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EXHIBIT 4.15
THIS WARRANT HAS 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 REGISTRATION STATEMENT UNDER THE ACT OR SUCH 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.
STOCK PURCHASE WARRANT
This Stock Purchase Warrant is issued this 25th day of March, 1998, by
ELECTRONICS ACCESSORY SPECIALISTS INTERNATIONAL, INC., a Delaware 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").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM.
(a) For and in consideration of SIRROM CAPITAL CORPORATION making a
loan to the Company in an amount of One Million Seven Hundred Fifty
Thousand and no/100ths Dollars, ($1,750,000.00) pursuant to the terms of a
secured promissory note of even date herewith (the "Note") and related loan
agreement dated June 24, 1997, as amended pursuant to a First Amendment to
Loan Agreement and Loan Documents of even date herewith (the "Loan
Agreement"), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby grants to
Holder the right to purchase 186,836 shares of the Company's common stock
(the "Common Stock"), which the Company represents equals 2% of the capital
stock of the Company on the date hereof, calculated on a fully diluted
basis after exercise ("Base Amount"), provided that in the event that the
indebtedness evidenced by the 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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June 24, 2000 283,143 shares of Common Stock,
which the Company represents equals
3% of the capital stock of the
Company on the date hereof
calculated on a fully diluted basis
after exercise.
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June 24, 2001 381,456 shares of Common Stock,
which the company represents equals
4% of the capital stock of the
Company on the date hereof
calculated on a fully diluted basis
after exercise.
June 24, 2002 481,839 shares of Common Stock,
which the Company represents equals
5% of the capital stock of the
Company on the date hereof
calculated on a fully diluted basis
after exercise.
(b) Notwithstanding the foregoing, if Borrower pays in full the
indebtedness represented by the Note on or before November 30, 1998, the
Base Amount shall be reduced to 92,474 shares of Common Stock which the
Company represents equals 1% of the capital stock of the Company on the
date hereof calculated on a fully diluted basis after exercise.
(c) Notwithstanding the foregoing, if Borrower pays in full all
indebtedness represented by the Note on or before March 31, 1999, the Base
Amount shall be reduced to 139,415 shares of Common Stock which the Company
represents equals 1.5% of the capital stock of the Company on the date
hereof calculated on a fully diluted basis after exercise.
(d) 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
July 31, 2002. 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.
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 one Hundred (100) 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 Xxxx Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx
00000 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
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Price of the Shares so purchased. The Exercise Price shall be payable, at the
option of the Holder, (i) by certified or bank check, (ii) by the surrender of
the 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 a fair market value equal to the aggregate Exercise Price. Upon receipt
of the notice of 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 REGISTRATION STATEMENT UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH
REGARD
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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.
(c) Except for securities issued under the Company's 1996 Long Term
Incentive Plan, as amended, (not to exceed 10% of the common shares of
Borrower outstanding from time-to-time on a fully diluted basis, with the
exercise price per share of any capital stock issued pursuant to any option
granted under such plan not to be less than 100% of the fair market value
of such stock on the date such option is granted), the Company covenants
and agrees that it shall not sell any shares of the Company's capital stock
at a price below the fair market value of such shares (as such may be
determined in good faith, from time to time, by the Company's board of
directors), without the prior written consent of the Holder hereof. In the
event that the Company sells shares of the Company's capital stock in
violation of this Section 4(c), 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).
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5. 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, 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.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS;
PREFERENCE RIGHTS. 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. 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 unless: (i) all indebtedness under the Loan
Agreement and/or Note has been paid in full and (ii) the investment made by the
holder thereof is based on the valuation of the Company being at least
$30,000,000.
7. 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)
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 Note has been paid in full.
8. 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
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prior to such stock split, stock dividend, recapitalization, combination of
shares, or other similar event. If any adjustment under this Section 8(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 8(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.
(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 8(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 8(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.
9. 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 thirty (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.
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(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 the later of (i) 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, or (ii) five (5) days
after Fair Market Value is determined by the appraisers pursuant to Section
9(c) hereof, not to exceed sixty (60) days of the receipt of written
notice.
(c) The Fair Market Value of the shares of Common Stock of the Company
issuable pursuant to this Warrant shall be the average trading price of
shares of Common Stock during the ten (10) trading days preceding the date
notice of the exercise of the Put is delivered to the Company or if the
Common Stock is not publicly traded at such time shall be determined as
follows:
(i) 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 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.
