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EXHIBIT 10.9
[FORM OF WARRANT]
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT.
XXXXX/XXXXXX, INC.
COMMON STOCK PURCHASE WARRANT
NEW YORK NO. _____ NEW YORK,
SEPTEMBER 8, 1997
XXXXX/XXXXXX, INC., a Texas corporation (the "COMPANY"), for
value received, hereby certifies that _________________ or its registered
assigns is entitled to purchase from the Company ____________ duly authorized,
validly issued, fully paid and nonassessable shares of the Company's Common
Stock, no par value per share (the "ORIGINAL COMMON STOCK"), at an initial
exercise price per share of $2.95, at any time or from time to time after the
date hereof and prior to 5:00 p.m., New York City time, on August 9, 2004 (the
"EXPIRATION DATE"), all subject to the terms, conditions and adjustments set
forth below in this Warrant; provided, that if the Company defaults in the
payment of any principal of any of the Notes (as defined below) when the same
shall become due, either by the terms thereof or otherwise as provided in the
Purchase Agreement (as defined below), the Expiration Date shall automatically
be extended to August 9, 2007, regardless whether such default is subsequently
cured or waived.
This Warrant is one of the Common Stock Purchase Warrants (the
"WARRANTS", such term to include all Warrants issued in substitution therefor)
originally issued in connection with the issue and sale by the Company of the
Company's 11% Second Priority Senior Secured Notes due August 9, 2004, in the
aggregate principal amount of $8,900,000 (the "NOTES"), pursuant to that certain
Note and Warrant Purchase Agreement dated as of even date herewith (the
"PURCHASE AGREEMENT") between the Company and Great-West Life & Annuity
Insurance Company, Life Investors Insurance Company of America and Nationwide
Life Insurance Company (each a "PURCHASER" and collectively the "PURCHASERS").
The Warrants originally so issued evidence rights to purchase an aggregate of
3,050,847 shares of Original Common Stock, subject to
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adjustment as provided herein. The term "NOTES" as used herein shall include
each Note delivered pursuant to any provision of the Purchase Agreement and each
Note delivered in substitution or exchange for any such Note pursuant to any
such provision. Certain capitalized terms used in this Warrant are defined in
section 13.
I. Exercise of Warrant.
1A. Manner of Exercise. This Warrant may not be exercised
unless the holder hereof at the time of exercise is also a holder of Notes or,
in the event the Notes have been prepaid or otherwise retired, was a holder of
Notes at the time of such prepayment or other retirement. Subject to the
foregoing, this Warrant may be exercised by the holder hereof, in whole or in
part, during normal business hours on any Business Day on or after the date
hereof to and including the Expiration Date, by surrender of this Warrant, with
the form of subscription at the end hereof (or a reasonable facsimile thereof)
duly executed by such holder, to the Company at its principal office (or, if
such exercise shall be in connection with an underwritten public offering of
shares of Common Stock (or Other Securities) subject to this Warrant, at the
location at which the underwriters shall have agreed to accept delivery
thereof), accompanied by payment, in cash or by certified or official bank check
payable to the order of the Company, in the amount obtained by multiplying (a)
the number of shares of Original Common Stock (without giving effect to any
adjustment therein) designated in such form of subscription by (b) $2.95. The
number of duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock which the holder of this Warrant shall be entitled to receive
upon each exercise hereof shall be determined by multiplying the number of
shares of Common Stock which would otherwise (but for the provisions of section
2) be issuable upon such exercise, as designated by the holder hereof pursuant
to this section 1A, by a fraction of which (a) the numerator is $2.95 and (b)
the denominator is the Exercise Price in effect on the date of such exercise.
The "EXERCISE PRICE" shall initially be $2.95 per share, shall be adjusted and
readjusted from time to time as provided in section 2 and, as so adjusted and
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by section 2.
1B. When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected and the Exercise Price shall be determined
immediately prior to the close of business on the Business Day on which this
Warrant shall have been surrendered to the Company as provided in section 1A,
and at such time the person or persons in whose name or names any certificate or
certificates for shares of Original Common Stock (or Other Securities) shall be
issuable upon such exercise as provided in section 1C shall be deemed to have
become the holder or holders of record thereof.
1C. Delivery of Stock Certificates, etc. Promptly after the
exercise of this Warrant, in whole or in part, and in any event within five
Business Days thereafter (unless such exercise shall be in connection with an
underwritten public offering of shares of Common Stock (or Other Securities)
subject to this Warrant, in which event concurrently with such exercise), the
Company at its expense will cause to be issued in the
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name of and delivered to the holder hereof or, subject to section 8, as such
holder may direct,
a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise, and
a) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, specifying the aggregate on the face or faces
thereof the number of shares of Common Stock equal to the number of
such shares specified on the face of this Warrant minus the number of
such shares designated by the holder upon such exercise as provided in
section 1A.
1D. Company to Reaffirm Obligations. The Company will, at the
time of or at any time after each exercise of this Warrant, upon the request of
the holder hereof or of any shares of Common Stock (or Other Securities) issued
upon such exercise, acknowledge in writing its continuing obligation to afford
to such holder all rights to which such holder shall continue to be entitled
after such exercise in accordance with the terms of this Warrant, provided that
if any such holder shall fail to make any such request, the failure shall not
affect the continuing obligation of the Company to afford such rights to such
holder.
