U.S. AGGREGATES, INC.
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WARRANT AGREEMENT
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DATED AS OF JUNE 5, 1998
3,208 WARRANTS TO PURCHASE COMMON STOCK
OF U.S. AGGREGATES, INC.
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES........... 1
1.1 Form of Warrant Certificates............................. 1
1.2 Execution of Warrant Certificates; Registration Books.... 2
1.3 Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Lost or Stolen Warrant Certificates........ 2
1.4 Subsequent Issuance of Warrant Certificates.............. 3
1.5 Effect of Issuance in Registered Form.................... 3
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE................ 3
2.1 Exercise of Warrants..................................... 3
2.2 Issuance of Common Stock................................. 4
2.3 Unexercised Warrants..................................... 4
2.4 Cancellation and Destruction of Warrant Certificates..... 4
2.5 Deemed Exercise of Warrants Prior to Expiration Date..... 4
2.6 Fractional Shares........................................ 5
3. AGREEMENTS OF THE COMPANY...................................... 5
3.1 Reservation of Common Stock.............................. 5
3.2 Common Stock To Be Duly Authorized and Issued, Fully Paid
and Nonassessable........................................ 5
3.3 Transfer Taxes........................................... 5
3.4 Common Stock Record Date................................. 6
3.5 Rights in Respect of Common Stock........................ 6
3.6 CUSIP Number............................................. 6
3.7 Right of Action.......................................... 6
3.8 Notice of Certain Events................................. 6
3.9 Changes in Capital Structure............................. 7
4. ANTI-DILUTION ADJUSTMENTS...................................... 7
4.1 Mechanical Adjustments................................... 7
4.2 Stock Dividends, Subdivisions and Combinations........... 7
4.3 Dividends and Distributions.............................. 8
4.4 Issuances of Additional Common Stock or Rights........... 9
4.5 Expiration of Rights..................................... 9
4.6 Reorganization, Reclassification, Consolidation, Merger
or Sale; Appraisal Procedure............................. 10
4.7 De Minimis Changes in Purchase Price..................... 10
4.8 Adjustment of Number of Shares Issuable Pursuant to
Warrants................................................. 10
4.9 Miscellaneous............................................ 11
4.10 Other Securities......................................... 11
4.11 Additional Agreements of the Company..................... 11
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TABLE OF CONTENTS (continued)
(Not Part of Agreement) Page
5. REPORTING COVENANTS........................................... 12
5.1 Financial and Business Information...................... 12
5.2 Information Concerning Anti-Dilution Adjustments........ 13
6. INTERPRETATION OF THIS AGREEMENT.............................. 13
6.1 Certain Defined Terms................................... 13
6.2 Descriptive Headings.................................... 20
6.3 Governing Law........................................... 20
7. MISCELLANEOUS................................................. 20
7.1 Expenses................................................ 20
7.2 Amendment and Waiver.................................... 21
7.3 Transferability......................................... 21
7.4 Directly or Indirectly.................................. 21
7.5 Survival of Representations and Warranties; Entire
Agreement............................................... 22
7.6 Successors and Assigns.................................. 22
7.7 Notices................................................. 22
7.8 Satisfaction Requirement................................ 22
7.9 Severability............................................ 22
7.10 Counterparts............................................ 23
7.11 Jurisdiction; Jury Trial................................ 23
Annex 1 -- Address of Purchaser
Annex 2 -- Address of Company
Attachment A -- Form of Warrant Certificate
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WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of June 5, 1998, between U.S. AGGREGATES,
INC., a Delaware corporation (together with its successors and assigns, the
"Company"), and THE PRUDENTIAL INSURANCE COMPANY OF AMERICA (together with its
successors and assigns, the "Purchaser").
RECITALS
A. The Board of Directors has authorized the issuance of an aggregate of
Three Thousand Two Hundred Eight (3,208) warrants (as further defined in Section
6, the "Warrants") of the Company, each Warrant representing the right to
purchase, upon the terms and subject to the conditions hereinafter set forth,
and subject to adjustment as set forth herein, one (1) share of Common Stock on
the terms and subject to the conditions hereinafter set forth.
B. The Company and the Purchaser have entered into an Amended and Restated
Note and Warrant Purchase Agreement (as may be amended from time to time, the
"Note Agreement"), dated as of even date herewith, pursuant to which the Company
agreed to sell, and the Purchaser agreed to purchase, Fifteen Million Dollars
($15,000,000) in aggregate principal amount of the Company's 10.09% Senior
Subordinated Notes due November 22, 2008 (the "Notes") and the Warrants, for an
aggregate consideration of Fifteen Million Dollars ($15,000,000) in cash.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties to this Agreement hereby agree as follows:
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES
1.1 Form of Warrant Certificates. The warrant certificates (individually,
a "Warrant Certificate" and, collectively, the "Warrant Certificates")
evidencing the Warrants, and the forms of assignment and of election to purchase
shares to be attached to such certificates, shall be substantially in the form
set forth in Attachment A hereto and may have such letters, numbers or other
marks of identification or designation as may be required to comply with any law
or with any rule or regulation of any governmental authority, stock exchange or
self-regulatory organization made pursuant thereto. Each Warrant Certificate
shall be dated the date of issuance thereof by the Company, either upon initial
issuance or upon transfer or exchange, and on its face shall initially entitle
the holder thereof to purchase a number of shares of Common Stock equal to the
number of Warrants represented by such Warrant Certificate at a price per share
equal to the Purchase Price, but the number of such shares and the Purchase
Price shall be subject to adjustment as provided herein.
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1.2 Execution of Warrant Certificates; Registration Books.
(a) Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by an officer of the Company
authorized by the Board of Directors. In case the officer of the Company
who shall have signed any Warrant Certificate shall cease to be such an
officer of the Company before issuance and delivery by the Company of such
Warrant Certificate, such Warrant Certificate nevertheless may be issued
and delivered with the same force and effect as though the individual who
signed such Warrant Certificate had not ceased to be such an officer of
the Company, and any Warrant Certificate may be signed on behalf of the
Company by any individual 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
Agreement any such individual was not such an officer.
(b) Registration Books. The Company will keep or cause to be kept at
its office maintained at the address of the Company set forth in Section
7.7, or at such other office of the Company in the United States of
America of which the Company shall have given notice to each holder of
Warrant Certificates, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Warrant Certificates, the
registration number and the number of Warrants evidenced on its face by
each of the Warrant Certificates and the date of each of the Warrant
Certificates.
1.3 Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Lost or Stolen Warrant Certificates.
