WARRANT CERTIFICATE
THESE WARRANTS AND ANY SHARES ACQUIRED UPON THE EXERCISE
THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE.
THESE WARRANTS AND SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND LAWS. THESE WARRANTS AND SUCH SHARES MAY NOT BE
TRANSFERRED EXCEPT UPON THE CONDITIONS SPECIFIED IN THIS WARRANT
CERTIFICATE, AND NO TRANSFER OF THESE WARRANTS OR SUCH SHARES SHALL
BE VALID OR EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE
BEEN COMPLIED WITH.
WARRANT CERTIFICATE
To Purchase Shares of Common Stock of
SIGNAL APPAREL COMPANY, INC.
1,000,000 Warrants
THIS CERTIFIES THAT, for good and valuable consideration, the
receipt of which is hereby acknowledged, MARVIN WINKLER or his
registered assigns (the "HOLDER"), is the registered owner of the
number of Warrants specified above, each of which Warrants entitles
the Holder, subject to the conditions and limitations hereinafter
set forth, to purchase from SIGNAL APPAREL COMPANY, INC. a
corporation organized and existing under the laws of the State of
Indiana(the "COMPANY"), one share of the Company's Common Stock,
$.01 par value (the "COMMON STOCK"), at a purchase price of $2.00
per share (the "EXERCISE PRICE"). The Warrants shall not be
terminable by the Company. The shares of Common Stock issuable
upon exercise of the Warrants (and any other or additional shares,
securities or property that may hereafter be issuable upon exercise
of the Warrants) are sometimes referred to herein as the "WARRANT
SHARES", and the number of shares so issuable are sometimes
referred to as the "AGGREGATE NUMBER" as such number may be
increased or decreased, as more fully set forth herein.
The Warrants shall be void and all rights represented hereby
shall cease on the Expiration Date (as defined in Section 10).
The Warrants represented hereby are issued on April 1, 1995
(the "ISSUANCE DATE") (such Warrants, or such lesser number thereof
as shall from time to time remain unexercised, being herein
collectively called the "WARRANTS"). The Warrants are being issued
pursuant to an Employment Agreement, dated as of April 1, 1995
between the Company and Holder (the "EMPLOYMENT AGREEMENT").
Certain terms used in this Warrant Certificate are defined in
Section 10 hereof. Terms and expressions in this Warrant
Certificate having a defined or generally accepted meaning under
the securities laws of the United States of America shall have the
same meaning in this Warrant Certificate, unless the express
contrary intention appears.
The Warrants are subject to the following provisions, terms
and conditions:
1. EXERCISE; ISSUE OF CERTIFICATES; PAYMENT FOR SHARES.
The rights represented by this Warrant Certificate may be exercised
by the Holder hereof, in whole or in part (but not as to fractional
shares of Common Stock), to purchase a total of up to 1,000,000
shares, vesting (i) in the amount of 166,668 on April 1, 1995; (ii)
at the rate of 41,667 shares per month on the first day of each
month from and including May 1, 1995 through November 1, 1996 and
(ii) in the amount of 41,659 on December 1, 1996 (subject to the
adjustments described in Section 4 hereof) (the "VESTING
SCHEDULE"), by the surrender of this Warrant Certificate (with the
Exercise Form annexed hereto as Schedule 1 properly completed and
executed) to the Company at its principal office specified in
Section 16, or its then current address, and upon payment to the
Company of the Exercise Price for the Warrant Shares being
purchased by cash or check or bank draft in New York Clearing House
funds. Holder may, at Holder's option, pay the Exercise Price in
the form of unencumbered shares of Common Stock freely transferable
to Signal by delivering such shares along with this Warrant
Certificate and a properly completed and executed Exercise Form.
