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EXHIBIT 10.124
This Warrant and the Common Stock issuable upon exercise hereof have not been
registered or qualified for sale under the Securities Act of 1933, as amended,
or any state securities laws and may not be offered, sold or transferred in the
absence of such registration or an exemption therefrom under such Act and
applicable state securities laws. In addition, transfer of this Warrant is
prohibited without the consent of the Corporation, as set forth in subparagraph
e of paragraph 11 hereof.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
EXSTAR FINANCIAL CORPORATION
VOID AFTER DECEMBER 31, 2003
THIS IS TO CERTIFY that, for value received and subject to the provisions
hereinafter set forth, FRONTIER INSURANCE GROUP, INC., a Delaware corporation,
or its registered assigns (the "Holder"), is entitled to purchase from EXSTAR
FINANCIAL CORPORATION, a Delaware corporation (the "Corporation"), as of the
times set forth in this Warrant, the Number of Warrant Shares (as hereinafter
defined), as applicable, of Common Stock, subject to the provisions and
adjustments and on the terms and conditions hereinafter set forth, at the
Purchase Price (as hereinafter defined) payable in cash or by check.
1. Definitions. In addition to the terms defined elsewhere in this
Warrant, the following terms have the following respective meanings:
"Change in Control" shall mean the ownership, direct or indirect, of more
than 25% of the voting stock of the Corporation or Alpine by a person or entity
other than Xxxxx X. X'Xxxxxxxxxxx.
"Claim Service Agreement" shall mean any agreement between Claims Control
Corporation ("CCC") and an insurance company affiliated with Frontier Insurance
Group, Inc. (a "Frontier Insurer") under which CCC provides claims management
services to the Frontier Insurer with respect to business placed with the
Frontier Insurer by Westcap Insurance Services, Inc. or any of its
predecessors, successors, assigns or affiliates, including Trinity E & S
Insurance Services, Inc. (together, "Westcap") or otherwise.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
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"Common Stock" as used herein shall mean the Common Stock of the
Corporation, $0.01 par value per share.
"Expiration Date" shall mean December 31, 2003, as set forth in
subparagraph d of paragraph 2 hereof.
"Forfeiture Event" shall mean the failure of a Limited Agency Agreement or
a Quota Share Arrangement to continue in effect on terms substantially similar
to those terms in effect as of October 1, 1997 (including a decrease in the
quota share percentage of business being assumed by Alpine Insurance Company,
an Illinois insurance company ("Alpine"), under a Quota Share Arrangement to
less than fifty percent (50%)), except where such failure is caused by (a) a
Change in Control of the Corporation or Alpine, or (b) a reduction in the quota
share percentage of business being assumed by Alpine as a result of a
regulatory action or restriction imposed on Alpine.
"Group A Warrant Shares" shall mean those shares of Common Stock becoming
eligible for purchase under the terms of this Warrant on October 1, 1997.
"Group B Warrant Shares" shall mean those shares of Common Stock becoming
eligible for purchase under the terms of this Warrant on or after October 1,
1998.
"Limited Agency Agreement" shall mean an agreement between a Frontier
Insurer and Westcap, under which Westcap produces insurance business on behalf
of the Frontier Insurer.
"Market Price" shall mean with respect to any security on any day (a) the
average of the closing prices of such security's sales on all recognized
securities exchanges on which such security may at the time be listed, or (b)
if there has been no sale on any such exchange on any day, the average of the
highest bid and lowest asked prices on all such exchanges at the end of such
day, or (c) if on any day such security is not so listed, the average of the
representative bid and asked prices reported through the automated quotation
system of the National Association of Securities Dealers, Inc. ("NASDAQ") as of
4:00 P.M., New York time, or (d) if on any day such security is not reported on
NASDAQ, the average of the highest bid and lowest asked prices on such day in
the domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization; in each such case
averaged over a period of sixty (60) consecutive business days ending on the
day prior to the day as of which "Market Price" is being determined. If at any
time such security is not listed on any securities exchange or reported on
NASDAQ or the over-the-counter market, the "Market Price" will be the fair
value thereof determined in good faith by the Board of Directors of the
Corporation.