1E. Fractional Shares. No fractional shares shall be issued
upon exercise of this Warrant and no payment or adjustment shall be made upon
any exercise on account of any cash dividends (except as provided in section 2B)
on the Common Stock or Other Securities issued upon such conversion. If any
fractional interest in a share of Common Stock would, except for the provisions
of the first sentence of this section 1E, be deliverable upon the exercise of
this Warrant, the Company shall, in lieu of delivering the fractional share
therefor, pay to the holder exercising this Warrant an amount in cash equal to
the Market Price of such fractional interest.
1F. Cashless Exercise. As an alternative to exercise of this
Warrant by payment in cash (or by certified or official bank check), as provided
above in section 1A, the holder of this Warrant may exercise its right to
purchase some or all of the shares of Common Stock pursuant to this Warrant
using either or both of the following payment methods:
(a) the holder of this Warrant may instruct the Company, by so
specifying in the form of subscription submitted in connection with an
exercise of this Warrant, to effect the purchase of a specified number
of shares of Common Stock pursuant to this Warrant on a net basis
without the exchange of any funds (a "NET BASIS EXERCISE"), such that
the holder hereof receives, in exchange for a partial or complete
surrender, as applicable, of this Warrant, a number of shares of Common
Stock, such number to be determined by multiplying the number of shares
of Common Stock with respect to which this Warrant is being exercised
by
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a fraction, the numerator of which shall be the difference between the
then-current Market Price and then-current Exercise Price, and the
denominator of which shall be the then-current Market Price; or
(b) the holder of this Warrant may instruct the Company, by so
specifying in the form of subscription submitted in connection with an
exercise of this Warrant, to apply to the payment required by section
1A all or any part of the principal amount then due and of the interest
on such principal amount then accrued on any one or more Notes or Put
Notes (as hereinafter defined) at the time held by such holder (a "NOTE
APPLICATION EXERCISE"), in which case the Company will accept the
aggregate amount of principal and accrued interest on such principal
specified in such form of subscription in satisfaction of a like amount
of such payment. Within 10 days after receipt of any such notice, the
Company will pay to the holder of the Notes or Put Notes submitting
such form of subscription, in the manner provided in such Notes or Put
Notes, all unpaid interest accrued to the date of the exercise of such
Warrant on the principal amount so specified in such form of
subscription that is not applied to the payment required by section 1A
under this section 1F. In the event that the entire unpaid principal
amount of any Note or Put Note is applied to the payment required by
section 1A under this section 1F, such Note or Put Note shall be
promptly surrendered and canceled, and in the event that less than the
entire unpaid principal amount of any Note or Put Note is so applied,
such Note or Put Note shall be promptly surrendered in exchange for a
new Note or Put Note, dated so as to carry any right to unpaid interest
accrued on the Note or Put Note surrendered, which the Company shall
issue and deliver to such holder in a principal amount equal to the
unpaid principal amount of the Note or Put Note surrendered less the
amount of principal which shall have been applied to such payment.
1G. Exercise Rights Unconditional. The Company, for itself and
its stockholders, acknowledges and agrees that, subject to the terms of this
Warrant, the right of the holder hereof to exercise this Warrant at any time
prior to the Expiration Date is and shall be absolute and unconditional,
notwithstanding that such exercise may have an adverse or undesired effect on
the Company or its stockholders, including, without limitation, loss of the
Company's status as a corporation qualified under Subchapter S of the Internal
Revenue Code of 1986, as amended.
I. Protection Against Dilution or Other Impairment of
Rights; Adjustment of Exercise Price.
2A. Issuance of Additional Shares of Common Stock. In case the
Company, at any time or from time to time after September 8, 1997 (the "INITIAL
DATE"), shall issue or sell Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to section 2C or
2D) without consideration or for a consideration per share (determined pursuant
to section 2E) less than the greater of the Exercise Price or the Market Price
in effect, in each case, on the date of and
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immediately prior to such issue or sale, then, and in each such case, subject to
section 2H, the Exercise Price shall be reduced, concurrently with such issue or
sale, to a price (calculated to the nearest .001 of a cent) determined by
multiplying such Exercise Price by a fraction,
(a) the numerator of which shall be (i) the number of shares
of Common Stock outstanding immediately prior to such issue or sale
plus (ii) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at
the greater of such Market Price or such Exercise Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale,
provided that, for the purposes of this section 2A, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2C or 2D, such Additional Shares shall be deemed to be outstanding, and
(y) treasury shares shall not be deemed to be outstanding.
2B. Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date hereof shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement and any redemption or
acquisition of any such stock or Options on the Common Stock, other than (a) a
dividend payable in Additional Shares of Common Stock or in Options for Common
Stock or (b) a regular periodic dividend payable in cash and permitted to be
made under the Dividend Restrictions, then, and in each such case, subject to
section 2H, the Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any class
of securities entitled to receive such dividend or distribution shall be
reduced, effective as of the close of business on such record date, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Exercise Price by a fraction,
(i) the numerator of which shall be the Market Price
in effect on such record date less (x) the amount of such dividend or
distribution (if payable in cash) or (y) the Fair Value of such
dividend or distribution (if payable in securities or other property),
in each case as applicable to one share of Common Stock, and
(ii) the denominator of which shall be such Market
Price.
2C. Treatment of Options and Convertible Securities. In case
the Company, at any time or from time to time after the date hereof, shall
issue, sell, grant or assume, or shall fix a record date for the determination
of holders of any class of securities
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entitled to receive, any Options or Convertible Securities, whether or not such
Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, issuable upon the
conversion or exchange of such Convertible Securities (or the exercise of such
Options for Convertible Securities and subsequent conversion or exchange of the
Convertible Securities issued), shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date, provided, that such Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per share (determined
pursuant to section 2E) of such shares would be less than the greater of the
Exercise Price or the Market Price in effect, in each case, on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading, as the case may be, and provided, further, that in any such case in
which Additional Shares of Common Stock are deemed to be issued,
(a) if an adjustment of the Exercise Price shall be made upon
the fixing of a record date as referred to in the first sentence of
this section 2C, no further adjustment of the Exercise Price shall be
made as a result of the subsequent issue or sale of any Options or
Convertible Securities for the purpose of which such record date was
set;
(b) no further adjustment of the Exercise Price shall be made
upon the subsequent issue or sale of Additional Shares of Common Stock
or Convertible Securities upon the exercise of such Options or the
conversion or exchange of such Convertible Securities;
(c) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the Company, or change in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon any such change becoming effective, be recomputed to reflect such
change insofar as it affects such Options, or the rights of conversion
or exchange under such Convertible Securities, which are outstanding at
such time;
(d) upon the expiration of any such Options or of the rights
of conversion or exchange under any such Convertible Securities which
shall not have been exercised (or upon purchase by the Company and
cancellation or retirement
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of any such Options which shall not have been exercised or of any such
Convertible Securities the rights of conversion or exchange under which
shall not have been exercised), the Exercise Price computed upon the
original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or in the
case of Convertible Securities, the only Additional Shares of
Common Stock issued or sold (or deemed issued or sold) were
the Additional Shares of Common Stock, if any, actually issued
or sold upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was (x) an amount equal to (A) the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus (B) the consideration actually received by the
Company upon such exercise, minus (C) the consideration paid
by the Company for any purchase of such Options which were not
exercised, or (y) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such Convertible Securities which were
actually converted or exchanged, plus (B) the additional
consideration, if any, actually received by the Company upon
such conversion or exchange, minus (C) the excess, if any, of
the consideration paid by the Company for any purchase of such
Convertible Securities, the rights of conversion or exchange
under which were not exercised, over an amount that would be
equal to the Fair Value of the Convertible Securities so
purchased if such Convertible Securities were not convertible
into or exchangeable for Additional Shares of Common Stock,
and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was an amount equal to (x) the consideration actually
received by the Company for the issue, sale, grant or
assumption of all such Options, whether or not exercised, plus
(y) the consideration deemed to have been received by the
Company (pursuant to section 2E) upon the issue or sale of the
Convertible Securities with respect to which such Options were
actually exercised, minus (z) the consideration paid by the
Company for any purchase of such Options which were not
exercised; and
(e) no recomputation pursuant to subsection (c) or (d) above
shall have the effect of increasing the Exercise Price then in effect
by an amount in excess of
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the amount of the adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Options or Convertible
Securities.
2D. Treatment of Stock Dividends, Stock Splits, Etc. In case
the Company, at any time or from time to time after the date hereof, shall
declare or pay any dividend or other distribution on any class of securities of
the Company payable in shares of Common Stock, or shall effect a subdivision of
the outstanding shares of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in Common
Stock), then, and in each such case, Additional Shares of Common Stock shall be
deemed to have been issued (a) in the case of any such dividend or other
distribution, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend or other distribution, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day upon which such
corporate action becomes effective.
2E. Computation of Consideration. For the purposes of
this Warrant:
(a) The consideration for the issue or sale of any Additional
Shares of Common Stock or for the issue, sale, grant or assumption of
any Options or Convertible Securities, irrespective of the accounting
treatment of such consideration,
(i) insofar as it consists of cash, shall be computed
as the amount of cash received by the Company, and insofar as
it consists of securities or other property, shall be computed
as of the date immediately preceding such issue, sale, grant
or assumption as the Fair Value of such consideration (or, if
such consideration is received for the issue or sale of
Additional Shares of Common Stock and the Market Price thereof
is less than the Fair Value of such consideration, then such
consideration shall be computed as the Market Price of such
Additional Shares of Common Stock), in each case without
deducting any expenses paid or incurred by the Company, any
commissions or compensation paid or concessions or discounts
allowed to underwriters, dealers or other performing similar
services and any accrued interest or dividends in connection
with such issue or sale, and
(ii) in case Additional Shares of Common Stock are
issued or sold or Options or Convertible Securities are
issued, sold, granted or assumed together with other stock or
securities or other assets of the Company for a consideration
which covers both, shall be the proportion of such
consideration so received, computed as provided in clause (i)
above, allocable to such Additional Shares of Common Stock or
Options or Convertible Securities, as the case may be, all as
determined in good faith by the Board of Directors or the
Company.
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(b) All Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company and all Additional
Shares of Common Stock issued to effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock) shall be deemed to have been issued without
consideration.
(c) Additional Shares of Common Stock deemed to have been
issued for consideration pursuant to section 2C, relating to Options
and Convertible Securities, shall be deemed to have been issued for a
consideration per share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration) payable to the
Company upon the exercise in full of such Options or the
conversion or exchange of such Convertible Securities or, in
the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case
computing such consideration as provided in the foregoing
subsection (a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities.
2F. Adjustments for Combinations, Etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Exercise Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
2G. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in section 2I) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis to which the
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standards established in the other provisions of this Warrant do not apply, the
exercise rights granted by this Warrant, then, and in each such case, the
computations, adjustments and readjustments provided for in this Warrant with
respect to the Exercise Price shall be made as nearly as possible in the manner
so provided and applied to determine the amount of Other Securities from time to
time receivable upon the exercise of this Warrant, so as to protect the holder
of this Warrant against the effect of such dilution.
2H. Minimum Adjustment of Exercise Price. If the amount of any
adjustment of the Exercise Price required hereunder would be less than one
percent of the Exercise Price in effect at the time such adjustment is otherwise
so required to be made, such amount shall be carried forward and adjustment with
respect thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate at least one percent of such Exercise Price; provided,
that upon the exercise of this Warrant, all adjustments carried forward and not
theretofore made up to and including the date of such exercise shall be made to
the nearest .001 of a cent.
2I. Changes in Common Stock. In case at any time the Company
shall be a party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets,
liquidation or recapitalization of the Common Stock) in which the previously
outstanding Common Stock shall be changed into or exchanged for different
securities of the Company or common stock or other securities of another
corporation or interests in a noncorporate entity or other property (including
cash) or any combination of any of the foregoing or in which the Common Stock
ceases to be a publicly traded security either listed on the New York Stock
Exchange or the American Stock Exchange or quoted by the Nasdaq National Market
or any successor thereto or comparable system (each such transaction being
herein called the "TRANSACTION", the date on which the Transaction is first
announced to the public being herein called the "ANNOUNCEMENT DATE", the date of
consummation of the Transaction being herein called the "CONSUMMATION DATE", the
Company (in the case of a recapitalization of the Common Stock or any other such
transaction in which the Company retains substantially all of its assets and
survives as a corporation) or such other corporation or entity (in each other
case) being herein called the "ACQUIRING COMPANY", and the common stock (or
equivalent equity interest) of the Acquiring Company being herein called the
"ACQUIRER'S COMMON STOCK", except that if the Acquiring Company shall not meet
the requirements set forth in subsections (d), (e) and (f) below and a
corporation which directly or indirectly controls the Acquiring Company (a
"PARENT") meets such requirements, "Acquiring Company" shall refer to such
Parent and "Acquirer's Common Stock" shall refer to such Parent's common stock
(or equivalent equity interests)) then, as a condition of the consummation of
the Transaction, lawful and adequate provisions (in form satisfactory to the
Required Holders) shall be made so that the holder of this Warrant, upon the
exercise thereof at any time on or after the Consummation Date (but subject, in
the case of an election pursuant to subsection (b) or (c) below, to the time
limitation hereinafter provided for such election),
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(a) shall be entitled to receive, and this Warrant shall
thereafter represent the right to receive, in lieu of the Common Stock
issuable upon such exercise prior to the Consummation Date, shares of
the Acquirer's Common Stock at an Exercise Price per share equal to the
lesser of (i) the Exercise Price in effect immediately prior to the
Consummation Date multiplied by a fraction the numerator of which is
the Market Price per share of the Acquirer's Common Stock determined as
of the Consummation Date and the denominator of which is the Market
Price per share of the Common Stock determined as of the Consummation
Date, or (ii) the Market Price per share of the Acquirer's Common Stock
determined as of the Consummation Date (subject in each case to
adjustments from and after the Consummation Date as nearly equivalent
as possible to the adjustments provided for in this Warrant),
or at the election of the holder of this Warrant pursuant to notice
given to the Company within six months after the Consummation Date,
(b) shall be entitled to receive, and this Warrant shall
thereafter represent the right to receive, in lieu of each share of
Common Stock issuable upon such exercise prior to the Consummation
Date, either (i) the greatest amount of cash, securities or other
property given to any shareholder in consideration for any share of
Common Stock at any time during the period from and after the
Announcement Date to and including the Consummation Date by the
Acquiring Company, the Company or any Affiliate of either thereof, or
(ii) an amount in cash equal to the product obtained by multiplying (x)
the number of shares of the Acquirer's Common Stock purchasable upon
the exercise or conversion of such Warrant as shall result from
adjustments thereto that would have been required pursuant to
subsection (a) above times (y) the Market Price per share for the
Acquirer's Common Stock, determined as of the day within the period
from and after the Announcement Date to and including the Consummation
Date for which the amount determined as provided in the definition of
Market Price shall have been the greatest, or, if neither the Acquiring
Company nor the Parent meets the requirements set forth in subsections
(d), (e) and (f) below, at the election of the holder of this Warrant
pursuant to notice given to the Company within six months after the
Consummation Date, or
(c) shall be entitled to receive, within 30 days after such
election, in full satisfaction of the exercise rights afforded under
this Warrant to the holder thereof, an amount equal to the fair market
value of such exercise rights as determined by an independent
investment banker (with an established national reputation as a valuer
of equity securities) selected by the Required Holders with the
approval of the Company, such fair market value to be determined with
regard to all material relevant factors but without regard to any
negative effects on such value of the Transaction.
The Company agrees to obtain and deliver to each holder of Warrants a copy of
the determination of an independent investment banker (selected by the Required
Holders with
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the approval of the Company) necessary to permit elections under subsection (c)
above within 15 days after the Consummation Date of any Transaction to which
subsection (c) is applicable.
The requirements referred to above in the case of the
Acquiring Company or its Parent are that immediately after the Consummation
Date:
(d) it is a solvent corporation organized under the laws of
any State of the United States of America having its common stock
listed on the New York Stock Exchange or the American Stock Exchange or
quoted by the Nasdaq National Market or any successor thereto or
comparable system, and such common stock continues to meet such
requirements for such listing or quotation,
(e) it is required to file, and in each of its three fiscal
years immediately preceding the Consummation Date has filed, reports
with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act, and
(f) in the case of the Parent, such Parent is required to
include the Acquiring Company in the consolidated financial statements
contained in the Parent's Annual Report on Form 10-K as filed with the
Commission and is not itself included in the consolidated financial
statements of any other Person (other than its consolidated
subsidiaries).
Notwithstanding anything contained herein to the contrary, the Company shall not
effect any Transaction unless prior to the consummation thereof each corporation
or entity (other than the Company) which may be required to deliver any
securities or other property upon the exercise of Warrants shall assume, by
written instrument delivered to each holder of Warrants, the obligation to
deliver to such holder such securities or other property as to which, in
accordance with the foregoing provisions, such holder may be entitled, and such
corporation or entity shall have similarly delivered to each holder of Warrants
an opinion of counsel for such corporation or entity, satisfactory to each
holder of Warrants, which opinion shall state that all the outstanding Warrants,
shall thereafter continue in full force and effect and shall be enforceable
against such corporation or entity in accordance with the terms hereof and
thereof, together with such other matters as such holders may reasonably
request.
2J. Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
Exercise Price in the case of the issuance of the Warrants and the issuance of
shares of Common Stock issuable upon exercise of the Warrants.
2K. Notice of Adjustment. Upon the occurrence of any event
requiring an adjustment of the Exercise Price, then and in each such case the
Company shall promptly deliver to the holder of this Warrant an Officer's
Certificate stating the Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of
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shares of Common Stock issuable upon the exercise of this Warrant, setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. Within 90 days after each fiscal year in which any such
adjustment shall have occurred, or within 30 days after any request therefor by
the holder of this Warrant stating that such holder contemplates the exercise of
such Warrant, the Company will obtain and deliver to the holder of this Warrant
the opinion of its regular independent auditors or another firm of independent
public accountants of recognized national standing selected by the Company's
Board of Directors, which opinion shall confirm the statements in the most
recent Officer's Certificate delivered under this section 2K. The cost of any
such opinion delivered within 90 days after a fiscal year shall be borne solely
by the Company, and the cost of any such opinion delivered within 30 days after
any request therefor by the holder of this Warrant shall be borne equally by the
Company and such holder.
2L. Other Notices. In case at any time:
(a) the Company shall declare to the holders of Common Stock
any dividend other than a regular periodic cash dividend or any
periodic cash dividend in excess of 115% of the cash dividend for the
comparable fiscal period in the immediately preceding fiscal year;
(b) the Company shall declare or pay any dividend upon Common
Stock payable in stock or make any special dividend or other
distribution (other than regular cash dividends) to the holders of
Common Stock;
(c) the Company shall offer for subscription pro rata to the
holders of Common Stock any additional shares of stock of any class or
other rights;
(d) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale of all or substantially all of
its assets to, another corporation or other entity;
(e) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
(f) there shall be made any tender offer for any shares of
capital stock of the Company; or
(g) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
this Warrant (i) at least 15 days prior to any event referred to in subsection
(a) or (b) above, at least 30 days prior to any event referred to in subsection
(c), (d) or (e) above (or immediately after it has knowledge thereof, in the
case of any involuntary dissolution, liquidation or winding-up of the Company),
and within five days after it has knowledge of any pending tender offer or other
Transaction, written notice of the date on which the
14
books of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, winding-up or Transaction or the date by which
shareholders must tender shares in any tender offer and (ii) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or tender offer or Transaction known to the Company, at
least 30 days prior written notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such notice in accordance with the foregoing clause (i) shall also specify, in
the case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, tender offer or Transaction, as the case may be. Such notice shall
also state that the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of security holders, if either is required.
2M. Certain Events. If any event occurs as to which, in the
good faith judgment of the Board of Directors of the Company, the other
provisions of this Warrant are not strictly applicable or if strictly applicable
would not fairly protect the exercise rights of the holders of the Warrants in
accordance with the essential intent and principles of such provisions, then the
Board of Directors of the Company shall appoint its regular independent auditors
or another firm of independent public accountants of recognized national
standing which shall give their opinion upon the adjustment, if any, on a basis
consistent with such essential intent and principles, necessary to preserve,
without dilution, the rights of the holders of the Warrants. Upon receipt of
such opinion, the Board of Directors of the Company shall forthwith make the
adjustments described therein; provided, that no such adjustment shall have the
effect of increasing the Exercise Price as otherwise determined pursuant to this
Warrant. The Company may make such reductions in the Exercise Price as it deems
advisable, including any reductions necessary to ensure that any event treated
for Federal income tax purposes as a distribution of stock or stock rights not
be taxable to recipients.
