1
Exhibit M to
Credit Agreement
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER SAID
ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL (WHO MAY BE AN EMPLOYEE OF SUCH
HOLDER) REASONABLY SATISFACTORY TO THE COMPANY THAT
REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT
REQUIRED UNDER SAID ACT. THE OFFERING OF THIS SECURITY HAS NOT
BEEN REVIEWED OR APPROVED BY ANY STATE'S SECURITIES
ADMINISTRATOR. THIS WARRANT AND THE SHARES OF COMMON STOCK
PURCHASABLE HEREUNDER ARE ALSO BENEFITED BY AND SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT, DATED AS OF AUGUST , 1995, BY
AND AMONG THE COMPANY AND THE OTHER PARTIES LISTED THEREIN, A
COPY OF WHICH IS ON FILE WITH THE COMPANY AND WILL BE FURNISHED
UPON WRITTEN REQUEST AND WITHOUT CHARGE.
Dated: , 1996
FORM OF WARRANT
To Purchase 100,000 Shares of Common Stock
ACS ENTERPRISES, INC.
EXPIRING , 2003.*
THIS IS TO CERTIFY THAT, for value received,
, or registered
assigns (the "Holder") is entitled to purchase from ACS
ENTERPRISES, INC., a Pennsylvania corporation (the "Company"),
at any time or from time to time prior to 5:00 p.m., New York
City time, on , 2003* at the place where a Warrant
Agency (as hereinafter defined) is located, at the Exercise
Price (as hereinafter defined), the number of shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the
Company shown above, all subject to adjustment and upon the
terms and conditions as hereinafter provided, and is entitled
also to exercise the other appurtenant rights, powers and
privileges hereinafter described. This Warrant is one of one
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* The seventh anniversary of the applicable Trigger Date (as
defined in the Credit Agreement).
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or more warrants (the "Warrants") of the same form and having
the same terms as this Warrant. The Holder shall designate at
the time of exercise whether the Common Stock to be received
shall be voting Common Stock or non-voting Common Stock.
Certain terms used in this Warrant are defined in
Article V.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in
whole or in part, the Holder shall deliver to the Company, at
the Warrant Agency, (a) this Warrant, (b) a written notice, in
substantially the form of the Subscription Notice attached
hereto, of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock
to be purchased, the denominations of the share certificate or
certificates desired, whether the Common Stock to be acquired
shall be voting Common Stock or non-voting Common Stock and the
name or names in which such certificates are to be the
registered, and (c) payment of the Exercise Price with respect
to such shares. Such payment may be made, at the option of the
Holder: (x) by cash, money order, certified or bank cashier's
check or wire transfer, (y) the surrender to the Company of
securities of the Company having a value equal to the aggregate
Exercise Price, as determined in good faith by the Company's
board of directors, or (z) the delivery of a notice to the
Company that the Holder is exercising this Warrant by
authorizing the Company to reduce the number of shares of
Common Stock subject to this Warrant by the number of shares
having an aggregate value equal to the aggregate Exercise
Price, as determined in good faith by the Company's board of
directors.
The Company shall, as promptly as practicable and in
any event within three Business Days thereafter, execute and
deliver or cause to be executed and delivered, in accordance
with such notice, a certificate or certificates representing
the aggregate number and type of shares of Common Stock
specified in said notice. The share certificate or
certificates so delivered shall be in such denominations as may
be specified in such notice or, if such notice shall not
specify denominations, shall be in the amount of the number of
shares of Common Stock for which the Warrant is being
exercised, and shall be issued in the name of the Holder or
such other name or names as shall be designated in such notice.
Such certificate or certificates shall be deemed to have been
issued, and such Holder or any other Person so designated to be
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named therein shall be deemed for all purposes to have become a
holder of record of such shares, as of the date the
aforementioned notice is received by the Company. If this
Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificate or
certificates, deliver to the Holder a new Warrant evidencing
the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant, or, at the
request of the Holder, appropriate notation may be made on this
Warrant which shall then be returned to the Holder. The
Company shall pay all expenses, taxes (if any) and other
charges payable in connection with the preparation, issuance
and delivery of share certificates and new Warrants, except
that, if share certificates or new Warrants shall be registered
in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes payable as a result of
such transfer shall be paid by the Holder at the time of
delivering the aforementioned notice of exercise or promptly
upon receipt of a written request of the Company for payment.
1.2 Shares To Be Fully Paid and Nonassessable. All
shares of Common Stock issued upon the exercise of this Warrant
shall be validly issued, fully paid and nonassessable and free
from all preemptive rights of any stockholder, and from all
taxes, liens and charges with respect to the issue thereof
(other than transfer taxes) and, if voting Common Stock is to
be issued upon exercise hereof and such Common Stock is then
listed on any national securities exchanges (as defined in the
Exchange Act) or quoted on NASDAQ, shall be duly listed or
quoted thereon, as the case may be.
1.3 No Fractional Shares To Be Issued. The Company
shall not be required to issue fractions of shares of Common
Stock upon exercise of this Warrant. If any fraction of a
share would, but for this Section, be issuable upon any
exercise of this Warrant, in lieu of such fractional share the
Company shall pay to the Holder, in cash, an amount equal to
such fraction of the Fair Market Value per share of outstanding
Common Stock of the Company on the Business Day immediately
prior to the date of such exercise.
1.4 Share Legend. Each certificate for shares of
Common Stock issued upon exercise of this Warrant, unless at
the time of exercise such shares are registered under the
Securities Act, shall bear the following legend:
"This security has not been registered under the
Securities Act of 1933, as amended, or under the
securities laws of any state or other jurisdiction
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and may not be sold, offered for sale or otherwise
transferred unless registered or qualified under
said Act and applicable state securities laws or
unless the Company receives an opinion of counsel
(who may be an employee of such holder) reasonably
satisfactory to the Company that registration,
qualification or other such actions are not
required under said Act. The offering of this
security has not been reviewed or approved by any
state securities administrator. This security is
also benefited by and subject to a Registration
Rights Agreement, dated as of August , 1995,
between the Company and the other parties listed
therein, a copy of which is on file with the
Company and will be furnished upon written request
and without charge."
Any certificate issued at any time in exchange or
substitution for any certificate bearing such legend (except a
new certificate issued upon completion of a public distribution
pursuant to a registration statement under the Securities Act)
shall also bear such legend unless, in the opinion of counsel
selected by the holder of such certificate (who may be an
employee of such holder), the securities represented thereby
are no longer subject to restrictions on resale under the
Securities Act.
1.5 Reservation; Authorization. The Company has
reserved and will keep available for issuance upon exercise of
the Warrants the total number of shares of Common Stock
deliverable upon exercise of all Warrants from time to time
outstanding. The issuance of the such shares has been duly and
validly authorized and, when issued and sold in accordance with
the Warrants, such shares will be duly and validly issued,
fully paid and nonassessable.
ARTICLE II
WARRANT AGENCY; TRANSFER, EXCHANGE
AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. If the holders of Warrants to
purchase a majority of the shares of Common Stock issuable upon
exercise of the Warrants shall request appointment of an
independent warrant agency with respect to the Warrants, the
Company shall promptly appoint and thereafter maintain, at its
own expense, an agency in New York, New York, which agency may
be the Company's then existing transfer agent (the "Warrant
Agency"), for certain purposes specified herein, and shall give
prompt notice of such appointment (and appointment of any
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successor Warrant Agency) to all holders of Warrants. Until an
independent Warrant Agency is so appointed, the Company shall
perform the obligations of the Warrant Agency provided herein
at its address at 2510 Metropolitan Drive, Trevose,
Pennsylvania 19053 or such other address as the Company shall
specify by notice to all Warrantholders.
2.2 Ownership of Warrant. The Company may deem and
treat the Person in whose name this Warrant is registered as
the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by any Person other than the
Warrant Agency) for all purposes and shall not be affected by
any notice to the contrary, until presentation of this Warrant
for registration of transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to
maintain at the Warrant Agency books for the registration of
transfers of the Warrants, and transfer of this Warrant and all
rights hereunder shall be registered, in whole or in part, on
such books, upon surrender of this Warrant at the Warrant
Agency, together with a written assignment of this Warrant duly
executed by the Holder or his duly authorized agent or
attorney, with (unless the Holder is the original Warrantholder
or an institutional investor) signatures guaranteed by a bank
or trust company or a broker or dealer registered with the
NASD, and funds sufficient to pay any transfer taxes payable
upon such transfer. Upon surrender the Company shall execute
and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in the
instrument of assignment, and this Warrant shall promptly be
cancelled. Notwithstanding the foregoing, a Warrant may be
exercised by a new holder without having a new Warrant issued.
The Warrant Agency shall not be required to register any
transfers if the Holder fails to furnish to the Company, after
a request therefor, an opinion of counsel (who may be an
employee of such Holder) reasonably satisfactory to the Company
that such transfer is exempt from the registration requirements
of the Securities Act.
2.4 Division or Combination of Warrants. This
Warrant may be divided or combined with other Warrants upon
surrender hereof and of any Warrant or Warrants with which this
Warrant is to be combined at the Warrant Agency, together with
a written notice specifying the names and denominations in
which the new Warrant or Warrants are to be issued, signed by
the holders hereof and thereof or their respective duly
authorized agents or attorneys. Subject to compliance with
Section 2.3 as to any transfer which may be involved in the
division or combination, the Company shall execute and deliver
a new Warrant or Warrants in exchange for the Warrant or
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Warrants to be divided or combined in accordance with such
notice.
2.5 Loss, Theft, Destruction or Mutilation of
Warrants. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of any Warrant
and, in the case of any such loss, theft or destruction, upon
receipt of indemnity or security reasonably satisfactory to the
Company (the original Warrantholder's indemnity being
satisfactory indemnity in the event of loss, theft or
destruction of any Warrant owned by such holder), or, in the
case of any such mutilation, upon surrender and cancellation of
such Warrant, the Company will make and deliver, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase
the same aggregate number of shares of Common Stock as provided
for in such lost, stolen, destroyed or mutilated Warrant.
2.6 Expenses of Delivery of Warrants. The Company
shall pay all expenses, taxes (other than transfer taxes) and
other charges payable in connection with the preparation,
issuance and delivery of Warrants and Warrant Shares hereunder.
ARTICLE III
CERTAIN RIGHTS
3.1 Registration Rights. The Common Stock issuable
upon exercise of this Warrant is entitled to the benefits of
the Registration Rights Agreement dated as of August , 1995,
by and among the Company and the other parties listed therein
(the "Registration Rights Agreement"). The Company shall keep
a copy of the Registration Rights Agreement, and any amendments
thereto, at the Warrant Agency and shall furnish copies thereof
to the Holder upon request.
3.2 Contest and Appraisal Rights. Upon each
determination of Fair Market Value hereunder (other than a
determination relating solely to setting the value of
fractional shares), the Company shall promptly give notice
thereof to all Warrantholders, setting forth in reasonable
detail the calculation of such Fair Market Value and the method
and basis of determination thereof, as the case may be. If a
majority in interest of Warrantholders shall disagree with such
determination and shall, by notice to the Company given within
15 days after the Company's notice of such determination, elect
to dispute such determination, such dispute shall be resolved
in accordance with this Section 3.2. In the event that a
determination of Market Price, or a determination of Fair
Market Value solely involving Market Price, is disputed, such
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dispute shall be submitted, at the Company's expense, to a New
York Stock Exchange member firm selected by the Company and
acceptable to the Warrantholders, whose determination of Fair
Market Value and/or Market Price, as the case may be, shall be
binding on the Company and the Warrantholders. In the event
that a determination of Fair Market Value, other than a
determination solely involving Market Price, is disputed, such
dispute shall be resolved through the Appraisal Procedure.
3.3 Certain Covenants. The Company covenants and
agrees that, until exercise or cancellation of this Warrant,
the Company will deliver to each Holder:
(a) As soon as available but not later than one
hundred twenty (120) days after the close of the fiscal year of
the Company, a consolidated balance sheet of the Company as at
the end of such year and the related consolidated and
consolidating statements of income, of stockholders' equity and
of cash flows for such year, such consolidated statements to be
audited by a firm of independent certified public accountants;
(b) As soon as available but not later than sixty
(60) days after the end of each quarter, a consolidated balance
sheet of the Company as at the end of, and the related
consolidated statement of income for, the portion of the
Company's fiscal year then elapsed, all prepared in accordance
with generally accepted accounting principles;
(c) As soon as available, any and all management
letters provided to the Company's board of directors or audit
committee by the Company's auditors;
(d) As soon as available, any and all reports filed
by the Company under the Securities Act and the Exchange Act;
and
(e) As soon as available, any and all press releases
of the Company which appear in the financial media.
3.4 Non-Voting Common Stock. Upon the request of a
Holder whose ownership of voting Common Stock, upon the
exercise of this Warrant, would be prohibited by the provisions
of Regulation Y of the Board of Governors of the Federal
Reserve System or any successor to such regulation to issue
non-voting Common Stock upon the exercise of this Warrant, the
Company shall issue to such Holder upon the exercise of this
Warrant non-voting Common Stock.
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ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 Adjustments Generally. The Exercise Price and
the number of shares of Common Stock (or other securities or
property) issuable upon exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of
certain events, as provided in this Article IV.
4.2 Common Stock Reorganization. If the Company
shall after the date of issuance of this Warrant subdivide its
outstanding shares of Common Stock into a greater number of
shares or consolidate its outstanding shares of Common Stock
into a smaller number of shares (any such event being called a
"Common Stock Reorganization"), then (a) the Exercise Price
shall be adjusted, effective immediately after the record date
at which the holders of shares of Common Stock are determined
for purposes of such Common Stock Reorganization, to a price
determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common
Stock outstanding on such record date before giving effect to
such Common Stock Reorganization and the denominator of which
shall be the number of shares of Common Stock outstanding after
giving effect to such Common Stock Reorganization, and (b) the
number of shares of Common Stock subject to purchase upon
exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of
shares of Common Stock subject to purchase immediately before
such Common Stock Reorganization by a fraction, the numerator
of which shall be the number of shares outstanding after giving
effect to such Common Stock Reorganization and the denominator
of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock
Reorganization.
4.3 Common Stock Distribution. (a) Subject to the
last sentence of this paragraph, if the Company shall after the
date of issuance of this Warrant issue or otherwise sell or
distribute any shares of Common Stock (other than upon the
exercise of options or warrants that were outstanding on August
31, 1995), otherwise than pursuant to a Common Stock
Reorganization (any such event, including any event described
in paragraphs (b) and (c) below, being herein called a "Common
Stock Distribution"), if such Common Stock Distribution shall
be for a consideration per share less than the Fair Market
Value per share of outstanding Common Stock of the Company on
the date of such Common Stock Distribution, or on the first
date of the announcement of such Common Stock Distribution
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(whichever is less), then, effective upon such Common Stock
Distribution, the number of shares of Common Stock purchasable
upon exercise of this Warrant shall be adjusted by multiplying
the number of shares of Common Stock subject to purchase upon
exercise of this Warrant by a fraction, the numerator of which
shall be the total number of shares of Common Stock outstanding
(and issuable upon exercise or conversion of outstanding
options, warrants and convertible securities) immediately prior
to such Common Stock Distribution plus the number of shares of
Common Stock issued (or deemed to be issued pursuant to
paragraphs (b) and (c) below) in such Common Stock Distribution
and the denominator of which shall be an amount equal to the
sum of (A) the number of shares of Common Stock outstanding
(and issuable upon exercise or conversion of outstanding
options, warrants and convertible securities) immediately prior
to such Common Stock Distribution, plus (B) the number of
shares of Common Stock which the aggregate consideration, if
any, received by the Company (determined as provided below) for
such Common Stock Distribution would buy at the Fair Market
Value thereof, as of the date immediately prior to such Common
Stock Distribution or as of the date immediately prior to the
date of announcement of such Common Stock Distribution
(whichever is less). In the event of any such adjustment, the
Exercise Price for each Warrant shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to
such Common Stock Distribution by the fraction used for
purposes of the aforementioned adjustment.
The provisions of this paragraph (a), including by
operation of paragraph (b) or (c) below, shall not operate to
increase the Exercise Price or to reduce the number of shares
of Common Stock subject to purchase upon exercise of this
Warrant.
(b) If the Company shall after the date of issuance
of this Warrant issue, sell, distribute or otherwise grant in
any manner (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common
Stock (such rights, warrants or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"),
whether or not such Options or the rights to convert or
exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion
or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or
receivable by the Company as consideration for the granting of
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such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all
such Options, plus, in the case of Options to acquire
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Fair Market Value per share of outstanding Common Stock of
the Company on the date of granting such Options or on the date
of announcement thereof (whichever is less), then for purposes
of paragraph (a) above, the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such
Options shall be deemed to have been issued as of the date of
granting of such Options and thereafter shall be deemed to be
outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided
above, therefor. Except as otherwise provided in paragraph (d)
below, no additional adjustment of the number of shares of
Common Stock purchasable upon the exercise of this Warrant or
of the Exercise Price shall be made upon the actual exercise of
such Options or upon conversion or exchange of such Convertible
Securities.
(c) If the Company shall after the date of issuance
of this Warrant issue, sell or otherwise distribute or grant
(whether directly or by assumption in a merger or otherwise)
any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon
such conversion or exchange (determined by dividing (i) the
aggregate amount received or receivable by the Company as
consideration for the issue, sale or distribution of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon
the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities) shall be less
than the Fair Market Value per share of outstanding Common
Stock of the Company on the date of such issue, sale or
distribution or on the date of announcement thereof (whichever
is less), then, for purposes of paragraph (a) above, the total
maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall
be deemed to have been issued as of the date of the issue, sale
or distribution of such Convertible Securities and thereafter
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shall be deemed to be outstanding and the Company shall be
deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise
provided in paragraph (d) below, no additional adjustment of
the number of shares of Common Stock purchasable upon exercise
of this Warrant or of the Exercise Price shall be made upon the
actual conversion or exchange of such Convertible Securities.
(d) If the purchase price provided for in any Option
referred to in paragraph (b) above, the additional
consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (b) or
(c) above, or the rate at which any Convertible Securities
referred to in paragraph (b) or (c) above are convertible into
or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to
protect against, and having the effect of protecting against,
dilution upon an event which results in a related adjustment
pursuant to this Article IV), the number of shares of Common
Stock purchasable upon exercise of this Warrant and the
Exercise Price then in effect shall forthwith be readjusted
(effective only with respect to any exercise of this Warrant
after such readjustment) to the number of shares of Common
Stock purchasable upon exercise of this Warrant and the
Exercise Price which would then be in effect had the adjustment
made upon the issue, sale, distribution or grant of such
Options or Convertible Securities been made based upon such
changed purchase price, additional consideration or conversion
rate, as the case may be; provided, however, that such
readjustment shall give effect to such change only with respect
to such Options and Convertible Securities as then remain
outstanding. If, at any time after any adjustment of the
number of shares of Common Stock purchasable upon exercise of
each Warrant or the Exercise Price shall have been made
pursuant to this Article IV on the basis of the issuance of any
Option or Convertible Securities or after any new adjustments
of the number of shares of Common Stock purchasable upon
exercise of each Warrant or the Exercise Price shall have been
made pursuant to this paragraph, the right of conversion,
exercise or exchange in such Option or Convertible Securities
shall expire or terminate, and the right of conversion,
exercise or exchange in respect of a portion of such Option or
Convertible Securities shall not have been exercised, such
previous adjustment shall be rescinded and annulled.
Thereupon, a recomputation shall be made of the effect of such
Option or Convertible Securities on the basis of treating the
number of shares of Common Stock, if any, theretofore actually
issued or issuable pursuant to the previous exercise of such
right of conversion, exercise or exchange as having been issued
on the date or dates of such conversion, exercise or exchange
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and for the consideration actually received and receivable
therefor, and treating any such Option or Convertible
Securities which then remain outstanding as having been granted
or issued immediately after the time of any such issuance for
the consideration per share for which shares of Common Stock
are issuable under such Option or Convertible Securities; and,
if and to the extent called for by the foregoing provisions of
this Section on the basis aforesaid, a new adjustment of the
number of shares of Common Stock purchasable upon exercise of
each Warrant and the Exercise Price shall be made, which new
adjustment shall supersede (effective only with respect to any
exercise of this Warrant after such readjustment) the previous
adjustment so rescinded and annulled.
(e) If the Company shall after the date of issuance
of this Warrant pay a dividend or make any other distribution
upon any capital stock of the Company payable in Common Stock,
Options or Convertible Securities, then, for purposes of
paragraph (a) above, such Common Stock, Options or Convertible
Securities, as the case may be, shall be deemed to have been
issued or sold without consideration.
(f) If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold or distributed for
cash, the consideration received therefor shall be deemed to be
the amount received by the Company therefor, after deduction
therefrom of any expenses incurred and any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed
for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be
deemed to be the Fair Market Value of such consideration, after
deduction of any expenses incurred and any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. If any shares of Common Stock, Options
or Convertible Securities shall be issued in connection with
any merger in which the Company is the surviving corporation,
the amount of consideration therefor shall be deemed to be the
Fair Market Value of such portion of the assets and business of
the nonsurviving corporation as shall be attributable to such
Common Stock, Options or Convertible Securities, as the case
may be. If any Options shall be issued in connection with the
issue and sale of other securities of the Company, together
comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for
consideration to be determined pursuant to the Appraisal
Procedure.
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(g) If the Company shall take a record of the
holders of the Common Stock for the purpose of entitling them
to receive a dividend or other distribution payable in Common
Stock, Options or Convertible Securities or to subscribe for or
purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue,
sale, distribution or grant of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date
of the granting of such right of subscription or purchase, as
the case may be.
(h) For purposes of determining whether any
adjustment is required pursuant to this Article IV, any
security of the Company having rights substantially equivalent
to the Common Stock as to dividends or upon liquidation,
dissolution or winding up of the Company shall be treated as if
such security were Common Stock.
4.4 Dividends. (a) If the Company shall after the
date of issuance of this Warrant issue or distribute to all or
substantially all holders of shares of Common Stock evidences
of indebtedness, any other securities of the Company or any
property, assets or cash, and if such issuance or distribution
does not constitute a Common Stock Reorganization or a Common
Stock Distribution (any such nonexcluded event being herein
called a "Dividend"), (i) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be
increased (but not decreased), effective immediately after the
record date at which the holders of shares of Common Stock are
determined for purposes of such Dividend, to a number
determined by multiplying the number of shares of Common Stock
subject to purchase immediately before such Dividend by a
fraction, the numerator of which shall be the Fair Market Value
per share of outstanding Common Stock on such record date and
the denominator of which shall be the Fair Market Value per
share of outstanding Common Stock of the Company on such record
date less the then Fair Market Value of the evidences of
indebtedness, securities, cash, or property or other assets
issued or distributed in such Dividend with respect to one
share of Common Stock, and (ii) the Exercise Price shall be
decreased (but not increased) to a price determined by
multiplying the Exercise Price then in effect by a fraction,
the numerator of which shall be the number of shares of Common
Stock subject to purchase upon exercise of this Warrant
immediately before such Dividend and the denominator of which
shall be the number of shares of Common Stock subject to
purchase upon exercise of this Warrant immediately after such
Dividend; provided, that in the case of any such distribution,
the Holder hereof may elect by giving the Company two days
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prior written or telephonic notice promptly confirmed in
writing, either (x) to have the adjustment provided for in this
clause (a) applied to its Warrant or (y) to receive such
distribution as set forth in clause (b) below). If after the
date of issuance of this Warrant the Company repurchases shares
of Common Stock for a per share consideration which exceeds the
Fair Market Value (as calculated immediately prior to such
repurchase), then the number of shares of Common Stock
purchasable upon exercise of this Warrant and the Exercise
Price shall be adjusted in accordance with the foregoing
provisions, as if, in lieu of such repurchases, the Company had
(I) distributed a Dividend having a Fair Market Value equal to
the Fair Market Value of all property and cash expended in the
repurchases, and (II) effected a reverse split of the Common
Stock in the proportion required to reduce the number of shares
of Common Stock outstanding from (A) the number of such shares
outstanding immediately before such first repurchase to (B) the
number of such shares outstanding immediately following all the
repurchases.
(b) If the Company shall, after the issuance of this
Warrant, declare a dividend or distribution on its Common
Stock, the Company shall, at least 30 days prior to the record
date for the declaration of any such dividend or other
distribution, give the registered Holder of this Warrant notice
of such record date and the dividend or distribution to be paid
or made. The registered Holder of this Warrant on the record
date for the declaration of any such dividend or other
distribution shall be entitled to share in any such dividend or
distribution by receiving such dividend or distribution as if
this Warrant had been exercised and the shares of Common Stock
underlying this Warrant were issued and outstanding on such
record date.
4.5 Capital Reorganization. If after the date of
issuance of this Warrant there shall be any consolidation or
merger to which the Company is a party, other than a
consolidation or a merger in which the Company is a continuing
corporation and which does not result in any reclassification
of, or change (other than a Common Stock Reorganization or a
change in par value), in, outstanding shares of Common Stock,
or any sale or conveyance of the property of the Company as an
entirety or substantially as an entirety (any such event being
called a "Capital Reorganization"), then, effective upon the
effective date of such Capital Reorganization, the Holder shall
have the right to purchase, upon exercise of this Warrant, the
kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or
have been entitled to receive after such Capital Reorganization
if this Warrant had been exercised immediately prior to such
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Capital Reorganization, assuming such holder (i) is not a
person with which the Company consolidated or into which the
Company merged or which merged into the Company or to which
such sale or conveyance was made, as the case may be
("constituent person"), or an Affiliate of a constituent person
and (ii) failed to exercise his rights of election, if any, as
to the kind or amount of securities, cash or other property
receivable upon such Capital Reorganization (provided that if
the kind or amount of securities, cash or other property
receivable upon such Capital Reorganization is not the same for
each share of Common Stock held immediately prior to such
consolidation, merger, sale or conveyance by other than a
constituent person or an Affiliate thereof and in respect of
which such rights of election shall not have been exercised
("non-electing share"), then for the purposes of this Section
the kind and amount of shares of stock and other securities or
other property (including cash) receivable upon such Capital
Reorganization shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing
shares). As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving
corporation, as the case may be, shall execute and deliver to
each Warrantholder and to the Warrant Agency an agreement as to
the Warrantholder's rights in accordance with this Section 4.5,
providing for subsequent adjustments as nearly equivalent as
may be practicable to the adjustments provided for in this
Article IV. The provisions of this Section 4.5 shall similarly
apply to successive Capital Reorganizations.
4.6 Certain Other Events. If any event occurs after
the date of issuance of this Warrant as to which the foregoing
provisions of this Article IV are not strictly applicable or,
if strictly applicable, would not, in the good faith judgment
of the Board of Directors of the Company, fairly protect the
purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then such
Board shall make such adjustments in the application of such
provisions, in accordance with such essential intent and
principles, as shall be reasonably necessary, in the good faith
opinion of such Board, to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the
effect of increasing the Exercise Price or decreasing the
number of shares of Common Stock subject to purchase upon
exercise of this Warrant, or otherwise adversely affect the
Warrantholders.
4.7 Adjustment Rules. (a) Any adjustments pursuant
to this Article IV shall be made successively whenever an event
referred to herein shall occur.
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(b) If the Company shall set a record date to
determine the holders of shares of Common Stock for purposes of
a Common Stock Reorganization, Common Stock Distribution,
Dividend or Capital Reorganization, and shall legally abandon
such action prior to effecting such Action, then no adjustment
shall be made pursuant to this Article IV in respect of such
action.
(c) No adjustment in the amount of shares
purchasable upon exercise of this Warrant or in the Exercise
Price shall be made hereunder unless such adjustment increases
or decreases such amount or price by one percent or more, but
any such lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent
adjustment which together with any adjustments so carried
forward shall serve to adjust such amount or price by one
percent or more.
(d) No adjustment in the Exercise Price shall be
made hereunder if such adjustment would reduce the exercise
price to an amount below par value of the Common Stock, which
par value shall initially be $.01 per share of Common Stock.
(e) No adjustment shall be made pursuant to the
Article IV in respect of the issuance of shares of Common Stock
upon exercise of the Warrants.
4.8 Proceedings Prior to Any Action Requiring
Adjustment. As a condition precedent to the taking of any
action which would require an adjustment pursuant to this
Article IV, the Company shall take any action which may be
necessary, including obtaining regulatory approvals or
exemptions, in order that the Company may thereafter validly
and legally issue as fully paid and nonassessable all shares of
Common Stock which the holders of Warrants are entitled to
receive upon exercise thereof.
4.9 Notice of Adjustment. Not less than 20 nor more
than 90 days prior to the record date or effective date, as the
case may be, of any action which requires or might require an
adjustment or readjustment pursuant to this Article IV, the
Company shall give notice to each Warrantholder of such event,
describing such event in reasonable detail and specifying the
record date or effective date, as the case may be, and, if
determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the
time of such notice, the Company shall give notice to each
Warrantholder of such adjustment and computation promptly after
such adjustment becomes determinable.
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ARTICLE V
DEFINITIONS
The following terms, as used in this Warrant, have
the following respective meanings:
"Appraisal Procedure" means a procedure whereby two
independent appraisers, one chosen by the Company and one by a
majority in interest of the Warrantholders, shall mutually
agree upon the determinations then the subject of appraisal.
Each party shall deliver a notice to the other appointing its
appraiser within 15 days after the Appraisal Procedure is
invoked. If within 30 days after appointment of the two
appraisers they are unable to agree upon the amount in
question, a third independent appraiser shall be chosen within
10 days thereafter by the mutual consent of such first two
appraisers or, if such first two appraisers fail to agree upon
the appointment of a third appraiser, such appointment shall be
made by the American Arbitration Association, or any
organization successor thereto, from a panel of arbitrators
having experience in the appraisal of the subject matter to be
appraised. The decision of the third appraiser so appointed
and chosen shall be given within 30 days after the selection of
such third appraiser. If three appraisers shall be appointed
and the determination of one appraiser is disparate from the
middle determination by more than twice the amount by which the
other determination is disparate from the middle determination,
then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average
shall be binding and conclusive on the Company and the Warrant-
holders; otherwise the average of all three determinations
shall be binding and conclusive on the Company and the Warrant-
holders. The costs of conducting any Appraisal Procedure shall
be borne by the Warrantholders requesting such Appraisal
Procedure, except (a) the fees and expenses of the appraiser
appointed by the Company and any costs incurred by the Company
shall be borne by the Company and (b) if such Appraisal
Procedure shall result in a determination that is disparate by
5% or more to the benefit of the holder from the Company's
initial determination, all costs of conducting such Appraisal
Procedure shall be borne by the Company.
"Business Day" shall mean (a) if any class of Common
Stock is listed or admitted to trading on a national securities
exchange, a day on which the principal national securities
exchange on which such class of Common Stock is listed or
admitted to trading is open for business or (b) if no class of
Common Stock is so listed or admitted to trading, a day on
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which any New York Stock Exchange member firm is open for
business.
"Capital Reorganization" shall have the meaning set
forth in Section 4.5.
"Closing Price" with respect to any security on any
day means (a) if such security is listed or admitted for
trading on a national securities exchange, the reported last
sales price regular way or, if no such reported sale occurs on
such day, the average of the closing bid and asked prices
regular way on such day, in each case as reported in the
principal consolidated transaction reporting system with
respect to securities listed on the principal national
securities exchange on which such class of security is listed
or admitted to trading, or (b) if such security is not listed
or admitted to trading on any national securities exchange, the
last quoted sales price, or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter
market on such day as reported by NASDAQ or any comparable
system then in use or, if not so reported, as reported by any
New York Stock Exchange member firm reasonably selected by the
Company for such purpose.
"Common Stock" shall have the meaning set forth in
the first paragraph of this Warrant subject to adjustment
pursuant to Article IV.
"Common Stock Distribution" shall have the meaning
set forth in Section 4.3(a).
"Common Stock Reorganization" shall have the meaning
set forth in Section 4.2.
"Company" shall have the meaning set forth in the
first paragraph of this Warrant.
"Convertible Securities" shall have the meaning set
forth in Section 4.3(b).
"Credit Agreement" means the Replacement Revolving
Credit Agreement dated as of August , 1995 among the Company,
Banque Indosuez, as agent, and the other parties thereto, as
amended from time to time, together with refinancings thereof.
"Dividend" shall have the meaning set forth in
Section 4.4.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and any similar or successor federal statute,
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and the rules and regulations of the Securities and Exchange
Commission (or its successor) thereunder, all as the same shall
be in effect at the time.
"Exercise Price" means the lower of (i) [ ]*
or (ii) the Initial Exercise Price (as defined in the Credit
Agreement) of any warrants issued by the Company after the date
of this Warrant pursuant to the Credit Agreement.
"Fair Market Value" means the fair market value of
the business or property in question, as determined in good
faith by the Board of Directors of the Company, provided,
however, that the Fair Market Value of any security for which a
Closing Price is available shall be the Market Price of such
security. The Fair Market Value of the Company shall be the
Fair Market Value of the Company and its subsidiaries as a
going concern. Notwithstanding the foregoing, if, at any date
of determination of the Fair Market Value of the Company, the
Common Stock of any class shall then be publicly traded, the
Fair Market Value of the Company on such date shall be the
Market Price on such date multiplied by the number of shares of
Common Stock then outstanding on a fully diluted basis.
"Holder" shall have the meaning set forth in the
first paragraph of this Warrant.
"Market Price" with respect to any security on any
day means the average of the daily Closing Prices of a share or
unit of such security for the 20 consecutive Business Days
ending on the most recent Business Day for which a Closing
Price is available; provided, however, that in the event that,
in the case of Common Stock, the Market Price is determined
during a period following the announcement by the Company of
(A) a dividend or distribution of Common Stock, or (B) any
subdivision, combination or reclassification of Common Stock
and prior to the expiration of 20 Business Days after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then, and in each such case, the Market Price
shall be appropriately adjusted to reflect the current market
price per share equivalent of Common Stock.
"NASD" means The National Association of Securities
Dealers, Inc.
- -------------------------
* Insert the Initial Exercise Price (as defined in the Credit
Agreement).
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"NASDAQ" means The National Association of Securities
Dealers, Inc. Automated Quotation System.
"Options" shall have the meaning set forth in Section
4.3(b).
"Registration Rights Agreement" shall have the
meaning set forth in Section 3.1.
"Securities Act" shall mean the Securities Act of
1933, as amended, and any similar or successor federal statute,
and the rules and regulations of the Securities and Exchange
Commission (or its successor) thereunder, all as the same shall
be in effect at the time.
"Warrant Agency" shall have the meaning set forth in
Section 2.1.
"Warrantholder" means a holder of a Warrant.
"Warrants" shall have the meaning set forth in the
first paragraph of this Warrant.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, consents and
other communications provided for herein shall be in writing
and shall be effective upon delivery in person, faxed or
telecopied, or mailed by certified or registered mail, return
receipt requested, postage pre-paid, addressed as follows:
if to the Company, to ACS Enterprises, Inc., 2510
Metropolitan Drive, Trevose, Pennsylvania 19053,
Attention: Alan Sonnenberg; with a copy to Fox,
Rothschild, O'Brien & Frankel, 2000 Market Street,
10th Floor, Philadelphia, Pennsylvania 19103,
Attention: Jerome E. Bogulz, Esq.;
if to an initial Holder of Warrants, to such
Holder at 1211 Avenue of the Americas, 7th Floor,
New York, New York 10036, with a copy to Cahill
Gordon & Reindel, 80 Pine Street, New York, New
York 10005, Attention: John Schuster, Esq., and
if to any subsequent Holder of Warrants, to it at
such address as may have been furnished to the
Company in writing by such Holder;
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or, in any case, at such other address or addresses as shall
have been furnished in writing to the Company (in the case of a
holder of Warrants) or to the Holders of Warrants (in the case
of the Company) in accordance with the provisions of this
paragraph.
6.2 Waivers; Amendments. No failure or delay of the
Holder in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise
of any other right or power. The rights and remedies of the
Holder are cumulative and not exclusive of any rights or
remedies which it would otherwise have. The provisions of this
Warrant may be amended, modified or waived with (and only with)
the written consent of the Company and the Warrantholders,
voting as a single class, entitling such holders to purchase a
majority of the Common Stock subject to purchase upon exercise
of such Warrants at the time outstanding (exclusive of Warrants
then owned by the Company or any subsidiary thereof); provided,
however, that no such amendment, modification or waiver shall,
without the written consent of each Warrantholder whose
interest might be adversely affected by such amendment,
modification or waiver, (a) change the number of shares of
Common Stock subject to purchase upon exercise of this Warrant,
the Exercise Price or provisions for payment thereof or (b)
amend, modify or waive the provisions of this Section or
Article III or IV. The provisions of the Registration Rights
Agreement may be amended, modified or waived only in accordance
with the respective provisions thereof.
Any such amendment, modification or waiver effected
pursuant to this Section or the applicable provisions of the
Registration Rights Agreement shall be binding upon the holders
of all Warrants and Warrant Shares, upon each future holder
thereof and upon the Company. In the event of any such
amendment, modification or waiver the Company shall give prompt
notice thereof to all Warrantholders and, if appropriate,
notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in
similar or other circumstances.
6.3 Governing Law. This Warrant shall be construed
in accordance with and governed by the laws of the State of New
York without regard to principles of conflicts of law.
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6.4 Survival of Agreements; Representations and
Warranties etc. All warranties, representations and covenants
made by the Company herein or in any certificate or other
instrument delivered by or on behalf of it in connection with
the Warrants shall be considered to have been relied upon by
the Holder and shall survive the issuance and delivery of the
Warrants, regardless of any investigation made by the Holder,
and shall continue in full force and effect so long as any
Warrant is outstanding. All statements in any such certificate
or other instrument shall constitute representations and
warranties hereunder.
6.5 Covenants to Bind Successor and Assigns. All
covenants, stipulations, promises and agreements in this
Warrant contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.
6.6 Severability. In case any one or more of the
provisions contained in the Registration Rights Agreement or
this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the
remaining provisions contained herein and therein shall not in
any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
6.7 Section Headings. The sections headings used
herein are for convenience of reference only, are not part of
this Warrant and are not to affect the construction of or be
taken into consideration in interpreting this Warrant.
6.8 No Rights as Stockholder. This Warrant shall
not entitle the Holder to any rights as a stockholder of the
Company.
6.9 No Impairment. The Company shall not by any
action including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will (a) not, directly
or indirectly, increase the par value of any shares of Common
Stock receivable upon the exercise of this Warrant above the
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amount payable therefor upon such exercise immediately prior to
such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its
commercially reasonable best efforts to obtain all such
authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.
24
IN WITNESS WHEREOF, ACS ENTERPRISES, INC. has caused
this Warrant to be executed in its corporate name by one of its
officers thereunto duly authorized, and attested by its
Secretary or an Assistant Secretary, all as of the day and year
first above written.
ACS ENTERPRISES, INC.
By:
----------------------------
Name:
Title:
Attest:
- -----------------------------
Name:
Title:
25
SUBSCRIPTION NOTICE
(To be executed upon exercise of Warrant)
TO ACS ENTERPRISES, INC.:
The undersigned hereby irrevocably elects to exercise
the right to purchase represented by the attached Warrant for,
and to purchase thereunder, _________________ shares of
[voting] [non-voting] Common Stock, as provided for therein,
and tenders herewith payment of the Exercise Price in full in
accordance with the terms of the attached Warrant.
Please issue a certificate or certificates for such
shares of Common Stock in the following name or names and
denominations:
If said number of shares shall not be all the shares
issuable upon exercise of the attached Warrant, a new Warrant
is to be issued in the name of the undersigned for the balance
remaining of such shares less any fraction of a share paid in
cash.
Dated: , 19
------------- --
---------------------------------
Note: The above signature should
correspond exactly with
the name on the face of
the attached Warrant or
with the name of the
assignee appearing in the
assignment form below.
26
ASSIGNMENT
(To be executed upon assignment of Warrant)
For value received, ______________________________
hereby sells, assigns and transfers unto __________________ the
attached Warrant, together with all rights, title and interest
therein, and does hereby irrevocably constitute and appoint
_________________ attorney to transfer said Warrant on the
books of ACS Enterprises, Inc., with full power of substitution
in the premises.
-----------------------------------
Note: The above signature should
correspond exactly with
the name on the face of
the attached Warrant.