(a) Transfer, Split Up, etc. Any Warrant Certificate, with or
without other Warrant Certificates, may be transferred, split up, combined
or exchanged for another Warrant Certificate or Warrant Certificates,
entitling the registered holder or Transferee thereof to purchase a like
number of shares of Common Stock as the Warrant Certificate or Warrant
Certificates surrendered then entitled such registered holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange
any Warrant Certificate shall make such request in writing delivered to
the Company, and shall surrender the Warrant Certificate or Warrant
Certificates to be transferred, split up, combined or exchanged at the
office of the Company referred to in Section 1.2(b), whereupon the Company
shall deliver promptly to the Person entitled thereto a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested.
(b) Loss, Theft, etc. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate (which evidence shall
be, in the case of the Purchaser or another institutional investor, notice
from such institutional investor of such ownership (or of ownership by
such institutional investor's nominee) and such loss, theft, destruction
or mutilation), and:
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(i) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company; provided, however, that if
the holder of such Warrant Certificate is the Purchaser or another
institutional investor, or a nominee of the Purchaser or another
institutional investor, the Purchaser's or institutional investor's
own unsecured agreement of indemnity shall be deemed to be
satisfactory; or
(ii) in the case of mutilation, upon surrender and
cancellation thereof;
the Company at its own expense will execute and deliver, in lieu thereof,
a new Warrant Certificate, dated the date of such lost, stolen, destroyed
or mutilated Warrant Certificate and of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate.
1.4 Subsequent Issuance of Warrant Certificates. Subsequent to the
original issuance, no Warrant Certificates shall be issued except:
(a) Warrant Certificates issued upon any transfer, combination,
split up or exchange of Warrants pursuant to Section 1.3(a);
(b) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 1.3(b);
and
(c) Warrant Certificates issued pursuant to Section 2.3 upon the
partial exercise of any Warrant Certificate to evidence the unexercised
portion of such Warrant Certificate.
1.5 Effect of Issuance in Registered Form. Every holder of a Warrant
Certificate by accepting the same consents and agrees with the Company and with
every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable only on the registry
books of the Company if surrendered at the office of the Company referred
to in Section 1.2(b), duly endorsed or accompanied by an instrument of
transfer (in the form attached hereto) and payment of any applicable
transfer tax or stamp tax; and
(b) the Company may deem and treat the Person in whose name each
Warrant Certificate is registered as the absolute owner thereof and of the
Warrants evidenced thereby (notwithstanding any notations of ownership or
writing on the Warrant Certificates made by anyone other than the Company)
for all purposes whatsoever, and the Company shall not be affected by any
notice to the contrary.
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE
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2.1 Exercise of Warrants.
(a) Manner of Exercise. At any time and from time to time on or
prior to the Expiration Date, the holder of any Warrant Certificate may
exercise the Warrants evidenced thereby, in whole or in part (but not, in
the case of any exercise in part, to the extent that such exercise would
result in the issuance of a fractional share of Common Stock), by
surrender of such Warrant Certificate, with an election to purchase (a
form of which is attached to each Warrant Certificate) attached thereto
duly executed, to the Company at its office referred to in Section 1.2(b).
(b) Payment of Purchase Price. It is understood and agreed that the
aggregate Purchase Price (as may be adjusted from time to time pursuant to
Section 4 of this Agreement) for all of the Warrants has been paid in full
to the Company on the date of this Agreement.
2.2 Issuance of Common Stock. Upon timely receipt of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied by
an amount equal to any applicable transfer tax (if not payable by the Company as
provided in Section 3.3), the Company shall thereupon promptly cause
certificates representing the number of whole shares of Common Stock then being
purchased to be delivered to or upon the order of the registered holder of such
Warrant Certificate, registered in such name or names as may be designated by
such holder, and, promptly after such receipt deliver the cash, if any, to be
paid in lieu of fractional shares pursuant to Section 2.6 to or upon the order
of the registered holder of such Warrant Certificate.
2.3 Unexercised Warrants. In case the registered holder of any Warrant
Certificate shall exercise less than all the Warrants evidenced thereby, a new
Warrant Certificate evidencing Warrants equal in number to the number of
Warrants remaining unexercised shall be issued by the Company to the registered
holder of such Warrant Certificate or to its duly authorized assigns.
2.4 Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered to the Company for the purpose of exercise, exchange,
substitution or transfer shall be cancelled by it, and no Warrant Certificates
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall cancel and retire any other
Warrant Certificates purchased or acquired by the Company otherwise than upon
the exercise thereof.
2.5 Deemed Exercise of Warrants Prior to Expiration Date.
(a) The Company acknowledges that it has received an executed
election to purchase for all of the Warrants, dated as of the day
immediately prior to the Expiration Date, together with the aggregate
Purchase Price therefor. To the extent that any Warrants have not been
exercised as of the day immediately preceding the Expiration Date, the
Company agrees that all such unexercised Warrants shall be deemed to have
been exercised as of such day and waives the
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requirement for prior delivery of any outstanding Warrant Certificate in
respect of unexercised Warrants. The Company agrees to provide written
notice to each holder of unexercised Warrants promptly, and in any event
within thirty (30) days thereafter, of such deemed exercise.
(b) The Company shall not be required to deliver shares of Common
Stock, following the deemed exercise pursuant to Section 2.5(a), until it
has received Warrant Certificates in respect thereof.
(c) The provisions of this Section 2.5 shall not affect the
provisions of this Agreement applying to the exercise of Warrants at any
time prior to the day immediately preceding the Expiration Date, except
that the Company acknowledges that the Purchase Price for each such
election to purchase has been paid to the Company on the date of this
Agreement.
2.6 Fractional Shares. The Company shall not be required to issue
fractional shares of Common Stock upon the exercise of any Warrant. Upon the
exercise of any Warrant, there shall be paid to the holder thereof, in lieu of
any fractional share of Common Stock resulting therefrom, an amount of cash
equal to the product of:
(a) the fractional amount of such share; times
(b) the Market Price, as determined on the trading day immediately
prior to the date of exercise of such Warrant.
3. AGREEMENTS OF THE COMPANY
3.1 Reservation of Common Stock. The Company covenants and agrees that it
will at all times cause to be reserved and kept available out of its authorized
and unissued shares of Common Stock such number of shares of Common Stock as
will be sufficient to permit the exercise in full of all Warrants issued
hereunder and all other Rights exercisable or convertible into Common Stock.
3.2 Common Stock To Be Duly Authorized and Issued, Fully Paid and
Nonassessable. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon the exercise of any Warrants, at the time of delivery of the certificates
representing such shares, shall be duly and validly authorized and issued and
fully paid and nonassessable, free of any preemptive rights in favor of any
Person in respect of such issuance and free of any Lien created by, or arising
out of actions of, the Company, any Subsidiary or any Affiliate.
