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EXHIBIT 4.14
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE ACT OR SUCH STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH SECURITIES
ACTS OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED TRANSFER.
AMENDED AND RESTATED STOCK PURCHASE WARRANT
This Amended and Restated Stock Purchase Warrant is issued this 25th
day of March, 1998, by ELECTRONICS ACCESSORY SPECIALISTS INTERNATIONAL, INC., a
Delaware corporation (the "Company"), to SIRROM CAPITAL CORPORATION, a Tennessee
corporation (SIRROM CAPITAL CORPORATION and any subsequent assignee or
transferee hereof are hereinafter referred to collectively as "Holder" or
"Holders"). This Amended and Restated Stock Purchase Warrant amends and restates
that certain Stock Purchase Warrant dated June 24, 1997 issued by the Company to
the Holder (the "Old Warrant") and shall not constitute a novation thereof. Upon
the execution and delivery of this Warrant, Holder shall deliver to the Company
the Old Warrant, marked "Replaced".
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of SIRROM
CAPITAL CORPORATION making a loan to the Company in an amount of One Million Six
Hundred Thousand and no/100ths Dollars ($1,600,000.00) pursuant to the terms of
a secured promissory note dated June 24, 1997 (the "Note") and a related Loan
Agreement dated June 24, 1997 which was amended pursuant to a First Amendment to
Loan Agreement and Loan Documents dated of even date herewith (the "Loan
Agreement"), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby grants to
Holder the right to purchase 171,698 shares of the Company's common stock (the
"Common Stock"), which the Company represents to equal 1.875% of the capital
stock of the Company on the date hereof, calculated on a fully diluted basis
after exercise ("Base Amount"), provided that in the event that the indebtedness
evidenced by the Note is outstanding on the following dates, the Base Amount
shall be increased to the corresponding number set forth below:
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DATE BASE AMOUNT
-------------------------- ------------------------------------------
June 24, 1999 231,288 shares of Common Stock,
which the Company represents to
equal 2.526% of the capital stock of the
Company on the date hereof calculated
on a fully diluted basis after exercise.
June 24, 2000 292,176 shares of Common Stock,
which the Company represents to
equal 3.191% of the capital stock of the
Company on the date hereof calculated
on a fully diluted basis after exercise.
June 24, 2001 354,322 shares of Common Stock,
which the Company represents to
equal 3.870% of the capital stock of the
Company on the date hereof calculated
on a fully diluted basis after exercise.
The shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." This Warrant shall be exercisable at
any time and from time to time from the date hereof until July 31, 2002. For
purposes of this Warrant the term "fully diluted basis" shall be determined in
accordance with generally accepted accounting principles as of the date hereof.
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. EXERCISE. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) as to all or any increment or
increments of One Hundred (100) Shares (or the balance of the Shares if less
than such number), upon delivery of written notice of intent to exercise to the
Company at the following address: 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx
00000 or such other address as the Company shall designate in a written notice
to the Holder hereof, together with this Warrant and payment to the Company of
the aggregate Exercise Price of the Shares so purchased. The Exercise Price
shall be payable, at the option of the Holder, (i) by certified or bank check,
(ii) by the surrender of the Note or portion thereof having an outstanding
principal balance equal to the aggregate Exercise Price or (iii) by the
surrender of a portion of this Warrant having a fair market value equal to the
aggregate
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Exercise Price. Upon receipt of the notice of exercise of this Warrant as
aforesaid, the Company shall as promptly as practicable, and in any event within
fifteen (15) days thereafter, execute and deliver to the Holder of this Warrant
a certificate or certificates for the total number of whole Shares for which
this Warrant is being exercised in such names and denominations as are requested
by such Holder. If this Warrant shall be exercised with respect to less than all
of the Shares, the Holder shall be entitled to receive a new Warrant covering
the number of Shares in respect of which this Warrant shall not have been
exercised, which new Warrant shall in all other respects be identical to this
Warrant. The Company covenants and agrees that it will pay when due any and all
state and federal issue taxes which may be payable in respect of the issuance of
this Warrant or the issuance of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended ("Securities Act") or any
state securities laws ("Blue Sky Laws"). This Warrant has been acquired
for investment purposes and not with a view to distribution or resale
and may not be pledged, hypothecated, sold, made subject to a security
interest, or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act and
such applicable Blue Sky Laws, or (ii) an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company and
its counsel, that registration is not required under the Securities Act
or under any applicable Blue Sky Laws (the Company hereby acknowledges
that Bass, Xxxxx & Xxxx is acceptable counsel). Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the
same manner and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION
UNDER SUCH SECURITIES ACTS OR SUCH APPLICABLE STATE SECURITIES
LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
TRANSFER.