2N. Prohibition of Certain Actions. The Company will not, by
amendment of its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (a) will not increase the
par value of any shares of Common
15
Stock receivable upon the exercise of this Warrant above the Exercise Price then
in effect, (b) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of all Warrants from time
to time outstanding, (c) will not take any action which results in any
adjustment of the Exercise Price if the total number of shares of Common Stock
or Other Securities issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock or Other
Securities then authorized by the Company's certificate of incorporation and
available for the purpose of issue upon such conversion, and (d) will not issue
any capital stock of any class which has the right to more than one vote per
share or any capital stock of any class which is preferred as to dividends or as
to the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage (or floating rate related to market yields)
of par value or stated value in respect of participation in dividends and a
fixed sum or percentage of par value or stated value in any such distribution of
assets.
3. Stock to be Reserved. The Company will at all times reserve and keep
available out of the authorized Common Stock, solely for the purpose of issue
upon the exercise of the Warrants as herein provided, such number of shares of
Common Stock as shall then be issuable upon the exercise of all outstanding
Warrants and the Company will maintain at all times all other rights and
privileges sufficient to enable it to fulfill all its obligations hereunder. The
Company covenants that all shares of Common Stock which shall be so issuable
shall, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable, free from preemptive or similar rights on the part of the holders
of any shares of capital stock or securities of the Company or any other Person,
and free from all taxes, liens and charges with respect to the issue thereof
(not including any income taxes payable by the holders of Warrants being
exercised in respect of gains thereon), and the Exercise Price will be credited
to the capital and surplus of the Company. The Company will take all such action
as may be necessary to assure that such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any applicable
requirements of the National Association of Securities Dealers, Inc. and of any
domestic securities exchange upon which the Common Stock may be listed.
4. Registration of Common Stock. If any shares of Common Stock required
to be reserved for purposes of the exercise of Warrants require registration
with or approval of any governmental authority under any Federal or State law
(other than the Securities Act, registration under which is governed by the
Registration Rights Agreement), before such shares may be issued upon the
exercise thereof, the Company will, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be duly registered or
approved, as the case may be. Shares of Common Stock issuable upon exercise of
the Warrants shall be registered by the Company under the Securities Act or
similar statute then in force if required by the Registration Rights Agreement
and subject to the conditions stated in such agreement. At any such time as the
Common Stock is listed on any national securities exchange or quoted by the
Nasdaq National Market or any successor thereto or any comparable system, the
Company will, at
16
its expense, obtain promptly and maintain the approval for listing on each such
exchange or quoting by the Nasdaq National Market or such successor thereto or
comparable system, upon official notice of issuance, the shares of Common Stock
issuable upon exercise of the then outstanding Warrants and maintain the listing
or quoting of such shares after their issuance so long as the Common Stock is so
listed or quoted; and the Company will also cause to be so listed or quoted,
will register under the Exchange Act and will maintain such listing or quoting
of, any Other Securities that at any time are issuable upon exercise of the
Warrants, if and at the time that any securities of the same class shall be
listed on such national securities exchange by the Company.
5. Issue Tax. The issuance of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the holders hereof
for any issuance tax in respect thereto.
6. Closing of Books. The Company will at no time close its transfer
books against the transfer of any Warrant or of any share of Common Stock issued
or issuable upon the exercise of any Warrant in any manner which interferes with
the timely exercise of such Warrant.
7. No Rights or Liabilities as Stockholders. This Warrant shall not
entitle the holder thereof to any of the rights of a stockholder of the Company,
except as expressly contemplated herein. No provision of this Warrant, in the
absence of the actual exercise of such Warrant and receipt by the holder thereof
of Common Stock issuable upon such conversion, shall give rise to any liability
on the part of such holder as a stockholder of the Company, whether such
liability shall be asserted by the Company or by creditors of the Company.
8. Restrictive Legends. Except as otherwise permitted by this section
8, each Warrant originally issued and each Warrant issued upon direct or
indirect transfer or in substitution for any Warrant pursuant to this section 8
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an exemption
therefrom under such Act."
Except as otherwise permitted by this section 8, (a) each certificate for
Original Common Stock (or Other Securities) issued upon the exercise of any
Warrant, and (b) each certificate issued upon the direct or indirect transfer of
any such Original Common Stock (or Other Securities) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the
absence of such registration or an exemption therefrom under such Act."
17
The holder of any Restricted Securities shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing the
applicable legend set forth above in this section 8 when such securities shall
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering such Restricted Securities,
(b) sold pursuant to Rule 144 or any comparable rule under the Securities Act,
(c) transferred to a limited number of institutional holders, each of which
shall have represented in writing that it is acquiring such Restricted
Securities for investment and not with a view to the disposition thereof, or (d)
when, in the opinion of independent counsel for the holder thereof experienced
in Securities Act matters, such restrictions are no longer required in order to
insure compliance with the Securities Act. The Company will pay the reasonable
fees and disbursements of counsel for any holder of Restricted Securities in
connection with all opinions rendered pursuant to this section 8.
9. Availability of Information. The Company will cooperate with each
holder of any Restricted Securities in supplying such information as may be
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any Warrants,
promptly upon their becoming available, copies of all financial statements,
reports, notices and proxy statements sent or made available generally by the
Company to its stockholders, and copies of all regular and periodic reports and
all registration statements and prospectuses filed by the Company with any
securities exchange or with the Commission.
10. Information Required By Rule 144A. The Company will, upon the
request of the holder of this Warrant, provide such holder, and any qualified
institutional buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Warrants, except at such times
as the Company is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act. For the purpose of this section 10, the term "qualified
institutional buyer" shall have the meaning specified in Rule 144A under the
Securities Act.
11. Registration Rights Agreement; Put Rights Agreement. The holder of
this Warrant and the holders of any securities issued or issuable upon the
exercise hereof are each entitled to the benefits of the Registration Rights
Agreement and the Put Rights Agreement, each dated as of the Initial Date, among
the Company and the Purchasers.
18
12. Ownership, Transfer and Substitution of Warrants.
12A. Ownership of Warrants. Except as otherwise required by
law, the Company may treat the Person in whose name any Warrant is registered on
the register kept at the principal office of the Company as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary except
that, if and when any Warrant is properly assigned in blank, the Company, in its
discretion, may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes, notwithstanding any notice to the
Company to the contrary. Subject to section 8, a Warrant, if properly assigned,
may be exercised by a new holder without first having a new Warrant issued.
12B. Transfer and Exchange of Warrants. Upon the surrender of
any Warrant, properly endorsed, for registration of transfer or for exchange at
the principal office of the Company, the Company at its expense will (subject to
compliance with section 8, if applicable) execute and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Original Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
12C. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant held by a Person other than a Purchaser or any
institutional investor reasonably satisfactory to the Company, upon delivery of
its unsecured indemnity reasonably satisfactory to the Company in form and
amount or, in the case of any such mutilation, upon surrender of such Warrant
for cancellation at the principal office of the Company, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
13. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
"ACQUIRER'S COMMON STOCK" shall have the meaning specified in
section 2I.
"ACQUIRING COMPANY" shall have the meaning specified in section 2I.
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
section 2C or 2D, deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than the
following:
(a) shares of Common Stock issued upon the exercise or partial
exercise of the Warrants;
19
(b) up to 1,404,340 shares of Common Stock held in treasury by
the Company, to be offered by the Company to, and to be purchased by,
certain existing stockholders of the Company and others not later than
December 31, 1997, for a purchase price of not less than $2.40 per
share, and upon the terms outlined in Exhibit A attached to the
memorandum dated August 14, 1997 from Xxx Xxxx to certain
representatives of the Purchasers and of General American Life
Insurance Company;
(c) up to 786,659 shares of Common Stock issued pursuant to
Options outstanding prior to January 1, 1997 and having an exercise
price of $2.95 per share or more; and
(d) shares of Common Stock issued in connection with
acquisitions by the Company of other insurance agencies or similar
entities, provided, that the Fair Value of the consideration received
for such shares shall be at least equal to the then-current Market
Price of such shares.
"ANNOUNCEMENT DATE" shall have the meaning specified in
section 2I.
"BUSINESS DAY" shall mean any day on which banks are open for
business in New York City (other than a Saturday, a Sunday or a legal holiday in
the State of New York), provided, that any reference to "days" (unless Business
Days are specified) shall mean calendar days.
"COMMISSION" shall mean the Securities and Exchange Commission
or any successor federal agency having similar powers.
"COMMON STOCK" shall mean the Original Common Stock, any stock
into which such stock shall have been converted or changed or any stock
resulting from any reclassification of such stock and all other stock of any
class or classes (however designated) of the Company the 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.
"COMPANY" shall have the meaning specified in the initial
paragraph of this Warrant.
"CONSUMMATION DATE" shall have the meaning specified in
section 2I.
"CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Additional Shares of
Common Stock.
20
"DIVIDEND RESTRICTIONS" shall mean the restrictions on the
ability of the Company to declare, order, pay or make dividends or other
distributions, as set forth in paragraph 6B of the Purchase Agreement, whether
or not such Purchase Agreement remains in effect.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934, as amended.
"EXERCISE PRICE" shall have the meaning specified in section
1A.
"FAIR VALUE" shall mean, with respect to any securities or
other property, the fair value thereof, as determined by an independent
investment bank, or accounting firm or other organization which is recognized
for, and experienced in valuing insurance agencies and brokers and similar
financial services firms (the "INDEPENDENT EVALUATOR"), which is, in any case,
selected and mutually agreed upon by the Majority Holders and the Company
(collectively, the "INTERESTED PARTIES"). If the Majority Holders or the Company
propose an Independent Evaluator and the Interested Parties cannot agree on that
or any other proposed Independent Evaluator within 30 days, the Majority Holders
and the Company shall each hire an Independent Evaluator within 15 days. The
cost of such appraisals shall be borne by the Company. The determination of Fair
Value by the Independent Evaluator shall be set forth within 45 days of the
engagement in a written opinion addressed to the Board of Directors of the
Company and to the holders of Warrants and shall be final, conclusive and
binding upon the Company and such holders. In the event that the Interested
Parties hire two Independent Evaluators, the Fair Value shall be the average of
the two values established unless there is a difference of more than 10%, in
which case the Independent Evaluators shall select a third Independent Evaluator
who shall establish a value within 30 days of such engagement and the Fair Value
shall be the average of the two closest prices established by the Independent
Evaluators. In the event a third Independent Evaluator is hired, the cost of
such evaluation shall be split evenly between the Company and the holders of
Warrants.
"INDEPENDENT EVALUATOR" shall have the meaning specified in
the definition of "Fair Value."
"INITIAL DATE" shall have the meaning specified in section 2A.
"INTERESTED PARTIES" shall have the meaning specified in the
definition of "Fair Value."
"MAJORITY HOLDERS" shall mean the holders of at least 50.1% of
all the Warrants at the time outstanding, determined on the basis of the number
of shares of Common Stock then purchasable upon the exercise of all Warrants
then outstanding.
"MARKET PRICE" shall mean on any date specified herein, (a)
with respect to Common Stock or to common stock (or equivalent equity interests)
of an Acquiring
21
Person or its Parent, the amount per share equal to (i) the last sale price of
shares of Common Stock, regular way, or of shares of such common stock (or
equivalent equity interests) on such date or, if no such sale takes place on
such date, the average of the closing bid and asked prices thereof on such date,
in each case as officially reported on the principal national securities
exchange on which the same are then listed or admitted to trading, or (ii) if no
shares of Common Stock or no shares of such common stock (or equivalent equity
interests), as the case may be, are then listed or admitted to trading on any
national securities exchange, the last sale price of shares of Common Stock,
regular way, or of shares of such common stock (or equivalent equity interests)
on such date, in each case or, if no such sale takes place on such date, the
average of the reported closing bid and asked prices thereof on such date as
quoted in the Nasdaq National Market or, if no shares of Common Stock or no
shares of such common stock (or equivalent equity interest), as the case may be,
are then quoted in the Nasdaq National Market, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in
either case as reported by any member firm of the New York Stock Exchange
selected by the Company, or (iii) if no shares of Common Stock or no shares of
such common stock (or equivalent equity interests), as the case may be, are then
listed or admitted to trading on any national securities exchange or quoted or
published in the over-the-counter market, the higher of (x) the book value
thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company, as of the
last day of any month ending within 60 days preceding the date as of which the
determination is to be made or (y) the Fair Value thereof; and (b) with respect
to any other securities, the Fair Value thereof.
"NET BASIS EXERCISE" shall have the meaning specified in
section 1F.
"NOTE APPLICATION EXERCISE" shall have the meaning specified
in section 1F.
"NOTES" shall have the meaning specified in the opening
paragraphs of this Warrant.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the
name of the Company by its President, one of its Vice Presidents or its
Treasurer.
"OPTIONS" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
"ORIGINAL COMMON STOCK" shall have the meaning specified in
the opening paragraphs of this Warrant.
"OTHER SECURITIES" shall mean any stock (other than Common
Stock) and any other securities of the Company or any other Person (corporate or
otherwise) which the holders of the Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the Warrants, in lieu of
or in addition to Common Stock, or which at
22
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to section 2I or
otherwise.
"PARENT" shall have the meaning specified in section 2I.
"PERSON" shall mean and include an individual, a partnership,
an association, a joint venture, a corporation, a trust, a limited liability
company, an unincorporated organization and a government or any department or
agency thereof.
"PURCHASE AGREEMENT" shall have the meaning specified in the
opening paragraphs of this Warrant.
"PURCHASER" and "PURCHASERS" shall have the respective
meanings specified in the opening paragraphs of this Warrant.
"PUT NOTE" shall mean a promissory note issued by the Company
to a holder of (i) Warrants or (ii) Common Stock issued upon the exercise of
Warrants, pursuant to the Company's obligation under the Put Rights Agreement to
repurchase such Warrants or Common Stock from such holder upon such holder's
exercise of its right under the Put Rights Agreement to require the Company to
effect such a repurchase.
"PUT RIGHTS AGREEMENT" shall mean that certain Put Rights
Agreement dated as of the Initial Date by and among the Company and the
Purchasers.
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain
Registration Rights Agreement dated as of the Initial Date by and among the
Company and the Purchasers.
"REQUIRED HOLDERS" shall mean the holders of at least 66 % of
all the Warrants at the time outstanding, determined on the basis of the number
of shares of Common Stock then purchasable upon the exercise of all Warrants
then outstanding.
"RESTRICTED SECURITIES" shall mean (a) any Warrants bearing
the applicable legend set forth in section 8 and (b) any shares of Original
Common Stock (or Other Securities) which have been issued upon the exercise of
Warrants and which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such section, and (c) unless the context
otherwise requires, any shares of Original Common Stock (or other Securities)
which are at the time issuable upon the exercise of Warrants and which, when so
issued, will be evidenced by a certificate or certificates bearing the
applicable legend set forth in such section.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"TRANSACTION" shall have the meaning specified in section 2I.
23
"WARRANTS" shall have the meaning specified in the opening
paragraphs of this Warrant.
14. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
15. Notices. All notices and other communications under this Warrant
shall be in writing and shall be mailed by registered or certified mail, return
receipt requested, addressed (a) if to any holder of any Warrant or any holder
of any Common Stock (or Other Securities), at the registered address of such
holder as set forth in the applicable register kept at the principal office of
the Company, or (b) if to the Company, to the attention of its President at the
Company's principal office, provided that the exercise of any Warrant shall be
effected in the manner provided in section 1.
16. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. The agreements of the Company contained in this Warrant other than
those applicable solely to the Warrants and the holders thereof shall inure to
the benefit of and be enforceable by any holder or holders at the time of any
Common Stock (or Other Securities) issued upon the exercise of Warrants, whether
so expressed or not. This Warrant shall be construed and enforced in accordance
with and governed by the laws of the State of New York. The section headings in
this Warrant are for purposes of convenience only and shall not constitute a
part hereof.
XXXXX/XXXXXX, INC.
By:
Name:
Title:
