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.
500,000 Warrants
THIS CERTIFIES THAT, for good and valuable consideration,
the receipt of which is hereby acknowledged, WALSH GREENWOOD &
CO. or its 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 $2.25 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 11).
The Warrants represented hereby are issued on August 10,
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 a Credit Agreement, dated as of March
31, 1995 among the Company, Walsh Greenwood & Co. and certain of
the Company's subsidiaries, as amended by a First Amendment to
Credit Agreement dated as of the date hereof (collectively, the
"Credit Agreement").
Certain terms used in this Warrant Certificate are defined
in Section 11 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 500,000 shares, vesting at the rate of 100,000 shares for each
$1 million in advances drawn by the Company upon the loan
extended under the Credit Agreement (subject to the adjustments
described in Section 5 hereof), 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 17, or its then current address, and
upon payment to the Company of the Exercise Price for the Warrant
Shares being purchased (i) by cash or check or bank draft in New
York Clearing House funds, (ii) by tender of shares of the
Company's Preferred Stock valued at $100,000 per share plus any
accrued but unpaid dividends, or (iii) by the total and complete
reduction of obligations of the Company under the Credit
Agreement in a dollar amount equal to the Exercise Price. 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 expire at the close of business on the Expiration Date;
provided, if such date should not be a Business Day, such
expiration will not occur until the close of business on the next
Business Day.
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; (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. Representations and Warranties. All representations
and warranties contained in Section 5 of the Credit Agreement are
true and correct and incorporated herein as if made by the
Company to the Holders of the Warrants.
4. Registration Rights.
(a) Demand Registration Rights. On any two occasions after
the Issuance Date and prior to the Expiration Date, upon the
request of Holders of at least 51% of the Warrant Shares
originally issued pursuant to this Warrant Certificate which are
then outstanding, which Holders shall request the registration of
such shares under the United States Securities Act of 1933, as
amended (provided that such request covers an aggregate of at
least 250,000 Warrant Shares), the Company shall file with the
Commission and use its best efforts to cause to become effective
as promptly as practicable (subject to the following sentence) a
registration statement covering at least all of the Warrant
Shares requested to be registered by such requesting Holders (any
Holders of Warrant Shares requesting registration under this
Section 4(a) are "Selling Holders"), all to the extent requisite
to permit the exercise or disposition in the United States, as
the case may be, by the Selling Holders of the Warrant Shares so
registered ("Demand Registration"); provided, however, that the
Company shall not be obligated to effect a Demand Registration
(i) prior to the date which is 90 calendar days after the closing
date of a previous United States public offering, (ii) if the
Company has given notice to the Holders of Warrants that the
Company expects to file a registration statement within 30 days
and while the Company has a public offering in registration,
(iii) at any time or in any manner which is in conflict with the
rights granted to Holders of registrable securities pursuant to
that certain Registration Rights Agreement dated as of November
22, 1994 by and between the Company and Kidd, Kamm Equity
Partners, L.P., as nominee (the "KKEP Agreement"), unless the
holders of such rights have explicitly waived any such conflict
in writing, or (iv) if three such Demand Registrations with
respect to all or a portion of the Warrant Shares have previously
been requested. Should the Company refuse to effect a Demand
Registration pursuant to subsections (i), (ii) or (iii) above,
such request shall not be considered on of the three rights to
demand registration grnated by this Section. The Company shall
promptly give written notice to all Holders of the Warrants and
the Warrant Shares of the receipt by it of a request for a Demand
Registration pursuant to this Section. If other selling
shareholders or the Company shall also propose to include shares
of Common Stock in a Demand Registration, and if the number of
includable shares shall exceed the total number of shares of
Common Stock proposed to be registered and/or Warrant Shares
proposed to be registered (all such securities proposed to be
registered, the "Registrable Securities"), the Registrable
Securities shall be included in the Demand Registration in the
following priority: first, the Registrable Securities held by
the Holders of Warrant Shares in proportion to the respective
numbers of Registrable Securities proposed to be sold by them,
and second, the Registrable Securities proposed to be registered
by the Company or other selling shareholders, allocated among
them in such manner as they shall determine. If a Holder or
Holders shall have requested a Demand Registration and the
Company shall have thereafter withdrawn such registration
statement, in addition to such other rights and remedies that the
Holders may be entitled to, such withdrawn registration shall not
be deemed to be one of the registration statements that may be
requested pursuant to this Section 4(a). The Holder agrees to
exercise all Warrants for which it has demanded registration of
Warrant Shares on the effective date of such registration.
