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EXHIBIT B
AMENDED AND RESTATED
STOCK PURCHASE WARRANT
This Warrant is issued this ____ day of January, 1999, by HARVEST
RESTAURANT GROUP, INC., a Texas corporation (the "Company"), to SIRROM CAPITAL
CORPORATION, a Tennessee corporation (SIRROM CAPITAL CORPORATION and any
subsequent assignee or transferee hereof are hereinafter referred to
collectively as "Holder" or "Holders").
RECITALS:
WHEREAS, Xxxxxx made a term loan to TRC Acquisition Corporation, a
Georgia corporation ("TRC") in the original principal amount of Two Million and
No/100ths Dollars ($2,000,000) (the "Loan") pursuant to the terms of a Loan
Agreement dated October 22, 1996 by and between TRC and Holder (the "Loan
Agreement");
WHEREAS, in connection with the Loan, TRC granted Holder the right to
purchase certain shares of common stock of TRC pursuant to that certain Stock
Purchase Warrant dated October 22, 1996 (the "Original Warrant");
WHEREAS, the Loan is evidenced by a Secured Promissory Note dated
October 22, 1996 in the original principal amount of $1,000,000 made and
executed by TRC, payable to the order of Holder and a Secured Promissory Note
dated February 25, 1997 in the original principal amount of $1,000,000 made and
executed by TRC, payable to the order of Holder (collectively the "Note");
WHEREAS, the Note has been amended and restated by that certain Xxxxxxx
and Restated Secured Promissory Note of even date herewith in the original
principal amount of $2,000,000 made and executed by Hartan, Inc., a Texas
corporation and wholly owned subsidiary of the Company ("Hartan") in favor of
Holder (the "Amended and Restated Note");
WHEREAS, pursuant to an Assumption Agreement and Consent of even date
herewith, Hartan is assuming all of the obligations of TRC under the Loan
Documents (as defined in the Loan Agreement);
WHEREAS, pursuant to a Guaranty Agreement of even date herewith, the
Company is guaranteeing the obligations of Hartan in connection with the Loan;
WHEREAS, on or before the date hereof TRC will merge with and into
Hartan (the "Merger");
WHEREAS, TRC, Hartan and the Company have requested that Holder consent
to the Merger;
WHEREAS, the Original Warrant has been assigned by Holder to Sirrom
Funding Corporation, a wholly owned subsidiary of Holder, with Holder retaining
certain rights and this Warrant will also be assigned to Sirrom Funding
Corporation; and
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WHEREAS, this Warrant shall amend, restate and replace the Original
Warrant.
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of SIRROM
CAPITAL CORPORATION having made loans to TRC which are being assumed by Hartan
in the aggregate principal amount of $2,000,000, as evidenced by the Amended and
Restated Note, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby confirms and
ratifies the grant to Holder on October 22, 1996 of the right to purchase
375,000 shares of TRC's common stock, which the Company represents equaled not
less than 12.5% of the common stock of TRC on October 22, 1996, calculated on a
fully diluted basis after exercise ("Base Amount"). Pursuant to the terms of the
Original Warrant, the Base Amount increased on October 22, 1998 to 409,682
shares. As a result of the Merger, in light of Section 9(b) of the Original
Warrant, the Base Amount is adjusted on the date hereof to 643,509 shares of the
Company's common stock ("Common Stock") (calculated by multiplying 409,682
shares by 1.57075, the exchange ratio used in the Merger, referred to herein as
the "Exchange Ratio", and rounding all fractions upward to the next whole
number) and the Company hereby grants to Holder the right to purchase the Base
Amount (as adjusted from time to time pursuant to the terms of this Warrant) of
Common Stock provided that in the event that the indebtedness evidenced by the
Amended and Restated Note is outstanding on the following dates, the Base Amount
shall be increased to the corresponding number set forth below:
DATE BASE AMOUNT
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October 22, 1999 699,259 shares of Common Stock,
which is equal to 445,175 shares of TRC
common stock prior to the Merger, the
amount set forth in the Original Warrant
multiplied by the Exchange Ratio.
