Exhibit 10
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS WARRANT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO CONCORDE
CAREER COLLEGES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO THE PROVISIONS OF RULE 144 OF THE ACT.
THIS WARRANT IS SUBJECT TO THE PROVISIONS OF A DEBENTURE PURCHASE AGREEMENT,
DATED AS OF FEBRUARY 25, 1997, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT AS THEREIN PROVIDED.
WARRANT TO ACQUIRE SHARES OF
COMMON STOCK OF
CONCORDE CAREER COLLEGES, INC.
February 25, 1997
THIS CERTIFIES THAT XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND, L.P.
("Holder"), for value received, or its registered assigns, is entitled to
purchase, on the terms and subject to the conditions hereinafter set forth, from
CONCORDE CAREER COLLEGES, INC., a Delaware corporation (the "Company"), at any
time after August 25, 1998 and on or before February 25, 2003, subject to
earlier termination (the "Exercise Period"), that number of shares (the "Warrant
Shares") of common stock, par value $.10 per share, of the Company (the "Common
Stock"), as set forth in Section 2.1 hereof.
SECTION 1
Exercise Price
The exercise price at which this Warrant may be exercised shall be
$1.36 per share of Common Stock (the "Exercise Price"), subject to any
adjustment pursuant to Section 3.3.
SECTION 2
Exercise of Warrant, Etc.
2.1 Number of Shares for Which Warrant is Exercisable. This Warrant shall
be exercisable for 2,438,419 shares of Common Stock, subject to any adjustment
pursuant to Section 3.3.
2.2 Procedure for Exercise of Warrant. The Warrant may be exercised in
whole or in part during the Exercise Period by surrendering this Warrant, with
the purchase form provided for herein duly executed by Holder or by Holder's
duly authorized attorney-in-fact, at the principal office of the Company or at
such other office or agency in the United States as the Company may designate by
notice in writing to the Holder accompanied by payment in full, in cash, bank
cashier's check or certified check payable to the order of the Company, of the
Exercise Price payable in respect of the Warrant Shares being exercised. In
addition to payments of the Exercise Price by cash or said checks, payment of
the Exercise Price with respect to the Warrants being exercised may be made, at
the option of the Holder, by the reduction in the principal amount of the
Debenture (the "Debenture") issued to the Holder pursuant to the Debenture
Purchase Agreement, dated as of February 25, 1997, by and between the Company
and the Holder (the "Debenture Purchase Agreement") (or forgiveness of any
accrued and unpaid interest thereon, whether or not payment of such interest has
been suspended pursuant to the provisions of such
Debenture), even during a period in which an Event of Default (as defined in the
Debenture Purchase Agreement) has occurred and is continuing under such
Debenture, in an amount equal to the Exercise Price with respect to the Warrant
being exercised; and in such a case, this Warrant shall be accompanied by said
Debenture (with the purchase form duly executed) which shall be substituted and
replaced by a new Debenture identical in form and content to the original
Debenture except that principal amount shall be appropriately reduced to reflect
the reduction in the principal amount applicable to the payment of the Exercise
Price with respect to the Warrant being exercised. If fewer than all of the
Warrant Shares are being exercised, the Company shall, upon exercise prior to
the end of the Expiration Period, execute and deliver to the Holder a new
certificate (dated the date hereof) evidencing the balance of the Warrant Shares
that remain exercisable.
2.3 Conversion.
(a) On or after August 25, 1998, in the event that the Company
consummates a firm-commitment underwritten public offering pursuant to an
effective registration statement under the Act covering the offer and sale of
Common Stock for the account of the Company in which (i) the net proceeds of the
public offering price equals or exceeds $20 million and (ii) the public offering
price per share of Common Stock equals or exceeds $4.00, then this Warrant shall
become mandatorily exercisable within six (6) months for that number of shares
of Common Stock issuable upon exercise of the Warrant.
(b) In the Event of Default (as defined in the Debenture Purchase
Agreement), then this Warrant shall immediately become exercisable, at the
option of the Holder, for that number of shares of Common Stock issuable upon
exercise of the Warrant.
2.4 Transfer Restriction Legend. Each certificate for Warrant Shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear the following
legend (and any additional legend required by any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof:
"These securities have not been registered under the Securities Act of
1933, as amended, or under any state securities laws and may be offered,
sold or transferred only if registered pursuant to the provisions of such
laws, or if in the opinion of counsel satisfactory to the Company, an
exemption from such registration is available."
2.5 Acknowledgment of Continuing Obligation. The Company will, if
Holder exercises this Warrant in part, upon request of the Holder, acknowledge
in writing the Company's continuing obligation to the Holder in respect of any
rights to which the Holder shall continue to be entitled after such exercise in
accordance with this Warrant, provided, that the failure of the Holder to make
any such request shall not affect the continuing obligation of the Company to
the Holder in respect of such rights.
2.6 Exercise Period. The Company and Purchaser agree to negotiate in
good faith to modify or extend the Exercise Period in the event that either the
Company or Purchaser deems it appropriate to modify or extend such Exercise
Period.