3.3 Transfer Taxes. The Company covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges that
may be payable in respect of the initial issuance or delivery of:
(a) each Warrant Certificate;
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(b) each Warrant Certificate issued in exchange for any other
Warrant Certificate pursuant to Section 1.3(a) or Section 2.3; and
(c) each share of Common Stock issued upon the exercise of any
Warrant.
The Company shall not, however, be required to:
(i) pay any transfer tax that may be payable in respect of the
transfer or delivery of certificates representing Warrant Shares in a name
other than that of the registered holder of the certificate surrendered
for exercise, conversion, transfer or exchange (any such tax being payable
by the holder of such certificate at the time of surrender); or
(ii) issue or deliver any such certificates referred to in the
foregoing clause (i) until any such tax referred to in the foregoing
clause (i) shall have been paid.
3.4 Common Stock Record Date. Each Person in whose name any certificate
for shares of Common Stock is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated, the date upon which
the Warrant Certificate evidencing such Warrants was duly surrendered with an
election to purchase attached thereto duly executed and payment of any
applicable transfer taxes, if payable by such Person, was made.
3.5 Rights in Respect of Common Stock. Except as otherwise set forth
herein, prior to the exercise of the Warrants evidenced thereby, the holder of a
Warrant Certificate shall not be entitled to any rights of a stockholder in the
Company with respect to shares for which the Warrants shall be exercisable,
including, without limitation, the right to vote in respect of any matter upon
which the holders of Common Stock may vote or the right to receive dividends or
other distributions and, except as expressly set forth herein, shall not be
entitled to receive any notice of any proceedings of the Company. Prior to the
exercise of the Warrants evidenced thereby, the holders of the Warrant
Certificates shall not have any obligation or any liability as stockholders of
the Company, whether such obligation or liabilities are asserted by the Company
or by creditors of the Company.
3.6 CUSIP Number. The Company acknowledges that the Purchaser has obtained
a private placement number in respect of the Warrants from the CUSIP Service
Bureau of Standard & Poor's, a division of McGraw-Hill, Inc., and covenants not
to take any action to revoke such number.
3.7 Right of Action. All rights of action in respect of the Warrants are
vested in the respective registered holders of the Warrant Certificates, and any
registered holder of any Warrant Certificate, without the consent of the holder
of any other Warrant Certificate, may, on its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act
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in respect of, its right to exercise the Warrants evidenced by such Warrant
Certificate in the manner provided in such Warrant Certificate and in this
Agreement.
3.8 Notice of Certain Events.
(a) Dividends and Distributions. In the event that the Company shall
declare any dividend or other distribution in respect of its Common Stock,
the Company shall give written notice of such declaration to each holder
of Warrants not less than thirty (30) days prior to the record date for
the determination of the registered holders of Common Stock entitled to
receive such dividend or distribution, which notice shall:
(i) state that the Company has declared a dividend, or is
otherwise making a distribution, in respect of its Common Stock;
(ii) describe in reasonable detail the consideration per share
of Common Stock of such dividend or distribution;
(iii) set forth the record date for the determination of the
registered holders of Common Stock entitled to receive such dividend
or distribution; and
(iv) set forth the number of shares of Common Stock into which
each Warrant is then exercisable.
(b) Organic Changes. In the event that the Company will engage in
any Organic Change, the Company shall give written notice thereof to each
holder of Warrants not less than thirty (30) days prior to the record date
for the determination of the registered holders of Common Stock entitled
to receive any consideration in exchange for such Common Stock, which
notice shall
(i) describe in reasonable detail such Organic Change;
(ii) describe in reasonable detail the consideration per share
of Common Stock to be received by holders of Common Stock in
exchange therefor;
(iii) set forth the record date for the determination of the
registered holders of Common Stock entitled to receive such
consideration; and
(iv) set forth the number of shares of Common Stock into which
each Warrant is then exercisable.
3.9 Changes in Capital Structure. The Company shall not, without the
written consent of each holder of Warrants, amend the Charter so as to change or
modify the powers, preferences or rights of the Common Stock in a manner which
adversely affects the holders of the Warrants as a separate class.
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4. ANTI-DILUTION ADJUSTMENTS
4.1 Mechanical Adjustments. The number of shares of Common Stock
purchasable upon the exercise of each Warrant, and the Purchase Price, shall be
subject to adjustment as set forth in this Section 4.
4.2 Stock Dividends, Subdivisions and Combinations. In the event that the
Company shall, on or after the date hereof:
(a) pay a dividend in shares of Additional Common Stock or make a
distribution in shares of Additional Common Stock;
(b) reclassify by subdivision its outstanding shares of Common Stock
into a greater number of shares; or
(c) reclassify by combination its outstanding shares of Common Stock
into a smaller number of shares;
then, and in each such case, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision or
combination shall be adjusted to that price determined by multiplying the
Purchase Price in effect immediately prior to such event by the quotient of:
(i) the total number of outstanding shares of Common Stock
immediately prior to such event; divided by
(ii) the total number of outstanding shares of Common Stock
immediately after such event.
An adjustment made pursuant to this Section 4.2 shall become effective on the
effective date of such event.
4.3 Dividends and Distributions. In the event that the Company shall make
or pay any dividend of, or distribute to holders of shares of Common Stock
(including, without limitation, any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation)
shares of capital stock (other than Common Stock), other Securities, evidences
of its indebtedness, or any of its Property (other than cash or Rights), then in
each case, the Purchase Price in effect after the record date in respect of
which such stock, other Securities, indebtedness, or Property were dividended or
distributed shall be adjusted by multiplying the Purchase Price in effect
immediately prior to such record date by the quotient of:
(a) the difference of:
(i) the Reference Price on such record date; minus
(ii) the quotient of:
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(A) the then fair value of the shares of stock, other
Securities, evidences of indebtedness or Property so
distributed or of such Rights so issued, such fair value to be
determined by the Required Warrantholders and the Company or,
if in the Company's view after reasonable negotiation no such
agreement can be reached, by the Valuation Agent, whose
determination, if so made, shall be conclusive; divided by
(B) the number of shares of Common Stock outstanding on
the record date;
divided by
(b) the Reference Price on such record date.
Such adjustment shall be made whenever any such dividend or distribution is
made, and shall become effective on the date of such dividend or distribution.
If the determination referred to in Section 4.3(a)(ii)(A) is to be made by the
Valuation Agent, each of the Company and the Required Warrantholders shall
submit, in writing, their respective determinations of the fair value referred
to in such Section at the time the Valuation Agent is requested to make such
determination. If the Valuation Agent's determination of such fair value is
closer to the Company's determination thereof, the holders of the Warrants shall
reimburse the Company, ratably in accordance with the number of Warrants held by
each of them, for the costs and expenses of the Valuation Agent incurred in
making such determination; if the Valuation Agent's determination of such fair
value is closer to the determination thereof of the Required Warrantholders, the
Company shall pay such costs and expenses.
