1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 12
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to Xxxxxx
Xxxxxxx or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company, at
$28.625 per share (the "Exercise Price"), 13,200 shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), subject to the provisions
and upon the terms and conditions herein set forth. The Exercise Price and the
number of Warrant Shares are subject to adjustment from time to time as provided
in Section 5.
2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
2
3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 0000 XxXxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
3
4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Xxxxxx Xxxxxxx'x
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Xxxxxx Xxxxxxx'x employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Xxxxxx Xxxxxxx'x
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Xxxxxx Xxxxxxx'x death, this Warrant may be exercised by Xxxxxx Xxxxxxx'x legal
representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
4
5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
5
6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. 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 subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
6
7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
7
8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
8
9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
0000 XxXxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
9
10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
10
11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Xx X. Xxxxxx, Xx.
-----------------------
Name: Xx X. Xxxxxx, Xx.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
11
12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ___________________________________.
Date _________________ Signature _________________________
12