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The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any shares of Common Stock issued
upon exercise hereof with applicable federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive
rights, if any, with respect thereto or to the issuance thereof. The
Company shall at all times reserve and keep available for issuance upon
the exercise of this Warrant such number of authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in
full of this Warrant.
(c) Except for securities issued under the Company's 1996 Long
Term Incentive Plan, as amended (not to exceed 50% of the common shares
of Borrower outstanding from time to time on a fully diluted basis,
with the exercise price per share of any capital stock issued pursuant
to any option granted under such plan not to be less than 100% of the
fair market value of such stock on the date such option is granted),
the Company covenants and agrees that it shall not sell any shares of
the Company's capital stock at a price below the fair market value of
such shares (as such may be determined in good faith, from time to
time, by the Company's board of directors), without the prior written
consent of the Holder hereof. In the event that the Company sells
shares of the Company's capital stock in violation of this Section
4(c), the number of shares of Common Stock issuable upon exercise of
this Warrant shall be equal to the product obtained by multiplying the
number of shares then issuable pursuant to this Warrant prior to such
sale by a fraction, the numerator of which shall be the product of (x)
the total number of shares of Common Stock outstanding on a fully
diluted basis immediately after such issuance or sale, multiplied by
(y) the fair market value immediately prior to such issuance or sale
and the denominator of which shall be the sum of (i) the number of
shares of Common Stock outstanding on a fully diluted basis immediately
prior to such issuance or sale multiplied by the fair market value
immediately prior to such issuance or sale, plus (ii) the aggregate
amount of the consideration received by the Company upon such issuance
or sale (as illustrated on Schedule I hereto).
5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer, the Company shall
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promptly execute and deliver a new Warrant or Warrants in the form hereof in the
name of the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS;
PREFERENCE RIGHTS. This Warrant does not confer upon the Holder, as such, any
right whatsoever as a shareholder of the Company. Notwithstanding the foregoing,
if the Company should offer to all of the Company's shareholders the right to
purchase any securities of the Company, then all shares of Common Stock that are
subject to this Warrant shall be deemed to be outstanding and owned by the
Holder and the Holder shall be entitled to participate in such rights offering.
The Company shall not grant any preemptive rights with respect to any of its
capital stock without the prior written consent of the Holder. The Company shall
not issue any securities which entitle the holder thereof to obtain any
preference over holders of Common Stock upon the dissolution, liquidation,
winding-up, sale, merger, or reorganization of the Company without the prior
written consent of the Holder unless: (i) all indebtedness under the Loan
Agreement and/or Note has been paid in full and (ii) the investment made by the
holder thereof is based on the valuation of the Company being at least
$30,000,000.
7. OBSERVATION RIGHTS. The Holder of this Warrant shall (a) receive
notice of and be entitled to attend or may send a representative to attend all
meetings of the Company's Board of Directors in a non-voting observation
capacity, (b) receive copies of all notices, packages and documents provided to
members of the Company's Board of Directors for each board of directors meeting,
and (c) receive copies of all actions taken by written consent by the Company's
Board of Directors, from the date hereof until such time as the indebtedness
evidenced by the Note has been paid in full.
8. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization,
combination of shares of the Company, or other similar event, occurring
after the date hereof, then the Holder exercising this Warrant shall
receive, for the aggregate price paid upon such exercise, the aggregate
number and class of shares which such Holder would have received if
this Warrant had been exercised immediately prior to such stock split,
stock dividend, recapitalization, combination of shares, or other
similar event. If any adjustment under this Section 8(a) would create a
fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be
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disregarded and the number of shares subject to this Warrant shall be
the next higher number of shares, rounding all fractions upward.
