EXHIBIT A
(Form of Warrant Certificate)
The Securities represented by this certificate were issued on
_____________, _______ (the "Closing Date") pursuant to the Securities
Transfer Agreement dated March ___, 1999 between Signal Apparel
Company, Inc. and Zvi Ben-Haim. The securities represented by this
certificate have not been registered under the Securities Act of 1933,
as amended (the "Act"), or applicable state securities laws. The
securities have been acquired for investment and may not be offered
for sale, sold, transferred or assigned in the absence of an effective
registration statement for the securities under the act and applicable
state securities laws, or unless sold pursuant to rule 144 under said
act."
Warrant No. ____________________
Warrant Certificate
SIGNAL APPAREL COMPANY, INC.
This Warrant Certificate certifies that [__________________________] (the
"Purchaser"), or its registered assigns, is the registered holder of one Warrant
(the "Warrant") expiring on March 31, 2009 (the "Termination Date") to purchase
shares of common stock, par value $.01 per share (the "Common Stock"), of SIGNAL
APPAREL COMPANY, INC., an Indiana corporation (the "Issuer"). The Warrant
entitles the holder to purchase from the Issuer [__________________] Warrant
Shares (as defined below) at $1.75 per share (the "Exercise Price"). The
Exercise Price multiplied by the Exercise Amount (as defined below) is referred
to as the "Warrant Purchase Price." A "Warrant Share" initially represents one
fully paid and nonassessable share of Common Stock, subject to adjustment
pursuant to Section 10 hereof.
The Warrant represented hereby was issued on [_____________] (the "Closing
Date") pursuant to the Securities Transfer Agreement, dated March _______, 1999
(the "Transfer Agreement"), between the Issuer and Zvi Ben-Haim, and is subject
to the terms and conditions thereof. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth in the Transfer
Agreement. A copy of the Transfer Agreement may be obtained by the registered
holder hereof upon written request to the Issuer.
The Warrant represented hereby shall have the following additional terms:
1. To exercise the Warrant, the registered holder must, prior to the
Termination Date, surrender this Warrant Certificate to the Issuer at
its principal office with the Exercise Notice attached hereto (an
"Exercise Notice") duly completed and signed by the registered holder
hereof and stating the total number of Warrant Shares in respect of
which the Warrant is then exercised (the "Exercise Amount") and tender
the applicable Warrant Purchase Price. The Warrant shall be
exercisable only in the minimum amount of 10,000 Warrant Shares and
integral multiples of 10,000 Warrant Shares in excess thereof (or such
lesser amount as shall constitute the full amount remaining of this
Warrant). As used herein, the term "Business Day" means any day on
which banks in the City of New York are open for business.
2. Within five days following an Exercise Date (an "Issue Date"), the
Issuer shall issue and cause to be delivered to the registered holder
hereof at such address as such holder shall specify in the Exercise
Notice a certificate or certificates for the number of full Warrant
Shares issuable upon the exercise of such Warrant, registered in such
holder's name, together with cash (if any) as provided in paragraph 4.
Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to
have become a holder of record of such Warrant Shares as of such
Exercise Date.
3. If on such Issue Date the number of Warrant Shares to be delivered
shall be less than the total number of Warrant Shares deliverable
hereunder, there shall be issued to the holder hereof or his assignee
on such Issue Date a new warrant certificate substantially identical
to this Warrant Certificate, except that such new warrant certificate
shall evidence the right to purchase the number of Warrant Shares
equal to (x) the total number of Warrant Shares deliverable hereunder
less (y) the number of Warrant Shares so delivered or previously
delivered under the Warrant.
4. The Issuer shall not be required to issue fractional Warrant Shares on
the exercise of the Warrant represented hereby. The number of full
Warrant Shares which shall be issuable upon the exercise of the
Warrant shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrant so presented. If
any fraction of a Warrant Share would, except for the provisions of
this paragraph 4, be issuable on the exercise of the Warrant, the
Issuer shall pay an amount in cash equal to $1.50 multiplied by such
fraction (subject to adjustment pursuant to Section 10).