Such delivered shares shall, for payment purposes hereunder, be
deemed to have a value equal to the average closing market price of
Common Stock for the five (5) trading days immediately prior to
their delivery. The shares so purchased shall be and will be deemed
to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which this
Warrant Certificate shall have been surrendered and payment made
for such shares as aforesaid. Certificates for the Warrant Shares
so purchased shall be delivered to the Holder within a reasonable
time, not exceeding ten (10) days, after this Warrant Certificate
shall have been so exercised, and unless the Warrants have expired,
a new Warrant Certificate representing the number of shares, if
any, with respect to which this Warrant Certificate shall not then
have been exercised shall also be delivered to the Holder hereof
within such time. Such certificate or certificates shall be deemed
to have been issued and any Person so designated to be named
therein shall be deemed for all purposes to have become a holder of
record of such Warrant Shares as of the close of business on the
date on which this Warrant Certificate shall have been surrendered
and payment of the Exercise Price made as aforesaid. The Warrant
Shares initially issued upon the exercise hereof shall be Common
Stock. The foregoing right of exercise will vest in accordance the
Vesting Schedule and will expire at the close of business on the
Expiration Date (as defined in Section 10 hereof).
2. SHARES TO BE FULLY PAID; RESERVATION OF SHARES; LISTING.
The Company covenants and agrees that: (a) all Warrant Shares
will, upon issuance, be original-issue shares (and not treasury
stock) fully paid and nonassessable and free from all taxes,
claims, liens, charges and other encumbrances with respect to the
issuance thereof; (b) without limiting the generality of the
foregoing, it will from time to time take all such action as may be
required to assure that the par value per share of Common Stock
shall at all times be less than or equal to the Exercise Price; (c)
during the period within which the rights represented by this
Warrant Certificate may be exercised, the Company will at all times
have authorized and reserved for the purpose of issue or transfer
upon exercise of the Warrants a sufficient number of original-issue
shares of its Common Stock to provide for the exercise of all the
Warrants or, if an insufficient number of such shares are available
under the Company's Restated Articles of Incorporation, as amended,
will request approval from the Company's shareholders for an
increase in the number of authorized shares; (d) upon the exercise
of the Warrants represented by this Warrant Certificate, it will,
at its expense, promptly notify each securities exchange on which
any Common Stock is at the time listed of such issuance and
maintain a listing of all shares of Common Stock from time to time
issuable upon the exercise of the Warrants to the extent such
shares can be listed.
3. REGISTRATION RIGHTS. Holders of Common Stock issued upon
exercise of warrants issued hereunder shall be entitled to
registration rights as set forth in a registration rights
agreement, in the form attached hereto as EXHIBIT A.
4. ADJUSTMENTS TO AGGREGATE NUMBER.
Under certain conditions, the Aggregate Number is subject to
adjustment as set forth herein.
The Aggregate Number shall be subject to adjustment from time
to time as follows and thereafter, as adjusted, shall be deemed to
be the Aggregate Number hereunder.
(a) In case at any time or from time to time the Company
shall:
(i) take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Common Stock,
(ii) subdivide its outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock,
then the Aggregate Number in effect immediately prior thereto shall
be adjusted so that Holder shall thereafter be entitled to receive,
upon exercise thereof, the number of shares of Common Stock that
Holder would have owned or have been entitled to receive after the
occurrence of such event had such Warrants been exercised
immediately prior to the occurrence of such event.