Whenever there shall be an adjustment pursuant to this Section 8(a),
the Company shall forthwith notify the Holder or Holders of this
Warrant of such adjustment, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment
was calculated.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares,
separation, reorganization or liquidation of the Company, or other
similar event, occurring after the date hereof, as a result of which
shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of securities
of the Company or another entity, then the Holder exercising this
Warrant shall receive, for the aggregate price paid upon such exercise,
the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such
merger, consolidation, exchange of shares, separation, reorganization
or liquidation, or other similar event. If any adjustment under this
Section 8(b) would create a fractional share of Common Stock or a right
to acquire a fractional share of Common Stock, such fractional share
shall be disregarded and the number of shares subject to this Warrant
shall be the next higher number of shares, rounding all fractions
upward. Whenever there shall be an adjustment pursuant to this Section
8(b), the Company shall forthwith notify the Holder or Holders of this
Warrant of such adjustment, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment
was calculated.
9. PUT AGREEMENT.
(a) The Company hereby irrevocably grants and issues to Holder
the right and option to sell to the Company (the "Put") this Warrant
for a period of thirty (30) days immediately prior to the expiration
thereof, at a purchase price (the "Purchase Price") equal to the Fair
Market Value (as hereinafter defined) of the shares of Common Stock
issuable to Holder upon exercise of this Warrant.
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(b) The Company shall pay to the Holder, in cash or certified
or cashier's check, the Purchase Price in exchange for the delivery to
the Company of this Warrant within the later of (i) thirty (30) days of
the receipt of written notice, addressed as set forth in Section 3
hereto, from the Holder of its intention to exercise the Put, or (ii)
five (5) days after Fair Market Value is determined by the appraisers
pursuant to Section 9(c) hereof, not to exceed sixty (60) days of the
receipt of written notice.
(c) The Fair Market Value of the shares of Common Stock of the
Company issuable pursuant to this Warrant shall be the average trading
price of shares of Common Stock during the ten (10) trading days
preceding the date notice of the exercise of the Put is delivered to
the Company or if the Common Stock is not publicly traded at such time
shall be determined as follows:
(i) The Company and the Holder shall each appoint an
independent, experienced appraiser who is a member of a
recognized professional association of business appraisers.
The two appraisers shall determine the value of the shares of
Common Stock which would be issued upon the exercise of the
Warrant, taking into consideration that such shares would
constitute a minority interest, and would lack liquidity, and
further assuming that the sale would be between a willing
buyer and a willing seller, both of whom have full knowledge
of the financial and other affairs of the Company, and neither
of whom is under any compulsion to sell or to buy.
(ii) If the highest of the two appraisals is not more
than 10% more than the lowest of the appraisals, the Fair
Market Value shall be the average of the two appraisals. If
the highest of the two appraisals is 10% or more than the
lowest of the two appraisals, then a third appraiser shall be
appointed by the two appraisers, and if they cannot agree on a
third appraiser, within thirty (30) days thereafter, the
American Arbitration Association shall appoint the third
appraiser. The third appraiser, regardless of who appoints him
or her, shall have the same qualifications as the first two
appraisers.
(iii) The Fair Market Value after the appointment of
the third appraiser shall be the mean of the three appraisals.
(iv) The fees and expenses of the appraisers shall be
paid one-half by the Company and one-half by the Holder.
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(d) Notwithstanding the foregoing, if the Note has been paid
in full and either (i) the Company has successfully completed an
underwritten public offering of the Company's capital stock and the
Company has a market capitalization in excess of $75,000,000.00, or
(ii) the Company is purchased by or merged with a public company having
a market capitalization of at least $75,000,000.00, and the Holder
receives marketable securities in such public company, the Put shall
terminate.
10. REGISTRATION.
(a) The Company and the Holder(s) agree that if at any time
after the date hereof the Company shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable
for a secondary offering of shares of Common Stock held by third
parties and which is not a registration solely to implement an employee
benefit plan or a transaction to which Rule 145 or any similar rule of
the Commission (as defined below) is applicable, it will give notice in
writing to such effect to the registered holder(s) of the Shares at
least thirty (30) days prior to such filing, and, at the written
request of any such registered holder, made within ten (10) days after
the receipt of such notice, will include therein at the Company's cost
and expense (including the fees and expenses of counsel to such
holder(s), but excluding underwriting discounts, commissions and filing
fees attributable to the Shares included therein) such of the Shares as
such holder(s) shall request; provided, however, that if the offering
being registered by the Company is underwritten and if the
representative of the underwriters certifies in writing that the
inclusion therein of the Shares would materially and adversely affect
the sale of the securities to be sold by the Company thereunder, then
the Company shall be required to include in the offering only that
number of securities of third parties (including Holder(s)), including
the Shares, which the underwriters determine in their sole discretion
will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among all selling shareholders
according to the total amount of securities entitled to be included
therein owned by each selling shareholder.
