THIRD WARRANT AGREEMENT
THIS THIRD WARRANT AGREEMENT dated as of October 30, 1997 (as amended,
supplemented or modified from time to time, the "Warrant Agreement") between
COMMUNICATIONS CENTRAL INC., a Georgia corporation (the "Issuer"), and FIRST
UNION NATIONAL BANK, successor by merger to First Union National Bank of
Georgia, having offices at 0000 Xxxxxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000
("Lender").
W I T N E S S E T H:
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WHEREAS, pursuant to the Second Amended and Restated Credit Agreement, dated
as of August 15, 1996, as amended (as the same may be further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement')
between the Issuer and Lender, Lender made certain loans to the Issuer upon the
terms, and subject to the conditions, set forth in the Credit Agreement;
WHEREAS, the Issuer and the Lender wish to enter into a Fourth Amendment to
the Credit Agreement (the "Fourth Amendment") to provide for the restructuring
of certain loans (the "Loans");
WHEREAS, in order to induce the Lender to restructure and to provide the
Loans, the Issuer has agreed to execute and deliver to Lender or an Affiliate
(as hereinafter defined) thereof the Warrants hereinafter described; and
WHEREAS, this Warrant Agreement is being entered into by the Issuer and the
Lender in connection with the Loans.
NOW, THEREFORE, in consideration of the premises the parties hereto agree as
follows:
Section 1. Definitions. (a) As used in this Warrant Agreement, unless
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otherwise defined herein, terms defined in the Credit Agreement (as in effect on
the date hereof, whether or not the Credit Agreement is thereafter terminated or
expires according to its terms) shall have such defined meanings when used
herein and the following terms shall have the following meanings, unless the
context otherwise requires:
"Affiliate" of any Person shall mean any other Person directly or indirectly
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controlling, controlled by or under direct or indirect common control with such
Person. For purposes of this definition, a Person shall be deemed to control
another Person if such first Person possesses directly or indirectly the power
to (i) vote 10% or more of the securities having ordinary voting power for the
selection of directors of such Person or (ii) direct, or cause the direction of,
the management and policies of the second Person, whether through the ownership
of voting securities, by contract or otherwise. In addition, as to Lender,
"Affiliate" shall include any partnership a majority of the partners of which
are officers, directors, employees or Affiliates of Lender, and as to the
Issuer, "Affiliate" shall not include Lender or any Affiliate of Lender which is
a holder of any Warrants.
"Closing Date" shall mean October 30, 1997, the date of the closing of the
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Fourth Amendment.
"Commission" shall mean the Securities and Exchange Commission or any entity
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succeeding to any or all of its functions under the Securities Act and the
Exchange Act.
"Common Stock" shall mean the Common Stock, par value $0.01 per share, of the
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Issuer, and shall include any stock into which such Common Stock shall have been
changed or any stock resulting from any reclassification of such Common Stock
and all other stock of any class or classes (however designated) of the Issuer
the registered holders of which have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference.
"Convertible Preferred Stock" shall mean the Convertible Preferred Stock, par
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value $0.01 per share, of the Issuer which shall be designated upon the
occurrence of certain conditions pursuant to Section 6(e) hereof, on the terms
and with the preferences, limitations and rights set forth on Exhibit C attached
hereto, and shall include any stock into which such Convertible Preferred Stock
shall have been changed or any stock resulting from any reclassification of such
Convertible Preferred Stock.
"Current Market Price Per Share" shall mean, with respect to any shares of the
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Common Stock, as of any particular date of determination:
(i) if the Common Stock is then reported on the Composite Transactions
Tape, the average of the daily high and low prices for the 30 consecutive
trading days immediately prior to such date as reported on the Composite
Transactions Tape (as adjusted for any stock dividend, split, combination
or reclassification that occurred during such 30-day period); or
(ii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then listed or admitted to trading on a national
securities exchange, the average of the high and low last sale prices
(regular way delivery) of the Common Stock, for the 30 consecutive trading
days immediately prior to such date (as adjusted for any stock dividend,
split, combination or reclassification that occurred during such 30-day
period), on the principal national securities exchange on which the Common
Stock is traded or, in case no such sale takes place on any such day, the
average of the closing bid and asked prices (regular way delivery), in
either case on such national securities exchange; or
(iii) if the Common Stock is not then reported on the Composite
Transaction Tape but is then traded in the over-the-counter market, the
average of the daily closing sales prices, or, if there is no closing
sales price, the average of the closing bid and asked prices, in the over-
the-counter market, for the 30 consecutive trading days immediately prior
to such date (as adjusted for any stock dividend, split, combination or
reclassification that occurred during such 30-day period), as reported by
the National Association of Securities Dealers' Automated Quotation
System, or, if not so reported, as reported by the National Quotation
Bureau, Incorporated or any successor thereof, or, if not so reported, the
average of the closing bid and asked prices as furnished by any member of
the National Association of Securities Dealers, Inc. selected from time to
time by the Board of Directors of the Issuer for that purpose; or
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(iv) if no such prices are then furnished, the higher of (x) the
Exercise Price and (y) the fair market value of a share of Common Stock as
determined by agreement between the holders of a majority of the Warrants
and the Issuer or, in the absence of such an agreement, by an independent
investment banking firm or an independent appraiser engaged by the Issuer
(in either case the cost of which engagement will be borne by the Issuer)
and reasonably acceptable to the holders of a majority of the Warrants.
"Equity of the Issuer" shall mean the total shareholders' equity of the
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Issuer, determined in accordance with generally accepted accounting principles.
The amount of Equity of the Issuer represented by any Warrant Shares shall be
determined by subtracting from total Equity of the Issuer the aggregate amount
distributable as a preference upon dissolution of the Issuer to the holders of
any then outstanding shares of any class or series of preferred stock (other
than the Convertible Preferred Stock), dividing the balance obtained by the sum
of the number of shares of Common Stock then outstanding and the number of
shares of Common Stock issuable upon conversion of any Convertible Preferred
Stock then outstanding, and multiplying that per share amount by the aggregate
number of Warrant Shares.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
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any successor federal statute.
"Exchange Right" shall have the meaning given to such term in subsection
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15(c).
"Exempted Securities" shall mean (A) Warrant Shares, (B) shares of the
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Issuer's capital stock issued as a stock dividend described in subsection 12(b),
(C) options granted under the Issuer's 1991 Stock Option Plan, 1993 Stock Option
Plan and Director Stock Option Plan to purchase up to an aggregate total of
1,325,000 shares of Common Stock of the Issuer and shares of Common Stock
issuable upon exercise of such options, (D) up to 44,500 shares of the Issuer's
capital stock issued upon exercise of warrants granted to employees of Xxxxx
Systems Field Services Corporation dated July 28, 1995, (E) securities which are
by their terms convertible into or exchangeable for shares of capital stock of
the Issuer or options to purchase or rights to subscribe for any such
convertible or exchangeable securities, and any shares of capital stock of the
Issuer issued upon conversion or exchange thereof, to the extent the proceeds of
such securities are applied by the Issuer to repay, reduce or refinance the
senior funded debt commitment of the Lender under the Credit Agreement and any
securities issued to repay, reduce or refinance such securities, (F) securities
issued in an underwritten public offering registered with the Commission
("Public Securities"), including any securities issued upon conversion, exchange
or exercise of such Public Securities and (G) shares or rights to purchase
shares under the Shareholder Rights Agreement dated as of July 25, 1995, as
amended, between the Issuer and First Union Bank of North Carolina, Rights
Agent. The limit in clauses (C) and (D) shall be proportionately adjusted for
dividends and other distributions payable in and for subdivisions and
combinations of shares of Common Stock.
"Exercise Price" shall mean the exercise price of a Warrant, which shall be
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the price per Warrant which is equal to the Current Market Price Per Share of
Common Stock as of the Closing Date, except that if the balance remaining on
either the Tranche A Loan or the Tranche B Loan (as each term is defined in the
Credit Agreement) has not been paid in full on April 30, 1998, the exercise
price of a Warrant shall be $0.01 per Warrant after April 30, 1998.
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"Expiration Date" shall mean October 30, 2007.
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"Non-Attributable Stock" shall mean shares of Common Stock or Convertible
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Preferred Stock which have been previously sold, or were issued pursuant to the
exercise of Warrants which were previously sold, either (a) in a widely
dispersed public offering; (b) in a private placement in which no purchaser,
individually or in concert with others, acquired Warrants, Common Stock,
Convertible Preferred Stock or any combination thereof, representing (upon
conversion, in the case of the Convertible Preferred Stock, and upon exercise
for Common Stock, in the case of the Warrants) more than 2% of the outstanding
Common Stock; (c) in compliance with Rule 144 (or any rule which is a successor
thereto) of the Securities Act or (d) into the secondary market in a market
transaction executed through a registered broker-dealer in blocks of no more
than 2.0% of the shares outstanding of the Issuer in any six month period.
"Non-Public Warrant Shares" shall mean Warrant Shares that have not been sold
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to the public and bear the legend set forth in subsection 14(b).
"Non-Surviving Combination" shall mean any merger, consolidation or other
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business combination by the Issuer with one or more Persons in which the Issuer
is not the survivor, or a sale of all or substantially all of the assets of the
Issuer to one or more such other Persons.
"Put Closing Date" shall have the meaning given to such term in subsection
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15(a)(ii).
"Put Price" shall have the meaning given to such term in subsection 15(a)(i).
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"Put Right" shall have the meaning given to such term in subsection 15(a)(i).
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"Registration Rights Agreement" shall mean the Registration Rights Agreement
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dated as of August 15, 1996 (as the same may be amended, supplemented or
otherwise modified from time to time) between the Issuer and Lender relating to
the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
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successor federal statute and the rules and regulations of the Commission
thereunder, all as the same may be in effect from time to time.
"Subsidiary" shall mean, as to any Person, a corporation of which shares of
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stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Warrant Agreement
shall refer to a Subsidiary or Subsidiaries of the Issuer.