(b) In case at any time or from time to time the Company
shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any dividend or other
distribution (collectively, a "DISTRIBUTION") of:
(i) cash (other than dividends payable out of earnings
or any surplus legally available for the payment of dividends
under the laws of the state of incorporation of the Company),
(ii) any evidences of its indebtedness (other than
Convertible Securities), any shares of its capital stock
(other than additional shares of Common Stock or Convertible
Securities) or any other securities or property of any nature
whatsoever (other than cash), or
(iii) any options or warrants or other rights to
subscribe for or purchase any of the following: any evidences
of its indebtedness (other than Convertible Securities), any
shares of its capital stock (other than additional shares of
Common Stock or Convertible Securities) or any other
securities or property of any nature whatsoever,
then Holder shall be entitled to receive upon the exercise thereof
at any time on or after the taking of such record the number of
shares of Common Stock to be received upon exercise of such
Warrants determined as stated herein and, in addition and without
further payment, the cash, stock, securities, other property,
options, warrants and/or other rights to which such Holder or
Holders would have been entitled by way of the Distribution and
subsequent dividends and distributions if Holder (x) had exercised
such Warrants immediately prior to such Distribution, and (y) had
retained the Distribution in respect of the Common Stock and all
subsequent dividends and distributions of any nature whatsoever in
respect of any stock or securities paid as dividends and
distributions and originating directly or indirectly from such
Common Stock. A reclassification of the Common Stock 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 paragraph (b) 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
event shall be deemed a subdivision or combination, as the case may
be, of the outstanding shares of Common Stock within the meaning of
paragraph (a) of this Section 4.
(c) In case at any time or from time to time the Company
shall (except as hereinafter provided) issue or sell any additional
shares of Common Stock for a consideration per share less than the
Prevailing Market Price, then the Aggregate Number in effect
immediately prior thereto shall be adjusted so that the Aggregate
Number thereafter shall be determined by multiplying the Aggregate
Number immediately prior to such action by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional
shares of Common Stock plus the number of such additional shares of
Common Stock so issued and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares of Common Stock plus the
number of shares of Common Stock which the aggregate consideration
for the total number of such additional shares of Common Stock so
issued would purchase at a price equal to the Prevailing Market
Price. The provisions of this paragraph (c) shall not apply to any
issuance of additional shares of Common Stock for which an
adjustment is provided under Section 4(a). No adjustment of the
Aggregate Number shall be made under this paragraph (c) upon the
issuance of any additional shares of Common Stock which are issued
pursuant to (1) the exercise of any of the Warrants or of any other
warrant or option to purchase Common Stock outstanding as of the
date of this Warrant Certificate,(2) the exercise of any of the
warrants issued to Walsh Greenwood & Co. in connection with the
loan under that certain Credit Agreement dated March 31, 1995 among
the Company, The Shirt Shed, Inc., American Marketing Works, Inc.
and Walsh Greenwood & Co. or (3) the exercise of stock options to
purchase shares of Common Stock pursuant to any stock options
granted to employees of the Company or its subsidiaries pursuant to
the Company's 1985 Stock Option Plan, as amended (collectively,
(1), (2)and (3), the "OPTIONS").
(d) In case at any time or from time to time the Company
shall (except as hereinafter provided) take a record of the holders
of its Common Stock for the purpose of entitling them to receive a
distribution of, or shall in any manner issue or sell, any warrants
or other rights to subscribe for or purchase (x) any share of
Common Stock or (y) any Convertible Securities, whether or not the
rights to subscribe, purchase, exchange or convert thereunder are
immediately exercisable, and the consideration per share for which
additional shares of Common Stock may at any time thereafter be
issuable pursuant to such warrants or other rights or pursuant to
the terms of such Convertible Securities shall be less than the
Prevailing Market Price, then the Aggregate Number in effect
immediately prior thereto shall be adjusted so that the Aggregate
Number thereafter shall be determined by multiplying the Aggregate
Number immediately prior to such action by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to the issuance of such warrants or
other rights plus the maximum number of additional shares of Common
Stock issuable pursuant to all such warrants or rights and/or
necessary to effect the conversion or exchange of all such
Convertible Securities and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to
the issuance of such warrants or other rights plus the number of
shares of Common Stock which the aggregate consideration for such
maximum number of additional shares of Common Stock would purchase
at a price equal to the Prevailing Market Price. For purposes of
this paragraph (d), the aggregate consideration for such maximum
number of additional shares of Common Stock shall be deemed to be
the minimum consideration received and receivable by the Company
for the issuance of such additional shares of Common Stock pursuant
to the terms of such warrants or other rights or such Convertible
Securities. No adjustment of the Aggregate Number shall be made
under this paragraph (d) upon the issuance of the Options.
