EXHIBIT 4.2
FORM OF WARRANT CERTIFICATE
[THE FOLLOWING PARAGRAPH SHALL APPEAR ON THE FACE OF EACH RESTRICTED WARRANT:]
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR AN
APPLICABLE EXEMPTION THEREFROM. THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THE SECURITIES.
[THE COMPANY SHALL PLACE THE FOLLOWING PARAGRAPH ON THE FACE OF EACH WARRANT
HELD BY OR TRANSFERRED TO AN "AFFILIATE" (AS DEFINED IN RULE 501(B) OF
REGULATION D UNDER THE SECURITIES ACT) OF THE COMPANY:]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO MAY BE
DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY BE
SOLD ONLY IN COMPLIANCE WITH RULE 144, PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A VALID EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT.
DAVE & BUSTER'S, INC.
WARRANT TO PURCHASE COMMON STOCK
Warrant No.: [ ] Number of Shares: [ ]
CUSIP No.: 23833N 112 (subject to adjustment)
Date of Issuance: August 7, 2003
DAVE & BUSTER'S, INC., a Missouri corporation (the "Company"), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, [____________], the registered holder hereof
or its permitted assigns, is entitled, subject to the terms and conditions set
forth below, to purchase from the Company upon surrender of this Warrant (as
defined below), at any time or times on or after the date hereof, but not after
5:00 p.m., Eastern Standard Time, on the Expiration Date (as defined below),
[______________] fully paid nonassessable shares of Common Stock (as defined
below) of the Company at the Exercise Price per share provided in Section 1(d)
of this Warrant, subject to adjustment as provided below. Capitalized terms used
herein but not defined shall have the same meanings assigned to them in the
Securities
Purchase Agreement dated as of August 6, 2003, by and between the Company and
the parties listed on the Schedule of Buyers attached thereto as Exhibit A (as
such agreement may be amended, supplemented and modified from time to time as
provided in such agreement, the "Securities Purchase Agreement").
This Warrant (as defined below) is one of a series of Warrants issued
in connection with the transactions described in that certain (i) Securities
Purchase Agreement and (ii) certain other related documents and agreements
including, without limitation, the Transaction Documents (as defined in the
Securities Purchase Agreement). The Warrant Shares (as defined below) issued
upon exercise of this Warrant and the holder hereof and thereof shall be
entitled to all of the rights and privileges set forth in the Transaction
Documents. The Warrants are issued under and pursuant to a Warrant Agent
Agreement dated as of August 7, 2003 (herein called the "Warrant Agent
Agreement"), between the Company and The Bank of New York (herein called the
"Warrant Agent"),
SECTION 1. DEFINITIONS. The following terms as used in this Warrant shall have
the following meanings:
(a) "Business Day" means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are required by law to
remain closed.
(b) "Common Stock" means (i) the common stock, $.01 par value per
share, of the Company, and (ii) any capital stock into which such Common Stock
shall have been changed or any capital stock resulting from a reclassification
of such Common Stock.
(c) "Exercise Price" shall be equal to $13.46, subject to further
adjustment as hereinafter provided.
(d) "Expiration Date" means August 6, 2008 or, if such date does not
fall on a Business Day or on a Trading Day, then the next Business Day.
(e) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization or association and a government or any department or agency
thereof.
(f) "Principal Market" means The New York Stock Exchange (the "NYSE")
or, if the Common Stock is not traded on the NYSE, then the principal securities
exchange or trading market for the Common Stock.
(g) "Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of August 7, 2003, among the Company, the Placement
Agents and certain of the initial purchasers of the Series B Preferred Stock as
such agreement may be amended, supplemented and modified from time to time in a
writing signed by all of the signatories thereto.
(h) "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
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(i) "Trading Day" shall mean (x) a day on which the Principal Market is
open for business or (y) if the applicable security is not so listed on a
Principal Market or admitted for trading or quotation, a Business Day.
(j) "Warrant" means this Warrant and the other warrants to purchase
shares of Common Stock issued pursuant to the Securities Purchase Agreement and
all warrants issued in exchange, transfer or replacement thereof.
(k) "Warrant Shares" means all shares of Common Stock issuable upon
exercise of the Warrants.
SECTION 2. Exercise of Warrant.
(a) Subject to the terms and conditions hereof, including the early
termination of this Warrant pursuant to Section 3(b) of this Warrant, this
Warrant may be exercised by the holder hereof then registered on the books of
the Company, in whole or in part, at any time on any Business Day on or after
the opening of business on the date hereof and prior to 5:00 p.m., Eastern Time,
on the Expiration Date by (i) delivery of a written notice, in the form of the
subscription notice attached as Exhibit A hereto or a reasonable facsimile
thereof (the "Exercise Notice"), to the Company at the principal corporate trust
office of the Warrant Agent and to the Company's designated transfer agent (the
"Transfer Agent"), of such holder's election to exercise all or a portion of
this Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) (A) payment to the Warrant Agent of an amount equal to the
Exercise Price multiplied by the number of Warrant Shares as to which this
Warrant is being exercised (the "Aggregate Exercise Price") in cash or delivery
of a certified check or bank draft payable to the order of the Warrant Agent or
wire transfer of immediately available funds or (B) notification to the Company
at the principal corporate trust office of the Warrant Agent that this Warrant
is being exercised pursuant to a Cashless Exercise (as defined in Section 2(e)
of this Warrant), and (iii) the surrender of this Warrant to a common carrier
for overnight delivery to the Warrant Agent as soon as practicable following
such date (or an indemnification undertaking or other form of security
reasonably satisfactory to the Company with respect to this Warrant in the case
of its loss, theft or destruction); provided, however, that if such Warrant
Shares are to be issued in any name other than that of the registered holder of
this Warrant, such issuance shall be deemed a transfer and the provisions of
Section 8 of this Warrant shall be applicable. In the event of any exercise of
the rights represented by this Warrant in compliance with this Section 2(a), the
Company shall use its best efforts on or before the third Business Day, but in
no event later than the fifth Business Day (the "Warrant Share Delivery Date")
following the date of receipt by the Warrant Agent of the Exercise Notice, the
Aggregate Exercise Price (or notice of Cashless Exercise) and this Warrant (or
an indemnification undertaking or other form of security reasonably satisfactory
to the Company with respect to this Warrant in the case of its loss, theft or
