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EXHIBIT 4.8
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DenAmerica Corp.
Common Stock Purchase Warrant
Dated as of July 3, 1996
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THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION UNDER SUCH ACT AND
LAWS IS IN EFFECT OR PURSUANT TO AN EXEMPTION THEREFROM UNDER SUCH ACT
AND LAWS. THIS WARRANT AND SUCH SHARES MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS WARRANT.
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TABLE OF CONTENTS
1. Exercise of Warrant................................................... 1
1.1. Manner of Exercise......................................... 1
1.2. When Exercise Effective.................................... 2
1.3. Delivery of Stock Certificates, etc........................ 2
2. Adjustment of Common Stock Issuable Upon Exercise..................... 2
2.1. General; Warrant Price..................................... 2
2.2. Adjustment of Warrant Price................................ 3
2.2.1 Issuance of Additional Shares of Common Stock........ 3
2.2.2 Extraordinary Dividends and Distributions............ 3
2.3. Treatment of Options and Convertible Securities............ 4
2.4. Treatment of Stock Dividends, Stock Splits, etc............ 7
2.5. Computation of Consideration............................... 7
2.6. Adjustments for Combinations, etc.......................... 8
2.7. Dilution in Case of Other Securities....................... 9
2.8. Minimum Adjustment of Warrant Price........................ 9
3. Consolidation, Merger, etc............................................ 9
3.1. Adjustments for Consolidation, Merger, Sale
of Assets, Reorganization, etc............................ 9
3.2. Assumption of Obligations.................................. 10
4. Other Dilutive Events................................................. 11
5. No Dilution or Impairment............................................. 11
6. Accountants' Report as to Adjustments................................. 12
7. Notices of Corporate Action........................................... 12
8. Registration of Common Stock.......................................... 13
9. Restrictions on Transfer.............................................. 14
9.1. Restrictive Legends........................................ 14
9.2. Notice of Proposed Transfer; Opinions of Counsel........... 14
9.3. Termination of Restrictions................................ 16
10. Availability of Information.......................................... 16
11. Reservation of Stock, etc............................................ 17
12. Registration and Transfer of Warrants, etc........................... 17
12.1. Warrant Register; Ownership of Warrants.................... 17
12.2. Transfer and Exchange of Warrants......................... 17
12.3. Replacement of Warrants................................... 17
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13. Registration under Securities Act, etc................................ 18
13.1. Registration on Request.................................... 18
13.2. Incidental Registration.................................... 20
13.3. Registration Procedures.................................... 22
13.4. Underwritten Offerings..................................... 27
13.5. Preparation; Reasonable Investigation...................... 30
13.6. Indemnification............................................ 30
14. Definitions........................................................... 35
15. Remedies.............................................................. 41
16. No Rights or Liabilities as Stockholder. ............................. 41
17. Notices............................................. 41
18. Amendments.......................................... 41
19. Expiration.......................................... 41
20. Representation with Respect to Capitalization....... 42
21. Covenant with Respect to Books,
Records and Inspections.................................. 42
22. Expenses............................................ 42
23. Descriptive Headings................................ 42
24. GOVERNING LAW....................................... 42
25. Judicial Proceedings; Waiver of Jury................ 42
FORM OF SUBSCRIPTION................................................................ 43
FORM OF ASSIGNMENT.................................................................. 44
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DENAMERICA CORP.
Common Stock Purchase Warrant
No. _______ July 3, 1996
DenAmerica Corp., a Georgia corporation (the "Company"), for value
received, hereby certifies that Banque Paribas, Cayman Island Branch, or
registered assigns, is entitled to purchase from the Company 300,000 duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
par value $.10 per share (the "Common Stock") of the Company. The purchase price
of the shares of Common Stock will be (a) with respect to the first 150,000
shares, 80% of the closing price of the Common Stock on the Effective Date (as
defined in that certain First Amendment to Credit Agreement (the "First
Amendment") by and among the Company, the Banks party thereto, and Banque
Paribas, individually and as agent (in such capacity, the "Agent"), which
amendment amends that certain Credit Agreement (the "Credit Agreement") dated as
of February 2, 1996, among the Company, the Banks named therein and Banque
Paribas, individually and as Agent) and (b) with respect to the remaining
150,000 shares, 120% of the closing price of the Common Stock on the Effective
Date (the "Warrant Price").
This Warrant is one of the Common Stock Purchase Warrants (the
"Warrants", such term to include any such warrants issued in substitution
therefor) originally issued pursuant to the Fee Letter (the "Fee Letter"), dated
July 3, 1996, between American Family Restaurants, Inc., a Georgia corporation
and Banque Paribas (the "Lender"). Certain capitalized terms used in this
Warrant are defined in section 14; references to an "Exhibit" are, unless
otherwise specified, to one of the Exhibits attached to this Warrant and
references to a "section" are, unless otherwise specified, to one of the
sections of this Warrant.
1. Exercise of Warrant. 1.1. Manner of Exercise. This Warrant may be
exercised by the holder hereof, in whole or in part, during normal business
hours on any Business Day on or before July 3, 2002, by surrender of this
Warrant to the Company at its principal office, accompanied by a subscription in
substantially the form attached to this Warrant (or a reasonable facsimile
thereof) duly executed by such holder and accompanied by payment, in cash, by
certified or official bank check payable to the order of the Company, in the
amount ob-
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tained by multiplying (a) the number of shares of Common Stock (without giving
effect to any adjustment thereof) designated in such subscription by (b) the
Warrant Price applicable to such shares, and such holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock (or Other Securities) determined as
provided in sections 2 through 4.
1.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in section 1.1, and at such time the Person or Persons in whose name or
names any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in section 1.3
shall be deemed to have become the holder or holders of record thereof.
1.3. Delivery of Stock Certificates, etc. As soon as practicable after
each exercise of this Warrant, in whole or in part, and in any event within ten
Business Days thereafter, the Company at its expense (including the payment by
it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder hereof or, subject to section 9, as such holder (upon
payment by such holder of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share on the Business Day
next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment thereof) to the number of such shares called
for on the face of this Warrant minus the number of such shares
designated by the holder upon such exercise as provided in section 1.1.
2. Adjustment of Common Stock Issuable Upon Exercise. 2.1. General;
Warrant Price. The Warrant
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Price shall be adjusted and readjusted from time to time as provided
in this section 2 and, as so adjusted or readjusted, shall remain in
effect until a further adjustment or readjustment thereof is required
by this section 2.
2.2. Adjustment of Warrant Price.
2.2.1 Issuance of Additional Shares of Common Stock. In case
the Company at any time or from time to time after the date hereof
shall issue or sell Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to
section 2.3 or 2.4) without consideration or for a consideration per
share less than the greater of the Current Market Price and the Warrant
Price in effect immediately prior to such issue or sale, then, and in
each such case, subject to section 2.8, such Warrant Price shall be
reduced, concurrently with such issue or sale, to a price (calculated
to the nearest .001 of a cent) determined by multiplying such Warrant
Price by a fraction
(a) the numerator of which shall be (i) the number of
shares of Common Stock outstanding immediately prior to such
issue or sale plus (ii) the number of shares of Common Stock
which the aggregate consideration received by the Company for
the total number of such Additional Shares of Common Stock so
issued or sold would purchase at the greater of such Current
Market Price and such Warrant Price, and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such
issue or sale,
provided that, for the purposes of this section 2.2.1, (x) immediately
after any Additional Shares of Common Stock are deemed to have been
issued pursuant to section 2.3 or 2.4, such Additional Shares shall be
deemed to be outstanding, and (y) treasury shares shall not be deemed
to be outstanding.
2.2.2 Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of other or additional
stock or other securities or property or Options by way of dividend or
spin-off, reclassification, recapitalization or similar corporate
rearrangement) on the Common Stock, other than (a) a dividend payable
in Additional Shares of Common Stock (b) a regular periodic cash
dividend, then, and in each such case, subject to section 2.8, the
War-
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rant Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades
on an ex-dividend basis, on the date prior to the commencement
of ex-dividend trading, less the amount of such dividend or
distribution (as determined in good faith by the Board of
Directors of the Company) applicable to one share of Common
Stock, and
(y) the denominator of which shall be such Current Market
Price,
provided that, in the event that the amount of such dividend as so determined is
equal to or greater than 80% of such Current Market Price or in the event that
such fraction is less than 1/5, in lieu of the foregoing adjustment, adequate
provision shall be made so that the holder of this Warrant shall receive, at the
time of exercise thereof, a pro rata share of such dividend based upon the
maximum number of shares of Common Stock at the time issuable to such holder
(determined without regard to whether the Warrant is exercisable at such time).
2.3. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case of Convertible Securities and Options therefor, the conversion or exchange
of such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue, sale, grant or assumption or,
in case such a record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading), provided that such
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to section
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2.5) of such shares would be less than the greater of the Current
Market Price and the Warrant Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or
immediately prior to the close of business on such record date (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading), as the case may be, and
provided, further, that in any such case in which Additional Shares of
Common Stock are deemed to be issued
(a) no further adjustment of the Warrant Price shall be made
upon the subsequent issue or sale of Convertible Securities or
shares of Common Stock upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, except in
the case of any such Options or Convertible Securities which
contain provisions requiring an adjustment, subsequent to the date
of the issue or sale thereof, of the number of Additional Shares of
Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities by reason of
(x) a change of control of the Company, (y) the acquisition by any
Person or group of Persons of any specified number or percentage of
the Voting Securities of the Company or (z) any similar event or
occurrence, each such case to be deemed hereunder to involve a
separate issuance of Additional Shares of Common Stock, Options or
Convertible Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in
the consideration payable to the Company, or decrease in the number
of Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise),
the Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or
date prior to the commencement of ex-dividend trading, as the case
may be, with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of conversion or
exchange under such Convertible Securities, which are outstanding
at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not
have been exercised or the expiration of any rights of conversion
or exchange
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under any such Convertible Securities which (or purchase by the
Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall
not have been exercised, the Warrant Price computed upon the
original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of
ex-dividend trading, as the case may be, with respect thereto), and
any subsequent adjustments based thereon, shall, upon such
expiration (or such cancellation or retirement, as the case may
be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued or
sold upon the exercise of such Options were issued at the time
of the issue, sale, grant or assumption of such Options, and
the consideration received by the Company for the Additional
Shares of Common Stock deemed to have then been issued was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration deemed to have been received
by the Company (pursuant to section 2.5) upon the issue or
sale of such Convertible Securities with respect to which such
Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount in
excess of the amount of the adjustment thereof originally made in
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respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
2.4. Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof
shall declare or pay any dividend on the Common Stock payable in Common
Stock, or shall effect a subdivision of the outstanding shares of
Common Stock into a greater number of shares of Common Stock (by
reclassifica- tion or otherwise than by payment of a dividend in Common
Stock), then, and in each such case, Additional Shares of Common Stock
shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date
for the determination of holders of any class of securities entitled to
receive such dividend, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day upon
which such corporate action becomes effective.
2.5. Computation of Consideration. For the purposes of this
section 2,
(a) the consideration for the issue or sale of any
Additional Shares of Common Stock shall, irrespective of the
accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed at
the amount of cash received by the Company, without
deducting any expenses paid or incurred by the Company
or any commissions or compensations paid or concessions
or discounts allowed to underwriters, dealers or others
performing similar services in connection with such
issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair
value thereof at the time of such issue or sale, as
determined in good faith by the Board of Directors of
the Company, and
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(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities
or other assets of the Company for a consideration which
covers both, be the portion of such consideration so
received, computed as provided in clauses (i) and (ii)
above, allocable to such Additional Shares of Common
Stock, all as determined in good faith by the Board of
Directors of the Company;
(b) Additional Shares of Common Stock deemed to have
been issued pursuant to section 2.3, relating to Options and
Convertible Securities, shall be deemed to have been issued
for a consideration per share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale,
grant or assumption of the Options or Convertible
Securities in question, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment
of such consideration to protect against dilution)
payable to the Company upon the exercise in full of such
Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of
such Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision
(a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without
regard to any provision contained therein for a
subsequent adjustment of such number to protect against
dilution) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible
Securities; and
(c) Additional Shares of Common Stock deemed to have
been issued pursuant to section 2.4, shall be deemed to have
been issued for no consideration.
2.6. Adjustments for Combinations, etc. In case the
outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or other-
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wise, into a lesser number of shares of Common Stock, the Warrant Price
in effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
2.7. Dilution in Case of Other Securities. In case any
Other Securities shall be issued or sold or shall become subject to
issue or sale upon the conversion or exchange of any stock (or Other
Securities) of the Company (or any issuer of Other Securities or any
other Person referred to in section 3) or to subscription, purchase or
other acquisition pursuant to any Options issued or granted by the
Company (or any such other issuer or Person) for a consideration such
as to dilute, on a basis consistent with the standards established in
the other provisions of this section 2, the purchase rights granted by
this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this section 2 with re-
spect to the Warrant Price shall be made as nearly as possible in the
manner so provided and applied to determine the amount of Other
Securities from time to time receivable upon the exercise of the
Warrants, so as to protect the holders of the Warrants against the
effect of such dilution.
2.8. Minimum Adjustment of Warrant Price. If the amount
of any adjustment of the Warrant Price required pursuant to this
section 2 would be less than one percent (1%) of the Warrant Price in
effect at the time such adjustment is otherwise so required to be made,
such amount shall be carried forward and adjustment with respect
thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so
carried forward, shall aggregate at least one percent (1%) of such
Warrant Price.
3. Consolidation, Merger, etc. 3.1. Adjustments for
Consolidation, Merger, Sale of Assets, Reorganization, etc. In case
the Company after the date hereof (a) shall consolidate with or merge
into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) shall permit any
other Person to consolidate with or merge into the Company and the
Company shall be the continuing or surviving Person but, in connection
with such consolidation or merger, the Common Stock or Other Securities
shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (c) shall transfer all
or substantially all of its properties or assets to any other Person,
or (d) shall effect a capital reorganization or reclassification of
the Common
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Stock or Other Securities (other than a capital reorganization or
reclassification resulting in the issue of Additional Shares of Common
Stock for which adjustment in the Warrant Price is provided in
section 2.2.1 or 2.2.2), then, and in the case of each such
transaction, proper provision shall be made so that, upon the basis and
the terms and in the manner provided in this Warrant, the holder of
this Warrant, upon the exercise hereof at any time after the
consummation of such transaction, shall be entitled to receive (at
the aggregate Warrant Price in effect at the time of such consummation
for all Common Stock or Other Securities issuable upon such exercise
immediately prior to such consummation), in lieu of the Common Stock or
Other Securities issuable upon such exercise prior to such consum-
mation, the highest amount of securities, cash or other property to
which such holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised the rights
represented by this Warrant immediately prior thereto, subject to
adjustments (subsequent to such consummation) as nearly equivalent as
possible to the adjustments provided for in sections 2 through 4,
provided that if a purchase, tender or exchange offer shall have been
made to and accepted by the holders of more than 50% of the outstanding
shares of Common Stock, and if the holder of such Warrants so
designates in a notice given to the Company on or before the date
immediately preceding the date of the consummation of such transaction,
the holder of such Warrants shall be entitled to receive the highest
amount of securities, cash or other property to which such holder would
actually have been entitled as a shareholder if the holder of such
Warrants had exercised such Warrants prior to the expiration of such
purchase, tender or exchange offer and accepted such offer, subject to
adjustments (from and after the consummation of such purchase, tender
or exchange offer) as nearly equivalent as possible to the adjustments
provided for in sections 2 through 4.
3.2. Assumption of Obligations. Notwithstanding anything
contained in the Warrants or in the Fee Letter to the contrary, the
Company will not effect any of the transactions described in clauses
(a) through (d) of section 3.1 unless, prior to the consummation
thereof, each Person (other than the Company) which may be required to
deliver any stock, securities, cash or property upon the exercise of
this Warrant as provided herein shall assume, by written instrument
delivered to the holder of this Warrant, (a) the obligations of the
Company under this Warrant (and if the Company shall survive the
consummation of such transaction, such assumption shall be in addition
to, and shall not release the Company from, any continuing obligations
of the Company under
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this Warrant) and (b) the obligation to deliver to such holder such
shares of stock, securities, cash or property as, in accordance with
the foregoing provisions of this section 3, such holder may be entitled
to receive.
4. Other Dilutive Events. In case any event shall occur as to
which the provisions of section 2 or section 3 are not strictly
applicable but the failure to make any adjustment would not fairly
protect the purchase rights represented by this Warrant in accordance
with the essential intent and principles of such sections, then, in
each such case, the Company shall appoint a firm of independent
certified public accountants of recognized national standing (which may
be the regular auditors of the Company), which shall give their opinion
upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in sections 2 and 3, necessary to
preserve, without dilution, the purchase rights represented by this
Warrant. Upon receipt of such opinion, the Company will promptly mail a
copy thereof to the holder of this Warrant and shall make the
adjustments described therein.
5. No Dilution or Impairment. The Company will not, by
amendment of its certificate of incorporation or through any
consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder
of this Warrant against dilution. Without limiting the generality of
the foregoing, the Company (a) will not permit the par value of any
shares of stock receivable upon the exercise of this Warrant to exceed
the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock
on the exercise of the Warrants from time to time outstanding, (c) will
not take any action which results in any adjustment of the Warrant
Price if the total number of shares of Common Stock (or Other
Securities) issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock (or
Other Securities) then authorized by the Company's certificate of
incorporation and available for the purpose of issue upon such
exercise, and (d) will not issue any capital stock of any class which
is preferred as to dividends or as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or winding-up,
unless the rights
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of the holders thereof shall be limited to a fixed sum or percentage of
par value or a sum determined by reference to a formula based on a
published index of interest rates, an interest rate publicly announced
by a financial institution or a similar indicator of interest rates in
respect of participation in dividends and to a fixed sum or percentage
of par value in any such distribution of assets.
6. Accountants' Report as to Adjustments. In each case of any
adjustment or readjustment in the Warrant Price and shares of Common
Stock (or Other Securities) issuable upon the exercise of this Warrant,
the Company at its expense will promptly compute such adjustment or
readjustment in accordance with the terms of this Warrant and cause
independent certified public accountants of recognized national
standing (which may be the regular auditors of the Company) selected by
the Company to verify such computation (other than any computation of
the fair value of property as determined in good faith by the Board of
Directors of the Company) and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method
of calculation thereof and the facts upon which such adjustment or
readjustment is based, including a statement of (a) the consideration
received or to be received by the Company for any Additional Shares of
Common Stock issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to
such issue or sale and as adjusted and readjusted (if required by
section 2) on account thereof. The Company will forthwith mail a copy
of each such report to each holder of a Warrant and will, upon the
written request at any time of any holder of a Warrant, furnish to such
holder a like report setting forth the Warrant Price at the time in
effect and showing in reasonable detail how it was calculated. The
Company will also keep copies of all such reports at its principal
office and will cause the same to be available for inspection at such
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by the holder thereof.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend (other than a
regular periodic dividend payable in cash) or other distribution,
or any right to subscribe for, purchase or otherwise acquire any
shares of stock of
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any class or any other securities or property, or to receive any
other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and
any other Person or any transfer of all or substantially all the
assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each recordholder of a Warrant a notice
specifying (i) the date or expected date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and
the amount and character of such dividend, distribution or right, and
(ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of
Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for the securities or
other property deliverable upon such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed at least 30 days
prior to the date therein specified.
8. Registration of Common Stock. If any shares of Common Stock
required to be reserved for purposes of exercise of this Warrant
require registration with or approval of any governmental authority
under any United States federal or state law (other than the Securities
Act) before such shares may be issued upon exercise, the Company will,
at its expense and as expeditiously as possible, use its best efforts
to cause such shares to be duly registered or approved, as the case may
be. At any such time as Common Stock is listed on any national
securities exchange, the Company will, at its expense, obtain promptly
and maintain the approval for listing on each such exchange, upon
official notice of issuance, the shares of Common Stock issuable upon
exercise of the then outstanding Warrants and maintain the listing of
such shares after their issuance; and the Company will also list on
such national securities exchange, will register under the Exchange Act
and will maintain such listing of, any Other Securities that at any
time are issuable upon exercise of the Warrants, if and at the time
that any securities of the same class
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shall be listed on such national securities exchange by the Company.
9. Restrictions on Transfer. 9.1. Restrictive Legends. Except
as otherwise permitted by this section 9, each Warrant (including each
Warrant issued upon the transfer of any Warrant) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"This Warrant and any shares acquired upon the exercise of
this Warrant have not been registered under the Securities Act of
1933, as amended, or any state securities laws, and may not be
transferred, sold or otherwise disposed of except while a
registration under such Act and laws is in effect or pursuant to
an exemption therefrom under such Act and laws. This Warrant and
such shares may be transferred only in compliance with the
conditions specified in this Warrant."
Except as otherwise permitted by this section 9, each certificate for
Common Stock (or Other Securities) issued upon the exercise of any
Warrant, and each certificate issued upon the transfer of any such
Common Stock (or Other Securities), shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 nor any state
securities laws and may not be transferred in the absence of
such registration or an exemption therefrom under such Act and
laws. Such shares may be transferred only in compliance with
the conditions specified in certain Common Stock Purchase
Warrants issued by DenAmerica Corp. A complete and correct
copy of the form of such Warrant is available for inspection
at the principal office of DenAmerica Corp. and will be
furnished to the holder of such shares upon written request
and without charge."
9.2. Notice of Proposed Transfer; Opinions of Counsel. Subject
to a holder's unlimited right to transfer Warrants to an Affiliate of
such holder without prior notice or approval, prior to any transfer of
any Restricted Securities which are not registered under an effective
registration statement under the Securities Act or any state securities
laws, the holder thereof will give written notice to the Company of
such holder's intention to effect such transfer and to comply in all
other re-
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spects with this section 9.2. Each such notice (a) shall describe the
manner and circumstances of the proposed transfer in sufficient detail
to enable counsel to render the opinions referred to below, and (b)
shall designate counsel for the holder giving such notice (who may be
house counsel for such holder). The holder giving such notice will
submit a copy thereof to the counsel designated in such notice and the
Company will promptly submit a copy thereof to its counsel. The
following provisions shall then apply:
(i) If (A) in the opinion of such counsel for the
holder the proposed transfer may be effected without
registration of such Restricted Securities under the
Securities Act and state securities laws, and (B) counsel for
the Company shall not have rendered an opinion within 15 days
after the receipt by the Company of such written notice that
such registration is required, such holder shall thereupon be
entitled to transfer such securities in accordance with the
terms of the notice delivered by such holder to the Company.
Each warrant or certificate, if any, representing such
securities issued upon or in connection with such transfer
shall bear the appropriate restrictive legend required by
section 9.1, unless in the opinion of each such counsel such
legend is no longer required to insure compliance with the
Securities Act. If for any reason counsel for the Company
(after having been furnished with the information required to
be furnished by clause (a) of this section 9.2) shall fail to
deliver an opinion to the Company as aforesaid, then for all
purposes of this Warrant the opinion of counsel for the
Company shall be deemed to be the same as the opinion of
counsel for such holders.
(ii) If in the opinion of either of or both such
counsel the proposed transfer may not legally be effected
without registration of such Restricted Securities under the
Securities Act (such opinion or opinions to state the basis of
the legal conclusions reached therein), the Company will
promptly so notify the holder thereof and thereafter such
holder shall not be entitled to transfer such Restricted
Securities until either (x) receipt by the Company of a
further notice from such holder pursuant to the foregoing
provisions of this section 9.2 and fulfillment of the
provisions of clause (i) above or (y) such shares have
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been effectively registered under the Securities Act.
Notwithstanding the foregoing provisions of this section 9.2(ii), the
purchaser of the Warrants shall be permitted to transfer any Restricted
Securities to a limited number of institutional investors, provided
that (A) each such investor represents in writing that it is acquiring
such Restricted Securities for investment and not with a view to the
distribution thereof (subject, however, to any requirement of law that
the disposition thereof shall at all times be within the control of
such transferee), (B) each such investor agrees in writing to be bound
by all the restrictions on transfer of such Restricted Securities
contained in this section 9.2 and (C) the purchaser of the Warrants
delivers to the Company an opinion of counsel satisfactory to the
Company, stating that such transfer may be effected without
registration under the Securities Act.
9.3. Termination of Restrictions. The restrictions imposed by
this section 9 upon the transferability of Restricted Securities shall
cease and terminate as to any particular Restricted Securities (a) when
such securities shall have been effectively registered under the
Securities Act, or (b) when, in the opinions of both counsel for the
holder thereof and counsel for the Company, such restrictions are no
longer required in order to insure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the holder thereof shall be entitled to receive
from the Company, without expense (other than applicable transfer
taxes, if any), new securities of like tenor not bearing the applicable
legends required by section 9.1.
10. Availability of Information. The Company shall timely file
the reports required to be filed by it under the Securities Act and the
Exchange Act (including but not limited to the reports under sections
13 and 15(d) of the Exchange Act referred to in subparagraph (c) of
Rule 144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder (or, if the
Company is not required to file such reports, will, upon the request of
any holder of Registrable Securities, make publicly available other
information) all to the extent required from time to time to enable
such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by
(a) Rule 144 under the Securities Act, as such Rule may be amended from
time to time, (b) Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or
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(c) any similar rule or regulation hereafter adopted by the Commission.
Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has
complied with the requirements of this section 10.
11. Reservation of Stock, etc. The Company will at all times
reserve and keep available, solely for issuance and delivery upon
exercise of the Warrants, the number of shares of Common Stock (or
Other Securities) from time to time issuable upon exercise of all
Warrants at the time outstanding. All shares of Common Stock (or Other
Securities) issuable upon exercise of any Warrants shall be duly
authorized and, when issued upon such exercise, shall be validly issued
and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
12. Registration and Transfer of Warrants, etc.
12.1. Warrant Register; Ownership of Warrants. The Company
will keep at its principal office a register in which the Company will
provide for the registration of Warrants and the registration of
transfers of Warrants. The Company may treat the Person in whose name
any Warrant is registered on such register as the owner thereof for all
other purposes, and the Company shall not be affected by any notice to
the contrary, except that, if and when any Warrant is properly assigned
in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes. Subject
to section 9, a Warrant, if properly assigned, may be exercised by a
new holder without a new Warrant first having been issued.
12.2. Transfer and Exchange of Warrants. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at
its principal office, the Company at its expense will (subject to
compliance with section 9, if applicable) execute and deliver in
exchange therefor a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called
for on the face or faces of the Warrant or Warrants so surrendered.
12.3. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft
or destruction of any Warrant, upon delivery of an indemnity bond in
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21
such reasonable amount as the Company may determine (or, in the case of
any Warrant held by any Institutional Holder or its nominee, of an
indemnity agreement from such Institutional Holder reasonably
satisfactory to the Company), or, in the case of any such mutilation,
upon the surrender of such Warrant for cancellation to the Company at
its principal office, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
13. Registration under Securities Act, etc.
13.1. Registration on Request.
(a) Request. Upon the written request of one or more
Initiating Holders, requesting that the Company effect the
registration under the Securities Act of all or part of such
Initiating Holders' Registrable Securities and specifying the
intended method of disposition thereof, the Company will, subject
to the terms of this Agreement, promptly give written notice of
such requested registration to all registered holders of
Registrable Securities, and thereupon the Company will effect the
registration under the Securities Act of
(i) the Registrable Securities which the Company has
been so requested to register by such Initiating Holders for
disposition in accordance with the intended method of
disposition stated in such request,
(ii) all other Registrable Securities the holders of
which shall have made a written request to the Company for
registration thereof within 30 days after the giving of such
written notice by the Company (which request shall specify the
intended method of disposition of such Registrable
Securities),
(iii) all shares of Common Stock which the Company may
elect to register in connection with the offering of
Registrable Securities pursuant to this section 13.1,
all to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid) of the Registrable
Securities and the additional shares of Common Stock, if any, so to be
registered.
(b) Registration Statement Form. Registrations under this
section 13.1 shall be on such appropriate registration form of
the Commission (i)
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as shall be selected by the Company and as shall be reasonably
acceptable to the holders of more than 50% (by number of
shares) of the Registrable Securities so to be registered and
(ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods
of disposition specified in their request for such
registration. The Company agrees to include in any such
registration statement all information which holders of
Registrable Securities being registered shall reasonably
request.
(c) Expenses. The Company will pay all Registration
Expenses in connection with any registration requested
pursuant to this section 13.1 by any Initiating Holders of
Registrable Securities prior to the time at which three such
registrations shall have been effected in which 80% of the
Registrable Securities requested to be included in such
registration by any holders of Registrable Securities shall
have been registered pursuant to this section 13.1. The
Registration Expenses (and underwriting discounts and
commissions and transfer taxes, if any) in connection with
each other registration requested under this section 13.1
shall be allocated pro rata among all Persons on whose behalf
securities of the Company are included in such registration,
on the basis of the respective amounts of the securities then
being registered on their behalf.
(d) Effective Registration Statement. A registration
requested pursuant to this section 13.1 shall not be deemed to
have been effected (i) unless a registration statement with
respect thereto has become effective, provided that a
registration which does not become effective after the Company
has filed a registration statement with respect thereto solely
by reason of the refusal to proceed of the Initiating Holders
(other than a refusal to proceed based upon the advice of
counsel relating to a matter with respect to the Company)
shall be deemed to have been effected by the Company at the
request of such Initiating Holders unless the Initiating
Holders shall have elected to pay all Registration Expenses in
connection with such registration, (ii) if, after it has
become effective, such registration becomes subject to any
stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any
reason, or (iii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in
connection with such registration are not
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satisfied, other than by reason of some act or omission by
such Initiating Holders.
(e) Selection of Underwriters. If a requested registration
pursuant to this section 13.1 involves an underwritten
offering, the managing underwriter or underwriters thereof
shall be selected by the holders of at least a majority (by
number of shares) of the Registrable Securities as to which
registration has been requested and shall be acceptable to the
Company, which shall not unreasonably withhold its acceptance
of any such underwriters.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this section 13.1 involves an
underwritten offering, and the managing underwriter shall
advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in
such registration (including securities of the Company which
are not Registrable Securities) exceeds the number which can
be sold in such offering within a price range acceptable to
the holders of a majority of the Registrable Securities
requested to be included in such registration, the Company
will include in such registration, to the extent of the number
which the Company is so advised can be sold in such
offering,(i) first, Registrable Securities requested to be
included in such registration by the holder or holders of
Registrable Securities, pro rata among the holders thereof
requesting such registration on the basis of the number of
such securities requested to be included by such holders and
(ii) second, securities the Company proposes to sell and other
securities of the Company included in such registration by the
holders thereof.
13.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its Common
Stock under the Securities Act (other than by a registration
on Form S-4 or S-8 or any successor or similar forms and other
than pursuant to section 13.1), whether or not for sale for
its own account, it will each such time give prompt written
notice to all holders of Registrable Securities of its
intention to do so and of such holders' rights under this
section 13.2. Upon the written request of any such holder made
within 30 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to
be
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24
disposed of by such holder and the intended method of
disposition thereof), the Company will, subject to the terms
of this Agreement, effect the registration under the
Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered, by inclusion
of such Registrable Securities in the registration statement
which covers the securities which the Company proposes to
register, provided that if, at any time after giving written
notice of its intention to register any securities and prior
to the effective date of the registration statement filed in
connection with such registration, the Company shall determine
for any reason either not to register or to delay registration
of such securities, the Company may, at its election, give
written notice of such determination to each holder of
Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its
obligation to register any Registrable Securities in
connection with such registration (but not from its obligation
to pay the Registration Expenses in connection therewith),
without prejudice, however, to the rights of any holder or
holders of Registrable Securities entitled to do so to
request that such registration be effected as a registration
under section 13.1, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in
registering such other securities. No registration effected
under this section 13.2 shall relieve the Company of its
obligation to effect any registration upon request under
section 13.1 nor shall any such registration hereunder be
deemed to have been effected pursuant to section 13.1. The
Company will pay all Registration Expenses in connection with
each registration of Registrable Securities requested pursuant
to this section 13.2.
(b) Priority in Incidental Registrations. If (i) a
registration pursuant to this section 13.2 involves an
underwritten offering of the securities so being registered,
whether or not for sale for the account of the Company, to be
distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting
terms appropriate for such a transaction, (ii) the Registrable
Securities so requested to be registered for sale for the
account of holders of Registrable
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Securities are not also to be included in such underwritten
offering (either because the Company has not been requested so
to include such Registrable Securities pursuant to section
13.4(b) or, if requested to do so, is not obligated to do so
under section 13.4(b)), and (iii) the managing underwriter of
such underwritten offering shall inform the Company and
holders of the Registrable Securities requesting such
registration by letter of its belief that the distribution of
all or a specified number of such Registrable Securities
concurrently with the securities being distributed by such
underwriters would interfere with the successful marketing of
the securities being distributed by such underwriters (such
writing to state the basis of such belief and the approximate
number of such Registrable Securities which may be distributed
without such effect), then the Company may, upon written
notice to all holders of such Registrable Securities, reduce
pro rata (if and to the extent stated by such managing
underwriter to be necessary to eliminate such effect) the
number of such Registrable Securities the registration of
which shall have been requested by each holder of Registrable
Securities so that the resultant aggregate number of such
Registrable Securities so included in such registration shall
be equal to the number of shares stated in such managing
underwriter's letter unless reduction would cause the
Company to breach the terms of any existing contract.
13.3. Registration Procedures. If and whenever the Company
is required to effect the registration of any Registrable
Securities under the Securities Act as provided in sections
13.1 and 13.2, the Company shall, as expeditiously as
possible:
(i) prepare and (in the case of a registration
pursuant to section 13.1, such filing to be made within 60
days after the initial request of one or more Initiating
Holders of Registrable Securities or in any event as soon
thereafter as possible) file with the Commission the
requisite registration statement to effect such
registration (including such audited financial statements
as may be required by the Securities Act or the rules and
regulations promulgated thereunder) and thereafter use its
best efforts to cause such registration statement to
become and remain effective, provided, however, that the
Company may discontinue any registration of its securities
which are not Registrable Securities (and, under the
circum-
22
26
stances specified in section 13.2(a), its securities which
are Registrable Securities) at any time prior to the
effective date of the registration statement relating
thereto;
(ii) prepare and file with the Commission such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary
to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement until the earlier of such time as all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or (i) in the
case of a registration pursuant to section 13.1, the
expiration of 180 days after such registration statement
becomes effective, or (ii) in the case of a registration
pursuant to section 13.2, the expiration of 90 days after such
registration statement becomes effective;
(iii) furnish to each seller of Registrable Securities
covered by such registration statement and each underwriter,
if any, of the securities being sold by such seller such
number of conformed copies of such registration statement and
of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities
Act, and such other documents, as such seller and underwriter,
if any, may reasonably request in order to facilitate the
public sale or other disposition of the Registrable Securities
owned by such seller;
(iv) use its best efforts to register or qualify all
Registrable Securities and other securities covered by such
registration statement under such other securities laws or
blue sky laws of such jurisdictions as any seller thereof and
any underwriter of the securities being sold by such seller
shall reasonably request, to keep such registrations or
qualifications in effect for so long as such registra-
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27
tion statement remains in effect, and take any other action
which may be reasonably necessary or advisable to enable such
seller and underwriter to consummate the disposition in such
jurisdictions of the securities owned by such seller, except
that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in
any jurisdiction wherein it would not but for the requirements
of this subdivision (iv) be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction or to
consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(vi) furnish to each seller of Registrable Securities a
signed counterpart, addressed to such seller and the
underwriters, if any of
(x) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(y) a "comfort" letter (or, in the case of such Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, a letter dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in
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28
opinions of issuer's counsel and in accountants' letters delivered to the
underwriters in underwritten public offerings of securities (with, in the case
of an "agreed upon procedures" letter, such modifications or deletions as may be
required under Statement on Auditing Standards No. 35;
(vii) notify the holders of Registrable Securities and
the managing underwriter or underwriters, if any, promptly and
confirm such advice in writing promptly thereafter:
(v) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to
the registration statement has been filed, and, with respect to the
registration statement or any post-effective amendment thereto, when
the same has become effective;
(w) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for
additional information;
(x) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings by any Person for that purpose;
(y) if at any time the representations and warranties of the
Company made as contemplated by section 13.4 below cease to be true and
correct;
(z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for such
purpose;
(viii) notify each seller of Registrable Securities
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon the Company's discovery that, or upon
the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the
request of any such seller promptly prepare and furnish to
such seller and each underwriter, if
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29
any, a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months,
beginning with the first day of the Company's first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, and will furnish to each such seller at least
five business days prior to the filing thereof a copy of any
amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such
seller shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the
rules or regulations thereunder;
(x) make available for inspection by a representative or
representatives of the holders of Registrable Securities, any
underwriter participating in any disposition pursuant to the
registration statement and any attorney or accountant retained
by such selling holders or underwriter (each, an "Inspector"),
all financial and other records, pertinent corporate documents
and properties of the Company (the "Records"), and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in
connection with such registration in order to permit a
reasonable investigation within the meaning of Section 11 of
the Securities Act;
(xi) provide and cause to be maintained a transfer agent
and registrar for all Registrable Securities covered by such
registration
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30
statement from and after a date not later than the effective
date of such registration statement; and
(xii) use its best efforts to list all Registrable
Securities covered by such registration statement on any
securities exchange on which any of the Registrable Securities
are then listed.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such
information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request in
writing.
Each holder of Registrable Securities shall be deemed to have
agreed by acquisition of such Registrable Securities that, upon receipt
of any notice from the Company of the occurrence of any event of the
kind described in subdivision (viii) of this section 13.3, such holder
will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii)
of this section 13.3 and, if so directed by the Company, will deliver
to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the
prospectus relating to such Registrable Securities current at the time
of receipt of such notice.
13.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of
Registrable Securities pursuant to a registration requested under
section 13.1, the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to be
satisfactory in substance and form to the Company, each such holder
and the underwriters, and to contain such representations and
warranties by the Company and such other terms as are generally
prevailing in agreements of this type, including, without
limitation, indemnities to the effect and to the extent provided in
section 13.6. The holders of the Registrable Securities will
cooperate with the Company in the negotiation of the underwriting
agreement and will give consideration to the reasonable suggestions
of the Company regard-
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ing the form thereof, provided that nothing herein contained shall
diminish the foregoing obligations of the Company. The holders of
Registrable Securities to be distributed by such underwriters shall
be parties to such underwriting agreement and may, at their option,
require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the
benefit of such underwriters shall also be made to and for the
benefit of such holders of Registrable Securities and that any or
all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable
Securities. Any such holder of Registrable Securities shall not
be required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations and warranties contained in a writing furnished by
such holder expressly for use in such registration statement or
agreements regarding such holder, such holder's Registrable
Securities, such holder's intended method of distribution and any
other representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the
Securities Act as contemplated by section 13.2 and such securities
are to be distributed by or through one or more underwriters, the
Company will, if requested by any holder of Registrable Securities
as provided in section 13.2 and subject to the provisions of
section 13.2(b), use its best efforts to arrange for such
underwriters to include all the Registrable Securities to be
offered and sold by such holder among the securities to be
distributed by such underwriters, provided that if the managing
underwriter of such underwritten offering shall inform the holders
of the Registrable Securities requesting such registration and the
holders of any other securities which shall have exercised, in
respect of such underwritten offering, registration rights
comparable to the rights under section 13.2 by letter of its belief
that inclusion in such underwritten distribution of all or a
specified number of such Registrable Securities or of such other
shares of securities so requested to be included would interfere
with the successful marketing of the securities (other than such
Registrable Securities and other shares of securities so requested
to be included) by the underwriters (such writing to state the
basis of such belief and the approximate number of such Regis-
trable Securities
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and shares of other securities so requested to be included which
may be included in such underwritten offering without such effect),
then the Company may, upon written notice to all holders of such
Registrable Securities and of such other shares of securities so
requested to be included, exclude pro rata from such underwritten
offering (if and to the extent stated by such managing underwriter
to be necessary to eliminate such effect) the number of such
Registrable Securities and shares of such other securities so
requested to be included the registration of which shall have been
requested by each holder of Registrable Securities and by the
holders of such other securities so that the resultant aggregate
number of such Registrable Securities and of such other shares of
securities so requested to be included which are included in such
underwritten offering shall be equal to the approximate number of
shares stated in such managing underwriter's letter unless
reduction would cause the Company to breach the terms of any
existing contract. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters
and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters
shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations
of such holders of Registrable Securities. Any such holder of
Registrable Securities shall not be required to make any
representations or warranties to or agreements with the Company or
the underwriters other than representations, warranties or
agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and
any other representation required by law.
(c) Holdback Agreements. Each holder of Registrable
Securities agrees by acquisition of such Registrable Securities, if
so required by the managing underwriter, not to sell, make any
short sale of, loan, grant any option for the purchase of, effect
any public sale or distribution of or otherwise dispose of any
securities of the Company, during the 90 days after any
underwritten registration pursuant to section 13.1 or 13.2 has
become effective, except as part of such underwritten registration.
Notwithstanding the foregoing sentence, each holder of Registrable
Securities subject to
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the foregoing sentence shall be entitled to sell during the
foregoing period securities in a private sale.
(d) Participation in Underwritten Offerings. No Person may
participate in any underwritten offering hereunder unless such
Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved, subject to the
terms and conditions hereof, by the Company and the holders of a
majority of Registrable Securities to be included in such
underwritten offering and (ii) completes and executes all
questionnaires, indemnities, underwriting agreements and other
documents (other than powers of attorney) required under the terms
of such underwriting arrangements. Notwithstanding the foregoing,
no underwriting agreement (or other agreement in connection with
such offering) shall require any holder of Registrable Securities
to make any representations or warranties to or agreements with
the Company or the underwriters other than representations and
warranties or agreements regarding such holder, such holder's
Registrable Securities and such holder's intended method of
distribution and any other representation required by law.
13.5. Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement
under the Securities Act pursuant to this Agreement, the Company
will give the holders of Registrable Securities registered under
such registration statement, their underwriters, if any, and their
respective counsel and accountants, the opportunity to participate
in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment
thereof or supplement thereto, and will give each of them such
access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent
public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
13.6. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and
hold harmless in the case of any registration statement filed
pursuant to section 13.1 or 13.2, the holder of any Registrable
Securities covered by such registration statement, its directors
and officers, each other Person who
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participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such
holder or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such holder or any such
director or officer or underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any
registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the
Company will reimburse such holder and each such director,
officer, underwriter and controlling person for any legal or any
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, liability,
action or proceeding, provided that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
such registration statement, any such preliminary prospectus,
final prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company
through an instrument duly executed by such holder, specifically
stating that it is for use in the preparation thereof and,
provided, further that the Company shall not be liable to any
Person who participates as an underwriter, in the offering or
sale of Registrable Securities or to any other Person, if any,
who controls such underwriter within the meaning of the
Securities Act, in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure
to send or give a copy of the final prospectus, as the same may
be then supplemented or amended, within the time required by the
Securities Act to the Person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable
Securities to such Person if
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such statement or omission was corrected in such final
prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such
holder or any such director, officer, underwriter or controlling
person and shall survive the transfer of such securities by such
holder.
(b) Indemnification by the Sellers. In the event of any
registration of any securities of the Company under the
Securities Act, the holders of the Registrable Securities
covered by such registration statement will, and hereby do,
indemnify and hold harmless (in the same manner and to the same
extent as set forth in subdivision (a) of this section 13.6) the
Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary
prospectus or final prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller
specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Any
such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Company or any
such director, officer or controlling person and shall survive
the transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding
subdivisions of this section 13.6, such indemnified party will,
if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the
preceding subdivisions of this section 13.6, except to the
extent that the indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's
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reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of
such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with
any other indemnifying party similarly notified, to the extent
that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent
of the indemnified party, consent to entry of any judgment or
enter into any settlement of any such action which does not
include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release
from all liability, or a covenant not to sue, in respect to such
claim or litigation. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any such action
without the consent of such indemnifying party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this section 13.6
(with appropriate modifications) shall be given by the Company
and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under
any United States, federal or state law or regulation of any
governmental authority, other than the Securities Act.
(e) Indemnification Payments. The indemnification required
by this section 13.6 shall be made by periodic payments of the
amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage
or liability is incurred.
(f) Contribution. If the indemnification provided for in the
preceding subdivisions of this section 13.6 is unavailable to an
indemnified party in respect of any expense, loss, claim, damage
or liability referred to therein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute
to the amount paid or payable by such indemnified party as a
result of such expense, loss, claim, damage or liability (i) in
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37
such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the holder
or underwriter, as the case may be, on the other from the
distribution of the Registrable Securities or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and
of the holder or underwriter, as the case may be, on the other
in connection with the statements or omissions which resulted in
such expense, loss, damage or liability, as well as any other
relevant equitable considerations. The relative benefits
received by the Company on the one hand and the holder or
underwriter, as the case may be, on the other in connection with
the distribution of the Registrable Securities shall be deemed
to be in the same proportion as the total amount borrowed under
the Facilities (as defined in the Fee Letter) bear to the gain,
if any, realized by the selling holder or the underwriting
discounts and commissions received by the underwriter, as the
case may be. The relative fault of the Company on the one hand
and of the holder or underwriter, as the case may be, on the
other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material
fact or omission to state a material fact relates to information
supplied by the Company, by the holder or by the underwriter and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or
omission, provided that the foregoing contribution agreement
shall not inure to the benefit of any indemnified party if
indemnification would be unavailable to such indemnified party
by reason of the provisions contained in the first sentence of
subdivision (a) of this section 13.6, and in no event shall the
obligation of any indemnifying party to contribute under this
subdivision (f) exceed the amount that such indemnifying party
would have been obligated to pay by way of indemnification if
the indemnification provided for under subdivisions (a) or (b)
of this section 13.6 had been available under the circumstances.
The Company and the holders of Registrable Securities agree
that it would not be just and equitable if contribution pursuant
to this subdivision (f) were determined by pro rata allocation
(even if the holders and any underwriters were treated as one
entity for such purpose) or by any
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38
other method of allocation that does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
in the preceding sentence and subdivision (c) of this section
13.6, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
any such action or claim.
Notwithstanding the provisions of this subdivision (f), no
holder of Registrable Securities or underwriter shall be
required to contribute any amount in excess of the amount by
which (i) in the case of any such holder, the net proceeds
received by such holder from the sale of Registrable Securities
or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to
the public were offered to the public exceeds, in any such case,
the amount of any damages that such holder or underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No Person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation.
14. Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective
meanings:
Additional Shares of Common Stock: All shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to
section 2.3 or 2.4, deemed to be issued) by the Company after the date
hereof, whether or not subsequently reacquired or retired by the
Company, other than
(a) shares issuable upon the conversion of options,
warrants, or other convertible securities outstanding on the
date hereof,
(b) shares issued upon the exercise of the Warrants,
(c) shares issued upon the exercise of the warrants
granted to holders of the Subordinated Notes or Series B
Subordinated Notes of the Company,
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(d) shares issued upon the exercise of options granted
or to be granted under the Company's stock option plans as in
effect on the date hereof or under any other employee stock
option or purchase plan or plans adopted or assumed after such
date; provided that any options granted after the date of
original issuance of the Warrants within any calendar year
shall not be exercisable for a number of shares greater than
1% of the issued and outstanding Common Stock of the Company
(on a fully diluted basis) on the first Business Day of such
calendar year.
Affiliate: With respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to,
all directors and officers of such Person), controlled by, or
under direct or indirect common control with such Person. A Person
shall be deemed to control a corporation if such Person possesses,
directly or indirectly, the power to (i) vote 10% or more of the
securities having ordinary voting power for the election of
directors of such corporation or (ii) direct or cause the
direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.
Business Day: Any day other than a Saturday or a Sunday
or a day on which commercial banking institutions in the City of
New York are authorized by law to be closed. Any reference to
"days" (unless Business Days are specified) shall mean calendar
days.
Commission: The Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act.
Common Stock: As defined in the introduction to this
Warrant, such term to include any stock into which such Common
Stock shall have been changed or any stock resulting from any
reclassification of such Common Stock, and all other stock of any
class or classes (however designated) of the Company the holders
of which have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
Company: As defined in the introduction to this Warrant,
such term to include any corporation which shall succeed to or
assume the obligations of the Company hereunder in compliance with
section 3.
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Convertible Securities: Any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for
Additional Shares of Common Stock.
Current Market Price: On any date specified herein, the
average daily Market Price during the period of the most recent 20
days, ending on such date, on which the national securities
exchanges were open for trading, except that if no Common Stock is
then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market, the Current
Market Price shall be the Market Price on such date. If the
determination of Current Market Price is made in connection with
an underwritten registered public offering of Common Stock which
results in proceeds to the Company in excess of $5,000,000, then
the Current Market Price on such date shall mean the Market Price.
Exchange Act: The Securities Exchange Act of 1934, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
Fee Letter: As defined in the introduction to this
Warrant.
Initiating Holders: Any holder or holders of Registrable
Securities holding at least 75% of the Registrable Securities
(by number of shares at the time issued and outstanding), and
initiating a request pursuant to section 13.1 for the registration
of all or part of such holder's or holders' Registrable
Securities.
Institutional Holder: Any original purchaser of any
Warrant, any insurance company, pension fund, mutual fund,
investment company, bank, savings bank, savings and loan
association, broker-dealer, investment adviser, investment banking
company, trust company or any finance or credit company, any
portfolio or any investment fund managed by any of the foregoing,
any other institutional investor and any nominee of any of the
foregoing.
Lender: As defined in the introduction to this Warrant.
Market Price: On any date specified herein, the amount
per share of the Common Stock, equal to (a) the last sale price of
such Common Stock, regular way, on such date or, if no such sale
takes place on such date, the average of the closing bid and asked
prices thereof
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on such date, in each case as officially reported on the principal
national securities exchange on which such Common Stock is then
listed or admitted to trading, or (b) if such Common Stock is not
then listed or admitted to trading on any national securities
exchange but is quoted on the Nasdaq Stock Market, the last
trading price of the Common Stock on such date, or, if no such
sale takes place on such date, the average of the closing bid and
asked prices thereof on such date, or (c) if the Common Stock is
not so quoted, the average of the closing bid and asked prices of
the Common Stock on such date as furnished by a professional
market maker making a market in the Common Stock selected by the
Board of Directors of the Company, or (d) if such Common Stock is
not then listed or admitted to trading on any national exchange or
quoted on the Nasdaq Stock Market or no professional market maker
is making a market in the Common Stock, the price determined by
the agreement of the Company and the holders of no less than 75%
of the then outstanding Warrants; provided that if the Company and
such holders cannot agree on a Market Price within 45 days, the
Market Price shall be determined by a financial expert selected by
holders of no less than 50% of the Warrants from a group of three
financial experts chosen by the Company, such financial experts to
be of recognized standing and experienced in appraising businesses
and properties of the type owned by the Company, who have not
previously performed services for, and are not Affiliates of, the
Company and its stockholders; provided further that the costs and
expenses of any such experts in making such valuation shall be
paid by the Company.
NASD: The National Association of Securities Dealers,
Inc.
Options: Rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common
Stock or Convertible Securities.
Other Securities: Any stock (other than Common Stock)
and other securities of the Company or any other Person (corporate
or otherwise) which the holders of the Warrants at any time shall
be entitled to receive, or shall have received, upon the exercise
of the Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities
pursuant to section 3 or otherwise.
Person: A corporation, an association, a partnership,
an organization, a business, an individual, a government or
political subdivision thereof or a governmental agency.
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Registrable Securities: (a) Any shares of Common Stock
or Other Securities issued or issuable upon exercise of this
Warrant and (b) any securities issued or issuable with respect to
any securities referred to in the foregoing subdivision by way of
stock dividend or stock split or in connection with a combination
of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective
under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b)
they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) under the Securities Act, (c)
they shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall have
been delivered by the Company and subsequent disposition of them
shall not require registration or qualification of them under the
Securities Act or any similar state law then in force, or (d) they
shall have ceased to be outstanding.
Registration Expenses: All expenses incident to the
Company's performance of or compliance with section 13, including,
without limitation, all registration, filing and NASD fees, all
fees and expenses of complying with securities or blue sky laws,
all word processing, duplicating and printing expenses, messenger
and delivery expenses, the fees and disbursements of counsel for
the Company and of its independent public accountants, including
the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance,
premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable
Securities being registered and any fees and disbursements of
underwriters customarily paid by issuers or sellers of securities,
but excluding underwriting discounts and commissions and transfer
taxes, if any, provided that, in any case where Registration
Expenses are not to be borne by the Company, such expenses shall
not include salaries of Company personnel or general overhead
expenses of the Company, auditing fees, premiums or other expenses
relating to liability insurance required by underwriters of the
Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the
ordinary course of its business or which the Company would have
incurred in any event.
Restricted Securities: (a) any Warrants bearing the
applicable legend set forth in section 9.2, (b)
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any shares of Common Stock (or Other Securities) issued upon the
exercise of Warrants which are evidenced by a certificate or
certificates bearing the applicable legend set forth in such
section, (c) any shares of Common Stock (or Other Securities)
issued subsequent to the exercise of any of the Warrants as a
dividend or other distribution with respect to, or resulting from
a subdivision of the outstanding shares of Common Stock (or Other
Securities) into a greater number of shares by reclassification,
stock splits or otherwise, or in exchange for or in replacement of
the Common Stock (or Other Securities) issued upon such exercise,
which are evidenced by a certificate or certificates bearing the
applicable legend set forth in such section, and (d) unless the
context otherwise requires, any shares of Common Stock (or Other
Securities) issuable upon the exercise of Warrants, which, when so
issued, will be evidenced by a certificate or certificates bearing
the applicable legend set forth in such section.
Securities Act: The Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Subordinated Promissory Notes: The Company's 12%
Subordinated Notes due March 31, 2002 in an aggregate principal
amount not in excess of $15,000,000 issued to BEP Holdings, Inc.
on July 3, 1996, and BEP Holdings, Inc.'s permitted successors and
assigns thereunder.
Series B Subordinated Notes: The Company's 13% Subordinated
Notes due 2003 in an aggregate principal amount not in excess of
$18,250,000 issued pursuant to that certain Indenture (Series B
Notes) dated as of March __, 1996 between the Company and State
Street Bank and Trust Company, as trustee, as the same may be
amended, modified, restated or supplemented from time to time.
Transfer: Any sale, assignment, pledge or other disposition
of any security, or of any interest therein, which could
constitute a "sale" as that term is defined in section 2(3) of the
Securities Act.
Voting Securities: Stock of any class or classes (or
equivalent interests), if the holders of the stock of such class
or classes (or equivalent interests) are ordinarily, in the
absence of contingencies, entitled to vote for the election of the
directors (or persons performing similar functions) of such
business entity, even though the right so to vote has been
suspended by the happening of such a contingency.
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Warrant Price: As defined in section 2.1.
Warrants: As defined in the introduction to this Warrant.
15. Remedies. The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default by the
Company in the performance of or compliance with any of the terms of
this Warrant are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein
or by an injunction against a violation of any of the terms hereof or
otherwise.
16. No Rights or Liabilities as Stockholder. Nothing contained
in this Warrant shall be construed as conferring upon the holder hereof
any rights as a stockholder of the Company or as imposing any
obligation on such holder to purchase any securities or as imposing any
liabilities on such holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by
creditors of the Company.
17. Notices. All notices and other communications under this
Warrant shall be in writing and shall be mailed by registered or
certified mail, return receipt requested, or delivered by a nationally
recognized overnight courier, postage prepaid, addressed (a) if to any
holder of any Warrant, at the registered address of such holder as set
forth in the register kept at the principal office of the Company, or
(b) if to the Company, to the attention of its President at its
principal office, provided that the exercise of any Warrant shall be
effective in the manner provided in section 1.
18. Amendments. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought.
19. Expiration. The Company will give the holder of this
Warrant not less than six weeks nor more than nine months notice of the
expiration of the right to exercise this Warrant. The right to exercise
this Warrant shall expire at 5:30 p.m., New York City time, on July 3,
2002, unless the Company shall fail to give such notice as aforesaid,
in which event the right to exercise this Warrant shall not expire
until a date six weeks after the date on which the Company shall give
the holder hereof notice of the expiration of the right to exercise
this Warrant.
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20. Representation with Respect to Capitalization. The Company
hereby represents and warrants that, after giving effect to the
exercise or conversion of all warrants, options and convertible
securities of the Company outstanding on the date of original issuance
of the Warrants, the total issued and outstanding capital stock of the
Company would be 16,304,967 shares of Common Stock.
21. Covenant with Respect to Books, Records and Inspections.
The Company shall, and shall cause each of its Subsidiaries to, keep
proper books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Company shall, and shall cause each of its Subsidiaries
to, permit any holder of the Warrants or any officers and designated
representatives of any purchaser of the Warrants to visit and inspect
any of the properties of the Company or any of its Subsidiaries, and to
examine the books of record and account of the Company or any of its
Subsidiaries, and discuss the affairs, finances and accounts of the
Company or any of its Subsidiaries with, and be advised as to the same
by, its and their officers and independent accountants, all upon
reasonable notice and at such reasonable times as such purchaser may
desire.
22. Expenses. The Company shall pay all reasonable
out-of-pocket costs and expenses of the Lender in connection with the
negotiation, preparation, execution and delivery of this Warrant
(including, without limitation, the fees and disbursements of Skadden,
Arps, Slate, Meagher & Flom, special counsel to the Lender and any
other attorneys retained by the Lender).
23. Descriptive Headings. The headings in this Agreement are
for purposes of reference only and shall not limit or otherwise affect
the meaning hereof.
24. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
25. Judicial Proceedings; Waiver of Jury. Any judicial
proceeding brought against the Company with respect to this Warrant may
be brought in any court of competent jurisdiction in the State of
Illinois or of the United States of America for the Northern District
of Illinois and, by execution and delivery of this Agreement, the
Company (a) accepts, generally and uncondi-
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tionally, the nonexclusive jurisdiction of such courts and any related
appellate court, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Warrant, subject to any rights
of appeal, and (b) irrevocably waives any objection the Company may now
or hereafter have as to the venue of any such suit, action or
proceeding brought in such a court or that such court is an
inconvenient forum. The Company hereby waives personal service of
process and consents that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of section
17, and service so made shall be deemed completed on the third Business
Day after such service is deposited in the mail or, if earlier, when
delivered. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of any
holder of any Warrant to bring proceedings against the Company in the
courts of any other jurisdiction. THE COMPANY HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, OR INDIRECTLY,
ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS WARRANT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
DENAMERICA CORP.
By: ______________________________
Title:
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FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To DenAmerica Corp.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ______* shares of Common
Stock of DenAmerica Corp. and herewith makes payment of $________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ______________ , whose address is ___________________.
Dated:
______________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
______________________________________
(Street Address)
______________________________________
(City)(State)(Zip Code)
- --------
* Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any
adjustment for Additional Shares of Common Stock or any other stock or
other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the case
of partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the
holder surrendering the Warrant.
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FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _____________________ the right
represented by such Warrant to purchase ___________ shares of Common Stock of
DenAmerica Corp. to which such Warrant relates, and appoints ________________
Attorney to make such transfer on the books of DenAmerica Corp. maintained for
such purpose, with full power of substitution in the premises.
Dated:
____________________________________
(Signature must conform in all re-
spects to name of holder as speci-
fied on the face of Warrant)
___________________________________
(Street Address)
___________________________________
(City)(State)(Zip Code)
Signed in the presence of:
__________________________________
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GUARANTEE OF SIGNATURE(S)
Authorized Signature ___________________________________
Name ___________________________________________________
(Please Print)
Name of Firm ___________________________________________
(Include Zip Code)
Address ________________________________________________
Area Code and Telephone Number _________________________
Dated __________________________________________________
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