5. For so long as the Warrant represented hereby has not been exercised
in full, the Issuer shall at all times prior to the Termination Date
reserve and keep available, free from pre-emptive rights, out of its
authorized but unissued Common Stock, for issuance upon exercise of
the Warrant represented hereby, the number of
shares of Common Stock then so issuable. In the event the number of
shares of Common Stock issuable in respect of the Warrant Shares
exceeds the authorized number of shares of Common Stock, the Issuer
shall promptly take all actions necessary to increase the authorized
number, including causing its Board of Directors to call a special
meeting of stockholders and recommend such increase.
6. By accepting delivery of this Warrant Certificate, the registered
holder hereof covenants and agrees with the Issuer not to exercise or
transfer the Warrant or any Warrant Shares except in compliance with
the terms of the Transfer Agreement and this Warrant Certificate.
7. By accepting delivery of this Warrant Certificate, the registered
holder hereof covenants and agrees with the Issuer that the Warrant
may not be sold, assigned, conveyed, encumbered, pledged, hypothecated
or in any other manner disposed of or transferred, in whole or in
part, unless and until such holder shall deliver to the Issuer: (i)
written notice thereof and of the name and address of the transferee,
(ii) a written agreement, in form and substance reasonably
satisfactory to the Issuer, of the transferee to comply with the
applicable terms of the Transfer Agreement and this Warrant
Certificate, (iii) assurances reasonably satisfactory to the Issuer
that the Warrant and the Warrant Shares are exempt from registration
under the Act and (iv) an opinion of counsel to the effect that the
Warrant and the Warrant Shares have been registered under the Act or
are exempt from registration thereunder. If a portion of the Warrant
is transferred, all rights of the registered holder hereunder may be
exercised by the transferee (subject to the requirement that such
transferee shall provide an opinion of counsel to the effect that the
Warrant and the Warrant Shares have been registered under the Act or
are exempt from registration thereunder) in respect of the number of
Warrant Shares transferred with the portion of the Warrant, provided
that any registered holder of the Warrant may deliver an Exercise
Notice only with respect to the Warrant Shares subject to such
holder's portion of the Warrant.
8. The Issuer will pay all documentary stamp taxes (if any) attributable
to the issuance of Warrant Shares upon the exercise of the Warrant by
the registered holder hereof; provided, however, that the Issuer shall
not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the registration of the Warrant
Certificate or any certificates for Warrant Shares in a name other
than that of the registered holder of the Warrant Certificate
surrendered upon the exercise of a Warrant, and the Issuer shall not
be required to issue or deliver the Warrant Certificate or
certificates for Warrant Shares unless or until the person or persons
requesting the issuance thereof shall have paid to the Issuer the
amount of such tax or shall have established to the satisfaction of
the Issuer that such tax has been paid.
9. In case this Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Issuer shall, upon request and in compliance with the
terms hereof, issue in exchange and substitution for and upon
cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the lost, stolen or
destroyed Warrant Certificate, a new Warrant Certificate of like
tenor, but only upon receipt of evidence reasonably satisfactory to
the Issuer of such loss, theft or destruction of such Warrant
Certificate and indemnity, if requested, reasonably satisfactory to
the Issuer. Applicants for a substitute Warrant Certificate shall also
comply with such other reasonable regulations and pay such other
reasonable charges as the Issuer may prescribe.
10. The number of shares of Common Stock issuable in respect of each
Warrant Share upon the exercise of the Warrant and the terms and
conditions of the Warrant are subject to adjustment by the Issuer
pursuant to Section 7 of the Transfer Agreement.