4.4 Issuances of Additional Common Stock or Rights. In the event that the
Company shall issue or sell shares of Additional Common Stock or Rights
(excluding Excluded Securities) for no consideration or at a Consideration Per
Share lower than the Reference Price in effect on the date of such issuance or
sale, or if the Company shall amend the provisions of any Rights such as to
reduce the Consideration Per Share applicable thereto, then the Purchase Price
in effect immediately after such event shall be adjusted by multiplying the
Purchase Price in effect immediately prior to such event by the quotient of:
(a) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such event; plus
(ii) the quotient of:
(A) the Aggregate Consideration Receivable; divided by
(B) the Reference Price;
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in each case immediately prior to such event;
divided by
(b) the sum of:
(i) the number of shares of Common Stock outstanding
immediately prior to such event; plus
(ii) the number of shares of Additional Common Stock so issued
or sold (or initially issuable pursuant to such Rights).
4.5 Expiration of Rights. Upon the expiration of any Rights in respect of
the issuance of which adjustment was made pursuant to Section 4.3 or Section
4.4, without the exercise thereof, the Purchase Price and the number of shares
of Common Stock purchasable upon the exercise of each Warrant shall, upon such
expiration, be readjusted and shall thereafter be such Purchase Price and such
number of shares of Common Stock as would have been had such Purchase Price and
such number of shares of Common Stock been originally adjusted (or had the
original adjustment not been required, as the case may be) as if:
(a) the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the exercise of such
Rights; and
(b) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all of such Rights, whether or not exercised;
provided that no such readjustment shall have the effect of increasing the
Purchase Price by an amount in excess of the amount of the reduction
initially made in respect of the issuance, sale, or grant of such Rights.
4.6 Reorganization, Reclassification, Consolidation, Merger or Sale;
Appraisal Procedure. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
or other transaction, which in each case is effected in such a way that the
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an "Organic Change." Prior to
the consummation of any Organic Change, the Company shall make appropriate
provision to insure that each holder of the Warrants shall thereafter have the
right to acquire and receive, in lieu of or in addition to (as the case may be)
the Warrant Shares immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of
Warrant Shares immediately theretofore acquirable and receivable upon exercise
of such holder's Warrant had such Organic Change not taken place. The Company
shall not effect any such Organic Change, unless prior to the consummation
thereof, the successor entity (if other than the
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Company) resulting from such Organic Change or the entity purchasing such assets
assumes, by written instrument, the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
4.7 De Minimis Changes in Purchase Price. No adjustment in the Purchase
Price shall be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the Purchase Price; provided that any
adjustments that, at the time of the calculation thereof, are less than one
percent (1%) of the Purchase Price at such time and by reason of this Section
4.7 are not required to be made at such time shall be carried forward and added
to any subsequent adjustment or adjustments for purposes of determining whether
such subsequent adjustment or adjustments, as so supplemented, exceed the one
percent (1%) amount set forth in this Section 4.7 and, if any such subsequent
adjustment, as so supplemented or otherwise, should exceed such one percent (1%)
amount, all adjustments deferred prior thereto and not previously made shall
then be made. In any case, all such adjustments being carried forward pursuant
to this Section 4.7 shall be given effect upon the exercise of any Warrants by
any holder thereof for purposes of determining the Purchase Price thereof. All
calculations shall be made to the nearest ten-thousandth of a dollar ($0.0001).
4.8 Adjustment of Number of Shares Issuable Pursuant to Warrants. Upon
each adjustment of the Purchase Price as a result of any calculations made
pursuant to Section 4.2, Section 4.3 or Section 4.4, each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of shares of
Common Stock (calculated to the nearest one-hundredth (.01)) obtained by
multiplying the number of shares of Common Stock covered by such Warrant
immediately prior to such adjustment by the quotient of:
(a) the Purchase Price in effect immediately prior to such
adjustment, divided by
(b) the Purchase Price in effect immediately after such adjustment.
All Warrants originally issued by the Company hereunder shall, subsequent to any
adjustment made to the Purchase Price hereunder, evidence the right to purchase,
at the adjusted Purchase Price, the number of shares of Common Stock determined
to be purchasable from time to time hereunder upon exercise of such Warrants,
all subject to further adjustment as provided herein. Each such adjustment shall
be valid and binding upon the Company and the holders of Warrants irrespective
of whether the Warrant Certificates theretofore and thereafter issued express
the Purchase Price per share of Common Stock and the number of shares of Common
Stock that were expressed upon the initial Warrant Certificates issued
hereunder.
4.9 Miscellaneous.
(a) Adjustments shall be made pursuant to this Section 4
successively whenever any of the events referred to in Section 4.2 through
Section 4.6, inclusive, shall occur.
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(b) If any Warrant shall be exercised subsequent to the record date
for any of the events referred to in Section 4.2 through Section 4.6,
inclusive, but prior to the effective date thereof, appropriate
adjustments shall be made immediately after such effective date so that
the holder of such Warrant on such record date shall have received, in the
aggregate, the kind and number of shares of Common Stock or other
Securities or Property that it would have owned or been entitled to
receive on such effective date had such Warrant been exercised prior to
such record date.
(c) Shares of Common Stock owned by or held for the account of the
Company or any Subsidiary shall not, for purposes of the adjustments set
forth in this Section 4, be deemed outstanding.
4.10 Other Securities. In the event that at any time, as a result of an
adjustment made pursuant to this Section 4, each holder of Warrants shall become
entitled to purchase any Securities of the Company other than shares of Common
Stock, the number or amount of such other Securities so purchasable and the
Purchase Price of such Securities shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in Section 4.2 through Section 4.6, inclusive, hereof, and
all other relevant provisions of this Section 4 that are applicable to shares of
Common Stock shall be applicable to such other Securities.
4.11 Additional Agreements of the Company. The Company covenants and
agrees that:
(a) The Company shall not, by amendment to its Charter, or through
any reorganization, transfer of assets, consolidation, merger,
dissolution, liquidation, issuance 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 hereunder by the Company, but
shall at all times in good faith assist in the carrying out of all the
provisions of this Section 4 and in the taking of all such actions as may
be necessary or appropriate in order to protect the rights of the holders
of the Warrant Certificates against dilution or other impairment.
(b) Before taking any action that would result in an adjustment to
the then current Purchase Price to a price that would be below the then
current par value of Common Stock issuable upon exercise of any Warrant,
the Company will take or cause to be taken any and all necessary corporate
or other action that may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common
Stock upon payment of such Purchase Price as so adjusted.
(c) If the Company shall, at any time after the date hereof, issue
any Right either (i) entitling the holder of such Right to receive all or
any part of dividends paid in cash on the Common Stock, or (ii) containing
provisions for an anti-dilution adjustment in the event that the Company
shall declare or pay a dividend all or partly in cash, then the Company
shall provide prompt written notice of such fact to each holder of
Warrants. The Company agrees, upon written
12
request therefor delivered by the holder of any Warrant, at its expense to
cause to be prepared, and to enter into, one or more amendments of this
Agreement providing for substantially the same cash dividend or
anti-dilution adjustment provision as provided for in the instrument or
agreement governing such other Right.
5. REPORTING COVENANTS
5.1 Financial and Business Information. To the extent not otherwise
delivered, the Company will, until a Public Offering shall have been
consummated, deliver to each holder of Warrant Shares that is an institutional
investor, in duplicate:
(a) Quarterly Financial Statements -- as soon as practicable and in
any event within forty-five (45) days after the end of each quarterly
period (other than the last quarterly period) in each fiscal year,
consolidating and consolidated statements of operations and cash flows of
the Company and its Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarterly period, and consolidating
and consolidated balance sheets of the Company and its Subsidiaries as at
the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and certified by an authorized
financial officer of the Company as fairly presenting, in all material
respects, the financial position of the Company and its Subsidiaries and
their results of operations and cash flows, subject to changes resulting
from year-end adjustments and the absence of footnotes; and
(b) Audited Annual Financial Statements -- as soon as practicable
and in any event within one hundred twenty (120) days after the end of
each fiscal year, consolidating and consolidated statements of operations,
shareholders' equity and cash flows of the Company and its Subsidiaries
for such year, and consolidating and consolidated balance sheets of the
Company and its Subsidiaries as at the end of such year, setting forth in
the case of such consolidated statements, in comparative form,
corresponding consolidated figures from the preceding annual audit, all in
reasonable detail and, as to the consolidated statements, certified to the
Company by Arthur Andersen LLP or other independent public accountants of
recognized standing selected by the Company and, as to the consolidating
statements, certified by an authorized financial officer of the Company,
such certificates in each case certifying such financial statements as
fairly presenting, in all material respects, the financial position of the
Company and its Subsidiaries and their results of operations and cash
flows.
5.2 Information Concerning Anti-Dilution Adjustments.
(a) Notice of Adjustment. Whenever the number of shares of Common
Stock issuable upon the exercise of Warrants is adjusted or the Purchase
Price in respect thereof is adjusted, as herein provided, the Company
shall promptly give to each holder of Warrants written notice of such
adjustment or adjustments setting forth:
13
(i) the number of shares of Common Stock issuable upon the
exercise of each Warrant and the Purchase Price of such shares after
such adjustment;
(ii) a brief statement of the facts requiring such adjustment;
and
(iii) the computation by which such adjustment was made.
(b) Confirmation by Accountants. At the request of the Required
Warrantholders, the Company shall obtain a certificate from the
independent certified public accountants of the Company confirming or
correcting the adjustment or adjustments set forth in the notice referred
to in Section 5.2(a); provided that if such accountants shall give such
confirmation, or shall give such confirmation subject to de minimis
corrections, such holder shall reimburse the Company for the costs and
expenses of the accountants incurred in making such confirmation, and if
such accountants shall correct such adjustment or adjustments (other than
de minimis corrections), the Company shall pay such costs and expenses.
6. INTERPRETATION OF THIS AGREEMENT
6.1 Certain Defined Terms. For the purpose of this Agreement, the
following terms shall have the meanings set forth below or set forth in the
Section hereof following such term:
Additional Common Stock -- means Common Stock, including treasury shares,
issued after the date hereof, except Common Stock issued upon the exercise of
any one or more Warrants.
Affiliate -- means, at any time, a Person (other than a Subsidiary or the
Purchaser):
(a) that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the
Company;
(b) that beneficially owns or holds five percent (5%) or more of any
class of the Voting Stock of the Company; or
(c) five percent (5%) or more of the Voting Stock (or in the case of
a Person that is not a corporation, five percent (5%) or more of the
equity interest) of which is beneficially owned or held by the Company or
any Subsidiary;
at such time.
As used in this definition,
control -- means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
14
Aggregate Consideration Receivable -- means, in the case of a sale of
shares of Additional Common Stock, the aggregate amount paid to the Company in
connection therewith and, in the case of an issuance or sale of Rights, or any
amendment thereto, the sum of:
(a) the aggregate amount paid to the Company for such Rights; plus
(b) the aggregate consideration or premiums stated in such Rights to
be payable for the shares of Additional Common Stock covered thereby;
in each case without deduction for any fees, expenses or underwriters'
discounts.
Agreement, this -- and references thereto shall mean this Warrant
Agreement as it may from time to time be amended or supplemented.
Board of Directors -- means the board of directors of the Company or any
committee thereof that, in the instance, shall have the lawful power to exercise
the power and authority of such board of directors.
Charter -- means the certificate of incorporation of the Company, as in
effect immediately after giving effect to the Charter Amendment (as defined in
the Note Agreement).
Closing Price -- means, per share of Common Stock, on any date specified
herein:
(a) the last sale price, regular way, on such date or, if no such
sale takes place on such date, the average of the closing bid and asked
prices on such date, in each case as officially reported on the principal
national securities exchange on which the Common Stock is then listed or
admitted to trading; and
(b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange, but is designated as a national market
system security by the NASD, the last trading price of the Common Stock on
such date, or if there shall have been no trading on such date or if the
Common Stock is not so designated, the average of the reported closing bid
and asked prices on such date as shown by the NASDAQ.
Common Stock -- means the voting common stock, $.01 par value, of the
Company.
Company -- shall have the meaning specified in the introductory paragraph
hereof.
Consideration Per Share -- means, with respect to shares of Common Stock
or Rights, the quotient of:
(a) the Aggregate Consideration Receivable in respect of such shares
of Common Stock or such Rights; divided by
15
(b) the total number of such shares of Common Stock or, in the case
of Rights, the total number of shares of Common Stock into which such
Rights are exercisable or convertible.