"Number of Warrant Shares" shall mean, at the time of any determination
thereof (a) if no adjustments have theretofore been made pursuant to the
provisions of paragraph 4 hereof, that portion of the Original Number of
Warrant Shares available for purchase pursuant to paragraph 2 hereof on any
given date and (b) if any one or more such adjustments have been so made, the
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amount to which the Original Number of Warrant Shares shall have been
so adjusted pursuant to the terms of this Warrant, in each case reduced
appropriately by the Number of Warrant Shares theretofore purchased pursuant to
the exercise of the Warrants.
"Original Number of Warrant Shares" shall mean 500,000 fully paid and
non-assessable shares of Common Stock of the Corporation, 100,000 of which
shall constitute Group A Warrant Shares and the remaining 400,000 of which
shall constitute Group B Warrant Shares.
"Person" shall mean any natural person, corporation, firm, joint venture,
partnership, trust, unincorporated organization, government or any department,
political subdivision or agency of a government.
"Price Adjustment" shall mean seven million five hundred thousand dollars
($7,500,000) less 83 1/3% of the amount of either of the following, if any,
which is included in (or increases) the Corporation's Stockholders' Equity: (a)
a decrease below $3.7 million in the difference between the Corporation's
equity in the losses of its affiliates and the amount of such losses funded on
or before December 31, 1997, or (b) a decrease below $5.3 million in the
Corporation's reserve against its deferred tax asset.
"Purchase Price" shall mean, (a) three dollars and sixty cents ($3.60)
with respect to each Group A Warrant Share purchasable and (b) with respect to
each Group B Warrant Share purchasable, an amount equal to the quotient derived
by dividing (i) one hundred fifteen percent (115%) of the sum of (A) the
Stockholders' Equity of the Corporation and (B) the Price Adjustment, by (ii)
the total number of outstanding shares of all classes of the Corporation's
stock as of December 31, 1997 (the "Group B Purchase Price").
"Qualified Plan" shall mean any employee stock bonus arrangement or an
employee stock incentive or ownership plan approved by the Board of Directors
of the Corporation, pursuant to which directors, officers or employees of the
Corporation or any of its subsidiaries may be issued shares of Common Stock or
rights to purchase securities that may become convertible into, exercisable for
or exchangeable for shares of Common Stock.
"Quota Share Arrangement" shall mean a quota share reinsurance arrangement
between Alpine and a Frontier Insurer under which the Frontier Insurer cedes to
Alpine, and Alpine assumes, a quota share portion of business placed with the
Frontier Insurer by Westcap.
"Restricted Stock" shall mean the shares of Common Stock issued upon the
exercise of any Warrant and evidenced by a certificate required to bear the
legend specified in subparagraph b of paragraph 11 hereof.
"Securities Act" shall mean the Securities Act of 1933, or any successor
federal statute, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time.
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"Stockholders' Equity" shall mean the stockholders' equity of the
Corporation on December 31, 1997, as reflected in its financial statements
prepared in accordance with generally accepted accounting principles for the
calendar year ending December 31, 1997, as audited by the Corporation's
regularly engaged certified public accountants.
"Underwriters' Securities" shall mean Warrants, Common Stock and other
securities issued on exercise of Warrants which, in each case, have not
previously been sold in a transaction registered under the Securities Act or in
brokers' transactions made in accordance with Rule 144 under the Securities
Act.
"Warrant Shares" shall mean shares of Common Stock purchased or
purchasable by the Holder upon the exercise hereof.
"Warrant" or "Warrants" as used herein shall mean this Warrant and any
other Warrants issued pursuant to the terms and provisions of paragraphs 13, 14
or 15 hereof.
2. Exercise of Warrant.
(a) Timing and Number of Shares. This Warrant entitles the Holder to
purchase up to an aggregate of five hundred thousand (500,000) shares of
Common Stock, as such number may be adjusted in accordance with the terms
of this Warrant. The Holder may exercise its purchase rights with respect
to such Warrant Shares only in accordance with the following schedule: on
and after October 1, 1997, the Holder may exercise its right to purchase
up to twenty percent (20%) of the Number of Warrant Shares (consisting of
all of the Group A Warrant Shares); on and after October 1, 1998, the
Holder may exercise its right to purchase up to an additional twenty
percent (20%) of the Number of Warrant Shares; on and after October 1,
1999, the Holder may exercise its right to purchase up to an additional
twenty-five percent (25%) of the Number of Warrant Shares; and on and
after October 1, 2000, the Holder may exercise its right to purchase up to
an additional thirty-five percent (35%) of the Number of Warrant Shares;
provided, however, that no purchase rights may be exercised after the
Expiration Date; provided further, that no such purchase rights shall
become exercisable following the occurrence of a Forfeiture Event except
as set forth in subparagraph f below; and provided further, that in no
event shall such purchase rights be exercisable until the Holder has
obtained any and all necessary regulatory approvals for the acquisition of
shares of Common Stock of the Corporation from the Department of Insurance
of the State of Illinois or such other state regulatory bodies as may be
applicable.
(b) Mechanics. The purchase rights represented by this
Warrant are exercisable by the Holder by the surrender of this Warrant and
the delivery of the Notice of Exercise attached hereto, completed and
executed on behalf of the Holder, to the office of the Corporation (or
such other office or agency of the Corporation as it may designate by
notice in writing to the Holder at the address of the Holder appearing on
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the books of the Corporation), upon payment in cash or by check made
payable to the Corporation of the Purchase Price of the shares to be
purchased.
(c) Certificates. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the Person entitled to
receive the shares of Common Stock issuable upon such exercise shall be
treated for all purposes as the holder of record of such shares as of the
close of business on such date. As promptly as possible on or after such
date and in any event within three (3) business days thereafter, the
Corporation shall issue and deliver to the Person or Persons entitled to
receive the same a certificate or certificates, in the name of the Holder
or such other names as are designated by the Holder, representing the
total number of shares issuable upon such exercise.
(d) Partial Exercise and Expiration Date. In the event that this
Warrant is exercised with respect to fewer than all of the shares of
Common Stock to which it relates, the Corporation will execute and deliver
a new Warrant of like tenor exercisable for the balance of shares for
which this Warrant may then be exercised; provided, however, that this
Warrant and all rights and options hereunder shall expire at the close of
business on December 31, 2003.
(e) Forfeiture of Purchase Rights. If at any time a Forfeiture Event
shall occur, the Holder or his, her or its assigns shall forfeit any and
all purchase rights with respect to which this Warrant has not yet become
exercisable as of the date of the Forfeiture Event.
(f) Acceleration of Purchase Rights. Notwithstanding anything herein
to the contrary, in the event of a Change in Control, or in the event that
a Quota Share Arrangement or Limited Agency Agreement is terminated by the
Corporation or any of its affiliates other than as a result of the failure
by an affiliate of Frontier Insurance Group, Inc. to perform its duties or
comply with its obligations thereunder, all purchase rights with respect
to any outstanding Warrant Shares shall become exerciseable, whether or
not such purchase rights have otherwise become exerciseable pursuant to
the schedule set forth in paragraph a above, and the Holder shall be
entitled to exercise such rights within sixty (60) days of such
termination.
3. Reservation of Common Stock. The Corporation covenants and agrees
that during the period within which the rights represented by this Warrant may
be exercised, the Corporation will at all times have authorized, and in
reserve, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
4. Protection Against Dilution. The Purchase Price and the Number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as follows:
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(a) Changes in Common Stock. In case after the effective date
hereof the Corporation shall:
(i) pay a dividend in Common Stock, or
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the Number of Warrant Shares shall be adjusted to that Number of
Warrant Shares determined by multiplying the Number of Warrant Shares
which could be purchased hereunder immediately prior to such event by a
fraction (i) the numerator of which shall be the total number of
outstanding shares of Common Stock of the Corporation immediately after
such event, and (ii) the denominator of which shall be the total number of
outstanding shares of Common Stock of the Corporation immediately prior to
such event. In the event of such an adjustment, the Purchase Price for
each Warrant Share shall be adjusted to the Purchase Price determined by
multiplying the applicable Purchase Price in effect immediately prior to
the event by a fraction (i) the numerator of which shall be the total
number of outstanding shares of Common Stock of the Corporation
immediately prior to the event, and (ii) the denominator of which shall be
the total number of outstanding shares of Common Stock of the Corporation
immediately after the event.
(b) Common Stock Distribution. In case after the effective date
hereof the Corporation shall issue or otherwise sell or distribute
additional shares of Common Stock for a consideration per share less than
the Group A Purchase Price or Group B Purchase Price in effect immediately
prior to the time of such issue or sale (any such event being herein
called a "Common Stock Distribution"), then, effective upon such Common
Stock Distribution, the following adjustments shall be made:
(i) If the additional shares of Common Stock are issued for a
consideration per share less than the Group A Purchase Price in
effect immediately prior to the time of such issue or sale, the
Number of Group A Warrant Shares shall be adjusted by multiplying the
Number of Group A Warrant Shares subject to purchase upon exercise of
this Warrant immediately before such Common Stock Distribution by a
fraction, the numerator of which shall be the sum of (A) the total
number of shares of Common Stock outstanding immediately prior to
such Common Stock Distribution, plus (B) the number of shares of
Common Stock issued in such Common Stock Distribution and the
denominator of which shall be an amount equal to the sum of (Z) the
number of shares of Common Stock outstanding immediately prior to
such Common Stock Distribution, plus (Y) the number of shares of
Common Stock which the
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aggregate consideration, if any, received by the Company for
such Common Stock Distribution would buy at the Group A Purchase
Price thereof, as of the date immediately prior to such Common Stock
Distribution; provided, however, that shares of Common Stock issued
or sold (or deemed issued or sold) without consideration shall be
deemed to have been issued or sold for $.01 per share. In the event
of any such adjustment, the Group A Purchase Price shall be adjusted
to a number determined by dividing the Group A Purchase Price
immediately prior to such Common Stock Distribution by the fraction
used for purposes of the aforementioned adjustment; and
(ii) If the additional shares of Common Stock are issued for a
consideration per share less than the Group B Purchase Price in
effect immediately prior to the time of such issue or sale, the
Number of Group B Warrant Shares shall be adjusted by multiplying the
Number of Group B Warrant Shares subject to purchase upon exercise of
this Warrant immediately before such Common Stock Distribution by a
fraction, the numerator of which shall be the sum of (A) the total
number of shares of Common Stock outstanding immediately prior to
such Common Stock Distribution, plus (B) the number of shares of
Common Stock issued in such Common Stock Distribution, and the
denominator of which shall be an amount equal to the sum of (Z) the
number of shares of Common Stock outstanding immediately prior to
such Common Stock Distribution, plus (Y) the number of shares of
Common Stock which the aggregate consideration, if any, received by
the Company for such Common Stock Distribution would buy at the Group
B Purchase Price thereof, as of the date immediately prior to such
Common Stock Distribution; provided, however, that shares of Common
Stock issued or sold (or deemed issued or sold) without consideration
shall be deemed to have been issued or sold for $.01 per share. In
the event of any such adjustment, the Group B Purchase Price shall be
adjusted to a number determined by dividing the Group B Purchase
Price immediately prior to such Common Stock Distribution by the
fraction used for purposes of the aforementioned adjustment.
(c) Certificate. Whenever the Number of Warrant Shares purchasable
shall be required to be adjusted pursuant to this paragraph 4, the
Corporation shall promptly prepare a certificate signed by the President
or a Vice President of the Corporation setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment,
the method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the
Corporation made any determination hereunder), and shall promptly cause a
copy of such certificate to be mailed (by first class mail postage
prepaid) to the Holder.
(d) Definition of Common Stock. For purposes of this paragraph 4
only, the term "Common Stock" shall include shares of common stock of the
Corporation and all shares of Common Stock issuable pursuant to warrants,
options and convertible securities
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issued by the Corporation with respect to its Common Stock, except such
Common Stock, warrants, options and convertible securities issued (i)
pursuant to a Qualified Plan, (ii) in connection with a merger,
consolidation or sale as set forth in paragraph 5 hereof, (iii) in
connection with the acquisition by the Corporation or its subsidiaries of
another entity or (iv) in connection with any settlement relating to
property leased by the Corporation or any of its affiliates at 000 Xxxxx
Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx.
(e) Adjustment for Expired Options and Convertible Securities. Upon
the expiration of any option or the termination of any right to convert or
exchange any convertible securities without the exercise of such option or
right, the applicable Purchase Price then in effect and the Number of
Warrant Shares acquirable hereunder shall be adjusted to the applicable
Purchase Price and the Number of Warrant Shares in effect at the time of
such expiration or termination had such option or convertible securities,
to the extent outstanding immediately prior to such expiration or
termination, never been issued.
(f) Calculation of Consideration Received. If any Common Stock,
options, warrants or convertible securities are issued or sold or deemed
to have been issued or sold for cash, the consideration received therefor
will be deemed to be the net amount received by the Corporation therefor.
In case any Common Stock, options, warrants or convertible securities are
issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be
determined in good faith by the Corporation's Board of Directors.
5. Mergers, Consolidations, Sales. In the case of any consolidation or
merger of the Corporation with another entity, or the sale of all or
substantially all of its assets to another entity, or any reorganization or
reclassification of the Common Stock or other equity securities of the
Corporation (except a subdivision or combination of the Common Stock, provision
for which is made in paragraph 4), then, as a condition of such consolidation,
merger, sale, reorganization or reclassification, lawful and adequate provision
shall be made whereby the Holder 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 immediately theretofore purchasable hereunder,
such shares of stock, securities or assets as may (by virtue of such
consolidation, merger, sale, reorganization or reclassification) be issued or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore so purchasable hereunder had such consolidation, merger, sale,
reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests
of the Holder to the end that the provisions hereof (including, but not limited
to, provisions for adjustment of the Number of Warrant Shares) shall thereafter
be applicable as nearly as may be, in relation to any shares of stock,
securities or assets thereafter deliverable upon exercise of this Warrant. The
Corporation shall not effect any such consolidation, merger or sale, unless
prior to or simultaneously with the consummation thereof, the successor entity
(if other than the Corporation) resulting from such consolidation or merger or
the entity purchasing such assets
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shall assume by written instrument executed and mailed or delivered to the
Holder, the obligation to deliver to the Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to receive.
6. Dissolution or Liquidation. In the event of any proposed distribution
of the assets of the Corporation in dissolution or liquidation (except under
circumstances when the foregoing paragraph 5 shall be applicable) the
Corporation shall mail notice thereof to the Holder and shall make no
distribution to stockholders until the expiration of 30 days from the date of
mailing of the aforesaid notice and, in any such case, the Holder may exercise
its Warrants within 30 days from the date of mailing such notice and all rights
herein granted not so exercised within such 30 day period shall thereafter
become null and void.
7. Notice of Special Dividends. If the Board of Directors of the
Corporation shall declare any dividend or other distribution on its Common
Stock except out of surplus or net profits legally available therefor
(determined in accordance with generally accepted accounting principles,
consistently applied) or by way of a stock dividend payable on its Common
Stock, the Corporation shall mail notice thereof to the Holder not less than 30
days prior to the record date fixed for determining stockholders entitled to
participate in such dividend or other distribution and the Holder shall not
participate in such dividend or other distribution or be entitled to any rights
on account or as a result thereof unless and to the extent that the Warrants
are exercised prior to such record date.
8. Fractional Shares. Fractional shares shall not be issued upon the
exercise of this Warrant but in any case where the Holder would, except for the
provisions of this paragraph, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Corporation
shall, upon the exercise of this Warrant for the largest number of whole shares
then called for, pay a sum in cash equal to the excess of the value of such
fractional share (determined in such reasonable manner as may be prescribed in
good faith by the Board of Directors of the Corporation) over the proportional
part of the applicable Purchase Price represented by such fractional share.
9. Fully Paid Stock; Taxes. The Corporation covenants and agrees that
the shares of stock represented by each and every certificate for its Common
Stock to be delivered on the exercise of the conversion rights herein provided
for shall, at the time of such delivery, be validly issued and outstanding and
be fully paid and nonassessable. The Corporation will not be required to pay
any transfer tax payable because shares of Common Stock or a new Warrant are to
be registered in a name other than that of the initial Holder, and the
Corporation will not be required to issue any shares of Common Stock or to
issue a new Warrant registered in a name other than that of the initial Holder
until (i) the Corporation receives either (A) evidence that any applicable
transfer taxes have been paid or (B) funds with which to pay those taxes or
(ii) it has been established to the Corporation's satisfaction that no such tax
is due.
10. Closing of Transfer Books. The stock transfer books of the
Corporation for its Common Stock shall not be closed in any manner which
interferes with the exercise of any
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Warrant.
11. Restrictions on Transferability of Warrants and Common Stock;
Compliance with Laws. This Warrant and the Common Stock issued upon the
exercise hereof shall not be transferable except upon the conditions
hereinafter specified, which conditions are intended to ensure compliance with
state insurance laws and the provisions of the Securities Act in respect of the
transfer of any Warrant or any such Common Stock.
(a) Insurance Laws. Prior to exercising its rights under this
Warrant or effecting any transfer of this Warrant or the Common Stock
issued upon exercise hereof, the Holder or the proposed assignee of this
Warrant or the Common Stock must obtain from applicable state insurance
regulatory bodies any and all approvals of such transfer required under
applicable state insurance laws and regulations.
(b) Restrictive Legends. Unless otherwise permitted by the
provisions of this subparagraph b, each Warrant shall bear on the face
thereof a legend substantially in the form of the notice endorsed on the
first page of this Warrant.
Each certificate for shares of Common Stock initially issued upon the
exercise of any Warrant and each certificate for shares of Common Stock
issued to a subsequent transferee of such certificate shall, unless
otherwise permitted by the provisions of this subparagraph b, bear on the
face thereof a legend reading substantially as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws and may not be offered, sold or transferred in the
absence of such registration or an exemption therefrom under such Act
and applicable state securities laws, and are transferable only upon
the conditions specified in the Warrant pursuant to which such shares
were issued."
In the event that a registration statement covering the Warrant, the
unissued Warrant Shares or the Restricted Stock shall become effective
under the Securities Act or in the event that the Corporation shall
receive an opinion of counsel satisfactory to it that, in the opinion of
such counsel, any such legend is not, or is no longer, necessary or
required (including, but not limited to, because of the availability of
the exemption afforded by Rule 144 of the General Rules and Regulations of
the Commission), the Corporation shall, or shall instruct its transfer
agents and registrars to (i) remove the applicable legend from the Warrant
or the certificates evidencing the Restricted Stock or issue new warrants
or certificates without such legend in lieu thereof and (ii) refrain from
including the applicable legend on certificates evidencing Warrant Shares
issued subsequent to the effective date of the registration statement or
the receipt of an opinion of counsel.
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(c) Notice of Proposed Transfer; Registration or Approval Not
Required. The holder of any Restricted Stock, by acceptance thereof,
agrees to give prior written notice to the Corporation of such holder's
intention to transfer such Restricted Stock (or any portion thereof),
describing briefly the manner and circumstances of the proposed transfer.
If the Restricted Stock has not been registered pursuant to paragraph 12
hereof or if no approval of the proposed transfer has been obtained from
any state insurance regulatory body, the Corporation shall, promptly after
receiving such written notice, present copies thereof to counsel for the
Corporation and to counsel designated by such holder, who may be an
employee of such holder. If in the opinion of each such counsel the
proposed transfer may be effected without registration, qualification or
regulatory approval under any federal or state law, the Corporation, as
promptly as practicable, shall notify such holder of such opinion and of
the terms and conditions, if any, to be observed, whereupon such holder
shall be entitled to transfer such Restricted Stock in accordance with the
terms of the notice delivered to such holder by the Corporation. If
either of such counsel is unable to render such an opinion (in which case
such counsel shall set forth in writing the basis for the legal
conclusions in this regard) the proposed transfer described in the written
notice given pursuant to this subparagraph may not be effected, and the
Corporation shall promptly so notify such holder and thereafter such
holder shall not be entitled to effect such transfer until receipt of a
subsequent notice from the Corporation pursuant to the immediately
preceding sentence.
(d) Restrictions on Resale of Warrant Shares. All Warrant Shares
obtained upon exercise of this Warrant shall be restricted from resale by
the holder of such shares for a period of one hundred eighty (180) days
following the exercise of this Warrant, or such other period of time as
may be prescribed by applicable state or federal securities laws and
regulations.
(e) Assignment of Warrant. This Warrant is not assignable except
with the express written consent of the Corporation and upon such terms and
conditions as the Corporation shall specify. Any authorized assignee
takes this Warrant subject to all of the rights and obligations of the
Holder specified herein, including, but not limited to, the forfeiture
obligations set forth in paragraph 2(e) hereof.
12. Registration Under the Securities Act. If, at any time the
Corporation files a registration statement (other than on Form X-0, Xxxx X-0,
or any successor form) under the Securities Act with the Commission, the
Corporation will give all the holders of Underwriters' Securities (the
"Eligible Holders") at least fifteen (15) days' prior written notice of the
Corporation's intention to file such a registration statement. If requested by
any Eligible Holder in writing within five (5) days after receipt of such
notice, the Corporation will, at the Corporation's sole expense (other than the
fees and disbursements of counsel for the Eligible Holders and the underwriting
discounts, if any, payable in respect of the Underwriters' Securities sold by
the Eligible Holders), include the shares of Common Stock which are, or which
shall be issuable on exercise of, Underwriters' Securities (hereinafter
"Registrable Securities") specified in the Eligible Holder's request in the
securities which are the subject of
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the registration statement, except that if the managing underwriter of that
offering advises the Corporation in writing that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Corporation will include in such
registration (a) first, the securities the Corporation proposes to sell and (b)
second, the Registrable Securities requested to be included in such
registration, pro rata among the Eligible Holders and any other Persons holding
similar registration rights requesting registration on the basis of the number
of such shares held by each such holder. Each holder of Registrable Securities
being included in a registration statement being filed by the Corporation under
this paragraph 12 will (a) comply with reasonable requests by the managing
underwriter to assure that Registrable Securities which are the subject of the
registration statement will be delivered at the closing of the offering, and
(b) execute an underwriting agreement containing usual and customary terms
applicable to similarly situated selling shareholders.
13. Partial Exercise and Partial Assignment. If this Warrant is exercised
in part only, the Holder shall be entitled to receive a new Warrant covering
the number of shares in respect of which this Warrant shall not have been
exercised as provided in paragraph 2 hereof. If this Warrant is partially
assigned, this Warrant shall be surrendered at the principal office of the
Corporation, and thereupon a new Warrant shall be issued to the Holder covering
the number of shares not assigned. The assignee of such partial assignment of
this Warrant shall also be entitled to receive a new Warrant covering the
number of shares so assigned.
14. Warrant Denominations. Warrants are issuable or transferable in such
denomination as the Holder may request, and the Warrants of each denomination
are interchangeable upon surrender thereof at the office of the Corporation for
Warrants of other denominations, but aggregating the same number of shares as
the Warrants so surrendered. All Warrants will be dated the same date as this
Warrant.
15. Lost, Stolen, Destroyed or Mutilated Warrants. In case any Warrant
shall be mutilated, lost, stolen or destroyed, the Corporation shall issue a
new Warrant of like date, tenor and denomination and deliver the same in
exchange and substitution for and upon surrender and cancellation of any
mutilated Warrant, or in lieu of any Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Corporation of the loss, theft or
destruction of such Warrant, and upon receipt of indemnity satisfactory to the
Corporation.
16. Warrant Holder Not Shareholder. This Warrant does not confer upon the
Holder any right to vote or to consent as a stockholder of the Corporation, as
such, in respect of any matters whatsoever, or any other rights or liabilities
as a shareholder, prior to the exercise hereof as hereinbefore provided.
17. Amendments. This Warrant may be amended only upon the written consent
of the Corporation and the Holder.
18. Severability. Should any part of this Warrant for any reason be
declared invalid, such decision shall not affect the validity of any remaining
portion, which remaining portion
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shall remain in full force and effect as if this Warrant had been executed
with the invalid portion thereof eliminated, and it is hereby declared the
intention of the parties hereto that they would have executed and accepted the
remaining portion of this Warrant without including therein any such part,
parts or portion which may, for any reason, be hereafter declared invalid.
19. Notices. Any notices, consents or other communications required or
permitted to be given under the terms of this Warrant must be in writing and
will be deemed to have been delivered (a) upon receipt, when delivered
personally; (b) upon receipt, when sent by facsimile, provided a copy is mailed
by U.S. certified mail, return receipt requested; (c) three days after being
sent by U.S. certified mail, return receipt requested, or (d) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Corporation:
Exstar Financial Corporation
0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx, President
With copy to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxxx
If to the Holder of this Warrant, to it at the address set
forth below such Holder's signature on the signature page hereof.
Each party shall provide five (5) days' prior written notice to the other party
of any change in address or facsimile number.
20. Governing Law. This Warrant shall be governed by, and construed
under, the laws of the State of Illinois relating to contracts and instruments
executed and to be performed entirely in such state.
21. Paragraph Headings. The paragraph headings in this Warrant are for
convenience
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only, are not part of this Warrant and are not intended to affect the meaning
or interpretation of any of the terms of this Warrant.
22. Effective Date. The effective date of this Warrant is October 1,
1997. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date, except that notwithstanding any
other provisions hereof, the provisions of paragraph 12 shall continue in full
force and effect after such Expiration Date as to any Warrant Shares issued
upon the exercise of this Warrant.
IN WITNESS WHEREOF, EXSTAR FINANCIAL CORPORATION has caused this Warrant
to be signed by its President and this Warrant to be dated as of October ___,
1997.
EXSTAR FINANCIAL CORPORATION
By:
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Xxxxxx Xxxxx, President
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NOTICE OF EXERCISE
To: Exstar Financial Corporation (the "Corporation")
The undersigned irrevocably elects to purchase ______ shares of Common
Stock of the Corporation by exercising the Warrant to which this form is
attached and tenders payment of the full Purchase Price with respect to such
shares of Common Stock. The undersigned requests that the certificates
representing the shares of Common Stock of the Corporation as to which the
Warrant is being exercised be registered as follows:
Name:
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Social Security or Employer Identification Number:
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Address:
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Deliver to:
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Address:
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If the number of shares of Common Stock of the Corporation as to which
the Warrant is being exercised are fewer than all the shares of Common Stock of
the Corporation to which the Warrant relates, please issue a new Warrant for
the balance of such shares of Common Stock registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address:
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Date: Signature
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(Signature of Owner)
(Signature must conform with the name of the
Holder as specified on the face of the Warrant)