(e) In case at any time or from time to 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 shall in
any manner issue or sell, Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately
exercisable, and the consideration per share for the additional
shares of Common Stock which may at any time thereafter be issuable
pursuant to the terms of such Convertible Securities shall be less
than the Prevailing Market Price, then the Aggregate Number in
effect immediately prior thereto shall be adjusted so that the
Aggregate Number thereafter shall be determined by multiplying the
Aggregate Number immediately prior to such action by a fraction,
the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such
Convertible Securities plus the maximum number of additional shares
of Common Stock necessary to effect the conversion or exchange of
all such Convertible Securities and the denominator of which shall
be the number of shares of Common Stock outstanding immediately
prior to the taking of such action plus the number of shares of
Common Stock which the aggregate consideration for such maximum
number of additional shares of Common Stock would purchase at a
price equal to the Prevailing Market Price. For purposes of this
paragraph (e), (x) the aggregate consideration for such maximum
number of additional shares of Common Stock shall be deemed to be
the minimum consideration received and receivable by the Company
for the issuance of such additional shares of Common Stock pursuant
to the terms of such Convertible Securities. No adjustment of the
Aggregate Number shall be made under this paragraph (e) upon the
issuance of any Convertible Securities which are issued pursuant to
the exercise of any warrants or other subscription or purchase
rights if an adjustment shall previously have been made or if no
such adjustment shall have been required upon the issuance of such
warrants or other rights pursuant to paragraph (d) of this Section
4.
(f) If, at any time after any adjustment of the Aggregate
Number shall have been made pursuant to paragraph (d) or (e) of
this Section 4 on the basis of the issuance of warrants or other
rights or the issuance of Convertible Securities, or after any new
adjustments of the Aggregate Number shall have been made pursuant
to this paragraph (f),
(i) such warrants or rights or the right of conversion
or exchange in such Convertible Securities shall expire, and
all or a portion of such warrants or rights, or the right of
conversion or exchange in respect of all or a portion of such
Convertible Securities, as the case may be, shall not have
been exercised, and/or
(ii) the consideration per share for which shares of
Common Stock are issuable pursuant to such warrants or rights
or the terms of such Convertible Securities shall be
irrevocably increased solely by virtue of provisions therein
contained for an automatic increase in such consideration per
share upon the arrival of a specified date or the happening of
a specified event, or such warrants or rights shall have been
exercised or such convertible Securities converted at a price
in excess of the minimum consideration used in the calculation
of the adjustment to the Aggregate Number,
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 such
adjustment 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 warrants or rights or Convertible Securities
increase in consideration per share on the basis of:
(x) eliminating the number of shares of Common
Stock subject to such warrants or rights or such right
of conversion or exchange which no longer may be
purchased, and
(y) treating any such warrants or rights or any
such Convertible Securities which then remain
outstanding as having been granted or issued immediately
after the time of such irrevocable increase of the
consideration per share for which shares of Common Stock
are issuable under such warrants or rights or
Convertible Securities;
and, if and to the extent called for by the foregoing provisions of
this paragraph (f) on the basis aforesaid, a new adjustment of the
Aggregate Number shall be made, and such new adjustment shall
supersede the previous adjustments rescinded and annulled.
Notwithstanding the foregoing, such new adjustment shall have no
effect on shares of Common Stock purchased pursuant to an exercise
hereof prior to the date of the new adjustment.
(g) The following provisions shall be applicable to the
making of adjustments of the Aggregate Number hereinbefore provided
for in this Section 4:
(i) The sale or other disposition of any issued share
of Common Stock owned or held by or for the account of the
Company shall be deemed an issuance thereof for the purposes
of this Section 4.
(ii) 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 (x) are issued for
cash consideration, the consideration received by the Company
therefor shall be deemed to be the amount of the cash received
by the Company therefor, (y) are offered by the Company for
subscription, the consideration received by the Company shall
be deemed to be the subscription price or (z) if a part or all
of the consideration received or receivable by the Company
consists of property other than cash, the value of such
consideration shall be the fair market value of such property
as determined in good faith by the Board of Directors.