2.7 Termination of Warrant. During the Exercise Period, in the event
that Holder fails to exercise this Warrant after the Company has provided Holder
(i) twenty (20) days prior written notice of its intention to pay in full and
redeem the Debenture on a particular date (the "Repayment Date"), and (ii)
thirty (30) days after the Redemption Date within which to exercise this
Warrant, then this Warrant shall terminate and thereafter be null and void.
Notwithstanding the preceding sentence, in the event that the Company repays and
redeems the Debenture in full on or before August 25, 1998, this Warrant shall
remain in full force and effect until September 25, 1998, when it shall expire.
SECTION 3
Ownership of this Warrant.
3.1 Deemed Holder. The Company may deem and treat the person in whose
name this Warrant is registered as the Holder and owner hereof (notwithstanding
any notations of ownership or writing hereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer as
provided in this Section 3.
3.2 Exchange, Transfer and Replacement. This Warrant is non-detachable
from the Debenture and may not be transferred, assigned, sold, pledged or
otherwise hypothecated ("Transferred") except with the Debenture, and if so
Transferred, then only as permitted under the terms and conditions of the
Debenture and the Debenture Purchase Agreement; provided, however, that if the
Company repays and redeems the Debenture in full on or before August 25, 1998,
this Warrant shall remain in full force and effect until September 25, 1998.
This Warrant and all rights hereunder are transferable in whole or in part upon
the books of the Company by the Holder in person or by duly authorized attorney,
and a new Warrant shall be made and delivered by the Company, of the same tenor
as this Warrant but registered in the name of the transferee, upon surrender of
this Warrant duly endorsed at said office or agency of the Company. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in case of loss, theft or
destruction, or indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant, provided,
however, that if the Holder of this Warrant is the original Holder, an affidavit
of lost Warrant shall be sufficient for all purposes of this Section 3.2. This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange, transfer or replacement. The Company shall pay all
reasonable expenses, taxes (other than stock transfer taxes and income taxes)
and other charges payable by it in connection with the preparation, execution
and delivery of Warrant Shares pursuant to this Section 3.2.
3.3 Antidilution.
(a) If at any time while all or any portion of this Warrant remains
outstanding all or any portion of this Warrant shall be exercised subsequent to
(i) any sales of shares of Common Stock of the Company at a price per share less
than the Exercise Price per share then applicable to this Warrant, or (ii) any
issuance of any security convertible into shares of Common Stock of the Company
with a conversion price per share less than the Exercise Price per share then
applicable to this Warrant, or (iii) any issuance of any option, warrant or
other right to purchase shares of Common Stock of the Company at any Exercise
Price per share less than the Exercise Price per share then applicable to this
Warrant (except pursuant to an employee or director stock option plan or similar
compensation plan approved by the Board of Directors); then in any and every
such event the Exercise Price per share for this Warrant shall be reduced and
shall be equal to such lower sales, conversion or Exercise Price per share.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, reorganization or liquidation
of the Company occurring after the date hereof, as a result of which such shares
of any class shall be issued in respect of outstanding shares of Common Stock of
the Company (or shall be issuable in respect of securities convertible into
shares of Common Stock) or upon exercise of rights (other than this Warrant) to
purchase shares of Common Stock or shares of such Common Stock shall be changed
into the same or a different number of shares of the same or another class or
classes, the Holder exercising this Warrant shall receive the aggregate number
and class of shares which such Holder would have received if this Warrant had
been exercised immediately before such stock dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
reorganization or liquidation.
SECTION 4
Special Agreements of the Company
The Company covenants and agrees that:
4.1 The Company will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock deliverable upon the exercise of this Warrant or of any other rights or
privileges provided for therein sufficient to enable the Company at any time to
fulfill all its obligations thereunder.
4.2 This Warrant shall be binding upon any corporation or entity
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
SECTION 5
Notices
Any notice or other document required or permitted to be given or
delivered to the Holder or the Company shall be delivered, or sent by certified
or registered mail, to the Holder or the Company at the address as set forth in
Section 10.4 of the Debenture Purchase Agreement.
SECTION 6
Governing Law
This Warrant shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Delaware, without giving
effect to its conflicts of laws provisions.
SECTION 7
Assignment
Notwithstanding any provision of this Warrant which may be construed
to the contrary, this Warrant and any rights hereunder shall not be assignable
by the Holder except in accordance with the provisions governing assignments
hereof set forth in the Debenture Purchase Agreement, dated as of February 25,
1997, among the Company and Holder, and any attempt by Holder to assign this
Warrant or any rights hereunder other than in accordance therewith shall be void
and of no force and effect.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer under its corporate seal, attested by its duly
authorized officer, and to be dated as of February 25, 1997.
ATTEST: CONCORDE CAREER COLLEGES, IN
/s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxx, Secretary Xxxx X. Xxxxxxx, President and Chief Executive
Officer
