1
EXHIBIT 10.3.1
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT THE TRANSACTION
PURSUANT TO WHICH SUCH WARRANT OR SECURITIES WILL BE OFFERED FOR SALE OR
OTHERWISE DISPOSED OF IS SUBJECT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
No. of Shares of Common Stock: 5,360 Warrant No. 4
AMENDED AND RESTATED WARRANT
To Purchase Shares of Common Stock of
AMERICA SERVICE GROUP INC.
THIS IS TO CERTIFY THAT HEALTH CARE EXECUTIVE PARTNERS L.P. ("HCEP"), or its
registered assigns, is entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from America Service Group Inc., a Delaware
corporation (the "Company"), 5,360 shares of Common Stock (as hereinafter
defined and subject to adjustment as provided herein), in whole or in part, at
the Current Warrant Price (as hereinafter defined), all on the terms and
conditions and pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.
"Adjustment Period" shall mean the period of five consecutive Trading
Days preceding the date as of which the Fair Market Value of a security is to be
determined.
"Board of Directors" shall mean the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday or Sunday or a
day on which banking institutions in the States of New York or Tennessee are
authorized or obligated by law or executive order to close.
2
"Certificate of Designation" shall mean the Certificate of Designation
establishing the Preferred Stock, dated as of the Closing Date.
"Change of Control" shall mean:
(a) a "person" or "Group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act) becoming, in a transaction or series of
related transactions, the Beneficial Owner of Voting Securities
entitled to exercise 50% or more of the total voting power of all
outstanding Voting Securities of the Company (including any Voting
Securities that are not then outstanding of which such person or Group
is deemed the Beneficial Owner) (the "Control Party"); or
(b) the acquisition of Beneficial Ownership of 20 percent or more of
the number of Voting Securities of the Company by any Person or Group,
together with contractual fights, which would enable such Person or
Group to prevent a merger, consolidation or sale of all or
substantially all of the assets or other sale of the Company; or
(c) individuals who at the beginning of any period of two consecutive
calendar years constituted the Board of Directors (together with any
new directors whose election by such Board of Directors or whose
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the members of the Board of Directors
then still in office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute
a majority of the members of the Board of Directors then in office; or
(d) sale of all or substantially all of the assets of the Company.
"Closing Date" shall have the meaning set forth in the Securities
Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $.01 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is not preferred
as to dividends or assets over any other class of stock of the Company and which
is not subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation (as defined in Section 4.10) received by or distributed to
the holders of Common Stock of the Company in the circumstances contemplated by
Section 4.10.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable or
exercisable, with or without
-2-
3
payment of additional consideration in cash or property, for Additional Shares
of Common Stock, either immediately or upon the occurrence of a specified date
or a specified event.
"Current Market Price" when used with reference to shares of Common
Stock or other securities on any date, shall mean the closing sale price per
share of Common Stock or such other securities on such date and, when used with
reference to shares of Common Stock or other securities for any period shall
mean the average of the daily closing sale prices per share of Common Stock or
such other securities for such period. The closing price for each day shall be
the closing sale price in the over-the-counter market, as reported by the Nasdaq
Stock Market or such other system then in use, or, if on any such date the
Common Stock or such other securities are not quoted by any such organization,
the closing sale price as furnished by a professional market maker making a
market in the Common Stock or such other secreted by the Board of Directors of
the Company. If the Common Stock is listed or admitted to trading on a national
securities exchange, the closing price shall be the closing sale price, regular
way, as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock or such other securities are not listed or
admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Stock or such
other securities are listed or admitted to trading. If the Common Stock or such
other securities are not publicly held or so listed or publicly traded, "Current
Market Price" shall mean the Fair Market Value per share of Common Stock or of
such other securities as determined in good faith by the Board of Directors of
the Company based on an opinion of an independent investment banking firm
acceptable to holders of a majority of the Warrants, which opinion may be based
on such assumptions as such firm shall deem to be necessary and appropriate.
"Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date or the price per share
which shall equal the Initial Warrant Price, subject to adjustments as provided
herein.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
mended, or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
Reference to a particular section of the Securities Exchange Act of 1934, as
amended, shall include reference to the comparable section, if any, of such
successor Federal statute.
"Expiration Date" shall mean a date which is seven years from the
issuance of this Warrant.
"Fair Market Value" shall mean, as to shares of Common Stock or any
other class of capital stock or securities of the Company or any other issuer
which are publicly traded, the average of the Current Market Prices of such
shares of securities for each day of the Adjustment Period. The "Fair Market
Value" of any security which is not publicly traded or of any other property
shall mean the fair value thereof as determined by an independent investment
banking or appraisal firm experienced in the valuation of such securities or
property selected in good faith
-3-
4
by the Board of Directors of the Company or a committee thereof and acceptable
to the Majority Holders.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, (i) all shares of Common Stock outstanding at such date and (ii) all
shares of Common Stock issuable in respect of this Warrant, and other options or
warrants to purchase, or securities convertible into, shares of Common Stock
outstanding on such date, the exercise or conversion price of which is less than
the Current Market Price such date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
"HCCP Group" shall mean Health Care Capital Partners L.P., its
Affiliates and the general partner of HCCP and its Affiliates.
"Holder" shall mean the Person in whose name this Warrant is registered
on the books of the Company maintained for such purpose. "Holders" shall mean,
collectively, each Holder of a Warrant, in the event of any division of this
Warrant.
"Initial Warrant Price" shall mean in respect of a share of Common
Stock, the price at which a share of Common Stock may initially be purchased
pursuant to this Warrant, which shall equal to the lower of (a) $9.45 per share,
or (b) the Current Market Price of a share of the Common Stock during the thirty
consecutive Trading Days prior to the Stockholders Meeting (as defined in the
Securities Purchase Agreement); provided, that such price shall in no event be
less than $5.50 per share (subject to adjustment from time to time as provided
herein). Notwithstanding the foregoing, at any time prior to the Stockholder
Approval Date, the Initial Warrant Price shall in no event be less than the
price at which the maximum number of shares of Common Stock issued or issuable
upon conversion of the Preferred Stock, together with shares of Common Stock
issued or issuable upon conversion of the Warrants, would exceed the greater of
(i) 711,241 shares of Common Stock (19.9% of the outstanding shares of Common
Stock of the Company) and (ii) 19.9% of the shares of Common Stock of the
Company then outstanding; provided, however, that if the Initial Warrant Price
is greater than the price that would be in effect but for this sentence and,
subsequently, the Company shall have obtained the Stockholder Approval, the
Initial Warrant Price shall be retroactively recalculated in accordance with the
first sentence of this definition of the "Initial Warrant Price."
"Majority Holders" shall mean the holders of Warrants exercisable for
in excess of 50% of the aggregate number of shares of Warrant Stock then
purchasable upon exercise of all Warrants.
"Notes" shall mean the 12% Subordinated Convertible Bridge Notes due
January 26, 2000, purchased by HCCP and HCEP pursuant to the Securities Purchase
Agreement and convertible into Preferred Stock.
"Other Property" shall have the meaning set forth in Section 4.10.
-4-
5
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, fully
diluted shares of Common Stock (calculated as prescribed by generally accepting
accounting principles), except shares then owned or held by or for the account
of the Company or any subsidiary thereof, and shall include all shares (i)
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock and (ii) issuable in respect of
options or warrants to purchase, or securities convertible into, shares of
Common Stock.
"Permitted Issuances" shall mean the issuance or reissuance of (a) any
shares of Common Stock or rights, warrants or other securities convertible into
shares of Common Stock (whether treasury shares or newly issued shares) (i)
pursuant to a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the Current Warrant Price pursuant to Section 4.3; (ii) pursuant
to any restricted stock or stock option plan or program of the Company involving
the grant of options or rights to acquire Common Stock to directors, officers
and employees of the Company and its Subsidiaries pursuant to the Company's
Employee Stock Purchase Plan so long as the granting of such options or rights
has been approved by the full Board of Directors or a committee of the Board of
Directors on which a director designated by the HCCP Group is a member; (iii)
pursuant to any option, warrant, right, or convertible security outstanding as
of the date hereof, or (b) the Series A Preferred Stock, the Warrants and any
shares of Common Stock issuable upon conversion or exercise thereof.
"Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor by merger or otherwise) of such
entity.
"Preferred Stock" shall mean the Company's Series A Convertible
Preferred Stock, par value $.01.
"Registration Rights Agreement" shall mean the registration rights
agreement, dated as of the Closing Date, among the Company, HCCP and HCEP.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the securities purchase
agreement, dated as of January 26, 1999 and as amended on June 17, 1999, among
the Company, HCCP and HCEP.
"Stockholder Approval" shall have the meaning assigned to it in the
Securities Purchase Agreement.
"Stockholder Approval Date" shall have the meaning assigned to it in
the Securities Purchase Agreement.
-5-
6
"Stock Issuance" shall have the meaning assigned to it in the
Securities Purchase Agreement.
"Trading Day" means a Business Day or, if the Common Stock is listed or
admitted to trading on any national securities exchange, a day on which such
exchange is open for the transaction of business.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof, which would constitute a sale thereof
within the meaning of the Securities Act.
