NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE.
CORE, INC.
Warrant for Common Stock
No. R-1 August 31, 1998
VOID AFTER AUGUST 31, 2003
THIS CERTIFIES that, for value received, FLEET NATIONAL BANK, or its
registered assigns, is entitled to subscribe for and purchase from CORE,
INC., a Massachusetts corporation (hereinafter called the "Corporation"), at
the price of $6.92 per share (such price, as it may be from time to time
adjusted as hereinafter provided, being hereinafter called the "Warrant
Exercise Price"), at any time after August 31, 1999 and on or prior to August
31, 2003, up to 156,322 (subject to adjustment as hereinafter provided) fully
paid and nonassessable shares of Common Stock, $.10 par value (hereinafter
called the "Common Stock"), of the Corporation, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. This
Warrant is issued pursuant to the Credit Agreement, dated as of August 31,
1998 (the "Credit Agreement"), between the Corporation and Fleet National
Bank. This Warrant, each such other warrant and any warrant or warrants
subsequently issued upon exchange or transfer hereof or thereof are
hereinafter collectively called the "Warrants".
Section 1. EXERCISE OF WARRANT.
(a) METHOD OF EXERCISE; NET ISSUE EXERCISE. The rights represented
by this Warrant may be exercised by the holder hereof, in whole at any time
or from time to time in part, but not as to a fractional share of Common
Stock, by the surrender of this Warrant, together with a properly completed
notice of exercise in the form of Exhibit A hereto (a "Notice of
Exercise"), at the office of the Corporation specified in or pursuant to
Section 9 hereof. Upon receipt by the Corporation of a Notice of Exercise,
the Warrant Expense Price shall be deemed paid and, subject to paragraph
(d) of this Section 1, the Corporation shall issue to the holder hereof a
number of shares of Common Stock equal to (A) the number of shares of
Common Stock acquirable upon exercise in full of this Warrant (or, if
applicable, the portion hereof being exercised), as at such date,
multiplied by (B) the balance remaining after deducting (x) the Warrant
Exercise Price, as in effect
on such date, from (y) the fair market value of one share of Common
Stock as at such date and dividing the result by (C) such fair market
value.
(b) DEFINITION OF FAIR MARKET VALUE. For purposes of paragraph
(a) above, the fair market value of the Common Stock shall be determined
as follows: if the Common Stock is listed or admitted to trading on one
or more national securities exchanges, the average of the last reported
sales prices per share regular way or, in case no such reported sales
takes place on any such day, the average of the last reported bid and
asked prices per share regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or
admitted to trading, for the thirty (30) trading days immediately
preceding the date upon which the fair market value is determined (the
"Determination Date"); if the Common Stock is not listed or admitted to
trading on a national securities exchange but is quoted by the NASD
Automated Quotation System ("NASDAQ"), the average of the last reported
sales prices per share regular way or, in case no reported sale takes
place on any such day or the last reported sales prices are not then
quoted by NASDAQ, the average for each such day of the last reported bid
and asked prices per share, for the thirty (30) trading days immediately
preceding the Determination Date as furnished by the National Quotation
Bureau Incorporated or any similar successor organization; and if the
Common Stock is not listed or admitted to trading on a national
securities exchange or quoted by NASDAQ or any other nationally
recognized quotation service, the fair market value shall be the fair
value thereof determined in good faith by the Board of Directors of the
Corporation; PROVIDED, HOWEVER, that if the holders of Warrants
outstanding representing a majority of the shares of Common Stock
acquirable upon exercise of the Warrants object, within a reasonable
time after being given notice thereof, to such determination, the fair
market value shall be determined in good faith by an independent
investment banking firm selected jointly by the Board of Directors of
the Corporation and the holders of Warrants outstanding representing a
majority of the shares of Common Stock acquirable upon exercise of the
Warrants or, if that selection cannot be made within fifteen (15) days,
by an independent investment banking firm selected by the American
Arbitration Association in accordance with its rules. Anything in this
paragraph (b) to the contrary notwithstanding, the fair market value of
this Warrant or any portion thereof as of any Determination Date shall
be equal to (i) the fair market value of the shares of Common Stock
issuable upon exercise of this Warrant (or such portion thereof)
(determined in accordance with the foregoing provisions of this
paragraph (b)) minus (ii) the aggregate Warrant Exercise Price of the
Warrant (or such portion thereof).
(c) DELIVERY OF CERTIFICATES, ETC. In the event of any exercise
of the rights represented by this Warrant, a certificate or
certificates. for the shares of Common Stock so purchased, registered in
the name of the holder, shall be delivered to the holder hereof within a
reasonable time, not exceeding ten (10) days, after the rights
represented by this Warrant shall have been so exercised; and, unless
this Warrant has expired, a new Warrant representing the number of
shares (except a remaining fractional share), if any, with respect to
which this Warrant shall not then have been exercised shall also be
issued
to the holder hereof within such time. The person in whose name any
certificate for shares of Common Stock is issued upon exercise of this
Warrant shall for all purposes be treated as having become the holder of
record of such shares on the date on which the Warrant was surrendered,
together with a properly completed Notice of Exercise, and payment of
the Warrant Exercise Price and any applicable taxes was made, except
that, if the date of such surrender and payment is a date on which the
stock transfer books of the Corporation are closed, such person shall be
treated as having become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books
are open.
(d) CASH OUT OPTION. In lieu of issuing shares of Common Stock
upon receipt of a Notice of Exercise pursuant to paragraph (a) above,
the Corporation shall have the option, exercisable within ten (10) days
after receipt of such Notice of Exercise, to repurchase the Warrant (or
portion thereof which is to be exercised) in consideration of the
payment to the holder of the Warrant in U.S. Dollars of an amount equal
to the fair market value of the Warrant (or such portion thereof), such
payment to be made to the holder in equal monthly installments over a
period of either six (6) or nine (9) months, at the Corporations's
election, commencing on the date of receipt of the Notice of Exercise;
PROVIDED , HOWEVER, if the Notice of Exercise is given to the
Corporation during the period from September 1, 1999 to and including
August 31, 2000, the amount of such payment shall not exceed $3.50 per
share. At any time on or after the date of this Warrant the Corporation
may elect to "cap its exposure" under this Warrant by (i) notifying the
holder of this Warrant in writing of its desire to repurchase the
Warrant (in whole and not in part) in consideration of the payment to
such holder of the higher of (A) $7.00 per share for each share issuable
upon the exercise of the Warrant or (B) if the fair market value of this
Warrant (determined on a per share basis) is higher than $7.00 per share
on the date of such notification, the fair market value of this Warrant
and (ii) making the payment described in clause (i) above to the holder
within thirty (30) days after the date of such notification.
Section 2. ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Warrant Exercise Price as provided in Section 3, the holder of this Warrant
shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment and subject to the provisions of Section 1,
the number of shares (calculated to the nearest tenth of a share) obtained by
multiplying the Warrant Exercise Price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment.
Section 3. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. The
adjustments provided for in this Section 3 shall be made for any events
occurring on or after August 31, 1998.
(a) SUBDIVISION OR COMBINATION OF STOCK. In case the Corporation
shall at any time subdivide its outstanding shares of Common Stock into
a greater number of shares, the Warrant Exercise Price in effect
immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares
of Common Stock of the Corporation shall be combined into a smaller
number of shares, the Warrant Exercise Price in effect immediately prior
to such combination shall be proportionately increased.
(b) STOCK DIVIDENDS. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the
Corporation payable in Common Stock, or rights to subscribe for or to
purchase, or options for the purchase of, Common Stock or any stock or
securities convertible or exchangeable for Common Stock (such rights or
options being herein called "Options" and such convertible or
exchangeable stock or securities being herein called "Convertible
Securities"), any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be treated as having been issued or sold without consideration,
and the Warrant Exercise Price shall be reduced as if the Corporation
had subdivided its outstanding shares of Common Stock into a greater
number of shares, as provided in paragraph (a) above.
(c) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
If any capital reorganization or reclassification of the capital stock of
the Corporation or any consolidation or merger of the Corporation with or
into another corporation, or the sale of all or substantially all of its
assets to another corporation shall be effected in such a way (including,
without limitation, by way of consolidation or merger) that holders of
Common Stock shall be entitled to receive stock, securities or assets with
respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provisions shall be made whereby each holder of Warrants shall
thereafter have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock of
the Corporation immediately theretofore receivable upon the exercise of
such Warrants, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore so receivable had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any
such case appropriate provision shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Warrant
Exercise Price) shall thereafter be applicable, as nearly practicable, in
relation to any shares of stock, securities or assets thereafter
deliverable upon the exercise of such exercise rights (including, if
necessary to effect the adjustments contemplated herein, an immediate
adjustment, by reason of such reorganization, reclassification,
consolidation, merger or sale, of the Warrant Exercise Price to the value
for the Common Stock reflected by the terms of such reorganization,
reclassification, consolidation, merger or sale if the value so reflected
is less than the Warrant Exercise Price in effect immediately prior to such
reorganization, reclassification, consolidation, merger or sale). The
Corporation will not effect any such consolidation or merger, or any sale
of all or substantially all of its assets and properties, unless prior to
the
consummation thereof the successor corporation (if other than the
Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument,
executed and mailed or delivered to each holder of Warrants at the last
address of such holder appearing on the records of the Corporation, the
obligation to deliver to such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may
be entitled to receive.
(d) NOTICE OF ADJUSTMENT. Upon any adjustment of the Warrant
Exercise Price, then and in each such case the Corporation shall give
written notice thereof, by first class mail postage prepaid, addressed
to each holder of Warrants at the address of such holder as shown on the
records of the Corporation, which notice shall state the Warrant
Exercise Price resulting from such adjustment, setting forth in
reasonable detail the method of calculation and the facts upon which
such calculation is based.
(e) CERTAIN EVENTS. If any event occurs as to which in the
opinion of the Board of Directors of the Corporation the other
provisions of this Section 3 are not strictly applicable or if strictly
applicable would not fairly protect the exercise rights of this Warrant,
in accordance with the essential intent and principles of such
provisions to protect against dilution, then such Board of Directors
shall in good faith make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so
as to protect such exercise rights as aforesaid.
(f) STOCK TO BE RESERVED. The Corporation will at all times
reserve and keep available out of its authorized Common Stock or its
treasury shares, solely for the purpose of issue upon the exercise of
this Warrant as herein provided, such number of shares of Common Stock
as shall then be issuable upon the exercise of this Warrant. The
Corporation covenants that all shares of Common Stock which shall be so
issued shall be duly and validly issued and fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue
thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such
action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the effective Warrant
Exercise Price. The Corporation will take all such action as may be
necessary to assure that all such shares of Common Stock may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common
Stock of the Corporation may be listed; PROVIDED, HOWEVER, that this
sentence shall not obligate the Corporation to register such shares
under the Securities Act of 1933, as amended (the "Securities Act"), or
any applicable state securities laws or to take any action to enable the
sale or transfer of such shares to be made in accordance with Rule 144
under the Securities Act. The Corporation will not take any action
which results in any adjustment of the Warrant Exercise Price if the
total number of shares of Common Stock issued and issuable after such
action upon exercise of this Warrant would exceed the total number of
shares of Common Stock then authorized by the Corporation's Articles of
Organization. The Corporation has not granted and will not grant any
right of first refusal with respect
to shares issuable upon exercise of this Warrant, and there are no
preemptive rights associated with such shares.
(g) ISSUE TAX. The issuance of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the
holder hereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of such holder.
(h) MAINTENANCE OF REGISTER. The Corporation shall keep at its
office specified in or pursuant to Section 9 hereof a register in which
the Corporation shall provide for the registration of this Warrant and
for the registration of transfer and exchange of this Warrant. The
holder of this Warrant may, at its option, and either in person or by
its duly authorized attorney, surrender the same for registration of
transfer or exchange at such office of the Corporation and, without
charge to such holder (except for taxes imposed in connection with any
transfer of this Warrant or, if applicable, any portion hereof in a name
other than that of such holder), receive in exchange therefor a Warrant
or Warrants each exercisable for such number of shares of Common Stock
as such holder may request (and collectively exercisable for the same
aggregate number of shares of Common Stock with respect to which this
Warrant or, if applicable, such portion hereof surrendered for transfer
or exchange shall not then have been exercised) and registered in the
name of such person or persons as may be designated by such holder.
This Warrant, when presented or surrendered for registration of transfer
or exchange, shall be accompanied by a written instrument of transfer,
satisfactory in form to the Corporation, duly executed by the holder of
hereof. Every Warrant so made and delivered in exchange for this
Warrant shall in all other respects be in the same form and have the
same terms as this Warrant. No transfer or exchange of this Warrant
shall be valid (x) unless made in the foregoing manner at such office or
agency and (y) unless registered under the Securities Act and any
applicable state securities laws or unless an exemption from such
registration is available. The Corporation will at no time close its
transfer books against the transfer of this Warrant or the transfer of
the shares of Common Stock issued or issuable upon the exercise of this
Warrant in any manner which interferes with the timely exercise of this
Warrant.
(i) DEFINITION OF COMMON STOCK. As used herein the term "Common
Stock" shall mean and include the Common Stock, $.10 par value, of the
Corporation as authorized on August 31, 1998, and also any capital stock
of any class of the Corporation thereafter authorized which shall not be
limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends or in the distribution of
assets upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, but in no event shall include the
Preferred Stock; PROVIDED, HOWEVER, that the shares purchasable pursuant
to this Warrant shall include only shares designated as Common Stock,
$.10 par value, of the Corporation on August 31, 1998, or shares of any
class or classes resulting from any reclassification or
reclassifications thereof which are
not limited to any such fixed sum or percentage and are not subject to
redemption by the Corporation and, in case at any time there shall be
more than one such resulting class, the shares of each class then so
issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears
to the total number of shares of all such classes resulting from all
such reclassifications.
Section 4. NOTICES OF RECORD DATES. In the event of
(1) any taking by the Corporation of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution
(other than cash dividends out of earned surplus), or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other
right, or
(2) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the
Corporation or any sale of all or substantially all the assets of the
Corporation to or consolidation or merger of the Corporation with or
into any other corporation, or
(3) any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
then and in each such event the Corporation will give notice to the holder of
this Warrant specifying (i) the date on which any such record is to be taken
for the purpose of such dividend, distribution or right and stating the
amount and character of such dividend, distribution or right, and (ii) the
date on which any such reorganization, reclassification, recapitalization,
sale, consolidation, merger, dissolution, liquidation or winding up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Common Stock will be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reorganization,
reclassification, recapitalization, sale, consolidation, merger, dissolution,
liquidation or winding-up. Such notice shall be given at least twenty (20)
days and not more than ninety (90) days prior to the date therein specified,
and such notice shall state that the action in question or the record date is
subject to the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act") or to a favorable vote of
stockholders, if either is required.
Section 5. REGISTRATION RIGHTS. The rights of the holder hereof with
respect to the registration under the Securities Act of the shares of Common
Stock issuable upon the exercise of this Warrant are set forth in the
Registration Rights Agreement, dated as of August 31, 1998, between the
Corporation and Fleet National Bank, as the same may hereafter be amended,
supplemented, restricted or otherwise modified from time to time.
Section 6. NO STOCKHOLDER RIGHTS OR LIABILITIES. This Warrant shall
not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Corporation. No provision
hereof, in the absence of affirmative action by the holder hereof to purchase
shares of Common Stock, and no mere enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of such
holder for the Warrant Exercise Price or as a stockholder of the Corporation,
whether such liability is asserted by the Corporation or by creditors of the
Corporation.
Section 7. INVESTMENT REPRESENTATION AND LEGEND. The holder, by
acceptance of the Warrant, represents and warrants to the Corporation that it
is acquiring the Warrant and the shares of Common Stock (or other securities)
issuable upon the exercise hereof for investment purposes only and not with a
view towards the resale or other distribution thereof and agrees that the
Corporation may affix upon this Warrant the following legend:
"NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE."
The holder, by acceptance of this Warrant, further agrees that the
Corporation may affix the following legend to certificates for shares of
Common Stock issued upon exercise of this Warrant:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE."
Section 8. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation may, upon
delivery of an indemnity agreement reasonably satisfactory to the Corporation
(which in the case of Fleet National Bank shall be Fleet National Bank's own
unsecured agreement of indemnity) and such other terms as the Corporation may
otherwise in its discretion reasonably impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of
like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Corporation, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
Section 9. NOTICES. All notices, requests, and other communications
required or permitted to be given or delivered hereunder shall be in writing,
and shall be delivered, or shall be sent by certified or registered mail,
postage prepaid and addressed, (i) if to the holder, to such
holder at the address shown on such holder's Warrant or Warrant Shares or at
such other address as shall have been furnished to the Corporation by notice
from such holder and (ii) if to the Corporation, to it at 00000 Xxx Xxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Attention: Chief Financial Officer or
at such other address as shall have been specified to the holder by notice
from the Corporation.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, CORE, INC. has executed this Warrant on and as of
the day and year first above written.
CORE, INC.
By: /s/ [ILLEGIBLE]
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Name:
Title:
