EXCAL ENTERPRISES, INC.
WARRANT AGREEMENT
THIS AGREEMENT, made and entered into as of this 1st day of May,
1998, by and between EXCAL ENTERPRISES, INC., a Delaware corporation
formerly known as Assix International, Inc. (the "Company"), and Xxxxxxxx
and X. Xxxx Xxxxxx, III, an employee and a director of the Company (the
"Holder").
W I T N E S S E T H :
WHEREAS, on December 1, 1989, the Board of Directors of the
Company (the "Board") approved the grant of a warrant to purchase shares of
the Company's common stock, $.001 par value (the "Common Stock"), to the
Holder;
WHEREAS, it is the intention of the parties that this Agreement
memorialize and confirm the terms and conditions of the grant as previously
approved by the Board; and
WHEREAS, the warrant granted under this Agreement is not intended
to constitute an incentive stock option, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements herein set forth, the parties hereby mutually
covenant and agree as follows:
1. Grant.
(a) Warrant. Subject to the terms and conditions of this
Agreement, the Company confirms the grant to the Holder of a warrant to
purchase from the Company all, or any part, of the aggregate number of
100,000 shares of Common Stock (hereinafter referred to as the "Warrant
Shares," and the warrant to purchase the Warrant Shares referred to as the
"Warrant").
(b) Reload Option. In addition to the Warrant granted
hereby (the "Underlying Warrant"), the Company will grant to the Holder a
reload option (the "Reload Option") if the Holder acquires shares of Common
Stock pursuant to the exercise of the Underlying Warrant and pays for such
shares and/or the tax obligation incurred by reason of the exercise of the
Underlying Warrant (the "withholding taxes") with shares of Common Stock
already owned by, or otherwise issuable to, the Holder (the "Tendered
Shares"). The Reload Option grants to the Holder the right to purchase
shares of Common Stock equal in number to the number of Tendered Shares.
The date on which the Tendered Shares are tendered to, or withheld by, the
Company in full or partial payment of the purchase price and withholding
taxes for the shares of Common Stock acquired pursuant to the exercise of
the Underlying Warrant is the Reload Grant Date. The exercise price of the
Reload Option is the fair market value of the Tendered Shares on the Reload
Grant Date. The fair market value of the Tendered Shares shall be the
closing bid price per share of the Company's Common Stock on the Reload
Grant Date. The Reload Option shall be fully exercisable as of the Reload
Grant Date. The Reload Option shall expire on November 30, 1999. Except
as provided herein, the Reload Option is subject to all of the other terms
and provisions of this Agreement governing the Warrant.
2. Warrant Price. The price to be paid for the Warrant Shares
shall be $7.425 per share.
3. Time of Exercise. The Warrant is fully exercisable and may
be exercised by the Holder in whole or in part at any time and from time to
time, after the date hereof.
4. Manner of Exercise and Payment. The Warrant may be
exercised only by written notice to the Company by the Holder of the
Holder's intent to exercise the Warrant, delivered to the Company at its
principal office, specifying the number of shares with respect to which the
Warrant is being exercised, accompanied by full payment for such shares:
(a) in cash or its equivalent; (b) with the consent of the Board, by
tendering shares of Common Stock valued at their fair market value at the
time of exercise; or (c) with the consent of the Board, by any combination
of (a) and (b).
5. Issuance of Stock Certificates. Upon satisfaction of the
conditions of Section 4, the Company shall promptly deliver to the Holder a
certificate or certificates for the number of shares of Common Stock in
respect of which the Warrant has been exercised, legended to reflect the
agreements and conditions applicable to such shares referred to in Section
11.
6. Nontransferability of Warrant. The Warrant is not
transferable by the Holder otherwise than by will or the laws of descent
and distribution.
7. Term. The Warrant shall expire on September 9, 2007, and
shall not be exercisable thereafter.
8. Termination of Employment.
(a) The Warrant shall terminate and shall not be
exercisable upon the date of expiration specified in Section 7 hereof and
shall not otherwise terminate as a result of a termination of Holder's
employment with the Company; and
(b) In the event of a Termination upon Change of Control
(as defined in the Employment Agreement dated March 1, 1994 between Holder
and the Company, as amended (the "Employment Agreement")), the Holder shall
have the right to compel the purchase by the Company of the Warrant Shares
at a price per Warrant Share equal to the greater of (i) the average of the
bid and asked prices per share of Common Stock on the day immediately
preceding the Change of Control (as defined in the Employment Agreement),
and (ii) $7.50 per share.