Excluded Securities -- means and includes:
(a) shares of Common Stock or Rights issued in any of the
transactions described in Section 4.2 through Section 4.6, inclusive, and
in respect of which an adjustment has been made pursuant to such Section;
(b) shares of Common Stock issuable upon exercise of the Warrants or
any other Rights outstanding on the date hereof;
(c) shares of Common Stock issued to the public in a bona fide
public offering registered under the Securities Act to Persons other than:
(i) Affiliates;
(ii) employees of the Company; or
(iii) existing holders of Common Stock or Rights;
provided, however, that a bona fide public offering sold through an
underwriter and held open to the public generally shall not fail to meet
the requirements of this clause (c) merely by virtue of the fact that one
or more Affiliates, employees or existing holders of Common Stock or
Rights may have been purchasers from the underwriters therein so long as
not more than twenty percent (20%) of such offering is sold to Affiliates,
employees or existing holders; and
(d) shares of Common Stock issued to employees or directors of the
Company or its Subsidiaries, and Rights consisting of employee or director
stock options and shares of Common Stock issued upon exercise of such
Rights, issued to employees or directors of the Company or its
Subsidiaries pursuant to any stock option plan or agreement approved by
the Board of Directors at any time, so long as, and to the extent that:
(i) the aggregate number of shares of Common Stock issuable
upon exercise of such stock options (whether or not then currently
exercisable) at such time, together with all shares of Common Stock
previously issued upon exercise of such stock options, does not
exceed Twenty-One Thousand Ninety (21,090) shares, such number of
shares to be appropriately adjusted in respect of the occurrence of
any of the events described in Section 4; and
(ii) no other holder of any Rights or any other Securities of
the Company shall have the right to any preemptive, subscription or
similar right in respect of such issuance.
16
Expiration Date -- means the final maturity date of the Notes, provided,
however, that if the Notes are prepaid in full prior to their final maturity
date, the Expiration Date shall be the date of such prepayment in full.
Fair Value -- means, with respect to any share of Common Stock, the
quotient of:
(a) the difference of:
(i) the sum of:
(A) the fair salable value of the Company as a going
concern, giving effect to all Property thereof and subject to
all liabilities thereof (including, without limitation,
indebtedness) that would be realized in an arm's length sale
between an informed and willing buyer and an informed and
willing seller, under no compulsion to buy or sell,
respectively, as of a date that is within fifteen (15) days of
the date as of which the determination is to be made, such
determination in either case to be made without regard to the
absence of a liquid or ready market for such Common Stock;
plus
(B) the aggregate exercise or conversion price of all
Warrants and all other Valuable Rights (including, without
limitation, Valuable Rights in respect of any shares of
Preferred Stock convertible at such time into shares of Common
Stock) in existence and remaining unexercised on such date;
minus
(ii) in the case of any outstanding shares of Preferred Stock
(other than Preferred Stock convertible at such time into shares of
Common Stock, which shares represent Valuable Rights at such time),
the aggregate liquidation preference of (or, if less, the aggregate
price, if any, at which the Company could elect to redeem) such
shares of Preferred Stock (together with all accrued and unpaid
dividends thereon);
divided by
(b) the sum of:
(i) the total number of shares of Common Stock then
outstanding; plus
(ii) the aggregate number of shares of Common Stock issuable
in respect of all Valuable Rights (including, without limitation,
Valuable Rights in respect of any shares of Preferred Stock
convertible at such time into shares of Common Stock) at such time.
17
The determination referred to in clause (a)(i)(A) of this definition shall be
made by agreement among the Relevant Warrantholders and the Company and if, in
the Company's view after reasonable negotiation, no such agreement can be
reached, by the Valuation Agent selected by the Company and reasonably
acceptable to the Relevant Warrantholders. If such determination is to be made
by the Valuation Agent, each of the Company and the Relevant Warrantholders
shall submit, in writing, their respective determinations of the fair salable
value referred to in such Section at the time the Valuation Agent is requested
to make such determination. If the Valuation Agent's determination of such fair
salable value is closer to the Company's determination thereof, the
Warrantholders in respect of which such determination has been made shall
reimburse the Company, ratably in accordance with the number of Warrants held by
each of them, for the costs and expenses of the Valuation Agent incurred in
making such determination; if the Valuation Agent's determination of such fair
salable value is closer to the determination thereof of the Relevant
Warrantholders, the Company shall pay such costs and expenses.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of Certified
Public Accountants and the Financial Accounting Standards Board and in such
statements, opinions and pronouncements of such other entities with respect to
financial accounting of for-profit entities as shall be accepted by a
substantial segment of the accounting profession in the United States.
Initial Purchase Price -- means One Cent ($.01) per share.
Lien -- means any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property (for purposes of this
definition, the "Owner"), whether such interest is based on the common law,
statute or contract, and includes but is not limited to:
(a) the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes, and the filing of any financing statement
under the Uniform Commercial Code of any jurisdiction, or an agreement to
give any of the foregoing;
(b) reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting real Property;
(c) stockholder agreements, voting trust agreements, buy-back
agreements and all similar arrangements affecting the Owner's rights in
stock owned by the Owner; and
(d) any interest in any Property held by the Owner evidenced by a
conditional sale agreement, capitalized lease or other arrangement
pursuant to which title to such Property has been retained by or vested in
some other Person for security purposes.
18
The term "Lien" does not include negative pledge clauses in loan agreements and
equal and ratable security clauses in loan agreements.
Market Price -- means, per share of Common Stock, as of any date of
determination, the arithmetic mean of the daily Closing Prices for the twenty
(20) consecutive trading days before such date of determination; provided that
if the Common Stock is then neither listed nor admitted to trading on any
national securities exchange, designated as a national market system security by
the NASD or quoted by NASDAQ, then "Market Price" means the Fair Value of one
(1) share of Common Stock.
NASD -- means the National Association of Securities Dealers, Inc.
NASDAQ -- means the National Association of Securities Dealers Automated
Quotation System.
Note Agreement -- has the meaning set forth in Recital B.
Notes -- has the meaning set forth in Recital B.
Organic Change -- has the meaning set forth in Section 4.6.
Person -- means an individual, partnership, corporation, limited liability
company, joint venture, trust, unincorporated organization, or a government or
agency or political subdivision thereof.
Preferred Stock -- means and includes all capital stock of the Company of
any class which is preferred, as to payment of dividends, payment upon a
liquidation or dissolution of the Company or both, over the Common Stock.
Property -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
Public Offering -- has the meaning set forth in the Registration Rights
and Stockholders' Agreement.
Purchase Price -- means, prior to any adjustment pursuant to Section 4,
the Initial Purchase Price, and thereafter, the Initial Purchase Price as
thereafter successively adjusted and readjusted from time to time.
Purchaser -- shall have the meaning specified in the introductory
paragraph hereof.
Reference Price -- means, per share of Common Stock, as of any date of
determination, ninety-five percent (95%) of the Market Price as of such date.
19
Registration Rights and Stockholders' Agreement -- means the Registration
Rights and Stockholders' Agreement, dated as of even date herewith, among the
Company, the Purchaser, James A. Harris, Michael J. Stone, and Golder, Thoma,
Cressey, Rauner Fund IV L.P., as amended by the First Amendment to Registration
Rights and Stockholders' Agreement, dated as of June 5, 1998, and as it may from
time to time be further amended or supplemented.
