Exhibit 11
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
CONCORDE CAREER COLLEGES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO THE PROVISIONS OF RULE 144 OF THE ACT.
THIS WARRANT IS SUBJECT TO THE PROVISIONS OF A DEBENTURE PURCHASE AGREEMENT,
DATED AS OF FEBRUARY 25, 1997, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT AS THEREIN PROVIDED.
WARRANT TO ACQUIRE SHARES OF
COMMON STOCK OF
CONCORDE CAREER COLLEGES, INC.
February 25, 1997
THIS CERTIFIES THAT STRATEGIC ASSOCIATES, L.P. ("Holder"), for
value received, or its registered assigns, is entitled to purchase, on the terms
and subject to the conditions hereinafter set forth, from CONCORDE CAREER
COLLEGES, INC., a Delaware corporation (the "Company"), at any time after August
25, 1998 and on or before February 25, 2003, subject to earlier termination (the
"Exercise Period"), that number of shares (the "Warrant Shares") of common
stock, par value $.10 per share, of the Company (the "Common Stock"), as set
forth in Section 2.1 hereof.
SECTION 1
Exercise Price
The exercise price at which this Warrant may be exercised
shall be $1.36 per share of Common Stock (the "Exercise Price"), subject to any
adjustment pursuant to Section 3.3.
SECTION 2
Exercise of Warrant, Etc.
2.1 Number of Shares for Which Warrant is Exercisable. This
Warrant shall be exercisable for 135,110 shares of Common Stock, subject to any
adjustment pursuant to Section 3.3.
2.2 Procedure for Exercise of Warrant. The Warrant may be
exercised in whole or in part during the Exercise Period by surrendering this
Warrant, with the purchase form provided for herein duly executed by Holder or
by Holder's duly authorized attorney-in-fact, at the principal office of the
Company or at such other office or agency in the United States as the Company
may designate by notice in writing to the Holder accompanied by payment in full,
in cash, bank cashier's check or certified check payable to the order of the
Company, of the Exercise Price payable in respect of the Warrant Shares being
exercised. In addition to payments of the Exercise Price by cash or said checks,
payment of the Exercise Price with respect to the Warrants being exercised may
be made, at the option of the Holder, by the reduction in the principal amount
of the Debenture (the "Debenture") issued to the Holder pursuant to the
Debenture Purchase Agreement, dated as of February 25, 1997, by and between the
Company and the Holder (the "Debenture Purchase Agreement") (or forgiveness of
any accrued and unpaid interest thereon, whether or not payment of such interest
has been suspended pursuant to the provisions of such Debenture), even during a
period in which an Event of Default (as defined in the Debenture Purchase
Agreement) has occurred and is continuing under such Debenture, in an amount
equal to the Exercise Price with respect to the Warrant being exercised; and in
such a case, this Warrant shall be accompanied by said Debenture (with the
purchase form duly executed) which shall be substituted and replaced by a new
Debenture identical in form and content to the original Debenture except that
principal amount shall be appropriately reduced to reflect the reduction in the
principal amount applicable to the payment of the Exercise Price with respect to
the Warrant being exercised. If fewer than all of the Warrant Shares are being
exercised, the Company shall, upon exercise prior to the end of the Expiration
Period, execute and deliver to the Holder a new certificate (dated the date
hereof) evidencing the balance of the Warrant Shares that remain exercisable.
2.3 Conversion.
(a) On or after August 25, 1998, in the event that the Company
consummates a firm-commitment underwritten public offering pursuant to an
effective registration statement under the Act covering the offer and sale of
Common Stock for the account of the Company in which (i) the net proceeds of the
public offering price equals or exceeds $20 million and (ii) the public offering
price per share of Common Stock equals or exceeds $4.00, then this Warrant shall
become mandatorily exercisable within six (6) months for that number of shares
of Common Stock issuable upon exercise of the Warrant.
(b) In the Event of Default (as defined in the Debenture
Purchase Agreement), then this Warrant shall immediately become exercisable, at
the option of the Holder, for that number of shares of Common Stock issuable
upon exercise of the Warrant.
2.4 Transfer Restriction Legend. Each certificate for Warrant
Shares initially issued upon exercise of this Warrant, unless at the time of
exercise such Warrant Shares are registered under the Act, shall bear the
following legend (and any additional legend required by any securities exchange
upon which such Warrant Shares may, at the time of such exercise, be listed) on
the face thereof:
"These securities have not been registered under the Securities Act of
1933, as amended, or under any state securities laws and may be
offered, sold or transferred only if registered pursuant to the
provisions of such laws, or if in the opinion of counsel satisfactory
to the Company, an exemption from such registration is available."
2.5 Acknowledgment of Continuing Obligation. The Company will,
if Holder exercises this Warrant in part, upon request of the Holder,
acknowledge in writing the Company's continuing obligation to the Holder in
respect of any rights to which the Holder shall continue to be entitled after
such exercise in accordance with this Warrant, provided, that the failure of the
Holder to make any such request shall not affect the continuing obligation of
the Company to the Holder in respect of such rights.
2.6 Exercise Period. The Company and Purchaser agree to
negotiate in good faith to modify or extend the Exercise Period in the event
that either the Company or Purchaser deems it appropriate to modify or extend
such Exercise Period.