"Warrant Certificate" shall mean a certificate evidencing one or more
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Warrants, substantially in the form of Exhibit A attached hereto, with such
changes therein as may be required to reflect any adjustments made pursuant to
Section 12.
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"Warrant Holders" shall mean Lender or an Affiliate thereof and such other
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financial institutions which receive Warrants in connection with the syndication
of the Loan and such other Persons to whom Lender or an Affiliate thereof or
such other financial institutions transfers Warrants in compliance with the
terms of this Warrant Agreement, and for purposes of the Registration Rights
Agreement shall include holders of Non-Public Warrant Shares.
"Warrant Office" shall mean the office or agency of the Issuer at which the
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Warrant Register shall be maintained and where the Warrants may be presented for
exercise, exchange, substitution and transfer, which office or agency will be
the office of the Issuer at 0000 Xxxxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000, which office or agency may be changed by the Issuer pursuant to
notice in writing to the Persons named in the Warrant Register as the holders of
the Warrants.
"Warrant Register" shall mean the register, substantially in the form of
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Exhibit B attached hereto, maintained by the Issuer at the Warrant Office.
"Warrant Shares" shall mean the shares of Common Stock or Convertible
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Preferred Stock issued or issuable upon exercise of the Warrants, or Common
Stock issued or issuable upon conversion of the Convertible Preferred Stock, in
each case as the number of such shares may be adjusted from time to time
pursuant to Section 12 and the provisions of the Issuer's Articles of
Incorporation.
"Warrants" shall mean the stock purchase warrants issued pursuant to this
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Warrant Agreement entitling the record holders thereof to purchase from the
Issuer at the Warrant Office an aggregate of 200,000 shares of Common Stock or
Convertible Preferred Stock (at the times, in the percentages and to the extent
provided in Section 6 hereof and subject in each case to adjustment as provided
in Section 12) at the Exercise Price; individually, a "Warrant."
(b) For all purposes of this Warrant Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(i) "Herein", "hereof" and "hereunder" and other words of similar
import refer to this Warrant Agreement as a whole and not to any
particular Section or other subdivision;
(ii) Any uses of the masculine, feminine or neuter gender shall also be
deemed to include any other gender as appropriate;
(iii) The exhibits and schedules to this Warrant Agreement shall be
deemed an integral part of this Warrant Agreement;
(iv) Except as specifically set forth in such representation, each of
the representations and warranties of the Issuer in Section 3
hereof is separate and is not limited, qualified or modified by the
existence, wording or satisfaction of any other representation of
the Issuer in Section 3 or otherwise;
(v) All references herein (in covenants or otherwise) to any action(s)
which are to be taken (or which are prohibited from being taken) by
any Person, the Issuer or any Subsidiary
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shall apply to such Person, the Issuer or such Subsidiary, as the
case may be, whether such action is taken directly or indirectly;
and
(vi) All references herein to actions by the Issuer or any Subsidiary
(including, without limitation, actions denoted by terms such as
"create", "sell", "transfer" or "dispose of") mean such action
whether voluntary or involuntary, by operation of law or otherwise.
Section 2. Issuance of Warrants. The Issuer hereby agrees to issue and
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deliver to Lender or, at the option of Lender, an Affiliate thereof, on the
Closing Date, the Warrants and one or more Warrant Certificates evidencing the
Warrants. No payment shall be required from Lender or its Affiliate in
consideration of its receipt of the Warrants.
Section 3. Representations and Warranties. The Issuer hereby represents and
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warrants to Lender, for the benefit of Lender and any other Warrant Holder, as
follows:
(a) The Issuer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Georgia, has the corporate power
and authority to conduct its business as presently conducted and as intended to
be conducted, has the corporate power and authority to execute and deliver this
Warrant Agreement and the Warrant Certificates, to issue the Warrants and to
perform its obligations under this Warrant Agreement and the Warrant
Certificates, has the corporate power and authority and legal right to own and
lease its properties and is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which it owns or leases real property or in
which the conduct of its business requires such qualification, except where
failure to be so qualified could not be reasonably expected to have a material
adverse effect on the business, properties, financial condition or results of
operations of the Issuer and its Subsidiaries taken as a whole ("Material
Adverse Effect").
(b) The execution, delivery and performance by the Issuer of this Warrant
Agreement and the Warrant Certificates, the issuance of the Warrants and the
issuance of the Warrant Shares upon the exercise of the Warrants and the
issuance of Common Stock upon conversion of the Convertible Preferred Stock have
been duly authorized by all necessary corporate action and do not and will not
violate, or result in a breach of, or constitute a default under, or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
the assets of the Issuer pursuant to, any law, statute, ordinance, rule,
regulation, order or decree of any court, governmental body or regulatory
authority or administrative agency having jurisdiction over the Issuer or its
Subsidiaries or the Issuer's Articles of Incorporation or any contract,
mortgage, loan agreement, note, lease or other instrument binding upon the
Issuer or its Subsidiaries or by which their properties are bound, except any
such violation, breach or default or the creation of any such Lien, charge or
encumbrance, the occurrence of which would not have a Material Adverse Effect.
(c) This Warrant Agreement has been duly executed and delivered by the Issuer
and constitutes a legal, valid, binding and enforceable obligation of the
Issuer. When the Warrants and Warrant Certificates have been issued as
contemplated hereby, (i) the Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations of the Issuer and
(ii) the Warrant Shares, when issued upon exercise of the Warrants in accordance
with the terms hereof, and the Common Stock, when issued upon conversion of the
Convertible Preferred Stock in accordance
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with the terms of the Issuer's Articles of Incorporation relating to the
Convertible Preferred Stock, will be duly authorized, validly issued, fully paid
and nonassessable shares of the Common Stock and Convertible Preferred Stock, as
applicable, with no personal liability attaching to the ownership thereof.
(d) The Issuer has authorized capital stock consisting of 50,000,000 shares
of Common Stock, par value $0.01 per share, of which 6,285,987 shares were
issued and outstanding as of September 25, 1997 and 2,000,000 shares of
Preferred Stock, par value $0.01 per share, none of which are issued and
outstanding. Except as set forth on SCHEDULE I hereto, there are no authorized
options, warrants, subscriptions, rights, convertible or exchangeable securities
or other agreements or plans under which the Issuer may be or become obligated
to issue, sell or transfer shares of its capital stock or other securities. To
the Issuer's best knowledge, there are no voting agreements, voting trusts,
proxies or other agreements or understandings with respect to the voting of any
capital stock of the Issuer or any Subsidiary.
(e) Except as set forth on SCHEDULE I hereto, no holder of securities of the
Issuer has any right to the registration of such securities under the Securities
Act and any applicable state securities law.
(f) The Issuer has filed all proxy statements, reports and other documents
required to be filed by it under the Exchange Act. The Issuer has furnished
Lender with copies of its annual report on Form 10-K for the fiscal years ended
June 30, 1997 and 1996, quarterly reports on Form 10-Q for the periods ended
September 30, 1996, December 31, 1996 and March 31, 1997 and reports on Form 8-
K, or amendments thereto, filed with the Commission on April 4, 1997, August 13,
1997, August 29, 1997, September 22, 1997, October 10, 1997, and October 21,
1997 (collectively, the "SEC Reports"). Each SEC Report was in substantial
compliance with the requirements of its respective form and none of the SEC
Reports, when read cumulatively with all other such SEC Reports issued prior to
the date of issuance of any specific SEC Report, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(g) Each of the Subsidiaries of the Issuer is listed on SCHEDULE II to this
Warrant Agreement. All outstanding shares of capital stock of such Subsidiaries
have been duly authorized and validly issued and are fully paid and
nonassessable and are owned beneficially and of record by the Issuer free and
clear of all Liens, options or claims of any kind. There are no outstanding
options, warrants, subscriptions, rights, convertible securities or other
agreements or plans under which Subsidiary of the Issuer may become obligated to
issue, sell or transfer shares of its capital stock or other securities.
Section 4. Registration, Transfer and Exchange of Certificates.
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(a) The Issuer shall maintain, at the Warrant Office, the Warrant Register
for registration of the Warrants and Warrant Certificates and transfers thereof.
On the Closing Date, the Issuer shall register the Warrants and Warrant
Certificates in the Warrant Register in the name of Lender or an Affiliate
thereof, as the case may be. The Issuer may deem and treat the registered
holders of the Warrant Certificates as the absolute owners thereof and the
Warrants represented thereby
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(notwithstanding any notation of ownership or other writing on the Warrant
Certificates made by any person) for the purpose of any exercise thereof or any
distribution to the holders thereof, and for all other purposes, and the Issuer
shall not be affected by any notice to the contrary.
(b) Subject to Section 14, the Issuer shall register the transfer of any
outstanding Warrants in the Warrant Register upon surrender of the Warrant
Certificates evidencing such Warrants to the Issuer at the Warrant Office,
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to it, duly executed by the registered holder or
holders thereof or by the duly appointed legal representative thereof. Upon any
such registration of transfer, new Warrant Certificates evidencing such
transferred Warrants shall be issued to the transferee and the surrendered
Warrant Certificates shall be canceled. If less than all the Warrants evidenced
by Warrant Certificates surrendered for transfer are to be transferred, new
Warrant Certificates shall be issued to the holder surrendering such Warrant
Certificates evidencing such remaining number of Warrants.
(c) Warrant Certificates may be exchanged at the option of the holders
thereof, when surrendered to the Issuer at the Warrant Office, for another
Warrant Certificate or other Warrant Certificates of like tenor and representing
in the aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange except for any
tax or other governmental charge imposed in connection therewith which shall be
paid by the Warrant Holder. Except as provided in subsection 14(b), each Warrant
Certificate issued upon transfer or exchange shall bear the legend set forth in
subsection 14(b) if the Warrant Certificate presented for transfer or exchange
bore such legend.