destruction) (the "Exercise Delivery Documents"), (A) in the case of a public
resale of such Warrant Shares, at the holder's request, to credit such aggregate
number of shares of Common Stock to which the holder shall be entitled to the
holder's or its designee's balance account with The Depository Trust Company
("DTC") through its Deposit Withdrawal Agent Commission system or (B) to issue
and deliver to the address as specified in the Exercise Notice, a certificate or
certificates in such denominations as may be requested by the holder in the
Exercise Notice, registered in the name of the holder or its designee, for the
number of shares of Common Stock to which the holder shall be
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entitled upon such exercise. Upon delivery of the Exercise Notice, this Warrant
and Aggregate Exercise Price referred to in clause (ii)(A) above or notification
of a Cashless Exercise referred to in Section 2(e) of this Warrant, the holder
of this Warrant shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has
been exercised, irrespective of the date of delivery of this Warrant as required
by clause (iii) above or the certificates evidencing such Warrant Shares. In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the number of Warrant Shares, the Company shall
promptly issue to the holder the number of shares of Common Stock that is not
disputed and shall submit the disputed determination or arithmetic calculation
to the holder via facsimile within two (2) Business Days after receipt of the
holder's Exercise Notice. If the holder and the Company are unable to agree upon
the determination of the Exercise Price or arithmetic calculation of the number
of Warrant Shares within two (2) Business Days of such disputed determination or
arithmetic calculation being submitted to the holder, then the Company shall
immediately submit via facsimile (i) the disputed determination of the Exercise
Price or the Closing Price (as defined in Section 9(f) of this Warrant) to an
independent, reputable investment banking firm selected jointly by the Company
and the holder or (ii) the disputed arithmetic calculation of the number of
Warrant Shares to its independent, outside auditor. The Company shall cause the
investment banking firm or the auditor, as the case may be, to perform the
determination or calculation and notify the Company and the holder of the
results no later than ten (10) Business Days from the time it receives the
disputed determination or calculation. Such investment banking firm's or
auditor's determination or calculation, as the case may be, shall be deemed
conclusive absent manifest error. All fees and expenses of such determinations
shall be borne solely by the Company.
(b) Unless the rights represented by this Warrant shall have expired or
shall have been fully exercised, the Company shall, as soon as practicable but
in no event later than five (5) Business Days after any exercise (the "Warrant
Delivery Date") and at its own expense, issue a new Warrant identical in all
respects to this Warrant exercised except it shall represent rights to purchase
the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised.
(c) Notwithstanding anything contained in this Warrant to the contrary,
the Company shall not be required to issue fractions of shares of Common Stock
upon exercise of this Warrant or to distribute certificates which evidence such
fractional shares. If more than one Warrant shall be presented for exercise in
full at the same time by the same holder, the number of full shares of Common
Stock which shall be issuable upon the exercise thereof shall be computed on the
basis of the aggregate number of shares of Common Stock purchasable on exercise
of all Warrants so presented. In lieu of any fractional shares, there shall be
paid to the holder an amount of cash equal to the same fraction of the current
market value of a share of Common Stock. For purposes of this Section 2(c) of
this Warrant, the current market value of a share of Common Stock shall be the
Closing Price of a share of Common Stock for the Trading Day immediately prior
to the date of such exercise or if not listed on a Principal Market, then as
determined by the holders of Warrants representing a majority of the shares of
Common Stock issuable upon exercise of all of the Warrants then outstanding.
(d) If the Company shall fail for any reason or for no reason (except
in the case of a dispute as to the Exercise Price or the Closing Price which is
being resolved in accordance with Section 2(a)
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of this Warrant) to issue to the holder within five (5) Business Days of receipt
of the Exercise Delivery Documents, a certificate for the number of shares of
Common Stock to which the holder is entitled or to credit the holder's or its
designee's balance account with DTC, in accordance with Section 2 of this
Warrant, for such number of shares of Common Stock to which the holder is
entitled upon the holder's exercise of this Warrant or a new Warrant for the
number of shares of Common Stock to which such holder is entitled pursuant to
Section 2(b) of this Warrant, the Company shall, in addition to any other
remedies under this Warrant or the Securities Purchase Agreement or otherwise
available to such holder, including any indemnification under Section 8 of the
Securities Purchase Agreement, pay as additional damages in cash to such holder
on each day after the Warrant Share Delivery Date if such exercise is not timely
effected and/or each day after the Warrant Delivery Date if such Warrant is not
delivered, as the case may be, in an amount equal to one-half percent (0.5%) per
month multiplied by the product of (I) the sum of the number of shares of Common
Stock not issued to the holder on or prior to the Warrant Share Delivery Date
and to which such holder is entitled and, in the event the Company has failed to
deliver a Warrant to the holder on or prior to the Warrant Delivery Date and to
which such holder is entitled, the number of shares of Common Stock issuable
upon exercise of the Warrant as of the Warrant Delivery Date and (II) the
Closing Price of the Common Stock on the Warrant Share Delivery Date, in the
case of failure to deliver Common Stock, or on the Warrant Delivery Date, in the
case of failure to deliver a Warrant, provided that if the Common Stock is not
listed on a Principal Market, then the Closing Price shall be as determined in
good faith by a majority of the Company's Board of Directors, whose
determination shall be final, binding and conclusive.
(e) Notwithstanding anything contained herein to the contrary, the
holder of this Warrant may, at its election exercised in its sole discretion,
exercise this Warrant as to all or a portion of the Warrant Shares and, in lieu
of making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the "Net Number" of shares of Common Stock determined
according to the following formula (a "Cashless Exercise"):
Net Number = (A x B) - (A x C)
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B
For purposes of the foregoing formula:
A= the total number of shares with respect to which this
Warrant is then being exercised.
B= the Closing Price of the Common Stock on the Trading
Day immediately preceding the date of the Exercise
Notice.
C= the Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.