"Warrants" shall mean this Warrant (as adjusted pursuant to Section 4)
and all warrants issuable upon transfer, division or combination of, or in
substitution for, any thereof. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. Manner of Exercise. (a) At any time or from time to time from and after the
Closing Date and until 5:00 P.M., New York time, on the Expiration Date, Holder
may exercise this Warrant, on any Business Day, for all or any part of the
number of shares of Common Stock purchasable hereunder.
(b) In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 000 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000 (i) a written notice of
Holder's election to exercise this Warrant, which notice shall specify
the number of shares of Common Stock to be purchased; (ii) payment of
the Warrant Price; and (iii) this Warrant. Such notice shall be
substantially in the form appearing at the end of this Warrant as
Exhibit A, duly executed by Holder.
(c) As promptly as practicable, and in no event later than five
Business Days after the receipt of the items specified in paragraph (b)
of this Section 2.1, the Company shall execute or cause to be executed
and deliver or cause to be delivered to Holder a certificate or
certificates representing the aggregate number of full shares of Common
Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be in such denomination or
denominations as Holder Shall request in the notice and shall be
registered in the name of Holder or, subject to Section 9, such other
name as shall be designated in the notice. This Warrant shall be deemed
to have been exercised and such certificate or certificates shall be
deemed to have been issued, and
-6-
7
Holder or any other Person so designated shall be deemed to have become
a holder of record of such shares for all purposes, as of the date the
notice, together with the Warrant Price and this Warrant, are received
by the Company as described above. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Stock, deliver to
Holder a new Warrant evidencing the right of Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which
new Warrant shall in all other respects be identical with this Warrant,
or, at the request of Holder, appropriate notation may be made on this
Warrant and the same returned to Holder.
(d) Payment of the Warrant Price shall be made at the option of Holder
(i) by certified or official bank check or (ii) by the surrender of
this Warrant to the Company, with a duly executed exercise notice
marked to reflect "Net Issue Exercise," and, in either case, specifying
the number of shares of Common Stock to be purchased, during normal
business hours on any Business Day. Upon a Net Issue Exercise, Holder
shall be entitled to receive shares of Common Stock equal to the value
of this Warrant (or the portion thereof being exercised by Net Issue
Exercise) by surrender of this Warrant to the Company together with
notice of such election, in which event the Company shall issue to
Holder a number of shares of the Company's Common Stock computed as of
the date of surrender of this Warrant to the Company using the
following formula:
X = Y x (A - B)
-----------
A
Where X -- the number of shares of Common Stock to be issued to Holder;
Y = the number of shares of Common Stock otherwise purchasable under
this Warrant (at the date of such calculation);
A = the Current Market Price of one share of the Company's Common Stock
(at the date of such calculation);
B = the Current Warrant Price (as adjusted to the date of such
calculation).
2.2. Payment of Taxes. All shares of Common Stock issuable upon the exercise of
this Warrant shall be validly issued, fully paid and nonassessable and without
any preemptive rights. The Company shall pay all expenses in connection with,
and all taxes and other governmental charges that may be imposed with respect
to, the issue or delivery thereof.
2.3. Fractional Shares. The Company shall not be required to issue fractional
share of Common Stock upon exercise of this Warrant. As to any fraction of a
share which Holder would otherwise be entitled to purchase upon such exercise,
the Company shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the Current Market Price per share of Common Stock
on the date of exercise.
-7-
8
3. TRANSFER, DIVISION AND COMBINATION
3.1. Transfer. Subject to compliance with Section 9, transfer of this Warrant
and all rights hereunder, in whole or in part, shall be registered on the books
of the Company to be maintained for such purpose, upon surrender of this Warrant
at the principal office of the Company referred to in Section 2.1, together with
a written assignment of this Warrant substantially in the form of Exhibit B
hereto duly executed by Holder and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall, subject to Section 9, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be canceled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.
3.2. Division and Combination. Subject to Section 9, this Warrant may be divided
into multiple Warrants or combined with other Warrants upon presentation hereof
at the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder. Subject to compliance with Section 3.1 and with Section 9, as
to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.
3.3. Expenses. The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 3.
3.4. Maintenance of Books. The Company agrees to maintain, at its aforesaid
office, books for the registration and the registration of the transfer of the
Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is exercisable
and/or the price at which such shares may be purchased upon exercise of this
Warrant, shall be subject to adjustment from time to time as set forth in this
Section 4. The Company shall give each Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.
4.1. Current Warrant Price. Unless the Company shall have redeemed or converted
all of the outstanding Notes, subject to adjustment as set forth in other
provisions of this Section 4, the Current Warrant Price shall be decreased by
$1.00 on the last Business Day of each month, commencing July 31, 1999 through
and including December 31, 1999; provided, that the Current Warrant Price shall
never be less than the par value per share of Common Stock; and provided,
further, that at any time prior to the Stockholder Approval Date, the Initial
Warrant Price shall in no event be less than the price at which the maximum
number of shares of Common Stock issued or issuable upon conversion of the
Preferred Stock, together with shares
-8-
9
of Common Stock issued or issuable upon exercise of the Warrants, would exceed
the greater of (a) 711,241 shares of Common Stock (19.9% of the outstanding
shares of Common Stock of the Company) and (b) 19.9% of the outstanding shares
of Common Stock of the Company.
4.2. Stockholder Approval Failure; Payment Default; NASDAQ Approval Failure.
Notwithstanding Section 4.1, in the event that:
(a) the Corporation shall (i) fail to obtain the Stockholder Approval
with respect to the Stock Issuance on or before August 31, 1999, (ii)
fail to convene the Stockholders Meeting on or before August 31, 1999,
(iii) withdraw or modify its approval or recommendation of the Stock
Issuance in any manner adverse to HCCP, its Affiliates or the general
partner of its Affiliates, (iv) fail to reaffirm such approval or
recommendation within 5 days following receipt of written request for
such reaffirmation from the HCCP, its Affiliates or the general partner
of its Affiliates, (v) fail to obtain the reaffirmation of the Fairness
Opinion (as defined in the Securities Purchase Agreement) in connection
with the mailing of the Proxy Statement (as defined in the Securities
Purchase Agreement), (vi) fail to obtain NASDAQ Approval (as such term
is defined in the Securities Purchase Agreement) within 30 days after
the Stockholder Approval, (vii) resolve to take any of the actions
specified in clauses (a)(i) through (a)(vi) above, or (viii) fail to
pay the principal amount of and accrued and unpaid interest due, if
any, on the Notes at maturity, or
(b) (i) a Change of Control; (ii) the Maturity Date of the Notes shall
occur; or (iii) notice of redemption of the Notes shall be given, and
on any such date the Notes may not be converted, at the election of the
Company, into shares of Preferred Stock,
then the Current Warrant Price shall be reduced to $.01 per share; provided,
however, that the Current Warrant Price shall not be adjusted as provided in
this Section 4.2 as a result of the occurrence of the condition described in
clause (a)(i) if (A) the holders of Common Stock representing a majority of the
shares of Common Stock present and voting at a meeting duly called and convened
in accordance with Section 6.19 of the Securities Purchase Agreement to approve
the Stock Issuance (as defined in the Securities Purchase Agreement) for reasons
other than those described in clauses (a)(ii) through (a)(vi) of this Section
4.2 do not approve the Stock Issuance (a "Stockholders Rejection") and (B) prior
to the Stockholder Rejection, none of the events described in clauses (a)(ii)
through (vi) above or paragraph (b) above shall have occurred. Notwithstanding
the foregoing, at any time prior to the Stockholder Approval Date, the Initial
Warrant Price shall in no event be less than the price at which the maximum
number of shares of Common Stock issued or issuable upon conversion of the
Preferred Stock, together with shares of Common Stock issued or issuable upon
exercise of the Warrants, would exceed the greater of (i) 711,241 shares of
Common Stock (19.9% of the outstanding shares of Common Stock of the Company)
and (ii) 19.9% of the outstanding shares of Common Stock of the Company;
provided, however, that if the Current Warrant Price is greater than the price
that would be in effect but for this sentence and, subsequently, the Company
shall have obtained the Stockholder Approval, the Initial Warrant Price shall be
retroactively recalculated as of the Stockholder Approval Date in accordance
with Sections 4.1 and 4.2 above.
-9-
10
(c) notwithstanding Section 4.2(b)(iii), upon the redemption of $7.5
million aggregate principal amount of the Notes on July 2, 1999 by the
Company, the Current Warrant Price shall be reduced to $.01 per share
with respect to one-half of the Warrants issued to Holder under this
Warrant. The exercise price of the remaining Warrants shall be
determined in accordance with the other provisions of Section 4 of this
Warrant.
4.3. Stock Dividends, Subdivisions and Combinations. In case the Company shall
at any time or from time to time:
(a) pay a dividend, or make a distribution, on its outstanding Common
Stock in Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock.
then and in each such case, (i) the number of shares of Common Stock for which
this Warrant is exercisable immediately after the occurrence of any such event
shall be adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the happening of such event, and (ii) the Current
Warrant Price per share shall be adjusted to equal (A) the Current Warrant Price
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares for which this Warrant is exercisable immediately after such adjustment.