2.7 Termination of Warrant. During the Exercise Period, in the
event that Holder fails to exercise this Warrant after the Company has provided
Holder (i) twenty (20) days prior written notice of its intention to pay in full
and redeem the Debenture on a particular date (the "Repayment Date"), and (ii)
thirty (30) days after the Redemption Date within which to exercise this
Warrant, then this Warrant shall terminate and thereafter be null and void.
Notwithstanding the preceding sentence, in the event that the Company repays and
redeems the Debenture in full on or before August 25, 1998, this Warrant shall
remain in full force and effect until September 25, 1998, when it shall expire.
SECTION 3
Ownership of this Warrant.
3.1 Deemed Holder. 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 this Section 3.
3.2 Exchange, Transfer and Replacement. This Warrant is
non-detachable from the Debenture and may not be transferred, assigned, sold,
pledged or otherwise hypothecated ("Transferred") except with the Debenture, and
if so Transferred, then only as permitted under the terms and conditions of the
Debenture and the Debenture Purchase Agreement; provided, however, that if the
Company repays and redeems the Debenture in full on or before August 25, 1998,
this Warrant shall remain in full force and effect until September 25, 1998.
This Warrant and all rights hereunder are transferable in whole or in part upon
the books of the Company by the Holder in person or by duly authorized attorney,
and a new Warrant shall be made and delivered by the Company, of the same tenor
as this Warrant but registered in the name of the transferee, upon surrender of
this Warrant duly endorsed at said office or agency of the Company. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in case of loss, theft or
destruction, or indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant, provided,
however, that if the Holder of this Warrant is the original Holder, an affidavit
of lost Warrant shall be sufficient for all purposes of this Section 3.2. This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange, transfer or replacement. The Company shall pay all
reasonable expenses, taxes (other than stock transfer taxes and income taxes)
and other charges payable by it in connection with the preparation, execution
and delivery of Warrant Shares pursuant to this Section 3.2.
3.3 Antidilution.
(a) If at any time while all or any portion of this Warrant
remains outstanding all or any portion of this Warrant shall be exercised
subsequent to (i) any sales of shares of Common Stock of the Company at a price
per share less than the Exercise Price per share then applicable to this
Warrant, or (ii) any issuance of any security convertible into shares of Common
Stock of the Company with a conversion price per share less than the Exercise
Price per share then applicable to this Warrant, or (iii) any issuance of any
option, warrant or other right to purchase shares of Common Stock of the Company
at any Exercise Price per share less than the Exercise Price per share then
applicable to this Warrant (except pursuant to an employee or director stock
option plan or similar compensation plan approved by the Board of Directors);
then in any and every such event the Exercise Price per share for this Warrant
shall be reduced and shall be equal to such lower sales, conversion or Exercise
Price per share.
(b) If all or any portion of this Warrant shall be exercised
subsequent to any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, reorganization or liquidation
of the Company occurring after the date hereof, as a result of which such shares
of any class shall be issued in respect of outstanding shares of Common Stock of
the Company (or shall be issuable in respect of securities convertible into
shares of Common Stock) or upon exercise of rights (other than this Warrant) to
purchase shares of Common Stock or shares of such Common
Stock shall be changed into the same or a different number of shares of the same
or another class or classes, the Holder exercising this Warrant shall receive
the aggregate number and class of shares which such Holder would have received
if this Warrant had been exercised immediately before such stock dividend,
split-up, recapitalization, merger, consolidation, combination or exchange of
shares, reorganization or liquidation.
SECTION 4
Special Agreements of the Company
The Company covenants and agrees that:
4.1 The Company will reserve and set apart and have at all
times, free from preemptive rights, a number of shares of authorized but
unissued Common Stock deliverable upon the exercise of this Warrant or of any
other rights or privileges provided for therein sufficient to enable the Company
at any time to fulfill all its obligations thereunder.
4.2 This Warrant shall be binding upon any corporation or
entity succeeding to the Company by merger, consolidation or acquisition of all
or substantially all of the Company's assets.
SECTION 5
Notices
Any notice or other document required or permitted to be given
or delivered to the Holder or the Company shall be delivered, or sent by
certified or registered mail, to the Holder or the Company at the address as set
forth in Section 10.4 of the Debenture Purchase Agreement.
SECTION 6
Governing Law
This Warrant shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of Delaware, without giving
effect to its conflicts of laws provisions.
SECTION 7
Assignment
Notwithstanding any provision of this Warrant which may be
construed to the contrary, this Warrant and any rights hereunder shall not be
assignable by the Holder except in accordance with the provisions governing
assignments hereof set forth in the Debenture Purchase Agreement, dated as of
February 25, 1997, among the Company and Holder, and any attempt by Holder to
assign this Warrant or any rights hereunder other than in accordance therewith
shall be void and of no force and effect.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer under its corporate seal, attested by its duly
authorized officer, and to be dated as of February 25, 1997.
ATTEST: CONCORDE CAREER COLLEGES, INC.
/s/ Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxx, Secretary Xxxx X. Xxxxxxx, President and
Chief Executive Officer