(iii) The adjustments required by the preceding
paragraphs of this Section 4 shall be made whenever and as
often as any specified event requiring an adjustment shall
occur. 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.
(iv) In computing adjustments under this Section 4
fractional interests in Common Stock shall be taken into
account to the nearest one-thousandth (.001) of a share and
shall be aggregated until they equal one whole share.
(v) 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 to stockholders thereof, but abandon its plan to pay or
deliver such dividend, distribution, subscription or purchase
rights, then no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled[; provided,
however, that such rescission shall have no effect on shares
of Common Stock purchased pursuant to an exercise hereof prior
to the date of the rescission].
(h) If any event occurs as to which the other provisions of
this Section 4 are not strictly applicable but the lack of any
provision for the exercise of the rights of Holder would not
fairly protect the purchase rights of Holder in accordance with the
essential intent and principles of such provisions, or, if strictly
applicable, would not fairly protect the conversion rights of
Holder in accordance with the essential intent and principles of
such provisions, then the Company shall appoint a firm of
independent certified public accountants in the United States
(which may be the regular auditors of the Company) of recognized
national standing in the United States satisfactory to Holder,
which shall give their opinion acting as an expert and not as an
arbitrator as to the adjustments, if any, necessary to preserve,
without dilution, on a basis consistent with the essential intent
and principles established in the other provisions of this Section
4, the exercise rights of the Holders of Warrants. Upon receipt of
such opinion, the Company shall forthwith make the adjustments
described therein. In the event of an adjustment in the Aggregate
Number pursuant to Section 4 hereof, the Exercise Price shall be
adjusted accordingly as appropriate to cause the aggregate cost for
exercising the Warrants issued hereunder to remain the same.
(i) Within forty-five (45) days after the end of each fiscal
quarter during which an event occurred that resulted in an
adjustment pursuant to this Section 4, and at any time upon the
request of Holder, the Company shall cause to be promptly mailed to
Holder by first-class mail, postage prepaid, notice of each
adjustment or adjustments to the Aggregate Number effected since
the date of the last such notice and a certificate of the Company's
Chief Financial Officer or, in the case of any such notice
delivered within forty-five (45) days after the end of a fiscal
year, a firm of independent public accountants in the United States
selected by the Company and acceptable to Holder (who may be the
regular accountants employed by the Company), in each case, setting
forth the Aggregate Number after such adjustment, a brief statement
of the facts requiring such adjustment and the computation by which
such adjustment was made. The fees and expenses of such accountants
shall be paid by the Company.
(j) The occurrence of a single event shall not trigger an
adjustment of the Aggregate Number under more than one paragraph of
this Section 4.
(k) If at any time or form time to time there shall be a
reorganization, merger or consolidation of the Company with or
into another corporation, or the sale of all or substantially all
of the Company's properties and assets to any other person, the
Holder shall thereafter be entitled to purchase (and it shall be
a condition to the consummation of any such reorganization,
merger, consolidation or sale, that appropriate provision be made
so that the Holders shall thereafter be entitled to purchase),
upon exercise of the Warrants, the kind and amount of shares of
stock or other securities or property of the Company, or of the
successor corporation resulting from such merger, consolidation
or sale, to which a holder of Common Stock issuable upon exercise
hereof would have been entitled in such capital reorganization,
merger, consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of
this Section 4 with respect to the rights of the Holder after the
reorganization, merger, consolidation or sale to the end that the
provisions of this Section 4 (including adjustment of the
Aggregate Number and the Exercise Price) shall be applicable
after that event in as nearly equivalent a manner as may be
practicable.
(l) The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the
provisions of this Section 4 and in the taking of all such action
as may be necessary or appropriate in order to protect the
exercise rights of the Holders against impairment.
5. TAXES ON CONVERSION. The issuance of certificates for
Warrant Shares upon the exercise of the Warrants shall be made
without charge to Holder exercising any such Warrant for any issue
or stamp tax in respect of the issuance of such certificates, and
such certificates shall be issued in the respective names of, or in
such names as may be directed by, Holder; provided, however, that
the Company shall not be required to pay any tax that may be
payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of
Holder, and the Company shall not be required to issue or deliver
such certificates unless or until the Person or Persons requesting
the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
6. LIMITATION OF LIABILITY. No provision hereof in the
absence of the exercise of the Warrants by Holder and no
enumeration herein of the rights or privileges of Holder shall give
rise to any liability on the part of Holder for the Exercise Price
of the Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by any creditor of the
Company.
7. CLOSING OF BOOKS. The Company will at no time close its
transfer books against the transfer of any Warrant or of any shares
of Common Stock issued or issuable upon the exercise of any warrant
in any manner that interferes with the timely exercise of the
Warrants.
8. AVAILABILITY OF INFORMATION. The Company will use its
best efforts to comply with the reporting requirements of the
United States Securities Exchange Act of 1934, as amended, if
applicable, and will use its best efforts to comply with all other
public information reporting requirements of the Commission
(including rules and regulations promulgated by the Commission
under the Securities Act) from time to time in effect and relating
to the availability of an exemption from the Securities Act for the
sale of any Warrant Shares. The Company will also cooperate with
Holder in supplying such information as may be necessary for Holder
to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale
of any Warrant Shares. The Company will deliver to Holder,
promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent or made
available generally by the Company to its shareholders, and copies
of all regular and periodic reports and all registration statements
and prospectuses filed by the Company with any securities exchange
or with the Commission.
9. RESTRICTIONS ON TRANSFER.
9.1 RESTRICTIVE LEGENDS. Each certificate for any Warrant
Shares issued upon the exercise of any Warrant, and each stock
certificate issued upon the transfer of any such Warrant Shares
(except as otherwise permitted by this Section 9) shall be stamped
or otherwise imprinted with a legend in substantially the following
form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF
ANY STATE. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION
THEREFROM UNDER SUCH ACT AND LAWS."
Each Warrant Certificate issued in substitution for any
Warrant Certificate pursuant to Section 12, 13 or 14 and each
Warrant Certificate issued upon the transfer of any Warrant (except
as otherwise permitted by this Section 9) shall be stamped or
otherwise imprinted with a legend in substantially the following
form:
"THESE WARRANTS AND ANY SHARES ACQUIRED UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE WARRANTS
AND SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SUCH ACT AND LAWS. THESE WARRANTS AND SUCH SHARES
MAY NOT BE TRANSFERRED EXCEPT UPON THE CONDITIONS
SPECIFIED IN THIS WARRANT CERTIFICATE, AND NO TRANSFER
OF THESE WARRANTS OR SUCH SHARES SHALL BE VALID OR
EFFECTIVE UNLESS AND UNTIL SUCH CONDITIONS SHALL HAVE
BEEN COMPLIED WITH."
9.2 TERMINATION OF RESTRICTIONS. The restrictions imposed by
this Section 9 upon the transferability of Warrants and Warrant
Shares shall cease and terminate as to any particular Warrants or
Warrant Shares, (a) as to Warrant Shares, when such securities
shall have been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering
such securities, or (b) when in the reasonable opinion of counsel
for Holder such restrictions are no longer required in order to
comply with the Securities Act. Whenever such restrictions shall
terminate as to any Warrants or Warrant Shares, Holder shall be
entitled to receive from the Company, without expense, new
certificates of like tenor not bearing the restrictive legends set
forth in Section 9.1.
10. DEFINITIONS. As used in this Warrant Certificate, unless
the context otherwise requires, the following terms have the
following respective meanings:
AGGREGATE NUMBER: as set forth in the first paragraph of
this Warrant Certificate and as subsequently varied pursuant
to Section 4.
BUSINESS DAY: any day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
authorized or required by law to close.
COMMISSION: the United States Securities and Exchange
Commission and any other similar or successor agency of the
United States federal government administering the United
States Securities Act or the Securities Exchange Act of 1934,
as amended.
COMMON STOCK: the shares of Common Stock, $.01 par
value per share, of the Company, currently provided for in the
Restated Articles of Incorporation of the Company, as amended,
and any other capital stock of the Company into which such
shares of Common Stock may be converted or reclassified or
that may be issued in respect of, in exchange for, or in
substitution of, such Common Stock by reason of any stock
splits, stock dividends, distributions, mergers,
consolidations or like events.
COMPANY: Signal Apparel Company, Inc., an Indiana
corporation, and its successors and assigns.
CONVERTIBLE SECURITIES: securities which by their terms
are convertible into or exchangeable for Common Stock.
DEMAND REGISTRATION: as set forth in Section 3.1(a)
hereof.
DISTRIBUTION: shall have the meaning specified in
Section 4(b).
EXERCISE PRICE: as set forth in the first paragraph of
this Warrant Certificate.
EXPIRATION DATE: this Warrant Certificate will expire
and the Warrants issued hereby will become null and void on
the six (6) month anniversary of the Date of Termination (as
defined in the Employment Agreement).
ISSUANCE DATE: April 1, 1995.
HOLDER: as set forth in the first paragraph of this
Warrant Certificate.
KKEP AGREEMENT: as set forth in Section 3.1(a) hereof.
OPTIONS: as set forth in Section 4(c) hereof.
PERSON: an individual, corporation, partnership, trust
or unincorporated organization, or a government or any agency
or political subdivision thereof.
PREVAILING MARKET PRICE: The average of the daily
closing prices of 30 consecutive trading days immediately
preceding the day in question after appropriate adjustment for
stock dividends, subdivisions, combinations or
reclassifications occurring within said 30-day period. The
closing price for each day shall be the average of the closing
bid and asked prices as furnished by a New York Stock Exchange
member firm or National Association of Securities Dealers,
Inc. member firm, selected from time to time by the
Corporation for that purpose, or, in the event that the Common
Stock is listed or admitted to trading on one or more national
securities exchanges (or as a NASDAQ National Market System
security), the last sale price on the NASDAQ system or on the
principal national securities exchange on which the Common
Stock is listed or admitted to trading or, in case no reported
sale takes place on such day, the average of the reported
closing bid and asked prices on the NASDAQ system or such
principal exchange.
REGISTRABLE SECURITIES: as set forth in Section 3.1(a)
hereof.
SECURITIES ACT: the United States Securities Act of
1933, as amended (or any successor statute).
WARRANTS: as set forth in the third paragraph of this
Warrant Certificate.
WARRANT SHARES: as set forth in the first paragraph of
this Warrant Certificate.
11. ACQUISITION OF WARRANTS. Holder represents that he is
acquiring the Warrants represented by this Warrant Certificate and,
upon any exercise of such Warrants, will acquire Common Stock
hereunder for his own account for the purpose of investment, and
not with a view to the public distribution thereof within the
meaning of the Securities Act, subject to any requirement of law
that the disposition thereof shall at all times be within the
control of Holder. Holder further represents and acknowledges that
he is an "Accredited Investor" within the meaning of Regulation D
under the Securities Act.
12. WARRANTS TRANSFERABLE. These Warrants are issued as
unregistered Warrants. Subject to the provisions of Section 9, the
transfer of any Warrant and all rights hereunder, in whole or in
part, is registrable at the office of agency of the Company
referred to in Section 1 hereof by Holder in person or by duly
authorized attorney, upon surrender of this Warrant Certificate
with the properly completed Form of Assignment in the form annexed
hereto as Schedule 2. The transfer of any Warrant or any rights
thereunder may be effected only by the surrender of such Warrant at
the office or agency of the Company and until due presentment for
registration of transfer on such books, the Company may treat the
registered Holder hereof as the owner for all purposes, and the
Company shall not be affected by notice to the contrary. No
transfer shall be effective until this Warrant Certificate has been
surrendered to the Company as provided herein and the replacement
Warrant Certificate issued to the transferee has been duly executed
by the Company. Only Warrants which shall have vested in accordance
with Section 1 shall be transferable, and the replacement Warrant
Certificate(s) shall indicate that such Warrants are fully vested.