(b) United States Federal and State Approval. The Company
shall effect the registration or qualification of the Warrant
Shares registered pursuant to this Section 4(a) and shall give
such notifications to, or receive approvals of, any governmental
authority under United States federal or, if reasonably requested
by the Selling Holders, any United States state securities laws,
or any other applicable law, or effect listing with any
securities exchange on which the Common Stock is listed at such
time, as may be necessary to permit the sale of the Warrants
and/or the exercise of the Warrants and the sale of Warrant
Shares in the manner proposed by the Selling Holders; provided,
the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified, to subject itself to
taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction.
(c) Expenses. Subject to the limitations contained in this
paragraph (c) and except as otherwise specifically provided in
this Section 4, the entire costs and expenses of each
registration and qualification pursuant to this Section 4,
whether or not such registration shall become effective or shall
be consummated, shall be borne by the Company. Such costs and
expenses shall include the fees and expenses of counsel for the
Company and of its accountants (including the cost of any special
audit required by or incidental to such registration), all other
costs and expenses of the Company incident to the preparation,
printing and filing under the Securities Act of the registration
statement and all amendments and supplements thereto, the cost of
furnishing copies of each preliminary prospectus, each final
prospectus and each amendment or supplement thereto to
underwriters, dealers and other purchasers of the Warrant Shares
and the costs and expenses (including fees and disbursements of
counsel) incurred by the Company in connection with the
qualification of the Warrant Shares under the Blue Sky laws of
various jurisdictions.
(d) Procedures. In the case of each registration or
qualification pursuant to this Section 4, the Company will keep
all Holders of Warrants advised in writing as to the initiation
of proceedings for such registration and qualification and as to
the completion thereof, and will advise any such Holders, upon
request, of the progress of such proceedings. At its expense, the
Company will promptly prepare and in any event, except as
otherwise expressly provided herein, within 90 days after the end
of the period within which requests for registration may be given
to the Company, file with the Commission a registration statement
with respect to the securities to be registered and use its best
efforts to cause such registration statement to become effective
and keep such registration and qualification in effect by such
action as may be necessary or appropriate, including, without
limitation, the filing of post-effective amendments and
supplements to any registration statement or prospectus necessary
to keep the registration statement current and further
qualification under any applicable Blue Sky or other state
securities laws to permit such sale or distribution, all as
reasonably requested by such Holder or Holders. At its expense,
the Company will furnish to each Holder whose Warrants and/or
Warrant Shares are included therein, at such Holder's
expense,such number of copies of such registration statement and
of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
included in such registration statement and covering such
Holder's Warrant Shares (including each preliminary prospectus),
in conformity with the requirements of the Securities Act, and
such other documents as such Holder may reasonably request in
order to facilitate the disposition of such Holder's Warrant
Shares contemplated in such registration statement. The Company
will notify each Selling Holder of any securities covered by such
registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, or of any other occurrence which,
under applicable securities laws, requires the prospectus to be
revised or updated (and upon receipt of such notice and until a
supplemented or amended prospectus as set forth below is
available, each Selling Holder will cease to offer or sell any
securities covered by the registration statement and will return
all copies of the prospectus to the Company if requested to do so
by it and will not sell any security of the Company until
provided with a current prospectus and notice for the Company
that it may resume its selling efforts). At the request of any
such Selling Holder, the Company shall furnish to such Selling
Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statement therein not misleading
in the light of the circumstances then existing. Notwithstanding
anything to the contrary herein, any prospective Selling Holder
may withdraw from a registration under this Section 4 any or all
of his Warrant Shares, upon written notice to the Company given
prior to the execution and delivery by such Selling Holder of a
binding underwriting agreement with the prospective underwriters.
