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EXHIBIT 10.5
THIS WARRANT AND THE SHARES OF COMMON STOCK SUBJECT TO THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NO SALE OR DISPOSITION OF THIS WARRANT OR
THE SHARES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL FOR THE
HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS
NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
AMERICAN TRAINING GROUP, INC.
AMENDED AND RESTATED WARRANT
TO PURCHASE COMMON STOCK
($0.01 Par Value Per Share)
This certifies that, for value received, __________________ ("the
Holder"), is entitled to subscribe for and purchase the number of shares of
fully paid and non-assessable shares of Common Stock of American Training Group,
Inc. (the "Company") determined as provided in Section 1 hereof (subject to
adjustment from time to time pursuant to Section 5 hereof), at the price
specified in Section 2 hereof, as may be adjusted from time to time pursuant to
Section 5 hereof (the "Warrant Price"), subject to the provisions and upon the
terms and conditions hereinafter set forth.
As used herein:
"Average Closing Price" shall mean the average closing price of a share
of Common Stock for ten (10) consecutive trading days on the principal national
securities exchange (including the Nasdaq National Market) on which the shares
of Common Stock are listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange (including the Nasdaq National
Market), the average of the bid and asked prices during such 10-day period in
the over-the-counter market as furnished by Nasdaq; provided, however, as of
immediately prior to the consummation of any Change of Control of the Company
the Average Closing Price shall be deemed to be the price at which the Common
Stock is valued in such Change of Control.
"Base Price" shall mean the price per share that shares of Common Stock
are sold by the Company in the IPO, subject to adjustment from time to time
pursuant to the provisions of Section 5 hereof.
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"Change of Control" shall mean a merger, consolidation, tender offer,
sale of all or substantially all of the Company's assets or comparable
transaction in which the holders of the Company's outstanding voting securities
(including other securities convertible or exercisable therefor) as of
immediately prior to such transaction do not hold immediately following such
transaction securities of the surviving or acquiring entity (or the direct or
indirect parent of such entity) entitled to cast a majority of the votes
entitled to be cast for the election of Director.
"Common Stock" shall mean the Company's presently authorized Common
Stock and any stock into or for which such Common Stock may hereafter be
converted or exchanged.
"IPO" shall mean the initial public offering of shares of Common Stock
registered under the Securities Act of 1933, as amended.
1. TERM OF WARRANT; NUMBER OF SHARES.
(a) Subject to acceleration as provided in subsection 1(c)
below, the purchase right represented by this Warrant shall become
exercisable (i) prior to the closing date of the IPO, only if the
Company has revenues of at least $150 million for its most recently
completed fiscal year, and (ii) on or after the closing date of the
IPO, as set forth below when and if the Average Closing Price has
achieved the percentage of the Base Price so set forth:
PERCENTAGE OF WARRANT AVERAGE CLOSING PRICE AS A
EXERCISABLE PERCENTAGE OF BASE PRICE
20% 200%
20% 300%
20% 400%
40% 500%
Notwithstanding the foregoing, this Warrant shall terminate
and no longer be exercisable on the earliest to occur of (x) seven (7)
years from the date the IPO closes, (y) the effective date of any
merger or consolidation in which the Company is not the surviving
corporation and the shareholders of the Company immediately prior to
such merger or consolidation do not hold substantially the same equity
interest in the surviving corporation following the merger or
consolidation, and (z) eight (8) years from the date hereof.
(b) The number of shares of Common Stock subject to this
Warrant (the "Underlying Shares") shall be equal to eighty-five (85)
shares of Common Stock, as adjusted pursuant to Section 5 hereof, or in
the event of an IPO, if greater, two and one-half percent (2.5%) of the
sum of (i) the number of shares of Common Stock outstanding immediately
prior to the closing date of the IPO plus (ii) the number of
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shares of Common Stock issuable by the Company as of the closing date
of the IPO in connection with the acquisition of "founding" companies
by the Company as of or prior to such date. The number of shares of
Common Stock subject to this Warrant shall be subject to adjustment
from time to time pursuant to the provisions of Section 5 hereof.