13. WARRANT CERTIFICATES EXCHANGEABLE FOR DIFFERENT
DENOMINATIONS. This Warrant Certificate is exchangeable, upon the
surrender hereof by Holder at such office or agency of the Company,
for a new Warrant Certificate of like tenor representing in the
aggregate the right to purchase the number of shares that may be
purchased hereunder, each of such new Warrant Certificates to
represent the right to purchase such number of shares as shall be
designated by Holder at the time of such surrender. Such Warrant
Certificate shall not be valid until duly executed by the Company.
14. REPLACEMENT OF WARRANT CERTIFICATES. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant Certificate and, in the
case of any such loss, theft or destruction, upon delivery of an
indemnity bond (or, in the case of the original holder hereof or
any substantial financial institution to which any Warrants
represented by this Warrant Certificate may be transferred, an
unsecured indemnity agreement) reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant Certificate, the Company
at its expense will execute and deliver, in lieu thereof, a new
Warrant Certificate of like tenor. Such Warrant Certificate shall
not be valid until duly executed by the Company.
15. CERTIFICATE RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF
WARRANTS. The rights and obligations of the Company contained in
Sections 1, 4, 5 and 6 hereof shall survive until the exercise of
all of the Warrants or the Expiration Date, whichever is earlier.
16. NOTICES. All notices, requests and other communications
required or permitted to be given or delivered to e Holder shall be
in writing, and shall be delivered or shall be sent by airmail, if
overseas, certified or registered mail postage prepaid and
addressed, to Holder at 428 Gentlemen's Ridge, Signal Mountain,
Tennessee 37377 with a copy to Jeffer, Mangels, Butler & Marmaro,
2121 Avenue of the Stars, Tenth Floor, Los Angeles, California
90067, Attention : Ron Goldie,Esq., or at such other address as
shall have been furnished to the Company by notice from Holder.
All notices, requests and other communications required or
permitted to be given or delivered to the Company shall be in
writing, and shall be delivered, or shall be sent by certified or
registered mail, postage prepaid and addressed to the office of the
Company, (return receipt requested) P.O. Box 4296, Manufacturer's
Road, Chattanooga, Tennessee 37405, Attention: Treasurer, with a
copy to Witt, Gaither & Whitaker, P.C., 1100 American National Bank
Building, Chattanooga, Tennessee 37402-2608, Attention: John F.
Henry, Jr., Esquire, or at such other address as shall have been
furnished to Holder by notice from the Company. Any such notice,
request or other communication may be sent by telegram or telex,
but shall in such case be subsequently confirmed by a writing
delivered or sent by certified or registered mail as provided
above. All notices shall be deemed to have been given either at
the time of the delivery thereof to (or the receipt by, in the case
of a telegram or telex) any officer or employee of the person
entitled to receive such notice at the address of such person for
purposes of this Section 16, or, if mailed, at the completion of
the third full day following the time of such mailing thereof to
such address, as the case may be.
17. AMENDMENTS. Neither this Warrant Certificate nor any
term or provision may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or
termination is sought.
19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of laws thereunder.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be executed by its duly authorized officer and this
Warrant Certificate to be dated April 1, 1995.
SIGNAL APPAREL COMPANY, INC.
By /s/ William H. Watts
_________________________
LIST OF OMITTED SCHEDULES AND EXHIBITS
SCHEDULE 1 EXERCISE FORM
SCHEDULE 2 FORM OF TRANSFER
EXHIBIT A REGISTRATION RIGHTS AGREEMENT
The Company hereby agrees to furnish a copy of any such omitted schedule or
exhibit supplementally upon request of the Commission's Staff.