(b) Whenever the Company undertakes to effect the registration
of any of the Shares, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering such Shares and use its best efforts to cause such
registration statement to be declared effective by the
Commission as expeditiously as possible and to keep such
registration effective until
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the earlier of (A) the date when all Shares covered by the
registration statement have been sold or (B) one hundred
eighty (180) days from the effective date of the registration
statement; provided, that before filing a registration
statement or prospectus or any amendment or supplements
thereto, the Company will furnish to each Holder of Shares
covered by such registration statement and the underwriters,
if any, copies of all such documents proposed to be filed
(excluding exhibits, unless any such person shall specifically
request exhibits), which documents will be subject to the
review of such Holders and underwriters, and the Company will
not file such registration statement or any amendment thereto
or any prospectus or any supplement thereto (including any
documents incorporated by reference therein) with the
Commission if (A) the underwriters, if any, shall reasonably
object to such filing or (B) if information in such
registration statement or prospectus concerning a particular
selling Holder has changed and such Holder or the
underwriters, if any, shall reasonably object.
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to such registration
statement as may be necessary to keep such registration
statement effective during the period referred to in Section
10(b)(i) and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered
by such registration statement, and cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed with the commission pursuant to Rule
424 under the Securities Act.
(iii) Furnish to the selling Holder(s) such numbers
of copies of such registration statement, each amendment
thereto, the prospectus included in such registration
statement (including each preliminary prospectus), each
supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of
the Shares owned by them.
(iv) Use all reasonable efforts to register and
qualify under such other securities laws of such jurisdictions
as shall be reasonably requested by any selling Holder and do
any and all other acts and things which may be reasonably
necessary or advisable to enable such selling Holder to
consummate the disposition of the Shares owned by such Holder,
in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to
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file a general consent to service of process in any such
states or jurisdictions.
(v) Promptly notify each selling Holder of the
happening of any event, upon discovery of such event, as a
result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not
misleading and, at the request of any such Holder, the Company
will prepare a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such
Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state any fact necessary to make
the statements therein not misleading.
(vi) Provide a transfer agent and registrar for all
such Shares not later than the effective date of such
registration statement.
(vii) Enter into such customary agreements (including
underwriting agreements in customary form) and take all such
other actions as the underwriters, if any, reasonably request
in order to expedite or facilitate the disposition of such
Shares (including, without limitation, effecting a stock split
or a combination of shares).
(viii) Make reasonably available for inspection by
any selling Holder or any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such
selling Holder or underwriter, all financial and other
records, pertinent corporate documents and properties of the
Company, and cause the officers, directors, employees and
independent accountants of the Company to supply all
information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with
such registration statement.
(ix) Promptly notify the selling Holder(s) and the
underwriters, if any, of the following events and (if
requested by any such person) confirm such notification in
writing: (A) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment or
post-effective amendment thereto and, with respect to the
registration statement or any post-effective amendment
thereto, the declaration of the effectiveness of such
documents, (B) any requests by the Commission for amendments
or supplements to the registration statement or the prospectus
or for additional information, (C) the issuance or threat of
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issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation
of any proceedings for that purpose, and (D) the receipt by
the Company of any notification with respect to the suspension
of the qualification of the Shares for sale in any
jurisdiction or the initiation or threat of initiation of any
proceeding for such purposes.
(x) Make every reasonable effort to prevent the entry
of any order suspending the effectiveness of the registration
statement and obtain at the earliest possible moment the
withdrawal of any such order, if entered.
(xi) Cooperate with the selling Holder(s) and the
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing the Shares to be sold
and not bearing any restrictive legends, and enable such
Shares to be in such lots and registered in such names as the
underwriters may request at least two (2) business days prior
to any delivery of the Shares to the underwriters.
