Exhibit 4.14
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE
SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH REGISTRATION OR QUALIFICATION AS
MAY BE NECESSARY UNDER THE SECURITIES LAWS OF ANY STATE, OR AN EXEMPTION FROM
SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS UNDER THE ACT OR SUCH STATE LAW.
PHC, INC.
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CLASS A COMMON STOCK PURCHASE WARRANT
_____________________________________________
Certificate No. ____
Dated as of October 19, 2004
Reference is made to that certain Revolving Credit, Term Loan and Security
Agreement dated as of the date hereof (as amended, supplemented or modified from
time to time, the "Loan Agreement"), among PHC, INC. a Massachusetts corporation
(the "Company") and certain of its subsidiaries, NORTH POINT PIONEER, INC. and
CAPITALSOURCE FINANCE LLC (the "Lender"), an affiliate of CS EQUITY LLC, a
Delaware limited liability company ("CapitalSource"), and to the other Loan
Documents, pursuant to which the Lender has agreed to make certain loans to the
Borrowers (the "Loans"). This Warrant is issued at Closing under the Loan
Agreement and means and shall include any and all warrants issued in
substitution for and/or in replacement of this Warrant. The obligations of the
Lender to execute and deliver the Loan Documents and to consummate the
transactions thereunder are conditioned on, among other things, the issuance of
this Warrant to CapitalSource, and the Company has agreed to issue this Warrant
to CapitalSource in order to induce such affiliate to enter into the Loan
Documents and to make the Loans.
Capitalized terms used in this Warrant and not elsewhere defined herein
shall have the meanings set forth in Schedule 1 to this Warrant or in the Loan
Agreement (if not defined herein).
1. Grant. In consideration of the foregoing and other value received, the
Company hereby grants to CapitalSource and/or its assigns or transferees
(collectively, the "Holder"), at the exercise price set forth in Section 3
below, the right to purchase up to 250,000 shares of Class A Common Stock
(or other security issued in accordance with Section 8) subject to
adjustment from time to time (the "Warrant Shares").
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2. Exercise Period. The right to exercise this Warrant, in whole or in part,
begins on the date that pursuant to Section 9 below, the Company has
informed the Holder that the Company has amended its Charter to provide for
adequate authorized Warrant Shares and has reserved those Warrant Shares
for issuance under this Warrant, and expires on the tenth anniversary of
the date hereof (such date, the "Expiration Date").
3. Exercise Price. The exercise price of this Warrant is $1.15 per share (the
"Exercise Price").
4. Anti-Dilution Adjustment.
(a) Dilutive Transactions. Each time the Company enters into a Dilutive
Transaction, the number of Warrant Shares issuable hereunder shall be increased
to the number determined by performing the following calculation and rounding
the resulting number to the nearest whole share: divide: (i) the Non-Dilutive
Price of a Warrant Share then in effect multiplied by the number of Warrant
Shares then issuable hereunder, by (ii) the Weighted Average Per Share Value.
(b) Readjustment. If any option, right or right to convert or exchange any
Common Stock Equivalent issued in connection with a Dilutive Transaction expires
without having been exercised prior to the exercise by the Holder of its rights
hereunder, the number of Warrant Shares then issuable hereunder shall forthwith
be readjusted to such lesser number as would have been issuable had the option,
right or Common Stock Equivalent never been issued.
(c) Adjustment of Exercise Price. Upon each adjustment of the number of
Warrant Shares as provided in Subsection 4(a), the Exercise Price shall be
adjusted to the dollar figure (calculated to the nearest hundredth of a cent)
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing the product thereof by the
number of Warrant Shares purchasable pursuant hereto immediately following such
adjustment.
5. Other Adjustments.
(a) Adjustment for Change in Class A Common Stock. If the Company (i) pays
a dividend or makes a distribution on its Class A Common Stock in shares of its
Common Stock, (ii) subdivides, splits or reclassifies its outstanding shares of
Class A Common Stock into a greater number of shares, or (iii) combines or
reclassifies its outstanding shares of Common Stock into a smaller number of
shares (each, an "Adjustment Event"), the number of Warrant Shares issuable
hereunder immediately prior to such action shall be proportionately adjusted so
that the Holder will receive, upon exercise, the aggregate number and kind of
shares of capital stock of the Company which it would have owned immediately
following such action if the Holder had exercised this Warrant in full
immediately prior to such Adjustment Event. The adjustment shall become
effective immediately after the record date in the case of a dividend or
distribution
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and immediately after the effective date in the case of a subdivision,
combination or reclassification. The adjustment shall be made successively
whenever any Adjustment Event occurs.
(b) Adjustment for Reorganization. Subject to Section 11.9, if there occurs
any Change of Control, there shall thereafter be deliverable, upon exercise of
this Warrant (in lieu of the number of Warrant Shares theretofore deliverable)
the number of shares of stock or other securities or property to which a holder
of the number of shares of Class A Common Stock that would otherwise have been
deliverable upon exercise of this Warrant in full would have been entitled upon
such Change of Control if such Warrant had been exercised in full immediately
prior to such Change of Control.
(c) Adjustment of Exercise Price. Upon each adjustment of the number of
Warrant Shares issuable hereunder as provided in this Section 5, the Exercise
Price shall also be equitably and proportionately adjusted.
(d) Certificate as to Adjustments. In each case of any adjustment or
readjustment in the number of shares, securities or other property issuable upon
exercise of this Warrant and/or in the Exercise Price, the Company at its
expense will promptly provide written notice to the Holder stating the number of
shares of Class A Common Stock, other securities or other property then issuable
upon exercise of this Warrant and the applicable Exercise Price after such
adjustment, showing how such amounts were calculated.
6. Participation in Dividends, Distributions, Repurchases or Redemptions. If
the Company declares any dividend or makes any distribution, in each case,
that is not in shares of Class A Common Stock, or repurchases or redeems
any of its capital stock (except forfeitures by holders, and/or repurchases
by the Company, of any shares of Class A Common Stock or options pursuant
to any employment agreements with executives of the Company or pursuant to
any equity incentive plan in existence on the date hereof that has been
approved by the stockholders of the Company and qualifies as an incentive
plan under the Internal Revenue Code of 1986, as amended (collectively,
"Permitted Redemptions")), the Company will pay the Holder the declared
dividend, or offer to include the Holder in such distribution, repurchase
or redemption, as if the Holder had exercised this Warrant in full
immediately prior to such event or any record date with respect thereto. If
the Holder elects to participate in a repurchase or redemption, this
Warrant shall be modified (as of the date of such event) so that the Holder
shall be entitled to receive, upon exercise, the number of Warrant Shares
issuable hereunder less the number of Warrant Shares redeemed or
repurchased.
7. Prior Notice as to Certain Events.
(a) Dividends, Distributions, Subscription Rights. If the Company (i) pays
any dividend, or makes any distribution, or repurchases or redeems any of its
capital stock (except Permitted Redemptions), (ii) offers any subscription
rights to the holders of its capital stock to purchase any additional shares of
stock of any class or any other rights, or (iii) authorizes the issuance of
shares of Common Stock or Common Stock Equivalents, then at least 15 Business
Days prior to the action or record date for such action, the Company will send
written notice to the Holder of the dates on which (A) the Company will close
its books or take a
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record for such action, (B) such action will occur, and (C) the holders of
capital stock of record will participate in such action.
(b) Change of Control. If the Company (i) enters into any Change of Control
or reclassification of its capital stock or equity securities, (ii) is the
subject of a voluntary or involuntary dissolution, liquidation or winding up or
(iii) receives a notice from any holder of its equity securities that such
holder desires to exercise its right to "put" or sell such securities back to
the Company or to have such securities redeemed or repurchased by the Company,
then at least 15 Business Days prior to such action or transaction, the Company
will send written notice to the Holder of the dates on which (A) the Company
will close its books or take a record for such action, (B) such action will
occur, and (C) if applicable, the holders of capital stock of record may
exchange their capital stock for securities or other property deliverable upon
such action.
8. Intentionally Omitted
9. Reservation of Class A Common Stock; Par Value. The Company shall set forth
a proposal to amend the Company's Certificate of Incorporation to increase
the number of authorized shares of the Company's Class A Common Stock such
that it will have upon the exercise of this Warrant such number of its
authorized but unissued shares of Class A Common Stock as will be
sufficient to permit the exercise in full of this Warrant, at each annual
meeting of the Company's stockholders until such proposal is adopted (and
at all times thereafter if there are insufficient authorized but unissued
shares of Class A Common Stock to permit the exercise in full of this
Warrant) or until the Expiration Date has occurred. Promptly following the
approval of such proposal by the Company's stockholders, the Company will
cause the Company's Certificate of Incorporation to be amended in
accordance with such approved proposal and shall provide the Holder with
prompt written notice thereof.
Upon issuance, each of the Warrant Shares will be validly issued, fully paid and
nonassessable, free and clear of all preemptive or similar rights, liens,
security interests, charges and other encumbrances and/or restrictions on sale
or otherwise. Without limiting the generality of the foregoing, the Company will
(i) not permit the par value, if any, of its Class A Common Stock to exceed the
then effective Exercise Price, and in furtherance of the foregoing, shall
promptly cause the Certificate of Incorporation of the Company to be amended to
reduce the par value of the Class A Common Stock if the Exercise Price is
reduced below the current par value, and (ii) not amend or modify any provision
of the Certificate of Incorporation of the Company or by-laws of the Company in
any manner that would adversely affect in any way the powers, preferences or
rights of the Class A Common Stock or which would adversely affect the rights of
the Holder.
10. No Voting Rights; Limitations of Liability. Prior to exercise, this Warrant
will not entitle the Holder to any voting rights or other rights as a
stockholder of the Company not granted herein. No provision of this
Warrant, in the absence of affirmative action by the Holder to exercise
this Warrant, and no enumeration in this Warrant of the rights or
privileges of the Holder, will give rise to any liability of such Holder
for the Exercise Price.
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11. Registration Rights.
11.1 Effective Date. The rights of each Holder that holds Registrable Securities
under this Section 11 are effective as of the date hereof and shall remain
in full force and effect for so long as the Holder continues to hold any
Registrable Securities and regardless of any transfer of this Warrant or
its termination upon its exercise in full.
11.2 Intentionally Omitted.
11.3 Piggyback Registrations.
(1) RIGHT TO PIGGYBACK. Whenever the Company proposes to register any of
its securities under the Securities Act (other than pursuant to a registration
on Form S-8 or Form S-4 or any successor forms, a registration covering only an
employee benefit plan (as defined in Rule 405 of the Securities Act) or a
registration covering only securities proposed to be issued in exchange for
securities or assets of another corporation) and the registration form to be
used may be used for the registration of Registrable Securities (a "Piggyback
Registration"), the Company will give prompt written notice to all holders of
Registrable Securities and (subject to subsections (2) and (3) below) shall
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15
Business Days after the day on which the Company's notice is deemed delivered
under the terms hereof. The foregoing right shall not apply to the Company
registration of shares of its Class A Common Stock on Form S-3 filed with the
SEC prior to the date hereof and awaiting SEC effectiveness.
(2) PRIORITY ON INITIAL REGISTRATION. If a Piggyback Registration is an
underwritten registration of shares being sold by the Company, and the managing
underwriter(s) advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Company will include in such registration:
(i) first, the securities the Company proposes to sell;
(ii) second, to the extent a number of additional securities are to be
included in the registration, the Registrable Securities requested to be
included in such registration; and
(iii) third, to the extent a number of additional securities are to be
included in the registration, all other securities requested to be included in
such registration pursuant to the exercise of other piggyback registration
rights granted by the Company.
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(3) PRIORITY ON SUBSEQUENT REGISTRATION. If a Piggyback Registration is an
underwritten registration other than a registration of shares being sold by the
Company, and the managing underwriter(s) advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration:
(i) first, Registrable Securities requested to be included in such
registration;
(ii) second, to the extent a number of additional securities are to be
included in the registration, the securities the Company proposes to sell; and
(iii) third, to the extent a number of additional securities are to be
included in the registration, all other securities requested to be included in
such registration pursuant to the exercise of other piggyback registration
rights granted by the Company.
11.4 Intentionally Omitted.
11.5 Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to
this Agreement, the Company will use its best reasonable efforts to effect
the registration and the sale of such Registrable Securities in accordance
with the intended method of disposition therefor, and pursuant thereto, the
Company will, as expeditiously as possible, do all of the following:
(1) REGISTRATION STATEMENT. Prepare and file with the U.S. Securities and
Exchange Commission (the "SEC") a registration statement with respect
to such Registrable Securities and use its best reasonable efforts to
cause such registration statement to become effective (provided that
before filing a registration statement or prospectus or any amendments
or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities
covered by such registration statement copies of all such documents
proposed to be filed, which documents will be subject to the review
and approval of such counsel) and use its best reasonable efforts to
avoid the issuance of (or if issued, obtain the withdrawal of) any
order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction as soon as possible;
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(2) AMENDMENTS & SUPPLEMENTS. Prepare and file with the SEC such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period necessary to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof, which period shall not be less
than six months;
(3) FURNISH COPIES. Furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included therein (including each
preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities covered by such registration statement;
(4) BLUE-SKY COMPLIANCE. Use its best reasonable efforts to register or
qualify such Registrable Securities under such other securities or
blue sky laws of such United States jurisdictions as any seller
reasonably requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify for this
subparagraph, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any
such jurisdiction other than with respect to the registration,
qualification or exemption therefrom of the Registrable Securities);
(5) NOTIFICATIONS. Notify each seller of such Registrable Securities at
any time when a registration statement related thereto is effective
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading in light of the
circumstances then existing, and, at the request of any such seller,
the Company will prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any fact necessary to make the
statements therein not misleading;
(6) LISTING. Use its best reasonable efforts to cause all such Registrable
Securities to be listed on any nationally recognized United States
trading market, if applicable, on which similar securities of the same
class issued by the Company are then listed;
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(7) TRANSFER AGENT; REGISTRAR. Provide a transfer agent and registrar for
all such Registrable Securities not later than the effective date of
such registration statement;
(8) OMITTED.
(9) SUPPLY INFORMATION. Make available for inspection by any seller of
Registrable Securities, underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant
or other agent retained by any such seller or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement; and
(10) OBTAIN COLD COMFORT LETTER AND OPINIONS OF COUNSEL. Obtain a cold
comfort letter from the Company's independent public accountants and
opinions of counsel from the Company's attorneys, each in customary
form and covering such matters as are customarily given or covered by
independent public accountants and attorneys, as applicable, in an
underwritten public offering of securities, addressed to the sellers.
11.6 Registration Expenses. The Company shall bear and pay all expenses incurred
in connection with any registration, filing or qualification of Registrable
Securities with respect to the registrations pursuant to this Section 11,
including, without limitation, all registration, filing and qualification
fees, printing and accounting fees, listing fees and expenses, fees and
expenses of compliance with securities or blue sky laws, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the sellers of Registrable Securities.
Underwriting discounts and commissions relating to Registrable Securities
will be borne and paid ratably by the sellers of such Registrable
Securities.
11.7 Indemnification Provisions.
(1) INDEMNITY OF HOLDERS OF REGISTRABLE SECURITIES. The Company agrees to
indemnify, to the extent permitted by law, each holder of Registrable
Securities, its officers and directors and each Person who controls each such
holder (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged untrue
statement of material fact contained in any registration statement, prospectus
or preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing to the
Company or any underwriter by such holder expressly for use therein or by such
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holder's failure to deliver to the Company in writing the information and
affidavits required by subsection (2) of this Section 11.7 after the Company has
furnished such holder with a sufficient number of copies of the registration
statement or prospectus or any amendments or supplements thereto.
(2) DISCLOSURE AND INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. In
connection with any registration statement in which a holder of such Registrable
Securities is participating, each such holder will furnish to the Company in
writing such information and affidavits relating to disclosure concerning such
holder required to be included in the registration statement as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, will indemnify the Company,
its directors and officers and each person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue statement of material fact contained in
the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission of 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 omission is
contained in any information or affidavit so furnished in writing by such
holder; provided, however, that the obligation to indemnify will be several, not
joint and several, among such holders; and provided, further, however that the
liability of each holder will be in proportion to and limited to the net amount
received by such holder from the sale of Registrable Securities pursuant to such
registration statement.
(3) NOTICE AND DEFENSE. Any person entitled to indemnification hereunder
will: (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, and (ii) unless in the reasonable
opinion of such indemnified party's counsel a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. The failure to give timely
notice will not relieve the receiving party of any obligation unless such delay
unduly prejudices such party's ability to defend such claim. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
settlement or omission made by the indemnified party without its consent (but
such consent will not be unreasonably withheld) and an indemnified party will
not be subject to any liability for any settlement or omission made by the
indemnifying party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
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(4) CONTINUING AND SURVIVING OBLIGATIONS; RIGHT OF CONTRIBUTION. The
indemnification provided for under this Warrant will remain in full force and
effect regardless of any investigation made by or on behalf of the indemnified
party or any officer, director or controlling person of such indemnified party
and will survive the transfer of securities after the completion of any
offering. The Company also agrees to make such provisions, based on its relative
fault, for contribution to such party in the event the Company's indemnification
is unavailable for any reason. The relative fault of the Company and the selling
holder shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by
the Company or the selling holder and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
11.8 Rule 144 Requirements. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to:
(1) make and keep public information available, as defined for purposes of
Rule 144 under the Securities Act;
(2) use its best reasonable efforts to file with the SEC in a timely manner
all reports and other documents required of the Company to be filed under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); and
(3) furnish to any holder of Registrable Securities, upon request, a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 under the Securities Act and of the Securities Act, a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents of the Company as such holder may reasonable request to
avail itself of any similar rule or regulation of the SEC allowing it to sell
any such securities without registration.
11.9 Mergers, Etc. The Company shall not, directly or indirectly, enter into any
Change of Control transaction in which the Company shall not be the
surviving Company unless the proposed surviving Company shall, prior to
such transaction, agree in writing to assume the obligations of the Company
under this Warrant, including but not limited to those under Section 11 of
this Warrant, and for that purpose references hereunder to "Registrable
Securities" shall be deemed to be references to the securities that a
Holder would be entitled to receive in exchange for Registrable Securities
under and/or in connection with any such transaction; provided, however,
that the provisions of this Warrant shall not apply in the event of any
such transaction in which the Company is not the surviving Company if all
Holders holding Registrable Securities are entitled to receive in exchange
for all of their Registrable Securities consideration consisting solely of
(i) cash, (ii) securities of the acquiring Company that may be immediately
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sold to the public without registration under the Securities Act, or (iii)
securities of the acquiring Company that the acquiring Company has agreed
to register, and actually does register, for resale to the public pursuant
to the Securities Act, provided such registration occurs contemporaneously
with consummation of the transaction.
11.10 Miscellaneous. The Company has not granted and will not grant to any
Person the right to request the Company to register any equity securities
of the Company, or any securities convertible or exchangeable into or
exercisable for such securities or any other Common Stock Equivalents, that
in any material manner are more favorable to such Person than those granted
herein.
12. Exercise Procedure. To exercise this Warrant, the Holder must deliver to
the principal office of the Company (prior to the Expiration Date) this
Warrant, the subscription substantially in the form of Exhibit A attached
hereto and the Exercise Price for the Warrant Shares being purchased. The
Holder may deliver the Exercise Price by any of the following methods, at
its option: (i) in legal tender, (ii) by bank cashier's or certified check,
(iii) by wire transfer to an account designated by the Company, or (iv) in
accordance with Section 13. Upon exercise, the Company, at its sole expense
(including the payment by the Company of any documentary, stamp, issue or
transfer taxes), will issue and deliver to Holder, within five Business
Days after the date on which the Holder exercises this Warrant,
certificates for the Warrant Shares purchased upon exercise of this
Warrant. The Warrant Shares so purchased shall be deemed issued, and the
Holder deemed the holder of record of such Warrant Shares, as of 9:00 a.m.
(New York City time) on the date on which the Holder exercises this
Warrant. The Company shall pay any and all documentary, stamp or issue,
transfer or similar taxes payable in respect of the issue or delivery of
the Warrant Shares. This Warrant may be exercised in whole or in part and
in the event this Warrant is partially exercised, the Company shall
forthwith issue and deliver to the Holder a new Warrant of like tenor to
purchase that number of Warrant Shares with respect to which such partial
exercise did not apply.
13. Cashless Exercise. In lieu of paying the applicable Exercise Price by legal
tender, check, or wire transfer, the Holder may elect to receive, upon any
exercise of this Warrant, that number of Warrant Shares equal to the
quotient obtained by dividing:
[(A-B)(X)] by (A), where:
A = the Fair Market Value of a share of Class A Common Stock on the
date of exercise;
B = the Exercise Price for a share of Class A Common Stock; and
X = the number of Warrant Shares (equal to or less than the number
of Warrant Shares then issuable hereunder) as to which this
Warrant is being exercised.
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14. Sale of Warrant or Warrant Shares. Neither the issuance of this Warrant nor
the issuance of any of the Warrant Shares upon exercise of this Warrant
have been registered under the Securities Act or the Exchange Act or under
the securities laws of any state. The issuance of the Warrant Shares upon
exercise of this Warrant shall be subject to compliance with all applicable
federal and state securities laws. Neither this Warrant nor any of the
Warrant Shares (when issued) may be sold, assigned, transferred, pledged or
hypothecated or otherwise disposed of except: (i) as permitted by any
effective registration statement under the Securities Act and such
registration or qualification as may be required under the securities laws
of any state in question, or (ii) as permitted by an exemption from such
registration and/or qualification requirements under the Securities Act and
the securities laws of any state or if any such registration and/or
qualification is not required. For so long as any Warrant Shares are
Registrable Securities, the Company shall cause each certificate evidencing
any such Warrant Shares to bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITRIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
REGISTRATION OR QUALIFICATION AS MAY BE NECESSARY UNDER THE SECRUITIES LAWS
OF ANY STATE, OR AN EXEMPTION FROM SUCH REGISTRATION OR QUALIFICATION
REQUIREMENTS UNDER THE ACT OR SUCH STATE LAW.
15. Put Right.
(a) Exercise of Put. At any time or times during any Put Period, but
subject to the provisions of subsection 15(d) below, the Holder shall have the
right to require the Company to repurchase (the "Put") (i) all or any number of
the then Warrant Rights and/or (ii) all or any number of the Warrant Shares then
held by the Holder (collectively, the "Put Securities"), at an aggregate price
equal to:
(x) the aggregate number of Put Securities specified in the Put Notice (as
defined below) multiplied by the Purchase Price, minus
(y) the then Exercise Price multiplied by the aggregate number of Warrant
Rights specified in the Put Notice,
but in all events a minimum of $100,000 if the Put is fully exercised and
pro-rated if partially exercised based on the number of Put Securities so
exercised (such aggregate dollar amount, being the "Put Amount" and the
$100,000 minimum dollar amount or portion thereof being the "Minimum Put
Amount"),
by delivering a written notice specifying the portion of the Warrant and/or
the number of Warrant Shares to be purchased (the "Put Notice"). Once a Put
Notice has been delivered, it shall remain in full force and
-- 16 --
effect and the Company shall have the obligation to consummate the Put
Closing (as defined below) notwithstanding that the Put Period may
thereafter terminate or be inapplicable because of events or actions
occurring after such delivery. The Company shall not be required to
consummate the Put Closing if such is prohibited by Massachusetts laws
relating to impairment of capital upon redemptions of capital stock, but in
such case the Company shall consummate the Put Closing immediately upon the
termination of such prohibition and the Company's obligation to pay the Put
Amount or Minimum Put Amount, as applicable, upon such consummation of the
Put Closing immediately upon the termination of such prohibition shall be
an Obligation under the Loan Agreement secured by the Collateral under the
Security Documents.
(b) Closing. Upon the delivery of any Put Notice, the Company shall in good
faith promptly determine the Purchase Price (including, if applicable, the Fair
Market Value of the number of Put Securities to be purchased), and, within five
(5) Business Days after its receipt of the Put Notice, the Company will
purchase, and the Holder will sell, the Put Securities specified in the Put
Notice (the "Put Closing"). At each Put Closing, the Holder shall surrender this
Warrant if being repurchased in whole or in part and deliver to the Company
certificates representing any Warrant Shares to be repurchased by the Company,
in each case without any representation or warranty (other than that Holder has
good and valid title thereto and the power and authority to surrender such
Warrant and/or Warrant Shares), and the Company shall deliver to the Holder the
total Put Amount for the number of Put Securities being repurchased by the
Company by cashier's or certified check payable to the Holder or by wire
transfer of immediately available funds to a bank account designated by the
Holder. In the event this Warrant or the Warrant Shares are partially
repurchased at any Put Closing, the Company shall forthwith issue and deliver to
the Holder a new certificate evidencing, or, as applicable, a new Warrant of
like tenor to purchase that number of shares with respect to which such partial
repurchase did not apply.
(c) Survival. Notwithstanding anything to the contrary in this Warrant, the
terms of this Section 15, if not then fully exercised by the Holder, shall
survive in full the exercise of this Warrant and (i) each public offering of
securities of the Company (including, without limitation, an IPO), (ii) each
Value Event, (iii) each Event of Default, and/or (iv) the payment or prepayment
in full of the Obligations.
(d) Company Option in Lieu of Put in Full. If all of the Put Securities may
then be sold by the Holder to the public in normal brokered transactions, the
Company shall have the right, to be exercised by written notice to the Holder
made no later than three (3) Business Days after delivery to the Company of the
Put Notice, to decline to consummate a Put Closing that results in payment of a
Put Amount in excess of the Minimum Put Amount and instead (i) pay to the Holder
at the Put Closing the Minimum Put Amount, (ii) issue to the Holder, if and as
necessary based on the allocation of Put Securities between Warrant Rights and
Warrant Shares, such number of Put Securities so that the aggregate Fair Market
-- 17 --
Value as of the date of the Put Notice of all Put Securities, including those so
issued, equals the Put Amount minus the Minimum Put Amount and (iii) require the
Holder to sell all Put Securities (after the exercise into Warrant Shares of Put
Securities that are Warrant Rights) in normal brokered transactions. If the
Company so elects, the Holder shall sell the Put Securities with reasonable
dispatch in normal brokered transactions. On the date that is one hundred
fifteen (115) days after delivery of the Put Notice under the provisions of this
Section 15, the Company shall pay to the Holder the dollar amount, if a positive
figure, equal to the lesser of:
(1) $350,000 minus any portion of the Minimum Put Amount previously paid
to the Holder under this Section; or
(2) the Put Price that the Company would have been required to pay to the
Holder for the Put Securities if the Company had not so elected the
provisions of this Section 15(d) minus the net proceeds (after
expenses and commissions paid or payable by the Holder in effecting
the sale of the Put Securities in normal brokered transactions)
received or receivable by the Holder for the sale of the Put
Securities minus any portion of the Minimum Put Amount previously paid
to the holder under this Section.
(e) Company Option in Connection with Refinancing.
(i) Notwithstanding anything herein that may be construed to the
contrary, if at any time or times while the Loans are outstanding
the Company decides in good faith to fully refinance the Loans
with any person that is not an Affiliate of the Company (a
"Refinancing"), the Company shall have the right to deliver a
written notice to the Holder (the "Refinancing Notice") no later
than thirty (30) days prior to the intended date of the
Refinancing, specifying the intended Refinancing and the intended
closing date thereof. The Holder shall thereupon have the right,
by written notice delivered to the Company no later than fifteen
(15) days prior to the intended date of the Refinancing, to
exercise the Put. If so exercised, the Put Closing and delivery
to the Holder of the entire Put Amount (or the Minimum Put Amount
if the Put is effected under the provisions of subsection (d))
shall be effected simultaneously with the closing of the
Refinancing.
(ii) If the Holder does not exercise the Put under this subsection (e)
and the Refinancing closes within three months after delivery of
the Refinancing Notice, then in connection with any future
exercise of the Put under this Section 15, the Put Amount or
Minimum Put Amount, as applicable, shall not be an Obligation
under the Loan Agreement and shall not be secured by the
Collateral under the Security Documents.
(iii) If the Refinancing does not occur by the date that is three
months after delivery of the Refinancing Notice, then the Holder
shall have the option at any time thereafter and prior to the
closing of the Refinancing to rescind its exercise of the Put and
the Company thereafter must wait at least sixty (60) days before
again invoking the provisions of this subsection (e).
-- 18 --
16. Transfer. The Company will register this Warrant on its books and keep such
books at its offices. To effect a transfer permitted by clause (ii) under
Section 14 hereof, the Holder must present (either in person, or by duly
authorized attorney) written notice substantially in the form of Exhibit B
attached hereto. To prevent a transfer in violation of Section 14, the
Company may issue appropriate stop orders to its transfer agent.
17. Replacement of Warrant. If the Holder provides evidence that this Warrant
or any certificate or certificates representing the Warrant Shares have
been lost, stolen, destroyed or mutilated, the Company (at the request and
expense of the Holder) will issue a replacement warrant or certificates
evidencing such Warrant Shares, as applicable, upon reasonably satisfactory
indemnification by the Holder (if required by the Company).
18. Governing Law; Interpretation. This Warrant shall be governed by and
construed in accordance with the internal laws of the State of Maryland
without giving effect to its choice of law provisions. Any judicial
proceeding against the Company or the Holder hereunder or with respect
hereto shall be brought exclusively in any federal or state court of
competent jurisdiction located in the State of Maryland. Each of the
Company and the Holder (i) accepts the non-exclusive jurisdiction of the
aforesaid courts and irrevocably agrees to be bound by any judgment
rendered thereby, (ii) waives personal service of process, (iii) agrees
that service of process upon it may be made as provided in the Loan
Agreement, (iv) waives any objection to jurisdiction and venue of any
action instituted hereunder and agrees not to assert any defense based on
lack of jurisdiction, venue or convenience, and (v) agrees that this
Warrant was issued in Maryland. Each party acknowledges that it
participated in the negotiation and drafting of this Warrant and that,
accordingly, neither party shall move or petition a court construing this
Warrant to construe it more stringently against one party than against any
other.
19. Information Covenants.
(a) Notice of Stockholder Meetings. If a meeting of the stockholders of the
Company is called or if consents of the Company's stockholders are solicited to
consider and take action on a proposal for (i) the declaration of a dividend or
payment of a distribution with respect to the Class A Common Stock, (ii) the
voluntary dissolution, liquidation or winding up of the Company, (iii) the
issuance of shares of Class A Common Stock or any Common Stock Equivalents, (iv)
any Change of Control or (v) any other action, then the Company send written
notice thereof to each Holder at least five (5) Business Days prior to the
record date for determining stockholders entitled to vote at such meeting or to
take action with respect to such consent.
(b) Cooperation. The Company shall cooperate with each Holder and each
holder of Warrant Shares in supplying such information as may be reasonably
necessary for such Person to complete and file any information reporting forms
presently or hereafter required by the SEC and/or any other Governmental
Authority as a condition to the availability of an exemption under the
Securities Act and any applicable state securities law for the sale or purchase
of this Warrant or any Warrant Shares.
-- 19 --
(c) Proper Books and Records. The Company covenants that it will, and will
cause its Subsidiaries to, keep proper books and records in which full, true and
correct entries in conformity with generally accepted accounting principles
shall be made of all dealings and transactions in relation to its business and
activities.
20. Notice. All notices and other communications given to or made under this
Warrant shall be in writing and shall be given to the Company at its
address set forth in the Loan Agreement and to Holder at its address shown
on the books of the Company, or at such other address as such party may
hereafter specify in a notice given in the manner required under this
Section 20, and shall be given only by, and shall be deemed to have been
received upon: (i) registered or certified mail, return receipt requested,
on the date on which such received as indicated in such return receipt,
(ii) delivery by a nationally recognized overnight courier, one (1)
Business Day after deposit with such courier, or (iii) facsimile or
electronic transmission, in each case upon telephone or further electronic
communication from the recipient acknowledging receipt (whether automatic
or manual from recipient), as applicable.
21. Assignment; Registration of Transfer. Subject to Section 14 hereof, Warrant
and the Warrant Shares may be assigned or transferred by the Holder. This
Warrant may not be assigned by the Company. This Warrant shall be binding
on and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the Company, the Holder and any holders of Registrable Securities any legal
or equitable right, remedy or cause of action under this Warrant. This
Warrant may be amended or modified only in writing signed by the Company
and the Holder and their permitted successors and assigns. Upon any
assignment of this Warrant, a new warrant in substantially the form of this
Warrant (any such new warrant, a "New Warrant"), evidencing the portion of
this Warrant so transferred shall be issued to the transferee and a New
Warrant evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a
Holder.
[intentionally left blank - signature page follows]
-- 20 --
[signature page to PHC, Inc. Warrant issued to CS Equity LLC]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on its
behalf, in its corporate name, by its ___________________________________, and
its corporate seal to be hereunto affixed and the said seal to be attested by
its Secretary, as of the date first written above.
PHC, INC.
Attest: /s/ Paula C. Wurts By: /s/ Bruce Shear
Name: Paula C. Wurts Name: Bruce Shear
Title: Secretary Title: Presdent
By signing below, the undersigned, as a shareholder and as the President of the
Company, hereby agrees to use his best reasonable efforts, including but not
limited to favorably voting his shares of capital stock in the Company, to cause
the Company to comply with its obligation in the second sentence of Section 9
above.
________________________________
Bruce A. Shear
-- 21 --
Exhibit A
IRREVOCABLE SUBSCRIPTION
To: PHC, Inc.
The undersigned hereby elects to exercise its right under the attached
Warrant by purchasing ____ shares of the Class A Common Stock, and hereby
irrevocably subscribes to such issue. The certificates for such shares shall be
issued in the name of:
_______________________________
(Name)
_______________________________
(Address)
_______________________________
(Taxpayer Number)
and delivered to:
_______________________________
(Name)
_______________________________
(Address)
PAYMENT EXERCISE: The aggregate Exercise Price of $____ per share is
enclosed.
or
CASHLESS EXERCISE: In lieu of payment of the aggregate Exercise Price
hereof, the attached Warrant is being exercised in accordance with Section
13 of the attached Warrant.
Date:_______________
Signed: ________________________________________
(Name of Holder, Please Print)
________________________________________
(Address)
________________________________________
(Signature)
-- 22 --
Exhibit B
ASSIGNMENT
For value received, the undersigned hereby sells, assigns and transfers
unto:
________________________________________
(Name)
________________________________________
(Address)
the attached Warrant, together with all right, title and interest therein
to purchase ____ shares of the Class A Common Stock, and does hereby irrevocably
appoint _______________________ as attorney-in-fact to transfer said Warrant on
the books of _______________________, with full power of substitution in the
premises.
Done this ______ day of ____________ 20____.
________________________________________
(Signature)
________________________________________
(Name and title)
________________________________________
(Address)
-- 23 --
SCHEDULE 1 TO PHC, INC. WARRANT
"Adjusted EBITDA" means a dollar amount equal to:
(a) EBITDA (as defined in the Loan Agreement) for the relevant
period, plus
(b) each of the following:
(i) management, consulting investment banking, financial
advisory, finder's, broker's and similar paid by the Company
and/or its Subsidiaries to any of their Affiliates; and
(ii) management consulting, investment banking, financial
advisory, finder's, broker's and similar fees paid by the Company
and/or its Subsidiaries to any-non-Affiliates that exceed the
normal and customary level of fees paid for similar services by
other similarly situated companies; and
(iii) fees or other compensation paid by the Company to its
Directors in consideration for their service as Board members
that exceed the normal and customary level of fees and
compensation paid for similar services by other similarly
situated companies; and
(iv) compensation (including salary, bonus and benefits) paid by
the Company and its Subsidiaries to their executive personnel
which exceed a reasonable level of compensation for each such
executive personnel based on the historical pattern of
compensation for such person while employed by the Company or a
Subsidiary (such pattern to take into effect an appropriate, as
long as it is consistent, level of incentive compensation based
on the actual performance of the Company or a Subsidiary).
"Change of Control" shall mean, with respect to the Company, the occurrence in
any transaction or series of transactions of any of the following: (i) a merger,
consolidation, reorganization, recapitalization or share or interest exchange,
sale or transfer or any other transaction or series of transactions in which its
stockholders immediately prior to such transaction or series of transactions
receive, in exchange for the stock or interests owned by them, cash, property or
securities of the resulting or surviving entity or any Affiliate thereof, and,
as a result thereof, Persons who, individually or in the aggregate, were holders
of 50% or more of its voting stock immediately prior to such transaction or
series of transactions hold less than 50% of the voting stock of the resulting
or surviving entity or such Affiliate thereof, calculated on a fully diluted
basis or (ii) a direct or indirect sale, transfer or other conveyance or
disposition, in any single transaction or series of transactions, of all or
substantially all of its assets. "Class A Common Stock" means the Class A Common
Stock, par value $.01 per share, of the Company.
"Common Stock" means any class of common stock of the Company, including but not
limited to the Class A Common Stock and the Class B Common Stock, par value $.01
per share, of the Company.
-- 24 --
"Common Stock Equivalent" means any security of the Company that is directly or
indirectly convertible, exercisable, or exchangeable into any Common Stock or
any other Common Stock Equivalent at any time.
"Common Stock Deemed Outstanding" means, at any given time, the sum of: (i) the
number of shares of Common Stock of the Company outstanding at such time, plus
(ii) the full number of shares of Common Stock issuable upon conversion,
exercise, or exchange of any Common Stock Equivalents outstanding at such time.
"Consideration" means:
(i) if the Company issues Common Stock, the gross proceeds received
by the Company for each such share of Common Stock;
(ii) if the Company issues Common Stock Equivalents, the gross
proceeds received by the Company for each such Common Stock
Equivalent, plus the minimum aggregate amount of gross proceeds,
if any, payable to the Company upon exchange or conversion of
each such Common Stock Equivalent;
(iii) if the Company issues options or rights to subscribe for or to
purchase Common Stock or Common Stock Equivalents, the gross
proceeds, if any, received by the Company for each such option or
right, plus the minimum aggregate amount of gross proceeds, if
any, payable to the Company upon exercise of each such option or
right and upon further exchange or conversion of each such Common
Stock Equivalent into which such option or right was exercised or
converted;
(iv) if the Company issues a combination of securities consisting of
Common Stock or Common Stock Equivalents and other securities of
the Company, and if the amount of gross proceeds allocable to the
Common Stock or Common Stock Equivalents is not determinable on
its face at the time of such issuance, the portion of gross
proceeds received by the Company, as determined in good faith by
the Company's Board of Directors; and
(v) if the Company receives any non-cash consideration, the fair
value of the non-cash consideration, as determined in good faith
by the Company's Board of Directors.
"Dilutive Transaction" means any transaction (other than Exempt Transactions)
effected on or after the date hereof, including but not limited to transactions
pursuant to or in connection with the Membership Purchase Agreement between the
Company, Pivotal Research Centers, L.L.C., and other parties dated April 30,
2004, in which the Company does any of the following, based on a Per Share Price
which is less than the Non-Dilutive Price: (i) issues or sells any Common Stock
or any Common Stock Equivalents; (ii) issues or sells any options, warrants or
other rights to purchase or otherwise acquire any Common Stock or any Common
-- 25 --
Stock Equivalent; or (iii) decreases the subscription, exercise, conversion or
exchange price of the securities described in (i) or (ii) whether or not issued
or sold initially at a Per Share Price in excess of the Non-Dilutive Price.
"Employee Options" means options to purchase shares of Common Stock issued by
the Company pursuant to its currently effective stock option plan or
non-employee directors' stock option plan.
"Employee Option Shares" means both shares of Common Stock into which Employee
Options are exercisable and shares of Common Stock issued under the Company's
currently effective employee stock purchase plan.
"Equity Infusion" means any cash investment or investments in the equity
securities of the Company after the date of this Warrant which in the aggregate
equals or exceeds $2,000,000.
"Exempt Transaction" means any transaction where the Company: (i) issues any
Common Stock upon conversion or exercise of securities outstanding or issued as
of the date hereof; (ii) issues any Common Stock upon exercise of this Warrant;
(iii) issues equity securities as a dividend or upon a stock split; or (iv)
issues Employee Options or Employee Option Shares in the aggregate not exceeding
the number of shares of such authorized as of the date hereof.
"Fair Market Value" of a share of Class A Common Stock means:
(i) the average of the daily closing prices for the thirty (30) consecutive
business days ending fifteen (15) business days before the date of
determination (as adjusted for any stock dividend, split, combination or
reclassification that took effect during such 30 business day period) with
the closing price for each day being the last reported sales price or, in
case no such reported sales took place on such day, the average of the last
reported bid and asked prices, in either case on the principal national
securities exchange on which the Class A Common Stock is listed or admitted
to trading or as reported by Nasdaq (or if the Class A Common Stock is not
at the time listed or admitted for trading on any such exchange or if
prices of the Class A Common Stock are not reported by Nasdaq, then such
price as shall be equal to the average of the last reported bid and asked
prices on such day as reported by The National Quotation Bureau
Incorporated or any similar reputable quotation and reporting service, if
such quotation is not reported by The National Quotation Bureau
Incorporated);
(ii) if clause (i) does not apply, and if the transaction involves the sale
by the Company of securities to unaffiliated third parties (utilizing the
services of an investment banker acceptable to Holder), the applicable per
share price in such transaction; and
(iii) in all other cases as determined in good faith by the Board of
Directors of the Company and approved by the Holder; provided that if the
Holder does not approve such determination by the Board of Directors, the
Fair Market Value shall be determined based on earnings and book value and
other appropriate items in accordance with the following procedure: (A) the
Holder will recommend three qualified, independent appraisers to the
Company; and (B) the Company will select one of the three appraisers (to be
-- 26 --
compensated by the Company) to determine a value, which value will be the
"Fair Market Value". All appraisal costs will be paid by the Company.
For all purposes, the Company and the Holder agree that the Fair Market Value of
the Warrant Rights or Warrant Shares, as the case may be, shall be determined
without any reduction in value for lack of control or the inherent lack of
liquidity of non-public minority interests.
"Formula Price" means the quotient obtained by dividing (i) six (6) times the
Adjusted EBITDA of the Company and its Subsidiaries for the 12-month period
(consisting of full months) immediately preceding the date of the Put Notice, by
(ii) the number of shares of Common Stock Deemed Outstanding (calculated on an
as-converted, fully diluted basis) on the date of the Put Notice.
"Non-Dilutive Price" means the Fair Market Value of a share of Common Stock
immediately prior to the Dilutive Transaction.
"Other Securities" means any stock (other than Class A Common Stock) and other
securities of the Company or any other Person which the Holders at any time
shall be entitled to receive, or shall have received, upon the exercise of the
Warrants, in lieu of or in addition to the Class A Common Stock, or which shall
be issuable or shall have been issued in exchange for or in replacement of Class
A Common Stock or Other Securities pursuant to this Warrant.
"Payment Date" means the date on which all of the Obligations have been
irrevocably paid in full in cash and fully performed and the Loan Documents have
been terminated.
"Per Share Price" means the total Consideration for each share of Class A Common
Stock or Common Stock Equivalent issued or issuable by the Company in connection
with a Dilutive Transaction.
"Public Offering" means any public offering and sale of equity securities by the
Company, which securities are registered under the Securities Act (other than
pursuant to a registration statement on Form S-8 or any successor form), and
which offering and sale is underwritten by a nationally recognized investment
bank.
-- 27 --
"Purchase Price" of one share of Common Stock means the greater of:
(i) the Formula Price as determined on the date of the Put Notice;
(ii) the Fair Market Value of one Warrant Share on the date of the Put
Notice; and
(iii) the gross sale price per share of Common Stock (prior to assumed
liabilities, broker fees and transaction expenses) received in the most
recent or any then current arm's-length Public Offering, Equity Infusion by
any Person who is not an Affiliate of the Company, Value Event or Change of
Control of the Company.
"Put Period" means:
(i) any time after the date hereof and to and through the Expiration Date
that the Company does not have reserved and available for issuance and
delivery upon the exercise of this Warrant such number of its authorized
but unissued shares of Class A Common Stock as will be sufficient to permit
the exercise in full of this Warrant, and
(ii) each period:
(A) commencing on the earlier of:
(w) the maturity and/or acceleration of any Obligations and/or
any Note;
(x) the occurrence of any Event of Default;
(y) the occurrence of a Value Event; and/or
(z) the Payment Date, and
(B) in each such case under this subsection (ii) continuing at all
times until the applicable Put Period Termination Date.
If a Put Period under this subsection (ii) shall have commenced and then
terminated at its applicable Put Period Termination Date, then a new Put
Period shall commence upon the commencement or occurrence of any other
events described in subsections (w) through (z) in the foregoing definition
of Put Period, the intent being that each Put Period shall constitute a
separate and distinct period standing on its own and the Holder shall have
the right to exercise the Put at anytime during each Put Period, regardless
of whether any previous Put Period shall have expired or terminated.
"Put Period Termination Date" as to each Put Period means the earlier of:
(A) the Expiration Date;
(B) the 60th calendar day after the commencement of the Put Period;
and
-- 28 --
(C) the date on which all of the Warrant Shares are transferable
without limitation or restriction by the holder thereof, whether
pursuant to a registration statement or under the provisions of Rule
144 or any similar rule then in effect (but the latter shall apply
only if there is then an active public trading market for the class of
securities constituting the Warrant Shares so that the Warrant Shares
may be sold in a single transaction without negatively affecting the
sale price therefor), at a price per share equal to or greater than
the Purchase Price, provided that if the Company is prevented from
closing the Put for any reason, the Put Period shall be tolled until
such time as the restriction is lifted.
"Registrable Securities" means: (i) all of the shares of Class A Common Stock or
Other Securities now held or hereafter acquired by the Holder, including
(without limitation) shares of Class A Common Stock constituting Warrant Shares,
and (ii) all of the shares of Class A Common Stock issued or issuable, directly
or indirectly, with respect to the securities referred to in clause (i) by way
of a stock dividend or stock split in connection with a combination of shares,
recapitalization or Change of Control. As to any particular Registrable
Securities, such securities will cease to be Registrable Securities upon the
earlier of (a) when they have been registered pursuant to an effective
registration statement under the Securities Act, and registered and qualified
under the securities laws of all applicable states, or (b) at such time as all
of the Registrable Securities of a holder are transferable without limitation or
restriction by the holder thereof in a single brokerage transaction under the
provisions of Rule 144(k) or any similar rule then in effect, but subsection (b)
shall apply only if there is then an active public trading market for the class
of securities constituting the Registrable Securities so that the Registrable
Securities may be sold in a single transaction without negatively affecting the
sale price therefor.
"Value Event" means the date of consummation of any (i) Public Offering, (ii)
Equity Infusion or (iii) Change of Control.
"Warrant" means this Warrant, each New Warrant and each Warrant issued in
replacement or substitution hereof or thereof.
"Warrant Rights" means the right of the Holder to purchase Warrant Shares upon
the exercise hereof, with one Warrant Right equaling the right to purchase one
Warrant Share hereunder.
-- 29 --
"Weighted Average Per Share Value" means the amount determined by performing the
following calculation and rounding the resulting number to the nearest whole
cent: divide:
(i) the sum of:
(a) the Non-Dilutive Price of a Warrant Share multiplied by the
number of shares of Common Stock Deemed Outstanding immediately
prior to the Dilutive Transaction, plus
(b) the aggregate Consideration, if any, received or to be
received by the Company in connection with the Dilutive
Transaction, by
(ii) the number of shares of Common Stock Deemed Outstanding
immediately after the Dilutive Transaction.
-- 30 --