Section 5. Mutilated or Missing Warrant Certificates. If any Warrant
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Certificate shall be mutilated, lost, stolen or destroyed, the Issuer shall
issue, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent number of Warrants, but only upon receipt of evidence
satisfactory to the Issuer of such loss, theft or destruction of such Warrant
Certificate and, if requested, indemnity satisfactory to it. The Issuer
acknowledges that a written indemnity by Lender or, if an Affiliate of Lender is
the holder of such lost, stolen or destroyed Warrant Certificate, by such
Affiliate shall be satisfactory to the Issuer for such purpose. No service
charge shall be made for any such substitution, but all expenses and reasonable
charges associated with procuring such indemnity and all stamp, tax and other
governmental duties that may be imposed in relation thereto shall be borne by
the holder of such Warrant Certificate. Each Warrant Certificate issued in any
such substitution shall bear the legend set forth in subsection 14(b) if the
Warrant Certificate for which such substitution was made bore such legend.
Section 6. Duration and Exercise of Warrants.
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(a) The Warrants evidenced by a Warrant Certificate shall be exercisable in
whole or in part by the registered holder thereof on any Business Day after
October 30, 1997 and on or before 5:00 P.M., Atlanta time, on the Expiration
Date.
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(b) Subject to the provisions of this Warrant Agreement, the Warrants
evidenced by a Warrant Certificate may be exercised by the registered holder
thereof by the surrender of the Warrant Certificate evidencing the Warrants to
be exercised, with the form of election to purchase on the reverse thereof or
attached thereto duly completed and signed, to the Issuer at the Warrant Office,
and upon payment of the aggregate Exercise Price for the number of Warrants
being exercised in lawful money of the United States of America and/or by
surrender to the Issuer of shares of Common Stock then owned by the Warrant
Holder and valued for purposes hereof at their Current Market Price Per Share at
the time of exercise. In lieu of exercising Warrants pursuant to the immediately
preceding sentence, the Warrant Holder shall have the right to require the
Issuer to convert the Warrants, in whole or in part and at any time or times
(the "Conversion Right"), into Warrant Shares, by surrendering to the Issuer the
Warrant Certificate evidencing the Warrants to be converted, accompanied by the
form of conversion notice on the reverse thereof or attached thereto which has
been duly completed and signed. Upon exercise of the Conversion Right, the
Issuer shall deliver to the Warrant Holder (without payment by the Warrant
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Holder of any Exercise Price) that number of Warrant Shares which is equal to
the quotient obtained by dividing (x) the value of the number of Warrants being
converted at the time the Conversion Right is exercised (determined by
subtracting the aggregate Exercise Price for all such Warrants immediately prior
to the exercise of the Conversion Right from the aggregate current market price
(determined on the basis of the Current Market Price Per Share) of that number
of Warrant Shares purchasable upon exercise of such Warrants immediately prior
to the exercise of the Conversion Right (taking into account all applicable
adjustments pursuant to Section 12, including without limitation any adjustments
which would be made pursuant to subdivision (7) of subsection 12(c) upon
exercise of the Warrants being converted) by (y) the Current Market Price Per
Share of one share of Common Stock (or the number of shares of Common Stock into
which one share of Convertible Preferred Stock can be converted if the Warrants
are being converted into Convertible Preferred Stock) immediately prior to the
exercise of the Conversion Right. Any references in this Warrant Agreement to
the "exercise" of any Warrants, and the use of the term "exercise" herein, shall
be deemed to include (without limitation) any exercise of the Conversion Right.
Any exercise of a Warrant hereunder may be made subject to the satisfaction of
one or more conditions (including, without limitation, the consummation of a
sale of the capital stock of the Issuer or a merger or other business
combination involving the Issuer) which are set forth in a writing which is made
a part of or is appended to the aforementioned form of election to purchase or
conversion notice (as the case may be) by the Warrant Holder.
(c) Upon exercise of any Warrants hereunder, the Issuer shall issue and cause
to be delivered to or upon the written order of the registered holders of such
Warrants and in such name or names as such registered holders may designate, a
certificate for the Warrant Share or Warrant Shares issued upon such exercise of
such Warrants. Any Persons so designated to be named therein shall be deemed to
have become holders of record of such Warrant Share or Warrant Shares as of the
date of exercise of such Warrants.
(d) If less than all of the Warrants evidenced by a Warrant Certificate are
exercised at any time, a new Warrant Certificate or Certificates shall be issued
for the remaining number of Warrants evidenced by such Warrant Certificate. Each
new Warrant Certificate so issued shall bear the legend set forth in subsection
14(b) if the Warrant Certificate presented in connection with partial exercise
thereof bore such legend unless the transfer restrictions referred to in such
legend are no longer
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applicable pursuant to subsection 14(d). All Warrant Certificates surrendered
upon exercise of Warrants shall be canceled.
(e) At the election of a Warrant Holder made at the time of exercise, the
Warrant Shares to be issued upon such exercise may be either Common Stock or
Convertible Preferred Stock (or a combination thereof), provided that the
Warrant Holder shall not have the right to have issued to it upon exercise
Common Stock which, when aggregated with the shares of Common Stock (other than
shares of Non-Attributable Stock) previously issued as Warrant Shares or issued
in conversion of Convertible Preferred Stock previously issued as Warrant
Shares, will exceed 4.99% of the then outstanding Common Stock unless such
Warrant Holder certifies that such Warrants have previously been transferred
either (i) in a widely dispersed public offering of the Warrants, or (ii) in a
private placement in which no purchaser, individually or in concert with others,
would have acquired more than 2% of the outstanding Common Stock if the Warrants
so transferred had been exercised for Common Stock, or (iii) in compliance with
Rule 144 (or any rule which is a successor thereto) of the Securities Act, or
(iv) into the secondary market in a market transaction executed through a
registered broker-dealer in blocks of no more than 2.0% of the shares
outstanding of the Issuer in any six month period. In the event that the
preceding sentence of this paragraph (e) prohibits a Warrant Holder from
receiving Common Stock upon the exercise of its Warrants, the Issuer agrees to
designate the Convertible Preferred Stock as a series of preferred stock and the
Warrant Holder shall receive Convertible Preferred Stock upon the exercise of
Warrants to the extent the Warrant Holder's holdings of Common Stock, when
aggregated pursuant to the first sentence, exceed 4.99% of outstanding Common
Stock. In the event two or more Warrant Holders attempt to exercise Warrants for
Common Stock simultaneously and, if permitted, such exercises would cause the
4.99% limitation to be exceeded, then the Issuer shall notify the Warrant
Holders who had attempted to exercise Warrants for Common Stock and each such
Warrant Holder shall be entitled to exercise for Common Stock only such number
of Warrants as shall equal the product of (i) the number of Warrants the Warrant
Holder sought to exercise for Common Stock times (ii) a fraction, the numerator
of which is the maximum number of Warrants which may be exercised for Common
Stock without exceeding the 4.99% limitation and the denominator of which is the
maximum number of Warrants sought to be exercised for Common Stock by such
Warrant Holders.
(f) Notwithstanding the foregoing provisions of this Section 6, in no event
shall any Warrant be exercisable for shares of Common Stock or Convertible
Preferred Stock which, when aggregated with all other Warrant Shares then held
by Lender or its Affiliates, would, upon issuance, represent in excess of 24.99%
of the Equity of the Issuer unless such shares, when issued, would constitute
Non-Attributable Stock.
Section 7. No Fractional Shares. The Issuer shall not be required to issue
---------------------
fractional shares of Common Stock or Convertible Preferred Stock upon exercise
of the Warrants but shall pay for any such fraction of a share an amount in cash
equal to the then Current Market Price Per Share of one share of Common Stock
multiplied by such fraction.
Section 8. Payment of Taxes. The Issuer will pay all taxes attributable to
----------------
the initial issuance of Warrant Shares upon the exercise of the Warrants,
provided that the Issuer shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue of any Warrant
Certificate or any certificate for Warrant Shares in a name other than that of
the registered
10
holder of a Warrant Certificate surrendered upon the exercise of a Warrant, and
the Issuer shall not be required to issue or deliver such certificate unless or
until the person or persons requesting the issuance thereof shall have paid to
the Issuer the amount of such tax or shall have established to the satisfaction
of the Issuer that such tax has been paid.
Section 9. Stockholder Rights.
------------------
(a) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as a stockholder in respect of the
meetings of stockholders or the election of directors of the Issuer or any other
matter, or any rights whatsoever as a stockholder of the Issuer.
(b) Nothing contained in this Warrant Agreement or in any of the Warrant
Certificates shall be construed as imposing any obligation on the registered
holders thereof to purchase any securities or as imposing any liabilities on
such holders as stockholders of the Issuer, whether such obligation or
liabilities are asserted by the Issuer or by creditors of the Issuer.
Section 10. Reservation and Issuance of Warrant Shares; Certain Corporate
-------------------------------------------------------------
Actions.
-------
(a) The Issuer will at all times have authorized, and reserve and keep
available, free from preemptive rights, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon the exercise of the Warrants
and conversion of the Convertible Preferred Stock, the number of shares of
Common Stock and Convertible Preferred Stock deliverable upon exercise of all
outstanding Warrants and conversion of Convertible Preferred Stock.
(b) The Issuer covenants that all Warrant Shares will, upon issuance in
accordance with the terms of this Warrant Agreement and the Issuer's Articles of
Incorporation, be fully paid and nonassessable and free from all taxes (except
as otherwise contemplated in Section 8 hereof) with respect to the issuance
thereof and from all liens, charges and security interests (other than any
created by or on behalf of any Warrant Holder).
(c) So long as any Warrants are outstanding, the Issuer shall make no
amendment of its Articles of Incorporation which would affect the authorization,
dividend, put, call, voting, liquidation, conversion, exchange or notice rights
or additional remedies provisions of the Convertible Preferred Stock without the
written consent of the holders of a majority of the outstanding Warrants and the
outstanding shares of Convertible Preferred Stock, voting as a single group,
and, until the Credit Agreement is terminated and all Obligations (as defined
therein) have been paid in full, the Lender.
(d) The Issuer will not, by amendment of its Articles of Incorporation or
through any consolidation, merger, reorganization, transfer of assets,
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 of this Warrant
Agreement or the Warrant Certificates. Without limiting the generality of the
foregoing, the Issuer (a) will not permit the par value or the determined or
stated value of any shares of the Issuer's Common Stock or Convertible Preferred
Stock receivable upon the exercise of the Warrants to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Issuer may validly and legally issue fully paid
and
11
nonassessable shares of the Issuer's Common Stock or Convertible Preferred
Stock (as the case may be), upon the exercise of the Warrants from time to time
outstanding, including, without limitation, amending its Articles of
Incorporation to reduce or eliminate the par value of the Common Stock, (c) will
not take any action which results in an adjustment in the number of Warrant
Shares obtainable upon the exercise of any Warrants if the total number of
shares of the Issuer's Common Stock (or other securities) issuable after such
action upon the exercise of all of the then-outstanding Warrants would exceed
the total number of shares of the Issuer's Common Stock (or other securities)
then authorized by the Issuer's Articles of Incorporation and available for
purpose of issuance upon such exercise, (d) will not have any authorized Common
Stock other than its existing authorized Common Stock, and (e) will not amend
its Articles of Incorporation to change any terms of its Common Stock.
(e) If the Issuer proposes, prior to the Expiration Date, to enter into a
transaction that would constitute a Non-Surviving Combination, if consummated,
the Issuer shall give written notice thereof to each of the Warrant Holders
promptly after an agreement is reached with respect to the Non-Surviving
Combination but in any event no less than thirty (30) days prior to the
consummation thereof. Such notice shall describe the proposed transaction in
reasonable detail and specify the consideration to be received by the Warrant
Holders in respect thereto and/or any adjustment to be made to the number of
Warrant Shares obtainable upon the exercise of the Warrants as a result of such
Non-Surviving Combination. The Issuer shall also furnish to each Warrant Holder
all notices and materials furnished to its stockholders in connection with such
transaction as and when such notices and materials are furnished to its
stockholders. The Issuer agrees that it will not enter into an agreement
providing for a Non-Surviving Combination with a publicly-held corporation or
effect any such Non-Surviving Combination unless the party to such transaction
that is the surviving entity thereof or the purchaser or purchasers of
substantially all of the assets of the Issuer (the "Survivor") (i) shall be
obligated to distribute or pay to each Warrant Holder, upon payment of the
Exercise Price prior to the Expiration Date, the number of shares of stock or
other securities or other property (including cash) of the Survivor that would
be distributable or payable on account of the Warrant Shares if such Warrant
Holder's Warrants had been exercised immediately prior to such Non-Surviving
Combination (or, if applicable, the record date therefor), as such number of
shares or other securities or other property may be adjusted pursuant to Section
12 of this Warrant Agreement and (ii) shall assume by written instrument all of
the obligations of the Issuer under this Warrant Agreement. If the Survivor to
such Non-Surviving Combination is not a publicly-held corporation or if the
holders of Common Stock of the Issuer receive solely cash in such Non-Surviving
Combination, the Warrants shall terminate upon the closing of such Non-Surviving
Combination if the agreement for such Non-Surviving Combination so provides.
(f) The Issuer will take no action with respect to its capital stock
(including without limitation any purchase of its shares or any combination of
shares or reverse stock split and elimination of fractional shares) which would
cause the sum of the number of Warrant Shares theretofore issued, if any, plus
the number of Warrant Shares then issuable in respect of Warrants then
outstanding to exceed 4.99% of the aggregate issued and outstanding shares of
the Issuer after giving effect to such action, unless in any such case the
holders of a majority of the outstanding Warrants and Warrant Shares shall have
given their prior written consent to such action.
Section 11. Obtaining of Governmental Approvals and Stock Exchange Listings.
---------------------------------------------------------------
Subject, in the case of any registration under the Securities Act, to the
limitations set forth in the Registration
12
Rights Agreement, the Issuer will, at its own expense, from time to time use its
best efforts to take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities which are or become requisite in connection with the issuance,
sale, transfer and delivery of the Warrant Certificates and the exercise of the
Warrants and the issuance, sale, transfer and delivery of the Warrant Shares and
all action which may be necessary so that such Warrant Shares, immediately upon
their issuance upon the exercise of Warrants and conversion of the Convertible
Preferred Stock, will be listed on each securities exchange, if any, on which
the Common Stock and/or Convertible Preferred Stock is then listed.
Section 12. Adjustment of Number of Warrant Shares Purchasable.
--------------------------------------------------
(a) The number of shares of Common Stock or Convertible Preferred Stock
purchasable upon the exercise of each Warrant is subject to adjustment from time
to time upon the occurrence of any of the events enumerated in this Section 12
at any time or from time to time after the date hereof and prior to the
Expiration Date.
(b) If the Issuer shall (i) declare a dividend on the Common Stock or
Convertible Preferred Stock in shares of its capital stock (whether shares of
Common Stock, Convertible Preferred Stock or of capital stock of any other
class), (ii) split or subdivide the outstanding Common Stock or Convertible
Preferred Stock or (iii) combine the outstanding Common Stock or Convertible
Preferred Stock into a smaller number of shares, each Warrant outstanding at the
time of the record date for such dividend or of the effective date of such
split, subdivision or combination shall thereafter entitle the holder of such
Warrant to receive the aggregate number and kind of shares which, if such
Warrant had been exercised immediately prior to such time, such holder would
have owned or have become entitled to receive by virtue of such dividend,
subdivision or combination. Such adjustment shall be made successively whenever
any event listed above shall occur and, if a dividend which is declared is not
paid, each Warrant outstanding shall again entitle the holder thereof to receive
upon exercise the number of shares of Common Stock or Convertible Preferred
Stock as would have been the case had such dividend not been declared. If at any
time, as a result of an adjustment made pursuant to this subsection 12(b), the
holder of any Warrant thereafter exercised shall become entitled to receive any
shares of capital stock of the Issuer other than shares of Common Stock and
Convertible Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant 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 Warrant Shares contained in this Section 12, and
the provisions of this Warrant Agreement with respect to the Warrant Shares
shall apply on like terms to such other shares.
(c) Until the Credit Agreement is terminated and all Obligations (as defined
therein) have been paid in full[, and for a period of six (6) months
thereafter,] if the Issuer shall issue any shares of Common Stock without
consideration or at a price per share less than the Current Market Price Per
Share of the Common Stock as at the date of such issuance, including any shares
of Common Stock deemed to have been issued pursuant to this subsection 12(c) but
excluding any Exempted Securities, each Warrant outstanding on the date of such
issuance shall thereafter entitle the holder of such Warrant to receive a number
of shares of Common Stock or Convertible Preferred Stock equal to the product of
(i) the number of shares of Common Stock or Convertible Preferred Stock to which
the
13
holder of such Warrant was entitled immediately prior to such issuance and
(ii) the quotient that is obtained by dividing:
(X) the total number of shares of Common Stock outstanding
immediately after such issuance (including any shares of Common
Stock deemed to have been issued pursuant to this subsection 12(c))
by
(Y) the sum of
(i) the number of shares of Common Stock outstanding immediately
prior to such issuance plus
(ii) the number of shares of Common Stock which the aggregate
consideration received (or deemed to be received) by the Issuer
upon such issuance would purchase at such Current Market Price
Per Share.
For purposes of any adjustment of the number of shares of Common Stock or
Convertible Preferred Stock obtainable upon the exercise of any Warrants
pursuant to this subsection 12(c), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash, the
consideration therefor shall be deemed to be the amount of cash paid therefor,
without deducting therefrom any discounts, commissions or other expenses
allowed, paid or incurred by the Issuer in connection with the issuance or sale
thereof.
(2) In the case of the issuance of Common Stock for a consideration part
or all of which shall be in a form other than cash, the value of such
consideration shall be as determined by agreement between the holders of a
majority of the outstanding shares of Convertible Preferred Stock and the
outstanding Warrants, voting as a single group, and the Issuer or, in the
absence of such an agreement, by an independent investment banking firm or an
independent appraiser engaged by the Issuer and reasonably acceptable to the
holders of a majority of the Warrants outstanding (in either case the cost of
which engagement will be borne by the Issuer); provided, however, that if the
shares of Common Stock are issued in an acquisition (whether by stock purchase,
merger, acquisition of assets or otherwise) of another business with a value
determined by the Board of Directors of the Issuer in good faith to be at least
equal in value to the Current Market Price Per Share multiplied by the number of
shares issued in connection with such acquisition, such determination by the
Board of Directors of the Issuer shall be conclusive. In the case of any
issuance of Common Stock upon the exercise of any warrants, options or other
rights or the conversion or exchange of any convertible or exchangeable
securities, the aggregate consideration received by the Issuer upon such
issuance shall be deemed to include the consideration, if any, received by the
Issuer as consideration for the issuance of such warrants, options or rights or
such convertible or exchangeable securities (excluding any cash received on
account of accrued interest or accrued dividends) and, in the case of any
conversion or exchange of securities, shall not include any amount attributable
to the converted or exchanged securities. If any warrant, option or right to
purchase or subscribe for any Common Stock or convertible securities is
14
issued in connection with the issuance or sale of other securities by the
Issuer, together comprising one integrated transaction in which no specific
consideration is allocated to such warrant, option or right, such warrant,
option or right shall be deemed to have been issued for no consideration.
(3) If (a) the Issuer shall issue warrants or options to purchase or
rights to subscribe for Common Stock other than Exempted Securities, and (b) the
consideration, if any, received by the Issuer as consideration for the issuance
of such warrants, options or rights plus the minimum aggregate consideration
required to be paid upon exercise of such warrants, options or rights (the
amount of such consideration to be determined in each case as set forth above)
shall be less than the product of the Current Market Price Per Share on the date
of such issuance multiplied by the maximum number of shares of Common Stock
deliverable upon such exercise, then such aggregate maximum number of shares
shall be deemed to have been issued at the time such warrants, options or rights
were issued and for a consideration equal to such minimum aggregate
consideration.