October 22, 2000 756,331 shares of Common Stock,
which is equal to 481,509 shares of TRC
common stock prior to the Merger, the
amount set forth in the Original Warrant
multiplied by the Exchange Ratio.
The shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." This Warrant shall be exercisable at
any time and from time to time from the date hereof until November 30, 2001. For
purposes of this Warrant the term "fully diluted basis" shall be determined in
accordance with generally accepted accounting principles as of the date hereof.
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2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. EXERCISE. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) as to all or any increment or
increments of Ten Thousand (10,000) Shares (or the balance of the Shares if less
than such number), upon delivery of written notice of intent to exercise to the
Company at the following address: 0000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, Attention: Chief Financial Officer, or such other
address as the Company shall designate in a written notice to the Holder hereof,
together with this Warrant and payment to the Company of the aggregate Exercise
Price of the Shares so purchased. The Exercise Price shall be payable, at the
option of the Holder, (i) by wire transfer, certified cashiers or bank check,
(ii) by the surrender of the Amended and Restated Note or portion thereof having
an outstanding principal balance equal to the aggregate Exercise Price or (iii)
by the surrender of a portion of this Warrant having an aggregate Fair Market
Value (as hereinafter defined) equal to the aggregate Exercise Price. Upon
exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute and
deliver to the Holder of this Warrant a certificate or certificates for the
total number of whole Shares for which this Warrant is being exercised in such
names and denominations as are requested by such Holder. If this Warrant shall
be exercised with respect to less than all of the Shares, the Holder shall be
entitled to receive a new Warrant covering the number of Shares in respect of
which this Warrant shall not have been exercised, which new Warrant shall in all
other respects be identical to this Warrant. The Company covenants and agrees
that it will pay when due any and all state and federal issue taxes which may be
payable in respect of the issuance of this Warrant or the issuance of any Shares
upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended ("Securities Act") or any
state securities laws ("Blue Sky Laws"). This Warrant has been acquired
for investment purposes and not with a view to distribution or resale
and may not be pledged, hypothecated, sold, made subject to a security
interest, or otherwise transferred without (i) an effective
registration statement for such Warrant under the Securities Act and
such applicable Blue Sky Laws, or (ii) an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the Company and
its counsel, that registration is not required under the Securities Act
or under any applicable Blue Sky Laws (the Company hereby acknowledges
that Bass, Xxxxx & Xxxx is acceptable counsel). Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the
same manner and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED UNTIL (I) A
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REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD THERETO, OR (II) IN THE OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY, REGISTRATION UNDER SUCH SECURITIES ACTS OR
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents
and instruments as counsel for the Company reasonably deems necessary
to effect the compliance of the issuance of this Warrant and any shares
of Common Stock issued upon exercise hereof with applicable federal and
state securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive
rights, if any, with respect thereto or to the issuance thereof. The
Company shall at all times reserve and keep available for issuance upon
the exercise of this Warrant such number of authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in
full of this Warrant.
5. BELOW MARKET VALUE ISSUANCES.
(a) In the event that the Company sells shares of the
Company's capital stock at a price below Fair Market Value, the number
of shares of Common Stock issuable upon exercise of this Warrant shall
be equal to the product obtained by multiplying the number of shares
then issuable pursuant to this Warrant prior to such sale by a
fraction, the numerator of which shall be the product of (x) the total
number of shares of Common Stock outstanding on a fully diluted basis
immediately after such issuance or sale, multiplied by (y) the fair
market value immediately prior to such issuance or sale and the
denominator of which shall be the sum of (i) the number of shares of
Common Stock outstanding on a fully diluted basis immediately prior to
such issuance or sale multiplied by the fair market value immediately
prior to such issuance or sale, plus (ii) the aggregate amount of the
consideration received by the Company upon such issuance or sale (as
illustrated on Schedule I hereto).
(b) No adjustment to the number of shares of Common Stock
issuable upon exercise of this Warrant shall be made under this Section
5 (i) upon the issuance of shares of Common Stock upon the exercise or
conversion of any of the warrants, options and/or preferred stock
described on Schedule II hereto; and (ii) if it would result in less
than a 0.1% change in number of Shares to be issued; provided, however,
that in such case any adjustment that would otherwise be required then
to be made shall be carried forward and shall be made at the time of
and together with the next subsequent adjustment which, together with
any adjustment so carried forward, shall amount to at least a 0.1%
change in the number of Shares to be issued.