(xii) Provide a CUSIP number for all the Shares not
later than the effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration
statement and any post-effective amendment thereto and at
each closing of an underwritten offering, (A) make such
representations and warranties to the selling Holder(s) and
the underwriters, if any, with respect to the Shares and the
registration statement as are customarily made by issuers in
primary underwritten offerings; (B) use its best efforts to
obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed
to the selling Holders and the underwriters, if any, such
letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by
underwriters in connection with underwritten offerings; (C)
deliver such-documents and certificates as may be reasonably
requested (1) by the holders of a majority of the Shares being
sold, and (2) by the underwriters, if any, to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company; and (D) obtain opinions
of counsel to the Company and updates thereof (which counsel
and which opinions shall be reasonably satisfactory to the
underwriters, if any), covering the matters customarily
covered in opinions requested in
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underwritten offerings and such other matters as may be
reasonably requested by the selling Holders and underwriters
or their counsel. Such counsel shall also state that no facts
have come to the attention of such counsel which cause them to
believe that such registration statement, the prospectus
contained therein, or any amendment or supplement thereto, as
of their respective effective or issue dates, contains any
untrue statement of any material fact or omits to state any
material fact necessary to make the statements therein not
misleading (except that no statement need be made with respect
to any financial statements, notes thereto or other financial
data or other expertized material contained therein). If for
any reason the Company's counsel is unable to give such
opinion, the Company shall so notify the Holders of the Shares
and shall use its best efforts to remove expeditiously all
impediments to the rendering of such opinion.
(xiv) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission and
make generally available to its security holders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than forty-five (45) days after the
end of any twelve-month period (or ninety (90) days, if such
period is a fiscal year) (A) commencing at the end of any
fiscal quarter in which the Shares are sold to underwriters in
a firm or best efforts underwritten offering, or (B) if not
sold to underwriters in such an offering, beginning with the
first month of the first fiscal quarter of the Company
commencing after the effective date of the registration
statement, which statements shall cover such twelve-month
periods.
(c) After the date hereof, the Company shall not grant to any
holder of securities of the Company any registration rights which have
a priority greater than or equal to those granted to Holders pursuant
to this Warrant without the prior written consent of the Holder(s).
(d) The Company's obligations under Section 10(a) above with
respect to each holder of Shares are expressly conditioned upon such
holder's furnishing to the Company in writing such information
concerning such holder and the terms of such holder's proposed offering
as the Company shall reasonably request for inclusion in the
registration statement. If any registration statement including any of
the Shares is filed, then the Company shall indemnify each holder
thereof (and each underwriter for such holder and each person, if any,
who controls such underwriter within the meaning of the Securities Act)
from any loss, claim, damage or liability arising out of, based upon or
in any way
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relating to any untrue statement of a material fact contained in such
registration statement or any omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except for any such statement or omission based
on information furnished in writing by such holder of the Shares for
use in connection with such registration statement; and such holder
shall indemnify the Company (and each of its officers and directors who
has signed such registration statement, each director, each person, if
any, who controls the Company within the meaning of the Securities Act,
each underwriter for the Company and each person, if any, who controls
such underwriter within the meaning of the Securities Act) and each
other such holder against any loss, claim, damage or liability arising
from any such statement or omission which was made in reliance upon
information furnished in writing to the Company by such holder of the
Shares for use in connection with such registration statement.
(e) For purposes of this Section 10, all of the Shares shall
be deemed to be issued and outstanding.
11. CERTAIN NOTICES. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in
stock or make any special dividend or other distribution to the holders
of its Common Stock;
(c) offer for subscription to the holders of any of its Common
Stock any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the
Company, or consolidate, merge or otherwise combine with (except where
the company is the surviving entity), or sell all or substantially all
of its assets to, another corporation; or
(e) voluntarily or involuntarily dissolve, liquidate or wind
up the affairs of the Company;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least
twenty (20) days' prior written notice of the date on which the books
of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution,
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liquidation or winding up, and (ii) in the case of such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation
or winding up, at least twenty (20) days' prior written notice of the
date when the same shall take place. Any notice required by clause (i)
shall also specify, in the case of any such dividend, distribution or
subscription rights, the date on which the holders of Common Stock
shall be entitled thereto, and any notice required by clause (ii) shall
specify the date on which the holders of Common Stock shall be entitled
to exchange their Common Stock for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may
be.
12. RIGHTS OF CO-SALE.
(a) Co-Sale Right. Until such time as the Company does an
underwritten public offering raising at least $10,000,000.00, neither
Empire National II, LLC, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxx, Xxxxxxx
Xxxxxx, nor Xxxxxx X. Breeze (individually a "Selling Shareholder" and
collectively the "Selling Shareholders") shall enter into any
transaction that would result in the sale by it of any Common Stock now
or hereafter owned by it, unless prior to such sale the Selling
Shareholder shall give notice to Holder of its intention to effect such
sale in order that Holder may exercise its rights under this Section 12
as hereinafter described. Such notice shall set forth (i) the number of
shares to be sold by the Selling Shareholder, (ii) the principal terms
of the sale, including the price at which the shares are intended to be
sold, and (iii) an offer by the Selling Shareholder to use its best
efforts to cause to be included with the shares to be sold by it in the
sale, on a share-by-share basis and on the same terms and conditions,
the Shares issuable or issued to Holder pursuant this Warrant.
(b) Rejection of Co-Sale Offer. If Holder has not accepted
such offer in writing within a period of ten (10) days from the date of
receipt of the notice, then the Selling Shareholder shall thereafter be
free for a period of ninety (90) days to sell the number of shares
specified in such notice, at a price no greater than the price set
forth in such notice and on otherwise no more favorable terms to the
Selling Shareholder than as set forth in such notice, without any
further obligation to Holder in connection with such sale. In the event
that the Selling Shareholder fails to consummate such sale within such
ninety-day period, the shares specified in such notice shall continue
to be subject to this Section.
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(c) Acceptance of Co-Sale Offer. If Holder accepts such offer
in writing within ten (10) day period, such acceptance shall be
irrevocable unless the Selling Shareholder shall be unable to cause to
be included in his sale the number of Shares of stock held by Holder
and set forth in the written acceptance. In that event, the Selling
Shareholder and Holder shall participate in the sale pro rata based on
their ownership.
(d) Offers Not Covered. The restrictions under this Section 12
will not apply to any sale or transfer of any Common Stock by a Selling
Shareholder to immediate family members (parent, grandparent, spouse,
children, grandchildren and siblings), or trusts for the benefit of
such family members of such Selling Shareholder, or the estate of a
Selling Shareholder as long as such transferee acknowledges that such
Common Stock shall remain subject to the terms of this Section 12, as
if held by a Selling Shareholder, and such transferee executes an
agreement stating that it is bound by the terms of this Section 12 and
will hold such shares of Common Stock subject to all such terms and
conditions.
13. EQUITY PARTICIPATION. This Warrant is issued in connection with the
Loan Agreement. It is intended that this Warrant constitute an equity
participation under and pursuant to T.C.A. Section.00-00-000, et seq. and that
such equity participation be permitted under said statutes and not constitute
interest on the Note. If under any circumstances whatsoever, fulfillment of any
obligation of this Warrant, the Loan Agreement, or any other agreement or
document executed in connection with the Loan Agreement, shall violate the
lawful limit of any applicable usury statute or any other applicable law with
regard to obligations of like character and amount, then the obligation to be
fulfilled shall be reduced to such lawful limit, such that in no event shall
there occur, under this Warrant, the Loan Agreement, or any other document or
instrument executed in connection with the Loan Agreement, any violation of such
lawful limit, but such obligation shall be fulfilled to the lawful limit. If any
sum is collected in excess of the lawful limit, such excess shall be applied to
reduce the principal amount of the Note.
14. GOVERNING LAW. This warrant shall be governed by the laws of the
State of Tennessee applicable to agreements made entirely within the State.
15. SEVERABILITY. If any provision(s) of this Warrant or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Warrant and the application
of such provisions to other
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persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
16. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and be different parties to this Warrant in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same Warrant.
17. JURISDICTION AND VENUE. The Company hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations arising under this Agreement or with respect to the transactions
contemplated hereby, and expressly waives any and all objections it may have as
to venue in any such courts.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
ELECTRONICS ACCESSORY SPECIALISTS
INTERNATIONAL, INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXX
---------------------------------------
Title: CEO
------------------------------------
SIRROM CAPITAL CORPORATION, a Tennessee
corporation
By: /s/ XXXXXXXXX LUNDIG
---------------------------------------
Title: Assistant Vice President
------------------------------------
The undersigned Shareholders join in the execution of this Warrant for
the purposes of acknowledging and agreeing to be bound by Section 12 hereof.
EMPIRE NATIONAL II, LLC
By: /S/ XXXXXX XXXXXXX
---------------------------------------
Title: Member
------------------------------------
/s/ XXXXXXX X. XXXXX
------------------------------------------
Xxxxxxx X. Xxxxx
/s/ XXXXXXX X. XXXX
------------------------------------------
Xxxxxxx X. Xxxx
/s/ XXXXXXX XXXXXX
------------------------------------------
Xxxxxxx Xxxxxx
/s/ XXXXXX X. BREEZE
------------------------------------------
Xxxxxx X. Breeze
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