[INCLUDE THE FOLLOWING PARAGRAPH ONLY IF HOLDER HAS ELECTED TO BE
GOVERNED BY SECTION 2(K)(i) OF THE SECURITIES PURCHASE AGREEMENT:
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(f) The Holder hereby agrees that in no event will it exercise any of
the Warrants in excess of the number of such Warrants upon the exercise of which
(x) the number of shares of Common Stock beneficially owned by such Holder
(other than the shares which would otherwise be deemed beneficially owned except
for being subject to a limitation on conversion analogous to the limitation
contained in this paragraph plus (y) the number of shares of Common Stock
issuable upon the exercise of such Warrants, would be equal to or exceed 9.99%
of the number of shares of Common Stock then issued and outstanding (after
giving effect to such conversion), it being the intent of the Company and the
Holder that the Holder not be deemed at any time to have the power to vote or
dispose of greater than 9.99% of the number of shares of Common Stock issued and
outstanding. As used herein, beneficial ownership shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). To the extent that the limitation contained in this
paragraph applies (and without limiting any rights the Company may otherwise
have), the Company may rely on the Holder's determination of whether the
Warrants are exercisable pursuant to the terms hereof, the Company having no
obligation whatsoever to verify or confirm the accuracy of such determination,
and the submission of the Exercise Notice by the Holder shall be deemed to be
the Holder's representation that the Warrants specified therein are exercisable
pursuant to the terms hereof. Nothing contained herein shall be deemed to
restrict the right of a Holder to exercise the Warrants at such time as the
conversion thereof will not violate the provisions of this paragraph.]
[INCLUDE THE FOLLOWING PARAGRAPHS ONLY IF HOLDER HAS ELECTED TO BE
GOVERNED BY SECTION 2(K)(ii) OF THE SECURITIES PURCHASE AGREEMENT:
(f) Each Holder hereby agrees that in no event will it exercise any of
the Warrants in excess of the number of such Warrants upon the exercise of which
(x) the number of shares of Common Stock beneficially owned by such Holder
(other than the shares which would otherwise be deemed beneficially owned except
for being subject to a limitation on conversion analogous to the limitation
contained in this paragraph) plus (y) the number of shares of Common Stock
issuable upon the exercise of such Warrants, would be equal to or exceed 4.99%
of the number of shares of Common Stock then issued and outstanding (after
giving effect to such conversion), it being the intent of the Company and the
Holder that the Holder not be deemed at any time to have the power to vote or
dispose of greater than 4.99% of the number of shares of Common Stock issued and
outstanding. As used herein, beneficial ownership shall be determined in
accordance with the Exchange Act. To the extent that the limitation contained in
this paragraph applies (and without limiting any rights the Company may
otherwise have), the Company may rely on the Holder's determination of whether
the Warrants are exercisable pursuant to the terms hereof, the Company having no
obligation whatsoever to verify or confirm the accuracy of such determination,
and the submission of the Exercise Notice by the Holder shall be deemed to be
the Holder's representation that the Warrants specified therein are exercisable
pursuant to the terms hereof. Nothing contained herein shall be deemed to
restrict the right of a Holder to exercise the Warrants at such time as the
conversion thereof will not violate the provisions of this paragraph.
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SECTION 3. DATE; DURATION; EARLY TERMINATION OF WARRANTS.
(a) The date of this Warrant is August 7, 2003 (the "Warrant Date").
This Warrant, in all events, shall be wholly void and of no effect at 5:00 pm
Eastern Standard Time on the Expiration Date, or the Termination Date (as
defined below), if applicable, as the case may be, except that notwithstanding
any other provisions hereof, the provisions of Section 8(c) of this Warrant
shall continue in full force and effect after such date as to any Warrant Shares
or other securities issued upon the exercise of this Warrant.
(b) If at any time after August 6, 2006 (1) the Closing Price per share
of the Common Stock has exceeded one hundred fifty percent (150%) of the
Exercise Price then in effect for any fifteen (15) Trading Days within a period
of twenty (20) consecutive Trading Days (the "Determination Period") and (2)
either (x) a shelf registration statement covering resales of the Common Stock
issuable upon exercise of the Warrants is effective and available for use at all
times during the period beginning thirty (30) days prior to the Notice Date (as
defined below) and ending on the Termination Date, and is expected to remain
effective and available for use until at least the earlier of thirty (30) days
following the Termination Date or the last date on which the shelf registration
statement is required to be kept effective under the terms of the Registration
Rights Agreement or (y) the Warrant Shares issuable upon a Cashless Exercise may
be sold pursuant to Rule 144 under the Securities Act, then the Company may, at
its option, terminate the Warrants. By following the procedures set forth below,
the Company may exercise this right of termination only if, within ten (10) days
following the Determination Period, the Company shall mail or cause to be mailed
a notice of such termination (the "Termination Notice," and the date such
Termination Notice is mailed, the "Notice Date") to the holders of the Warrant
at the address set forth for such holder in Section 12 of this Warrant. Such
mailing shall be by first class mail and the Company shall contemporaneously
issue a press release through PRNewswire or Bloomberg Financial Markets
containing substantially the same information as the notice of termination
described below. Each such notice of termination shall specify the CUSIP number
of the Warrant, the Termination Date, that the Warrants may not be exercised
after 5:00 p.m., Eastern Standard Time, on the Termination Date and the current
Exercise Price.
If all of the conditions described in the preceding paragraph have been
met and if no Event of Default (as that term is defined in the Indenture) shall
have occurred and be continuing under the Indenture, dated as of August 7, 2003
between the Company and The Bank of New York, as trustee, any Warrant not
exercised before the close of business on the ninetieth (90th) day after the
mailing date of the notice of termination (such ninetieth (90th) day, the
"Termination Date") shall automatically be deemed exercised in a Cashless
Exercise in accordance with Section 2(e) and the Company will deliver the number
of Warrant Shares issuable to the holder upon receipt of a completed Exercise
Notice along with the original copy of the Warrant for cancellation (or an
affidavit of lost Warrant in accordance with Section 12).
SECTION 4. COVENANTS AS TO COMMON STOCK. The Company hereby covenants and agrees
as follows:
(a) Issuance of Warrants and Warrant Shares. This Warrant is, and any
Warrants issued in substitution for or replacement of this Warrant will, upon
issuance, be, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges with respect to the issuance thereof, and
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shall not be subject to preemptive rights or other similar rights of
shareholders of the Company. All Warrant Shares which may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance and
payment hereof or Cashless Exercise in accordance with the terms hereof, be
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges created by or through the Company with respect to the issue thereof,
with the holders being entitled to all rights accorded to a holder of Common
Stock.
(b) Reservation of Shares. During the period within which the rights
represented by this Warrant may be exercised, the Company will take all actions
reasonably necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than one hundred five percent (105%) of the number
of shares of Common Stock needed to provide for the issuance of the Warrant
Shares upon exercise of all of the Warrants without regard to any limitations on
conversions or exercise.
(c) Listing. The Company shall promptly use reasonable efforts to
secure the listing of the shares of Common Stock issuable upon exercise of this
Warrant upon each national securities exchange and automated quotation system,
if any, upon which shares of Common Stock are then listed (subject to official
notice of issuance upon exercise of this Warrant) and shall use reasonable
efforts to maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all shares of Common Stock issuable from time to time
upon the exercise of this Warrant; and the Company shall use reasonable efforts
to list on the Principal Market or automated quotation system, as the case may
be, and shall use reasonable efforts to maintain such listing of, any other
shares of capital stock of the Company issuable upon the exercise of this
Warrant if and so long as any shares of the same class shall be listed on such
Principal Market or automated quotation system. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this Section
4(c).
(d) Certain Actions. The Company will not, by amendment of its Articles
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any shares of Common Stock issuable upon the exercise of this Warrant above the
Exercise Price then in effect, (ii) will take all such actions as may be
reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant and (iii) will not take any action which results in any
adjustment of the Exercise Price if the total number of shares of Common Stock
issuable after the action upon the exercise of all of the Warrants would exceed
the total number of shares of Common Stock then authorized by the Company's
Articles of Incorporation and available for the purpose of issue upon such
exercise.
(e) Obligations Binding on Successors. This Warrant will be binding
upon any entity succeeding to the Company in one or a series of transactions by
merger, consolidation or acquisition of all or substantially all of the
Company's assets or other similar transactions.
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SECTION 5. TAXES.
(a) The Company shall pay any and all documentary, stamp, transfer and
other similar taxes which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.
(b) Notwithstanding any other provision of this Warrant or any other
Transaction Document, for income tax purposes, any assignee or transferee shall
agree that the Company and the Company's Transfer Agent shall be permitted to
withhold from any amounts payable to such assignee or transferee any taxes
required by law to be withheld from such amounts. Unless exempt from the
obligation to do so, each assignee or transferee shall execute and deliver to
the Company or the Transfer Agent, as applicable, properly completed Form W-8 or
W-9, indicating that such assignee or transferee is not subject to back-up
withholding for United States Federal income tax purposes. Each assignee or
transferee that does not deliver such a form pursuant to the preceding sentence
shall have the burden of proving to the Company's reasonable satisfaction that
it is exempt from such requirement.
SECTION 6. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as otherwise
specifically provided herein, prior to the exercise of the Warrants represented
hereby, the holder of this Warrant shall not be entitled, as such, to any rights
of a shareholder of the Company, including, without limitation, the right to
vote or to consent to any action of the shareholders of the Company, to receive
dividends or other distributions, to exercise any preemptive right or to receive
dividends or other distributions, to exercise any preemptive right or to receive
any notice of meetings of shareholders of the Company, and shall not be entitled
to receive any notice of any proceedings of the Company. In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on such
holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a shareholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.
SECTION 7. COMPLIANCE WITH SECURITIES LAWS.
(a) The holder of this Warrant, by the acceptance hereof, represents
and warrants that (i) it is acquiring this Warrant and (ii) upon exercise of
this Warrant will acquire the Warrant Shares then issuable upon exercise thereof
for its own account for investment only and not with a view towards, or for
resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the Securities
Act; provided, however, that by making the representations herein, the holder
does not agree to hold this Warrant or any of the Warrant Shares for any minimum
or other specific term and reserves the right to dispose of this Warrant and the
Warrant Shares at any time in accordance with or pursuant to a registration
statement or an exemption under the Securities Act. The holder of this Warrant
further represents, by acceptance hereof, that, as of this date, such holder is
an "accredited investor" as such term is defined in Rule 501(a) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
and was not organized for the specific purpose of acquiring the Warrants or
Warrant Shares.
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(b) This Warrant and all the Warrant Shares issued upon exercise hereof
or conversion thereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by state
securities laws or any securities exchange upon which such Warrant Shares may,
at the time of such exercise, be listed) on the face thereof unless at the time
of exercise such Warrant Shares shall be registered under the Securities Act:
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM. THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN SECURED BY THE SECURITIES.
In addition, any Warrants or Warrant Shares held by or transferred to
an "affiliate" (as defined in Rule 501(b) of Regulation D under the Securities
Act) of the Company shall be stamped or imprinted with a legend substantially in
the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON WHO
MAY BE DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY BE SOLD ONLY IN COMPLIANCE WITH RULE 144,
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO A VALID EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT.
The legends set forth above shall be removed and the Company (in the
case of Warrants) shall direct the Warrant Agent to issue a new Warrant or
Warrant(s) of like tenor and exercisable for the same number of Warrant Shares,
or the Transfer Agent (in the case of Warrant Shares) shall issue a certificate
or certificates representing Warrant Shares, as appropriate, without such
legends to the holder of the Warrant(s) or Warrant Shares upon which they are
stamped, (i) if such Warrant(s) or Warrant Shares are registered for resale
under the Securities Act and are transferred or sold pursuant to such
registration, (ii) if, pursuant to a sale transaction, such holder provides the
Company with an opinion of counsel reasonably acceptable to the Company to the
effect that a public sale, assignment or transfer of the Warrant(s) or Warrant
Shares may be made without registration under the Securities Act, or (iii) if
the holder of the Securities has not been an "affiliate" (as defined in Rule
501(b) of Regulation D under the Securities Act) during the preceding three (3)
months, upon expiration of the two- (2) year period under Rule 144(k)
promulgated under the Securities Act (or any successor rule). In the event Rule
144(k) (or any successor rule) is amended to change the two- (2) year or three-
(3) month periods, the reference(s) in the preceding sentence shall be deemed to
be a reference to such changed period(s), provided that such change shall not
become effective if it is otherwise prohibited by, or would otherwise cause a
violation of, the then applicable federal securities laws. The Company shall not
require such opinion of counsel for the sale of Warrant(s) or Warrant Shares in
accordance with Rule 144 of the Securities Act, provided the seller provides
such
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representations that the Company shall reasonably request confirming compliance
with the requirements of Rule 144.
SECTION 8. OWNERSHIP AND TRANSFER.
(a) The Company shall cause the Warrant Agent to maintain at its
principal corporate trust office (or at such other office or agency of the
Company as the Company may designate by notice to the holder hereof), a register
for this Warrant (the "Warrant Register"), in which the Warrant Agent shall
record the name and address of the Person in whose name this Warrant has been
issued, as well as the name and address of each transferee. The Company may
treat the Person in whose name any Warrant is registered on the Warrant Register
as the owner and holder thereof for all purposes, notwithstanding any notice to
the contrary, but in all events recognizing any transfers made in accordance
with the terms of this Warrant.
(b) This Warrant and all rights hereunder shall be assignable and
transferable by the holder hereof without the consent of the Company upon
surrender of this Warrant with a properly executed assignment (in the form of
Exhibit B attached hereto) at the principal corporate trust office of the
Warrant Agent (or such other office or agency of the Company as the Company may
designate in writing to the holder hereof).
(c) The Company is obligated to register all of the Warrants and the
Warrant Shares for resale under the Securities Act pursuant to the Registration
Rights Agreement. The Warrants and the shares of Common Stock issuable upon
exercise of this Warrant shall constitute Registrable Securities (as such term
is defined in the Registration Rights Agreement). Each holder of this Warrant
shall be entitled to all of the benefits afforded to a holder of any such
Registrable Securities under the Registration Rights Agreement and such holder,
by its acceptance of this Warrant, agrees and shall agree to be bound by and to
comply with the terms and conditions of the Registration Rights Agreement
applicable to such holder as a holder of such Registrable Securities.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES ISSUABLE. The
Exercise Price, the number of Warrant Shares issuable upon the exercise of each
Warrant and the number of Warrants outstanding are subject to adjustment from
time to time upon the occurrence of the events enumerated in this Section 9.
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Exercise Price in effect at the opening of business on the date
following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the Record Date
(as defined in Section 9(f) of this Warrant) fixed for such determination and
(ii) the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction in the Exercise Price to become effective immediately after the
opening of business on the day following the Record Date. If any dividend or
distribution of the type described in this Section 9(a) of this Warrant is
declared but not so paid or made, the Exercise Price shall again be adjusted to
the Exercise Price which would then be in effect if such dividend or
distribution had not been declared.
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(b) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Exercise Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and conversely, in case
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Exercise Price in effect at the opening of business
on the day following the day upon which such combination becomes effective shall
be proportionately increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(c) In case the Company shall issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined in Section 9(f) of this Warrant) on the Record Date
fixed for the determination of stockholders entitled to receive such rights or
warrants, the Exercise Price shall be adjusted so that the same shall equal the
price determined by multiplying the Exercise Price in effect at the opening of
business on the date after such Record Date by a fraction (i) the numerator of
which shall be the sum of the number of shares of Common Stock outstanding at
the close of business on the Record Date plus the number of shares that the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such Current Market Price and (ii)
the denominator of which shall be the sum of the number of shares of Common
Stock outstanding at the close of business on the Record Date plus the total
number of additional shares of Common Stock so offered for subscription or
purchase. Such adjustment shall become effective immediately after the opening
of business on the day following the Record Date fixed for determination of
stockholders entitled to receive such rights or warrants. To the extent that
shares of Common Stock are not delivered pursuant to such rights or warrants,
upon the expiration or termination of such rights or warrants, the Exercise
Price shall be readjusted to the Exercise Price that would then be in effect had
the adjustments made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued, the
Exercise Price shall again be adjusted to be the Exercise Price that would then
be in effect if such date fixed for the determination of stockholders entitled
to receive such rights or warrants had not been fixed. In determining whether
any rights or warrants entitle the holders to subscribe for or purchase shares
of Common Stock at less than the Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received for such rights or warrants, the value
of such consideration, if other than cash, to be determined in good faith by the
Company's Board of Directors.
(d) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock shares of any class of capital stock of the
Company (other than any dividends or distributions to which Section 9(a) of this
Warrant applies) or evidences of its indebtedness or other assets (including
securities, but excluding (1) any rights or warrants referred to in Section 9(c)
of this Warrant and (2) dividends and distributions paid exclusively in cash
(except as set forth in Sections 9(e) and 9(f) of this Warrant, (the foregoing
hereinafter in this Section 9(d) called the "Securities")), unless the Company
elects to reserve such Securities for distribution to the holders upon exercise
of the Warrants so that any such holder converting Warrants will receive upon
such exercise, in addition to the shares of Common Stock to which such holder is
entitled, the amount and
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kind of such Securities which such holder would have received if such holder had
exercised its Warrants into Common Stock immediately prior to the Record Date
for such distribution of the Securities, then, in each such case, the Exercise
Price shall be reduced so that the same shall be equal to the price determined
by multiplying the Exercise Price in effect immediately prior to the close of
business on the Record Date with respect to such distribution by a fraction the
numerator of which shall be the Current Market Price (as defined in Section 9(f)
of this Warrant) on such date less the fair market value (as determined in good
faith by the Company's Board of Directors, whose determination shall be
conclusive) on such date of the portion of the Securities so distributed
applicable to one share of Common Stock and the denominator of which shall be
such Current Market Price, such reduction to become effective immediately prior
to the opening of business on the day following the Record Date; provided,
however, that in the event the then fair market value (as determined in good
faith by the Company's Board of Directors, whose determination shall be
conclusive) of the portion of the Securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price on
the Record Date, in lieu of the foregoing adjustment, adequate provision shall
be made so that each holder shall have the right to receive upon conversion of a
Warrant (or any portion thereof) the amount of Securities such holder would have
received had such holder converted such Warrant (or portion thereof) immediately
prior to such Record Date.
In the event that such dividend or distribution is not so paid or made,
the Exercise Price shall again be adjusted to be the Exercise Price which would
then be in effect if such dividend or distribution had not been declared. If a
majority of the independent members of the Company's Board of Directors
determines the fair market value of any distribution for purposes of this
Section 9(d) by reference to the actual or when issued trading market for any
securities comprising all or part of such distribution, it must in doing so
consider the prices in such market over the same period (the "Reference Period")
used in computing the Current Market Price pursuant to Section 9(f) of this
Warrant to the extent possible, unless a majority of the independent members of
the Company's Board of Directors determines in good faith that determining the
fair market value during the Reference Period would not be in the best interest
of the holders.
In the event that the Company implements a new stockholder rights plan,
such rights plan shall provide that upon exercise of the Warrants the holders
will receive, in addition to the Common Stock issuable upon such exercise, the
rights issued under such rights plan (as if the holder had exercised the Warrant
prior to implementing the rights plan and notwithstanding the occurrence of an
event causing such rights to separate from the Common Stock at or prior to the
time of exercise). Any distribution of rights or warrants pursuant to a
stockholder rights plan complying with the requirements set forth in the
immediately preceding sentence of this paragraph shall not constitute a
distribution of rights or warrants for the purposes of this Section 9(d).
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"), (i) are deemed to be transferred with such shares of Common
Stock, (ii) are not exercisable, and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 9(d) (and no adjustment to the Exercise Price under
this Section 9(d) will be required) until the occurrence of the earliest
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Trigger Event. If such right or warrant is subject to subsequent events, upon
the occurrence of which such right or warrant shall become exercisable to
purchase different securities, evidences of indebtedness or other assets or
entitle the holder to purchase a different number or amount of the foregoing or
to purchase any of the foregoing at a different purchase price, then the
occurrence of each such event shall be deemed to be the date of issuance and
record date with respect to a new right or warrant (and a termination or
expiration of the existing right or warrant without exercise by the holder
thereof). In addition, in the event of any distribution (or deemed distribution)
of rights or warrants, or any Trigger Event or other event (of the type
described in the preceding sentence) with respect thereto, that resulted in an
adjustment to the Exercise Price under this Section 9(d), (1) in the case of any
such rights or warrants that shall all have been redeemed or repurchased without
exercise by any holders thereof, the Exercise Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder of Common
Stock with respect to such rights or warrants (assuming such holder had retained
such rights or warrants), made to all holders of Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such rights or warrants
all of which shall have expired or been terminated without exercise, the
Exercise Price shall be readjusted as if such rights and warrants had never been
issued.
For purposes of this Section 9(d) and Sections 9(a) and (c) of this
Warrant, any dividend or distribution to which this Section 9(d) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock to which Section 9(a) or (c) of this
Warrant applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets, shares of capital stock,
rights or warrants other than such shares of Common Stock or rights or warrants
to which Section 9(c) of this Warrant applies (and any Exercise Price reduction
required by this Section 9(e) with respect to such dividend or distribution
shall then be made) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (and any further Exercise
Price reduction required by Sections 9(a) and (c) of this Warrant with respect
to such dividend or distribution shall then be made), except (A) the Record Date
of such dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution," "Record Date fixed for such determination" and "Record Date"
within the meaning of Section 9(a) of this Warrant and as "the date fixed for
the determination of stockholders entitled to receive such rights or warrants,"
"the Record Date fixed for the determination of the stockholders entitled to
receive such rights or warrants" and "such Record Date" within the meaning of
Section 9(c) of this Warrant and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of Section
9(a) of this Warrant.
(e) Subject to the provisions of Section 9(i), in case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
cash (excluding any cash that is distributed upon a merger or consolidation to
which Section 10 of this Warrant applies or as part of a distribution referred
to in Section 9(d) of this Warrant), then, and in each such case, immediately
after the close of business on such date, the Exercise Price shall be reduced so
that the same shall equal the price determined by multiplying the Exercise Price
in effect immediately prior to the close of business on such Record Date by a
fraction (i) the numerator of which shall be equal to the
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Current Market Price on the Record Date less an amount equal to the quotient of
(x) the amount of such cash distribute to all holders of its Common Stock, and
(y) the number of shares of Common Stock outstanding on the Record Date and (ii)
the denominator of which shall be equal to the Current Market Price on such
date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each holder shall
have the right to receive upon exercise of a Warrant (or any portion thereof)
the amount of cash such holder would have received had such holder exercised
such Warrant (or portion thereof) immediately prior to such Record Date. In the
event that such dividend or distribution is not so paid or made, the Exercise
Price shall again be adjusted to be the Exercise Price that would then be in
effect if such dividend or distribution had not been declared.
(f) For purposes of this Section 9, the following terms shall have the
meanings indicated:
(1) "Closing Price" with respect to any securities on any day
shall mean the closing sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the Nasdaq National Market or New York
Stock Exchange, as applicable, or, if such security is not listed or admitted to
trading on such National Market or Exchange, on the principal national security
exchange or quotation system on which such security is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading on any
national securities exchange or quotation system, the average of the closing bid
and asked prices of such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose, whose determination shall be
conclusive
(2) "Current Market Price" shall mean the average of the daily
Closing Prices per share of Common Stock for the ten (10) consecutive Trading
Days immediately prior to the date in question; provided, however, that (1) if
the "ex" date (as hereinafter defined) for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Exercise Price pursuant to Section 9(a), (b), (c), (d) or (e) of this Warrant
occurs during such ten (10) consecutive Trading Days, the Closing Price for each
Trading Day prior to the "ex" date for such other event shall be adjusted by
multiplying such Closing Price by the same fraction by which the Exercise Price
is so required to be adjusted as a result of such other event, (2) if the "ex"
date for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Exercise Price pursuant to
Section 9(a), (b), (c), (d) or (e) of this Warrant occurs on or after the "ex"
date for the issuance or distribution requiring such computation and prior to
the day in question, the Closing Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the reciprocal of the fraction by which the Exercise Price is so
required to be adjusted as a result of such other event, and (3) if the "ex"
date for the issuance or distribution requiring such computation is prior to the
day in question, after taking into account any adjustment required pursuant to
clause (1) or (2) of this proviso, the Closing Price for each Trading Day on or
after such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined in good faith by the Company's Board of
Directors in a manner consistent with any determination of such value for
purposes of Section 9(d) of this
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Warrant, whose determination shall be conclusive) of the evidences of
indebtedness, shares of capital stock or assets being distributed applicable to
one share of Common Stock as of the close of business on the day before such
"ex" date. For purposes of this paragraph, the term "ex" date, (1) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to receive
such issuance or distribution and (2) when used with respect to any subdivision
or combination of shares of Common Stock, means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
time at which such subdivision or combination becomes effective. Notwithstanding
the foregoing, whenever successive adjustments to the Exercise Price are called
for pursuant to this Section 9, such adjustments shall be made to the Current
Market Price as may be necessary or appropriate to effectuate the intent of this
Section 9 and to avoid unjust or inequitable results as determined in good faith
by the Company's Board of Directors.
(3) "fair market value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's length transaction.
(4) "Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of stockholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Company's Board of Directors or by
statute, contract or otherwise).
(g) The Company may make such reductions in the Exercise Price, in
addition to those required by Section 9(a), (b), (c), (d) or (e) of this
Warrant, as the Company's Board of Directors considers to be advisable to avoid
or diminish any income tax to holders of Common Stock or rights to purchase
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for income tax purposes.
(h) To the extent permitted by applicable law, the Company from time to
time may reduce the Exercise Price by any amount for any period of time if the
period is at least twenty (20) days, the reduction is irrevocable during such
period and the Company's Board of Directors shall have made a determination that
such reduction would be in the best interests of the Company, which
determination shall be conclusive and described in a Board Resolution. Whenever
the Exercise Price is reduced pursuant to the preceding sentence, the Company
shall mail or cause to be mailed to the holder of each Warrant at his last
address in the Warrant Register a notice of the reduction at least five (5) days
prior to the date the reduced Exercise Price is to take effect, and such notice
shall state the reduced Exercise Price and the period during which it will be in
effect.
(i) No adjustment in the Exercise Price shall be required under this
Section 9 unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 9(i) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 9 shall be made by the Company and shall be
made to the nearest cent or to the
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nearest one hundredth of a share, as the case may be. No adjustment need be made
for a change in the par value of the Common Stock.
(j) Notice to Holders of Warrants Prior to Certain Actions. In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in the
Exercise Price pursuant to this Section 9; or
(2) the Company shall authorize the granting to the holders of
its Common Stock of rights or warrants to subscribe for or purchase any share of
any class or any other rights or warrants; or
(3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock, or a
change from par value to no par value), or 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 sale and transfer of all or substantially all of
the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
the Company shall mail or cause to be mailed to the holder at such
address appearing in the Warrant Register as promptly as possible but in any
event at least fifteen (15) days prior to the applicable date hereinafter
specified, a notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights are to be determined, or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up is expected to become effective
or occur, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up and the Company shall
contemporaneously issue a press release through PRNewswire or Bloomberg
Financial Markets containing substantially the same information as the notice
described above. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. In addition, whenever the Exercise Price is adjusted
as provided in this Section 9, the Company shall prepare a notice of such
adjustment of the Exercise Price setting forth the adjusted Exercise Price and
the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Exercise Price to the holder of each Warrant at his
last address in the Warrant Register within twenty (20) days of the effective
date of such adjustment. Failure to deliver such notice shall not effect the
legality or validity of any such adjustment.
(k) In any case in which this Section 9 provides that an adjustment
shall become effective immediately after a Record Date for an event, the Company
may defer until the occurrence of such event (i) issuing to the holder of any
Warrant exercised after such Record Date and before the occurrence of such event
the additional shares of Common Stock issuable upon such exercise by reason of
the adjustment required by such event over and above the Common Stock issuable
upon
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such conversion before giving effect to such adjustment and (ii) paying to such
holder any amount in cash in lieu of any fractions of shares of Common Stock
pursuant to Section 2(c) of this Warrant.
(l) For purposes of this Section 9, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(m) Upon each adjustment of the Exercise Price pursuant to this Section
9, each Warrant shall thereupon evidence the right to purchase that number of
shares of Common Stock (calculated to the nearest hundredth of a share) obtained
by multiplying the number of shares of Common Stock purchasable immediately
prior to such adjustment upon exercise of the Warrant by the Exercise Price in
effect immediately prior to such adjustment and dividing the product so obtained
by the Exercise Price in effect immediately after such adjustment. The
adjustment pursuant to this Section 9(m) to the number of shares of Common Stock
purchasable upon exercise of a Warrant shall be made each time an adjustment of
the Exercise Price is made pursuant to this Section 9 (or would be made but for
Section 9(k) of this Warrant).
SECTION 10. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any of
the following events occur, namely (i) any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination), (ii) any consolidation, merger or combination of
the Company with another person as a result of which holders of Common Stock
shall be entitled to receive stock, securities or other property or assets
(including cash) with respect to or in exchange for such Common Stock (other
than as a result of a change in name, a change in par value or a change in the
jurisdiction of incorporation), (iii) any statutory exchange, as a result of
which holders of Common Stock generally shall be entitled to receive stock,
securities or other property or assets (including cash) with respect to or in
exchange for such Common Stock (such transaction, a "Statutory Exchange"), (iv)
any sale or conveyance of the properties and assets of the Company as, or
substantially as, an entirety to any other person as a result of which holders
of Common Stock shall be entitled to receive stock, securities or other property
or assets (including cash) with respect to or in exchange for such Common Stock,
then the Company or the successor or purchasing person, as the case may be,
shall issue a replacement Warrant providing that such Warrant shall be
exercisable for the kind and amount of shares of stock and other securities or
property or assets (including cash) receivable upon such reclassification,
change, consolidation, merger, combination, Statutory Exchange, sale or
conveyance by a holder of a number of shares of Common Stock issuable upon
exercise of such Warrants (assuming, for such purposes, a sufficient number of
authorized shares of Common Stock available for issuance upon exercise of all
such Warrants) immediately prior to such reclassification, change,
consolidation, merger, combination, Statutory Exchange, sale or conveyance
assuming such holder of Common Stock did not exercise his rights of election, if
any, that holders of Common Stock who were entitled to vote or consent to such
transaction had as to the kind or amount of securities, cash or other property
receivable upon such consolidation, merger, combination, Statutory Exchange,
sale or conveyance (provided that, if the kind or amount of securities, cash or
other property receivable upon such consolidation, merger, combination,
Statutory Exchange, sale or conveyance is not the same for each share of Common
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Stock in respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section 10, the kind and
amount of securities, cash or other property receivable upon such consolidation,
merger, combination, Statutory Exchange, sale or conveyance for each
non-electing share shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). Such replacement Warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 9 of this Warrant. If, in
the case of any such reclassification, change, consolidation, merger,
combination, Statutory Exchange, sale or conveyance, the stock or other
securities and assets receivable thereupon by a holder of shares of Common Stock
shall include shares of stock or other securities and assets of a corporation
other than the successor or purchasing person, as the case may be, in such
reclassification, change, consolidate, merger, combination, Statutory Exchange,
sale or conveyance, then such replacement Warrant shall also be executed by such
other person and shall contain such additional provisions to protect the
interests of the holder of the Warrants as the Company's Board of Directors
shall reasonably consider necessary by reason of the foregoing. The Exercise
Price for the stock and other securities, property and assets (including cash)
so receivable upon such event shall be an amount equal to the Exercise Price
immediately prior to such event.
The Company shall mail or cause to be mailed such replacement Warrant
to each holder of Warrants, at such holder's address appearing in the Warrant
Register within twenty (20) days after execution thereof. Failure to deliver
such notice shall not affect the legality or validity of such replacement
Warrant.
The above provisions of this Section 10 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 10 applies to any event or occurrence, Section 9 of
this Warrant shall not apply.
SECTION 11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANTS. If this Warrant is
lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt of
an indemnification undertaking or other form of security reasonably acceptable
to the Company (or in the case of a mutilated Warrant, the Warrant), cause the
Warrant Agent to issue a new Warrant of like denomination and tenor as this
Warrant so lost, stolen, mutilated or destroyed. Notwithstanding the foregoing,
if this Warrant is lost by, stolen from or destroyed by the original holder
hereof, the affidavit of such original holder setting forth the circumstances of
such loss, theft or destruction shall be accepted as satisfactory evidence
thereof, and no indemnification bond or other security shall be required by the
Company as a condition to the execution and delivery by the Company of a new
Warrant to such original holder other than such original holder's unsecured
written agreement to indemnify the Company solely for losses actually incurred
by the Company as a direct consequence of the loss, theft or destruction of the
Warrant.
SECTION 12. NOTICE. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile; or (iii) one
(1) Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. If
notice is to be sent to the
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Company, the holder shall use its reasonable best efforts to provide additional
copies to the individuals listed below; provided, however, that the failure of
such holder to send such additional copies shall in no way limit the
effectiveness of any notice sent to the Company to the attention of Chief
Financial Officer as provided for below. The addresses and facsimile numbers for
such communications shall be:
If to the Company:
Dave & Buster's, Inc.
2481 Manana Drive
Dallas, Texas 75220
Telephone: (214) 357-9588
Facsimile: (214) 357-1536
Attention: John Davis, Esq.
Senior Vice President and General Counsel
with a copy to:
Hallett & Perrin, P.C.
2001 Bryan Street, Suite 3900
Dallas, Texas 75201
Telephone: (214) 922-4120
Facsimile: (214) 922-4170
Attention: Bruce H. Hallett, Esq.
If to the Transfer Agent:
Mellon Investor Services LLC
Overpeck Centre
Ridgefield Park, NJ 07660
Telephone: ( ) -
--- --- ----
Facsimile: ( ) -
--- --- ----
Attention:
---------------
If to the Warrant Agent:
The Bank of New York
101 Barclay Street, Floor 8W
New York, New York 10286
Telephone: (212) 815-6907
Facsimile: (212) 815-5707
Attention: Corporate Trust Administration
If to a holder of this Warrant, to it at the address and facsimile
number set forth on the Schedule of Buyers to the Securities Purchase Agreement,
with copies to such holder's representatives as set forth on such Schedule of
Buyers, or at such other address and facsimile as shall be delivered to the
Company upon the issuance or transfer of this Warrant. Each party shall provide
five days' prior written notice to the other party of any change in address or
facsimile number. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile
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machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (C) provided by a nationally recognized
overnight delivery service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
SECTION 13. AMENDMENTS. This Warrant and any term hereof may be amended,
changed, waived, discharged, or terminated only by an instrument in writing
signed by the Company and holders of a majority of Warrant Shares represented by
all Warrants. Such amendment, change, waiver, discharge or termination shall be
binding on the Company and all of the Warrant holder's assignees and
transferees; provided, however, that no such action may increase the Exercise
Price, including by a waiver of or an amendment to Section 9 of this Agreement,
or decrease the number of shares or class of stock issuable upon exercise of any
Warrants without the written consent of the holder of such Warrant. No waivers
of any term, condition or provision of this Warrant in any one or more instances
shall be deemed to be or construed as a further or continuing waiver of any such
term, condition or provision.
SECTION 14. GOVERNING LAW; JURISDICTION; JURY TRIAL. The corporate laws of the
State of Missouri shall govern all issues concerning the relative rights of the
Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Warrant and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. If any provision of this Warrant shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Warrant in that jurisdiction or the validity or enforceability
of any provision of this Warrant in any other jurisdiction. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
SECTION 15. DESCRIPTIVE HEADINGS. The headings of this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of day and year first above written.
"COMPANY"
DAVE & BUSTER'S, INC.
By:
------------------------------------
Its:
------------------------------------
S-1
EXHIBIT A TO WARRANT
FORM OF EXERCISE NOTICE
The undersigned holder hereby exercises the right to purchase
______________ shares of Common Stock ("Warrant Shares") of DAVE & BUSTER'S,
INC, a Missouri corporation (the "Company"), evidenced by the attached Warrant
(the "Warrant"). Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
______ "Cash Exercise" with respect to ________ Warrant Shares;
and/or
______ "Cashless Exercise" with respect to ______ Warrant Shares
(to the extent permitted by the terms of the Warrant).
2. Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the sum of $___________________ to the
Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The holder of this warrant has sold or
will sell the shares of common stock issuable pursuant to this Notice pursuant
to a registration statement or an exemption from registration under the
Securities Act of 1933, as amended.
4. Private Placement Representations. The holder of this Warrant
confirms the continuing validity of, and reaffirms as of the date hereof, its
representations and warranties set forth in Section 7 of the Warrant.
Date: _______________, ____
- --------------------------------- --------------------------------
Name of Registered Holder Tax ID of Registered Holder
(if applicable)
By:
---------------------------
Its:
---------------------------
A-1
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs
Mellon Investor Services LLC to issue the above indicated number of shares of
Common Stock in accordance with the Irrevocable Transfer Agent Instructions
dated August 7, 2003 from the Company and acknowledged and agreed to by
[_____________].
DAVE & BUSTERS'S, INC.
By:
---------------------------------
Its:
---------------------------------
A-2
EXHIBIT B TO WARRANT
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of DAVE & BUSTER'S, INC., a Missouri
corporation, represented by warrant certificate no. _____, standing in the name
of the undersigned on the books of said corporation. The undersigned does hereby
irrevocably constitute and appoint ______________, attorney to transfer the
warrants of said corporation, with full power of substitution in the premises.
Dated: _________, 200_
-----------------------------------
By:
------------------------------
Its:
------------------------------
Taxpayer I.D. No. or Soc. Sec. No:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
-----------------------------------
Name in which new Warrant(s) should be registered:
Right to Purchase No. of Shares of Common Stock:
-----------------
Name:
-----------------------------------------
Taxpayer I.D. No. or Soc. Sec. No:
------------
Address:
----------------------------------------
-----------------------------------------
-----------------------------------------
The balance of the attached Warrant not so transferred shall be
returned to the transferor in the form of a new Warrant reflecting such reduced
amount.