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EXHIBIT 10.24
Execution Copy
WARRANT PURCHASE AGREEMENT
BETWEEN
FIRST PREMIUM SERVICES, INC.
AND
INTERNATIONALE NEDERLANDEN (U.S.) FINANCE CORPORATION
DATED AS OF FEBRUARY 12, 1993
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TABLE OF CONTENTS
SECTION PAGE
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1. Purchase and Sale of Warrants; Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Execution of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Registration of Transfers and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
6. Warrants; Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. Mutilated or Missing Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Adjustment of Exercise Price and Number of Warrant Shares Issuable . . . . . . . . . . . . . . . . . 6
(a) Adjustment for Change in Capital Stock of the Issuer . . . . . . . . . . . . . . . . . . . . 6
(b) Adjustment for Common Stock Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Adjustment for Convertible Securities Issue . . . . . . . . . . . . . . . . . . . . . . . . 8
(d) Adjustment for Right, Option and Warrant Issues . . . . . . . . . . . . . . . . . . . . . . 9
(e) Current Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Consideration Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(g) Special Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(h) When No Adjustment Recruited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(i) Notice of Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Reorganization of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(l) When Issuance or Payment May Be Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(m) Adjustment in Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Fractional Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Put of Warrant Ownership; Disposition of Warrant Shares;
Registration of Warrant Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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SECTION PAGE
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13. Notice to Warrant Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
14. Notices to the Issuer and Warrant Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
15. Cash Distributions and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
16. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
17. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
18. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
19. Benefits of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
20. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
21. Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
22. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
23. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
24. Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
25. Annual and Quarterly Reports; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . 20
26. Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
27. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
28. Purchaser Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Exhibit A Form of Warrant Certificate
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Execution Copy
WARRANT PURCHASE AGREEMENT
WARRANT PURCHASE AGREEMENT, dated as of February 12, 1993, between
FIRST PREMIUM SERVICES, INC., an Illinois corporation (the "Issuer"), and
INTERNATIONALE NEDERLANDEN (U.S.) FINANCE CORPORATION (the "Purchaser").
W I T N E S S E T H
WHEREAS, the Issuer proposes to issue to the Purchaser warrants to
purchase certain common stock of the Issuer as hereinafter described (the
"Warrants"), which Warrants will initially be exercisable for 1,114 shares of
Class B Nonvoting Convertible Common Stock, $.01 par value per share (the
"Class B Common Stock"), of the Issuer, on the terms and conditions hereinafter
set forth; and
WHEREAS, the Purchaser and the Issuer desire to set forth the terms
and provisions of the Warrants and the conditions to the issuance and sale
thereof to the Purchaser; and
NOW THEREFORE, in consideration of the premises and the agreements
herein set forth and as part of the consideration for the execution and
delivery to the Issuer by an affiliate of the Purchaser of its commitment
letter dated December 30, 1992 (the "Commitment Letter"), the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF WARRANTS; CLOSING.
(a) The Issuer hereby agrees to sell to the Purchaser,
and the Purchaser agrees to purchase from the Issuer, Warrants to
purchase,1,114 shares of Class B Common Stock for an aggregate
purchase price of $1.00.
(b) The sale and purchase of the Warrants shall take
place at a closing (the "Closing") at the offices of Sullivan &
Worcester, 767 Third Avenue, New York, New York at 10:00 a.m. on or
before February 16, 1993 (the "Closing Date"). At the Closing, the
Issuer will deliver to the Purchaser Warrant Certificates (as defined
in Section 2) evidencing the Warrants to be purchased by the Purchaser
(in such permitted denomination or denominations as the Purchaser may
request and registered in its name or the name of its nominee), dated
the Closing Date, against payment, of the purchase price therefor by
certified or bank cashier's check or by wire transfer of immediately
available funds.
SECTION 2. WARRANT CERTIFICATES. The certificates evidencing the
Warrants (the "Warrant Certificates") to be delivered pursuant to this
Agreement shall be in registered form only and shall be in the form set forth as
Exhibit A attached hereto.
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SECTION 3. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates
shall be signed on behalf of the Issuer by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the Chairman of the Board, President, Vice President,
Secretary or Assistant Secretary and may be printed or otherwise reproduced on
the Warrant Certificates and for that purpose the Issuer may adopt and use the
facsimile signature of any person who shall have been chairman of the Board,
President, Vice President, Secretary or Assistant Secretary, notwithstanding the
fact that at the time the Warrant Certificates shall be delivered or disposed of
such person shall have ceased to hold such office.
In case any officer of the Issuer who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Issuer, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Issuer; and any Warrant Certificate
may be signed on behalf of the Issuer by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Issuer to sign such Warrant Certificate although at the date of the execution
of this Agreement any such person was not such officer.
SECTION 4. REGISTRATION. The Issuer shall number and register the
Warrant Certificates in a register as they are issued. The Issuer may deem
and treat the registered holder(s) of the Warrant Certificates as the absolute
owner(s) thereof (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 5. REGISTRATION OF TRANSFERS AND EXCHANGES. The Issuer shall
from time to time register the transfer of any outstanding Warrant Certificates
in a Warrant register to be maintained by the Issuer upon surrender of such
Warrant Certificates accompanied by a written instrument or instruments of
transfer in form reasonably satisfactory to the Issuer, duly executed by the
registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be canceled and
disposed of by the Issuer.
If such transfer of Warrants is not made pursuant to an effective
Registration-Statement under the Securities Act of 1933, as amended (the
"Act"), the Warrant holder will, if reasonably requested by the Issuer, deliver
to the Issuer an opinion of counsel, which may be counsel to the holder,
reasonably satisfactory in form, scope and substance to the Issuer, that the
Warrants may be sold publicly without registration under the Act, as well as:
(1) an investment covenant reasonably satisfactory to the
Issuer signed by the proposed transferee;
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(2) an agreement by such transferee to the impression of
the restrictive investment legend set forth below on the Warrant
Certificate; and
(3) an agreement by such transferee to be bound by the
provisions of: (a) this Agreement, and (b) the provisions of the
Stockholders Agreement, to be entered into pursuant to Section 27(vii)
of this Agreement, on or before February 28, 1993, among the Issuer,
the stockholders of the Issuer set forth on Exhibit A thereto and the
Purchaser (the " Stockholders Agreement");
provided that, the Purchaser may transfer the Warrants to an affiliate of the
Purchaser without providing the Issuer with an opinion of counsel.
The Warrant holders agree that each Warrant Certificate and each
certificate representing Warrant Shares will bear the following legend:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended. said
securities may not be sold or transferred in the absence of
such registration or an exemption, or an opinion of counsel
(which may be counsel to the holder) as to an exemption, from
the registration provisions of said Act."
Warrant Certificates may be exchanged at the option of the holder(s)
thereof when surrendered to the Issuer at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants, including, without limitation, upon an
adjustment in the Exercise Price or in the number of Warrant Shares purchasable
upon exercise of this Warrant. Warrant Certificates surrendered for exchange
shall be canceled and disposed of by the Issuer.
SECTION 6. WARRANTS; EXERCISE OF WARRANTS. Subject to the terms of
this Agreement, each Warrant holder shall have the right, which may be exercised
at any time on or after (1) the earliest of (i) December 31, 1995, (ii) the
effectiveness of a registration statement relating to a Stipulated Public
Offering (as defined in the Put Agreement) of the Issuer, (iii) the occurrence
of an event of default under the Credit Agreement executed and delivered
pursuant to the Commitment Letter (as amended, modified, extended or replaced
from time to time, the "Credit Agreement"), (iv) any merger or consolidation of
the Issuer with or into any corporation or other entity that is not an Affiliate
(as defined in the Put Agreement) of the Issuer (v) any sale or other
disposition of all or substantially all of the assets of the Issuer not made in
the ordinary course of business of the Issuer, (vi) Crabtree Capital Corporation
defaults in its obligations under a certain indemnification agreement of even
date herewith with respect to certain tax consequences relating to the Issuer's
Note (as defined in the next paragraph) and (vii) any sale or other disposition
by the Issuer of shares of Common Stock constituting more that 50% of the number
of shares of
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Common Stock then outstanding and prior to (2) December 31, 2004, to receive
from the Issuer the number of fully paid and nonassessable Warrant Shares which
the holder may at the time be entitled to receive on exercise of such warrants
and payment of the Exercise Price then in effect for such Warrant Shares. No
adjustments as to dividends will be made upon exercise of the Warrants. The
term "Warrant Shares" shall mean shares of Class B Common Stock issuable upon
the exercise of each Warrant or such other securities, property and cash which
the Warrant holders shall be entitled to receive upon exercise of the Warrants
pursuant to the provisions of Section 10, including without limitation
subsection (k) thereof.
A Warrant may be exercised upon surrender to the Issuer at its office
designated for such purpose (the address of which is set forth in Section 14)
of the certificate or certificates evidencing the Warrants to be exercised with
the form of election to purchase attached thereto duly filled in and signed,
upon payment to the Issuer of the exercise price of $500 per Warrant Share (the
"Exercise Price"), as adjusted as herein provided, for the number of Warrant
Shares in respect of which such Warrants are then exercised. Payment of the
aggregate Exercise Price shall be made in cash or by check payable to the order
of the Issuer or by application against the Exercise Price amounts evidenced by
that certain promissory note issued by the Issuer in the original principal
amount of $557,000 (the "Issuer's Note").
Upon such surrender of Warrant Certificates and payment of the
Exercise Price, the Issuer shall issue and cause to be delivered with all
reasonable dispatch (and in any event within two business days) to or upon the
written order of the holder, and in the name of the Warrant holder or the
Warrant holder's nominee, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise of such warrants together with such
other property (including cash) and securities as may then be deliverable upon
such exercise, including cash for fractional Warrant Shares as provided in
Section 11. Such certificate or certificates shall be deemed to have been
issued and the person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrant Certificates and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part, and, in the event that a
Warrant Certificate is exercised in respect of fewer than all of the Warrant
Shares issuable on such exercise at any time prior to the date of expiration of
the Warrants, a new Warrant Certificate evidencing the remaining Warrant or
Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 3.
All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled and disposed of by the Issuer. The Issuer shall keep copies of
this Agreement and any notices received hereunder available for inspection
during normal business hours at its office. The Issuer will furnish, at its
expense, copies of this Agreement and all such notices, upon request, to any
holder of any Warrant Certificates.
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SECTION 7. PAYMENT OF TAXES. The Issuer will pay all stamp and
transfer taxes in connection with the issuance, sale, delivery or transfer of
the Warrants hereunder, as well as all such stamp and transfer taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
warrants and payment of the Exercise Price.
SECTION 8. MUTILATED OR MISSING WARRANT CERTIFICATES. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Issuer shall issue, in exchange and substitution for and upon cancellation
of the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate of like
tenor and representing an equivalent number of Warrants.
SECTION 9. RESERVATION OF WARRANT SHARES. The Issuer will at all
times reserve and keep available, free from preemptive or similar rights, out of
the aggregate of its authorized but unissued capital stock or its authorized
and issued capital stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, (i)
the maximum number of shares of each class of capital stock constituting a part
of the Warrant Shares which may then be deliverable upon the exercise of all
outstanding Warrants and (ii) the maximum number of shares of each class of
capital stock of the Issuer which may then be deliverable upon the conversion
into Class A Common Stock of the Issuer of all issued Warrant Shares. The
Issuer shall cause all Warrant Shares of each class of capital stock of the
Issuer or other securities of the Issuer reserved for issuance upon exercise of
the Warrants to be listed (or to be listed subject to notice of issuance) on
each securities exchange on which such shares of capital stock of the Issuer or
any such other securities are listed.
The Issuer or, if appointed, the transfer agent for shares of each
class of capital stock of the Issuer (the "Transfer Agent") and every,
subsequent transfer agent for any shares of the Issuer's capital stock issuable
upon the exercise of the Warrants will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Issuer will keep a copy of this Agreement on file with
the Transfer Agent and with every, subsequent transfer agent for any shares of
the Issuer's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants or of the rights of conversion of the Warrant
Shares. The Issuer will furnish such Transfer Agent a copy of all notices of
adjustments, and certificates related thereto, transmitted to each holder
pursuant to Section 13.
The Issuer covenants that (i) all Warrant Shares which may be issued
upon exercise of Warrants will, upon issuance and payment of the Exercise Price
therefor, and (ii) all shares of capital stock of the Issuer which may be
issued upon the conversion of any issued Warrant Shares will, in each case, be
fully paid, nonassessable, free of preemptive or similar rights and free from
all taxes, liens, charges and security interests with respect to the issuance
thereof.
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SECTION 10. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. The Exercise Price and the number of Warrant Shares issuable upon
the exercise of each Warrant are subject to adjustment from time to time upon
the occurrence of the events enumerated in this Section. For purposes of this
Section, "Common Stock" means shares now or hereafter authorized of any class
of common stock of the Issuer and any other stock of the Issuer, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets
upon voluntary or involuntary liquidation, dissolution or winding up or of the
earnings of the Issuer without limit as to per share amount. "Common Stock"
shall not include preferred or special stock.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK OF THE ISSUER:
If the Issuer
(1) pays a dividend or makes a distribution on any class
of its Common Stock in shares of any class of its Common Stock;
(2) subdivides its outstanding shares of any class of
Common Stock into a greater number of shares;
(3) combines its outstanding shares of any class of
Common Stock into a smaller number of shares;
(4) makes a distribution on any class of its Common Stock
in shares of its capital stock other than Common Stock; or
(5) issues by reclassification of any class of its Common
Stock any shares of its capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Issuer which it would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action, as determined by
the Board of Directors of the Issuer in the good faith exercise of its
reasonable business judgment.
The adjustment shall become effective immediately after the record
date in the case of such a stock dividend or distribution and immediately after
the effective date in the case of a subdivision, combination or
reclassification.
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If after an adjustment a holder of a Warrant upon exercise of such
Warrant may receive shares of two or more classes of capital stock of the
Issuer, the Board of Directors of the Issuer shall determine in the good faith
exercise of its reasonable business judgment the allocation of the adjusted
Exercise Price between the classes of capital stock. After such allocation,
the exercise privilege and the Exercise Price of each class of capital stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) ADJUSTMENT FOR COMMON STOCK ISSUE
If the Issuer issues shares of Common Stock for a consideration per
share less than the Current Market Price per share on the date the Issuer fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the following formula:
P
-
E,= E x 0 + M
---------
A
where:
E, = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Current Market Price per share on the date of issuance of
such additional shares.
A = the number of shares outstanding immediately after the
issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
The provisions of this subsection do not apply to:
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(1) any of the transactions described in subsection (a)
or for which an adjustment has been made pursuant to the provisions of
subsection (c) or (d) of this Section, or
(2) the exercise of Warrants.
(c) ADJUSTMENT FOR CONVERTIBLE SECURITIES ISSUE
If the Issuer issues any Convertible Securities (other than
Convertible Securities for which an adjustment has been made pursuant to the
provisions of subsection (d) of this Section), whether or not the right to
convert or exchange thereunder is immediately exercisable or is conditioned
upon the passage of time, the occurrence or non-occurrence of some other event,
or both, for a consideration per share of Common Stock initially deliverable
upon conversion or exchange of such Convertible Securities less than the
Current Market Price per share on the date of issuance of such Convertible
Securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-
E'= E x 0 + M
----------
0 + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the Current Market Price per share on the date of issuance of
such securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the Minimum Rate.
The term "Minimum Rate" means the lowest rate at which the Convertible
Securities can be converted into or exchanged for Common Stock, regardless of
whether that is the initial rate or is conditioned upon the passage of time,
the occurrence or nonoccurrence of some other event, or both.
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The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities has not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
(d) ADJUSTMENT FOR RIGHT, OPTION AND WARRANT ISSUES
If the Issuer issues any rights, options or warrants (other than the
Warrants, the Deerpath Warrants and the Employee Options (as hereinafter
defined)) to subscribe for or purchase or otherwise acquire Common Stock or
Convertible Securities (the "Option Securities"), then, upon the issuance of
the Common Stock and/or Convertible Securities deliverable upon the exercise of
such Option Securities or upon the conversion or exchange of such securities,
an adjustment shall be made pursuant to Section 10(b) on the basis of the
actual number of shares of Common Stock issued upon such exercise, conversion
or exchange of such Option Securities.
(e) CURRENT MARKET PRICE
In subsections (b), (c) and (d) of this Section the Current Market
Price per share of Common Stock on any date is the average of the Quoted Prices
of the Common Stock for 30 consecutive trading days commencing 45 trading days
before the date in question. The "Quoted Price" of the Common Stock for each
day is the last reported sales price of the Common Stock on such day as
reported by NASDAQ, National Market System, or, if the Common Stock is listed
on a securities exchange, the last reported sales price of the Common Stock on
such exchange (which shall be for consolidated trading if applicable to such
exchange) on such day, or if neither is so reported or listed, the average of
the last reported bid and asked prices of the Common Stock on such day. In the
absence of one or more such quotations, the Current Market Price shall be
determined by the Board of Directors of the Issuer in its reasonable business
judgment exercised in good faith and notice of such determination shall be
delivered to the Purchaser; provided, however, that during the 30-day period
following the date notice of such determination is received by holders of the
Warrants, such holders may object to such determination by giving notice to the
Issuer. If within such 30-day period, the holders of a majority of the
Warrants notify the Issuer of their objection (the "Objection Notice") and such
holders and the Issuer do not agree upon the Current Market Price within
fifteen (15) days following receipt by the Issuer of the objection Notice (the
"Negotiation Period"), then either the Issuer or a majority in interest of the
holders of the Warrants shall have the right to invoke the following procedure:
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1. The Issuer and the holders shall each submit their
determination of Current Market Price within ten (10) days after the expiration
of the Negotiation Period;
2. Such determinations of Current Market Price shall be submitted
to one of the following investment banking firms: Kidder Peabody & Co., Inc.,
The First Boston Corp. and Dillon Reade & Co., as selected by a majority in
interest of the holders of the Warrants within five (5) days after the
expiration of the Negotiation Period or if each of such investment banking
firms shall decline or fail to act, a recognized investment banking firm of
national reputation selected by agreement of the Issuer and a majority in
interest of the holders of the Warrants (the firm so chosen, the "Appraiser")
for consideration; and
3. The Appraiser shall decide within twenty (20) days of its
selection but no earlier than ten (10) days of its selection which of the
determinations considered most closely approximates Current Market Price, which
decision shall be final and binding on the Issuer and the holders of the
Warrants unless they agree in writing to settle their dispute prior to the
Appraiser's determination. Upon receipt of the submission from both the Issuer
and the representative of the holders of the Warrants of their determination of
Contract Value, the Appraiser shall promptly transmit the determination of each
party to the other party.
All costs of appraisal shall be borne by the party whose determination was not
selected by the Appraiser as the Current Market Price and in the case of
agreement subsequent to the Appraiser's selection but prior to such
determination, such costs shall be divided equally.
(f) CONSIDERATION RECEIVED
For purposes of any computation respecting consideration received
pursuant to any subsection of this Section, the following shall apply:
(1) in the case of the issuance of shares of common Stock
for cash, the consideration shall be the amount of such cash, after
deduction for any commissions, discounts or other expenses incurred by
the Issuer for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common Stock
for a consideration consisting in whole or in part of other than cash,
the consideration other than cash shall be deemed to be the fair
market value thereof as determined by the Board of Directors of the
Issuer in the good faith exercise of its reasonable business judgment,
after deduction for all expenses incurred by the Issuer in connection
therewith, provided that the Issuer agrees that in no event will
shares of capital stock of the Issuer be issued in exchange for
services;
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(3) in the case of the issuance of Convertible securities
or securities issuable upon the exercise of Option Securities (other
than the Deerpath Warrants and the Employee options (as defined in
paragraph (4) below)), the aggregate consideration received therefor
shall be deemed to be the consideration received by the Issuer for the
issuance of such Convertible Securities, plus the consideration, if
any, received by the Issuer for the issuance of such Option
Securities, plus the additional minimum consideration, if any, to be
received by the Issuer upon the conversion, exchange or exercise
thereof (the consideration in each case to be determined in the same
manner as provided in clauses (1) and (2) of this subsection); and
(4) in the case of (i) the warrants to purchase an
aggregate of 482 shares of Common Stock issued by the Issuer to
Deerpath, (ii) the warrants to purchase an aggregate of 600 shares of
Common Stock to be issued by the Issuer to Deerpath as required by
Section 27(v) of this Agreement (each, a "Deerpath Warrant" and
together, the "Deerpath Warrants") and (iii) the options to purchase
an aggregate of 3,240 shares of Common Stock authorized for issuance
to certain employees of the Issuer (the "Employee Options"), the
aggregate consideration received therefor shall be deemed to be zero
and the issuance of shares pursuant to the Deerpath Warrants and the
Employee Options shall cause an adjustment to be made pursuant to
Section 10(b) of this Agreement.
(g) SPECIAL ADJUSTMENT
If the purchase price provided for in any option Securities, the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible Securities are
convertible into or exchangeable for Common Stock shall change (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price or number of Warrant Shares purchasable upon the exercise of the
Warrants in effect at the time of such event shall forthwith be readjusted to
the Exercise Price or number of Warrant Shares purchasable upon the exercise of
the Warrants which would have been in effect at such time had such Option
Securities or Convertible Securities outstanding at such time initially been
granted, issued or sold and the Exercise Price or number of Warrant Shares
purchasable upon the exercise of the Warrants initially adjusted as provided in
the applicable subsection of this Section, whichever was applicable, except
that the minimum amount of additional consideration payable and the total
maximum number of shares issuable shall be determined after giving effect to
such event (and any prior event or events).
(h) WHEN NO ADJUSTMENT RECRUITED
No adjustment need be made for a change in the par value or absence of
par value of any Common Stock.
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To the extent the Warrants become exercisable, in whole or in part,
for cash, no adjustment need be made thereafter as to the cash. Interest shall
not accrue on the cash.
No adjustment in the Exercise Price need be made if (i) it would
reduce the Exercise Price below the then par value (provided that the number of
Warrant Shares for which this Warrant shall thereafter be exercisable shall be
computed as if such Exercise Price had been so reduced) or (ii) the adjustment
would require an increase or decrease of less than .001% in the Exercise Price.
Any adjustments that are not made but deferred shall be carried forward and
taken into account in any subsequent adjustment.
(i) NOTICE OF ADJUSTMENT
Whenever the Exercise Price is adjusted or the Issuer takes any action
that would require (a) any adjustment in (i) the Exercise Price or (ii) the
number and type of securities or other property constituting Warrant Shares
purchasable upon exercise of the Warrants or (b) the execution and delivery of
a supplemental Warrant Agreement, the Issuer shall provide the notices required
by Section 13.
(j) VOLUNTARY REDUCTION
The Issuer may reduce the Exercise Price from time to time by any
amount for any period of time of at least 20 days (including, without
limitation, permanently) if the reduction is irrevocable during such period;
Provided, however, that in no event may the Exercise Price be reduced to an
amount less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Issuer shall mail to
Warrant holders, in the manner set forth in Section 13, a notice of such
reduction at least 20 days before the date such reduction takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
Any reduction of the Exercise Price under this subsection (other than
a permanent reduction) shall not change or adjust the Exercise Price otherwise
in effect for purposes of the other subsections of this Section.
(k) REORGANIZATION OF THE ISSUER
In the event of any capital reorganization, recapitalization or
reclassification of the capital stock of the Issuer, or consolidation, merger
or amalgamation of the Issuer with another entity, or the sale, lease,
transfer, conveyance or other disposition other than in the ordinary course of
business of all or substantially all of its assets to another entity (any such
occurrence being hereinafter referred to as a ("Major Transaction"), then, as a
condition to such Major Transaction, lawful and adequate provision shall be
made whereby (i) the holders of the Warrant Certificates
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shall thereafter have the right to purchase and receive upon exercise of the
Warrant, on the basis and upon the terms and conditions specified in this
Agreement and in lieu of the Warrant Shares purchasable and receivable upon the
exercise of the rights represented by the Warrants immediately prior to such
Major Transaction, such shares of stock, securities or assets as would be
issuable or payable with respect to or in exchange for the number of Warrant
Shares which would have been outstanding had this Warrant been exercised
immediately prior to such Major Transaction, and (ii) if such Major Transaction
is part of a transaction with any person (or any affiliate of such person) who
shall previously have made a purchase, tender or exchange offer which was
accepted by the holders of not less than twenty percent (20%) of the
outstanding shares of Common Stock, the holder of the Warrants shall have been
given a reasonable period of time (and, in no event, less than 30 days) to
elect to receive upon exercise of the Warrant, on the basis and upon the terms
and conditions specified in this Agreement and in lieu of the Warrant Shares
purchasable and receivable upon the exercise of the rights represented by the
Warrants immediately prior to such Major Transaction, either (x) the stock,
securities, cash or properties it would have received pursuant to clause (i) or
(y) stock, securities, cash or properties of the nature or type issued to
holders of the Common Stock in accordance with such purchase, tender or
exchange offer, or the equivalent thereof, in an amount which the holder of the
Warrants would have received had it held the number of shares of Common Stock
for which the Warrant was exercisable immediately prior to such purchase,
tender or exchange offer.
The Issuer shall not effect any such Major Transaction unless prior to
or simultaneously with the consummation thereof the successor entity (if other
than the Issuer) resulting from such consolidation, merger or amalgamation or
the entity purchasing or otherwise acquiring such assets (i) shall enter into a
supplemental Warrant Agreement, containing provisions with respect to the
rights and interests of the holder of the Warrants (including without
limitation provisions for adjustment of the Exercise Price and of the number
and type of securities purchasable upon the exercise of the Warrants)
substantially identical to the provisions of this Agreement (which supplemental
Warrant Agreement shall be satisfactory in form, scope and substance to a
majority in interest of the holders of the Warrants and shall be mailed or
delivered to the registered holders of the Warrants in accordance with Section
14) and shall assume the obligation to deliver to such holders such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holders may be entitled to purchase (the "Substitute Securities") and (ii)
shall assume all of the obligations of the Issuer set forth in the Put
Agreement of even date herewith between the Issuer and the Purchaser (the "Put
Agreement") and the Registration Rights Agreement of even date herewith between
the Issuer and the Purchaser (the "Registration Rights Agreement"), provided
that such obligations shall, following such assumption, apply to the Substitute
Securities rather than to the Warrants and the Warrant Shares. The foregoing
provisions of this paragraph shall similarly apply to successive Major
Transactions.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee entity, such issuer shall join in the
supplemental Warrant Agreement.
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(l) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED
In any case in which this Section shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified event,
the Issuer may elect to defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares
issuable upon such exercise over and above the Warrant Shares issuable upon
such exercise on the basis of the Exercise Price prior to such adjustment and
(ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 11; provided, however, that the Issuer shall deliver to
such holder a bill or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares and cash upon the occurrence of
the event requiring such adjustment.
(m) ADJUSTMENT IN NUMBER OF SHARES
Upon each adjustment of the Exercise Price pursuant to this Section,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to
the nearest hundredth) obtained from the following formula:
N,= N x E
-
E,
where:
N, = the adjusted number of Warrant Shares issuable upon exercise
of a Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise
of a Warrant by payment of the Exercise Price prior to
adjustment.
E, = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
Anything in this subsection or elsewhere in this Agreement to the contrary
notwithstanding, if, because of any limitation set forth in subsection (h), no
adjustment in the Exercise Price is made, the provisions of this subsection
shall nevertheless be given effect so as to increase the adjusted number of
Warrant Shares as though E, in the above formulas had actually been adjusted.
SECTION 11. FRACTIONAL INTERESTS. The Issuer shall not be required
to issue fractional Warrant Shares on the Exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full Warrant Shares which
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shall be issuable upon exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of the Warrant Shares would, except for the
provisions of this Section, be issuable on the exercise of any Warrants (or
specified portion thereof), the Issuer shall pay an amount in cash equal to the
Exercise Price on the day immediately preceding the date the Warrant is
presented for exercise, multiplied by such fraction.
SECTION 12. PUT OF WARRANT OWNERSHIP; DISPOSITION OF WARRANT SHARES;
REGISTRATION OF WARRANT SHARES. The put and call of the Warrant shall be
governed by the Put Agreement; ownership and disposition of the Warrants and
the Warrant Shares shall be subject to the Stockholders Agreement; and
registration of the Warrant Shares shall be governed by the Registration Rights
Agreement.
SECTION 13. NOTICE TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price or number of Warrant Shares purchasable upon exercise of the
Warrants pursuant to Section 10, and as otherwise required by Section 10, the
Issuer shall promptly thereafter (i) cause to be filed with the Issuer a
certificate of the Chief Financial Officer of the Issuer setting forth the
Exercise Price and the number and type of securities or other property
constituting Warrant Shares after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number and type of securities or
other property constituting Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price or number of Warrant Shares purchasable
upon exercise of the Warrants, upon exercise of a warrant and payment of the
adjusted Exercise Price, and (ii) cause to be given to each of the registered
holders of the Warrant Certificates at its address appearing on the Warrant
register written notice of such adjustments by first-class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included
as a part of the notice required to be mailed under the other provisions of
this Section.
In the event:
(a) the Issuer shall authorize the issuance to holders
(although not necessarily to all such holders) of shares of Common
Stock rights, options or warrants to subscribe for or purchase or
otherwise acquire shares of Common Stock or any other securities or
property (including securities of any other company) or of any other
subscription rights, options or warrants; or
(b) the Issuer shall authorize the payment of any
dividend or distribution to holders of shares of Common Stock of cash,
Common Stock or other securities or property (including securities of
any other company) of the Issuer; or
(c) of any capital reorganization, reclassification or
recapitalization of the capital stock of the Issuer, or any
amalgamation, consolidation or merger to which the
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Issuer is a party, or of the sale, lease, conveyance, transfer or
other disposition of the properties and assets of the Issuer (other
than in the ordinary course of business) substantially as an entirety,
or a purchase, tender or exchange offer for shares of Common Stock or
other securities constituting part of the Warrant Shares (whether by
the Issuer or some other party); or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Issuer; or
(e) the Issuer proposes to take any action which would
require an adjustment of the Exercise Price or number of Warrant
Shares purchasable upon exercise of the Warrants pursuant to Section
10;
then the Issuer shall cause to be given to each of the registered holders of
the Warrant Certificates at his or its address appearing on the Warrant
register, at least 30 days (or 20 days in any case specified in clauses (a) or
(b) above) prior to the applicable record date hereinafter specified (or
promptly in the case of events for which there is no record date) by first
class mail, postage prepaid, a written notice stating (as applicable) (i) the
date as of which the holders of record of shares of Common Stock entitled to
receive any such rights, options, warrants or distribution are to be
determined, (ii) the initial expiration date set forth in any purchase, tender
or exchange offer for shares of Common Stock, or (iii) the date on which any
such consolidation, merger, sale, lease, conveyance, transfer, disposition,
dissolution, liquidation or winding up is expected to become effective or be
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock or other securities constituting a part of the Warrant
Shares (or securities into which the Warrant Shares may be converted) shall be
entitled to exchange such shares or securities for securities or other
property, if any, deliverable upon such reclassification, recapitalization,
reorganization, consolidation, merger, amalgamation, sale, lease, conveyance,
transfer, disposition, dissolution, liquidation or winding up. The failure to
give the notice required by this Section or any defect therein shall not affect
the legality or validity of any distribution, right, option, warrant,
reorganization, recapitalization, reclassification, consolidation, merger,,
amalgamation, sale, lease, conveyance, transfer, disposition, dissolution,
liquidation or winding up, or the vote upon any action.
The Issuer shall give to each Warrant holder written notice of any
determination to register any of its Common Stock at the same time that it
gives notice to holders of Registrable Securities (as defined in the
Registration Rights Agreement) pursuant to the Registration Rights Agreement.
The Issuer shall promptly deliver to each Warrant holder copies of all
reports and filings made with the Securities and Exchange Commission (the
"SEC") or furnished to the holders of its Common Stock or other securities
constituting a part of the Warrant Shares or into which Warrant Shares may be
converted.
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Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the
right to vote or to consent as shareholders in respect of the meetings of
shareholders or the election of members of the Board of Directors of the Issuer
or any other matter, or any rights whatsoever as shareholders of the Issuer.
SECTION 14. NOTICES TO THE ISSUER AND WARRANT HOLDERS. Any notice or
demand authorized by this Agreement to be given or made by the registered
holder of any Warrant Certificate to or on the Issuer shall be sufficiently
given or made when received at the office of the Issuer expressly designated by
the Issuer as its office for purposes of this Agreement (until the Warrant
holders are otherwise notified in accordance with this Section by the Issuer),
as follows:
First Premium Services, Inc.
520 Lake Cook Road
Suite 300
Deerfield, Illinois 60015-4926
Attention: Mr. James C. Knollenberg
with a copy to: Rudnick & Wolfe
203 North LaSalle Street, Suite 1800
Chicago, Illinois 60601
Attention: Michael B. Fischer, Esq.
Any notice pursuant to this Agreement to be given by the Issuer to the
registered holder(s) of any Warrant Certificate shall be sufficiently given
when received by such holder at the address appearing on the Warrant register
of the Issuer (until the Issuer is otherwise notified in accordance with this
Section by such holder).
SECTION 15. CASH DISTRIBUTIONS AND DIVIDENDS. The Issuer shall not
declare or pay any dividends or make any distributions to the holders of its
Common Stock other than dividends payable in and distributions of Common Stock.
Notwithstanding the foregoing and without authorizing same, if the Issuer pays
a dividend or makes a distribution to the holders of its Common Stock of any
securities (other than Common Stock) or property (including cash and securities
of other companies) of the Issuer, or any rights, options or warrants to
purchase securities (other than Common Stock) or property (including securities
of other companies) of the Issuer, then, simultaneously with the payment of
such dividend or the making, of such distribution, it will pay or distribute to
the holders of the Warrant Certificates an amount of property (including
without limitation cash) and/or securities (including without limitation
securities of other companies) of the Issuer as would have been received by
such holders had they exercised all of the Warrants (whether or not the
Warrants were then exercisable) immediately prior to the record date (or other
applicable date) used for determining stockholders of the Issuer entitled to
receive such dividend or distribution. Anything in subsection (d) of Section
10 to the contrary notwithstanding, no adjustment to the Exercise Price shall
be made for any distribution
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of Convertible Securities of the Issuer to the Warrant holders pursuant to the
provisions of this Section.
SECTION 16. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Issuer or the holders shall bind and
inure to the benefit of their respective successors and assigns, including
those by operation of law, merger, consolidation or as otherwise provided in
Section 10(k).
SECTION 17. TERMINATION. This Agreement shall terminate when all
Warrants have been exercised pursuant to this Agreement, have expired
unexercised in accordance with their terms or have been redeemed pursuant to
the Put Agreement.
SECTION 18. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE ISSUED HEREUNDER SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE
LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.
SECTION 19. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Issuer
and the registered holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Issuer and the registered holders of the
Warrant Certificates.
SECTION 20. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.
SECTION 21. AMENDMENTS; WAIVERS. No provision of this Agreement may
be amended or waived except by an instrument in writing signed by the party
sought to be bound; provided, however, that any amendment requested or waiver
sought from the Warrant holders of any provision of this Agreement which
affects Warrant holders generally may be given by holders of at least sixty-six
and two-thirds percent (66-2/3%) of the Warrants outstanding and any waiver so
given shall be binding on all Warrant holders; provided, however, that the
provisions of Section 6 with respect to the type of securities for which the
Warrants are exercisable may not be changed without the consent of each holder
of Warrants affected thereby. No failure or delay by any party in exercising
any right or remedy hereunder shall operate as a waiver thereof, nor shall a
waiver of a particular right or remedy on one occasion be deemed a waiver of
any other right or remedy or a waiver of the same right or remedy on any
subsequent occasion.
SECTION 22. WAIVER OF JURY TRIAL. THE PURCHASER AND THE ISSUER
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS
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THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, THE WARRANTS OR
ANY OTHER DOCUMENT EXECUTED PURSUANT HERETO, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PURCHASER OR
THE ISSUER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PURCHASER'S
ENTERING INTO THIS AGREEMENT.
SECTION 23. JURISDICTION. The Issuer hereby agrees that any legal
action or proceeding against it with respect to this Agreement, the Warrants or
any of the documents delivered in connection herewith or therewith may be
brought in the courts of the State of New York or of the United States of
America for the Southern District of New York as any holder of the Warrants may
elect, and, by execution and delivery hereof, it accepts and consents for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts and agrees that such jurisdiction shall be
exclusive, unless waived by a majority in interest of the holders of the
Warrants in writing, with respect to any action or proceeding brought by it
against such holders. The Issuer hereby irrevocably designates, appoints and
empowers CT Corporation Systems, whose present address is 1633 Broadway, New
York, New York 10019 as its authorized agent to receive, for and on behalf of
it and its property, service of process in the State of New York when and as
such legal actions or proceedings may be brought in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and such service of process shall be deemed complete upon the date of
delivery thereof to such agent, or upon the earliest of any other date
permitted by applicable law. It is understood that a copy of said process
served on such agent will be forwarded to the Issuer as soon as practicable, at
is address set forth herein, but its failure to receive such copy shall not
affect in any way the service of said process on said agent as the agent of the
Issuer. The Issuer irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the mailing of
the copies thereof by certified mail, return receipt requested, postage
prepaid, to it at its address set forth herein, such service to become
effective upon the earlier of (1) the date 10 calendar days after such mailing
and (ii) any earlier date permitted by applicable law. The Issuer agrees that
it will at all times continuously maintain an agent to receive service of
process in the State of New York on behalf of itself and its properties and in
the event that, for any reason, the agent named above or its successor shall no
longer serve as its agent to receive service of process in the State of New
York on its behalf, it shall promptly appoint a successor so to serve and shall
advise the holders of the Warrants thereof. The Issuer agrees that Sections
5-1401 and 5-1402 of the General Obligations Law of the State of New York shall
apply to this Agreement and waives any right to stay or to dismiss any action
or proceeding brought before said courts on the basis of forum non conveniens.
Nothing herein shall affect the right of any holder of the Warrants to bring
proceedings against the Issuer in the courts of any other jurisdiction or to
serve process in any other manner permitted by applicable law.
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SECTION 24. SPECIFIC PERFORMANCE. The Issuer recognizes that the
rights of the holders of the Warrants under this Agreement are unique and,
accordingly, the holders of the Warrants shall, in addition to such other
remedies as may be available to any of them at law or in equity, have the right
to enforce their rights hereunder by actions for injunctive relief and specific
performance to the extent permitted by law. The Issuer agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive in
any action for specific performance the defense that a remedy at law would be
adequate. This Agreement is not intended to limit or abridge any rights of the
holders of the Warrants which may exist apart from this Agreement.
SECTION 25. ANNUAL AND QUARTERLY REPORTS; OTHER INFORMATION. The
Issuer will deliver to each holder of Warrants and Warrant Shares,
(a) as soon as practicable after the end of each fiscal
year audited annual financial statements of the Issuer and after the
end of each quarter, unaudited quarterly financial statements of the
Issuer, including, in each case, a balance sheet, a statement of
operations, and a statement of cash flow of the Issuer for such year
or quarter, all prepared in accordance with generally accepted
accounting principles;
(b) as soon as available, copies of all documents (other
than any which have been granted confidential treatment) filed with
the SEC;
(c) as soon as available, copies of all reports and
financial and other information furnished to its shareholders; and
(d) until the consummation of the initial public offering
of any class of equity securities of the Issuer, such other financial
and other information as may, from time to time, be reasonably
requested by any such holder.
SECTION 26. CHARTER PROVISIONS.
So long as any Warrants or issued Warrant Shares are outstanding, the
Issuer's certificate of incorporation shall contain the following provisions
regarding the Class A Stock and the Class B Stock:
"FOURTH: Number of Shares. The total number of shares of
stock which the Corporation shall have authority to issue is:
_______________ (_________) shares of capital stock (the
"Capital Stock"), of which _________________ (________) shall
be designated Class A Voting Common Stock, par value $.01 per
share (herein called the "Class A Common Stock"),
______________ (_________) shall be designated Class B
Nonvoting Convertible
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Common Stock, par value $.01 per share (herein called the
"Class B Common Stock") [and ________________ (__________)
shall be designated Preferred Stock, [no] par value
[$___________] per share]. The Class A Common Stock and Class
B Common Stock are sometimes hereinafter jointly referred to
as the Common Stock.
All cross references in each subdivision of this ARTICLE refer to
other paragraphs in such subdivision unless otherwise indicated.
COMMON STOCK
Except as otherwise provided herein, all shares of Class A Common
Stock and Class B Common Stock will be identical and will entitle the holders
thereof to the same rights and privileges.
(1) VOTING RIGHTS. Each share of Common Stock of the corporation
shall be equal in all respects to each other share of Common Stock, except that
the Class B Common Stock shall have no voting power or voting rights with
respect to any matter whatsoever (except as may be otherwise required by law).
The holders of shares of Class A Common Stock shall be entitled to one (1) vote
for each share of Common Stock held with respect to all matters as to which the
Class A Common Stock is entitled to be voted. Except as otherwise stated in a
Certificate of Designation designating any class or series of Preferred Stock
or as otherwise required by law, the holders of the Class A Common Stock shall
vote together with the holders of shares of the Preferred Stock and not
separately by class, on any matter as to which the Class A Common Stock is
entitled to be voted.
(2) DIVIDENDS. The holders of the Common Stock shall be entitled
to receive such dividends (payable in cash, stock or otherwise) as may be
declared on the Common Stock by the Board of Directors at any time or from time
to time out of any funds legally available therefor. When and as dividends are
declared thereon, whether payable in cash, property or securities of the
Corporation, the holders of Class A Common Stock and the holders of Class B
Common Stock will be entitled to share, ratably according to the number of
shares of Class A Common Stock or Class B Common Stock held by them, in such
dividends; provided that if dividends are declared which are payable in shares
of Class A Common Stock or Class B Common Stock, dividends will be declared
which are payable at the same rate on both classes of Common Stock, and the
dividends payable in shares of Class A Common Stock will be payable to holders
of Class A Common Stock, and the dividends payable in shares of Class B Common
Stock will be payable to the holders of Class B Common Stock.
(3) LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
after payment shall have been made to the holders of any preferred stock
pursuant to this ARTICLE, the holders of Class A Common Stock
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and Class B Common Stock shall be entitled, to the exclusion of the holders of
preferred stock, to share, ratably according to the number of shares of Class A
Common Stock or Class B Common Stock held by them, in the remaining assets of
the Corporation available for distribution to its stockholders.
(4) CONVERSION OF CLASS B COMMON STOCK. (i) At any time and from
time to time, each record holder of Class B Common Stock will be entitled to
convert any and all of the shares of such holder's Class B Common Stock into
the same number of shares of Class A Common Stock at such holder's election;
provided that each holder of Class B Common Stock shall only be entitled to
convert any share or shares of Class B Common Stock to the extent that after
giving effect to such conversion such holder or its affiliates shall not
directly or indirectly own, control or have power to vote a greater quantity of
securities of any kind issued by the Corporation than such holder and its
affiliates are permitted to own, control or have power to vote under any law or
under any regulation, rule or other requirement of any governmental authority
at any time applicable to such holder and its affiliates.
(ii) Each conversion of shares of Class B Common Stock into shares
of Class A Common Stock will be effected by the surrender of the certificate or
certificates representing the shares to be converted at the principal office of
the Corporation (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holder or holders of the
Class B Common Stock) at any time during normal business hours, together with a
written notice by the holder of such Class B Common Stock stating that such
holder desires to convert the shares, or a stated number of the shares, of
Class B Common Stock represented by such certificate or certificates into Class
A Common Stock and that upon such conversion such holder and its affiliates
will not directly or indirectly own, control or have the power to vote a
greater quantity of securities of any kind issued by the Corporation than such
holders and its affiliates are permitted to own, control or have the power to
vote under any applicable law, regulation, rule or other governmental
requirement (and such statement will obligate the Corporation to issue such
Class A Common Stock). Such conversion will be deemed to have been effected as
of the close of business on the date on which such certificate or certificates
have been surrendered and such notice has been received, and at such time the
rights of the holder of the converted Class B Common Stock as such holder will
cease and the person or persons in whose name or names the certificate or
certificates for shares of Class A Common Stock are to be issued upon such
conversion will be deemed to have become the holder or holders of record of the
shares of Class A Common Stock represented thereby.
(iii) Promptly after such surrender and the receipt of such written
notice, the Corporation will issue and deliver in accordance with the
surrendering holder's instructions (x) the certificate or certificates for the
Class A Common Stock issuable upon such conversion and (y) a certificate
representing any class B Common Stock which was represented by the certificate
or certificates delivered to the Corporation in connection with such conversion
but which was not converted.
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(iv) If the Corporation in any manner subdivides or combines the
outstanding shares of either Class A Common Stock or Class B Common Stock, the
outstanding shares of the other class will be proportionately subdivided or
combined.
(v) In the case of, and as a condition to, any capital
reorganization of, or any reclassification of the capital stock of, the
Corporation (other than a subdivision or combination of shares of Class A
Common Stock or Class B Common Stock into a greater or lesser number of shares
(whether with or without par value) or a change in the par value of Class A
Common Stock or Class B Common Stock or from par value to no par value, or from
no par value to par value) or in the case of, and as a condition to, the
consolidation or merger of the Corporation with or into another corporation
(other than a merger in which the Corporation is the continuing corporation and
which does not result in any reclassification of outstanding shares of Class A
Common Stock or Class B Common Stock), each share of Class B Common Stock shall
be convertible into the number of shares of stock or other securities or
property receivable upon such reorganization, reclassification, consolidation
or merger by a holder of the number of shares of Class A Common Stock of the
corporation into which such share of Class B Common Stock was convertible
immediately prior to such reorganization, reclassification, consolidation or
merger; and, in any such case, appropriate adjustment shall be made in the
application of the provisions set forth in this paragraph (4) with respect to
the rights and interests thereafter of the holders of Class B Common Stock to
the end that the provisions set forth in this paragraph (4) (including
provisions with respect to the conversion rate) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the conversion of the shares
of Class B Common Stock.
(vi) Shares of Class B Common Stock which are converted into shares
of Class A Common Stock as provided herein shall not be reissued.
(vii) The Corporation wail at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock or its
treasury shares, solely for the purpose of issuance upon the conversion of the
Class B Common Stock as provided in this paragraph (4), such number of shares
of Class A Common Stock as shall then be issuable upon the conversion of all
then outstanding shares of Class B Common Stock (assuming that all such shares
of Class B Common Stock are held by persons entitled to convert such shares
into Class A Common Stock).
(viii) The issuance of certificates for Class A Common Stock upon
conversion of Class B Common Stock will be made without charge to the holders
of such shares for any stamp, transfer or issuance tax in respect thereof or
other cost incurred by the corporation in connection with such conversion and
the related issuance of Class A Common Stock. The Corporation will not close
its books against the transfer of Class B Common Stock or of Class A Common
Stock issued or issuable upon conversion of Class B Common Stock in any manner
which would interfere with the timely conversion of Class B Common Stock."
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Notwithstanding the foregoing and subject to Section 9 hereof, the Issuer may
from time to time amend its certificate of incorporation, without the consent
of the Warrant holders to increase the authorized number of shares of Common
Stock.
SECTION 27. COVENANTS.
The Issuer hereby covenants and agrees that, except as Purchaser may
otherwise agree in writing, the Issuer shall:
(i) CONTINUANCE OF BUSINESS, ETC. Not wind up, liquidate or
dissolve; not engage to a material extent in any line of business other than
those in which it is actively engaged on the date hereof; maintain all rights,
privileges and franchises necessary in the normal conduct of its business; and
conduct its business in compliance in all material respects with all
requirements of law (including environmental laws and, with respect to all
employee benefit plans, the Employee Retirement Income Security Act of 1974, as
amended).
(ii) TRANSACTIONS WITH AFFILIATES. Not enter into any transaction,
including, without limitation, the purchase, sale, leasing or exchange of
property, real or personal, or the rendering of any service, with any person or
entity affiliated with Issuer, except in the ordinary course of, and pursuant
to the reasonable requirements of, its business and upon fair and reasonable
terms non less favorable than would be obtained in a comparable arms-length
transaction with any other person or entity not affiliated with Issuer.
(iii) OTHER OBLIGATIONS. Maintain all of its obligations for
borrowed money, including, without limitation, its obligations to LaSalle
National Bank under the Loan and Security Agreement, dated as of June 26, 1991
and as amended to date and from time to time hereafter, between the Issuer and
LaSalle, as agent for itself and The Daiwa Bank Limited, in a current status.
(iv) RESTRICTED PAYMENTS. Not purchase, redeem or retire or make
any dividend or distribution on account of any shares of the capital stock of
Issuer or issue any phantom stock or stock appreciation rights, except fore
redemption of the Initial Preferred Stock (as defined in the Put Agreement)
pursuant to the terms thereof.
(v) DEERPATH WARRANTS. On or before February 28, 1993, convert
the Deerpath Shares into, or exchange them for, Deerpath Warrants exercisable
not earlier than December 31, 1995 for not more than 600 shares of Common Stock
at an exercise price of not less than $500 per share.
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(vi) DEERPATH PREFERRED STOCK. The rights, designations,
preferences, redemption provisions and other terms of the Initial Preferred
Stock (as defined in the Put Agreement) shall be satisfactory in form and
substance to the Purchaser.
(vii) STOCKHOLDERS AGREEMENT. Enter into the Stockholders Agreement
on or before February 28, 1993.
(viii) REGISTRATION RIGHTS AGREEMENT. Enter into a Registration
Rights Agreement satisfactory in form and substance to the Purchaser on or
before February 28, 1993.
The covenants set forth in this Section 27 shall survive the exercise of the
Warrants and the termination of this Agreement and shall remain in full force
and effect until the expiration of the Put Agreement.
SECTION 28. PURCHASER OPTION. (a) In the event the Issuer issues
additional shares of Common Stock (other than shares issued upon the exercise
of any Warrant), it shall so notify the Purchaser in writing (the "Issuance
Notice") prior to accepting subscriptions for such stock. The Purchaser shall
be granted an option to subscribe for that number of such additional shares of
Common Stock not in excess of the number obtained by multiplying (i) the total
number of additional shares of Common Stock issued by (ii) a fraction (a) the
numerator of which is the number of Warrant Shares for which the Warrants are
exercisable at the time of such issuance and (b) the denominator of which is
the total number of issued and outstanding shares of Common Stock prior to such
issuance. Such shares to be purchased by the Purchaser shall be issued as
Class B Common Stock if the Purchaser so requests.
(b) The Purchaser shall have a period of ten (10) Business Days
(as defined in the Put Agreement) from the date of receipt of the Issuance
Notice (the "Election Expiration Date") to elect, by written notice to the
Issuer (the "Response Notice"), to subscribe or refrain from subscribing for
any additional shares. If the Purchaser elects to purchase additional shares
it shall (i) specify in the Response Notice the number of shares for which it
elects to subscribe, up to the maximum to which it shall be entitled pursuant
to paragraph (a) above, (ii) execute a subscription agreement in the form
customarily used by the Issuer in accepting subscriptions for its capital stock
and (iii) make payment for such shares within the time required by the Issuer.
In the event the Purchaser does not deliver a Response Notice to the Issuer on
or prior to the Election Expiration Date, the Purchaser shall be deemed to have
elected to refrain from subscribing for any additional shares.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year set above written.
FIRST PREMIUM SERVICES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
Attest:________________________________
Secretary/Assistant Secretary
INTERNATIONALE NEDERLANDEN (U.S.)
FINANCE CORPORATION
By:_____________________________________
Name:________________________________
Title:_______________________________
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year set above written.
FIRST PREMIUM SERVICES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
Attest:________________________________
Secretary/Assistant Secretary
INTERNATIONALE NEDERLANDEN (U.S.)
FINANCE CORPORATION
By:_____________________________________
Name: Jamie Gubbins
Title: Senior Vice President
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION, OR AN OPINION
OF COUNSEL (WHICH MAY BE COUNSEL TO THE HOLDER) AS TO AN EXEMPTION, FROM THE
REGISTRATION PROVISIONS OF SAID ACT.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A PUT
AGREEMENT, DATED AS OF February 12, 1993 BY AND BETWEEN FIRST PREMIUM SERVICES,
INC. AND INTERNATIONALE NEDERLANDEN (U.S.) FINANCE CORPORATION.
1114 Warrants
WARRANT CERTIFICATE
FIRST PREMIUM SERVICES, INC.
This warrant Certificate certifies that INTERNATIONALE NEDERLANDEN
(U.S.) FINANCE CORPORATION, or registered assigns, is the registered holder of
the number of Warrants (the "Warrants") set forth above to purchase shares of
Class B Convertible Common Stock (the "Common Stock") of FIRST PREMIUM
SERVICES, INC., an Illinois corporation ("the Issuer"). Each Warrant entitles
the holder upon exercise to receive from the Issuer one fully paid and
nonassessable share of Class B Convertible Common Stock, $.01 par value, of the
Issuer (a "Warrant Share") at the initial exercise price (the "Exercise Price")
of $500, payable in lawful money of the United States of America, upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
office of the Issuer designated for such purpose, subject to the conditions set
forth herein and in the Warrant Purchase Agreement hereinafter referred to.
The Exercise Price and number and type of Warrant Shares issuable upon exercise
of the Warrants are subject to adjustment upon the occurrence of certain
events, as set forth in the Warrant Purchase Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants, and are issued or to be issued pursuant to a
Warrant Purchase Agreement dated as of February 12, 1993 (the "Warrant
Agreement"), duly executed and delivered by the Issuer, which Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and
is hereby referred to for a description of the rights, obligations, duties and
immunities hereunder of the Issuer and the holders of the Warrants (the words
"holders" or "holder" meaning the
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registered holders or registered holder). A copy of the Warrant Agreement may
be obtained by the holder hereof upon written request to the Issuer.
The holder of Warrants evidenced by this Warrant Certificate may
exercise such Warrants under and pursuant to the terms and conditions of the
Warrant Agreement by surrendering this Warrant Certificate, with the form of
election to purchase attached hereto (and by this reference made a part hereof)
properly completed and-executed, together with payment of the Exercise Price in
cash or by check payable to the order of the Issuer at the office of the Issuer
designated for such purpose. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the total
number of Warrants evidenced hereby, there shall be issued by the Issuer to the
holder hereof or his or its registered assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractional shares of Common
Stock will be issued upon the exercise of any Warrant, but the Issuer will pay
the cash value thereof determined as provided in the Warrant Agreement. No
adjustment shall be made for any cash dividends on any Common Stock issuable
upon exercise of this Warrant.
The Warrant Agreement provides that upon exercise of the Warrants, the
holder of Common Stock issued upon such exercise will be bound by and subject
to the terms of that certain Stockholders Agreement dated as of February 12,
1993, by and among the Issuer, Crabtree Capital Corporation, the Purchaser
listed therein, and the other parties thereto (the "Stockholders Agreement").
By acceptance of this Warrant Certificate, the holder hereof agrees that upon
exercise of some or all of the Warrants evidenced hereby, he or it will be
bound by the Stockholders Agreement as a Purchaser thereunder. A copy of the
Stockholders Agreement may be obtained by the holder hereof upon written
request to the Issuer.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock issuable upon the exercise thereof.
Said registration rights are set forth in a Registration Rights Agreement dated
as of February 12, 1993, by and between the Issuer and the Purchaser of the
Warrants (the "Registration Rights Agreement"). By acceptance of this Warrant
Certificate, the holder hereof agrees that upon exercise of some or all of the
Warrants evidenced hereby, he or it will be bound by the Registration Rights
Agreement as a Purchaser thereunder. A copy of the Registration Rights
Agreement may be obtained by the holder hereof upon written request to the
Issuer.
The Warrants are subject to that certain Put Agreement, dated as of
February 12, 1993, by and among the Issuer, and the Purchaser of the Warrants
(the "Put Agreement"), pursuant to which the holder hereof possesses certain
rights to put the Warrants to the Issuer, all at the times
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32
specified in, and pursuant to the terms and conditions set forth in the Put
Agreement. By acceptance of this Warrant Certificate, the holder hereof agrees
to be bound by the Put Agreement to the same extent as the Purchaser of the
Warrants. A copy of the Put Agreement may be obtained by the holder hereof
upon written request to the Issuer.
Warrant Certificates, when surrendered at the office of the Issuer by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
The Issuer may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing made hereon) for the purpose of any exercise hereof,
of any distribution to the holder(s) hereof and for all other purposes, and the
Issuer shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Issuer (other than the right to receive dividends and
distributions as set forth in Section 15 of the Warrant Agreement).
IN WITNESS WHEREOF, First Premium Services, Inc. has caused this
Warrant Certificate to be signed by its duly authorized officers and has caused
its corporate seal to be affixed hereunto or imprinted hereon.
Dated: February 12, 1993 FIRST PREMIUM SERVICES, INC.
By:_____________________________________
Name:________________________________
Title:_______________________________
By:_____________________________________
Name:________________________________
Title:_______________________________
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FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned holder hereby represents that he or it is the
registered holder of this Warrant Certificate, and hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, to receive shares
of Class B Convertible Common Stock, par value $.01 per share, of First Premium
Services, Inc., and herewith tenders payment for such shares to the order of
First Premium Services, Inc. in the amount of $_______________ in accordance
with the terms hereof or by reduction and application of amounts due under the
Issuer's Note (as defined in Section 6 of the Warrant Agreement). The
undersigned requests that a certificate for such shares be registered in the
name of the undersigned or his/its nominee hereinafter set forth, and further
that such certificate be delivered to the undersigned at the address
hereinafter set forth or to such other person or entity as is hereinafter set
forth. If said number of shares is less than all of the shares of Common Stock
purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares be registered in the name of
the undersigned or his/its nominee hereinafter set forth, and further that such
certificate be delivered to the undersigned at the address hereinafter set
forth or to such other person or entity as is hereinafter set forth.
Certificate to be registered as follows:
Name:_________________________________________________
Address:______________________________________________
Certificate to be delivered as follows:
Name:_________________________________________________
Address:______________________________________________
Date:________________________________ _______________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the face of Warrant, unless Form of
Assignment has been executed)
Federal Taxpayer ID No.______________
34
FORM OF ASSIGNMENT
(TO BE EXECUTED UPON TRANSFER OF WARRANT)
For value received, the undersigned registered holder of the enclosed
Warrant hereby sells, assigns and transfers unto the right represented by such
warrant to purchase shares of Common Stock of First Premium Services, Inc. to
which such Warrant relates, and appoints Attorney to make such transfer on the
books of First Premium Services, Inc. maintained for such purpose, with full
power of substitution in the premises.
Date:_________________________________ _______________________________________
(Signature must conform in all respects
to the name of the holder as specified
on the face of Warrant, unless Form of
Assignment has been executed)
________________________________________
(Street Address)
________________________________________
(City, State, Zip Code)
Assignee's Federal Taxpayer ID No._________