EXHIBIT 4.7
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of July 11, 1997,
is made and entered into by and among Optel, Inc., a Delaware corporation (the
"Company"), and Rory O. Cole (the "Warrantholder"). This Agreement is being
executed in connection with the Separation Agreement of even date herewith by
and between the Company and the Warrantholder (the "Separation Agreement").
The Company agrees, in consideration of the Warrantholder's entering
into the Separation Agreement, to issue and sell, and the Warrantholder, by
entering into the Separation Agreement, will receive warrants, as hereinafter
described (the "Warrants"), to purchase up to 9,406.36 shares (the "Shares"), of
the Company's Class A Common Stock, par value $.01 per share (the "Common
Stock"). The Purchase and sale of the Warrants shall occur contemporaneous with,
and is subject to the closing of the Separation Agreement.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby agree
as follows:
Section 1. Transferability and Form of Warrants.
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1.1. Registration. The Warrants shall be numbered and shall
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be registered on the books of the Company when issued.
1.2. Certain Limitations on Transfer. The Warrants and the
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Shares shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this Agreement. The Warrants may not be transferred
voluntarily and may only be transferred upon death, either by will or
intestacy law, or otherwise by operation of law and only then if such
transfer is made in accordance with the terms of this Agreement. The
Warrantholder will cause any proposed purchaser, assignee, transferee or
pledgee of the Warrants or the Shares, except for transferees in
dispositions of Shares that are pursuant to an effective registration
statement under the Act (as defined herein) or transferees in dispositions
of Shares occurring after an IPO (as defined herein) pursuant to Rule 144
under the Securities Act of 1933, as amended (the "Act"), to agree to take
and hold such securities subject to the provisions and upon the conditions
specified in this Agreement. The Warrants may be divided or combined, upon
request to the Company by the Warrantholder into a certificate or
certificates representing the right to purchase the same aggregate number
of Shares. Unless the context indicates otherwise, the term "Warrantholder"
shall include any transferee or transferees of the Warrants or the Shares
that is required to be bound by the terms hereof, and the term "Warrants"
shall include any and all warrants outstanding pursuant to this Agreement,
including those evidenced by a certificate or certificates issued upon
division,
exchange, transfer or substitution pursuant to this Agreement. The Company
may refuse to effect the transfer of the Warrants until the transferee of
the Warrants executes a counterpart to this Agreement and it shall be a
condition to any transfer that the transferee execute and deliver to the
Company a separate certificate that contains the representations and
covenants in Section 11 hereof. The Warrantholder, by his receipt of a
Warrant Certificate, agrees to be bound by and to comply with the terms of
this Agreement. The Warrantholder represents and agrees that the Warrant
(and Shares if the Warrant is exercised) is purchased only for investment,
for the Warrantholder's own account and without any present intention to
sell, or with a view to distribution ot the Warrant or Shares.
1.3. Form of Warrants. The text of the Warrants and of the
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form of election to purchase Shares shall be substantially as set forth in
Exhibit A attached hereto. The number of Shares issuable upon exercise of
the Warrants is subject to adjustment upon the occurrence of certain
events, all as hereinafter provided. The Warrants shall be executed on
behalf of the Company by its President or by a Vice President, attested to
by its Secretary or an Assistant Secretary. A Warrant bearing the signature
of an individual who was at any time the proper officer of the Company
shall bind the Company, notwithstanding that such individual shall have
ceased to hold such office prior to the delivery of such Warrant or did not
hold such office on the date of this Agreement.
The Warrants shall be dated as of the date of signature
thereof by the Company either upon initial issuance or upon division,
exchange, transfer or substitution.
1.4. Legend on Warrants. Each Warrant Certificate shall bear
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the following legend:
(a) "THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECRRITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW. SUCH WARRANTS MAY NOT BE SOLD OR TRANSFERRED UNLESS
REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS AND UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER REASONABLY ACCEPTABLE TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE WARRANT AGREEMENT COVERING THE PURCHASE OF THESE
WARRANTS AND IMPOSING VARIOUS REQUIREMENTS, INCLUDING WITHOUT
LIMITATION PROVISIONS RESTRICTING THEIR TRANSFER, MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION."; and
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(b) any legend required by applicable state securities
law.
Any certificate issued at any time in exchange or substitution
for any Warrant certificate bearing such legends shall also bear the above
legends unless, in the opinion of the Company's counsel, the securities
represented thereby need no longer be subject to such restrictions. The
Warrantholder consents to the Company's making a notation on his records
and giving instructions to any registrar or transfer agent of the Warrants
in order to implement the restrictions on transfer established in this
Agreement.
Section 2. Exchange of Warrant Certificate. Any Warrant
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certificate may be exchanged for another certificate or certificates entitling
the Warrantholder to purchase a like aggregate number of Shares as the
certificate or certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in wriring delivered to the Company, and shall surrender,
properly endorsed, with signatures guaranteed, the certificate evidencing the
Warrant to be so exchanged. Thereupon, the Company shall execute and deliver to
the person entitled thereto a new Warrant certificate or certificates as so
requested.
Section 3. Term of Warrants: Exercise of Warrants.
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(a) Subject to the terms of this Agreement, the
Warrantholder shall have the right, at any time and from time to time
during the period commencing on the Waiver Effective Date (as such
term is defined in the Separation Agreement), and ending at 5:00 p.m.
Dallas, Texas time, on July 11, 2002 (the "Termination Date"), to
purchase from the Company up to the number of fully paid and
nonassessable Shares to which the Warrantholder may at the time be
entitled tS purchase pursuant to this Agreement, upon surrender to the
Company, at its principal office, of the certificate evidencing the
Warrants to be exercised, together with the purchase form on the
reverse thereof duly filled in and signed, with signatures guaranteed,
and upon payment to the Company of the Warrant Price (as defined in
and determined in accordance with the provisions of this Section 3 and
Sections 7 and 8 hereof), but in no event for less than 1,000 Shares
(subject to appropriate adjustment for any stock split,
recapitalization or similar event) for any Warrantholder (unless less
than an aggregate of 1,000 Shares (subject to appropriate adjustment
for any stock split, recapitalization or similar event) are then
purchasable under all outstanding Warrants held by a Warrantholder.