(4) If (a) the Issuer shall issue (i) securities (other than Exempted
Securities) which are by their terms convertible into or exchangeable for Common
Stock or (ii) warrants or options to purchase or rights to subscribe for any
such convertible or exchangeable securities, and (b) the consideration received
by the Issuer for any such securities or any such options or rights (excluding
any cash received on account of accrued interest or accrued dividends) plus the
minimum aggregate consideration (not including any amount attributable to the
converted or exchanged securities), if any, to be received by the Issuer upon
the conversion or exchange of such securities or upon the exercise of such
options and the conversion or exchange of the securities received upon such
exercise, as the case may be (the amount of such consideration to be determined
in each case as set forth above) shall be less than the product of the Current
Market Price Per Share on the date of such issuance multiplied by the maximum
number of shares deliverable upon conversion of or in exchange for such
convertible or exchangeable securities or upon the exercise of any such options
and subsequent conversion or exchanges thereof, then such aggregate maximum
number of shares shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to such minimum aggregate consideration.
(5) Upon any reduction in the exercise price of Common Stock deliverable
upon exercise of any of such warrants, options or rights as are referred to in
this subsection 12(c) or any reduction in the amount of consideration required
to be paid or the conversion or exchange price or ratio payable upon conversion
or exchange of any of such convertible or exchangeable securities, in each case
other than a change resulting from any antidilution provisions thereof which are
no more favorable in such instance to the holder thereof than the provisions of
this Section 12 are to the Warrant Holders, (i) if an adjustment shall
previously have been made pursuant to this subsection 12(c) in respect of such
warrants, options or rights or such securities, the number of shares of Common
Stock or Convertible Preferred Stock obtainable upon the exercise of the
Warrants shall forthwith be readjusted to such number of shares as would have
obtained had the adjustment made upon the issuance of such warrants, options,
rights or securities as have not been exercised, converted or exchanged prior to
such change (or any prior adjustment made pursuant to this subdivision (5)) been
made upon the basis of such change, and (ii) if an adjustment has not previously
been made pursuant to this subsection 12(c) in respect of such options or rights
or such securities, then such warrants, options or rights or such securities
shall be deemed to have been granted or issued (as the case may be) for purposes
of this subsection 12(c) as of the date of such reduction, and any adjustments
required to be
15
made pursuant to this subsection 12(c) as a result of such deemed grant or
issuance shall forthwith be made effective as of such date.
(6) All grants or issuances of options or other rights to acquire shares
of Common Stock (or securities convertible into or exchangeable for shares of
Common Stock) issued to any officer, director or employee of the Issuer or of
any Subsidiary of the Issuer or to members of the immediate family of any of
them ("Management Options"), and all issuances of shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock) under or
pursuant to such Management Options shall, for purposes of subsection 12(c), be
deemed to be granted and issued for no consideration except to the extent cash
or notes are paid therefor (or such officer, director or employee delivers
securities of the Issuer in a "cashless exercise" having a value, at the Current
Market Price Per Share, equal to the amount due upon exercise thereunder).
(7) If and when any Warrants shall be exercised as set forth herein, (i)
if there shall be any outstanding warrants (other than the Warrants) or options
to purchase or rights to subscribe for shares of Common Stock or any outstanding
warrants (other than the Warrants) or options to purchase or rights to subscribe
for or securities which are by their terms convertible into or exchangeable for
Common Stock which in each case would, if issued on the date of such Warrant
exercise, result in an adjustment pursuant to either of subdivisions (3) or (4)
of this subsection 12(c), then such warrants or options shall be deemed to have
been exercised in full immediately prior to the exercise of such Warrants for a
consideration equal to the consideration, if any, received by the Issuer upon
the issuance of such options or rights plus the minimum aggregate consideration
required to be paid upon exercise of such options or rights (the amount of such
consideration to be determined in each case as set forth above), and (ii) if
there shall be any outstanding securities which are by their terms convertible
into or exchangeable for Common Stock at the time of such warrant exercise or at
any time thereafter which in each case would, if issued on the date of such
Warrant exercise, result in an adjustment pursuant to subdivision (4) of this
subsection, then such securities shall be deemed to have been converted or
exchanged in full immediately prior to the exercise of such Warrants for a
consideration equal to the consideration received by the Issuer for any such
securities plus the minimum aggregate consideration (not including any amount
attributable to the converted or exchanged securities), if any, required to be
paid upon the conversion or exchange of such securities (the amount of such
consideration to be determined in each case as set forth above); provided that
any adjustment made pursuant to this subdivision (7) of subsection 12(c) shall
only be made with respect to such Warrants as are then being exercised.
(8) Shares of Common Stock owned by or held for the account of the
Issuer or any majority-owned Subsidiary shall not be deemed outstanding for the
purpose of any computation made pursuant to this subsection 12(c). Any
adjustment required to be made pursuant to this subsection 12(c) shall be made
successively whenever the date of issuance or deemed issuance of any such Common
Stock or any such options, rights or convertible or exchangeable securities is
fixed (which date of issuance shall be the record date for such issuance if a
record date therefor is fixed) and, in the event that (A) such shares or
options, rights, warrants or convertible or exchangeable securities are not so
issued, or (B) any such option, right, warrant or convertible or exchangeable
security (or the conversion or exchange right thereunder) expires according to
its terms without having been exercised, converted or exchanged, each Warrant
outstanding shall again, as of the date of cancellation of such issuance in the
case of clause (A) above and the date of such expiration in the case of clause
(B) above,
16
entitle the holder thereof to receive upon exercise the number of shares of
Common Stock or Convertible Preferred Stock as would have been the case had the
date of such issuance of such unissued options, rights, warrants or convertible
or exchangeable securities not been fixed or such expired options, rights,
warrants or convertible or exchangeable securities not been issued, as the case
may be.
(d) In case the Issuer shall make a distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Issuer is the continuing corporation) of evidences of its
indebtedness, cash or other assets, each Warrant outstanding on the date of such
distribution shall thereafter entitle the holder of such Warrant to receive a
number of shares of Common Stock and Convertible Preferred Stock equal to the
product of (i) the number of shares of Common Stock and Convertible Preferred
Stock to which the holder of such Warrant was entitled immediately prior to such
date of distribution and (ii) a fraction of which the numerator shall be the
then Current Market Price Per Share of Common Stock on such date and of which
the denominator shall be the then Current Market Price Per Share of Common Stock
on such date less the fair market value, as determined by agreement between the
holders of a majority of the Warrants and the Issuer or, in the absence of such
an agreement, by an independent investment banking firm or an independent
appraiser engaged by the Issuer and reasonably acceptable to the holders of a
majority of the Warrants (in either case the cost of which engagement will be
borne by the Issuer) of the portion of the assets or evidences of indebtedness,
or the portion of the cash, so to be distributed applicable to one share of
then-outstanding Common Stock. Such adjustment shall be made successively
whenever a date for such distribution is fixed (which date of distribution shall
be the record date for such distribution if a record date therefor is fixed)
and, if such distribution is not so made, each Warrant outstanding shall again
entitle the holder thereof to receive upon exercise the number of shares of
Common Stock and Convertible Preferred Stock as would have been the case had
such date of distribution not been fixed.
(e) In the event of any capital reorganization of the Issuer, or of any
reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock), or in case of the consolidation of the
Issuer with or the merger of the Issuer with or into any other publicly-held
corporation or of the sale of the properties and assets of the Issuer as, or
substantially as, an entirety to any other publicly-held corporation, each
Warrant shall after such capital reorganization, reclassification of Common
Stock, consolidation, merger or sale be exercisable upon the terms and
conditions specified in this Warrant Agreement, for the number of shares of
stock or other securities or assets to which a holder of the number of Warrant
Shares purchasable (at the time of such capital reorganization, reclassification
of Common Stock, consolidation, merger or sale) upon exercise of such Warrant
would have been entitled upon such capital reorganization, reclassification of
Common Stock, consolidation, merger or sale; and in any such case, if necessary,
the provisions set forth in this Section 12 with respect to the rights
thereafter of the holders of the Warrants shall be appropriately adjusted so as
to be applicable, as nearly as may reasonably be, to any shares of stock or
other securities or assets thereafter deliverable on the exercise of the
Warrants.
(f) No adjustment in the number of Warrant Shares purchasable shall be
required unless such adjustment would require an increase or decrease in the
aggregate number of Warrant Shares purchasable of at least 1%, provided that any
adjustments which by reason of this subsection 12(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
17
All calculations under this Section 12 shall be made to the nearest cent or to
the nearest hundredth of a share, as the case may be.
(g) Irrespective of any adjustments in the number or kind of shares
purchasable upon the exercise of the Warrant, Warrant Certificates theretofore
or thereafter issued may continue to express the same number and kind of shares
as are stated on the Warrant Certificates initially issuable pursuant to this
Warrant Agreement.
(h) If any question shall at any time arise with respect to the number of
Warrant Shares purchasable following any adjustment pursuant to this Section 12,
such question shall be determined by agreement between the holders of a majority
of the Warrants and the outstanding shares of Convertible Preferred Stock,
voting as a single group, and the Issuer or, in the absence of such an
agreement, by an independent investment banking firm or an independent appraiser
engaged by the Issuer (in either case the cost of which engagement will be borne
by the Issuer) and reasonably acceptable to the Issuer and the holders of a
majority of Warrants and such determination shall be binding upon the Issuer and
the holders of the Warrants.
(i) Anything in this Section 12 to the contrary notwithstanding:
(1) the Issuer shall be entitled to make such increases in the number of
Warrant Shares purchasable upon the exercise of each Warrant, in addition to
those adjustments required by this Section 12, as it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision
of the Common Stock, or any issuance wholly for cash or any shares of Common
Stock at less than the Current Market Price Per Share, or any issuance wholly
for cash or shares of Common Stock or securities which by their terms are
convertible into or exchangeable for shares of Common Stock or any stock
dividend, or any issuance of rights, options or warrants referred to
hereinabove in this Section 12, hereinafter made by the Issuer to the holders
of its Common Stock shall not be taxable to them; and
(2) no adjustment in the number of Warrant Shares purchasable shall be
required in the event the Issuer pays a cash dividend to holders of Common
Stock and/or Convertible Preferred Stock; provided that the Issuer also pays a
cash dividend to all holders of Warrants which dividend shall be calculated as
if the Warrants had been exercised.
Section 13. Notices to Warrant Holders; Notices of Issuances and Dividends.
--------------------------------------------------------------
(a) Upon any adjustment of the number of Warrant Shares purchasable upon
exercise of a Warrant pursuant to Section 12, the Issuer shall promptly but in
any event within 20 days thereafter, cause to be given to each of the registered
holders of the Warrants at its address appearing on the Warrant Register by
registered mail, postage prepaid, return receipt requested a certificate signed
by its chairman, president or chief financial officer setting forth the number
of Warrant Shares purchasable upon exercise of a Warrant as so adjusted and
describing in reasonable detail the facts accounting for such adjustment and the
method of calculation used. Where appropriate, such certificate may be given in
advance and included as a part of the notice required to be mailed under the
other provisions of this Section 13.
18
(b) In the event:
(i) that the Issuer shall authorize the issuance to all holders of
Common Stock or Convertible Preferred Stock of rights or warrants to subscribe
for or purchase capital stock of the Issuer or of any other subscription
rights or warrants; or
(ii) that the Issuer shall authorize the distribution to all holders of
Common Stock or Convertible Preferred Stock of evidences of its indebtedness
or assets (including, without limitation cash dividends or cash distributions
payable out of consolidated earnings or earned surplus or dividends payable in
Common Stock or Convertible Preferred Stock); or
(iii) of any consolidation or merger to which the Issuer is a party and
for which approval of any stockholders of the Issuer is required, or of the
conveyance or transfer of the properties and assets of the Issuer
substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (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); or
(iv) of the voluntary or involuntary dissolution, liquidation or winding
up of the Issuer; or
(v) that the Issuer proposes to take any other action which would
require an adjustment in the number of Warrant Shares or other securities or
assets to which each Warrant Holder is entitled pursuant to Section 12;
then the Issuer shall cause to be given to each of the registered holders of the
Warrants at its address appearing on the Warrant Register at least 20 calendar
days prior to the applicable record date, if any, hereinafter specified, or, if
no such record date is specified, 20 calendar days prior to the taking of any
action referred to in clauses (i) through (v) above, by registered mail, postage
prepaid, return receipt requested, a written notice stating (i) the date as of
which the holders of record of Common Stock or Convertible Preferred Stock to be
entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, or (iii) the date on which such other action is to be
effected, and the date as of which it is expected that holders of record of
Common Stock or Convertible Preferred Stock shall be entitled to exchange their
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up or other action. The failure to give the notice
required by this Section 13 or any defect therein shall not affect the legality
or validity of any distribution, right, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up or other action
referred to above, or the vote upon any such action.
(c) Prior to the expiration or exercise of all outstanding Warrants, the
Issuer shall furnish to each Warrant Holder:
(i) as soon as available, but in any event within 95 days after the end
of each fiscal year of the Issuer, either (A) a copy of the Issuer's Annual
Report on Form 10-K (or any
19
successor form) and any documents incorporated by reference into such form for
the prior fiscal year, as filed with the Commission under the Exchange Act, or
(B) a copy of the consolidated balance sheet of the Issuer and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statement of income and retained earnings and of cash flow for
such year, setting forth in each case in comparative form the figures for the
previous year certified by certified independent public accountants not
unacceptable to Lender;
(ii) as soon as available but in any event not later than 50 days after
the end of each of the first three quarterly periods of each fiscal year of
the Issuer, either (A) a copy of the Issuer's Quarterly Report on Form 10-Q
(or any successor form) for the preceding fiscal quarter, as filed with the
Commission under the Exchange Act, or (B) the unaudited consolidated balance
sheet of the Issuer and its consolidated Subsidiaries as at the end of each
such quarter and the related unaudited consolidated statements of income and
retained earnings and of cash flow of the Issuer and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through such
date setting forth in each case in comparative form the figures for the same
period of the previous fiscal year, reviewed by independent certified public
accountants and certified by the chief financial or accounting officer as
being fairly stated in all material respects (subject to normal year-end audit
adjustments); and
(iii) promptly after the sending or filing thereof, as the case may be,
copies of any reports, certificates, projections, definitive proxy statements
or financial statements which Issuer sends to its shareholders and copies of
any regular periodic and special reports or registration statements which
Issuer files with the Commission (or any governmental agency substituted
therefor), including, but not limited to, any report or registration statement
which Issuer files with any national securities exchange;
(iv) no later than October 31 of each year, a certificate of the
chairman, president or chief financial officer of the Issuer setting forth the
number of Warrant Shares purchasable upon exercise of a Warrant as of the end
of the preceding fiscal year and a description in reasonable detail of any
adjustments in such number during the preceding fiscal year;
all such financial statements to be prepared in reasonable detail and in
accordance with generally accepted accounting principles applied consistently
throughout the periods reflected therein (except as permitted by the Commission
or approved by such accountants and officer and disclosed therein). So long as
the Credit Agreement remains in effect, compliance by the Issuer with the
provisions of Section 6.1 thereof shall be deemed to be compliance with
subsections 13(c)(i) and 13(c)(ii).
Section 14. Restrictions on Transfer.
------------------------
(a) Each of Lender and its Affiliates who are issued Warrants pursuant to
this Agreement (i) represents that it is acquiring the Warrants for its own
account for investment and not with a view to any distribution or public
offering within the meaning of the Securities Act, except in any case pursuant
to the registration of such Warrants or Warrant Shares under the Securities Act
or pursuant to a valid exemption from such registration requirement, (ii)
acknowledges that the Warrants and the Warrant Shares issuable upon exercise
thereof have not been registered under the Securities Act and (iii) agrees that
it will not sell or otherwise transfer any of its Warrants or Warrant Shares
except upon the terms
20
and conditions specified herein and that it will cause any transferee thereof to
agree to take and hold the same subject to the terms and conditions specified
herein, provided that the Warrant Holders may sell the Warrants or the Warrant
Shares purchased upon exercise of the Warrants and issued on conversion of the
Convertible Preferred Stock in one or more private transactions not requiring
registration under the Securities Act, subject to the requirement of the
issuance of a legal opinion with respect thereto as provided in subsection 14(d)
hereof.
(b) Except as provided in subsection 14(d) hereof, each Warrant Certificate
and each certificate for the Warrant Shares issued to Lender or an Affiliate
thereof or to a subsequent transferee thereof pursuant to subsection 14(c) shall
include a legend in substantially the following form (with such changes therein
as may be appropriate to reflect whether such legend refers to Warrants or
Warrant Shares), provided that such legend shall not be required if such
transfer is being made in connection with a sale which is exempt from
registration pursuant to Rule 144 under the Securities Act or if the opinion of
counsel referred to in subsection 14(c) is to the further effect that neither
such legend nor the restrictions on transfer in this Section 14 are required in
order to ensure compliance with the Securities Act:
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS
AND SHARES MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED
IN AND ARE SUBJECT TO OTHER PROVISIONS OF THE WARRANT AGREEMENT, DATED AS OF
OCTOBER 30, 1997, BETWEEN THE ISSUER AND FIRST UNION NATIONAL BANK, A COMPLETE
AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE
OF THE ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
(c) Prior to or promptly after any assignment, transfer or sale of any
Warrant or any Warrant Shares (other than a transfer among Lender and/or its
Affiliates), the holder thereof shall give written notice to the Issuer of such
holder's intention to effect such assignment, transfer or sale, which notice
shall set forth the date of such proposed assignment, transfer or sale, the
identity of the proposed transferee and, if it is the case, that the proposed
transferee is an Affiliate of the holder. Each holder wishing to effect such a
transfer of any Warrant or Warrant Shares shall also furnish to the Issuer an
agreement by the transferee thereof that it is taking and holding the same
subject to the terms and conditions specified herein and, unless the transferee
is an Affiliate of such holder, a written opinion of such holder's counsel, in
form and substance reasonably satisfactory to the Issuer, to the effect that the
proposed transfer may be effected without registration under the Securities Act.
(d) The restrictions set forth in this Section 14 shall terminate and cease
to be effective with respect to any Warrants or Warrant Shares which are
registered under the Securities Act or upon receipt by the Issuer of an opinion
of counsel, in form and substance reasonably satisfactory to the Issuer, to the
effect that compliance with such restrictions is not necessary in order to
comply with the Securities Act with respect to the transfer of the Warrants and
the Warrant Shares; provided, however,
21
that, unless at that time such Warrant Holder is an Affiliate of the Issuer,
after two (2) years from the date of issuance of any Warrants, such restrictions
will automatically terminate (without the necessity of any opinion of counsel)
as to such Warrants and as to any Warrant Shares issued in respect of such
Warrants upon exercise of the Conversion Right set forth in subsection 6(b)
above. Whenever such restrictions shall so terminate, the holder of such
Warrants and/or Warrant Shares shall be entitled to receive from the Issuer,
without expense (other than transfer taxes, if any), Warrant Certificates or
certificates for such Warrant Shares not bearing the legend set forth in
subsection 14(b), at which time the Issuer will rescind any transfer
restrictions relating thereto.
(e) With a view to making available to Lender and its Affiliates and
subsequent holders of the Warrant Shares the benefits of certain rules and
regulations of the Commission (including, without limitation, Rules 144 and 144A
under the Securities Act) which may permit the sale of Warrants and Warrant
Shares to the public or certain other institutions without registration, the
Issuer agrees to use its best efforts to take any and all such actions as may be
required of it to make available to Lender and its Affiliates and such
subsequent holders such benefits, including without limitation, to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act or any successor
provision thereto from and after the date the Issuer first becomes subject to
the provisions of Section 13 or 15(d) of the Exchange Act;
(ii) file with the Commission in a timely manner all reports and other
documents required of the Issuer under the Securities Act and the Exchange
Act from and after the date the Issuer first becomes subject to the
provisions of Section 13 or 15(d) of the Exchange Act; and
(iii) so long as Lender or an Affiliate thereof owns any Warrants or
Warrant Shares, furnish to Lender forthwith upon request a written statement
by the Issuer as to its compliance with the reporting requirements of Rule 144
or any successor provision thereto, and to the extent not previously furnished
to Lender under subsection 13(c), a copy of the most recent annual or
quarterly report of the Issuer filed with the Commission, in each case from
and after the date the Issuer first becomes subject to the provisions of
Section 13 or 15(d) of the Exchange Act, and such other reports and documents
of the Issuer and other information in the possession of or reasonably
obtainable by the Issuer as Lender and its Affiliates and subsequent holders
of the Warrants may reasonably request in availing itself of any rule or
regulation of the Commission allowing Lender and its Affiliates and subsequent
holders of the Warrants to sell any such securities without registration.
Section 15. Put Rights and Exchange Rights.
------------------------------
(a)(i) Subject to the limitations hereinafter set forth, Lender and its
Affiliates shall have the right, if the outstanding Warrant Shares issued or
issuable upon exercise of the Warrants and held by Lender and its Affiliates,
when aggregated with all other Warrant Shares then held by Lender or its
Affiliates, would represent in excess of 24.99% of the Equity of the Issuer,
excluding Non-Attributable Stock, upon written notice to Issuer, to require
the Issuer to purchase that portion of such Warrant Shares as will reduce the
Warrant Shares held by or
22
issuable to Lender and its Affiliates to 24.99% of the Equity of the Issuer,
excluding Non-Attributable Stock (such right being herein called a "Put
Right"). The price to be paid to the holder upon exercise of a Put Right shall
be the Current Market Price Per Share of Common Stock at the date the notice
exercising such Put Right is given to the Issuer, multiplied by the aggregate
number of shares of Common Stock of the Issuer (i) comprising the Warrant
Shares to be purchased by the Issuer, and/or (ii) issuable upon exercise of
the Warrants to be purchased by the Issuer, and/or (iii) issuable upon
conversion of the Convertible Preferred Stock comprising the Warrant Shares to
be purchased by the Issuer, and/or (iv) issuable upon conversion of the
Convertible Preferred Stock issuable upon exercise of the Warrants to be
purchased by the Issuer (assuming Convertible Preferred Stock, rather than
Common Stock, is then issuable under such Warrants)(the "Put Price").
(ii) The completion of all purchases and sales of Warrants and Warrant
Shares pursuant to exercises of Put Rights shall take place on the thirtieth
(30th) day following the date on which the respective notice exercising such
Put Right is given, unless another date is mutually agreed upon by the Issuer
and the selling holder (the "Put Closing Date"). The Put Prices for all such
purchases and sales shall be paid by the Issuer issuing to the selling holder
in immediately available funds against delivery of certificates representing
the Warrants and/or Warrant Shares to be purchased, duly endorsed for transfer
to the Issuer.
(b) The Put Price for all purchases of Warrants and Warrant Shares pursuant
to exercises of Put Rights shall be determined and calculated in accordance with
subsection 15(a). The Issuer shall deliver to the selling holder, not later than
15 days prior to the completion of each purchase and sale under subsection
15(a), a written statement, signed by its duly authorized officer, setting forth
in reasonable detail the respective purchase price and the calculation thereof
and stating the basis of such calculation and that such calculation was made and
delivered pursuant to this Section 15.
(c) Lender and its Affiliates shall have the right, if the outstanding Common
Stock issued upon exercise of the Warrants and held by Lender and its Affiliates
at any time exceeds 4.99% of the aggregate number of issued and outstanding
shares of Common Stock, upon written notice to Issuer, to require the Issuer to
exchange that portion of such Common Stock for Convertible Preferred Stock as
will reduce the shares of Common Stock held by Lender and its Affiliates to
4.99% of the aggregate number of issued and outstanding shares of Common Stock
(such right being called an "Exchange Right").
(d) As used in this Section 15, "Warrant Shares" shall include all shares of
Common Stock and/or Convertible Preferred Stock and other securities of the
Issuer or its Affiliates issued to holders of the Issuer's Common Stock and/or
Convertible Preferred Stock in respect of stock dividends, stock splits and
other distributions and any recapitalizations, to the extent the same were not
included in any adjustment of the Warrant Shares issuable upon exercise of
Warrants pursuant to Section 12 hereof.
(e) The certificates representing the Warrants and the Warrant Shares shall
bear a legend indicating that the Warrants and Warrant Shares are subject
to the provisions of this Section 15.
23
(f) Notwithstanding any provision of this Warrant Agreement to the contrary,
all Warrant Shares which are sold pursuant to an effective registration
statement under the Securities Act shall, upon such sale, cease to be subject to
the provisions of this Section 15.
Section 16. Preemptive Right.
----------------
(a) Until the Credit Agreement is terminated and all Obligations (as defined
therein) have been paid in full, if the Issuer proposes to (i) issue, sell, give
away, transfer, pledge, mortgage, assign or otherwise dispose of, (ii) grant any
rights (preemptive or other) or options to subscribe for or purchase, or (iii)
enter into any agreements, or issue any warrants, providing for the issuance of,
any of the Common Stock of the Issuer or any stock or securities convertible
into or exchangeable for any of the Common Stock of the Issuer (other than the
issuance of (x) Exempted Securities, (y) other equity securities pursuant to the
acquisition of another corporation by the Issuer by stock purchase, merger,
purchase of substantially all of the assets or other form of reorganization or
business combination or (z) shares or rights to purchase shares under the
Shareholder Rights Agreement dated as of July 25, 1995, as amended, between the
Issuer and First Union Bank of North Carolina, Rights Agent), the Issuer shall:
(i) give written notice to the Lender setting forth in reasonable detail
(1) the designation and all of the terms and provisions of the securities
proposed to be issued (the "Proposed Securities"), including, where
applicable, the voting powers, preferences and relative participating,
optional or other special rights, and the qualification, limitations or
restrictions thereof and interest or dividend rate and maturity; (2) the price
and other terms of the proposed sale of such securities; (3) the amount of
such securities proposed to be issued; and (4) such other information as the
Lender may reasonably request in order to evaluate the proposed issuance; and
(ii) offer to issue to the Lender, subject to the same terms and
provisions as set forth in paragraph (i) above, a portion of the Proposed
Securities equal to a percentage determined by dividing (x) the number of
shares of Common Stock and/or Convertible Preferred Stock then held by the
Lender and issuable to the Lender, assuming exercise of all Warrants by the
Lender and conversion in full of any convertible securities then held by the
Lender, by (y) the total number of shares of Common Stock then outstanding,
including for purposes of this calculation all shares of Common Stock issuable
upon exercise of Warrants and conversion in full of any then outstanding
convertible securities.
(b) The Lender must exercise its preemptive right to purchase its portion of
the Proposed Securities offered hereunder within ten (10) days after receipt of
such notice from the Issuer. Upon the expiration of the offering period
described above, the Issuer will be free to sell such Proposed Securities that
the Lender has not elected to purchase during the ninety (90) days following
such expiration on terms and conditions no more favorable to the purchasers
thereof than those offered to the Lender. Any Proposed Securities offered or
sold by the Issuer after such 90 day period must be reoffered to the Lender
pursuant to this Section 16.
(c) The election by the Lender not to exercise its preemptive rights under
this Section 16 in any one instance shall not affect its right (other than in
respect of a reduction in its percentage holdings)
24
as to any subsequent proposed issuance. Any sale of such securities by the
Issuer without first giving the Lender the rights described in this Section 16
shall be void and of no force and effect.
(d) For purposes of this Section 16, references to "the Lender" shall include
any Affiliate of the Lender which holds Warrants or Warrant Shares.
Section 17. Amendments and Waivers. Any provision of this Warrant Agreement
----------------------
may be amended, supplemented, waived, discharged or terminated by a written
instrument signed by the Issuer and the holders of not less than a majority of
the outstanding Warrants (or in the case of Sections 14 and 15, the holders of a
majority of the aggregate outstanding Warrants and Non-Public Warrant Shares,
voting as a single group), provided that (i) this Agreement may not be amended,
supplemented or waived so as to increase the Exercise Price, reduce the number
of Warrant Shares issuable upon exercise of any Warrants, alter the period
during which any Warrants may be exercised (except to provide for a later
Expiration Date), or reduce the Put Price, in each case without the consent of
the holders of all outstanding Warrants (and, with respect to any reduction in
the Put Price, all outstanding Non-Public Warrant Shares), and (ii) this Section
17 may not be amended or supplemented without the consent of the holders of all
outstanding Warrants and Non-Public Warrant Shares, voting as a single group,
and no waiver of the requirements of this Section 17 shall be binding upon any
such holder without its consent.
Section 18. Specific Performance. The parties agree that irreparable damage
--------------------
will result in the event that the obligations of the Issuer under this Warrant
Agreement are not specifically enforced, and that any damages available at law
for a breach of any such obligations would be inadequate. Therefore, the
holders of the Warrants and/or Non-Public Warrant Shares shall have the right to
specific performance by the Issuer of the provisions of this Warrant Agreement,
and appropriate injunctive relief may be applied for and granted in connection
therewith. The Issuer hereby irrevocably waives, to the extent that it may do
so under applicable law, any defense based on the adequacy of a remedy at law
which may be asserted as a bar to the remedy of specific performance in any
action brought against the Issuer for specific performance of this Warrant
Agreement by the holders of the Warrants and/or Non-Public Warrant Shares. Such
remedies and all other remedies provided for in this Warrant Agreement shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which may be available under this Warrant Agreement.
Section 19. Notices.
-------
(a) Any notice or demand to be given or made by the Warrant Holders or the
holders of Warrant Shares to or on the Issuer pursuant to this Warrant Agreement
shall be sufficiently given or made if sent by registered mail, return receipt
requested, postage prepaid, addressed to the Issuer at the Warrant Office.