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6. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer and subject to the terms
of Section 4 hereof, the Company shall promptly execute and deliver a new
Warrant or Warrants in the form hereof in the name of the assignee or assignees
and in the denominations specified in such instructions. The Company shall pay
all expenses incurred by it in connection with the preparation, issuance and
delivery of Warrants under this Section.
7. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS;
PREFERENCE RIGHTS. Except as otherwise provided herein, this Warrant does not
confer upon the Holder, as such, any right whatsoever as a shareholder of the
Company. Notwithstanding the foregoing, if the Company should offer to all of
the Company's shareholders the right to purchase any securities of the Company,
then all shares of Common Stock that are subject to this Warrant shall be deemed
to be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering. The Company shall not grant any preemptive
rights with respect to any of its capital stock without the prior written
consent of the Holder. Other than securities described on Schedule II hereto,
the Company shall not issue any securities which entitle the holder thereof to
obtain any preference over holders of Common Stock upon the dissolution,
liquidation, winding-up, sale, merger, or reorganization of the Company without
the prior written consent of the Holder.
8. OBSERVATION RIGHTS. The Holder of this Warrant shall (a) receive
notice of and be entitled to attend or may send a representative to attend all
meetings of the Company's Board of Directors in a non-voting observation
capacity, (b) subject to reasonable confidentiality requirements of the Company,
receive copies of all notices, packages and documents provided to members of the
Company's Board of Directors for each board of directors meeting, and (c)
receive copies of all actions taken by written consent by the Company's Board of
Directors, from the date hereof until such time as the indebtedness evidenced by
the Amended and Restated Note has been paid in full.
9. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised
subsequent to any stock split, stock dividend, recapitalization,
combination of shares of the Company, or other similar event, occurring
after the date hereof, then the Holder exercising this Warrant shall
receive, for the aggregate price paid upon such exercise, the aggregate
number and class of shares which such Holder would have received if
this Warrant had been exercised immediately prior to such stock split,
stock dividend, recapitalization, combination of shares, or other
similar event. If any adjustment under this Section 9(a) would create a
fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and
the number of shares subject to this Warrant shall be the next higher
number of shares, rounding all fractions upward. Whenever there shall
be an adjustment pursuant to this Section 9(a), the Company shall
forthwith notify the Holder or Holders of this Warrant of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
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(b) If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, exchange of shares,
separation, reorganization or liquidation of the Company, or other
similar event, occurring after the date hereof, as a result of which
shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of securities
of the Company or another entity, then the Holder exercising this
Warrant shall receive, for the aggregate price paid upon such exercise,
the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such
merger, consolidation, exchange of shares, separation, reorganization
or liquidation, or other similar event. If any adjustment under this
Section 9(b) would create a fractional share of Common Stock or a right
to acquire a fractional share of Common Stock, such fractional share
shall be disregarded and the number of shares subject to this Warrant
shall be the next higher number of shares, rounding all fractions
upward. Whenever there shall be an adjustment pursuant to this Section
9(b), the Company shall forthwith notify the Holder or Holders of this
Warrant of such adjustment, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment
was calculated.
10. PUT AGREEMENT.
(a) The Company hereby irrevocably grants and issues to Holder
the right and option to sell to the Company (the "Put") this Warrant
for a period of 30 days immediately prior to the expiration thereof, at
a purchase price (the "Purchase Price") equal to the Fair Market Value
(as hereinafter defined) of the shares of Common Stock issuable to
Holder upon exercise of this Warrant less the exercise price of such
Shares.
(b) The Company shall pay to the Holder, in cash or certified
or cashier's check, the Purchase Price in exchange for the delivery to
the Company of this Warrant within thirty (30) days of the receipt of
written notice, addressed as set forth in Section 3 hereto, from the
Holder of its intention to exercise the Put.
(c) The Fair Market Value of the shares of Common Stock of the
Company issuable pursuant to this Warrant shall be determined as
follows:
(i) Using the previous five day average closing bid
price for the day or, where no sale is made on that day, the
average of the closing bid and asked prices for that day on
the Nasdaq Stock Market or the OTC Bulletin Board if the
securities are at the time listed or quoted thereon,
respectively, or, if it is not so listed or quoted, on any
other national securities exchange selected by the Company on
which it is at the time listed. If at the applicable time the
Common Stock is quoted on the OTC Bulletin Board, the
foregoing calculations shall be based on a Trade and Quote
Summary Report from the OTC Bulletin Board Research Service if
available, and if not, on any other publicly available data
reasonably deemed reliable by the Company.
(ii) By mutual agreement of the Company and the
Holder;
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(iii) By an investment banking company selected by
the Company and the Holder;
(iv) If the Company and the Holder cannot agree on an
investment banking company, then the Company and the Holder
shall each appoint an independent, experienced appraiser who
is a member of a recognized professional association of
business appraisers. The two appraisers shall determine the
value of the shares of Common Stock which would be issued upon
the exercise of the Warrant, taking into consideration all
factors deemed by such appraiser to be relevant, including
that such shares would constitute a minority interest, and
would lack liquidity, and further assuming that the sale would
be between a willing buyer and a willing seller, both of whom
have full knowledge of the financial and other affairs of the
Company, and neither of whom is under any compulsion to sell
or to buy.
(v) If the highest of the two appraisals is not more
than 10% more than the lowest of the appraisals, the Fair
Market Value shall be the average of the two appraisals. If
the highest of the two appraisals is 10% or more than the
lowest of the two appraisals, then a third appraiser shall be
appointed by the two appraisers, and if they cannot agree on a
third appraiser, the American Arbitration Association shall
appoint the third appraiser. The third appraiser, regardless
of who appoints him or her, shall have the same qualifications
as the first two appraisers.
(vi) The Fair Market Value after the appointment of
the third appraiser shall be the mean of the three appraisals.
(vii) The fees and expenses of the appraisers shall
be paid one-half by the Company and one-half by the Holder.
(d) The Put shall terminate upon the Company's successful
completion of a bona fide underwritten public offering of its capital
stock with net proceeds to the Company of at least $10,000,000 ("IPO").
11. REGISTRATION.
(a) The Company and the holders of the Shares agree that if at
any time after the date hereof the Company's Board of Directors shall
authorize the filing of a registration statement with respect to any of
its Common Stock on a form suitable for a secondary offering (excluding
Form S-4 and Form S-8 or the successors thereto), it will give notice
in writing to such effect to the registered holder(s) of the Shares at
least thirty (30) days prior to such filing, and, at the written
request of any such registered holder, made within ten (10) days after
the receipt of such notice, will include therein at the Company's cost
and expense (excluding underwriting discounts, commissions and filing
fees attributable to the Shares included therein) such of the Shares as
such holder(s) shall request; provided, however, that if the offering
being registered by the Company is underwritten and if the
representative of the underwriters certifies in writing that the
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inclusion therein of the Shares would materially and adversely affect
the sale of the securities to be sold by the Company thereunder, then
the Company shall be required to include in the offering only that
number of securities, including the Shares, which the underwriters
determine in their sole discretion will not jeopardize the success of
the offering (the securities so included to be apportioned pro rata
among all selling shareholders according to the total amount of
securities entitled to be included therein owned by each selling
shareholder).
(b) Whenever required under this Agreement to use its best
efforts to effect the registration of any of the Shares, the Company
shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering such Shares and use its best efforts to cause such
registration statement to be declared effective by the
Commission as expeditiously as possible and to keep such
registration effective until the earlier of (A) the date when
all Shares covered by the registration statement have been
sold or (B) two hundred seventy (270) days from the effective
date of the registration statement; provided, that
contemporaneously with a registration statement or prospectus
or any amendment or supplements thereto, the Company will
furnish to each Holder of Shares covered by such registration
statement and the underwriters, if any, copies of all such
documents proposed to be filed. If an amendment to the
Company's registration statement is filed, the Company will
contemporaneously with such filing deliver a copy to the
Holder.
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to such registration
statement as may be necessary to keep such registration
statement effective during the period referred to in Section
11(b)(i) and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered
by such registration statement, and cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed with the Commission pursuant to Rule
424 under the Securities Act.
(iii) Furnish to the selling Holder(s) such numbers
of copies of such registration statement, each amendment
thereto, the prospectus included in such registration
statement (including each preliminary prospectus), each
supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of
the Shares owned by them.
(iv) Use its best efforts to register and qualify
under such other securities laws of such jurisdictions as
shall be reasonably requested by any selling Holder and do any
and all other acts and things which may be reasonably
necessary or advisable to enable such selling Holder to
consummate the disposition of the Shares owned by such Holder,
in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a
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condition thereto to qualify to transact business or to file a
general consent to service of process in any such states or
jurisdictions.
(v) Promptly notify each selling Holder of the
happening of any event as a result of which the prospectus
included in such registration statement contains an untrue
statement of a material fact or omits any material fact
necessary to make the statements therein not misleading and,
at the request of any such Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such
prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading.
(vi) Provide a transfer agent and registrar for all
such Shares not later than the effective date of such
registration statement.
(vii) [Intentionally Omitted]
(viii) [Intentionally Omitted]
(ix) Promptly notify the selling Holder(s) and the
underwriters, if any, of the following events and (if
requested by any such person) confirm such notification in
writing: (A) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment or
post-effective amendment thereto and, with respect to the
registration statement or any post-effective amendment
thereto, the declaration of the effectiveness of such
documents, (B) any requests by the Commission for amendments
or supplements to the registration statement or the prospectus
or for additional information, (C) the issuance or threat of
issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation
of any proceedings for that purpose, and (D) the receipt by
the Company of any notification with respect to the suspension
of the qualification of the Shares for sale in any
jurisdiction or the initiation or threat of initiation of any
proceeding for such purposes.
(x) [Intentionally Omitted]
(xi) [Intentionally Omitted]
(xii) [Intentionally Omitted]
(xiii) [Intentionally Omitted]
(xiv) [Intentionally Omitted]
(c) After the date hereof, the Company shall not grant to any
holder of securities of the Company any registration rights which have
a priority greater than or equal to those granted to Holders pursuant
to this Warrant without the prior written consent of the Holder(s).
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(d) The Company's obligations under Section 11(a) above with
respect to each holder of Shares are expressly conditioned upon such
holder's furnishing to the Company in writing such information
concerning such holder and the terms of such holder's proposed offering
as the Company shall reasonably request for inclusion in the
registration statement. If any registration statement including any of
the Shares is filed, then the Company shall indemnify each holder
thereof (and each underwriter for such holder and each person, if any,
who controls such underwriter within the meaning of the Securities Act)
from any loss, claim, damage or liability arising out of, based upon or
in any way relating to any untrue statement of a material fact
contained in such registration statement or any omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except for any such
statement or omission based on information furnished in writing by such
holder of the Shares expressly for use in connection with such
registration statement; and such holder shall indemnify the Company
(and each of its officers and directors who has signed such
registration statement, each director, each person, if any, who
controls the Company within the meaning of the Securities Act, each
underwriter for the Company and each person, if any, who controls such
underwriter within the meaning of the Securities Act) and each other
such holder against any loss, claim, damage or liability arising from
any such statement or omission which was made in reliance upon
information furnished in writing to the Company by such holder of the
Shares expressly for use in connection with such registration
statement.
(e) For purposes of this Section 11, all of the Shares shall
be deemed to be issued and outstanding.
12. CERTAIN NOTICES. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in
stock or make any special dividend or other distribution to the holders
of its Common Stock;
(c) offer for subscription to the holders of any of its Common
Stock any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the
Company, or consolidate, merge or otherwise combine with, or sell all
or substantially all of its assets to, another corporation; or
(e) voluntarily or involuntarily dissolve, liquidate or wind
up the affairs of the Company;
then, in any one or more of said cases, the Company shall give
to the Holder of the Warrant, by certified or registered mail, (i) at
least twenty (20) days' prior written notice of the date on which the
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 or winding up,
and (ii) in the case of such reorganization,
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reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least twenty (20) days' prior written
notice of the date when the same shall take place. Any notice required
by 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 any notice required by
clause (ii) shall 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 or winding up, as the case may be.
13. RIGHTS OF CO-SALE.
(a) Co-Sale Right. Prior to an IPO and excluding any sale
pursuant to the exemptions set forth in Rule 144 promulgated under the
Securities Act, neither Xxxxx X. Xxxx, III, Xxxx X. Xxxxxxx nor Xxxxxxx
X. Xxxxxx (individually a "Selling Shareholder" and collectively the
"Selling Shareholders") shall enter into any transaction that would
result in the sale by him of any Common Stock now or hereafter owned by
him, unless prior to such sale the Selling Shareholder shall give
notice to Holder of his intention to effect such sale in order that
Holder may exercise its rights under this Section 13 as hereinafter
described. Such notice shall set forth (i) the number of shares to be
sold by the Selling Shareholder, (ii) the principal terms of the sale,
including the price at which the shares are intended to be sold, and
(iii) an offer by the Selling Shareholder to use his best efforts to
cause to be included with the shares to be sold by him in the sale, on
a share-by-share basis and on the same terms and conditions, the Shares
issuable or issued to Holder pursuant this Warrant.
(b) Rejection of Co-Sale Offer. If Holder has not accepted
such offer in writing within a period of ten (10) days from the date of
receipt of the notice, then the Selling Shareholder shall thereafter be
free for a period of ninety (90) days to sell the number of shares
specified in such notice, at a price no greater than the price set
forth in such notice and on otherwise no more favorable terms to the
Selling Shareholder than as set forth in such notice, without any
further obligation to Holder in connection with such sale. In the event
that the Selling Shareholder fails to consummate such sale within such
ninety-day period, the shares specified in such notice shall continue
to be subject to this Section.
(c) Acceptance of Co-Sale Offer. If Xxxxxx accepts such offer
in writing within ten (10) day period, such acceptance shall be
irrevocable unless the Selling Shareholder shall be unable to cause to
be included in his sale the number of Shares of stock held by Xxxxxx
and set forth in the written acceptance. In that event, the Selling
Shareholder and Holder shall participate in the sale pro rata, with the
Selling Shareholder and Holder each selling half the total number of
such shares to be sold in the sale.
14. EQUITY PARTICIPATION. This Warrant is issued in connection with the
Loan Agreement. It is intended that this Warrant constitute an equity
participation under and pursuant to T.C.A. ss.00-00-000, et seq. and that such
equity participation be permitted under said statutes and not constitute
interest on the Amended and Restated Note. If under any circumstances
whatsoever, fulfillment of any obligation of this Warrant, the Loan Agreement,
or any other
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agreement or document executed in connection with the Loan Agreement, shall
violate the lawful limit of any applicable usury statute or any other applicable
law with regard to obligations of like character and amount, then the obligation
to be fulfilled shall be reduced to such lawful limit, such that in no event
shall there occur, under this Warrant, the Loan Agreement, or any other document
or instrument executed in connection with the Loan Agreement, any violation of
such lawful limit, but such obligation shall be fulfilled to the lawful limit.
If any sum is collected in excess of the lawful limit, such excess shall be
applied to reduce the principal amount of the Amended and Restated Note.
15. GOVERNING LAW. This Warrant shall be governed by the laws of the
State of Tennessee applicable to agreements made entirely within the State.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
HARVEST RESTAURANT GROUP, INC., a
Texas corporation
By:
---------------------------------------
Title:
------------------------------------
SIRROM CAPITAL CORPORATION, a Tennessee
corporation
By:
---------------------------------------
Title:
------------------------------------
SIRROM FUNDING CORPORATION, a Tennessee
corporation
By:
--------------------------------------
Title:
------------------------------------
The undersigned, being all of the Shareholders of the Company, join in
the execution of this Warrant for the purposes of acknowledging and agreeing to
be bound by Section 13 hereof:
-----------------------------
Xxxx X. Xxxxxxx
12
13
----------------------------
Xxxxx X. Xxxx, III
-----------------------------
Xxxxxxx X. Xxxxxx
13