9. Tax Withholding.
(a) It shall be a condition of the obligation of the
Company to issue or transfer shares of Common Stock upon exercise of the
Warrant, that the Holder shall pay to the Company upon its demand, or agree
that the Company may withhold from compensation due the Holder, such amount
as may be requested by the Company for the purpose of satisfying its
liability to withhold federal, state or local income or other taxes
incurred by reason of the exercise of the Warrant. If the Holder fails to
comply with this Section 9, the Company may refuse to issue or transfer
shares of Common Stock upon exercise of the Warrant.
(b) With the consent of the Board, the Holder may elect to
have the Company withhold that number of Warrant Shares otherwise issuable
to the Holder upon exercise of the Warrant or to deliver to the Company a
number of Shares, in each case, having a fair market value at the time of
exercise, as determined by the Board, equal to the minimum amount required
to be withheld as a result of such exercise. The election must be made in
writing and delivered to the Company on or prior to the date of exercise.
The shares so withheld or delivered shall be free of all adverse claims and
shall be endorsed in blank by the Holder or accompanied by stock powers
duly endorsed in blank.
10. Capital Adjustments Affecting Stock. In the event of a
capital adjustment resulting from a stock dividend, stock split, spin-off,
reorganization, recapitalization, merger, consolidation, reclassification,
combination or exchange of shares, the Warrant Shares shall be adjusted in
a manner consistent with such capital adjustment. The price of any shares
under the Warrant shall be adjusted such that there will be no change in
the aggregate purchase price payable upon exercise of the Warrant. To the
extent deemed equitable and appropriate by the Board, subject to any
required action by shareholders, in any merger, consolidation,
reorganization, liquidation or dissolution, the Warrant shall pertain to
the securities and other property to which a holder of the number of shares
of stock covered by the Warrant would have been entitled to receive in
connection with any such event.
11. Restriction on Transfer of Common Stock. The shares to be
acquired upon exercise of the Warrant may not be sold or offered for sale
except (i) pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws, (ii) in a transaction satisfying the requirements of Rule
144 promulgated under the Act, or (iii) in a transaction which, in the
opinion of counsel for the Company, is exempt from the registration
provisions of the Act or applicable state securities laws. The Holder
agrees that any certificate representing shares acquired upon exercise of
the Warrant may bear the following legend:
The shares of Common Stock represented by this
certificate are restricted securities as that term is
defined under Rule 144 promulgated under the Securities Act
of 1933, as amended (the "Act"). These shares may not be
sold, transferred or disposed of unless they are registered
under the Act, sold in a transaction satisfying the
requirements of Rule 144 or unless the request to transfer
is accompanied by an opinion of counsel acceptable to the
issuer, that the transfer will not result in a violation of
the Act or any applicable state securities laws.
12. Specific Restrictions Upon Warrant Shares. The Holder
hereby agrees with the Company that the Holder shall acquire the Warrant
Shares for investment purposes only and not with a view to resale or other
distribution thereof to the public in violation of the Act, and shall not
dispose of the Warrant Shares in any transaction which, in the opinion of
counsel to the Company, would violate the Act, or the rules and regulations
thereunder, or any applicable state securities or blue sky laws.
13. Rights as Shareholder. The Holder shall not be deemed for
any purposes to be a shareholder of the Company with respect to any of the
Warrant Shares except to the extent that the Warrant shall have been
exercised, such shares shall have been fully paid, and a stock certificate
issued therefor.
14. Power of Company Not Affected. The existence of the Warrant
shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
15. Amendment or Modification. No term or provision of this
Agreement may be amended, modified or supplemented orally, but only by an
instrument in writing signed by the party against which or whom the
enforcement of the amendment, modification or supplement is sought.
16. Governing Law. This Agreement shall be governed by the
internal laws of the State of Florida as to all matters, including but not
limited to matters of validity, construction, effect, performance and
remedies.
17. Entire Agreement. This Agreement entered into between the
Holder and the Company sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and supersedes all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer,
employee or representative of any party hereto; and any prior agreement of
the parties hereto in respect of the subject matter contained herein is
hereby terminated and canceled.
18. Delegation by Board. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange or market, the
Board may delegate all or any portion of its responsibilities and powers to
any one or more of its members. Any such delegation may be revoked by the
Board at any time.
19. Heirs and Successors. This Agreement shall be binding upon,
and inure to the benefit of, the Company and its successors and assigns,
and upon any person acquiring all or substantially all of the Company's
assets and business. In the event of the Holder's death prior to exercise
of the Warrant, the Warrant may be exercised by the estate of the Holder to
the extent such exercise is otherwise permitted by this Agreement.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer, and the Holder has executed this
Agreement as of the day and year first above written.
EXCAL ENTERPRISES, INC.
By:
Title:
HOLDER:
R. PARK XXXXXX, III
XXXXXXXX XXXXXX
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