EXHIBIT 10.9.3
STOCK PURCHASE WARRANT AND REGISTRATION RIGHTS AGREEMENT
This STOCK PURCHASE WARRANT AND REGISTRATION RIGHTS AGREEMENT ("Warrant
Agreement") is issued this 29th day of May, 1998, by IMTEK OFFICE SOLUTIONS,
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").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM.
(a) For and in consideration of SIRROM CAPITAL CORPORATION making
a loan to the Company in an amount of Six Million and no/100ths Dollars
($6,000,000) pursuant to the terms of one or more secured promissory notes
(collectively the "Note") and related loan agreement 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 119,891 shares ("Base Amount") of the Company's
common stock (the "Common Stock"), which the Company represents to equal 1.5% of
the shares of capital stock outstanding on the date hereof, calculated on a
fully diluted basis and assuming exercise of this Warrant, provided that in the
event that any portion of 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 (the "Outstanding Debt Rachets"):
DATE BASE AMOUNT
---------------------------------------- ----------------------------------------------------
May 29, 2001 160,670 shares, which the Company
represents to equal 2.0% of the shares of the
Company's capital stock outstanding on the date
hereof calculated on a fully diluted basis after
exercise of this Warrant
May 29, 2002 201,868 shares, which the Company
represents to equal 2.5% of the shares of the
Company's capital stock outstanding on the date
hereof calculated on a fully diluted basis after
exercise of this Warrant
May 29, 2003 243,491 shares, which the
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Company represents to equal 3.0% of the shares of
the Company's capital stock outstanding on the date
hereof calculated on a fully diluted basis after
exercise of this Warrant
and further provided that the initial Base Amount shall be increased to 569,885
shares, which the Company represents equals 6.75% of the shares of the Company's
capital stock outstanding on the date hereof calculated on a fully diluted basis
after exercise in the event the Company does not complete a bona fide
underwritten secondary public offering with net proceeds to the Company of at
least $15,000,000 by May 29, 1999. If the initial Base Amount is increased as
set forth above, the Outstanding Debt Rachets shall be adjusted to increase the
adjusted initial Base Amount by .5% for each year the Note remains outstanding
beyond May 29, 2001. By way of illustration, if the initial Base Amount adjusted
to 6.75% because the Company does not complete a bona fide underwritten
secondary public offering with net proceeds to the Company of at least
$15,000,000 by May 29, 1999, the Outstanding Debt Rachets for 2001, 2002, and
2003 shall be 7.25%, 7.75%, and 8.25%, respectively.
(b) The shares of Common Stock issuable upon exercise of this
Warrant are hereinafter referred to as the "Shares." This Warrant shall be
exercisable at any time and from time to time from the date hereof until July
31, 2003 (the "Expiration Date").
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per
share for which all or any of the Shares may be purchased pursuant to the terms
of this Warrant Agreement shall be One Cent ($.01).
3. EXERCISE. The Warrants granted pursuant to this Warrant
Agreement may be exercised by the Holder hereof (but only on the conditions
hereinafter set forth) in whole or in part, upon delivery of written notice of
intent to exercise (the "Exercise Notice") to the Company in the manner and at
the address of the Company set forth in Section 14 hereof, together with this
Warrant and payment to the Company of the aggregate Exercise Price of the Shares
so purchased. The Exercise Notice shall set forth the number of Warrants to be
exercised and will contain a written acknowledgement that the Holder has read
and been afforded an opportunity to ask questions of the Company's management
regarding all financial and other information provided to Holder regarding the
Company. In addition to exercise of the Warrants, Holder shall permit the
Company to deliver to Holder all financial and other information regarding the
Company it believes necessary to enable Holder to make an informed investment
decision, and Holder shall make all customary investment representations
(including, without limitation, regarding securities compliance) which the
Company shall reasonably require. 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 the Warrants
granted pursuant to this Warrant Agreement where the Shares subject to the
portion of the Warrants granted pursuant to this Warrant Agreement that are
surrendered have a fair market value equal to the aggregate Exercise Price. In
the absence of an established public market for the Common Stock, fair market
value shall be established by the Company's board of directors in a commercially
reasonable
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manner. Upon exercise of the Warrants granted pursuant to this Warrant
Agreement as aforesaid, the Company shall as promptly as practicable, and in
any event within fifteen (15) days thereafter, execute and deliver to the
Holder under this Warrant Agreement a certificate or certificates for the
total number of whole Shares for which the Warrants granted pursuant to this
Warrant Agreement are being exercised in such names and denominations as are
requested by such Holder. If the Warrants granted pursuant to this Warrant
Agreement shall be exercised with respect to less than all of the Shares, the
Holder shall be entitled to receive a new Warrant Agreement covering the
number of Shares in respect of which this Warrant Agreement shall not have
been exercised, which new Warrant Agreement shall in all other respects be
identical to this Warrant Agreement. 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 Agreement or the issuance
of any Shares upon exercise of the Warrants granted pursuant to this Warrant
Agreement.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither the Warrants granted pursuant to this Warrant
Agreement nor the Shares have been registered under the Securities Act
of 1933, as amended ("Securities Act"), or any state securities laws
("Blue Sky Laws"). The Warrants granted pursuant to this Warrant
Agreement have been acquired for investment purposes and not with a
view to distribution or resale and may not be sold or otherwise
transferred without (i) an effective registration statement for such
Warrants 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
Xxxxxxxxx, Xxxxxx & Xxxxxxx, P.C. is acceptable counsel). Transfer of
the Shares 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 AND 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 AND SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
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 the Warrants granted
pursuant to this Warrant Agreement and any shares of Common Stock
issued upon exercise hereof with applicable federal and state
securities laws. Sirrom Capital Corporation hereby represents to the
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Company that it is an "accredited investor" as defined in Regulation D
promulgated under the Act.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of the Warrants granted pursuant to this
Warrant Agreement 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 the
Warrants granted pursuant to this Warrant Agreement such number of
authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of the Warrants granted pursuant to this
Warrant Agreement.
(c) The Company covenants and agrees that it shall not sell
any shares of the Company's capital stock at a price per share below
the fair market value of such shares, without the prior written consent
of the Holder hereof (which consent shall not be unreasonably
withheld). In the event that the Company sells shares of Common Stock
at a price per share below the fair market value of such shares (a
"Below Market Transaction"), without the prior written consent of the
Holder hereof, the Company covenants and agrees that the number of
shares issuable upon exercise of the Warrants granted pursuant to this
Warrant Agreement shall be equal to the product obtained by multiplying
the number of shares issuable pursuant to this Warrant Agreement prior
to the Below Market Transaction by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately
prior to consummation of the Below Market Transaction plus the number
of shares of Common Stock issued in the Below Market Transaction, and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to the Below Market Transaction plus the
number of shares of Common Stock that the aggregate consideration
received by the Company in the Below Market Transaction would purchase
at fair market value. For purposes of this subsection, Common Stock
shall be deemed to include that number of shares of Common Stock that
would be obtained assuming (i) the conversion of any securities of the
Company which, by their terms, are convertible into or exchangeable for
Common Stock, and (ii) the exercise of all options to purchase or
rights to subscribe for Common Stock or securities which, by their
terms, are convertible into or exchangeable for Common Stock. In the
absence of an established public market for the securities sold by the
Company in a Below Market Transaction, fair market value shall be
established by the Company's board of directors in a commercially
reasonable manner.
5. TRANSFER OF WARRANTS. Subject to the provisions of Section 4
hereof, the Warrants granted pursuant to this Warrant Agreement may be
transferred, in whole or in part, to any person or business entity, by
presentation of this Warrant Agreement to the Company with written instructions
for such transfer. Prior to transferring any Warrant to any person, Holder shall
cause the prospective transferee to be bound by this Warrant Agreement and to
execute and deliver a counterpart of this Warrant Agreement to the Company,
pursuant to which such transferee will, with respect to the Warrants acquired by
such transferee, be bound by the
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obligations of the transferor under this Warrant Agreement. Upon such
presentation for transfer, the Company shall 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. Except as otherwise provided herein, this Warrant Agreement 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 Agreement 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.
7. OBSERVATION RIGHTS. The Holder of this Warrant Agreement shall
receive prior written notice of and be entitled to attend or may send a
representative to attend in person (or in the case of a telephonic meeting, join
in the conference call) all meetings of the Company's Board of Directors in a
non-voting observation capacity and shall receive a copy of all correspondence
and information delivered to 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 the Warrants granted
pursuant to this Warrant Agreement 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 any such Warrants shall receive, for the
aggregate Exercise Price, the aggregate number and class of shares
which such Holder would have received if the Warrants granted pursuant
to this Warrant Agreement 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
disregarded and the number of shares subject to this Warrant Agreement
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 Agreement 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 the Warrants granted
pursuant to this Warrant Agreement 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
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another class or classes of securities of the Company or another
entity, or the holders of Common Stock are entitled to receive cash or
other property, then the Holder exercising such Warrants shall receive,
for the aggregate Exercise Price, the aggregate number and class of
shares, cash or other property which such Holder would have received if
such Warrants 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
Agreement 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 Agreement 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") the Warrants
granted pursuant to this Warrant Agreement for a period of sixty (60)
days immediately prior to the Expiration Date, at a purchase price (the
"Put Price") equal to the Fair Market Value (as hereinafter defined) of
the shares of Common Stock issuable to Holder upon exercise of such
Warrants.
(b) Holder may exercise the Put by delivery of written notice
(the "Put Notice") of such exercise to the Company in the manner and at
the address of the Company set forth in Section 14 hereof. The Company
shall pay to Holder, in cash or by wire transfer of immediately
available funds, the Put Price within thirty (30) days of the receipt
of the Put Notice.
(c) For purposes of this Section 9, the Fair Market Value of
the shares of Common Stock of the Company issuable pursuant to this
Warrant Agreement 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
Warrants granted pursuant to this Warrant Agreement, 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 higher of the two appraisals is not
ten percent (10%) greater than the lower of the appraisals,
the Fair Market Value shall be the average of the two
appraisals. If the higher of the two appraisals is equal to or
greater than ten percent (10%) more than the lower of the two
appraisals, then a
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third appraiser shall be appointed by the two appraisers, and
if they cannot agree on a third appraiser, 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.
10. REGISTRATION.
(a) The Company and the Holders of the Shares 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 (including its initial public
offering), it will give notice in writing to such effect to the
registered holder(s) of the Shares at least fifteen (15) 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 advises
the Company in writing (a copy of which is provided to the Holder
requesting inclusion of the Shares therein) that, in its opinion, 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 such registration only that
number of securities which the underwriters determine in their sole
discretion will not jeopardize the success of the offering selected in
the following order of priority: (i) in the case of a primary
registration on behalf of the Company (A) first, the securities that
the Company intends to be including in such registration, and (B)
second, Shares that Holder and all other parties requested to be
included in such registration (pro rata according to the securities
proposed to be included in the registration by such other parties or
Holder); or (ii) in the case of a secondary registration for the
account of any holders (including Holder) of the Company's security's,
(A), first, the securities requested to be included therein by the
holders initially requesting such registration and the Shares requested
to be included in such registration by Holder (pro rata according to
the securities proposed to be included in the registration by such
other parties or Holder), and (B) second, securities hold by all other
parties requested to be included in such registration (pro rata
according to the securities proposed to be included in the registration
by such other parties).
(b) Whenever the Company undertakes to effect the registration
of any of the Shares, the Company shall, as expeditiously as reasonably
possible:
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(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 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 its 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, to subject
itself to taxation, or to file a general consent to service of
process in any such states or jurisdictions.
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(v) Promptly notify each selling Holder of the
happening of any 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 for a
primary offering) 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 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
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) Use its reasonable efforts 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.
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(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
reasonable 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 primary
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
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 reasonable 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,
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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 (i) agreeing to sell its securities on the basis provided in
any underwriting arrangements approved by the persons entitled to
approve such arrangements; (ii) 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 and (iii) completing and executing all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements and this Warrant Agreement. 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 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 expressly
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 expressly 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.
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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, or sell of
all or substantially all of its assets to, another corporation;
(e) voluntarily or involuntarily dissolve, liquidate or wind
up of the affairs of the Company; or
(f) redeem or purchase any shares of its capital stock or
securities convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant Agreement, 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, 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
12. RIGHTS OF CO-SALE.
(a) None of Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxx, Xxxxxx X. Xxxxx,
Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxx or Xxxxxx X. Xxxxxx (the "Management
Shareholders") shall enter into any transaction that would result in
the sale by it of any Common Stock now or hereafter owned by him,
unless prior to such sale such Management Shareholder shall give
written notice (the "Co-Sale Notice") to Holder addressed and delivered
as set forth in Section 14 hereof, 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 such Management 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 such Management Shareholder to use
his 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 Agreement.
(b) If Holder has not accepted such offer in writing within a
period of ten (10) days from the date of receipt of the Co-Sale Notice,
then such Management Shareholder shall thereafter be free for a period
of ninety (90) days to sell the number of shares specified in the
Co-Sale Notice, at a price no greater than the price set forth in the
Co-Sale Notice and on otherwise no more favorable terms to such
Management Shareholder than as set forth in the Co-Sale Notice, without
any further obligation to Holder in connection with such sale. In the
event that such Management Shareholder fails to consummate such sale
within such ninety-day period, the shares specified in Co-Sale Notice
shall continue to be subject to this Section 12.
(c) If Holder accepts such offer in writing within ten-day
period, then such acceptance shall be irrevocable unless such
Management 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, such Management Shareholder and
Holder shall participate in the sale equally, with such Management
Shareholder and Holder each selling half the total number of such
shares to be sold in the sale.
13. ARTICLE AND SECTION HEADINGS. Numbered and titled article and
section headings are for convenience only and shall not be construed as
amplifying or limiting any of the provisions of this Warrant Agreement.
14. NOTICE. Any and all notices, elections or demands permitted or
required to be made under this Warrant Agreement shall be in writing, signed by
the party giving such notice, election or demand and shall be delivered
personally, telecopied, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery or telecopy or two (2) business days after the date of mailing (or the
next business day after delivery to such courier service), as
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the case may be, shall be the date of such notice, election or demand. For the
purposes of this Warrant Agreement:
The Address of Lender is: Sirrom Capital Corporation
Suite 200
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: 615/726-1208
with a copy (which shall Xxxxxxxxx, Xxxxxx & Xxxxxxx, P.C.
not constitute notice) to: 0000 Xxxxxx Xxxxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telecopy No.: 423/265-9574
The Address of Borrower is: Imtek Office Solutions, Inc.
0000 Xxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: 410/633-5215
with a copy (which shall McGuire, Woods, Battle
not constitute notice) to: & Xxxxxx, LLP
The Xxxxxxxxx Building
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: 410/659-4599
15. SEVERABILITY. If any provisions(s) of this Warrant Agreement
or the application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Warrant Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
16. ENTIRE AGREEMENT. This Warrant Agreement between the Company
and Holder represents the entire agreement between the parties concerning the
subject matter hereof, and all oral discussions and prior agreement are merged
herein.
17. GOVERNING LAW AND AMENDMENTS. This Warrant Agreement shall be
construed and enforced under the laws of the State of Tennessee applicable to
contracts to be wholly performed in such State. No amendment or modification
hereof shall be effective except in a writing executed by each of the parties
hereto.
18. COUNTERPARTS. This Warrant Agreement may be executed in any
number of counterparts and be different parties to this Warrant Agreement 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 Agreement.
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19. CONSENT TO JURISDICTION; EXCLUSIVE VENUE. The Company hereby
irrevocably consents to the jurisdiction of the United States District Court for
the Middle District of Tennessee and of all Tennessee state courts sitting in
Davidson County, Tennessee, for the purpose of any litigation to which Holder
may be a party and which concerns this Warrant Agreement. It is further agreed
that venue for any such action shall lie exclusively with courts sitting in
Davidson County, Tennessee, unless Holder agrees to the contrary in writing.
20. WAIVER OF TRIAL BY JURY. HOLDER AND THE COMPANY HEREBY
KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY
ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR
OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
WARRANT AGREEMENT.
15
21. EQUITY PARTICIPATION. This Warrant Agreement is issued in
connection with the Loan Agreement. It is intended that this Warrant Agreement
constitute an equity participation under and pursuant to T.C.A. 00-00-000, ET
SEQ. and that 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 Agreement, 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 Agreement, 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.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
COMPANY:
IMTEK OFFICE SOLUTIONS, INC.,
a Delaware corporation
By:
------------------------------
Title:
---------------------------
HOLDER:
SIRROM CAPITAL CORPORATION,
a Tennessee corporation
By:
------------------------------
Title:
---------------------------
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Warrant Agreement to be executed as of the date first above written for the
purpose of agreeing to the terms and conditions of Section 12 hereof.
MANAGEMENT SHAREHOLDERS:
/s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxx
-----------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxx
-----------------------------
Xxxxxx X. Xxxxx
16
/s/ Xxxx X. Xxxxxxxx
-----------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
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