Relevant Warrantholders -- means (i) in connection with any determination
of Market Price pursuant to Section 2.6, the holder or holders of Warrants
delivering Warrant Certificates for exercise, and (ii) in connection with any
determination of Reference Price pursuant to Section 4.3 or Section 4.4, the
Required Warrantholders.
Required Warrantholders -- means, at any time, the holders of at least a
majority of all Warrants then outstanding (excluding any Warrants directly or
indirectly held by the Company, any Subsidiary or any Affiliate) at such time.
Right -- means and includes:
(a) any warrant (including, without limitation, any Warrant) or any
option (including, without limitation, employee stock options) to acquire
Common Stock;
(b) any right issued to holders of the Common Stock, or any class
thereof, permitting the holders thereof to subscribe to shares of
Additional Common Stock (pursuant to a rights offering or otherwise);
(c) any right to acquire Common Stock pursuant to the provisions of
any Security convertible or exchangeable into Common Stock; and
(d) any similar right permitting the holder thereof to subscribe for
or purchase shares of Common Stock.
Securities Act -- means the Securities Act of 1933, as amended.
Security -- shall have the meaning specified in section 2(1) of the
Securities Act.
Subsidiary -- means, at any time, each corporation, association, limited
liability company or other business entity which qualifies as a subsidiary of
the Company that is properly included in a consolidated financial statement of
the Company and its subsidiaries in accordance with GAAP at such time.
Transferee -- means any registered transferee of all or any part of any
one or more Warrant Certificates acquired by the Purchaser under this Agreement.
Valuable Right -- means, at any time, a Right, the effective conversion,
exercise or purchase price of which on the date of determination is less than
the Fair Value in respect of the shares of Common Stock issuable upon
conversion, exercise or purchase pursuant to such Right on such date.
20
Valuation Agent -- means a firm of independent certified public
accountants, an investment banking firm or appraisal firm (which firm shall own
no Securities of, and shall not be an Affiliate, Subsidiary or a related Person
of, the Company) of recognized national standing, retained by the Company and
reasonably acceptable to the Relevant Warrantholders.
Voting Stock -- means, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time any stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
Warrant -- shall mean each Warrant to purchase shares of the Common Stock
issued pursuant to this Agreement.
Warrant Certificate -- has the meaning set forth in Section 1.1.
Warrant Shares -- means, without duplication:
(a) any shares of Common Stock that have been issued upon the
exercise of any Warrant; and
(b) any shares of Common Stock that are issuable upon the exercise
of the Warrants referred to in clause (a) above.
6.2 Descriptive Headings. The descriptive headings of the several Sections
of this Agreement are inserted for convenience only and do not constitute a part
of this Agreement.
6.3 Governing Law. THIS AGREEMENT AND THE WARRANT CERTIFICATES SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
7. MISCELLANEOUS
7.1 Expenses. The Company agrees to pay, and save the Purchaser and any
Transferees harmless against liability for the payment of, all out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of special counsel for the Purchaser and any Transferee) arising in connection
with the transactions herein contemplated, including, without limitation:
(a) the cost, if any, of complying with Section 3.6;
(b) any subsequent proposed modification of, or proposed consent
requested or initiated by or on behalf of the Company under, this
Agreement, the Registration Rights and Stockholders' Agreement, the
Warrant Certificates or the Warrants, whether or not such proposed
modification shall be effected or
21
proposed consent granted (including, without limitation, all document
production and duplication charges and the reasonable fees and expenses of
one special counsel engaged by the holders of Warrants in connection
therewith); and
(c) the enforcement of (or determination of whether or how to
enforce) any rights under this Agreement, the Registration Rights and
Stockholders' Agreement, the Warrant Certificates or the Warrants or in
responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the
Registration Rights and Stockholders' Agreement, or the transactions
contemplated hereby or thereby, or by reason of the Purchaser's or any
Transferee's having acquired any Warrant Certificate, including, without
limitation, the reasonable fees and expenses of one special counsel
engaged by the holders of the Warrant Shares and incurred by the holders
of the Warrant Shares and the costs and expenses incurred in any
bankruptcy case involving the Company or any Subsidiary.
The obligations of the Company under this Section 7.1 shall survive the transfer
of any Warrant Certificate or portion thereof or interest therein by the
Purchaser or any Transferee and the exercise or expiration of any Warrant.
7.2 Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with and only with the
written consent of the Company and the Required Warrantholders; provided,
however, that:
(a) no such amendment or waiver of any of the provisions of this
Agreement pertaining to the Purchase Price or the number or kind of shares
of Common Stock that may be purchased upon exercise of each Warrant,
(b) no change accelerating the occurrence of the Expiration Date,
and
(c) no such amendment or waiver of any of the provisions of this
Section 7.2,
shall be effective as to the holder of any Warrant unless consented to in
writing by such holder.
7.3 Transferability. The Warrants shall only be transferable upon
compliance with the provisions applicable to the transfer of Warrant Shares (as
defined in the Registration Rights and Stockholders' Agreement) set forth in
Section 10 of the Registration Rights and Stockholders' Agreement, the Warrants
being deemed to be Warrant Shares (as defined in the Registration Rights and
Stockholders' Agreement) solely for purposes of applying such Section to the
Warrants.
7.4 Directly or Indirectly. Where any provision in this Agreement refers
to any action to be taken by any Person, or that such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person, including actions taken by or on behalf of any
partnership in which such Person is a general partner.
22
7.5 Survival of Representations and Warranties; Entire Agreement. This
Agreement and the Warrant Certificates embody the entire agreement and
understanding between the Company and the Purchaser, and supersede all prior
agreements and understandings, relating to the subject matter hereof.
7.6 Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not. Notwithstanding the foregoing sentence, the Company may not assign any of
its rights, duties or obligations hereunder or under the Warrants without the
prior written consent of all holders of the Warrants then outstanding.
7.7 Notices. All communications hereunder or under the Warrants shall be
in writing and shall be delivered either by national overnight courier (with
charges prepaid) or by facsimile transmission (confirmed by delivery by national
overnight courier sent on the day of the sending of such facsimile
transmission), and shall be addressed to the following addresses:
(a) if to the Purchaser, at its address set forth on Annex 1 to this
Agreement, or at such other address as the Purchaser shall have specified
to the Company in writing;
(b) if to any other holder of any Warrant Certificate, addressed to
such other holder at such address as such other holder shall have
specified to the Company in writing or, if any such other holder shall not
have so specified an address to the Company, then addressed to such other
holder in care of the last holder of such Warrant Certificate that shall
have so specified an address to the Company; and
(c) if to the Company, at the address set forth on Annex 2 to this
Agreement, or at such other address as the Company shall have specified to
each holder of Warrants in writing.
Any communication addressed and delivered as herein provided shall be deemed to
be received when actually delivered to the address of the addressee (whether or
not delivery is accepted) or received by the telecopy machine of the recipient.
Any communication not so addressed and delivered shall be ineffective.
7.8 Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to the Purchaser or to any holder or holders of
Warrant Certificates, the determination of such satisfaction shall, unless
specifically required herein in any instance to be "reasonable" or words to
similar effect, be made by such Purchaser, holder or holders, as the case may
be, in the sole and exclusive judgment (exercised in good faith) of the Person
or Persons making such determination.
23
7.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument.
7.11 Jurisdiction; Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS AND
INSTRUMENTS CONTEMPLATED HEREBY AND EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT. NONE OF THE PARTIES HERETO SHALL SEEK
A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION
PROCEDURE BASED UPON OR ARISING OUT OF OR OTHERWISE RELATED TO THIS AGREEMENT OR
ANY OF THE WARRANTS AND EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO ANY SUCH JURY TRIAL AND ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY SUCH PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 7.11.
[Remainder of page intentionally left blank;
next page is a signature page.]
24
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered by one of its duly authorized officers or
representatives.
U.S. AGGREGATES, INC.
By: /s/ Michael J. Stone
Name: Michael J. Stone
Title: Executive Vice President,
Chief Financial Officer
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Robert R. Derrick
Name: Robert R. Derrick
Title: Vice President
ANNEX 1
ADDRESS OF PURCHASER
The Prudential Insurance Company of America
c/o Prudential Capital Group
One Gateway Center, 11th Floor
Newark, New Jersey 07102-5311
Annex 1-1
ANNEX 2
ADDRESS OF COMPANY
400 South El Camino Real
Suite 500
San Mateo, California 94402
Attention: Michael J. Stone
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: John Schoenfeld, Esq.
Annex 2-1
ATTACHMENT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD EXCEPT IN
A TRANSACTION REGISTERED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT.
WARRANT CERTIFICATE
U.S. AGGREGATES, INC.
No. WS-___ __________ Warrants
Date: ________ PPN: 90345@ 12 9
This Warrant Certificate certifies that ___________________, or registered
assigns, is the registered holder of ___________ (________) Warrants. Each
Warrant entitles the owner thereof to purchase at any time on or prior to the
Expiration Date, one (1) fully paid and nonassessable share of Common Stock, par
value $.01 per share (the "Common Stock"), of U.S. AGGREGATES, INC., a Delaware
corporation (together with its successors and assigns, the "Company"), at a
Purchase Price (subject to adjustment as provided therein) of One Cent ($.01)
per share, upon presentation and surrender of this Warrant Certificate with a
form of election to purchase duly executed and delivered to the Company in the
manner set forth in the Warrant Agreement. The number of shares of Common Stock
that may be purchased upon exercise of each Warrant and the Purchase Price are
the number and the Purchase Price as of the date hereof, and are subject to
adjustment as referred to below.
The Warrants are issued pursuant to the Warrant Agreement (as it may from
time to time be amended or supplemented, the "Warrant Agreement"), dated as of
June 5, 1998, between the Company and the investor named therein, and are
subject to all of the terms, provisions and conditions thereof, which Warrant
Agreement is hereby incorporated herein by reference and made a part hereof and
to which Warrant Agreement reference is hereby made for a full description of
the rights, obligations, duties and immunities of the Company and the holders of
the Warrant Certificates. Capitalized terms used, but not defined, herein have
the respective meanings ascribed to them in the Warrant Agreement.
As provided in the Warrant Agreement, the Purchase Price and the number of
shares of Common Stock that may be purchased upon the exercise of the Warrants
evidenced by this Warrant Certificate are, upon the happening of certain events,
subject to modification and adjustment.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time (but not, in the case
of any exercise in part, as
Attachment A-1
to a fractional Warrant). If this Warrant Certificate shall be exercised in
part, the holder shall be entitled to receive, upon surrender hereof, another
Warrant Certificate or Warrant Certificates for the number of Warrants not
exercised. This Warrant Certificate, with or without other Warrant Certificates,
upon surrender in the manner set forth in the Warrant Agreement, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
evidencing Warrants entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Warrants evidenced by the Warrant Certificate or
Warrant Certificates surrendered shall have entitled such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of this
Warrant Certificate shall be entitled to vote or receive dividends or be deemed
for any purpose the holder of shares of Common Stock or of any other Securities
of the Company that may at any time be issued upon the exercise hereof, nor
shall anything contained in the Warrant Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a holder of a share
of Common Stock in the Company or any right to vote upon any matter submitted to
holders of shares of Common Stock at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of Securities, change of par value, consolidation,
merger, conveyance, or otherwise), or to receive dividends or subscription
rights, or otherwise, until the Warrant or Warrants evidenced by this Warrant
Certificate shall have been exercised as provided in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE COMPANY AND THE HOLDER HEREOF SHALL BE GOVERNED BY,
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
WITNESS the signature of a duly authorized officer of the Company as of
the date first above written.
U.S. AGGREGATES, INC.
By:
-------------------------------------
Name:
Title:
Attachment A-2
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if
such holder desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, _______________________________________ hereby sells,
assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee.)
the accompanying Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint:
________________________________________________________________________________
attorney, to transfer the accompanying Warrant Certificate on the books of the
Company with full power of substitution.
Dated: ____________________, ________.
[HOLDER]
By _____________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
Attachment A-3
[FORM OF ELECTION TO PURCHASE]
(To be executed by the registered holder if
such holder desires to exercise the Warrant Certificate)
To U.S. AGGREGATES, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________ Warrants represented by the accompanying Warrant
Certificate to purchase the shares of Common Stock issuable upon the exercise of
such Warrants and requests that certificates for such shares be issued in the
name of:
________________________________________________________________________________
(Please print name and address.)
________________________________________________________________________________
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address.)
________________________________________________________________________________
(Please insert social security or other identifying number.)
Attachment A-4
As stated in Section 2.1(b) of the Warrant Agreement, the Purchase Price
for the shares of Common Stock to be issued on the exercise of the foregoing
Warrants was paid to the Company on the date of the execution of the Warrant
Agreement.
Dated: __________________, ______.
[HOLDER]
By______________________________________
NOTICE
The signature to the foregoing Election to Purchase must correspond to the
name as written upon the face of the accompanying Warrant Certificate or any
prior assignment thereof in every particular, without alteration or enlargement
or any change whatsoever.
Attachment A-5