The Warrants shall be exercisable, at the election of the
Warrantholder, either in full or from time to time (subject to the
other provisions in this Section) in part and, in the event of a
certificate evidencing the Warrants is exercised in respect of less
than all of the Shares specified therein at any time prior to the
Termination Date, a new certificate evidencing the remaining portion
of the Warrants held by the Warrantholder will be issued by the
Company. It shall be a condition to exercise that the Warrantholder
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execute and deliver a certificate to the Company containing the
representations and covenants set forth in Section 11 hereof which
certificate must state that such representations and warranties are
true and correct. If the Waiver Effective Date does not occur, then
this Agreement will be terminated without further obligation by
either parry.
(b) Payment by each Warrantholder of the aggregate
Warrant Price due from him shall be made
(i) in cash or by immediately available funds,
check, or any combination thereof; or
(ii) by means of a "Cashless Exercise". In the
event of a Cashless Exercise, the Warrantholder shall exchange
its Warrant for such number of shares of Common Stock determined
by multiplying the number of Shares by a fraction, the numerator
of which shall be the difference between the then-current market
price per share of Common Stock and the Warrant Price, and the
denominator of which shall be the then-current market price per
share of Common Stock. For purposes of this Section the "then
current market price per share of Common Stock" at any date shall
be deemed to be (a) if the Common Stock is not traded on an
established securities market, the fair market value of the
Common Stock as determined in good faith by the Board of
Directors of the Company, which determination shall be conclusive
and binding on the Warrantholder, and (b) if the Common Stock is
traded on an established securities market, the average of the
daily closing prices for 20 consecutive trading days commencing
30 trading days before such date. The closing price for each day
shall be the last sales price regular way or, in case no such
reported sales take place on such day, the average of the last
reported bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock
is admitted to trading or listed or, if not listed or admitted to
trading on any such exchange, on NASDAQ, or if closing prices are
not quoted on NASDAQ, the representative closing bid price as
reported by NASDAQ or by another similar organization if NASDAQ
is no longer reporting such information.
(c) Upon such surrender of the Warrants and payment of
such Warrant Price as aforesaid, the Company shall issue and cause to
be delivered to or upon the written order of the exercising
Warrantholder and in such name or names as the exercising
Warrantholder may designate (which in no way shall limit the transfer
restrictions hereunder) a certificate or certificates for the number
of full Shares so purchased upon the exercise of his Warrant, together
with cash, as provided
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in Section 9 hereot, in respect of any fractional Shares otherwise
issuable upon such surrender. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such
securities as of the date of surrender of the Warrants and payment of
the Warrant Price, as aforesaid, notwithstanding that the certificate
or certificates representing such securities shall not actually have
been delivered or that the stock transfer books of the Company shall
then be closed.
Section 4. Payment of Taxes. The Company will pay all documentary
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stamp taxes, if any, attributable to the initial issuance of the Warrants or the
securities comprising the Shares; provided, however, the Company shall not be
required to pay any tax which may be payable in respect of any secondary
transfer of the Warrants or of the securities comprising the Shares.
Section 5. Mutilated or Missing Warrants. In case the certificate
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or certificates evidencing the Warrants shall be mutilated, lost, stolen or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount at the applicant's cost. Applicants for such
substitute Warrant certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
Section 6. Reservation of Shares. There has been reserved, and the
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Company shall at all times keep reserved so long as the Warrants remain
outstanding, out of its authorized Common Stock, such number of shares of Common
Stock as shall be subject to purchase under the Warrants.
Section 7. Warrant Price. The price per Share at which Shares
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shall be purchasable upon the exercise of the Warrants (the "Warrant Price")
shall be $74.42, subject to adjustment as provided in this Agreement.
Section 8. Adjustment of Number of Shares and Warrant Price. The
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number and kind of securities purchasable upon the exercise of the Warrants and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
8.1. Adjustments. The number of Shares purchasable upon the
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exercise of the Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in
Common Stock or make a distribution in Common Stock, (ii) subdivide
its outstanding Common Stock, (iii) combine its outstanding Common
Stock into a smaller number
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of shares of Common Stock or (iv) issue by reclassification of its
Common Stock other securities of the Company, the number of Shares
purchasable upon exercise of the Warrants immediately prior thereto
shall be adjusted so that the Warrantholder shall be entitled to
receive the kind and number of Shares or other securities of the
Company which it would have owned or would have been entitled to
receive immediately after the happening of any of the events described
above had the Warrants been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subsection 8.1(a) shall become
effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) No adjustment in the number of Shares purchasable
pursuant to the Warrants shall be required unless such adjustment
would require an increase or decrease of at least five percent in the
number of Shares then purchasable upon the exercise of the Warrants;
provided, however, that any adjustments which by reason of this
subsection 8.l(b) are not required to be made immediately shall be
carried forward and taken into account in any subsequent adjustment.
(c) Whenever the number of Shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Warrant
Price payable upon exercise of the Warrant shall be adjusted by
multiplying such Warrant Price immediately prior to such adjustment by
a fraction, of which the numerator shall be the number of Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment and of which the denominator shall be the number of Shares
so purchasable immediately thereafter.
(d) Whenever the number of Shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company
shall cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment and a certificate of
the chief financial officer of the Company setting forth the number of
Shares purchasable upon the exercise of the Warrants after such
adjustment, a brief statement of the facts requiring such adjustment
and the computation by which such adjustment was made.
(e) For the purpose of this Section 8.1, the term
"Common Stock" shall mean (i) the class of stock designated as the
Class A Common Stock of the Company at the date of this Agreement or
(ii) any other class of stock resulting from successive change or
reclassifications of such Common Stock consisting solely of changes in
par value, or from par value to no par value, or from no par value to
par value. In the event that at any time, as a result of an adjustment
made pursuant to this Section 8, the Warrantholder shall become
entitled to purchase any securities of the Company other than Common
Stock, thereafter the number of such other securities so purchasable
upon exercise of the Warrants shall be subject to adjustment
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from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Shares contained in
this Section 8.