(c) Notwithstanding subsection 1(a) above, the purchase right
represented by this Warrant shall become exercisable in full as of immediately
prior to the consummation of a Change of Control of the Company if (and only if)
the holder of this Warrant has opposed such Change of Control transaction in the
manner set forth below. The holder shall be deemed to have opposed such
transaction:
(i) if the holder is then a director of the Company,
by voting against the resolution(s) by which the Company's Board of
Directors approved the transaction and recommended that the holders of
the Company's voting securities approve the transaction, or if such
transaction is to be consummated without the approval of the Company's
Board of Directors (e.g., by tender offer), by voting as a director in
a manner that does not recommend the proposed Change of Control; or
(ii) if the holder is not then a director of the
Company, by giving written notice of his opposition to the transaction
to the Secretary of the Company prior to meeting of the holders of the
Common Stock at which such shareholders voted to approve the
transaction and by not voting any shares of Common Stock held by him in
favor of the transaction at such meeting of stockholders, or if the
transaction is to be consummated without a vote of the holders of
Common Stock (e.g., by tender offer), either by not tendering his
shares in the tender offer or by giving written notice of his
opposition to the transaction to the Secretary of the Company prior to
the consummation thereof.
The acceleration of this Warrant's exercise schedule provided in this subsection
(c) is conditioned upon the consummation of the subject Change of Control
transaction, and in the event such transaction is terminated prior to
consummation, any purported exercise of this Warrant in contemplation thereof
shall be null and void without action by the holder or the Company.
2. WARRANT PRICE.
The Warrant Price is the greater of (a) one dollar ($1.00) per share,
subject to adjustment from time to time pursuant to the provisions of Section 5
hereof, and (b) following the IPO, the price per share determined as provided
below, subject to adjustment from time to time following the IPO pursuant to the
provisions of Section 5 hereof:
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For the first twelve months following
the closing date of the IPO - Base Price
For each twelve months thereafter until - Base Price plus (a) 10% of the Base
relevant portion of this Warrant Price times (b) the number of full
becomes exercisable twelve-month periods elapsed since
the closing date of the IPO
3. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT.
Subject to Section 1 hereof, the purchase right represented by this
Warrant may be exercised by the holder hereof, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Exhibit 1 duly executed) at the principal office of the Company and by the
payment to the Company, by certified check or wire transfer, of an amount equal
to the then applicable Warrant Price per share multiplied by the number of
shares then being purchased. The Warrant Price shall be payable, at the option
of the holder hereof, (a) by wire transfer, certified check, official bank check
or bank cashier's check payable to the order of the Company or (b) by the
surrender of Warrants exercisable for a number of shares having a Market Price
as of the date of surrender equal to the aggregate Warrant Price of all Warrants
covered thereby. "Market Price" means the average closing price of a share of
Common Stock for the ten (10) consecutive trading days preceding such date on
the principal national securities exchange (including the Nasdaq national
market) on which the shares of Common Stock are listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange
(including the Nasdaq National Market), the average of the bid and asked prices
during such 10-day period in the over-the-counter market as furnished by Nasdaq,
or, if the shares of Common Stock are not publicly traded, as determined by, the
Board of Directors of the Company in good faith. The Company agrees that the
shares so purchased shall be deemed to be issued to the holder thereof as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares as
aforesaid. In the event of any exercise of the rights represented by this
Warrant, certificates for shares of stock so purchased shall be delivered to the
holder hereof within 15 days thereafter and, unless this Warrant has been fully
exercised or expired, a new Warrant representing the portion of the shares, if
any, with respect to which this Warrant shall not then have been exercised,
shall also be issued to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Underlying Shares will, upon issuance, be fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
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5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The kind of securities purchasable upon the exercise of this Warrant,
the Warrant Price and the number of shares purchasable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events as follows:
(a) RECLASSIFICATION. In case of any reclassification or
change of outstanding securities of the class issuable upon exercise of
this Warrant (other than a change in par value, or from par value to no
par value, or from no par value to par value, or as a result of a
subdivision or combination), shall execute a new warrant, providing
that the holder of this Warrant shall have the right to exercise such
new Warrant and procure upon such exercise, in lieu of each share of
Common Stock theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification or change by a holder of
one share of Common Stock. Such new Warrant shall provide for
adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in this Section 5. The provisions of
this Section 5(a) shall similarly apply to successive reclassifications
and changes.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its Common Stock, the Warrant Price shall be
proportionately decreased in the case of a subdivision or increased in
the case of a combination.
(c) STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with respect
to Common Stock payable in, or make any other distribution with respect
to Common Stock (except any distribution specifically provided for in
the foregoing Section 5(a) or Section 5(b) or in the following Section
5(d)) of, Common Stock, then the Warrant Price shall be adjusted, from
and after the date of determination of stockholders entitled to receive
such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of
determination by a fraction (a) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to
such dividend or distribution and (b) the denominator of which shall be
the total number of shares of Common Stock outstanding immediately
after such dividend or distribution.
(d) EXTRAORDINARY DIVIDENDS. In case the Company shall declare
a dividend upon its Common Stock (except a dividend payable in shares
of Common Stock referred to in Section 5(c)) payable otherwise than out
of retained earnings, the per share Warrant Price in effect immediately
prior to the declaration of such dividend shall be reduced (but not
below par value) by an amount equal, in the case of a dividend in cash,
to the amount thereof payable per share of Common Stock or, in the case
of any other dividend, to the fair value thereof per share of Common
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Stock as determined in good faith by the Board of Directors of the
Company. For the purposes of the foregoing, a dividend payable other
than in cash shall be considered payable out of retained earnings only
to the extent that such retained earnings are charged an amount equal
to the fair value of such dividend as determined by the Board of
Directors of the Company. Such reduction shall take effect as of the
date on which a record is taken for the purpose of such dividend or, if
a record is not taken, the date as of which the holders of the Common
Stock of record entitled to such dividend are to be determined.
Appropriate readjustment of the per share Warrant Price shall be made
in the event that any dividend referred to in this Section 5(d) shall
be lawfully abandoned.
(e) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Warrant Price pursuant to any of Sections 5(b) or 5(c) hereof, the
number of shares of Common Stock purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by
multiplying the number of shares purchasable immediately prior to such
adjustment in the Warrant Price by a fraction, the numerator of which
shall be the Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately thereafter.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, the Warrant Price or Prices after giving effect to such adjustment
and the number of shares then purchasable upon exercise of this Warrant, and
shall cause copies of such certificate to be mailed (by first class mail,
postage prepaid) to the holder of this Warrant at the address specified in
Section 9(d) hereof, or at such other address as may be provided to the Company
in writing by the holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Common Stock will be issued in connection with
any exercise hereunder, but in lieu of such fractional shares the Company shall
make a cash payment therefor upon the basis of the Warrant Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS.
(a) The holder of this Warrant, by acceptance hereof, agrees
that this Warrant and the Underlying Shares are being acquired for
investment and that it will not offer, sell or otherwise dispose of
this Warrant or any Underlying Shares except under circumstances which
will not result in a violation of the Securities Act of 1933, as
amended (the "Securities Act"). Upon exercise of this Warrant, the
holder hereof
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shall, if requested by the Company and the holder, confirm in writing,
in a form satisfactory to the Company, that the Underlying Shares are
being acquired for investment and not with a view toward distribution
or resale. This Warrant and the certificates representing the
Underlying Shares (unless registered under the Securities Act) shall be
stamped or imprinted with a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION
THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) Unless counsel for the Company is of the opinion that to
do so is not permitted under the Securities Act as then interpreted by
the Securities and Exchange Commission, upon the written request of the
holder of this Warrant setting forth such holder's intent to exercise
all or any portion of this Warrant, the Company shall, subject to the
conditions of this Section 8, as expeditiously as reasonably possible,
endeavor in good faith to register and/or qualify under applicable
Federal or State law the sale to such holder of the Underlying Shares
and any required listing with any securities exchange following such
exercise as may be required reasonably to permit the resale or other
disposition of such Underlying Shares.
(c) In the event registration or qualification under
subsection (b) is not permitted and/or the holder elects to proceed
under this subsection (c), upon the written request of the holder of
this Warrant setting forth such holder's intent to transfer all or any
portion of the Underlying Shares and requesting that the Company effect
the registration or qualification under applicable Federal or State law
of such transfer, the Company shall, subject to the conditions of this
Section 8, as expeditiously as reasonably possible, endeavor, in good
faith, to effect any such registration or qualification of such
Underlying Shares and any required listing with any securities exchange
as may be required reasonably to permit the sale or other disposition
of any such Underlying Shares.
(d) The Company shall not be required to register or qualify
or to use its best efforts to effect any registration or qualification
of the Underlying Shares under the Securities Act or any applicable
State securities law or regulation pursuant to this Section 8 on any
form other than Form S-3 or any successor thereto.
(e) The Company shall maintain the effectiveness of any
registration statement filed in connection with any registration
pursuant to this Section 8 and, if
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necessary, amend the registration statement and supplement the
prospectus (i) if the registration statement has been filed pursuant to
subsection (b) above, so long as the Warrant remains unexercised and
(ii) if the registration statement has been filed pursuant to
subsection (c) above, until all Underlying Shares have been sold or
otherwise disposed.