(e) Cross-Indemnity and Contribution Agreements. In
connection with the registration of Warrant Shares in accordance
with this Section 4, the Company agrees to enter into an
appropriate cross-indemnity agreement and a contribution
agreement, each in customary form, with each underwriter, if any,
and each Holder of Warrant Shares included in such registration
statement; and, if requested, enter into an underwriting
agreement containing conventional representations, warranties,
allocation of expenses, and customary closing conditions
including, but not limited to, opinions of counsel and
accountants' comfort letters, with any underwriter who acquires
the Warrant Shares.
(f) Cooperation of Selling Holders. Every Selling Holder
who has any Warrant Shares included in a registration statement
agrees as follows:
(i) To furnish the Company, in writing, such
appropriate information and covenants regarding the proposed
methods of sale or other disposition of the Warrant Shares
as the Company, any underwriter, the Commission and/or any
state or other regulatory authority may request;
(ii) To execute, deliver and/or file with or supply to
the Company, any underwriter, the Commission and/or any
state or other regulatory authority such information,
documents, representations, undertakings and/or agreements
as are (A) necessary to carry out the provisions of this
Warrant Certificate, (B) necessary to effect the
registration or qualification of the Warrant Shares under
the Securities Act and/or any of the laws and regulations of
any jurisdiction, and (C) as the Company may reasonably
require to ensure the transfer or disposition of the Warrant
Shares is not in violation of the Securities Act or any
applicable state securities laws;
(iii) To furnish to the Company, not later than every
thirty (30) days after the date of effectiveness of the
registration statement, a report of the number of Warrant
Shares sold during such thirty (30) day period; and
(iv) To cancel any orders to sell and/or to reverse
any sale of Warrant Shares which, in the reasonable belief
of the Company, based upon the opinion of legal counsel
experienced in securities law matters, orders and/or sales
were effected in violation of the Securities Act or any
applicable State securities laws.
5. 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 the Aggregate Number shall
be deemed to be the Aggregate Number hereunder as adjusted.
(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 the Holder or Holders of Warrants shall
thereafter be entitled to receive, upon exercise thereof, the
number of shares of Common Stock that such Holder or Holders
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 the Holder or Holders of Warrants 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 such Holder or Holders (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 5.
(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 5(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 Floating Rate
Warrants issued pursuant to the Credit Agreement, and (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 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 Corporation 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 5.
(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 5 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 on the basis of:
(x) treating the number of additional shares
of Common Stock, if any, theretofore actually issued or
issuable pursuant to the previous exercise of such
warrants or rights or such right of conversion or
exchange as having been issued on the date or dates of
such exercise and for the consideration actually
received and receivable therefor, 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, such new adjustment shall
supersede the previous adjustments rescinded and annulled.
(g) If the Company redeems or exchanges all or any portion
of its Series A or Series C Preferred Stock through the issuance
or exchange of the Company's Common Stock, the Aggregate Number
shall be adjusted by multiplying such Aggregate Number by a
fraction the numerator of which is the total number of issued and
outstanding shares of the Company's Common Stock immediately
prior to such redemption or exchange plus the total of all shares
of the Company's Common Stock issued in exchange for the redeemed
or exchanged Preferred Stock and the denominator of which is the
total number of issued and outstanding shares of the Company's
Common Stock immediately prior to such redemption or exchange.
(h) The following provisions shall be applicable to the
making of adjustments of the Aggregate Number hereinbefore
provided for in this Section 5:
(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 5.
(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 solely 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, or (y)
are offered by the Company for subscription, the
consideration received by the Company shall be deemed to be
the subscription price.
(iii) The adjustments required by the preceding
paragraphs of this Section 5 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 5
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.
(i) If any event occurs as to which the other provisions of
this Section 5 are not strictly applicable but the lack of any
provision for the exercise of the rights of a Holder or Holders
of Warrants would not fairly protect the purchase rights of such
Holder or Holders of Warrants in accordance with the essential
intent and principles of such provisions, or, if strictly
applicable, would not fairly protect the conversion rights of the
Holder or Holders of Warrants in accordance with the essential
intent and principles of such provisions, then the Company shall
appoint a firm or 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 the 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 5, the exercise rights of the Holders
of Warrants. Upon receipt of such opinion, the Company shall
forthwith make the adjustments described therein.
(j) 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 5, and at any time upon the
request of any Holder of Warrants, the Company shall cause to be
promptly mailed to each 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 the Holder(s) (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.
(k) The occurrence of a single event shall not trigger an
adjustment of the Aggregate Number under more than one paragraph
of this Section 5.