(ii) 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, within thirty (30) days
thereafter, 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.
(iii) The Fair Market Value after the appointment of the third
appraiser shall be the mean of the three appraisals.
(iv) The fees and expenses of the appraisers shall be paid
one-half by the Company and one-half by the Holder.
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(d) Notwithstanding the foregoing, if the Note has been paid in
full and either (i) the Company has successfully completed an
underwritten public offering of the Company's capital stock and the
Company has a market capitalization in excess of $75,000,000.00, or
(ii) the Company is purchased by or merged with a public company
having a market capitalization of at least $75,000,000.00, and the
Holder receives marketable securities in such public company, the Put
shall terminate.
10. REGISTRATION.
(a) The Company and the Holder(s) agree that if at any time after
the date hereof the Company shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable
for a secondary offering of shares of Common Stock held by third
parties and which is not a registration solely to implement an
employee benefit plan or a transaction to which Rule 145 or any
similar rule of the Commission (as defined below) is applicable, 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 (including the fees and expenses of
counsel to such holder(s), but 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 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 of third parties
(including Holder(s)), 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 the Company undertakes 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
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the earlier of (A) the date when all Shares covered by the
registration statement have been gold or (B) one hundred eighty
(180) days from the effective date of the registration statement;
provided, that before filing 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 (excluding exhibits,
unless any such person shall specifically request exhibits),
which documents will be subject to the review of such Holders and
underwriters, and the Company will not file such registration
statement or any amendment thereto or any prospectus or any
supplement thereto (including any documents incorporated by
reference therein) with the Commission if (A) the underwriters,
if any, shall reasonably object to such filing or (B) if
information in such registration statement or prospectus
concerning a particular selling Holder has changed and such
Holder or the underwriters, if any, shall reasonably object.
(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 10(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 all reasonable 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 condition thereto to
qualify to transact business or to
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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, upon discovery of such event, as a result of which the
prospectus included in such registration statement contains an
untrue statement of a material fact or omits any 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 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) Enter into such customary agreements (including
underwriting agreements in customary form) and take all such
other actions as the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such Shares
(including, without limitation, effecting a stock split or a
combination of shares).
(viii) Make reasonably available for inspection by any
selling Holder or any underwriter participating in any
disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such selling
Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
officers, directors, employees and independent accountants of the
Company to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
(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
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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) Make every reasonable effort to prevent the entry of any
order suspending the effectiveness of the registration statement
and obtain at the earliest possible moment the withdrawal of any
such order, if entered.
(xi) Cooperate with the selling Holder(s) and the
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing the Shares to be sold and
not bearing any restrictive legends, and enable such Shares to be
in such lots and registered in such names as the underwriters may
request at least two (2) business days prior to any delivery of
the Shares to the underwriters.
(xii) Provide a CUSIP number for all the Shares not later
than the effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration
statement and any post-effective amendment thereto and at each
closing of an underwritten offering, (A) make such
representations and warranties to the selling Holder(s) and the
underwriters, if any, with respect to the Shares and the
registration statement as are customarily made by issuers in
primary underwritten offerings; (B) use its best efforts to
obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to
the selling Holders and the underwriters, if any, such letters to
be in customary form and covering matters of the type customarily
covered in "cold comfort" letters by underwriters in connection
with underwritten offerings; (C) deliver such-documents and
certificates as may be reasonably requested (1) by the holders of
a majority of the Shares being sold, and (2) by the underwriters,
if any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting agreement or
other agreement entered into by the Company; and (D) obtain
opinions of counsel to the Company and updates thereof (which
counsel and which opinions shall be reasonably satisfactory to
the underwriters, if any), covering the matters customarily
covered in opinions requested in
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underwritten offerings and such other matters as may be
reasonably requested by the selling Holders and underwriters or
their counsel. Such counsel shall also state that no facts have
come to the attention of such counsel which cause them to believe
that such registration statement, the prospectus contained
therein, or any amendment or supplement thereto, as of their
respective effective or issue dates, contains any untrue
statement of any material fact or omits to state any material
fact necessary to make the statements therein not misleading
(except that no statement need be made with respect to any
financial statements, notes thereto or other financial data or
other expertized material contained therein). If for any reason
the Company's counsel is unable to give such opinion, the Company
shall so notify the Holders of the Shares and shall use its best
efforts to remove expeditiously all impediments to the rendering
of such opinion.
(xiv) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make
generally available to its security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act,
no later than forty-five (45) days after the end of any
twelve-month period (or ninety (90) days, if such period is a
fiscal year) (A) commencing at the end of any fiscal quarter in
which the Shares are sold to underwriters in a firm or best
efforts underwritten offering, or (B) if not sold to underwriters
in such an offering, beginning with the first month of the first
fiscal quarter of the Company commencing after the effective date
of the registration statement, which statements shall cover such
twelve-month periods.
(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).
(d) The Company's obligations under Section 10(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
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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
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 for use in connection with such
registration statement.
(e) For purposes of this Section 10, all of the Shares shall be
deemed to be issued and outstanding.
11. 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 (except where the
Company is the surviving entity), 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,
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liquidation or winding up, and (ii) in the case of such
reorganization, 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.
12. RIGHTS OF CO-SALE.
(a) Co-Sale Right. Until such time as the Company completes an
underwritten public offering raising at least $10,000,000.00, neither
Empire National II, LLC, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxx, Xxxxxxx
Xxxxxx, nor Xxxxxx X. Breeze (individually a "Selling Shareholder" and
collectively the "Selling Shareholders") shall enter into any
transaction that would result in the sale by it of any Common Stock
now or hereafter owned by it, unless prior to such sale the Selling
Shareholder shall give notice to Holder of its intention to effect
such sale in order that Holder may exercise its rights under this
Section 12 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 its best efforts to cause to be included with the shares to be
sold by it 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.
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(c) Acceptance of Co-Sale Offer. If Holder 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 Holder
and set forth in the written acceptance. In that event, the Selling
Shareholder and Holder shall participate in the sale pro rata based on
their ownership.
(d) Offers Not Covered. The restrictions under this Section 12
will not apply to any sale or transfer of any Common Stock by a
Selling Shareholder to immediate family members (parent, grandparent,
spouse, children, grandchildren and siblings), or trusts for the
benefit of such family members of such Selling Shareholder, or the
estate of a Selling Shareholder as long as such transferee
acknowledges that such Common Stock shall remain subject to the terms
of this Section 12, as if held by a Selling Shareholder, and such
transferee executes an agreement stating that it is bound by the terms
of this Section 12 and will hold such shares of Common Stock subject
to all such terms and conditions.
13. 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. Section 00-00-000,
et seq. and that such equity participation be permitted under said
statutes and not constitute interest on the Note. If under any
circumstances whatsoever, fulfillment of any obligation of this
Warrant, the Loan Agreement, or any other 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 Note.
14. GOVERNING LAW. This warrant shall be governed by the laws of the
State of Tennessee applicable to agreements made entirely within the
State.
15. SEVERABILITY. If any provision(s) of this Warrant or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Warrant and the
application of such provisions to other
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persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
16. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and be different parties to this Warrant in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the
same Warrant.
17. JURISDICTION AND VENUE. The Company hereby consents to the
jurisdiction of the courts of the State of Tennessee and the United
States District Court for the Middle District of Tennessee, as well as
to the jurisdiction of all courts from which an appeal may be taken
from such courts, for the purpose of any suit, action or other
proceeding arising out of any of its obligations arising under this
Agreement or with respect to the transactions contemplated hereby, and
expressly waives any and all objections it may have as to venue in any
such courts.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
ELECTRONICS ACCESSORY SPECIALISTS
INTERNATIONAL, INC., a Delaware corporation
By: /s/ XXXXXXX X. XXXXX
-----------------------------------------
Title: CEO
--------------------------------------
SIRROM CAPITAL CORPORATION,
a Tennessee corporation
By: /s/ XXXXXXXXX LUNDIG
-----------------------------------------
Title: Assistant Vice President
--------------------------------------
The undersigned Shareholders join in the execution of this Warrant for the
purposes of acknowledging and agreeing to be bound by Section 12 hereof.
EMPIRE NATIONAL II, LLC
By: /s/ XXXXXX XXXXXXX
-----------------------------------------
Title: Member
--------------------------------------
/s/ XXXXXXX X. XXXXX
------------------------------------------
Xxxxxxx X. Xxxxx
/s/ XXXXXXX X. XXXX
------------------------------------------
Xxxxxxx X. Xxxx
/s/ XXXXXXX XXXXXX
------------------------------------------
Xxxxxxx Xxxxxx
/s/ XXXXXX X. BREEZE
------------------------------------------
Xxxxxx X. Breeze
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