4.4. Certain Other Distributions. In case the Company shall at any time or from
time to time after the issuance of this Warrant declare, order, pay or make a
dividend or other distribution on its Common Stock of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock or any
other securities or property of any nature whatsoever by way of
dividend (other than cash, Convertible Securities or Additional Shares
of Common Stock), or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the number of shares of Common Stock for
which this Warrant is exercisable
-10-
11
immediately prior to such adjustment multiplied by a fraction (A) the numerator
of which shall be the Current Market Price per share of Common Stock for the
period of 20 Trading Days preceding such record (the "Period") and (B) the
denominator of which shall be such Current Market Price per share of Common
Stock for the Period less the Fair Market Value per share of Common Stock of any
such dividend or distribution and (ii) the Current Warrant Price shall be
adjusted to equal (A) the Current Warrant Price multiplied by the number of
shares of Common Stock for which this Warrant is exercisable immediately prior
to the adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a reduction in par value, or from par value to no par value)
into shares of Common Stock and shares of any other class of stock shall be
deemed a distribution by the Company to the holders of its Common Stock of such
shares of such other class of stock within the meaning of this Section 4.4 and,
if the outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such reclassification,
such change shall be deemed a subdivision or combination, as the case may be, of
the outstanding shares of Common Stock within the meaning of Section 4.3.
Notwithstanding the foregoing, no adjustment shall be required under this
Section 4.4 solely by reason of the issuance of stock purchase rights under a
stockholder rights plan of the Company, provided that the adjustments required
by this Section 4.4 shall be made if any "flip-in" or "flip-over" event shall
occur under such stockholder rights plan not triggered by the holder hereof.
4.5. Issuance of Additional Shares of Common Stock. If at any time the Company
shall (except as hereinafter provided) issue or sell any Additional Shares of
Common Stock, other than Permitted Issuances, in exchange for consideration in
an amount per Additional Share of Common Stock less than the greater of (1) the
Current Market Price per share of Common Stock for the period of 20 Trading Days
preceding the earlier of the issuance or public announcement of the issuance of
such Additional Shares of Common Stock and (2) the Current Warrant Price at the
time the Additional Shares of Common Stock are issued, then (i) the Current
Warrant Price as to the number of shares for which this Warrant is exercisable
prior to such adjustment shall be reduced to a price determined by multiplying
the Current Warrant Price by (A) a fraction, the numerator of which shall be the
sum of (x) the number of shares of Common Stock Outstanding immediately prior to
such issue or sale multiplied by the greater of (1) the then applicable Current
Warrant Price and (2) the Current Market Price per share of Common Stock for the
period of 20 Trading Days preceding the earlier of the issuance or public
announcement of the issuance of such Additional Shares of Common Stock (the
greater of (1) and (2) above hereinafter referred to as the "Adjustment Price")
and (y) the aggregate consideration receivable by the Company for the total
number of shares of Common Stock so issued (or into or for which the rights,
warrants or other Convertible Securities may convert or be exercisable), and the
denominator of which shall be the sum of (a) the total number of shares of
Common Stock Outstanding on such date and (b) the number of Additional Shares
issued (or into or for which the rights, warrants or convertible securities may
be converted or exercised), multiplied by the Adjustment Price; and (ii) the
number of shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the Current Warrant Price
in effect immediately prior to such issue or sale by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
issue or sale and dividing the product thereof by the Current Warrant Price
resulting from the adjustment
-11-
12
made pursuant to clause (i) above. For purposes of this Section 4.5 and for the
purposes of making adjustments of the number of shares of Common Stock for which
this Warrant is exercisable and the Current Price as provided in this Section 4,
the aggregate consideration receivable by the Company in connection with the
issuance of shares of Common Stock or of rights, warrants or other securities
convertible into shares of Common Stock shall be deemed to be equal to the sum
of the aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common Stock,
rights, warrants and convertible securities plus the aggregate amount (as
determined on the date of issuance), if any, payable upon exercise or conversion
of any such rights, warrants and convertible securities into shares of Common
Stock. If, subsequent to the date of issuance of such rights, warrants or
Convertible Securities, the exercise or conversion price thereof is reduced,
such aggregate amount shall be recalculated and the Current Warrant Price and
number of shares of Common Stock for which the Warrant is exercisable adjusted
retroactively to give effect to such reduction. If Common Stock is sold as a
unit with other securities, the aggregate consideration received for such Common
Stock shall be deemed to be net of the Fair Market Value of such other
securities.