6. Taxes on Conversion. The issuance of certificates for
Warrant Shares upon the exercise of the Warrants shall be made
without charge to the 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, the
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 the 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.
7. Limitation of Liability. No provision hereof in the
absence of the exercise of the Warrants by the Holder and no
enumeration herein of the rights or privileges of the Holder
shall give rise to any liability on the part of the 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.
8. 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.
9. 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 each Holder of any Warrants in supplying such
information as may be necessary for such 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 any 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.
10. Restrictions on Transfer.
10.1 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 10) 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 13, 14 or 15 and each
Warrant Certificate issued upon the transfer of any Warrant
(except as otherwise permitted by this Section 10) 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."
10.2 Termination of Restrictions. The restrictions imposed
by this Section 10 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 the Holder thereof 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, the Holder thereof shall be
entitled to receive from the Company, without expense, new
certificates of like tenor not bearing the restrictive legends
set forth in Section 10.1.
11. 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 5.
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, con-solidations 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.
Credit Agreement: the Credit Agreement, dated as of
March 31, 1995, among the Company, Walsh Greenwood & Co. and
certain of the Company's subsidiaries as amended by the
First Amendment to Credit Agreement, dated as of August 10,
1995.
Demand Registration: as set forth in Section 4.1(a)
hereof.
Distribution: shall have the meaning specified in
Section 5(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 earlier of three years from the date the last Warrants
vest or three years from the Termination Date of the Credit
Agreement.
Issuance Date: August 10, 1995.
Holder or Holders: as set forth in the first paragraph
of this Warrant Certificate.
KKEP Agreement: as set forth in Section 4(a) hereof.
Options: as set forth in Section 5(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 reclas-
sifications 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 4(a)
hereof.
Securities Act: the United States Securities Act of
1933, as amended (or any successor statute).
Selling Holders: as set forth in Section 4(a) hereof.
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.
12. Acquisition of Warrants. Holder represents that it is
acquiring the Warrants represented by this Warrant Certificate
and, upon any exercise of such Warrants, will acquire Common
Stock hereunder for its 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 the Holder. The Holder further
represents and acknowledges that it is an "Accredited Investor"
within the meaning of Regulation D under the Securities Act.
13. Warrants Transferable. These Warrants are issued as
unregistered Warrants. Subject to the provisions of Section 10,
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 the Holder hereof 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 Paragraph 1 shall be
transferable, and the replacement Warrant Certificate(s) shall
indicate that such Warrants are fully vested.
14. Warrant Certificates Exchangeable for Different
Denominations. This Warrant Certificate is exchangeable, upon
the surrender hereof by the 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 such Holder at the
time of such surrender. Such Warrant Certificate shall not be
valid until duly executed by the Company.
15. 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.
16. Certificate Rights and Obligations Survive Exercise of
Warrants. The rights and obligations of the Company contained
herein shall survive until the exercise of all of the Warrants or
the Expiration Date, whichever is earlier.
17. Notices. All notices, requests and other
communications required or permitted to be given or delivered to
the Holders of Warrants 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 each Holder at
the address shown on such Holder's Warrant certificate, or at
such other address as shall have been furnished to the Company by
notice from such 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 the Holders of Warrants 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 17,
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.
18. 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, provided that any change or
waiver of any term or provision hereof, and any consent or
direction given hereunder by the Holders may be effected by the
Holders of 51% in interest of the Warrants originally issued
pursuant to this Warrant Certificate on the Issuance Date, except
that no change or waiver that would (i) increase the Exercise
Price of any Warrant or reduce the Aggregate Number, (ii)
change or waive any of the provisions of Section 4 in
connection with the registration rights of Holders of Warrants
or (iii) change or waive any of the provisions of this Section
18 as to the requisite percentage of the Holders of the
Warrants required to effect any change or wavier of any
provision of this Warrant Certificate, shall be effective as to
any Holder without the consent of such Holder.
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 August 10, 1995.
SIGNAL APPAREL COMPANY, INC.
By /s/William H. Watts, CFO
--------------------------
Schedule 1
EXERCISE FORM FOR CASH EXERCISE
[To be executed only upon exercise of Warrant with cash payment
of exercise price]
To: SIGNAL APPAREL COMPANY, INC.
The undersigned irrevocably exercises ________________ of
the Warrants for the purchase of one share (subject to
adjustment) of Common Stock, $.01 par value per share, of SIGNAL
APPAREL COMPANY, INC. for each Warrant represented by the within
Warrant Certificate and herewith makes payment of $_________
(such payment being in cash or by check or bank draft in New York
Clearing House funds payable to the order of Signal Apparel
Company, Inc., all at the exercise price and on the terms and
conditions specified in the within Warrant Certificate,
surrenders the within Warrant Certificate and all right, title
and interest therein (except as to any unexercised Warrants) to
Signal Apparel Company, Inc. and directs that the shares of
Common Stock deliverable upon the exercise of such Warrants be
registered or placed in the name and at the address specified
below and delivered thereto.
Date:_______________________
______________________________
(Signature of Owner)
______________________________
______________________________
(Address)
________________________
(1) The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
Any unexercised Warrants evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:
Name:
Address:
EXERCISE FORM FOR EXERCISE WITH PREFERRED SHARES
[To be executed only upon exercise of Warrant with payment of
exercise price in shares of the Company's Preferred Stock]
To: SIGNAL APPAREL COMPANY, INC.
The undersigned irrevocably exercises ________________ of
the Warrants for the purchase of one share (subject to
adjustment) of Common Stock, $.01 par value per share, of SIGNAL
APPAREL COMPANY, INC. for each Warrant represented by the within
Warrant Certificate and herewith makes payment of $_________
(such payment being made through surrender of shares of the
Preferred Stock of SIGNAL APPAREL COMPANY, INC., having a stated
value equal to such amount plus all accrued but unpiad dividends)
all at the exercise price and on the terms and conditions
specified in the within Warrant Certificate, surrenders the
within Warrant Certificate and all right, title and interest
therein (except as to any unexercised Warrants) to SIGNAL APPAREL
COMPANY, INC. and directs that the shares of Common Stock
deliverable upon the exercise of such Warrants be registered or
placed in the name and at the address specified below and
delivered thereto.
Date:_______________________
______________________________
(Signature of Owner)
______________________________
______________________________
(Address)
________________________
(1) The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
Any unexercised Warrants evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:
Name:
Address:
EXERCISE FORM FOR EXERCISE THROUGH DEBT CANCELLATION
[To be executed only upon exercise of Warrant with payment of
exercise price through cancellation of the Company's indebtedness
under the related Credit Agreement]
To: SIGNAL APPAREL COMPANY, INC.
The undersigned irrevocably exercises ________________ of
the Warrants for the purchase of one share (subject to
adjustment) of Common Stock, $.01 par value per share, of SIGNAL
APPAREL COMPANY, INC. for each Warrant represented by the within
Warrant Certificate and herewith makes payment of $_________
(such payment being made through extinguishment of an equal
amount of the principal debt due to the undersigned pursuant to
that certain Credit Agreement dated as of March ___, 1995 among
SIGNAL APPAREL COMPANY, INC., WALSH GREENWOOD & CO. and certain
subsidiaries of Signal Apparel Company, Inc.), all at the
exercise price and on the terms and conditions specified in the
within Warrant Certificate, surrenders the within Warrant
Certificate and all right, title and interest therein (except as
to any unexercised Warrants) to SIGNAL APPAREL COMPANY, INC. and
directs that the shares of Common Stock deliverable upon the
exercise of such Warrants be registered or placed in the name and
at the address specified below and delivered thereto.
Date:_______________________
WALSH GREENWOOD & CO.
______________________________
(Signature of Owner)
______________________________
______________________________
(Address)
________________________
(1) The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
Any unexercised Warrants evidenced by the within Warrant
Certificate to be issued to:
Please insert social security or identifying number:
Name:
Address:
Schedule 2
FORM OF TRANSFER
FOR VALUE RECEIVED the undersigned registered Holder of the
within Warrant Certificate hereby transfers to the Assignee(s)
named below the following number of Warrants:
Names of Number of
Assignees Address Warrants
Date:_______________________
___________________________(1)
(Signature of Holder)
______________________________
______________________________
(Address)
________________________
(1) The signature must correspond with the name as written upon
the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change
whatsoever.