Exhibit 10.3
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
RMH TELESERVICES, INC.
COMMON STOCK PURCHASE WARRANT
______ Warrants
Common Shares DW -
--------------------
September 28, 2001
This certifies that _____________________, or its assigns (the "Holder"),
is the owner of ______ Common Stock Purchase Warrants (the "Warrants"), each of
which represents the right to purchase from RMH Teleservices, Inc., a
Pennsylvania corporation (the "Company"), subject to the terms set forth below,
in whole or in part, at any time until September 28, 2006 at 5:00 p.m.,
Minneapolis, Minnesota time (the "Expiration Date"), one (1) duly authorized,
validly issued, fully paid and non-assessable share of Common Stock of the
Company, as constituted on the date hereof (the "Common Stock"), at a purchase
price of twelve dollars ($12.00) per share of Common Stock (subject to
adjustment as provided herein, the "Exercise Price").
1. Exercise of Warrant.
1.1 Exercise This Common Stock Purchase Warrant (this "Warrant") may be
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exercised by the Holder, in whole or in part (but in minimum quantities of
10,000 shares), at any time on and after the date hereof and prior to the
Expiration Date (the "Warrant Exercise), by surrendering the Warrant with the
form of exercise (the "Warrant Exercise Form") attached hereto duly executed by
the Holder, to the Company at its principal office, accompanied by payment,
unless the Holder is exercising under Section 5 herein, in cash or by cashier's
check payable to the order of the Company, of the Exercise Price payable in
respect of the Common Stock being purchased. If less than all of the Common
Stock purchasable hereunder is purchased, the Company will, upon the Warrant
Exercise, execute and deliver to the Holder a new warrant (dated as of the date
hereof) evidencing the number of shares of Common Stock not so purchased.
1.2 Delivery of Certificates. As soon as practicable after the Warrant
------------------------
Exercise and payment of the Exercise Price, and in any event within five (5)
business days, the Company, at its sole cost and expense (including the payment
by it of any applicable issuance taxes) will cause to be issued in the name of
and delivered to the Holder, or as the Holder may direct, a
certificate or certificates representing the shares of Common Stock purchased
pursuant to the Warrant Exercise. The Company may require that such certificate
or certificates contain on the face thereof a legend substantially as follows:
The transfer of the shares represented by this certificate is restricted
pursuant to the terms of a Common Stock Purchase Warrant dated September
28th, 2001, issued by RMH Teleservices, Inc., a copy of which is available
for inspection at the principal office of RMH Teleservices, Inc. Transfer
may not be made except in accordance with the terms of the Common Stock
Purchase Warrant. In addition, no sale, offer to sell or transfer of the
shares represented by this certificate shall be made unless a registration
statement under the Securities Act of 1933, as amended (the "1933 Act"),
with respect to such shares is then in effect or an exemption from the
registration requirements of the 1933 Act is then in fact applicable to
such shares.
1.3 When exercise effective. Each exercise of this Warrant shall be
-----------------------
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1. At such time, the person or persons in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon such exercise as provided in Section 1.3 shall be deemed to have
become the stockholder(s) of record thereof.
1.4 Representations of Holder. The Holder represents, warrants and
-------------------------
acknowledges to the Company that:
1.4.1 it is an accredited investor within the meaning of Regulation D
promulgated under the Securities Act;
1.4.2 it has been furnished with and has carefully read all documents that
the Holder has deemed necessary in connection with its investment in the Warrant
and is aware of the merits and risks of an investment in the Warrant to be
purchased by it and, due to its knowledge and experience in financial and
business matters, is capable of evaluating the merits and risks of such
investment;
1.4.3 it has been given the opportunity to ask questions of, and receive
answers from, the Company (including its authorized representatives) concerning
the terms and conditions of the Warrant to be purchased by it and other matters
pertaining to an investment in the Warrant, in order for the Warrant holder to
evaluate the merits and risks of an investment in the Warrant to be purchased by
it to the extent the Company possesses such information or can acquire it
without unreasonable effort or expense;
1.4.4 it is aware this Warrant has not been registered under the
Securities Act, or any state securities or blue sky laws and, therefore, the
Warrant cannot be resold unless it is registered under such laws or unless an
exemption from registration thereunder is available;
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1.4.5 it is purchasing the Warrant for its own account for investment, and
not with a view to, or for resale in connection with the distribution thereof,
and has no present intention of distributing or reselling the Warrant; and
1.4.6 in making the foregoing representations, it is aware that it must
bear, and is able to bear, the economic risk of such investment for an
indefinite period of time.
1.5 Representations of the Company.
------------------------------
The Company represents, warrants and acknowledges to the Holder that:
1.5.1 it is a corporation duly formed and validly existing in the
Commonwealth of Pennsylvania;
1.5.2 the Company will at all times reserve and keep available, solely for
issuance and delivery upon the exercise of the Warrants, the number of shares of
Common Stock (or Other Securities) from time to time issuable upon the exercise
of all Warrants at the time outstanding. All such securities shall be duly
authorized and, when issued upon such exercise, shall be validly issued and, in
the case of shares, fully paid and nonassessable with no liability on the part
of the holders thereof.
1.5.3 this Warrant has been duly authorized and approved by all requisite
action of the Company, and constitutes a valid and binding agreement of the
Company; and
when issued in accordance with the terms of this Warrant, the shares of Common
Stock covered by this Warrant will be duly authorized and validly issued, fully
paid and nonassessable.
2. Negotiability and Transfer. This Warrant is issued upon the following
terms, to which the Holder consents and agrees:
2.1 Absolute Owner. Until this Warrant is duly transferred on the books
of the Company, the Company may treat the registered Holder as absolute owner
hereof for all purposes without being affected by any notice to the contrary.
2.2 Successive Holder. Each successive holder of this Warrant, or of any
portion of the rights represented thereby, shall be bound by the terms and
conditions set forth herein.
3. Adjustments. The Exercise Price and the number of shares of Common Stock
issuable upon exercise of each Warrant shall be subject to adjustment from time
to time as follows:
3.1 Divisions; Consolidations, Reclassifications. In case the Company
shall, on or before the Expiration Date, (i) issue any shares of Common Stock in
payment of a dividend or other distribution with respect to its Common Stock or
other shares of capital stock, (ii) subdivide its issued and outstanding shares
of Common Stock, (iii) consolidate its issued and outstanding shares of Common
Stock into a smaller number of shares, or (iv) reclassify or convert the shares
of Common Stock (other than a reclassification in connection with a merger,
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consolidation or other business combination governed by Section 3.9), then the
number of shares of Common Stock purchasable upon exercise of each Warrant
immediately prior to the record date for such issue or distribution or the
effective date of such subdivision, consolidation, reclassification or
conversion shall be adjusted so that the Holder of each Warrant shall thereafter
be entitled to receive the kind and number of shares of Common Stock which such
Holder would have been entitled to receive after the happening of any of the
events described above had such Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An adjustment
made pursuant to this Section 3.1 shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
3.2 Rights; Options; Warrants. In case the Company shall issue rights,
options, warrants or convertible or exchangeable securities (other than an
issuance of convertible or exchangeable securities subject to Section 3.1) to
all holders of its Common Stock, entitling them to subscribe for or purchase
shares of Common Stock at a price per share which is lower (at the record date
for such issuance) than the then Fair Market Value (as defined in Section 5.3
hereof) per share of Common Stock, then the Company shall ensure that at the
time of such issuance, the same or a like offer or invitation is made to the
Holder as if its Warrants had been exercised on the day immediately preceding
the record date of such offer or invitation on the terms (subject to any
adjustment pursuant to Section 3.1 for a prior event) on which such Warrants
could have been exercised on such date; provided that if the board of directors
of the Company (the "Board") so resolves, the Company shall not be required to
ensure that the same offer or invitation is made to the Holder, but the number
of shares of Common Stock thereafter purchasable upon the exercise of each
Warrant shall instead be adjusted and shall be determined by multiplying the
number of shares of Common Stock theretofore purchasable upon exercise of each
Warrant by a fraction, the numerator of which shall be the sum of (i) the number
of shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or convertible or exchangeable securities plus (ii)
the number of additional shares of Common Stock which may be purchased or
subscribed for upon exercise, exchange or conversion of such rights, options,
warrants or convertible or exchangeable securities and the denominator of which
shall be the sum of (x) the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
convertible or exchangeable securities plus (y) the number of shares
which the total consideration received by the Company for such rights, options,
warrants or convertible or exchangeable securities so offered would purchase at
the then Fair Market Value per share of Common Stock.
In the event that the Company decreases the purchase price per share of any
outstanding rights, options, warrants or convertible or exchangeable securities
(other than under or as a result of provisions designed to protect against
dilution of the type set forth in this Article 3), then the number of shares of
Common Stock thereafter issuable upon exercise of each Warrant shall be
determined by multiplying the number of shares of Common Stock theretofore
issuable upon exercise of each Warrant by a fraction, the numerator of which
shall be the number of outstanding shares of Common Stock plus the number of
shares of Common Stock which may thereafter be purchased or subscribed for upon
exercise, exchange or conversion of such rights, options, warrants or
convertible or exchangeable securities and the denominator of which shall be (x)
the number of outstanding shares of Common Stock plus (y) the number of shares
of
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Common Stock which the aggregate decreased purchase price would have purchased
at the then Fair Market Value per share of Common Stock.
In the event that the Company increases the number of shares of Common
Stock which may be purchased or subscribed for upon exercise, exchange or
conversion of any outstanding rights, options, warrants or convertible or
exchangeable securities (other than under or as a result of provisions designed
to protect against dilution of the type set forth in this Section 3), then the
number of shares of Common Stock thereafter issuable upon exercise of each
Warrant shall be determined by multiplying the number of shares of Common Stock
theretofore issuable upon exercise of each Warrant by a fraction, the numerator
of which shall be the number of outstanding shares of Common Stock plus the
number of shares of Common Stock which may thereafter be purchase or subscribed
for upon exercise, exchange or conversion of such rights, option, warrants or
convertible or exchangeable securities and the denominator of which shall be (x)
the number of outstanding shares of Common Stock plus (y) the number of shares
of Common Stock which theretofore could have been purchase or subscribed for
upon exercise, exchange or conversion of such rights, options, warrants or
convertible or exchangeable securities.
Except as otherwise provided above or in Section 3.11, such adjustment
shall be made whenever such rights, options, warrants or convertible or
exchangeable securities are issued, or the date of any such decrease in purchase
price or such increase in underlying Common Stock, and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such rights, options, warrants or convertible
or exchangeable securities or to such decrease or increase.
3.3 Issuances of Common Stock at Lower Values. In case the Company shall
sell and issue any shares of Common Stock or Right (as defined below) (excluding
(i) any Right issued in any of the transactions described in Section 3.1 or 3.2
above, (ii) shares of Common Stock issued pursuant to the Warrants or any Right
issued in any transaction described in Section 3.1 or 3.2 above, (iii) shares of
Common Stock issued pursuant to options outstanding as of the date hereof, and
(iv) shares of Common Stock or Rights issued as consideration when any
corporation or business is acquired, merged into or becomes part of the Company
or a subsidiary of the Company in an arm's-length transaction between the
Company and a Person (as defined below) (other than an Affiliate of the Company,
as defined below) at a price per share of Common Stock (determined in the case
of any such Right, by dividing (x) the total consideration receivable by the
Company in consideration of the sale and issuance of such Right, plus the total
consideration payable to the Company upon exercise, conversion or exchange
thereof, by (y) the total number of shares of Common Stock covered by such
Right) that is lower than the Fair Market Value per share of Common Stock as
determined immediately prior to the date of such sale or issuance (or, in the
case of a Securities Offering (as defined below) of shares of Common Stock or
Rights, the date not more than five business days prior to the date of such sale
or issuance on which the Company fixes the price therefor) then the number of
shares of Common Stock thereafter purchasable upon the exercise of each Warrant
shall be determined by multiplying the number of shares of Common Stock
theretofore purchasable upon exercise of such Warrant by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such sale or issuance and the denominator of which shall be
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the number of shares of Common Stock outstanding immediately prior to such sale
or issuance plus the number of shares of Common Stock which the aggregate
consideration received (determined as provided below) for such sale or issuance
would purchase at such Fair Market Value per share of Common Stock. For purposes
of this Section 3.3, the shares of Common Stock which the holder of any such
Right shall be entitled to subscribe for or purchase shall be deemed to be
issued and outstanding as of the date of sale and issuance of such Right and the
consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such Right, plus the consideration or
premiums stated in such Right to be paid for the Common Stock covered thereby.
In case the Company shall sell and issue any Right together with one or more
other securities as part of a unit at a price per unit, then in determining the
"price per share of Common Stock" and the "consideration received by the
Company" for purposes of the first sentence of this Section 3.3, the Board shall
determine, in good faith, the fair value of the Right then being sold as part of
such unit. For purposes of this paragraph, a "Right" means any right, option,
warrant or convertible or exchangeable security containing the Right to
subscribe for or acquire one or more shares of Common Stock, excluding the
Warrants. For purposes of this Article 3, "Securities Offering" shall mean a
bona fide public offering or private placement (to five or more investors)
pursuant to Section 4(2) of the Securities Act, Regulation D thereunder or
Regulation S thereunder, made through at least one investment bank of national
standing.
For purposes of this Section 3 a "Person" means an individual, general
partnership, limited partnership, corporation trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof. An "Affiliate" means, as applied to any Person, any
other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
3.4 Distribution of Debt, Assets, Subscription Rights or Convertible
Securities. In case the Company shall make a distribution to holders of its
Common Stock of (i) evidences of its indebtedness, or assets, or other dividends
or distributions, or (ii) any options, warrants or other rights to subscribe for
or purchase any of the foregoing (excluding (1) any issuance of Common Stock
referred to in Section 3.1 above, (2) distributions in connection with the
dissolution, liquidation or winding-up of the Company governed by Section 3.10
and (3) distributions of securities referred to in Section 3.1, Section 3.2 or
Section 3.3), then, in each case, the number of shares of Common Stock
purchasable after the record date for the determination of stockholders entitled
to receive such distribution (or the date provided for in Section 3.11, if
applicable) upon the exercise of each Warrant, shall be determined by
multiplying the number of shares of Common Stock purchasable upon the exercise
of this Warrant immediately prior to such date by a fraction, the numerator of
the Fair Market Value per share of Common Stock immediately prior
to such date and the denominator of which shall be the Fair Market Value per
share of Common Stock immediately prior to such date less (a) any cash so
distributed per share of Common Stock plus (b) the then fair value (as
determined in good faith by the Board and set forth in a Board resolution
delivered to the
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Holder) of the evidences of its indebtedness, or non-cash assets or other non-
cash dividends or distributions, options or subscription or purchase rights so
distributed attributable to one share of Common Stock (notwithstanding the
foregoing, if the fair value in the above formula equals or exceeds the Fair
Market Value per share of Common Stock, then the Fair Market Value per share of
Common Stock shall be equal to such fair value). Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the date
of distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution (or the date provided for in
Section 3.11, if applicable).
3.5 Expiration of Rights, Options and Conversion Privileges. Upon the
expiration of any rights, options, warrants or conversion or exchange privileges
(including, without limitation, any Rights) that have previously resulted in an
adjustment hereunder, if any thereof shall not have been exercised, exchanged or
converted, the Exercise Price and the number of shares of Common Stock issuable
upon the exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter, upon any future exercise, be such as they would have been had
they been originally adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the exercise, exchange or
conversion of such rights, options, warrants or conversion or exchange rights
(including, without limitation, any Rights) and (ii) such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Company upon such exercise, exchange or conversion plus the consideration,
if any, actually received by the Company for issuance, sale or grant of all such
rights, options, warrants or conversion or exchange rights (including, without
limitation, any Rights) whether or not exercised; provided, however, that no
such readjustment shall (except by reason of an intervening adjustment under
Section 3.1) have the effect of decreasing the number of shares of Common Stock
issuable upon the exercise of each Warrant by an amount in excess of the amount
of the adjustment initially made in respect of the issuance, sale or grant of
such rights, options, warrants or conversion exchange privileges.
3.6 Consideration Received. For purposes of any computation respecting
consideration received pursuant to this Section 3, the following shall apply:
(i) in the case of the issuance of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Company for any underwriting of the issue or otherwise in connection
therewith;
(ii) in the case of the issuance of Common Stock for a consideration in
whole or in part other than cash, the consideration other than cash shall be
deemed to be the Fair Market Value thereof as determined in good faith by the
Board (irrespective of the accounting treatment thereof), whose determination
shall be conclusive and described in reasonable detail in a Board resolution
which shall be provided promptly thereafter to the Holder; and
(iii) in the case of the issuance of rights, options, warrants or
securities convertible into or exchangeable for shares of Common Stock
(including, without limitation, any Rights), the
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aggregate consideration received therefor shall be deemed to be the
consideration received by the Company for the issuance of such rights, options,
warrants or securities convertible into or exchangeable for shares of Common
Stock, plus the additional minimum consideration, if any, to be received by the
Company upon the exercise, conversion or exchange thereof (the consideration in
each case to be determined in the same manner as provided in clauses (i) and
(ii) of this Section 3.6).
3.7 De Minimis Adjustments. No adjustment in the number of shares of
Common Stock purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the number
of shares of Common Stock purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this Section 3.7 are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest
one-ten-billionth of a share.
3.8 Adjustments of Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of each Warrant is adjusted, as
herein provided, the Exercise Price per share of Common Stock payable upon
exercise of such Warrant shall be adjusted (calculated to the nearest $0.01) so
that it shall equal the price determined by multiplying such Exercise Price
immediately prior to such adjustment by a fraction the numerator of which shall
be the number of shares of Common Stock purchasable upon the exercise of each
Warrant immediately prior to such adjustment and the denominator of which shall
be the number of shares of Common Stock so purchasable immediately thereafter.
If after an adjustment, a Holder of a Warrant upon exercise of it may
receive shares of two or more classes in the capital of the Company, the Company
shall determine the allocation of the adjusted Exercise Price between such
classes of shares in a manner that the Board deems fair and equitable to the
Holders. After such allocation, the exercise privilege and the Exercise Price
of each class of shares shall thereafter be subject to adjustment on terms
comparable to those applicable to shares of Common Stock in this Section 3.
3.9 Consolidation, Merger, Etc.
(i) Subject to the provisions of Subsection (ii) below of this Section
3.9, in case of the consolidation of the Company with, or merger of the Company
with or into, or of the sale of all or substantially all of the properties and
assets of the Company to, any Person, and in connection therewith consideration
is payable to holders of Common Stock (or other securities or property
purchasable upon exercise of Warrants) in exchange therefor, the Warrants shall
remain subject to the terms and conditions set forth in this Agreement and each
Warrant shall, after such consolidation, merger or sale, entitle the Holder to
receive upon exercise the number of shares in the capital or other securities or
property (including cash) of or from the Person resulting from such
consolidation or surviving such merger or to which such sale shall be made or of
the parent of such Person, as the case may be, that would have been
distributable or payable on account of the Common Stock if such Holder's
Warrants had been exercised immediately prior to such merger, consolidation or
sale (or, if applicable, the record date therefor); and in any such case the
provisions of this Agreement with respect to the rights and interests thereafter
of the Holders of
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Warrants shall be appropriately adjusted by the Board in good faith so as to be
applicable, as nearly as may reasonably be, to any shares, other securities or
any property thereafter deliverable on the exercise of the Warrants.
(ii) Notwithstanding the foregoing, (x) if the Company merges or
consolidates with, or sells all or substantially all of its property and assets
to, another Person (other than an Affiliate of the Company) and consideration is
payable to holders of Common Stock in exchange for their shares of Common Stock
in connection with such merger, consolidation or sale which consists solely of
cash, or (y) in the event of the dissolution, liquidation or winding up of the
Company, then the Holders of Warrants shall be entitled to receive distributions
on the date of such event on an equal basis with holders of Common Stock (or
other securities issuable upon exercise of the Warrants) as if the Warrants had
been exercised immediately prior to such event, less the Exercise Price. Upon
receipt of such payment, if any, the rights of the Holder shall terminate and
cease and the Holder's Warrants shall expire. In case of any such merger,
consolidation or sale of assets, the surviving or acquiring Person and, in the
event of any dissolution, liquidation or winding up of the Company, the Company
shall, after receipt of surrendered Warrant Certificates, make payment by
delivering a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holder.
3.10 When No Adjustment Required. No adjustments need be made for:
(i) exercises of Rights granted to and held by directors of the Company
or employees of the Company or any of its subsidiaries, and existing on the
Closing Date;
(ii) Rights granted to and held by directors of the Company or employees
of the Company or its subsidiaries after the Closing Date or Common Stock issued
or granted to such employees or directors after the Closing Date, whether or not
upon the exercise, exchange or conversion of any such Rights, to the extent that
all such shares of Common Stock do not have (and such Rights are not
exercisable, exchangeable or convertible for shares of Common Stock having) an
aggregate equity value in excess of 5.0% of the equity value of the Company
(such percentage to be calculated on a fully-diluted basis after giving effect
to all Common Stock and Rights outstanding on the Closing Date), as determined
in good faith by the Board and set forth in a Board resolution delivered upon
request to any Holder;
(iii) rights to purchase Common Stock pursuant to a Company plan for
reinvestment of dividends or interest; or
(iv) a Securities Offering of any security trading on any national
securities exchange or in the over the counter market, or of a security directly
or indirectly convertible or exchangeable for any such security (the latter
security being a "Reference Security"), where such security (or the Reference
Security as applicable) is sold to investors at a price at least equal to the
closing sale, bid or ask price (whichever is customary) of such security (or the
Reference Security as applicable) on the date (not more than five business days
prior to the consummation of such Securities Offering, or an average of such
days not exceeding five) on which the Company fixes such price for such sale.
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(v) To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
3.11 Detachable Rights, Options or Warrants. Rights, options or warrants
distributed by the Company to all holders of Common Stock entitling the holders
thereof to subscribe for or purchase shares of the Company's capital stock
(either initially or under certain circumstances), which rights, options or
warrants, until the occurrence of a specified event or events (a "Trigger
Event"), (i) are deemed to be transferred with such shares of Common Stock, (ii)
are not exercisable and (iii) are also issued in respect of future issuances of
shares of Common Stock, shall be deemed not to have been distributed for
purposes of Section 3.2 or Section 3.4 (and no adjustment under such Section
will be required) until the date of occurrence of the earliest Trigger Event. If
such right, option or warrant is subject to subsequent events, upon the
occurrence of which such right, option or warrant shall become exercisable to
purchase different securities, evidences of indebtedness or other assets or
entitle the holder to purchase a different number or amount of the foregoing or
to purchase any of the foregoing at a different purchase price, then the
occurrence of each such event shall be deemed to be the date of issuance and
record date with respect to a new right, option or warrant (and a termination or
expiration of the existing right, option or warrant without exercise by the
holder thereof). In addition, in the event of any distribution (or deemed
distribution) of rights or warrants, or any Trigger Event or other event (of the
type described in the preceding sentence) with respect thereto, that resulted in
an adjustment under Section 3.2 or Section 3.4, (1) in the case of any such
rights, options or warrants which shall all have been redeemed or repurchased
without exercise by any holders thereof, the Exercise Price and the number of
shares of Common Stock issuable upon the exercise of each Warrant shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder of Common Stock with respect to such rights, options or warrants
(assuming such holder had retained such rights, options or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of such rights, options or warrants all of which shall have
expired or been terminated without exercise, the Exercise Price and the number
of shares of Common Stock issuable upon the exercise of each Warrant shall be
readjusted as if such rights, options or warrants had never been issued.
3.12 Shareholder Rights Plans. Notwithstanding the foregoing, if the
Company distributes "poison pill" rights pursuant to a "poison pill" shareholder
rights plan (the "Stockholder Rights"), the Company shall, in lieu of making any
adjustment pursuant to this Section 3, make proper provision so that if the
Warrant Exercise is made after the record date for such distribution and prior
to the expiration or redemption of the Stockholder Rights, the Holder shall be
entitled to receive upon the Warrant Exercise, in addition to the shares of
Common Stock issuable upon the Warrant Exercise, a number of Stockholder Rights
to be determined as follows: (a) if the Warrant Exercise occurs on or prior to
the date of distribution to the holders of Rights of separate certificates
evidencing such Stockholder Rights (the "Distribution Date"), the same number of
Stockholder Rights to which a holder of a number of shares of Common Stock equal
to the number of shares of Common Stock issuable upon the Warrant Exercise at
the time of the Warrant Exercise would be entitled in accordance with the terms
and provisions of and applicable to the Stockholder Rights; and (b) if the
Warrant Exercise occurs after the Distribution Date, the same number of
Stockholder Rights to which a holder of the number of shares of
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Common Stock purchasable under this Warrant would be entitled if this Warrant
was exercised immediately prior to the Distribution Date in accordance with the
terms and provisions of and applicable to the Stockholder Rights, and in each
case subject to the terms and conditions of the Stockholder Rights.
3.13 Other Adjustments. In the event that at any time, as a result of an
adjustment made pursuant to this Section 3, Holders shall be entitled to receive
any securities of the Company other than Common Stock, thereafter the number of
such other securities so receivable upon exercise of the Warrants and the
Exercise Price applicable to such exercise shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Article 3.
3.14 Other Events. If any event occurs as to which the foregoing provisions
of this Section 3 are not strictly applicable or, if strictly applicable, would
not fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
there shall be made such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary to protect such purchase rights as aforesaid, but in no event shall
any such adjustment have the effect of increasing the Exercise Price or
decreasing the number of shares of Common Stock issuable upon exercise of each
Warrant.
3.15 Method and Notice of Adjustment. When any adjustment is required to be
made in the Exercise Price, initial or adjusted, the Company shall forthwith
determine the new Exercise Price, and
(i) Prepare and retain on file, a statement describing in reasonable
detail the method used in arriving at the new Exercise Price; and
(ii) Cause a copy of such statement to be mailed to the Holder within ten
(10) days after the date of the circumstances giving rise to the adjustment
occurs.
3.16 Fractional Interests. If more than one Warrant shall be presented for
exercise in full at the same time by the Holder, the number of full shares of
Common Stock which shall be issuable upon such exercise thereof shall be
computed on the basis of the aggregate number of shares of Common Stock
purchasable on exercise of the Warrants so presented. The Company shall not be
required to issue fractional shares of Common Stock upon the exercise of
Warrants. If any fraction of a share of Common Stock would, except for the
provisions of this Section 3.16, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company may pay an amount in cash calculated by
it to be equal to the then Fair Market Value per Common Share multiplied by such
fraction computed to the nearest whole cent.
3.17 When Issuance or Payment May be Deferred. In any case in which this
Section 3 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the Holder with respect
to any Warrant exercised after such record date the shares of Common Stock and
other shares in the capital of the Company, if any, issuable upon such exercise
over and above the shares of Common Stock and other shares in the capital of the
11
Company, if any, issuable upon such exercise and (ii) paying such holder any
amount in cash in lieu of a fractional share; provided, however, that the
Company shall deliver to such Holder a due xxxx or other appropriate instrument
evidencing such Holder's right to receive such additional Common Stock, other
shares and cash upon the occurrence of the event requiring such adjustment.
3.18 No Dilution or Impairment. The Company will not by amendment of its
charter or through reorganization, consolidation, merger, dissolution, sale of
assets or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Agreement, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder against dilution or other impairment. Without limiting the generality of
the foregoing, the Company will not (a) increase the par value of the Common
Stock above the Exercise Price or (b) take any action that would, after giving
effect to the provisions of this Section 3, result in a reduction of the
Exercise Price to an amount below the par value per share of Common Stock unless
the Company takes all action necessary in order to protect the Holder against
dilution or other impairment as contemplated by this Section 3. At all times,
the Company will take all such action (including, without limitation, reducing
the par value of the Common Stock) as may be necessary or appropriate in order
that the Company may validly and legally issue Common Stock upon the exercise of
the Warrants.
4. Transferability; Registration Rights.
4.1 Transferability. Prior to making any disposition of this Warrant or of
any Common Stock purchased upon the Warrant Exercise, the Holder will give
written notice (the "Transfer Notice") to the Company describing briefly the
manner of any such proposed disposition. The Holder will not make any such
disposition until: (a) the Company has notified the Holder that, in the opinion
of its counsel, registration under the Securities Act of 1933, as amended (the
"1933 Act"), is not required with respect to such disposition, or (b) a
registration statement covering the proposed distribution has been filed by the
Company and has become effective. The Holder then will make such disposition
only pursuant to the conditions of such opinion or registration. The Company
agrees that, upon receipt of the Transfer Notice, it will use its best efforts,
in consultation with the Holder's counsel, to ascertain as promptly as possible
whether or not registration is required, and will advise the Holder promptly
with respect thereto, and the Holder will cooperate in providing the Company
with information necessary to make such determination.
4.2 Registration Rights. The Holder shall have the registration rights and
obligations set forth in the Registration Rights Agreement dated September 28,
2001, between the Company, the Holder and the Purchasers (as defined therein).
5. Cashless Exercise Option.
5.1 Conversion. So long as the Fair Market Value is greater than the
Exercise Price, the Holder shall have the right to elect to effect exercises of
this Warrant through one or more transactions of a type commonly referred to as
a "cashless exercise" in conformity with the provisions of Regulation T of the
Federal Reserve Board of Governors (each a "Cashless
12
Exercise"). In the event of any such Cashless Exercise, it is understood that
the Company will receive payment of the Exercise Price in cash from the Holder
or from the broker selected by such Holder as described below. To effect a
Cashless Exercise of this Warrant, the Holder shall deliver to the Company and
to a broker selected by such Holder and acceptable to the Company in its
reasonable discretion such Holder's completed Warrant Exercise Form together
with instructions for the Company to deliver to such broker the Common Stock
issuable upon such exercise, and the Company shall take such actions as are
necessary and appropriate to facilitate such Cashless Exercise, including
(without limitation) to verify to such broker that it will deliver, and to
deliver, such Common Stock promptly to such broker. Until such time as this
Warrant is exercised in full or expires, the Exercise Price and the securities
issuable upon exercise of this Warrant are subject to adjustment as hereinafter
provided.
5.2 Intentionally Left Blank.
5.3 Fair Market Value Defined. The "Fair Market Value" of one share of
Common Stock (the "Determination Date") shall mean:
(i) If the Common Stock is traded on an exchange or is quoted on the
Nasdaq National Market System or the Small Cap Market then the average closing
or last sale prices reported for the ten (10) trading days immediately preceding
the Determination Date.
(ii) If the Common Stock is not traded on an exchange or on the Nasdaq
National Market System or the Small Cap Market but is traded in the
over-the-counter market, then the average of the closing bid and asked prices
reported for the ten (10) trading days immediately preceding the Determination
Date.
(iii) If the Common Stock is not publicly traded and there has been a bona
fide sale of such Common Stock for cash in an arm's length transaction within
forty- five (45) days prior to the Determination Date by the Company privately
to one or more investors unaffiliated with the Company (a "Qualifying Sale"),
then such most recent sales price.
(iv) If the Common Stock is not publicly traded and there has been no
Qualifying Sale, then the highest price per share which the Company could obtain
from a willing buyer in an arm's length transaction (not including a current
employee or director), as determined in good faith by the Board of Directors of
the Company based on the written advice of a nationally recognized Independent
Financial Expert. For purposes of determining Fair Market Value in accordance
with this Section 5, an Independent Financial Expert means a Financial Expert
that does not (and, to the knowledge of the Company after due inquiry, whose
directors, executive officers and 5% stockholders do not) have a direct or
indirect financial interest in the Company or any of its subsidiaries or
Affiliates, which has not been for at least five years and, at the time that it
is called upon to give independent financial advice to the Company, is not (and,
to the knowledge of the Company after due inquiry, none of its directors,
executive officers or 5% stockholders is) a promoter, director or officer of the
Company or any of its subsidiaries or Affiliates.
13
6. Notices.
6.1 Shareholder Notices. The Company shall mail to the Holder, at the
Holder's last known post office address appearing on the books of the Company,
not less than fifteen (l5) days prior to the date on which (a) a record will be
taken for the purpose of determining the holders of Common Stock entitled to
dividends (other than cash dividends) or subscription rights, or (b) a record
will be taken (or in lieu thereof, the transfer books will be closed) for the
purpose of determining the holders of Common Stock entitled to notice of and to
vote at a meeting of stockholders at which any capital reorganization,
reclassification of shares of Common Stock, consolidation, merger, dissolution,
liquidation, winding up or sale of substantially all of the Company's assets
shall be considered and acted upon.
6.2 Other Notices. All notices or other communications to a party required
or permitted hereunder shall be in writing and shall be delivered personally or
by telecopy (receipt confirmed) to such party (or, in the case of an entity, to
an executive officer of such party) or shall be sent by a reputable express
delivery service or by certified mail, postage prepaid with return receipt
requested, addressed as follows:
if to the Holder:
To such address as may be designated in writing to the Company by the
Holder.
with copy to:
ThinkEquity Partners LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxxxxxxx, Esq.
Fax: 000-000-0000
if to the Company:
RMH Teleservices, Inc.
00 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Fax: 000-000-0000
with copy to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
0000 Xxxx Xxxxxx
00/xx/ Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxx, Xx., Esq.
Fax: 000-000-0000
14
Any party may change the above-specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by telecopy) or on the day shown on the return receipt
(if delivered by mail or delivery service).
7. Reservation of Common Stock. The Company shall at all times reserve and
keep available such number of shares of its authorized but unissued Common Stock
deliverable upon exercise of the Warrants as will be sufficient to permit the
exercise in full of all outstanding Warrants. The Company represents, warrants,
covenants and agrees that all shares of Common Stock of the Company that may be
issued upon the exercise of the Warrants will, upon issuance, be duly
authorized, validly issued, fully paid, non-assessable and not subject to any
calls for funds and free from pre-emptive rights and all taxes, liens, charges
and security interests with respect to the issue thereof.
8. Replacement. On receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of loss, theft or destruction, on delivery of an indemnity agreement, or bond
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company, at its
expense, will execute and deliver, in lieu of this Warrant, a new Warrant of
like tenor.
9. Miscellaneous.
9.1 Common Stock. Whenever reference is made herein to the issue or sale of
shares of Common Stock, the term "Common Stock" shall include any stock of any
class of the Company other than preferred stock with a fixed limit on dividends
and a fixed amount payable in the event of voluntary or involuntary liquidation,
dissolution or winding up of the Company.
9.2 Survival. The representations, warranties and agreements herein
contained shall survive the exercise of this Warrant. References to the "holder
of" include the immediate holder of shares purchased upon exercise of this
Warrant, and the word "holder" shall include the plural thereof. This Warrant
shall be interpreted under the laws of the State of Minnesota without regard to
its choice of law principles.
9.3 Validly Issued, Fully Paid. All shares of Common Stock or other
securities issued upon the exercise of this Warrant shall be validly issued,
fully paid and non-assessable, and the Company will pay all taxes in respect of
the issuer thereof.
9.4 Signatures. Signatures to this warrant may be manual or facsimile.
9.5 Warrant Holder Deemed Not a Stockholder. Notwithstanding anything
contained herein to the contrary, the Holder of this Warrant shall not be deemed
a stockholder (including, no right to vote on any matters coming before the
shareholders) of the Company for any purpose whatsoever unless and until this
Warrant is duly exercised.
15
IN WITNESS WHEREOF, this Warrant has been duly executed this 28th day of
September, 2001.
RMH TELESERVICES, INC.
By: _____________________________________
Name:
Title:
16
WARRANT EXERCISE FORM
To be signed only upon exercise of the Warrant.
The undersigned, the Holder of the attached Warrant, hereby irrevocably
elects to exercise the purchase right represented by the Warrant for, and to
purchase thereunder, __________________ shares of Common Stock of RMH
Teleservices, Inc. to which such Warrant relates and herewith makes payment of
$___________ therefor in cash or by certified check, and requests that such
shares be issued and be delivered to, _________________________, the address for
which is set forth below the signature of the undersigned.
Dated: ___________________
__________________________ ______________________________________________
(Taxpayer's I.D. Number) (Signature)
______________________________________________
______________________________________________
(Address)
ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrant.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto ______________________________ the right to purchase shares of Common Stock
of RMH Teleservices, Inc. to which the attached Warrant relates and appoints
_________________, attorney, to transfer said right on the books of RMH
Teleservices, Inc. with full power of substitution in the premises.
Dated: ___________________
__________________________________________
(Signature)
__________________________________________
__________________________________________
(Address)
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 5 of Warrant)
The undersigned hereby irrevocably elects a cashless exercise of the right
of purchase represented by the attached Common Stock Purchase Warrant for, and
to purchase thereunder, ______________________ shares of Common Stock, as
provided for in Section 5 therein.
If said number of shares is not all the shares purchasable under the
attached Common Stock Purchase Warrant, a new Warrant is to be issued in the
name of the undersigned for the whole remaining balance of the shares
purchasable thereunder rounded up to the next higher number of shares.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional shares to:
NAME __________________________________________________________
(Please Print Name)
ADDRESS ____________________________________________________________
____________________________________________________________
SOCIAL SECURITY NO. __________________________________________________
SIGNATURE _______________________________________________________
NOTE: The above signature should correspond exactly with the name on the first
page of this Common Stock Purchase Warrant or with the name of the assignee
appearing in the assignment form on the preceding page.
