PARTIES THERETO UNTIL THE LATER OF DECEMBER 31, 2002 OR NINE MONTHS FROM
THEIR DATE OF ISSUANCE.
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY ARE SUBJECT TO FORFEITURE TO SMTC
CORPORATION UNTIL MARCH 31, 2003.
C-1
No. Warrants
---- ----
Warrant Certificate
SMTC CORPORATION
This Warrant Certificate certifies that , or
--------------------------
registered assigns, is the registered holder of Series C Common
-----------
Stock Purchase Warrants expiring [ ] (the "Warrants") to purchase
-----------
Common Stock, par value $0.01 per share (the "Common Stock"), of SMTC
Corporation, a Delaware corporation (the "Company"). Each Warrant entitles the
holder upon exercise to receive from the Company on or before 5:00 p.m. New York
City Time on [ ], that number of fully paid and nonassessable shares
-----------
of Common Stock (each, a "Warrant Share") as set forth below at the exercise
price (the "Exercise Price") as determined pursuant to the Warrant Agreement
referenced below payable in lawful money of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office or agency of the Warrant Agent, but only subject to the conditions set
forth herein and in the Warrant Agreement referred to on the reverse hereof.
Notwithstanding the foregoing, Warrants may be exercised without the exchange of
funds pursuant to the net exercise provisions of Section 6 of the Warrant
Agreement.
Each Warrant is initially exercisable for one share of Common Stock,
and the initial Exercise Price per share of Common Stock for any Warrant is
equal to $1.33 per share. The Exercise Price and number of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City Time on [ ] and to the extent not exercised by such time such
-----------
warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
C-2
IN WITNESS WHEREOF, SMTC Corporation has caused this Warrant
Certificate to be signed by its President and by its Chief Financial Officer.
SMTC Corporation
By
----------------------------------
[Name]
President
By
----------------------------------
[Name]
Chief Financial Officer
Countersigned:
Dated:
Mellon Investor Services LLC
as Warrant Agent
By
------------------------------------------
Authorized Signatory
C-3
[Form of Series C Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring [ ] entitling the holder on
-----------
exercise to receive shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of February 8, 2002 (the "Warrant Agreement"), duly
executed and delivered by the Company to Mellon Investor Services LLC, a New
Jersey limited liability company, as warrant agent (the "Warrant Agent"), which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City time on [ ]. The holder of Warrants evidenced by this Warrant
-----------
Certificate may exercise them by surrendering this Warrant Certificate, with the
form of election to purchase set forth hereon properly completed and executed,
together with payment of the Exercise Price as specified in the Warrant
Agreement at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof and the number of shares
of Common Stock issuable upon exercise may be adjusted. No fractions of a share
of Common Stock will be issued upon the exercise of any Warrant, but the Company
will pay the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of February 8, 2002, among the Company and certain investors named
therein. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company.
The holders of the Warrants have certain restrictions on transfer as
outlined in the Warrant Agreement.
On or prior to March 31, 2003, the Company may repurchase any
outstanding Warrants, as evidenced by this Warrant Certificate, at a price equal
to twice their Exercise Price, if all outstanding commitments under the Credit
Agreement have been paid in full and all commitments thereunder have been
terminated and may purchase any shares of Common Stock
C-4
issued upon exercise of the Warrants ("Warrant Shares") at a price equal to
three times their exercise price.
The holders of the Warrants must surrender all outstanding Warrants to
the Company if all outstanding obligations under the Credit Agreement are paid
in full and all commitments thereunder are terminated on or before March 31,
2003.
Warrant Certificates, when surrendered at the office of the Warrant
Agent designated for such purpose by the registered holder thereof in person or
by legal representative or attorney duly authorized in writing, may be
exchanged, in the manner and subject to the limitations provided in the Warrant
Agreement, but without payment of any service charge, for another Warrant
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
C-5
Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive shares of Common
--------
Stock and herewith tenders payment for such shares to the order of SMTC
Corporation in the amount of $ in accordance with the terms hereof
--------
unless the holder is exercising Warrants pursuant to the net exercise provisions
of Section 6 of the Warrant Agreement. The undersigned requests that a
certificate for such shares be registered in the name of , whose
--------------
address is and that such shares be delivered to
------------------------------
whose address is . If said
- ------------------ -------- ------------------------
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of ,
--------
whose address is , and that such Warrant Certificate be
-------------------------
delivered to , whose address is .
------------------- --------------------
Signature:
Date:
Signature Guaranteed:
C-6