(b) Any notice to be given by the Issuer to the Warrant Holders or the
holders of Warrant Shares shall be sufficiently given or made if sent by
registered mail, return receipt requested, postage prepaid, addressed to such
holder as such holder's name and address shall appear on the Warrant Register or
the Common Stock or Convertible Preferred Stock registry of the Issuer, as the
case may be.
25
Section 20. Binding Effect. This Warrant Agreement shall be binding upon and
--------------
inure to the sole and exclusive benefit of the Issuer, its successors and
assigns, Lender, Affiliates of Lender and the registered holders from time to
time of the Warrants and the Warrant Shares.
Section 21. Continued Validity. A holder of Warrant Shares shall continue to
------------------
be entitled with respect to such Warrant Shares to all rights and subject to all
obligations to which it would have been entitled or subject as a Warrant Holder
under Sections 14 through 24 of this Warrant Agreement. The Issuer will, at the
time of each exercise of any Warrant, in whole or in part, upon the request of
the holder of the Warrant Shares issued upon such exercise thereof, acknowledge
in writing, in form reasonably satisfactory to such holder, its continuing
obligation to afford to such holder all such rights, provided, however, that if
such holder shall fail to make any such request, such failure shall not affect
the continuing obligation of the Issuer to afford to such holder all such
rights.
Section 22. Counterparts. This Warrant Agreement may be executed in one or
------------
more separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 23. Georgia Law. THIS WARRANT AGREEMENT AND EACH WARRANT CERTIFICATE
-----------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA.
Section 24. Benefits of This Warrant Agreement. Nothing in this Warrant
----------------------------------
Agreement shall be construed to give to any Person other than the Issuer and the
registered holders of the Warrants and the Warrant Shares any legal or equitable
right, remedy or claim under this Warrant Agreement.
Section 25. Voting and Consents to be on a Fully Converted Basis. Wherever
----------------------------------------------------
this Warrant Agreement calls for the written consent or vote of any combinations
of the holders of the Warrants, any of the Warrant Shares and/or the Convertible
Preferred Stock, voting as a single group, the Warrants shall be counted as if
they had been exercised for Common Stock and shares of Convertible Preferred
Stock shall be counted as if they had been converted to Common Stock.
Section 26. Entire Agreement. This Warrant Agreement constitutes the entire
----------------
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior negotiations, understandings and agreements between
such parties in respect of such subject matter.
[Remainder of page intentionally left blank]
26
IN WITNESS WHEREOF the parties hereto have caused this Warrant Agreement to be
duly executed and delivered by their proper and duly authorized officers, as of
the date and year first above written.
COMMUNICATIONS CENTRAL INC.
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
Attest:
--------------------------------
Name:
--------------------------
Title:
-------------------------
FIRST UNION NATIONAL BANK
By:
------------------------------------
Name:
------------------------------
Title: , First Union - Georgia
-----------------
Attest:
--------------------------------
Name:
--------------------------
Title:
-------------------------
27
EXHIBIT A
To Third Warrant Agreement
--------------------------
FORM OF WARRANT CERTIFICATE
THE WARRANTS AND SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES
LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAW. SUCH WARRANTS AND SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN AND ARE SUBJECT
TO OTHER PROVISIONS OF THE THIRD WARRANT AGREEMENT, DATED AS OF_______________
__, 1997, BETWEEN THE ISSUER AND FIRST UNION NATIONAL BANK, A COMPLETE AND
CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF THE
ISSUER AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN PUT RIGHTS,
AND EXCHANGE RIGHTS MORE FULLY SET FORTH IN THE WARRANT AGREEMENT.
EXERCISABLE ONLY ON OR BEFORE
______________, 2007
Warrant Certificate
(Third Warrant Agreement)
This Warrant Certificate certifies that _____________________, or registered
assigns, is the registered holder of _______ Warrants (the "Warrants") to
purchase Common Stock or Convertible Preferred Stock of Communications Central
Inc., a Georgia corporation (the "Issuer"). Each Warrant entitles the holder,
but only subject to the conditions set forth herein and in the Warrant Agreement
referred to below, to purchase from the Issuer before 5:00 P.M., Atlanta time,
on ____________, 2007 (the "Expiration Date"), one (1) fully paid and
nonassessable share of the Common Stock or Convertible Preferred Stock of the
Issuer (the "Warrant Shares") in the percentages and to the extent set forth in
the Warrant Agreement, at a price (the "Exercise Price") of $______ per Warrant,
which Exercise Price shall be equal to the Current Market Price Per Share of the
Common Stock as of the Closing Date, except that if the balance remaining on
either the Tranche A Loan or the Tranche B Loan (as each term is defined in the
Credit Agreement) has not been paid in full on April 30, 1998, the Exercise
Price shall be $0.01 per Warrant after April 30, 1998, such Exercise Price being
payable in lawful money of the United States of America, upon surrender of this
Warrant Certificate, execution of the annexed Form of Election to Purchase and
payment of the Exercise Price at the office of the Issuer at 0000 Xxxxxxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, or such other address as the Issuer
1
may specify in writing to the registered holder of the Warrants evidenced hereby
(the "Warrant Office"). In lieu of exercising Warrants pursuant to the
immediately preceding sentence, the Warrant holder shall have the right to
require the Issuer to convert the Warrants, in whole or in part and at any time
or times, into Warrant Shares, by surrendering to the Issuer the Warrant
Certificate evidencing the Warrants to be converted, accompanied by the annexed
Form of Notice of Conversion which has been duly completed and signed. The
number of Warrant Shares purchasable upon exercise of each of the Warrants is
subject to adjustment prior to the Expiration Date as set forth in the Warrant
Agreement. In no event shall this Warrant be exercisable for shares of Common
Stock or Convertible Preferred Stock which, when aggregated with all other
Warrant Shares (as defined in the Warrant Agreement) previously issued (other
than Non-Attributable Stock (as defined in the Warrant Agreement)) would, upon
issuance, represent in excess of 24.99% of the Equity of the Issuer (defined in
the Warrant Agreement) unless such shares, when issued, would constitute Non-
Attributable Stock (as defined in the Warrant Agreement).
No Warrant may be exercised after 5:00 P.M., Atlanta time, on the Expiration
Date and (except as otherwise provided in the Warrant Agreement) all rights of
the registered holders of the Warrants shall cease after 5:00 P.M., Atlanta
time, on the Expiration Date.
The Issuer may deem and treat the registered holders of the Warrants evidenced
hereby as the absolute owners thereof (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof
and of any distribution to the holders hereof and for all other purposes, and
the Issuer shall not be affected by any notice to the contrary.
Warrant Certificates, when surrendered at the office of the Issuer at the
above-mentioned address by the registered holder hereof in person or by a legal
representative duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant Certificate
at the office of the Issuer at the above-mentioned address, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued in exchange for this Warrant
Certificate to the transferee(s) and, if less than all the Warrants evidenced
hereby are to be transferred, to the registered holder hereof, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith which shall be paid
by the Warrant Holder.
This Warrant Certificate is one of the Warrant Certificates referred to in the
Third Warrant Agreement, dated as of ___________, 1997, between the Issuer and
First Union National Bank (formerly First Union National Bank of Georgia) (the
"Warrant Agreement"). Said Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Issuer and the holders.
2
IN WITNESS WHEREOF the Issuer has caused this Warrant Certificate to be signed
by its duly authorized officers and has caused its corporate seal to be affixed
hereunto.
COMMUNICATIONS CENTRAL INC.
By:
------------------------------------
Title:
-----------------------------
(CORPORATE SEAL)
ATTEST:
------------------------------
Secretary
3
ANNEX to Form
of Warrant
Certificate
--------------
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented
by this Warrant Certificate, to purchase ___ Warrant Shares* and herewith
tenders payment for such Warrant Shares to the order of the Issuer in the amount
of $ ____________________ in accordance with the terms hereof. The undersigned
requests that a certificate for such Warrant Shares be registered in the name of
________________________________________________________________________________
____ whose address is ________________________________________________________
___________________________________________________________________ and that
such certificate be delivered to ___________________________ whose address is
_______________________________________________. If said number of Warrant
Shares is less than all of the Warrant Shares purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of the Warrant Shares be registered in the name of ___________________
_________________________________________________________whose address is ____
________________________________________________________________________________
_______ and that such Warrant Certificate be delivered to _____________________
________________________________________________________whose address is ______
__________________________________________________________.
Signature:
__________________________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date:_____________
* Consisting of:
_____ shares of Common Stock
_____ shares of Convertible Preferred Stock
1
ANNEX to Form
of Warrant
Certificate
--------------
FORM OF NOTICE OF CONVERSION
(To be executed upon conversion of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented
by this Warrant Certificate, to convert Warrants represented hereby into ___
Warrant Shares* in accordance with the terms hereof. The undersigned requests
that a certificate for such Warrant Shares be registered in the name of
________________________________________________________________________________
____ whose address is _________________________________________________________
___________________________________________________________________ and that
such certificate be delivered to ___________________________ whose address is
_______________________________________________. If said number of Warrant
Shares is less than all of the Warrant Shares obtainable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of the Warrant Shares be registered in the name of ____________________
_________________________________________________________whose address is ____
________________________________________________________________________________
_______ and that such Warrant Certificate be delivered to
________________________________________________________whose address is ______
___________________.
Signature:
------------------------------------------
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date:_____________
* Consisting of:
_____ shares of Common Stock
_____ shares of Convertible Preferred Stock
1
EXHIBIT B to
Warrant Agreement
-----------------
WARRANT REGISTER
----------------
Warrant Original Number Number of Names and
Certificate of Warrants and Warrants Addresses of
Number Warrant Shares Expired Warrant Holders
1
SCHEDULE I
OUTSTANDING OPTIONS, WARRANTS AND OTHER RIGHTS AS TO
----------------------------------------------------
THE CAPITAL STOCK OF THE ISSUER
-------------------------------
[Employee Stock Option Plan]
1
SCHEDULE II
SUBSIDIARIES OF THE ISSUER
--------------------------
Communications Central of Georgia, Inc.
Central Payphone Services, Inc.
Invision Telecom, Inc.
Payphones Plus, Inc.
1