4.6. Issuance of Warrants or Other Rights. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or (other than Permitted Issuances) shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell, any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Warrants or other rights or upon
conversion or exchange of such Convertible Securities shall be less than the
greater of (1) the Current Market Price per share of Common Stock for the period
of 20 Trading Days preceding the earlier of the issuance or public announcement
of the issuance of such Additional Shares of Common Stock, warrants or other
rights and (2) the Current Warrant Price in effect immediately prior to the time
of such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.5 on the basis that the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding and the Company shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of the number of shares for which this Warrant is exercisable and such
warrants or other rights. No further adjustments of the Current Warrant Price
shall be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or exchange of such Convertible
Securities. Notwithstanding the foregoing, no adjustment shall be required under
this Section 4.6 solely by reason of the issuance of stock purchase rights under
a stockholder rights plan of the Company, provided that the adjustments required
by this Section 4.6 shall be made if any "flip-in" or "flip-over" event shall
occur under such stockholder rights plan not triggered by the holder hereof.
-12-
13
4.7. Issuance of Convertible Securities. If at any time the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or (other than Permitted Issuances) shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell, any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately exercisable,
and the price per share for which Common Stock is issuable upon such conversion
or exchange shall be less than the greater of (a) the Current Market Price per
share of Common Stock for the period of 20 Trading Days preceding the earlier of
the issuance or public announcement of the issuance of such Convertible
Securities and (b) the Current Warrant Price in effect immediately prior to the
time of such issue or sale, then the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.5 on the basis that the maximum number of Additional Shares of Common
Stock necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and the Company
shall have received all of the consideration payable therefor, if any, as of the
date of actual issuance of such Convertible Securities. No adjustment of the
number of shares for which this Warrant is exercisable and the Current Warrant
Price shall be made under this Section 4.7 upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to Section 4.6. No further adjustments of the number of shares for
which this Warrant is exercisable and the Current Warrant Price shall be made
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and, if any issue or sale of such Convertible Securities
is made upon exercise of any warrant or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments of the number of
shares for which this Warrant is exercisable and the Current Warrant Price have
been or are to be made pursuant to other provisions of this Section 4, no
further adjustments of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made by reason of such issue
or sale.
4.8. Superseding Adjustment. If, at any time after any adjustment of the number
of shares of Common Stock for which this Warrant is exercisable and the Current
Warrant Price shall have been made pursuant to Section 4.6 or Section 4.7 as the
result of any issuance of warrants, rights or Convertible Securities,
(a) such warrants or rights, or the fight of conversion or exchange in
such other Convertible Securities, shall expire, and all or a portion
of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as
the case may be, shall not have been exercised, or
(b) the consideration per share for which shares of Common Stock are
issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of
provisions therein contained for an automatic increase in such
consideration per share upon the occurrence of a specified date or
event,
-13-
14
then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of the
effect of such rights or options or other Convertible Securities on the basis of
(c) treating the number of Additional Shares of Common Stock or other
property, if any, theretofore actually issued or issuable pursuant to
the previous exercise of any such warrants or rights or any such fight
of conversion or exchange, as having been issued on the date or dates
of any such exercise and for the consideration actually received and
receivable therefor, and
(d) treating any such warrants or rights or any such other Convertible
Securities which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration
per share for which shares of Common Stock or other Property are
issuable under such warrants or rights or other Convertible Securities;
whereupon a new adjustment of the number of shares of Common Stock for
which this Warrant is exercisable and the Current Warrant Price shall
be made, which new adjustment shall supersede the previous adjustment
so rescinded and annulled.
4.9. Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent that any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase any Additional Shares of
Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall
be the amount of the cash received by the Company therefor, or, if such
Additional Shares of Common Stock or Convertible Securities are offered
by the Company for subscription, the subscription price, or, if such
Additional Shares of Common Stock or Convertible Securities are sold to
underwriters or dealers for public offering, without a subscription
offering, the initial public offering price (in any such case
subtracting any amounts paid or receivable for accrued interest or
accrue dividends and without taking into account any compensation,
discounts or expensed or incurred by the Company for and in the
underwriting of, or otherwise in connection with, the issuance
thereof). To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided,
the amount of such consideration shall be deemed to be the Fair Market
Value of such consideration at the time of such issuance. In case any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase such Additional
Shares of Common Stock or Convertible Securities shall be issued in
connection with any merger in which the Company issues any securities,
the amount of consideration therefor shall be deemed to be the Fair
Market Value of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to
be attributable to
-14-
15
such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or
other rights to subscribe for or purchase the same shall be the
consideration received by the Company for issuing such warrants or
other rights plus the additional consideration payable to the Company
upon exercise of such warrants or other rights. The consideration for
any Additional Shares of Common Stock issuable pursuant to the terms of
any Convertible Securities shall be the consideration received by the
Company for issuing warrants or other rights to subscribe for or
purchase such Convertible Securities, plus the consideration paid or
payable to the Company in respect of the subscription for or purchase
of such Convertible Securities, plus the additional consideration, if
any, payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities. In case of the
issuance at any time of any Additional Shares of Common Stock or
Convertible Securities in payment or satisfaction of any dividends upon
any class of stock other than Common Stock, the Company shall be deemed
to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied. If Additional Shares of Common Stock are
sold as a unit with other securities or rights of value, the aggregate
consideration received for such Additional Shares of Common Stock shall
be deemed to be net of the Fair Market Value of such other securities
or rights of value.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable
that would otherwise be required may be postponed (except in the case
of a subdivision or combination of shares of the Common Stock, as
provided for in Section 4.3) up to, but not beyond the date of exercise
if such adjustment either by itself or with other adjustments not
previously made results in an increase or decrease of less than 1% of
the shares of Common Stock for which this Warrant is exercisable
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon
as such adjustment, together with other adjustments required by this
Section 4 and not previously made, would result in a minimum adjustment
or on the date of exercise. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(c) Fractional Interests. In computing adjustments under this Section
4, fractional interests in Common Stock shall be taken into account to
the nearest 1/100th of a share.
(d) When Adjustment Not Required. If the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights
and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall
-15-
16
be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and
annulled.
(e) Escrow of Warrant Stock. If Holder exercises this Warrant after any
property becomes distributable pursuant to this Section 4 by reason of
the taking of any record of the holders of Common Stock, but prior to
the occurrence of the event for which such record is taken, any
additional shares of Common Stock issuable upon exercise by reason of
such adjustment shall be deemed the last shares of Common Stock for
which this Warrant is exercised (notwithstanding any other provision to
the contrary herein) and such shares or other property shall be held in
escrow for Holder by the Company to be issued to Holder when and to the
extent that the event actually takes place, upon payment of the then
Current Warrant Price. Notwithstanding any other provision to the
contrary herein, if the event for which such record was taken fails to
occur or is rescinded, then such escrowed shares shall be canceled by
the Company and escrowed property returned.
(f) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in
good faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Majority Holders,
and any dispute shall be resolved by an investment banking firm of
recognized national standing selected by the Company and acceptable to
the Majority Holders.
4.10. Reorganization, Reclassification, Merger, Consolidation or Disposition of
Assets. In case the Company shall reorganize its capital, reclassify its capital
stock, consolidate or merge with or into another corporation (where the Company
is not the surviving corporation or where there is a change in or distribution
with respect to the Common Stock of the Company), or sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to another
corporation and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation ("Other Property"), are to be received by
or distributed to the holders of Common Stock of the Company, then Holder shall
have the right thereafter to receive, upon exercise of this Warrant and payment
of the Warrant Price, the number of shares of common stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable which shall be
-16-
17
as nearly equivalent as practicable to the adjustments provided for in this
Section 4. For purposes of this Section 4.10, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class
which is not preferred as to dividends or assets over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon the arrival of a specified date or the happening of a specified event and
any warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.10 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.11. Other Action Affecting Common Stock. In case at any time or from time to
time the Company shall take any action in respect of its Common Stock, other
than any action described in this Section 4, then the number of shares of Common
Stock or other stock for which this Warrant is exercisable and/or the purchase
price thereof shall be adjusted in such manner as may be equitable in the
circumstances.
4.12. Certain Limitations. Notwithstanding anything herein to the contrary, the
Company agrees not to (i) increase the par value of its Common Stock or (ii)
enter into any transaction which, by reason of any adjustment hereunder, would
cause the Current Warrant Price to be less than the par value per share of
Common Stock.
5. NOTICES TO WARRANT HOLDERS
5.1. Notice of Adjustments; Change in Warrant Status. (a) Whenever the number of
shares of Common Stock for which this Warrant is exercisable, or whenever the
price at which a share of such Common Stock may be purchased upon exercise of
the Warrants, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial officer of
the Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated (including a
description of the basis on which the Board of Directors of the Company
determined the Fair Market Value of any evidences of indebtedness, shares of
stock, other securities or property or warrants or other subscription or
purchase rights referred to in Section 4.4 or 4.9(a)), specifying the number of
shares of Common Stock for which this Warrant is exercisable and (if such
adjustment was made pursuant to Section 4.10 or 4.11) describing the number and
kind of any other shares of stock or Other Property for which this Warrant is
exercisable, and any change in the purchase price or prices thereof, after
giving effect to such adjustment or change.
(b) The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 12.2. The
Company shall keep at its principal office copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder or any prospective
purchaser of a Warrant designated by a Holder thereof.
-17-
18
5.2. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend (other than a
cash dividend payable out of earnings or earned surplus legally
available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution, or
any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 20 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 20 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(x) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (y) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 12.2.
6. RIGHTS OF HOLDERS
6.1. No Impairment. The Company shall not by any action, including, without
limitation, amending its Certificate of Incorporation or comparable governing
instruments 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 of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder against impairment. Without limiting
the generality of the foregoing, the
-18-
19
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) 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 this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the period this
Warrant is outstanding acknowledge in writing, in form reasonably satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Closing Date, the Company shall at all times reserve and keep
available for issue upon the exercise of Warrants such number of its authorized
but unissued shares of Common Stock as will be sufficient to permit the exercise
in full of all outstanding Warrants. All shares of Common Stock which shall be
so issuable, when issued upon exercise of any Warrant and payment therefor in
accordance with the terms of such Warrant, shall be duly and validly issued and
fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the Current
Warrant Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Warrants, the Company shall take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 9,
which conditions are intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Warrant or any Warrant Stock.
Holder, by acceptance of this Warrant, agrees to be bound by the provisions of
this Section 9.
-19-
20
9.1. Restrictive Legend. Except as otherwise provided in this Section 9, each
Warrant and each certificate for Warrant Stock initially issued upon the
exercise of a Warrant, and each certificate for Warrant Stock issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with the legend required by Section 13.12 of the Securities Purchase
Agreement.
9.2. Registration Rights. The holders of Warrants and Warrant Stock shall have
the registration rights set forth in the Registration Rights Agreement among the
Company, HCCP and HCEP dated the date hereof.
10. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of this
Warrant and indemnity reasonably satisfactory to it, and in case of mutilation
upon surrender and cancellation hereof, the Company will execute and deliver in
lieu hereof a new Warrant of like tenor to such Holder; provided, that in the
case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation.
11. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges of
Holder hereof, shall give rise to any liability of such Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
12. MISCELLANEOUS
12.1. Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder's rights, powers or remedies. If the
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
12.2. Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:
-20-
21
(a) If to any Holder or holder of Warrant Stock, at its last known
address appearing on the books of the Company maintained for such
purpose.
(b) If to the Company at
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback, or three Business Days after the same shall have been deposited in
the United States mail. Failure or delay in delivering copies of any notice,
demand, request, approval, declaration, delivery or other communication to the
person designated above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval, declaration, delivery
or other communication.
12.3. Remedies. Each holder of Warrant and Warrant Stock, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under of this Warrant.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this Warrant
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
12.4. Successors and Assigns. Subject to the provisions of Section 3.1, this
Warrant and the rights evidenced hereby shall inure to the benefit of and be
binding upon the successors of the Company and the successors and assigns of
Holder. The provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and, with respect to Section 9 hereof,
holders of Warrant Stock, and shall be enforceable by any such Holder or holder
of Warrant Stock.
12.5. Amendment. This Warrant and all other Warrants may be modified or amended
or the provisions hereof waived with the written consent of the Company and the
Majority Holders; provided, that no such Warrant may be modified or amended to
reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.
12.6. Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be
-21-
22
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Warrant.
12.7. Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
12.8. Governing Law. This Warrant shall be governed by the laws of the State of
New York, without regard to the provisions thereof relating to conflict of laws.
-22-
23
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and
its corporate seal to be impressed hereon and attested by its Secretary or an
Assistant Secretary.
Originally issued January 26, 1999
Amended and restated July 2, 1999
AMERICA SERVICE GROUP INC.
By:/s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive
Officer
Attest:
By: /s/Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Secretary
-23-
24
EXHIBIT A
EXERCISE FORM
[To be executed only upon exercise of Warrant]
Net Issue Exercise No Yes
--- ---
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for the purchase of _______ shares of Common Stock of America Service
Group Inc. and herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered to
______________________________ whose address is _____________________ and, if
such shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.
------------------------------------------
(Name of Registered Owner)
------------------------------------------
(Signature of Registered Owner)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
25
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the undersigned under this Warrant, with respect to the number of shares of
Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint _______________________
attorney-in-fact to register such transfer on the books of America Service Group
Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated: Print Name:
----------- ------------------------------
Signature:
------------------------------
Witness:
--------------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