8.2. No Adjustment for Certain Matters. During the term of
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the Warrants or upon the exercise of the Warrants, no adjustment shall be
made (i) in respect of any dividends or distributions, except as
specifically provided in subsection 8.1(a) or (ii) in respect of the
consummation of any dissolution, liquidation or winding up of the Company
or a consolidation, merger, share exchange or similar business combination
or sale of its property, assets and business as an entirety or
substantially as an entirety. Without limiting the generality of the
foregoing, the Company shall have no obligation to cause any purchaser or
successor by merger, sale of assets or similar business combination to
assume the obligations under this Agreement. If, however, at any time prior
to the expiration of the Warrants and prior to their exercise, a merger or
similar business combination shall be proposed, and the purchaser shall not
have agreed to assume the obligations under this Agreement, then the
Company shall give notice in writing of such event to the Warrantholder, as
provided in Section 12 hereof, promptly prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to vote on such proposed merger or business
combination in order to provide the Warrantholder an opportunity to
exercise the Warrant. Without limiting any claim for damages that a
Warrantholder might have for breach by the Company of its obligations under
the immediately preceding sentence, failure to mail or receive such notice
or any defect therein shall not affect the validity of any action taken
with respect to the merger or business combination.
8.3. Statement on Warrant Certificates. Irrespective of any
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adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to
express the same number of securities as are stated in the similar Warrant
certificates initially issuable pursuant to this Agreement. However, the
Company may, at any time in its sole discretion (which shall be
conclusive), make any change in the form of Warrant certificate that it may
deem appropriate and that does not affect the substance thereof; and any
Warrant certificate thereafter issued, whether upon registration or
transfer of, or in exchange or substitution for, an outstanding Warrant
certificate, may be in the form so changed.
Section 9. Fractional Interests: Fair Value. The Company shall not be
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required to issue fractional Shares on the exercise of the Warrants. If any
fraction of a Share would, except for the provisions of this Section 9, be
issuable on the exercise of the Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the then Fair Value of the Common
Stock multiplied by such fraction. As used herein, the term "Fair Value" of the
Common Stock or other Securities or other property shall mean the fair value as
determined in good faith by the Company's Board of Directors, which
determination shall be binding upon the Warrantholder; provided, however, that
after the closing date of an initial public offering of Common Stock pursuant to
a registration statement filed with and declared effective by the SEC (an
"IP0"), Fair Value of the
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Common Stock for any day shall mean the last sales price, regular way, on such
day or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, on such day, in either case as reported in
the principal transaction reporting system with respect to securities listed or
admitted to trading on the principal national securities exchange on which such
security is listed or admitted to trading, or, if such security is not listed or
admitted to trading on any national securities exchange but sales price
information is reported for such security, as reported by The Nasdaq Stock
Market ("Nasdaq") National Market or such other self-regulatory organization or
registered securities information processor (as such terms are used under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) that then
reports information concerning such security, or, if sales price information is
not so reported, the average of the high bid and low asked prices in the over-
the-counter market on such day, as reported by Nasdaq or such other entity, or,
if on such day such security is not quoted by any such entity, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in such security selected by the Board of Directors of the
Company. If on such day no market maker is making a market in such security, the
fair value of such security on such day as determined in good faith by the Board
of Directors of the Company shall be used and such determination shall be
conclusive and binding on the Warrantholder and his transferees.
Section 10. No Right as Stockholder: No Notices to Warrantholder.
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Nothing contained in this Agreement or in the Warrants shall be construed as
conferring upon the Warrantholder or his transferees any rights as a stockholder
of the Company, including the right to vote, receive dividends, call meetings,
consent or receive notices as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or any other matter or
imposing any fiduciary or other duty on the Company, its officers or directors,
in favor of the Warrantholder, all of which rights and duties are expressly
disclaimed and waived by the Warrantholder.
Section 11. Securities Laws: Restrictions on Transfer of Shares:
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Registration Rights.
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11.1.
(a) Compliance with Securities Act. The Warrantholder
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agrees that this Warrant and the related Shares (each of the Warrant
and the Shares being referred to herein as a "Security" and together,
"Securities") are being acquired for investment and that such
Warrantholder will not purchase, offer, sell or otherwise dispose of
any of the Securities except under circumstances which will not result
in a violation of the Act. in order to exercise this Warrant, the
Warrantholder must be able to confirm and shall confirm in writing, by
executing a certificate to be supplied by the Company, all of the
representations and other covenants contained in this Agreement,
including that the Securities so purchased are being acquired for
investment and not with a view toward distribution or resale. The
Securities (unless registered under the Act) shall be stamped or
imprinted with, in addition to any other appropriate or required
legend, a legend in substantially the following form:
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"THE SECURITIES EVIDENCED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED UNLESS REGISTERED OR QUALIFIED
UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE CORPORATION
RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER, REASONABLY SATISFACTORY TO THE
CORPORATION, STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID
ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SECURITIES THAT RESTRICT
THEIR TRANSFER AND PROVIDE, FOR CERTAIN
VOTING AGREEMENTS AND RIGHTS OF FIRST
REFUSAL MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION."
Any certificate for Shares issued at any time in exchange
or substitution for any certificate bearing such legends (except a new
certificate issued to a transferee upon completion of a public
distribution pursuant to a registration statement under the Act or
upon completion of a sale occurring after an IP0 under Rule 144 under
the Act of the securities represented thereby) shall also bear the
above legends unless, in the opinion of the Company's counsel, the
securities represented thereby need no longer be subject to such
restrictions. The Warrantholder consents to the Company making a
notation on his records and giving instructions to any registrar or
transfer agent of the Common Stock in order to implement the
restrictions on transfer established in this Agreement.
In addition, the Warrantholder specifically represents to
the Company both at the time of initial purchase of the Warrant and at
those future times as specified herein:
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(i) Prior to entering into the Separation Agreement,
the original Warrantholder was the Chief Operating Officer of
the Company. The Warrantholder has experience in analyzing and
investing in companies like the Company and is capable of
evaluating the merits and risks of an investment in the Company
and has the capacity to protect his own interests. The
Warrantholder is an "Accredited Investor" as that term is
defined in Rule 501(a) promulgated under the Act. The
Warrantholder is aware of the Company's business affairs and
financial condition, and has acquired information about the
Company sufficient to reach an informed and knowledgeable
decision to acquire the Securities. The Warrantholder is
acquiring the Securities for his own account for investment
purposes only not as a nominee or agent and not with a view to,
or for the resale in connection with, any "distribution" thereof
for purposes of the Act. The Warrantholder is acquiring the
Securities for investment for his own account, not as a nominee
or agent, and not with a view to, or for resale in connection
with, any distribution thereof. The Warrantholder acknowledges
the Company has no obligation to include the Shares in any
registration statements, the effectiveness of which registration
statements may be required for the resale of the Shares. Without
limiting the generality of the preceding sentences of this
Section, the Warrantholder has not offered or sold any portion
of the Securities to be acquired by such Warrantholder and has
no present intention of reselling or otherwise disposing of any
portion of such Securities either currently or after the passage
of a fixed or determinable period of time or upon the occurrence
or nonoccurrence of any predetermined event or circumstance. The
Warrantholder understands that investment in the Securities is
subject to a high degree of risk. The Warrantholder can bear the
economic risk of his investment, including the full loss of his
investment, and by reason of his business or financial
experience or the business or financial experience of his
professional advisors has the capacity to evaluate the merits
and risks of his investment and protect his own interest in
connection with the purchase of the Securities. The
Warrantholder represents that he does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the Securities. If other than an
individual, the Warrantholder also represents he has not been
organized for the purpose of acquiring the Securities. The
Warrantholder's purchase is not and will not be part of a plan
or scheme to evade the registration requirements of the Act.
(ii) The Warrantholder understands that the Securities
have not been and will not be registered under the Act or any
applicable state securities law in reliance upon a specific
exemption therefrom, which exemption depends upon, among other
things, the bona fide nature of the Warrantholder's investment
intent as expressed herein and the accuracy of the
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Warrantholder's representations as expressed herein and the
Warrantholder will furnish the Company with such additional
information as is reasonably requested by the Company in
connection with such exemption.
(iii) The Warrantholder further understands that the
Securities must be held indefinitely unless subsequently
registered under the Act and any applicable state securities
laws, or unless exemptions from registration are otherwise
available. Moreover, the Warrantholder understands that the
Company is under no obligation to and does not expect to
register the Securities.
(iv) The Warrantholder is aware of the provisions of
Rule 144, promulgated under the Act, which, in substance, permit
limited public resale of "restricted securities" acquired,
directly or indirectly, from the issuer thereof (or from an
affiliate of such issuer), subject to the satisfaction of
certain conditions, if applicable, including, among other
things: the availability of certain public information about the
Company; the resale occurring not less than one year after the
party has purchased and paid for the securities to be sold; the
sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as
said term is defined under the Exchange Act); and the amount of
securities being sold during any three-month period not
exceeding the specified limitations stated therein.
(v) The Warrantholder further understands that at the
time he wishes to sell the Securities, it is possible that there
will be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may
not be satisfying the current public information requirements of
Rule 144, and that, in such event, the Warrantholder may be
precluded from selling the Securities under Rule 144 even if the
minimum holding period had been satisfied.
(vi) The Warrantholder further understands that in the
event all of the requirements of Rule 144 are not satisfied,
registration under the Act or compliance with registration
exemption will be required; and that, notwithstanding the fact
that Rule 144 is not exclusive, the Staff of the SEC has
expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and
otherwise than pursuant to Rule 144 will have a substantial
burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that
such persons and their respective brokers who participate in
such actions do so at their own risk.
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(vii) The Warrantholder has had a reasonable
opportunity to ask questions relating to the Company's business,
management and financial affairs with the Company's management,
customers and other parties, and the Warrantholder has received
satisfactory responses to the Warrantholder's inquiries. The
Warrantholder is not, and has not been within the ninety (90)
days prior to the closing date of the purchase of the
Securities, a broker or dealer of securities. To the best of his
knowledge, (i) the Warrantholder was contacted regarding the
sale of the Securities by a person or entity with whom the
Warrantholder had a prior relationship and (ii) no securities
were offered or sold to him by means of any form of general
solicitation or general advertising, and in connection therewith
the Warrantholder: did not (A) receive or review any
advertisement, article, notice or other communication published
in a newspaper or magazine or similar media or broadcast over
television or radio, whether closed circuit or generally
available; or (B) attend any seminar, meeting or industry
investor conference whose attendees were invited by any general
solicitation or general advertising.
11.2 Disposition of Securities. There shall be no transfer of
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Warrants except for transfer at death as set forth in Section 1.2. The
transferee any Warrants must give notice to the Company of such transfer. With
respect to any offer, sale or other disposition of any Securities that are not
registered under the Act, the Warrantholder hereof agrees to give written notice
to the Company prior thereto, describing briefly the manner thereof together
with a written opinion of such Warrantholder's counsel to the effect that such
offer, sale or other disposition may be effected without registration or
qualification (under the Act as then in effect or any federal or state law then
in effect) of such Securities and indicating whether or not under the Act,
certificates for the Securities in question to be sold or otherwise disposed of
require any restrictive legend as to applicable restrictions on transferability
in order to ensure compliance with such law. Such opinion and such counsel must
be satisfactory to the Company in its reasonable judgment and such opinion
shall state that it may be relied upon by counsel to the Company, and any stock
exchange or transfer agent. Promptly upon receiving such written notice and
satisfactory opinion, if so requested, the Company shall notify such
Warrantholder that such Warrantholder may sell or otherwise dispose of such
Securities, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this subsection (b) that
the opinion of counsel for the Warrantholder is not satisfactory to the Company,
the Company shall so notify the Warrantholder promptly after such determination
has been made and shall specify in detail the legal analysis supporting any such
conclusion. Each certificate representing the Securities thus transferred
(except a transfer registered under the Act or a transfer of Shares, occurring
after an IP0, pursuant to Rule 144) shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with such laws,
unless in the aforesaid opinion of counsel for the Warrantholder, such legend is
not required in order to ensure compliance with such laws. The Company may issue
stop transfer instructions to its transfer agent in connection with such
restrictions. Notwithstanding the
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foregoing provisions of this Section 11.2, the Warrantholder agrees that
transfers may further be subject to Section 11.3 and Appendix I.
11.3 Restrictions on Transfer and Repurchase and Sale Rights. The
-------------------------------------------------------
Warrantholder agrees that, in the event the Warrant is exercised prior to an
IPO, the Warrantholder will be subject to the terms and provisions of Appendix I
attached hereto and made a part hereof, which imposes restrictions on the
transfer of the Shares acquired upon exercise of the Warrant. The Warrantholder
further agrees that, in the event the Warrant is exercised prior to the
occurrence of an IPO, the Company may require as a condition to the exercise of
the Warrant that the Warrantholder furnish the Company with the written consent
of the Warrantholder's spouse (if any), or that any transferee of the Warrant
pursuant to Section 1.2 furnish written consent, to be bound by the terms and
conditions of Appendix I attached hereto, and such consent shall be furnished on
such form as the Company shall prescribe. Certificates representing the Shares
issued pursuant to the exercise of the Warrant will bear all legends required by
law and necessary to effectuate the revisions of this Agreement. The Company may
place a "stop transfer" order against the Shares issued pursuant to the exercise
of this Warrant until all restrictions and conditions set forth in Appendix I
attached hereto and the legends referred to in this Section 11.3 have been
complied with.
11.4 No Registration Rights. The Warrantholder is not entitled to
----------------------
any registration rights with respect to the transfer of the Warrants or with
respect to Shares acquired upon exercise of the Warrants.
Section 12. Notices. Any notice pursuant to this Agreement by the
-------
Company or by the Warrantholder or a Holder of Shares shall be in writing and
shall be deemed to have been duly given if delivered or mailed led by certified
or registered first class mail, return receipt requested and postage prepaid:
(a) If to the Warrantholder or a Holder of Shares,
addressed to Roy O. Cole, 4339 Beverly Drive, Dallas, Texas 75205.
(b) If to the Company, addressed to it at Optel, Inc.,
1111 West Mockingbird Lane, Dallas, Texas 75247, Attention: Chief
Executive Officer (with a copy to the General Counsel of the Company
at the same address).
Each party may from time to time change the address to which notices to it are
to be delivered or mailed hereunder by notice in accordance herewith to the
other parry.
Section 13. Successors. All the covenants and provisions of this
----------
Agreement by or for the benefit of the Company, the Warrantholder or the Holder
of Shares shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 14. Applicable Law. This Agreement shall be deemed to be a
--------------
contract made under the laws of the State of Texas and for all purposes shall be
construed in
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accordance with the laws of said State applicable to contracts made and to be
performed entirely within such state.
Section 15. Benefits of this Agreement. Nothing in this Agreement
--------------------------
shall be construed to give to any person or corporation other than the Company,
the Warrantholder and the Holders of Shares any legal or equitable right, remedy
or claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Company, the Warrantholder and the Holders of Shares.
Section 16. Counterparts. This Agreement may be executed in any
------------
number of counterparts each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
Section 17. Amendment. Except as expressly provided herein, neither
---------
this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought;
provided, however, that any provisions hereof may be amended, waived, discharged
or terminated upon the written consent of the Company and the Warrantholder
having the right to acquire by virtue of holding the Warrants at least 50% of
the Shares which are then issuable upon exercise of the then outstanding
Warrants.
Section 18. Termination of Company Obligations. Notwithstanding any
----------------------------------
other provision of this Agreement, all rights (but not the obligations) of any
Warrantholder (including without limitation, both any successor to the original
Warrantholder and any Holder of Shares) shall terminate and all obligations (but
not all rights) of the Company shall terminate upon the first date that Mr. Rory
0. Cole violates the terms of the Separation Agreement.
Section 19. Gender. The gender of words used in this Agreement shall
------
be construed to include whichever may be appropriate under any particular
circumstances of the masculine, feminine or neuter genders.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
OPTEL, INC.
By: /s/ Michael Katzenstein
--------------------------------
Name: Michael Katzenstein
Title: VP and General Counsel
----------------------------
RORY O. COLE
/s/ Rory O. Cole
-----------------------------------
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Exhibit A
---------
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. SUCH WARRANTS
MAY NOT BE SOLD OR TRANSFERRED UNLESS REGISTERED OR
QUALIFIED UNDER SAID ACT AND APPLICABLE SATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
ACCEPTABLE TO THE COMPANY STATING, THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES
OF THE WARRANT AGREEMENT COVERING THE PURCHASE OF
THESE WARRANTS AND VARIOUS REQUIREMENTS, INCLUDING
WITHOUT LIMITATION PROVISIONS PROHIBITING THEIR
TRANSFER, MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
Warrant Certificate No.3
WARRANTS TO PURCHASE
9,406.36 SHARES OF CLASS A COMMON STOCK
OPTEL, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that, for value received, Rory 0. Cole, the registered
holder hereof (the "Warrantholder"), is entitled to purchase from OPTEL, INC.
(the "Company"), at any time during the period commencing the Waiver Effective
Date (as such term is defined in the Separation Agreement described below) and
ending at 5:00 p.m., Dallas, Texas time on July 11, 2002, at a purchase price
per share of $74.42, the number of shares of Class A Common Stock of the Company
set forth above (the "Shares"). The number of shares of Class A Common Stock of
the Company purchasable upon exercise of each Warrant evidenced hereby shall be
subject to adjustment from time to time as set forth in the Warrant Agreement.
-1-
The Warrants evidenced hereby may be exercised in whole or in part as
provided in the Warrant Agreement, by presentation of this Warrant Certificate
with the Purchase Form attached hereto duly executed (with at a signature
guarantee as provided thereon) and simultaneous payment of the Warrant Price at
the principal office of the Company. Payment of such price shall be made as set
forth in the Warrant Agreement.
The Warrants evidenced hereby represent the right to purchase Shares
and are issued under and in accordance with at a Warrant Agreement, dated as of
July 11, 1997 (the "Warrant Agreement"), between the Company and the
Warrantholder and are subject to the terms and provisions contained in the
Warrant Agreement, to all of which the Warrantholder by acceptance hereof
consents. The Warrant is being issued in connection with a Separation Agreement
between the Company and Rory 0. Cole.
Upon any partial exercise of the Warrants evidence hereby, there shall
be signed and issued to the Warrantholder a new Warrant Certificate in respect
of the Shares as to which the Warrants evidenced hereby shall not have been
exercised. These Warrants may be exchanged at the office of the Company by
surrender of this Warrant Certificate properly endorsed for one or more new
Warrants of the same aggregate number of Shares as here evidenced by the Warrant
or Warrants exchanged. No fractional shares of Class A Common Stock will be
issued upon the exercise of rights to purchase hereunder, but the Company shall
pay the cash value of any fraction upon the exercise of one or more Warrants.
These Warrants are not transferable and any attempted transfer shall be void.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a stockholder of the Company.
OPTEL, INC.
By: /s/ Michael Katzenstein
--------------------------------
VP and General Consel
Dated: October 30, 1997
ATTEST:
Scott V. Williams
- - --------------------------
Assistant Secretary
-2-
OPTEL, INC.
PURCHASE FORM
OPTEL, INC.
[ADDRESS]
THE UNDERSIGNED HEREBY IRREVOCABLY ELECTS TO EXERCISE THE RIGHT OF PURCHASE
REPRESENTED BY THE WITHIN WARRANT CERTIFICATE FOR, AND TO PURCHASE THEREUNDER,
_____ SHARES OF CLASS A COMMON STOCK (THE "SHARES") PROVIDED FOR THEREIN, AND
REQUESTS THAT CERTIFICATES FOR THE SHARES BE ISSUED IN THE NAME OF:
_______________________________________________
(PLEASE PRINT OR TYPE NAME, ADDRESS AND SOCIAL SECURITY NUMBER)
_______________________________________________
_______________________________________________
AND, IF SAID NUMBER OF SHARES SHALL NOT BE ALL THE SHARES PURCHASABLE HEREUNDER,
THAT AT A NEW WARRANT CERTIFICATE FOR THE BALANCE OF THE SHARES PURCHASABLE
UNDER THE WITHIN WARRANT CERTIFICATE BE REGISTERED IN THE NAME OF THE
UNDERSIGNED WARRANTHOLDER OR HIS ASSIGNEE AS BELOW INDICATED AND DELIVERED TO
THE ADDRESS STATED BELOW. THE UNDERSIGNED HAS ALSO SUBMITTED TO THE COMPANY AT A
CERTIFICATE IN WHICH IT HAS MADE THE REPRESENTATIONS AND COVENANTS REQUIRED IN
SECTION 11 OF THE WARRANT AGREEMENT.
DATED:_________________
NAME OF WANANTHOLDER
OR ASSIGNEE:__________________________
(PLEASE PRINT)
ADDRESS: _____________________________
_____________________________
SIGNATURE:____________________________
NOTE: THE ABOVE SIGNATURE MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE
OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER, UNLESS THESE WARRANTS HAVE BEEN ASSIGNED.
SIGNATURE GUARANTEED: ________________
(SIGNATURE MUST BE GUARANTEED BY AT A BANK OR TRUST COMPANY HAVING AN OFFICE OR
CORRESPONDENT IN THE UNITED STATES OR BY AT A MEMBER FIRM OF AT A REGISTERED
SECURITIES EXCHANGE OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.)
APPENDIX I
RESTRICTIONS ON TRANSFER OF SHARES AND PURCHASE AND SALE RIGHTS
Shares subject to the foregoing Warrant Agreement (the "Agreement")
acquired upon exercise of the Warrant may be Transferred (as defined below) only
after compliance with the specific limitations on the Transfer of Shares set
forth in the Agreement and in this Appendix I, including those with respect to
certain rights of first refusal granted to the Company (Paragraphs 4 and 5
below), restrictions upon Transfer imposed by applicable state or federal
securities laws, and certain required undertakings of the transferee (Paragraph
3 below). All Transfers of Shares not meeting the conditions set forth in this
Appendix I are expressly prohibited; provided, however, that the provisions of
this Appendix I will terminate upon the earlier of (i) the occurrence of an IPO,
or (ii) September 30, 2002. This Appendix I constitutes a part of the Agreement.
1. DEFINITIONS: All capitalized terms herein shall have the meanings
ascribed to them in the Agreement unless otherwise defined herein:
(a) "FAIR MARKET VALUE" means the fair market value of the Shares as
determined in good faith by the Board of Directors of the Company. The
determination of the Board of Directors shall be conclusive and binding on
all persons.
(b) "INVOLUNTARY TRANSFER" means a Transfer that occurs pursuant to
any of the following: an assignment of Shares for the benefit of creditors
of the Warrantholder; a Transfer by operation of law, including, without
limitation, a Transfer by will or under the laws of descent and
distribution; an execution of judgment against Shares or the acquisition of
record or beneficial ownership of Shares by a lender or creditor; a
Transfer pursuant to any decree of divorce, dissolution, or separate
maintenance, any property settlement, any separation agreement, or any
other agreement with a spouse under which a part or all of any Shares is
Transferred or awarded to the spouse of the Warrantholder or is required to
be sold; or a Transfer resulting from the filing of the Warrantholder of a
petition for relief or the filing of an involuntary petition against the
Warrantholder, under the bankruptcy laws of the United States or of any
other nation.
(c) "OFFERED PRICE" has the meaning ascribed thereto in Paragraph
4(b).
(d) "OFFEROR" has the meaning ascribed thereto in Paragraph 4(a).
(e) "SHAREHOLDER NOTICE OF OFFER" has the meaning ascribed thereto in
Paragraph 4(b).
(f) "SHAREHOLDER NOTICE OF TRANSFER" has the meaning ascribed thereto
in Paragraph 5(b).
(g) "TRANSFER," with respect to Shares, includes, without limitation,
a voluntary or involuntary sale, assignment, transfer, conveyance, pledge,
hypothecation, encumbrance, disposal, loan, gift, attachment, or levy of
such Shares.
(h) "TRANSFEREE NOTICE" has the meaning ascribed thereto in Paragraph
5(b).
(i) "VOLUNTARY TRANSFER" means any Transfer other than an Involuntary
Transfer.
2. EFFECT OR PROHIBITED TRANSFER: Any prohibited Transfer of Shares,
whether a Voluntary Transfer or an Involuntary Transfer, is void and of no
effect. Should such a Transfer purport to occur, the Company may refuse to carry
out the Transfer on its books, attempt to set aside the Transfer, enforce any
undertaking or right under the Agreement or this Appendix I, or exercise any
other legal or equitable remedy.
3. REQUIRED UNDERTAKINGS: Any Transfer that would otherwise be
permitted under the terms of the Agreement or this Appendix I is prohibited
unless the transferee executes such documents as the Company may reasonably
require to ensure that the Company's rights are adequately protected with
respect to the Shares so transferred. Such agreements may include, without
limitation, the transferee's agreement to be bound by all of the terms of the
Agreement or this Appendix I, as if he or she or it were the original
Warrantholder. Without limiting the generality of any other provision contained
herein, it is the intent of this paragraph that the Company's rights if waived
or otherwise not exercised in respect of a Transfer to a transferee shall
nonetheless continue with respect to any subsequent Transfers by such
transferee.
4. COMPANY'S RIGHT OF FIRST REFUSAL RELATED TO THIRD PARTY OFFER:
(a) SCOPE OF RIGHT: If Shares are Transferred or are proposed to be
--------------
Transferred incident to a bona fide offer from a third party (the
"Offeror"), the Company will have the right (but not the obligation) to
purchase Shares on the terms and conditions set out in this Paragraph 4.
This right does not extend to a Third Party Offer made if the Warrantholder
has no intention of transferring the Shares. The Company's rights under
this Paragraph 4 are assignable by the Company and will terminate upon the
earlier of (i) the occurrence of an IPO, or (ii) September 30, 2002,
whether or not previously assigned. The right of first refusal under this
Paragraph 4 will be exercisable in whole or in part as to any particular
Transfer or proposed Transfer of Shares.
(b) Mechanics and Notice: The transferor of any Shares subject to this
--------------------
Paragraph 4 will provide to the Company a notice of proposed Transfer (the
"Shareholder Notice of Offer") stating: the number of Shares that the
transferor
-2-
proposes to Transfer and the transferor's bona fide intention to Transfer
such Shares; the name and address of the transferor, the Offeror, and the
original Warrantholder of the Shares (if other than the transferor); the
manner and the date of such proposed Transfer; and the bona fide cash price
and/or other consideration (and the fair market value thereof as estimated
in good faith by the transferor) per share of Shares, if any, that the
Offeror offered to pay for such Shares (the "Offered Price").
The Company (or its assignee) may exercise its right of first
refusal under this Paragraph 4 at any time not more than 60 days after the
Company has received the Shareholder Notice of Offer with respect to such
Shares. The Company (or its assignee) will exercise its right, if at all,
by informing the transferor and Offeror in writing of the Company's (or its
assignee's) intention to do so, in a notice that specifies a closing date
that is no more than 30 days (or such later date as the Offeror may have
offered) after the later of (i) receipt of the Shareholder Notice of Offer
or (ii) determination of fair market value of the Shares. Additionally, if
the Company disagrees with the transferor's estimate of the fair market
value of any noncash consideration, the Board of Directors shall determine
the Fair Market Value, and the Offered Price will be adjusted accordingly.
(c) EXERCISE PRICE: In exercising its repurchase rights under this
--------------
Paragraph 4, the Company (or its assignee) will pay in cash upon repurchase
a price equal to the Offered Price, subject to an appropriate adjustment as
determined by the Board of Directors to take into account the risk of
nonpayment or deferral of any installment payments that may have been
contained in the Offeror's offer.
5. COMPANY'S RIGHT OF FIRST REFUSAL UNRELATED TO THIRD PARTY OFFER:
(a) SCOPE OF RIGHT: If Shares are Transferred or are proposed to be
--------------
Transferred other than incident to a bona fide third parry offer or other
than as expressly permitted under the Agreement, the Company will have the
right (but not the obligation) to purchase Shares on the terms and
conditions set forth in this Paragraph 5. The Company's rights under this
Paragraph 5 will apply to any proposed or actual Voluntary Transfer or
Involuntary Transfer other than those subject to Paragraph 4. The Company's
rights under this Paragraph 5 are assignable by the Company and will
terminate upon the earlier of (i) the occurrence of an IPO, or (ii)
September 30, 2002, whether or not previously assigned. The right of first
refusal under this Paragraph 5 will be exercisable in whole or in part as
to any particular Transfer or proposed Transfer of Shares.
(b) MECHANICS AND NOTICE: The transferor of any Shares subject to
--------------------
this Paragraph 5 will (whether such Transfer is a Voluntary Transfer or an
Involuntary Transfer) provide to the Company a notice of proposed Transfer
(the "Shareholder Notice of Transfer") stating: the number of Shares that
the transferor proposes to Transfer; the names and addresses of the
transferor, the transferee or proposed transferee, and the original
Warrantholder of the Shares (if other than the transferor);
-3-
and the circumstances, manner and date of such proposed Transfer (including
information concerning the consideration involved). In the event of an
Involuntary Transfer, the person obtaining the Shares promptly will notify
the Secretary of the Company of such Involuntary Transfer and provide the
information required in the Shareholder Notice of Transfer (the "Transferee
Notice").
The Company (or its assignee) may exercise its right of first refusal
under this Paragraph 5 at any time during the 60-day period after (i) the
Company has received either the Shareholder Notice of Transfer or the
Transferee Notice with respect to such Shares or, if later (ii) the date
that is 9 months after the death of the Warrantholder (if the Transfer was
an Involuntary Transfer due to death). The Company (or its assignee) will
exercise its right, if at all, by informing the transferor and transferee
in writing of the Company's (or its assignee's) intention to do so, in a
notice that specifies a closing date that is no more than 30 days after the
later of (i) receipt of the Shareholder Notice of Transfer or the
Transferee Notice, whichever is applicable, or (ii) the determination of
Fair Market Value of the Shares, or (iii) one year after the death of the
Warrantholder (if the Transfer was an Involuntary Transfer due to death).
(c) EXERCISE PRICE: In exercising its repurchase rights under this
--------------
Paragraph 5, the Company (or its assignee) will pay in cash upon repurchase
a price equal to the Fair Market Value of the Shares that are Transferred
or are proposed to be Transferred, as of the date of the Shareholder Notice
of Transfer or the Transferee Notice.
6. OPTION TO PURCHASE AND SELL THE SHARES:
(a) SCOPE OF RIGHT: If on July 11, 2002 the Company has not
--------------
consummated an IPO, (i) the Company will have the right but not the
obligation) to purchase all of the Shares (the "Company's Call Right"), and
(ii) the Warrantholder will have the right but not the obligation) to sell
all of the Shares to the Company (the "Warrantholder's Put Right"). The
rights under this Paragraph 6 are assignable in whole or in part by the
Company and the Warrantholder and will terminate on September 30, 2002, if
not earlier terminated due to the occurrence of an IPO. The purchase option
under this Paragraph 6 will be exercisable on an all-or-nothing basis as to
any particular holder of Shares.
(b) MECHANICS AND NOTICE:
--------------------
(i) The Company's Call Right Mechanics. The Company (or its
----------------------------------
assignee) will provide to any holder of Shares a notice of proposed
purchase (the "Company's Purchase Notice") stating that it wishes to
exercise its option to purchase all of the Shares owned by that
holder; the Fair Market Value per Share and aggregate purchase price
based thereon; and the proposed closing date of such purchase
-4-
which must be at least 30 but not more than 90 days from the date the
Company's Purchase Notice was delivered to the holder of Shares. The
Shares will be purchased on that date.
(ii) The Warrantholder's Put Right Mechanics. The Warrantholder
---------------------------------------
(or his assignee) will provide to the Company (or its assignee) a
notice of intent to sell (the "Put Notice"), stating that the
Warrantholder wishes to exercise the option to sell the Shares, and
upon receipt of the Put Notice the Company will furnish the
Warrantholder (or his assignee) a notice of the Fair Market Value per
Share and the aggregate purchase price based thereon; and the proposed
closing date of such purchase which must be at least 30 but not more
than 90 days from the date the Company's notice was delivered to the
Warrantholder (or his assignee). The Shares will be purchased on that
date if the Warrantholder furnishes the Company with a written
acceptance at least 10 days before the proposed closing date.
Notwithstanding the foregoing, however, if any repurchase due to a Put
Notice requires the consent of the Company's lenders or investors and
such consent is not given or if the repurchase would otherwise violate
any covenant by which the Company is bound, then the repurchase shall
occur at such later date as approved by the lenders or investors or as
would not violate such covenant at a price determined pursuant to
clause (c) below.
(c) EXERCISE PRICE: Upon a sale of the Shares under this Paragraph 6,
--------------
the Company (or its assignee) will pay in immediately available funds upon
purchase the aggregate cash price equal to the Fair Market Value of the
Shares purchased. In the event the repurchase due to a Put Notice has been
delayed due to the failure to obtain the required consent of the Company's
lenders or investors or due to the restrictions imposed by any covenant,
then the purchase price for the Shares purchased shall be the Fair Market
Value of the Shares on the date of the Put Notice plus interest accrued
from the date of the Put Notice at an annual rate equal to the "prime rate"
as reported in the Money Rates section of The Wall Street Journal on the
first day reported after the date of the Put Notice.
7. MATTERS OF GENERAL APPLICABILITY: All closings shall take place at
the Company's (or its assignees) principal executive offices. If the consent or
approval of any governmental entity is necessary for the purchase of Shares
under the Agreement or if the expiration of any waiting period following the
giving of any notice to a governmental entity is required before such purchase
may be effected, the date of closing shall be extended to such date not more
than 10 days after the date on which such consent or approval is obtained or
notice period expired. At such closing the transferor of the Shares shall
assign, or cause to be assigned to the extent any of its rights in its Shares is
then held by another person, to the Company (or its assignee) all right, title
and interest in and to the Shares, free and clear of all liens. The transferor
of the Shares shall also, at the request of the Company (or its assignee),
execute all other documents and take such other actions
-5-
as may be reasonably necessary or desirable to effectuate the transfer of the
Shares and to carry out the purposes of this Appendix I. The transferor of the
Shares shall deliver to the Company (or its assignee) certificates representing
the Shares with a blank stock power executed by such transferor attached
thereto. The parties shall use their best efforts to obtain all consents,
approvals, releases and authorizations of all governmental entities and other
persons necessary or advisable to effect the transfer of Shares as provided
herein and otherwise permit the transfer and sale of such Shares as provided
herein. Without limiting the generality of any other provision hereof the
Company (or its assignee) may delay the closing and shall not be obligated to
make any payment in respect of the Shares unless he receives all releases
reasonably requested by him from parties that could assert an interest in the
Shares or proceeds therefrom. Notwithstanding any provisions to the contrary
contained herein, the Company's obligations to pay or complete payment for any
Shares to be purchased by it under this Appendix I is subject to it being
legally permitted to do so under applicable corporate law.
8. ESCROW: For purposes of facilitating the enforcement of the
restrictions on Transfer set forth in the Agreement and this Appendix I, the
Board of Directors may, at its discretion, require any holder of Shares to
deliver the certificate(s) for such Shares with a stock power executed by him or
her and by his or her spouse (if required for Transfer), in blank, to the
Secretary of the Company or his or her designee, to hold said certificate(s) and
stock power(s) in escrow and to take all such actions and to effectuate all such
Transfers and/or releases as are in accordance with the terms of the Agreement
and this Appendix I. The certificates may be held in escrow so long as the
Shares are subject to a right of first refusal under the Agreement and this
Appendix I. The escrow holder will not be liable to the Warrantholder (or to any
other party) for any actions or omissions unless the escrow holder is grossly
negligent relative thereto. The escrow holder may rely upon any letter, notice,
or other document executed by any signature purported to be genuine.
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