EXHIBIT 4.3
THE SECURITY REPRESENTED BY THIS CERTIFICATE
HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED OR SOLD UNLESS SO
REGISTERED OR UNLESS THE COMPANY IS FURNISHED
WITH AN OPINION OF COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED, AND THAT AN
EXEMPTION THEREFROM IS AVAILABLE.
COMMON STOCK PURCHASE WARRANT
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Date of Issuance: December 11, 1995
Certificate No. A-1
For value received in connection with the Senior Subordinated Loan
Agreement dated as of December 11, 1995 (the "Loan Agreement") by and between
DIVERSIFIED SPECIALISTS, INC., a Texas corporation (the "Company"), and HIBERNIA
CORPORATION, a Louisiana corporation ("Hibernia"), the Company hereby grants to
Hibernia or its registered assigns (the "Registered Holder") the right to
purchase from the Company an aggregate of 388,888 shares of Common Stock of the
Company at a price per share of $2.00 (the "Initial Exercise Price"). Certain
capitalized terms used herein are defined in Section 3 hereof. The amount and
kind of securities purchasable pursuant to the rights granted hereunder and the
purchase price for such securities are subject to adjustment pursuant to the
provisions contained in this Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
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1A. Exercise Period; Expiration; Redemption. (1) The Registered Holder
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may exercise, in whole or in part, the purchase rights represented by this
Warrant at any time and from time to time after the Date of Issuance until 5:00
p.m., New Orleans time, until the tenth anniversary of the date hereof.
(2) Notwithstanding the foregoing, this Warrant if not sooner exercised in
full, will expire simultaneously with the reacquisition by Tommy Moss ("Moss")
of indefeasible ownership of at least 85% of the outstanding common stock of the
Company ("Moss Reacquisition") following a default by the Company in the
indebtedness of the Company to Tommy Moss in the original principal amount of
$21,400,000 ("Moss Loan").
(3) In the event that this Warrant is exercised in whole or in part and
thereafter a Moss Reacquisition occurs, then for a period of thirty days after
the Moss reacquisition, the Company shall have the right to redeem the Common
Stock acquired pursuant to the exercise of this Warrant upon payment to the
Registered Holder of an amount equal to the Exercise Price for the Common Stock
so acquired. The provisions of this subsection (3) shall terminate upon the
repayment in full of the Moss Loan.
1B. Exercise Procedure.
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(i) This Warrant shall be deemed to have been exercised when all of
the following items have been delivered to the Company (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in paragraph 1C
below, executed by the Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth in Exhibit II
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hereto evidencing the assignment of this Warrant to the Purchaser, in which
case the Registered Holder shall have complied with the provision set forth
in Section 5 hereof; and
(d) the product of the Exercise Price (as such term is defined in
the first sentence of Section 2) multiplied by the number of shares of
Common Stock being purchased upon such exercise (the "Aggregate Exercise
Price") payable, at the option of the Purchaser, by either (A) a certified
or official bank check payable to the Company in an amount equal to the
Aggregate Exercise Price, or (B) if, and only if, the Purchaser is the
payee under the Loan Agreement, crediting certain principal payments due
under the Loan Agreement (in the inverse order of maturity) in an amount
equal to the Aggregate Exercise Price.
(ii) Certificates for shares of Common Stock purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within five
business days after the date of the Exercise Time together with any cash payable
in lieu of a fraction of a share pursuant to Section 12 hereof. Unless this
Warrant has expired or all of the purchase rights represented hereby have been
exercised, the Company shall prepare a new Warrant, substantially identical
hereto, representing the rights formerly represented by this Warrant which have
not expired or been exercised and shall, within such five-day period, deliver
such new Warrant to the Person designated for delivery in the Exercise
Agreement.
(iii) The Common Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the Exercise Time, and
the Purchaser shall be
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deemed for all purposes to have become the record holder of such Common Stock at
the Exercise Time.
(iv) The issuance of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
shares of Common Stock; provided, however, that the Company shall not be
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required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance of any Warrants or any certificates for shares of
Common Stock in a name other than that of a Registered Holder, and the Company
shall not be required to issue or deliver such Warrant or certificate for shares
of Common Stock unless and until the Person requesting the issuance thereof
shall have paid to the Company the amount of such tax or shall have established
to the reasonable satisfaction of the Company that such tax has been paid.
(v) The Company shall not close its books against the transfer of
this Warrant or of any share of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant. The Company shall from time to time take all such action as
may be necessary to assure that the par value per share of the unissued Common
Stock acquirable upon exercise of this Warrant is at all times equal to or less
than the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with the Registered
Holder or any Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant. Until all requisite government approvals are received (including,
without limitation, any approvals required under the Bank Holding Company Act of
1956, as amended), this Warrant shall be exercisable only to the extent that
governmental approvals are not required.
(vii) Notwithstanding any other provision hereof, the exercise of any
portion of this Warrant may be made on a conditional basis, and such exercise
shall not be deemed to be effective until the condition has been met.
(viii) The Company shall at all times reserve and keep available out
of its authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the exercise of this Warrant, the aggregate number of shares of
Common Stock issuable upon the exercise of this Warrant. All shares of Common
Stock which are so issuable shall, when issued and upon the payment of the
Exercise Price therefor, be duly and validly issued, fully paid and
nonassessable and free from all taxes (subject to the provisions of paragraph
1B(iv)), liens and charges. The Company shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance). The Company will
use its best efforts to cause the shares of Common Stock issuable upon exercise
of this Warrant,
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immediately upon such exercise, to be listed on any domestic securities exchange
upon which shares of such class of Common Stock are listed at the time of
issuance.
1C. Exercise Agreement. Upon any exercise of this Warrant, the Exercise
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Agreement shall be substantially in the form set forth in Exhibit I hereto,
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except that if the shares of Common Stock are not to be issued in the name of
the Person in whose name this Warrant is registered, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the shares
of Common Stock are to be issued and if less than all of the number of shares of
Common Stock purchasable hereunder are to be so purchased, it shall also state
the name of the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be delivered. Such Exercise Agreement shall be dated the
actual date of execution thereof.
1D. Condition to Exercise of Warrant. Hibernia may exercise the Warrant
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only to the extent that Hibernia does not own, after such exercise, more than
4.9% of the total voting power of all outstanding voting securities of the
Company; provided, however, that this restriction will lapse at such time as
Hibernia transfers the Warrant to a Small Business Investment Company owned by
Hibernia.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to
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prevent dilution of the rights granted under this Warrant, the Initial Exercise
Price shall be subject to adjustment from time to time as provided in this
Section 2 (such price or such price as last adjusted pursuant to the terms
hereof, as the case may be, is herein called the "Exercise Price"), and the
number of shares of Common Stock obtainable upon exercise of this Warrant shall
be subject to adjustment from time to time as provided in this Section 2.
2A. Adjustment of Exercise Price if Common Stock is Issued Below Exercise
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Price. If and whenever on or after the Date of Issuance of this Warrant, the
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Company issues or sells, or in accordance with paragraph 2C is deemed to have
issued or sold, any shares of Common Stock (other than pursuant to a Permitted
Issuance) for a consideration per share less than the Exercise Price, then
immediately upon such issue or sale the Exercise Price shall be reduced to equal
the amount of such consideration per share.
2B. Adjustment of Exercise Price if Common Stock is Issued Below Market
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Value. If and whenever on or after the Date of Issuance of this Warrant, the
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Company issues or sells, or in accordance with paragraph 2C is deemed to have
issued or sold, any shares of Common Stock (other than pursuant to a Permitted
Issuance) for a consideration per share less than the Market Price then in
effect (but greater than the Exercise Price), then immediately upon such issue
or sale the Exercise Price shall be reduced to equal the amount determined by
multiplying the Exercise Price in effect immediately prior to such issue or sale
by a fraction, the numerator of which will be the sum of (x) the number of
shares of Common Stock Deemed Outstanding immediately prior to such issuance or
sale multiplied by the Market Value per share of Common Stock determined as of
the date of such issuance or sale (but without giving effect to such issuance or
sale), plus (y) the consideration, if any, received by the Company upon such
issuance or sale, and the denominator of which will be the product derived by
multiplying such
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Market Value per share of Common Stock by the number of shares of Common stock
Deemed Outstanding immediately after such issuance or sale. If the holder of
this Warrant does not exercise preemptive rights in connection with such
issuance, then, in addition to the foregoing adjustment to the Exercise Price,
the number of shares of Common Stock acquirable upon exercise of this Warrant
shall be adjusted to the number of shares determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. For purposes of this Section 2, the calculation of the number
of shares of Common Stock Deemed Outstanding shall exclude the shares of Common
Stock issuable upon exercise of this Warrant.
2C. Effect on Exercise Price of Certain Events. For purposes of
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determining the adjusted Exercise Price under paragraphs 2A and 2B, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
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grants any rights, options or warrants to subscribe for or to purchase Common
Stock or any evidences of indebtedness, stock or other securities convertible
into or exchangeable for Common Stock (such rights or options being herein
called "Options" and such convertible or exchangeable stock or securities being
herein called "Convertible Securities") 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 is less than the Market Price, or less
than the Exercise Price then in effect, then 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 be outstanding and to have
been issued and sold by the Company for such price per share, unless the
issuance of such shares of Common Stock upon such exercise, conversion or
exchange constitutes a Permitted Issuance. For purposes of this paragraph, the
"price per share for which Common Stock is issuable upon exercise of such
Options or upon conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any, received or receivable by
the Company as consideration for the granting of 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 such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon exercise of such Options
or upon the conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options. No adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Stock or of such Convertible
Securities upon the exercise of such Options or upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
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manner issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon such conversion or exchange is less than the
Market Price or the Exercise Price then in
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effect, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share, unless the issuance of such shares of Common Stock upon such exercise,
conversion or exchange constitutes a Permitted Issuance. For the purposes of
this paragraph, the "price per share for which Common Stock is issuable upon
such conversion or exchange" is determined by dividing (A) the total amount
received or receivable by the Company as consideration for the issue or sale 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 (B) the total maximum number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities. No adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Exercise Price had been or are to be made pursuant to
other provisions of this paragraph 2C, no further adjustment of the Exercise
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If (A) the purchase
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price provided for in any Options, (B) the additional consideration, if any,
payable upon the issue, conversion or exchange of any Convertible Securities, or
(C) the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock shall change at any time, the Exercise Price in
effect at the time of such change shall be readjusted to the Exercise Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may be, at the
time initially granted, issued or sold and the number of shares of Common Stock
shall be correspondingly readjusted; provided that if such adjustment would
result in an increase of the Exercise Price then in effect, such adjustment
shall not be effective until 30 days after written notice thereof has been given
by the Company to the Registered Holder.
(iv) Treatment of Expired Options and Unexercised Convertible
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Securities. Upon the expiration of any Option or the termination of any right
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to convert or exchange any Convertible Securities without the exercise of such
Option or right, the Exercise Price then in effect and the number of shares of
Common Stock acquirable hereunder shall be adjusted to the Exercise Price and
the number of shares which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities never been
issued.
(v) Calculation of Consideration Received. If any Common Stock,
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Options or Convertible Securities are issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be deemed to
be the net amount received by the Company therefor. In case any Common Stock,
Options or Convertible Securities are issued or sold for a consideration other
than cash, the amount of the consideration other than cash received by the
Company shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of consideration
received by the Company shall be the Market Price thereof as of the date of
receipt. In case any Common Stock, Options or
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Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor shall be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or securities
shall be determined jointly by the Company and the Registered Holders of
Warrants representing a majority of the shares of Common Stock obtainable upon
exercise of such Warrants. If such parties are unable to reach agreement within
a reasonable period of time, the value of such consideration shall be determined
by an appraiser jointly selected by the Company and the Registered Holders of
Warrants representing a majority of the shares of Common Stock obtainable upon
exercise of such Warrants. The determination of such appraiser shall be final
and binding on the Company and the registered Holder, and the fees and expenses
of such appraiser shall be paid by the Company.
(vi) Integrated Transactions. In case any Option is issued in
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connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such Options by the parties thereto, the Options shall be deemed to
have been issued for such consideration as shall have been determined jointly by
the Company and the Registered Holders of Warrants representing a majority of
the shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, the
value of such consideration shall be determined by an appraiser jointly selected
by the Company and the Registered Holders of Warrants representing a majority of
the shares of Common Stock obtainable upon exercise of such Warrants. The
determination of such appraiser shall be final and binding on the Company and
the registered Holder, and the fees and expenses of such appraiser shall be paid
by the Company.
(vii) Treasury Shares. The number of shares of Common Stock
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outstanding at any given time does not include shares owned or held by or for
the account of the Company or any Subsidiary, and the disposition of any shares
so owned or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Company takes a record of the holders of
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Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (B) 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 or
sale 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.
2D. Subdivision or Combination of Common Stock. If the Company at any
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time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares or pays a dividend or makes a distribution to holders
of its Common Stock of shares of Common Stock, the
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Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of shares of Common Stock obtainable upon
exercise of this Warrant shall be proportionately increased. If the Company at
any time combines (by reverse stock split or otherwise) one or more classes of
its outstanding shares of Common Stock into a small number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of shares of Common Stock obtainable
upon exercise of this Warrant shall be proportionately decreased.
2E. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
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recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets to another Person or other
transaction which is effected in such a way that holders of Common Stock are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock is referred
to herein as a "Company Sale." Prior to the consummation of any Company Sale,
the Company shall make appropriate provision (in form and substance satisfactory
to the Registered Holders of the Warrants representing a majority of the Common
Stock obtainable upon exercise of all Warrants then outstanding) to insure that
each of the Registered Holders of the Warrants shall thereafter have the right
to acquire and receive in lieu of or addition to (as the case may be) the shares
of Common Stock immediately theretofore acquirable and receivable upon the
exercise of such holder's Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for the number of shares
of Common Stock immediately theretofore acquirable and receivable upon exercise
of such holder's Warrant had such Company Sale not taken place. In any such
case, the Company shall make appropriate provision (in form and substance
satisfactory to the Registered Holders of the Warrants representing a majority
of the Common Stock obtainable upon exercise of all Warrants then outstanding)
with respect to such holders' rights and interest to insure that the provisions
of this Section 2 and Section 3 hereof shall thereafter be applicable to the
Warrants (including, in the case of any such consolidation, merger or sale in
which the successor entity or purchasing entity is other than the Company, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon exercise of the Warrants, if the value so
reflected is less than the Exercise Price in effect immediately prior to such
consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from a consolidation or
merger or the corporation purchasing such assets assumes by written instrument
(in form and substance satisfactory to the Registered Holders of Warrants
representing a majority of the Common Stock obtainable upon exercise of all of
the Warrants then outstanding), the obligation to deliver to each such holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
2F. Certain Events. If any event occurs of the type contemplated by the
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provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity
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features but excluding any Permitted Issuance), then the Company's board of
directors shall make an appropriate adjustment in the Exercise Price and the
number of shares of Common Stock obtainable upon exercise of this Warranty so as
to protect the rights of the holders of the Warrants; provided that no such
adjustment shall increase the Exercise Price or decrease the number of shares of
Common Stock obtainable as otherwise determined pursuant to this Section 2.
2G. Notices.
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(i) Immediately upon adjustment of the Exercise Price, the Company
shall give written notice thereof to the Registered Holders, setting forth in
reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered Holders
at least 30 days prior to the date on which the Company closes its books or
takes a record (A) with respect to any dividend or distribution upon the Common
Stock, (B) with respect to any pro rata subscription offer to holders of Common
Stock or (C) for determining rights to vote with respect to any Company Sale,
dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holders at least 30 days prior to the date on which any Company Sale,
dissolution or liquidation shall take place.
2H. Liquidating Dividends. If the Company declares or pays a
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dividend upon the Common Stock payable otherwise than in cash out of earnings or
earned surplus (determined in accordance with generally accepted accounting
principles, consistently applied) except for a stock dividend payable in shares
of Common Stock (a "Liquidating Dividend"), then the Company shall, at least
thirty (30) days prior to the record date established for such Liquidating
Dividend, give notice to the Registered Holders of this Warrant, which notice
shall specify the occurrence and the amount of the Liquidating Dividend per
share, the type of securities and other property to be included in such
Liquidating Dividend and the record and payment dates for such Liquidating
Dividend.
Section 3. Definitions. The following terms have the meanings set forth
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below:
"Affiliate", as applied to any Person, means (a) any other Person directly
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or indirectly controlling, controlled by or under common control with, that
Person, (b) any other Person that owns or controls (i) 5% or more of any class
of equity securities of that Person or any of its Affiliates or (ii) 5% or more
of any class of equity securities (including any equity securities issuable upon
the exercise of any option or convertible security) of that Person or any of its
Affiliates, or (c) any director, partner, officer, agent, employee or relative
of such Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with") as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the
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management and policies of that Person, whether through ownership of voting
securities or by contract or otherwise.
"Common Stock" means the Company's Common Stock and any capital stock of
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any class of the Company hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of the holders
thereof to participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company; provided that if there is
a change such that the securities issuable upon exercise of the Warrants are
issued by an entity other than the Company or there is a change in the class of
securities so issuable, then the term "Common Stock" shall mean one share of the
security issuable upon exercise of the Warrants if such security is issuable in
shares, or shall mean the smallest unit in which such security is issuable if
such security is not issuable in shares.
"Common Stock Deemed Outstanding" means, at any given time, the number of
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shares of Common Stock actually outstanding at such time, plus the number of
shares of Common Stock deemed to be outstanding pursuant to Section 2 hereof.
"Market Price" means as to any security the average of the closing prices
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of such security's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted
Stock Market as of 4:00 P.M., New York time, on such day, or, if on any day such
security is not traded on the Stock Market, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which "Market Price" is being determined and the 20
consecutive business days prior to such day; provided that if such security is
listed on any domestic securities exchange the term "business days" as used in
this sentence means business days on which such exchange is open for trading.
If at any time such security is not listed on any domestic securities exchange
or traded on the Stock Market or the domestic over-the-counter market, the
"Market Price" shall be the fair value thereof as determined jointly by the
Company and the Registered Holders of Warrants representing a majority of the
shares of Common Stock obtainable upon exercise of such Warrants. If such
parties are unable to reach agreement within a reasonable period of time, the
value of such consideration shall be determined by an appraiser jointly selected
by the Company and the Registered Holders of Warrants representing a majority of
the shares of Common Stock obtainable upon exercise of such Warrants. The
determination of such appraiser shall be final and binding on the Company and
the registered Holder, and the fees and expenses of such appraiser shall be paid
by the Company. The value of such consideration shall be determined without
giving effect to any discount for minority interest, any restrictions on
transferability or any lack of liquidity of the Common Stock or to the fact that
the Company has no class of equity registered under the Securities Exchange Act
of 1934.
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"Permitted Issuance" means the issuance by the Company of shares of Common
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Stock (a) on or prior to the Date of Issuance of this Warrant; (b) upon exercise
of this Warrant; (c) upon the conversion or exchange of any shares of any class
of Common Stock into a different class of Common Stock; and (d) in connection
with any dividend or distribution to the holders of Common Stock.
"Person" means an individual, a partnership, a joint venture, a
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corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"Registered Holders" means, collectively, the Registered Holder specified
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in the first paragraph of this Warrant and each holder of a Warrant, if any,
registered as such on the books of the Company in accordance with the provision
of Section 11 hereof.
"Restricted Common Stock" means shares of Common Stock which are, or which
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upon their issuance on the exercise of this Warrant would be, evidenced by a
certificate bearing one or more legends referred to in Section 3 hereof.
Section 4. No Voting Rights; Limitations of Liability. This Warrant shall
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not entitle the holder hereof to any voting rights or other rights as a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Registered Holder to purchase Common Stock, and no enumeration
herein of the rights or privileges of the Registered Holder shall give rise to
any liability or such holder for the Exercise Price of Common Stock acquirable
by exercise hereof or as a stockholder of the Company.
Section 5. Restrictions. Subject to the provisions of this Section 5,
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this Warrant and all rights hereunder are transferable, in whole or in part,
without charge to the Registered Holder (subject to the provisions of paragraph
1B(iv) hereof), upon surrender of this Warrant with a properly executed
Assignment (in the form of Exhibit II hereto) at the principal office of the
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Company. The Registered Holder agrees that it will not sell, transfer or
otherwise dispose of this Warrant or any shares of Common Stock purchased upon
exercise of this Warrant, in whole or in part, except pursuant to an effective
registration statement under the Securities Act of 1933 or an exemption from
registration thereunder. The Company shall cooperate with Hibernia in providing
information and executing forms reasonably required by Hibernia to assign this
Warrant to a qualified and licensed small business investment company owned by
Hibernia.
Section 6. Warrant Exchangeable for Different Denominations. This Warrant
------------------------------------------------
is exchangeable upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. The date the Company initially issues this
Warrant shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and unexercised
rights formerly represented by this Warrant shall be issued. All Warrants
representing portions of the rights hereunder are referred to herein as the
"Warrants."
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Section 7. Replacement. Upon receipt of evidence reasonable satisfactory
-----------
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Company (provided that
if the holder is a financial institution or other institutional investor its own
agreement shall be satisfactory) or, in the case of any such mutilation upon
surrender of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind representing
the same rights represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 8. Notices. Except as otherwise expressly provided herein, all
-------
notices and deliveries referred to in this Warrant shall be in writing and shall
be delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or sent via a nationally recognized overnight
courier service and shall be deemed to have been given when so delivered,
deposited in the U.S. Mail or sent (i) to the Company, at its principal
executive offices and (ii) to the Registered Holder of this Warrant, at such
holder's address as it appears in the records of the Company (unless otherwise
indicated by any such holder).
Section 9. Amendment and Waiver. Except as otherwise provided herein, the
--------------------
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Registered
Holders of Warrants representing a majority of the shares of Common Stock
obtainable upon exercise of the Warrants; provided that no such action may
change the Exercise Price of the Warrants or the number of shares or class of
stock obtainable upon exercise of the Warrants without the written consent of
the Registered Holders of Warrants representing at least 75% of the shares of
Common Stock obtainable upon exercise of the Warrants.
Section 10. Descriptive Headings; Governing Law. The descriptive headings
-----------------------------------
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. This Warrant
shall be governed and construed in accordance with the laws of the state of
Texas applicable to a contract executed and performed in such state without
giving effect to the conflicts of laws principles thereof.
Section 11. Warrant Register. The Company shall maintain at its principal
----------------
executive offices books for the registration and, subject to the provisions of
Section 5 hereof, the registration of transfer of this Warrant. The Company may
deem and treat the Registered Holder as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone) for all purposes and shall not be affected by any notice to the
contrary.
Section 12. Fractions of Shares. The Company may, but shall not be
-------------------
required to, issue a fraction of a share of Common Stock upon the exercise of
this Warrant in whole or in part. As to any fraction of a share which the
Company elects not to issue, the Company shall make
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a cash payment in respect of such fraction in an amount equal to the same
fraction of the Market Price on the date of such exercise.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
and attested by its duly authorized officers under its corporate seal and to be
dated the Date of Issuance hereof.
DIVERSIFIED SPECIALISTS, INC.
By /s/ M.D. Davis
------------------------------
Name: M.D. Davis
Title: CEO
Attest:
/s/ Thomas V. Yarnell
- -----------------------------
Name: Thomas V. Yarnell
Title: Secretary
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EXHIBIT I
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. _________), hereby agrees to subscribe for the purchase
of _________ shares of Common Stock covered by such Warrant and makes payment
herewith in full therefor at the price per share provided by such Warrant.
Please issue a certificate for such shares of Common Stock in the name of, and
pay any cash in lieu of fractional shares to:
Name________________________________
Signature___________________________
Address_____________________________
NOTE: The name should correspond exactly with the name on
the face of the Warrant or the name of the assignee
appearing in the accompanying assignment form.
If such number of shares of Common Stock is not all of the shares purchasable
under the attached Warrant, a new Warrant is to be issued in the name appearing
above covering the balance of the shares purchasable thereunder, less any
fraction of a share paid in cash.
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EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, _________________________________ hereby sells,
assigns and transfers all the rights of the undersigned under the attached
Warrant (Certificate No. _____) with respect to the number of shares of the
Common Stock covered thereby set forth below, unto:
Names of Assignees Address No. of Shares
- ------------------ ------- -------------
and hereby irrevocably constitutes and appoints ______________________ as agent
and attorney-in-fact to transfer said Warrant on the books of the within named
corporation, with full power of substitution in the premises.
Dated: Signature ___________________________
___________________________
Witness ___________________________
NOTE: The above signature must correspond exactly
with the name on the face of the attached Warrant.
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