THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. THIS WARRANT
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
CONCORDE CAREER COLLEGES, INC. THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS
SOLD PURSUANT TO THE PROVISIONS OF RULE 144 OF THE ACT.
THIS WARRANT IS SUBJECT TO THE PROVISIONS OF A DEBENTURE PURCHASE AGREEMENT,
DATED AS OF FEBRUARY 25, 1997, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT AS THEREIN PROVIDED.
WARRANT TO ACQUIRE SHARES OF
COMMON STOCK OF
CONCORDE CAREER COLLEGES, INC.
February 25, 1997
THIS CERTIFIES THAT XXXXXX, XXXXXXX STRATEGIC PARTNERS FUND, L.P.
("Holder"), for value received, or its registered assigns, is entitled to
------
purchase, on the terms and subject to the conditions hereinafter set forth, from
CONCORDE CAREER COLLEGES, INC., a Delaware corporation (the "Company"), at any
-------
time after August 25, 1998 and on or before February 25, 2003, subject to
earlier termination (the "Exercise Period"), that number of shares (the "Warrant
--------------- -------
Shares") of common stock, par value $.10 per share, of the Company (the "Common
------ ------
Stock"), as set forth in Section 2.1 hereof.
-----
SECTION 1
Exercise Price
--------------
The exercise price at which this Warrant may be exercised shall be $1.36
per share of Common Stock (the "Exercise Price"), subject to any adjustment
--------------
pursuant to Section 3.3.
SECTION 2
Exercise of Warrant, Etc.
-------------------------
2.1 Number of Shares for Which Warrant is Exercisable. This Warrant shall
-------------------------------------------------
be exercisable for 2,438,419 shares of Common Stock, subject to any adjustment
pursuant to Section 3.3.
2.2 Procedure for Exercise of Warrant. The Warrant may be exercised in
---------------------------------
whole or in part during the Exercise Period by surrendering this Warrant, with
the purchase form provided for
herein duly executed by Holder or by Holder's duly authorized attorney-in-fact,
at the principal office of the Company or at such other office or agency in the
United States as the Company may designate by notice in writing to the Holder
accompanied by payment in full, in cash, bank cashier's check or certified check
payable to the order of the Company, of the Exercise Price payable in respect of
the Warrant Shares being exercised. In addition to payments of the Exercise
Price by cash or said checks, payment of the Exercise Price with respect to the
Warrants being exercised may be made, at the option of the Holder, by the
reduction in the principal amount of the Debenture (the "Debenture") issued to
---------
the Holder pursuant to the Debenture Purchase Agreement, dated as of February
25, 1997, by and between the Company and the Holder (the "Debenture Purchase
------------------
Agreement") (or forgiveness of any accrued and unpaid interest thereon, whether
---------
or not payment of such interest has been suspended pursuant to the provisions of
such Debenture), even during a period in which an Event of Default (as defined
in the Debenture Purchase Agreement) has occurred and is continuing under such
Debenture, in an amount equal to the Exercise Price with respect to the Warrant
being exercised; and in such a case, this Warrant shall be accompanied by said
Debenture (with the purchase form duly executed) which shall be substituted and
replaced by a new Debenture identical in form and content to the original
Debenture except that principal amount shall be appropriately reduced to reflect
the reduction in the principal amount applicable to the payment of the Exercise
Price with respect to the Warrant being exercised. If fewer than all of the
Warrant Shares are being exercised, the Company shall, upon exercise prior to
the end of the Expiration Period, execute and deliver to the Holder a new
certificate (dated the date hereof) evidencing the balance of the Warrant Shares
that remain exercisable.
2.3 Conversion.
----------
(a) On or after August 25, 1998, in the event that the Company consummates
a firm-commitment underwritten public offering pursuant to an effective
registration statement under the Act covering the offer and sale of Common Stock
for the account of the Company in which (i) the net proceeds of the public
offering price equals or exceeds $20 million and (ii) the public offering price
per share of Common Stock equals or exceeds $4.00, then this Warrant shall
become mandatorily exercisable within six (6) months for that number of shares
of Common Stock issuable upon exercise of the Warrant.
(b) In the Event of Default (as defined in the Debenture Purchase
Agreement), then this Warrant shall immediately become exercisable, at the
option of the Holder, for that number of shares of Common Stock issuable upon
exercise of the Warrant.
2.4 Transfer Restriction Legend. Each certificate for Warrant Shares
---------------------------
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Act, shall bear the following
legend (and any additional legend required by any securities exchange upon which
such Warrant Shares may, at the time of such exercise, be listed) on the face
thereof:
- 2 -
"These securities have not been registered under the Securities Act of
1933, as amended, or under any state securities laws and may be offered,
sold or transferred only if registered pursuant to the provisions of such
laws, or if in the opinion of counsel satisfactory to the Company, an
exemption from such registration is available."
2.5 Acknowledgment of Continuing Obligation. The Company will, if Holder
---------------------------------------
exercises this Warrant in part, upon request of the Holder, acknowledge in
writing the Company's continuing obligation to the Holder in respect of any
rights to which the Holder shall continue to be entitled after such exercise in
accordance with this Warrant, provided, that the failure of the Holder to make
any such request shall not affect the continuing obligation of the Company to
the Holder in respect of such rights.
2.6 Exercise Period. The Company and Purchaser agree to negotiate in good
---------------
faith to modify or extend the Exercise Period in the event that either the
Company or Purchaser deems it appropriate to modify or extend such Exercise
Period.
2.7 Termination of Warrant. During the Exercise Period, in the event that
----------------------
Holder fails to exercise this Warrant after the Company has provided Holder (i)
twenty (20) days prior written notice of its intention to pay in full and redeem
the Debenture on a particular date (the "Repayment Date"), and (ii) thirty (30)
--------------
days after the Redemption Date within which to exercise this Warrant, then this
Warrant shall terminate and thereafter be null and void. Notwithstanding the
preceding sentence, in the event that the Company repays and redeems the
Debenture in full on or before August 25, 1998, this Warrant shall remain in
full force and effect until September 25, 1998, when it shall expire.
SECTION 3
Ownership of this Warrant.
-------------------------
3.1 Deemed Holder. The Company may deem and treat the person in whose
-------------
name this Warrant is registered as the Holder and owner hereof (notwithstanding
any notations of ownership or writing hereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice to the
contrary, until presentation of this Warrant for registration of transfer as
provided in this Section 3.
3.2 Exchange, Transfer and Replacement. This Warrant is non-detachable
----------------------------------
from the Debenture and may not be transferred, assigned, sold, pledged or
otherwise hypothecated ("Transferred") except with the Debenture, and if so
-----------
Transferred, then only as permitted under the terms and conditions of the
Debenture and the Debenture Purchase Agreement; provided, however, that if the
Company repays and redeems the Debenture in full on or before August 25, 1998,
this Warrant shall remain in full force and effect until September 25, 1998.
This Warrant
- 3 -
and all rights hereunder are transferable in whole or in part upon the books of
the Company by the Holder in person or by duly authorized attorney, and a new
Warrant shall be made and delivered by the Company, of the same tenor as this
Warrant but registered in the name of the transferee, upon surrender of this
Warrant duly endorsed at said office or agency of the Company. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in case of loss, theft or
destruction, or indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make
and deliver a new Warrant of like tenor, in lieu of this Warrant, provided,
--------
however, that if the Holder of this Warrant is the original Holder, an affidavit
-------
of lost Warrant shall be sufficient for all purposes of this Section 3.2. This
Warrant shall be promptly canceled by the Company upon the surrender hereof in
connection with any exchange, transfer or replacement. The Company shall pay all
reasonable expenses, taxes (other than stock transfer taxes and income taxes)
and other charges payable by it in connection with the preparation, execution
and delivery of Warrant Shares pursuant to this Section 3.2.
3.3 Antidilution.
------------
(a) If at any time while all or any portion of this Warrant remains
outstanding all or any portion of this Warrant shall be exercised subsequent to
(i) any sales of shares of Common Stock of the Company at a price per share less
than the Exercise Price per share then applicable to this Warrant, or (ii) any
issuance of any security convertible into shares of Common Stock of the Company
with a conversion price per share less than the Exercise Price per share then
applicable to this Warrant, or (iii) any issuance of any option, warrant or
other right to purchase shares of Common Stock of the Company at any Exercise
Price per share less than the Exercise Price per share then applicable to this
Warrant (except pursuant to an employee or director stock option plan or similar
compensation plan approved by the Board of Directors); then in any and every
such event the Exercise Price per share for this Warrant shall be reduced and
shall be equal to such lower sales, conversion or Exercise Price per share.
(b) If all or any portion of this Warrant shall be exercised subsequent to
any stock dividend, split-up, recapitalization, merger, consolidation,
combination or exchange of shares, reorganization or liquidation of the Company
occurring after the date hereof, as a result of which such shares of any class
shall be issued in respect of outstanding shares of Common Stock of the Company
(or shall be issuable in respect of securities convertible into shares of Common
Stock) or upon exercise of rights (other than this Warrant) to purchase shares
of Common Stock or shares of such Common Stock shall be changed into the same or
a different number of shares of the same or another class or classes, the Holder
exercising this Warrant shall receive the aggregate number and class of shares
which such Holder would have received if this Warrant had been exercised
immediately before such stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, reorganization or liquidation.
- 4 -
SECTION 4
Special Agreements of the Company
---------------------------------
The Company covenants and agrees that:
4.1 The Company will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock deliverable upon the exercise of this Warrant or of any other rights or
privileges provided for therein sufficient to enable the Company at any time to
fulfill all its obligations thereunder.
4.2 This Warrant shall be binding upon any corporation or entity
succeeding to the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets.
SECTION 5
Notices
-------
Any notice or other document required or permitted to be given or delivered
to the Holder or the Company shall be delivered, or sent by certified or
registered mail, to the Holder or the Company at the address as set forth in
Section 10.4 of the Debenture Purchase Agreement.
SECTION 6
Governing Law
-------------
This Warrant shall be governed by, and construed and enforced in accordance
with, the internal laws of the State of Delaware, without giving effect to its
conflicts of laws provisions.
SECTION 7
Assignment
----------
Notwithstanding any provision of this Warrant which may be construed to the
contrary, this Warrant and any rights hereunder shall not be assignable by the
Holder except in accordance with the provisions governing assignments hereof set
forth in the Debenture Purchase Agreement, dated as of February 25, 1997, among
the Company and Holder, and any attempt by Holder to assign this Warrant or any
rights hereunder other than in accordance therewith shall be void and of no
force and effect.
- 5 -
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer under its corporate seal, attested by its duly
authorized officer, and to be dated as of February 25, 1997.
ATTEST: CONCORDE CAREER COLLEGES, INC.
______________________________ By: _____________________________________
Xxxx X. Xxxxx, Secretary Xxxx X. Xxxxxxx, President and
Chief Executive Officer
- 6 -
ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER IF IT DESIRES AND IS PERMITTED TO
TRANSFER THE WARRANT OF
CONCORDE CAREER COLLEGES, INC.
FOR VALUE RECEIVED ___________________________________ hereby sells,
assigns and transfers unto __________________________ the right to purchase
[______%] of the number of shares of Common Stock covered by the within Warrant,
and does hereby irrevocably constitute and appoint
__________________________________________________ Attorney to transfer the said
Warrant on the books of the Company (as defined in said Warrant) with full power
of substitution.
The undersigned represents and warrants to the Company that this assignment
has been effected in compliance with all applicable provisions of said Warrant
and any applicable provisions of the Debenture Purchase Agreement referred to in
such Warrant.
Signature: __________________________(SEAL)
Address: ________________________________
Dated: ___________________199__
In the presence of
______________________________ By: _____________________________________
NOTICE
The signature to the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
WARRANT CERTIFICATE
TO BE EXECUTED BY THE REGISTERED HOLDER
IF IT DESIRES TO EXERCISE THE WARRANT OF
CONCORDE CAREER COLLEGES, INC.
The undersigned hereby exercises the right to purchase shares of Common
Stock obtainable by exercise of [_____%] of the within Warrant, according to the
conditions thereof and makes payment of the Exercise Price for such shares in
full by the enclosed payment and/or by reduction in the principal amount of the
Debenture (as defined in the Warrant) as more specifically set forth below:
Signature: __________________________(SEAL)
Address: ________________________________