(f) The Company agrees to pay all expenses in connection with
the registration effected pursuant to this Section 8 other than
underwriting or brokerage fees or discounts and the legal fees and
expenses of counsel for any holder of Underlying Shares.
(g) In connection with the registration or qualification of
securities under this Section, the Company hereby agrees to indemnify
the holder of the Underlying Shares and each person, if any, who
controls such holder within the meaning of Section 15 of the Securities
Act, against all losses, claims, damages and liabilities caused by any
untrue or alleged untrue, statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented if
the Company shall have furnished any amendments or supplements thereto)
or any preliminary prospectus or caused by any omission, or alleged
omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement or omission
based upon information furnished in writing to the Company by or on
behalf of such holder expressly for use therein, and the Company and
each officer, director and controlling person of the Company shall be
indemnified by each holder of Underlying Shares for all such losses,
claims, damages and liabilities caused by any untrue, or alleged
untrue, statement or omission or alleged omission, based upon
information furnished in writing to the Company by or on behalf of such
holder for any such use.
Promptly upon receipt by a party indemnified under this
subsection (g) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be
sought against any indemnifying party under this subsection, such
indemnified party shall notify the indemnifying party in writing of the
commencement of such action, but the failure so to notify the
indemnifying party shall not relieve it of any liability which it may
have to any indemnified party otherwise than under this subsection. In
case notice of commencement of any such action shall be given to the
indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
of such action at its own expense, with counsel chosen by it and
satisfactory to such indemnified party. The indemnified party shall
have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable costs of investigation) shall be paid by
the indemnified party unless the indemnifying party either agrees to
pay the
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same or fails to assume the defense of such action with counsel
satisfactory to the indemnified party. No indemnifying party shall be
liable for any settlement entered into without its consent.
(h) The holder of this Warrant or any Underlying Shares agrees
that it will not sell or otherwise transfer any Underlying Shares for a
period of 90 days following any underwritten public offering of Common
Stock by the Company.
(i) The Company's obligation to register Underlying Share
under this Section 8 shall be subject to the condition that each holder
of Underlying Shares participating in any registered offering shall
have provided such information and executed such documents not
inconsistent with the terms of this Warrant, as may be requested by the
Company in connection with such registration.
9. MISCELLANEOUS.
(a) NO RIGHTS AS STOCKHOLDER. No holder of the Warrant or
Warrants shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof for any purpose, nor
shall anything contained herein be construed to confer upon the holder
of this Warrant, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant
or Warrants shall have been exercised and the shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein.
(b) 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.
(c) NOTICE OF CAPITAL CHANGES. In case:
(i) the Company shall declare any dividend or
distribution payable to the holders of its Common Stock;
(ii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company
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with, or sale of all or substantially all of its assets to,
another corporation or business organization; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give the
holder of this Warrant written notice, in the manner set forth in
Section 9(d) below, of the date on which a record shall be taken for
such dividend or distribution or for determining stockholders entitled
to vote upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up and of the date
when any such transaction shall take place, as the case may be. Such
written notice shall be given at least 30 days prior to the transaction
in question and not less than 20 days prior to the record date in
respect thereof.
(d) NOTICE. Any notice given to either party under this
Agreement shall be in writing, and any notice hereunder shall be deemed
to have been given upon delivery, addressed to the Company at its
principal executive offices and to the holder at its address set forth
in the Company's books and records or at such other address as the
holder may have provided to the Company in writing.
(e) NO IMPAIRMENT. The Company will not, by amendment of its
charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder
by the Company, but will at all times in good faith assist in the
carrying out of all the provisions in this Warrant.
(f) GOVERNING LAW. This Warrant shall be governed by and
construed under the laws of the Commonwealth of Massachusetts.
This Warrant is executed as of this 15th day of January, 1998.
AMERICAN TRAINING GROUP, INC.
By:____________________________
Name:__________________________
Title:_________________________
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EXHIBIT 1
NOTICE OF EXERCISE
To: AMERICAN TRAINING GROUP, INC.
1. The undersigned hereby elects to purchase _____ shares of the Common
Stock of American Training Group, Inc. (the "Company") pursuant to the terms of
the attached Warrant, and [check box] [ ] tenders herewith payment of the
purchase price of such shares in full, [ ] sells, assigns and transfers to the
Company all of the rights of the undersigned under the attached Warrant, with
respect to the number of shares of Common Stock covered by such Warrant
sufficient to pay the purchase price in full.
2. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below.
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(Name)
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(Address)
3. The undersigned represents that the aforesaid shares of Common Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares.
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Signature