11. The Issuer shall serve as warrant agent (the "Warrant Agent") under
this Agreement. The Warrant Agent hereunder shall at all times
maintain a register (the "Warrant Register") of the holders of
Warrants. Upon 30 days' notice to the registered holder hereof, the
Issuer may appoint a new Warrant Agent. Such new Warrant Agent shall
be a corporation doing business and in good standing under the laws of
the United States or any state thereof, and having a combined capital
and surplus of not less than $50,000,000. The combined capital and
surplus of any such new Warrant Agent shall be deemed to be the
combined capital and surplus as set forth in the most recent annual
report of its condition published by such Warrant Agent prior to its
appointment; provided that such reports are published at least
annually pursuant to law or to the requirements of a federal or state
supervising or examining authority. After acceptance in writing of
such appointment by the new Warrant Agent, it shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be
reasonably necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the
expense of the Issuer and shall be legally and validly executed and
delivered by the Issuer.
12. Any corporation into which the Issuer or any new Warrant Agent may be
merged or any corporation resulting from any consolidation to which
the Issuer or any new Warrant Agent shall be a party or any
corporation to which the Issuer or any new Warrant Agent transfers
substantially all of its corporate trust or shareholders services
business shall be a successor Warrant Agent under this Agreement
without any further act; provided that such a corporation (i) would be
eligible for appointment as successor to the Warrant Agent under the
provisions of this paragraph 11 or (ii) is a wholly owned subsidiary
of the Warrant Agent. Any such successor Warrant Agent shall promptly
cause notice of its succession as Warrant Agent to be mailed (by first
class mail, postage prepaid) the registered holder hereof at such
holder's last address as shown on the Warrant Register.
13. (i) In the event of any registration of the Warrant Shares under the
Securities Act, the Issuer shall indemnify and hold harmless the
holder of such Warrant Shares, such holder's directors and officers,
and each other person (including each underwriter) who participated in
the offering of such Warrant Shares and each other person, if any, who
controls such holder or such participating person within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such
director or officer or participating person or controlling person may
become subject under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon (A) any
untrue statement or alleged untrue statement of any material fact
contained, on the effective date thereof, in any Registration
Statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (B) any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse such holder or such director, officer
or participating person or controlling person for any legal or any
other expenses reasonably incurred by such holder or such director,
officer or participating person or controlling person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Issuer shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon any alleged
untrue statement or alleged omission made in such Registration
Statement, preliminary prospectus, prospectus or amendment or
supplement in reliance upon and in conformity with written information
furnished to the Issuer by such holder specifically for use therein or
so furnished for such purposes by any underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of such holder or such director, officer or
participating person or controlling person, and shall survive the
transfer of such securities by such holder.
(ii) Purchaser, by acceptance of the Warrant and the Warrant Shares,
agrees to indemnify and hold harmless the Issuer, its directors and
officers, and each other person (including each underwriter) who
participated in the offering of the Warrant Shares and each other
person, if any, who controls the Issuer or such participating person
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which the Issuer or any such
director or officer or participating person or controlling person may
become subject under the Act or any other statute or at common law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (A) any untrue
statement or alleged untrue statement of any material fact contained,
on the effective date thereof, in any Registration Statement under
which such securities were registered under the Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or (B) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only
to the extent that such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Issuer by or on
behalf of Purchaser specifically for use therein, and shall reimburse
the Issuer or such director, officer or participating person or
controlling person for any legal or any other expenses reasonably
incurred by the Issuer or such director, officer or participating
person or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Issuer or such director,
officer or participating person or controlling person, and shall
survive the transfer of the Warrant or the Warrant Shares by the
holder thereof.
(iii) If the indemnification provided for in this Section 13 from the
indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contributed to the amount
or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnified party and
indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnifying parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, ahs been made
by, or relates to information supplied by, such indemnifying party of
such indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation
or proceeding.
(iv) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 13 were determined by pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
14. This Warrant Certificate shall not be valid unless signed by the
Issuer.
IN WITNESS WHEREOF, Signal Apparel Company, Inc. has caused this Warrant
Certificate to be signed by its duly authorized officer.
SIGNAL APPAREL COMPANY, INC.
By:
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Name:
Title: