Exhibit 13
THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES
THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
THE SECURITIES LAWS OF ANY STATE. THIS COMMON STOCK
PURCHASE WARRANT HAS BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO DISTRIBUTION, AND THIS
COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT
MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
THE PROPOSED TRANSACTION DOES NOT REQUIRE
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES ACT
OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
PERSONNEL GROUP OF AMERICA, INC.
COMMON STOCK PURCHASE WARRANT
Date of Issuance: April 11, 2003 Certificate No. W-[_]
THIS IS TO CERTIFY that [_________________________], and its transferees,
successors and assigns (the "Holder"), for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, is entitled to
purchase from PERSONNEL GROUP OF AMERICA, INC., a Delaware corporation (the
"Company"), at the price of $[______] per share (the "Exercise Price") (as
such price may be adjusted as provided herein), at any time after the date
hereof (the "Commencement Date") and expiring on April __, 2013 (the
"Expiration Date"), [10% of fully diluted] shares (the "Aggregate Number") of
the fully paid and nonassessable Common Stock, par value $0.001 per share
("Common Stock"), of the Company (as such number may be adjusted as provided
herein).
Capitalized terms used herein shall have the meanings ascribed to such
terms in Section 13 hereof unless otherwise defined herein.
SECTION 1. The Warrant; Transfer and Exchange.
(a) The Warrant. This Common Stock Purchase Warrant (the "Warrant") is
issued under and pursuant to the Restructure Agreement. This Warrant and the
rights and privileges of the Holder and the Company hereunder may be exercised
by the Holder in whole or in part as provided herein; shall survive any
termination of the Restructure Agreement; and, as more fully set forth in
Sections 1(b) and 8 hereof, may be transferred by the Holder to any other
Person or
Persons at any time or from time to time, in whole or in part, regardless of
whether the Holder retains any or all rights under the Restructure Agreement.
(b) Transfer and Exchanges. The Company shall initially record this
Warrant on a register to be maintained by the Company with its other stock
books and subject to Section 8 hereof, from time to time thereafter shall
reflect the transfer of this Warrant on such register when surrendered for
transfer in accordance with the terms hereof and properly endorsed,
accompanied by appropriate instructions, and further accompanied by payment in
cash or by check, bank draft or money order payable to the order of the
Company, in United States currency, of an amount equal to any stamp or other
tax or governmental charge or fee required to be paid in connection with the
transfer thereof. Upon any such transfer, a new warrant or warrants shall be
issued to the transferee and the Holder (in the event the Warrant is only
partially transferred) and the surrendered warrant shall be canceled. Each
such transferee shall succeed to all of the rights of the Holder under the
Restructure Agreement; provided, that the Holder and such transferee may,
simultaneously, also hold rights under the Restructure Agreement in proportion
to their respective interests in this Warrant. This Warrant may be exchanged
at the option of the Holder, when surrendered at the Principal Office of the
Company, for another warrant or other warrants of like tenor and representing
in the aggregate the right to purchase a like number of shares of Common
Stock.
SECTION 2. Exercise.
(a) Right to Exercise. At any time after the Commencement Date and on or
before the Expiration Date, the Holder, in accordance with the terms hereof,
may exercise this Warrant, in whole at any time or in part from time to time,
by delivering this Warrant to the Company during normal business hours on any
Business Day at the Company's Principal Office, together with the Election to
Purchase, in the form attached hereto as Exhibit A and made a part hereof (the
"Election to Purchase"), duly executed, and payment of the Exercise Price per
share for the number of shares to be purchased (the "Exercise Amount"), as
specified in the Election to Purchase. If the Expiration Date is not a
Business Day, then this Warrant may be exercised on the next succeeding
Business Day.
(b) Payment of Exercise Price. Payment of the Exercise Price shall be
made to the Company in cash or other immediately available funds or as
provided in Section 2(c), or a combination thereof. In the case of payment of
all or a portion of the Exercise Price pursuant to Section 2(c), the direction
by the Holder to make a "Cashless Exercise" shall serve as accompanying
payment for that portion of the Exercise Price. The amount of the Exercise
Price to be paid shall equal the product of (i) the Exercise Amount multiplied
by (ii) the Exercise Price per share.
(c) Cashless Exercise. The Holder shall have the right to pay all or a
portion of the Exercise Price by making a "Cashless Exercise" pursuant to this
Section 2(c), in which case the portion of the Exercise Price to be so paid
shall be paid by (i) reducing the number of shares of Common Stock otherwise
issuable pursuant to the Election to Purchase or (ii) tendering shares of the
Common Stock held by the Holder as of the date of the Election to Purchase, by
an amount equal to (A) the Exercise Price to be so paid divided by (B) the
Fair Market Value Per Share.
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The number of shares of Common Stock to be issued to the Holder as a result of
a Cashless Exercise will therefore be as follows:
(Fair Market Value Per Share - Exercise Price per share) x Cashless Exercise Amount*
--------------------------------------------------------
Fair Market Value Per Share
* The Cashless Exercise Amount in the above formula is that portion of the
Exercise Amount (expressed as a number of shares of Common Stock) with
respect to which the Exercise Price is being paid by Cashless Exercise
pursuant to this Section 2(c).
(d) Issuance of Shares of Common Stock. Upon receipt by the Company of
this Warrant at its Principal Office in proper form for exercise, and
accompanied by payment of the Exercise Price as aforesaid, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that certificates representing such shares of
Common Stock may not then be actually delivered. Upon such surrender of this
Warrant and payment of the Exercise Price as aforesaid, the Company shall
issue and cause to be delivered with all reasonable dispatch to, or upon the
written order of, the Holder (and in such name or names as the Holder may
designate) a certificate or certificates for the Exercise Amount, subject to
any reduction as provided in Section 2(c) for a Cashless Exercise.
(e) Fractional Shares. The Company shall not be required to deliver
fractions of shares of Common Stock upon exercise of this Warrant. If any
fraction of a share of Common Stock would be deliverable upon an exercise of
this Warrant, the Company may, in lieu of delivering such fraction of a share
of Common Stock, make a cash payment to the Holder in an amount equal to the
same fraction of the Fair Market Value Per Share determined as of the Business
Day immediately preceding the date of exercise of this Warrant.
(f) Partial Exercise. In the event of a partial exercise of this Warrant,
the Company shall issue to the Holder a Warrant in like form for the
unexercised portion thereof.
(g) Exercise Price. Notwithstanding anything to the contrary contained in
this Warrant, the Exercise Price will not be adjusted below the amount equal
to the par value per share of the Common Stock.
SECTION 3. Payment of Taxes. The Company shall pay all stamp taxes
attributable to the initial issuance of shares or other securities issuable
upon the exercise of this Warrant or issuable pursuant to Section 6 hereof,
excluding any tax or taxes which may be payable because of the transfer
involved in the issuance or delivery of any certificates for shares or other
securities in a name other than that of the Holder in respect of which such
shares or securities are issued.
SECTION 4. Replacement Warrant. In case this Warrant is mutilated, lost,
stolen or destroyed, the Company shall issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and in substitution for the Warrant lost, stolen or destroyed, a new Warrant
of like tenor and representing an equivalent right or interest, but only upon
receipt of evidence reasonably satisfactory to the Company of such loss, theft
or destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the
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Company provided that if the Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory).
SECTION 5. Reservation of Common Stock; Other Covenants.
(a) Reservation of Authorized Common Stock. The Company shall at all
times reserve and keep available out of the aggregate of its authorized but
unissued shares, free of preemptive rights, such number of its duly authorized
shares of Common Stock, or other stock or securities deliverable pursuant to
Section 6 hereof, as shall be sufficient to enable the Company at any time to
fulfill all of its obligations under this Warrant.
(b) Affirmative Actions to Permit Exercise and Realization of Benefits.
If any shares of Common Stock reserved or to be reserved for the purpose of
the exercise of this Warrant, or any shares or other securities reserved or to
be reserved for the purpose of issuance pursuant to Section 6 hereof, require
registration with or approval of any governmental authority under any federal
or state law (other than securities laws) before such shares or other
securities may be validly delivered upon exercise of this Warrant, then the
Company covenants that it will, at its sole expense, use its commercially
reasonable best efforts to secure upon and after exercise of this Warrant such
registration or approval, as the case may be (including but not limited to
approvals or expirations of waiting periods required under the Xxxx Xxxxx
Xxxxxx Antitrust Improvements Act).
(c) Regulatory Requirements and Restrictions. In the event of any
reasonable determination by the Holder that, by reason of any existing or
future federal or state law, statute, rule, regulation, guideline, order,
court or administrative ruling, request or directive (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) (collectively, a "Regulatory Requirement"), the Holder is
effectively restricted or prohibited from holding this Warrant or the Warrant
Shares (including any shares of capital stock or other securities
distributable to the Holder in any merger, reorganization, readjustment or
other reclassification), or otherwise realizing upon or receiving the benefits
intended under this Warrant, the Company shall use its reasonable best efforts
to take such action as the Holder and the Company shall jointly agree in good
faith to be reasonably necessary to permit the Holder to comply with such
Regulatory Requirement. The reasonable costs of taking such action, whether by
the Company, the Holder or otherwise, shall be borne by the Company.
(d) Validly Issued Shares. The Company covenants that all shares of
Common Stock that may be delivered upon exercise of this Warrant, assuming
full payment of the Exercise Price, (including those issued pursuant to
Section 6 hereof) shall upon delivery by the Company be duly authorized and
validly issued, fully paid and nonassessable, free from all stamp taxes, liens
and charges with respect to the issue or delivery thereof and otherwise free
of all other security interests, encumbrances and claims of any nature
whatsoever.
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SECTION 6. Adjustments to Aggregate Number.
Under certain conditions, the Aggregate Number is subject to adjustment
as set forth in this Section 6. No adjustments shall be made under this
Section 6 as a result of the issuance by the Company of (i) the Warrant Shares
upon exercise of this Warrant, (ii) Common Stock, or options therefore, issued
pursuant to bona fide employee or non-employee director benefit plans approved
by the Board of Directors, (iii) Common Stock in connection with the
acquisition of another Person (which is not a stockholder, or an Affiliate of
any stockholder, of the Company) by the Company by merger, purchase of all or
substantially all of such other Person's assets or by other reorganization
whereby the Company ends up owning, directly or indirectly, greater than 50%
of the voting power of such Person or (iv) Common Stock pursuant to a bona
fide underwritten public offering by the Company (collectively, the "Exempt
Issuances").
(a) Adjustments. The Aggregate Number, after taking into consideration
any prior adjustments pursuant to this Section 6, shall be subject to
adjustment from time to time as follows and, thereafter, as adjusted, shall be
deemed to be the Aggregate Number hereunder.
(i) Stock Dividends. Subdivisions and Combinations. In case at any
time or from time to time the Company shall:
(A) issue to the holders of its Common Stock a dividend
payable in, or other distribution of, Common Stock (a "Stock
Dividend"),
(B) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, including without
limitation by means of a stock split (a "Stock Subdivision"), or
(C) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock (a "Stock Combination"),
then the Aggregate Number in effect immediately prior thereto shall be (1)
proportionately increased in the case of a Stock Dividend or a Stock
Subdivision and (2) proportionately decreased in the case of a Stock
Combination. In the event the Company shall declare or pay, without
consideration, any dividend on the Common Stock payable in any right to
acquire Common Stock for no consideration, then the Company shall be deemed to
have made a Stock Dividend in an amount of shares equal to the maximum number
of shares issuable upon exercise of such rights to acquire Common Stock.
(ii) Other Distributions. In case at any time or from time to time
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive any dividend or other distribution
(collectively, a "Distribution") of:
(A) cash,
(B) any evidences of its indebtedness (other than Convertible
Securities), any shares of its capital stock (other than additional
shares of
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Common Stock or Convertible Securities) or any other securities or
property of any nature whatsoever (other than cash), or
(C) any options, warrants or other rights to subscribe for or
purchase any of the following: any evidences of its indebtedness
(other than Convertible Securities), any shares of its capital
stock (other than additional shares of Common Stock or Convertible
Securities) or any other securities or property of any nature
whatsoever,
then the Holder shall be entitled to elect by written notice to the Company to
receive (1) immediately and without further payment the cash, evidences of
indebtedness, stock, securities, other property, options, warrants and/or
other rights (or any portion thereof) to which the Holder would have been
entitled by way of such Distribution as if the Holder had exercised this
Warrant immediately prior to such Distribution or (2) upon the exercise of
this Warrant at any time on or after the taking of such record, the number of
Warrant Shares to be received upon exercise of this Warrant determined as
stated herein and, in addition and without further payment, the cash,
evidences of indebtedness, stock, securities, other property, options,
warrants and/or other rights (or any portion thereof) to which the Holder
would have been entitled by way of such Distribution and subsequent dividends
and distributions through the date of exercise as if such Holder (x) had
exercised this Warrant immediately prior to such Distribution and (y) had
retained the Distribution in respect of the Common Stock and all subsequent
dividends and distributions of any nature whatsoever in respect of any stock
or securities paid as dividends and distributions and originating directly or
indirectly from such Common Stock.
A reclassification of the Common Stock into shares of Common Stock and
shares of any other class of stock shall be deemed a Distribution by the
Company to the holders of its Common Stock of such shares of such other class
of stock and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, such event shall be deemed a Stock Subdivision or Stock
Combination, as the case may be, of the outstanding' shares of Common Stock
within the meaning of Section 6(a)(i) hereof.
(iii) Issuance of Common Stock. If at any time or from time to time
the Company shall (except as hereinafter provided in this Section 6(a)(iii))
issue or sell any additional shares of Common Stock for a consideration per
share less than the Fair Market Value Per Share, then, effective on the date
specified below, the Aggregate Number shall be adjusted by multiplying (A) the
Aggregate Number immediately prior thereto by (B) a fraction, the numerator of
which shall be the sum of the number of shares of Common Stock outstanding
immediately prior to the issuance of such additional shares of Common Stock,
the number of shares of Common Stock issuable upon the conversion or exercise
of options, warrants, rights or convertible securities (whether or not then
exercisable), and the number of such additional shares of Common Stock so
issued and the denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to the issuance of such
additional shares of Common Stock, the number of shares of Common Stock
issuable upon the conversion or exercise of options, warrants, rights or
convertible securities (whether or not then exercisable), and the number of
shares of Common Stock which the aggregate consideration for the total
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number of such additional shares of Common Stock so issued would purchase at
the Fair Market Value Per Share. The date as of which the Fair Market Value
Per Share shall be computed shall be the earlier of the date on which the
Company shall enter into a firm contract or commitment for the issuance of
such additional shares of Common Stock or the date of actual issuance of such
additional shares of Common Stock.
The provisions of this Section 6(a)(iii) shall not apply to any
issuance of additional shares of Common Stock for which an adjustment is
otherwise provided under Section 6(a)(i) hereof. No adjustment of the
Aggregate Number shall be made under this Section 6(a)(iii) upon the issuance
of any additional shares of Common Stock which are issued pursuant to (1) the
exercise of this Warrant in whole or in part or pursuant to any other Exempt
Issuances, (2) the exercise of other subscription or purchase rights or (3)
the exercise of any conversion or exchange rights in any Convertible
Securities; provided that for purposes of clauses (2) or (3) an adjustment
shall previously have been made upon the issuance of such other rights or upon
the issuance of such Convertible Securities (or upon the issuance of any
warrants or other rights therefor) pursuant to Section 6(a)(iv) or (v) hereof.
(iv) Warrants and Options. If at any time or from time to time the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner
(whether directly, by assumption in a merger in which the Company is the
surviving corporation and in which the shareholders of the Company immediately
prior to the merger continue to own more than 50% of the Outstanding Common
Stock immediately after the merger and for a period of 180 days thereafter, or
otherwise) issue or sell any warrants, options or other rights to subscribe
for or purchase (A) any shares of Common Stock or (B) any Convertible
Securities, whether or not the rights to subscribe, purchase, exchange or
convert thereunder are immediately exercisable, and the consideration per
share for which additional shares of Common Stock may at any time thereafter
be issuable pursuant to such warrants, options or other rights or pursuant to
the terms of such Convertible Securities shall be less than the Fair Market
Value Per Share, then the Aggregate Number shall be adjusted as provided in
Section 6(a)(iii) hereof on the basis that (1) the maximum number of
additional shares of Common Stock issuable pursuant to all such warrants,
options or other rights or necessary to effect the conversion or exchange of
all such Convertible Securities shall be deemed to have been issued as of the
date of the determination of the Fair Market Value Per Share as hereinafter
provided and (2) the aggregate consideration for such maximum number of
additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of such
additional shares of Common Stock pursuant to the terms of such warrants,
options or other rights or such Convertible Securities. For purposes of this
Section 6(a)(iv), the effective date of such adjustment and the date as of
which the Fair Market Value Per Share shall be computed shall be the earliest
of (A) the date on which the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive any such warrants,
options or other rights, (B) the date on which the Company shall enter into a
firm contract or commitment for the issuance of such warrants, options or
other rights and (C) the date of actual issuance of such warrants, options or
other rights.
(v) Convertible Securities. If at any time or from time to time the
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to
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receive a distribution of or shall in any manner (whether directly, by
assumption in a merger in which the Company is the surviving corporation and
in which the shareholders of the Company immediately prior to the merger
continue to own more than 50% of the Outstanding Common Stock immediately
after the merger and for a period of 180 days thereafter, or otherwise) issue
or sell Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the consideration per
share for the additional shares of Common Stock which may at any time
thereafter be issuable pursuant to the terms of such Convertible Securities
shall be less than the Fair Market Value Per Share, then the Aggregate Number
shall be adjusted as provided in Section 6(a)(iii) hereof on the basis that
(A) the maximum number of additional shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the date of the determination of the Fair
Market Value Per Share as herein provided and (B) the aggregate consideration
for such maximum number of additional shares of Common Stock shall be deemed
to be the minimum consideration received and receivable by the Company for the
issuance of such additional shares of Common Stock pursuant to the terms of
such Convertible Securities. For purposes of this Section 6(a)(v), the
effective date of such adjustment and the date as of which the Fair Market
Value Per Share shall be computed shall be the earliest of (1) the date on
which the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive any such Convertible Securities, (2)
the date on which the Company shall enter into a firm contract or commitment
for the issuance of such Convertible Securities and (3) the date of actual
issuance of such Convertible Securities.
No adjustment of the Aggregate Number shall be made under this
Section 6(a)(v) upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants, options or other subscription
or purchase rights if an adjustment shall previously have been made or if no
such adjustment shall have been required upon the issuance of such warrants,
options or other rights pursuant to Section 6(a)(iv) hereof.
(vi) Subsequent Adjustments. If at any time after any adjustment of
the Aggregate Number shall have been made pursuant to Section 6(a)(iv) or (v)
hereof on the basis of the issuance of warrants, options or other rights or
the issuance of Convertible Securities, or after any new adjustments of the
Aggregate Number shall have been made pursuant to this Section 6(a)(vi),
(A) such warrants, options or rights or the right of
conversion or exchange in such Convertible Securities shall expire, and
a portion of such warrants, options or rights, or the right of
conversion or exchange in respect of a portion of such Convertible
Securities, as the case may be, shall not have been exercised prior to
such expiration, and/or
(B) in the case of adjustments made pursuant to Section
6(a)(iv) or (v), the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants, options or rights per the
terms of such Convertible Securities shall be irrevocably increased
solely by virtue of provisions therein contained for an automatic
increase in such consideration per share upon the arrival of a specified
date or the happening of a specified event,
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such previous adjustment shall be rescinded and annulled and the additional
shares of Common Stock which were deemed to have been issued by virtue of the
computation made in connection with such adjustment shall no longer be deemed
to have been issued by virtue of such computation. Simultaneously therewith, a
recomputation shall be made of the effect of such warrants, options or rights
or Convertible Securities on the determination of the Aggregate Number, which
shall be made on the basis of:
(1) treating the number of additional shares of Common Stock,
if any, theretofore actually issued pursuant to the previous
exercise of such warrants, options or rights or such right of
conversion or exchange as having been issued on the date or dates
of such exercise and, in the case of a recomputation of a
calculation originally made pursuant to Section 6(a)(iv) or (v),
for the consideration actually received and receivable therefor,
and
(2) in the case of a recomputation of a calculation originally
made pursuant to Section 6(a)(iv) or (v), treating any such
warrants, options or rights or any such Convertible Securities
which then remain outstanding as having been granted or issued
immediately after the time of such irrevocable increase of the
consideration per share for which shares of Common Stock are
issuable under such warrants, options or rights or Convertible
Securities;
and, if and to the extent called for by the foregoing provisions of
Section 6(a)(vi) on the basis aforesaid, a new adjustment of the
Aggregate Number shall be made, such new adjustment shall supersede the
previous adjustment so rescinded and annulled.
(vii) Miscellaneous. The following provisions shall be applicable to
the making of adjustments of the Aggregate Number provided above in this
Section 6(a):
(A) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Company or any
of its Subsidiaries shall be deemed an issuance thereof for the purposes
of this Section 6(a).
(B) To the extent that any additional shares of Common Stock
or any Convertible Securities or any warrants, options or other rights
to subscribe for or purchase any additional shares of Common Stock or
any Convertible Securities (1) are issued solely for cash consideration,
the consideration received by the Company therefor shall be deemed to be
the amount of the cash received by the Company therefor, (2) are offered
by the Company for subscription, the consideration received by the
Company shall be deemed to be the subscription price or (3) are sold to
underwriters or dealers for public offering, the net consideration
(after giving effect to underwriting discounts) received by the Company
shall be deemed to be the consideration received by the Company
therefor, in any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends. To the extent that such issuance
shall be for a consideration other than cash, or partially for cash and
partially for other consideration, then, except as otherwise expressly
provided herein, the amount of such consideration
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shall be deemed to be the fair market value of such consideration plus,
if applicable, the amount of such cash) at the time of such issuance,
determined in the manner set forth in Section 6(d)(ii). In case any
additional shares of Common Stock or any Convertible Securities or any
warrants, options or other rights to subscribe for or purchase such
additional shares of Common Stock or Convertible Securities shall be
issued in connection with any merger in which the Company is the survivor
and issues any securities, the amount of consideration therefor shall be
deemed to be the fair market value of such additional shares of Common
Stock, Convertible Securities, warrants, options or other rights, as the
case may be, determined in the manner set forth in Section 6(d)(ii).
The consideration for any shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be equal to
(x) the consideration received by the Company for issuing any warrants,
options or other rights to subscribe for or purchase such Convertible
Securities, plus (y) the consideration paid or payable to the Company in
respect of the subscription for or purchase of such Convertible
Securities, plus (z) the consideration, if any, payable to the Company
upon the exercise of the right of conversion or exchange of such
Convertible Securities.
In case of the issuance at any time of any additional shares
of Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, the
Company shall, be deemed to have received for such additional shares of
Common Stock or Convertible Securities a consideration equal to the
amount of such dividend so paid or satisfied.
(C) The adjustments required by the preceding paragraphs of
this Section 6(a) shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that no adjustment of
the Aggregate Number that would otherwise be required shall be made
(except in the case of a Stock Subdivision or Stock Combination, as
provided for in Section 6(a)(i) hereof) unless and until such adjustment
either by itself or with other adjustments not previously made adds or
subtracts at least one one-hundredth of one share to or from the
Aggregate Number immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section
6(a) and not previously made, would result in a minimum adjustment. For
the purpose of any adjustment, any specified event shall be deemed to
have occurred at the close of business on the date of its occurrence.
(D) In computing adjustments under this Section 6(a),
fractional interests in Common Stock shall be taken into account to the
nearest one-thousandth of a share.
(E) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall, thereafter
and before the distribution to
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shareholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then no
adjustment shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall be rescinded
and annulled.
(b) Changes in Common Stock. In case at any time the Company shall
initiate any transaction or be a party to any transaction (including, without
limitation, a merger, consolidation, share exchange, sale, lease or other
disposition of all or substantially all of the Company's assets, liquidation,
recapitalization or reclassification of the Common Stock) in connection with
which the previous Outstanding Common Stock shall be changed into or exchanged
for different securities of the Company or capital stock or other securities
of another corporation or interests in a non-corporate entity or other
property (including cash) or any combination of the foregoing (each such
transaction being herein called a "Transaction"), then, as a condition of the
consummation of the Transaction, lawful, enforceable and adequate provision
shall be made so that the Holder shall be entitled to elect by written notice
to the Company to receive (i) a new warrant in form and substance similar to,
and in exchange for, this Warrant to purchase all or a portion of such
securities or other property or (ii) upon exercise of this Warrant at any time
on or after the consummation of the Transaction, in lieu of the Warrant Shares
issuable upon such exercise prior to such consummation, the securities or
other property (including cash) to which such Holder would have been entitled
upon consummation of the Transaction if such Holder had exercised this Warrant
immediately prior thereto (subject to adjustments from and after the
consummation date as nearly equivalent as possible to the adjustments provided
for in this Section 6). The Company will not effect any Transaction unless
prior to the consummation thereof each corporation or other entity (other than
the Company) which may be required to deliver any new warrant, securities or
other property as provided herein shall assume, by written instrument
delivered to the Holder, the obligation to deliver to such Holder such new
warrant, securities or other property as in accordance with the foregoing
provisions such Holder may be entitled to receive and such corporation or
entity shall have similarly delivered to the Holder an opinion of counsel for
such corporation or entity, satisfactory to the Holder, which opinion shall
state that all of the terms of the new warrant or this Warrant shall be
enforceable against the Company and such corporation or entity in accordance
with the terms hereof and thereof, together with such other matters as the
Holder may reasonably request. The foregoing provisions of this Section 6(b)
shall similarly apply to successive Transactions.
(c) Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action of the type contemplated in
Section 6(a) or (b) hereof but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then, unless in
the opinion of the Company's board of directors such action will not have a
Material Adverse Effect upon the rights of the Holder (taking into
consideration, if necessary, any prior actions which the Board of Directors
deemed not to materially adversely affect the rights of the Holder), the
Aggregate Number shall be adjusted in such manner and at such time as the
Board of Directors of the Company may in good faith determine to be equitable
in the circumstances.
11
(d) Notices.
(i) Notice of Proposed Actions. In case the Company shall propose
(A) to pay any dividend payable in stock of any class to the holders of its
Common Stock or to make any other distribution to the holders of its Common
Stock, (B) to offer to the holders of its Common Stock rights to subscribe for
or to purchase any Convertible Securities or additional shares of Common Stock
or shares of stock of any class or any other securities, warrants, rights or
options, (C) to effect any reclassification of its Common Stock, (D) to effect
any recapitalization, stock subdivision, stock combination or other capital
reorganization, (E) to effect any consolidation or merger, share exchange, or
sale, lease or other disposition of all or substantially all of its property,
assets or business, (F) to effect the liquidation, dissolution or winding up
of the Company or (G) to effect any other action which would require an
adjustment under this Section 6, then in each such case the Company shall give
to the Holder written notice of such proposed action, which shall specify the
date on which a record is to be taken for the purposes of such stock dividend,
distribution or rights, or the date on which such reclassification,
reorganization, consolidation, merger, share exchange, sale, transfer,
disposition, liquidation, dissolution, winding up or other transaction is to
take place and the date of participation therein by the holders of Common
Stock, if any such date is to be fixed, or the date on which the transfer of
Common Stock is to occur, and shall also set forth such facts with respect
thereto as shall be reasonably necessary to indicate the effect of such action
on the Common Stock and on the Aggregate Number after giving effect to any
adjustment which will be required as a result of such action. Such notice
shall be so given in the case of any action covered by clause (A) or (B) above
at least 30 days prior to the record date for determining holders of the
Common Stock for purposes of such action and, in the case of any other such
action, at least 30 days prior to the earlier of the date of the taking of
such proposed action or the date of participation therein by the holders of
Common Stock.
(ii) Adjustment Notice. Whenever the Aggregate Number is to be
adjusted pursuant to this Section 6, unless otherwise agreed by the Holder,
the Company shall promptly (and in any event within 10 Business Days after the
event requiring the adjustment) prepare a certificate signed by the chief
financial officer of the Company, setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment is to
be calculated. The certificate shall set forth, if applicable, a description
of the basis on which the Board of Directors in good faith determined, as
applicable, the Fair Market Value Per Share, the fair market value of any
evidences of indebtedness, shares of stock, other securities, warrants, other
subscription or purchase rights, or other property or the equitable nature of
any adjustment under Section 6(b) or (c) hereof, the new Aggregate Number and,
if applicable, any new securities or property to which the Holder is entitled.
The Company shall promptly cause a copy of such certificate to be delivered to
the Holder. In the case of any determination of Fair Market Value Per Share,
such certificate shall be delivered to the Holder within the time period set
forth in the definition of Fair Market Value Per Share and the Holder may
object thereto as provided therein. Any other determination of fair market
value shall first be determined in good faith by the Board of Directors and be
based upon an arm's length sale of such indebtedness, shares of stock, other
securities, warrants, other subscription or purchase rights or other property,
such sale being between a willing buyer and a willing seller. In the case of
any such determination of fair market value, the Holder may object to the
determination in such certificate by giving written
12
notice within 10 Business Days of the receipt of such certificate and, if the
Holder and the Company cannot agree to the fair market value within 10
Business Days of the date of the Holder's objection, the fair market value
shall be determined by a national or regional investment bank or a national
accounting firm mutually selected by the Holder and the Company, the fees and
expenses of which shall be paid 50% by the Company and 50% by the Holder
unless such determination results in a fair market value more than 110% of the
fair market value determined by the Company in which case such fees and
expenses shall be paid by the Company. The Company shall keep at its Principal
Office copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by the Holder or any
prospective purchaser of the Warrant (in whole or in part) if so designated by
the Holder.
SECTION 7. No Dilution or Impairment. The Company will not, by amendment
of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, share exchange,
dissolution or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, including
without limitation the adjustments required under Section 6 hereof, and will
at all times in good faith assist in the carrying out of all such terms and in
taking of all such action as may be necessary or appropriate to protect the
rights of the Holder against dilution or other impairment. Without limiting
the generality of the foregoing and notwithstanding any other provision of
this Warrant to the contrary (including by way of implication), the Company
(a) will not increase the par value of any shares of Common Stock receivable
on the exercise of this Warrant above the amount payable therefor on such
exercise or (b) will take all such action as may be necessary or appropriate
so that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock on the exercise of this Warrant.
SECTION 8. Transfers of the Warrant.
(a) Generally. Subject to the restrictions set forth in this Section 8,
the Restructure Agreement, and the legend set forth on the face of this
Warrant, the Holder may at any time and from time to time freely transfer this
Warrant and the Warrant Shares in whole or in part. This Warrant has not been,
and the Warrant Shares at the time of their issuance may not be, registered
under the Securities Act and except as provided in the Registration Rights
Agreement, nothing herein contained shall be deemed to require the Company to
so register this Warrant and the Warrant Shares. This Warrant and the Warrant
Shares are issued or issuable subject to the provisions and conditions
contained herein, and every Holder hereof by accepting the same agrees with
the Company to such provisions and conditions, and represents to the Company
that this Warrant has been acquired and the Warrant Shares will be acquired
for the account of the Holder for investment and not with a view to or for
sale in connection with any distribution thereof.
(b) Compliance with Securities Laws. The Holder agrees that the Warrant
and the Warrant Shares may not be sold or otherwise disposed of except
pursuant to an effective registration statement under the Securities Act and
applicable state securities laws or pursuant to an applicable exemption from
the registration requirements of the Securities Act and such state securities
laws. Notwithstanding the legend set forth on the face of this Warrant, in the
event
13
that the Holder transfers this Warrant or the Warrant Shares pursuant to an
applicable exemption from registration, the Company may request (other than
with respect to a transfer from lender or its affiliates to another lender or
its affiliates pursuant to the Restructure Agreement), at its expense, an
opinion of counsel reasonably satisfactory to the Company that the proposed
transfer does not require registration or qualification under the Securities
Act or applicable state securities laws.
(c) Restrictive Securities Legend. The certificate representing the
shares of Common Stock issued upon the exercise of the Warrant shall bear the
restrictive legends set forth below:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, or the securities laws of any State
and may not be sold or otherwise disposed of in the absence of an
effective registration statement under such Act and applicable State
securities laws or an opinion of counsel reasonably satisfactory to the
issuer that the proposed transaction does not require registration or
qualification under such Act and such laws."
SECTION 9. Covenants.
The Company hereby represents, warrants and covenants to the Holder that
so long as Holder holds the Warrant or any Warrant Shares:
(a) Certain Amendments. The Company will not, and will not permit or
cause any of its Subsidiaries to, amend, modify or change any provision of its
articles or certificate of incorporation, bylaws, or the terms of any class or
series of its Capital Stock to the extent such amendment, modification or
change would have an adverse effect on the Holder.
(b) Limitation on Certain Restrictions. The Company will not, and will
not permit or cause any of its Subsidiaries (to the extent the Company has any
Subsidiaries after the Closing Date) to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any restriction or
encumbrance on the ability of the Company and any such Subsidiaries to perform
and comply with their respective obligations under this Warrant.
SECTION 00.Xxxxxx of Non-Compliance and Remedies.
(a) Events of Non-Compliance. If the Company fails to keep and fully and
promptly perform and observe in all material respects any of the terms,
covenants or representations contained or referenced herein within 30 days
from the earlier to occur of (A) written notice from the Holder specifying
what failure has occurred, or requesting that a specified failure be remedied
or (B) an executive officer of the Company becoming aware of such failure (an
"Event of Non-Compliance"), the Holder shall be entitled to the remedies set
forth in subsection (b) hereof.
(b) Remedies. On the occurrence of an Event of Non-Compliance, in
addition to any remedies the Holder may have under applicable law, the Holder
may bring any action for injunctive relief or specific performance of any term
or covenant contained herein or in the
14
Restructure Agreement, the Company hereby acknowledging that an action for
money damages may not be adequate to protect the interests of the Holder
hereunder.
SECTION 11. Option to Put.
(a) Put Rights. Notwithstanding any other provision of this Warrant, the
Required Holders may elect by giving the Company written notice thereof
pursuant to Section 12(a) hereof, from time to time, at any time specified in
Section 11(b) hereof and prior to the Expiration Date, to sell to the Company
(at a price established pursuant to Section 12(c) hereof) this Warrant, the
Warrant Shares or any portion thereof (collectively, the "Warrant Securities")
and the Company shall be required to purchase such Warrant Securities or
portion thereof in accordance with the terms hereof and Section 12 hereof.
(b) Put Events. The right of the Required Holders to require the Company
to purchase the Warrant Securities or any portion thereof under Section 11(a)
hereof shall be exercisable at any time ninety (90) days after the date of
this Warrant other than (A) such time during which the Company maintains an
effective registration statement with respect to the resale of all shares of
common stock of the Company acquired or acquirable upon exercise of the
Warrants held by the Holder or (B) all shares of common stock of the Company
acquired or acquirable upon exercise of the Warrants are eligible for resale,
without registration, in any three-month period under Rule 144 of the
Securities Act (including Rule 144(k)) or any similar rule or regulation
hereinafter adopted by the Commission; provided, however, resales of such
shares under the registration statement may be blocked by the Company to
prevent premature disclosure of nonpublic information by the Company pursuant
to Section 2(f) of that certain Registration Rights Agreement dated as of the
date hereof by and among the Company and the investors listed on the signature
pages thereto.
SECTION 12. Manner of Put Redemption.
(a) Put Notice. The Required Holders shall give notice of exercise (the
"Put Notice") of the option under Section 11 hereof to put the Warrant
Securities to the Company by hand delivery, receipt requested, by overnight
delivery service, or by registered first-class mail, postage prepaid. Such
notice shall be mailed or, in the case of hand delivery or overnight delivery
service, delivered (such date of mailing or delivery being the "Put Exercise
Date") not less than 30 nor more than 60 days prior to the date set forth in
the notice as the date fixed for redemption (the "Put Redemption Date"), to
the Company at its Principal Office. All redemption notices shall set forth
the Put Redemption Date and the Warrant Securities to be redeemed.
(b) Exercise Notice. Within five Business Days after receipt of a Put
Notice from the Required Holders, the Company shall give written notice of
such exercise (the "Exercise Notice") to each other holder of Warrant
Securities (such other holders being referred to herein collectively as the
"Other Holders"). Each Other Holder will have the right to participate in the
redemption and require the Company to redeem all or any portion of such Other
Holder's Warrant Securities by delivering written notice thereof to the
Company within 10 Business Days following receipt of the Exercise Notice. All
such notices delivered by such Other Holders will be deemed to have been
delivered as of the date of the initial Put Notice and taken together will
15
be deemed to be one exercise of the rights of such Required Holders and Other
Holders to put all or a portion of their Warrant Securities as provided
hereunder.
(c) Put Redemption Price. The purchase price (the "Put Redemption
Price") of the Warrant Securities or any part thereof to be redeemed by the
Company hereunder shall be calculated (for the purposes of a redemption under
this Section 12 as of the Put Exercise Date (the "Put Redemption Price
Calculation Date") and shall be equal to (i) in the case of this Warrant, the
product of (A) the difference of (1) the Put Price Per Share minus (2) the
Exercise Price per share then in effect multiplied by (B) that portion of this
Warrant (expressed in Warrant Shares) to be redeemed and (ii) in the case of
any Warrant Shares issued upon exercise of this Warrant, the product of (A)
the Put Price Per Share multiplied by (B) that number of Warrant Shares to be
redeemed.
The "Put Price Per Share" shall mean an amount equal to the Fair Market
Value Per Share determined as of the date of the Company's receipt of the Put
Notice (and if such date is not a Business Day, then as of the immediately
preceding Business Day).
(d) Closing. On the Put Redemption Date, the holders of the Warrant
Securities to be redeemed shall surrender such Warrant Securities to the
Company at its Principal Office or such other place as may be set forth in the
Put Notice on tender by the Company of the Put Redemption Price in cash or
other immediately available funds. Payment of the Put Redemption Price shall
only be out of Legally Available Funds.
(e) Partial Exercise. If this Warrant is redeemed only in part, the
Company shall issue a new warrant or warrants for the remaining portion of the
warrant, which warrant shall be registered in the name of and delivered to the
appropriate holder.
(f) No Restrictive Agreements: Legally Available Funds.
(i) Covenant Not to Impair Put Rights. The Company covenants and
agrees that, after the date hereof, it shall not, without the prior written
consent of the Required Holders, enter into or agree to become subject to any
term, condition, provision or agreement that would restrict in any way the
performance of the Company's obligations under this Section 12 or the
availability of Legally Available Funds with which to perform such
obligations.
(ii) Restrictions on Purchase. Notwithstanding anything in the
Warrant to the contrary, the Company shall not be required to redeem any
portion of the Warrant Securities to the extent that at the time of the Put
Redemption Date there exist any Restrictions on Purchase.
(iii) Remedial Action. Upon receipt of a Put Notice, if the Company
believes that at the time of the Put Redemption Date, the Company would not
have sufficient Legally Available Funds to perform its obligations under this
Section 12, then the Company shall promptly use all reasonable efforts to
cause such Legally Available Funds to become available in any manner permitted
or contemplated by the General Corporation Law of the State of Delaware, as
amended, or any comparable provision of any succeeding law. If,
notwithstanding the Company's reasonable efforts pursuant hereto, the Company
is unable to fulfill its obligations
16
under this Section 12 because of insufficient Legally Available Funds or due
to the existence of one or more Restrictions on Purchase, the Company shall
give prompt written notice thereof to each holder of Warrant Securities
specifying in reasonable detail the nature thereof and the extent, if any, to
which the Company would be able to fulfill its obligations under this Section
12.
(iv) Holder Options. If any Restrictions on Purchase exist on the
proposed Put Redemption Date, the Required Holders may elect pursuant to
written notice given by the Required Holders to the Company: (A) that each
holder's put rights pursuant to the Put Notice shall remain exercised and the
Put Redemption Date shall be deferred until any of the first five Business
Days after all such Restrictions on Purchase cease to exist; provided, that,
as and to the extent that such Restrictions on Purchase cease to exist, the
Company shall promptly make partial payments of the Put Redemption Price to
the holders of Warrant Securities to be redeemed, in which case there shall be
a series of redemptions, each of which shall take place not more than five
Business Days after such Restrictions on Purchase have ceased to exist to an
extent that would permit such partial payments of the Put Redemption Price in
increments of not less than $25,000; (B) the exercise of the put rights
pursuant to Section 11(a) shall be rescinded in whole or in part at the option
of the Required Holders (with the result that the Required Holders may require
the Company to redeem the Warrant Securities at any time thereafter until the
later of 18 months after the date the Required Holders give notice to rescind
the exercise of such put rights); or (C) to the extent the Company is unable
to pay the Put Redemption Price in compliance with the terms of this Section
12(f), such Put Redemption Price shall be paid by delivery to the Holder
hereof of a promissory note of the Company dated the date of the applicable
Put Redemption Date, having a term of one year from the date thereof,
providing for a single payment of principal at the end of its term, bearing
interest at a rate per annum (computed for the actual number of days elapsed
on the basis of a 360-day year) equal to 15% with quarterly interest payments
payable in cash or in kind and allowing for prepayment at any time without
premium or penalty.
SECTION 13. Definitions.
As used herein, in addition to the terms defined elsewhere herein, the
following terms shall have the following meanings. Capitalized terms not
appearing below and not otherwise defined herein shall have the meaning
ascribed to them in the Restructure Agreement.
"Affiliate" means, with respect to a Person, any other Person (other
than a Subsidiary) which directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such Person. The term "control" means (a) the power to vote more than
50% of the securities or other equity interests of a Person having ordinary
voting power (on a fully diluted basis), or (b) the possession, directly or
indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Aggregate Number" has the meaning set forth in the Preamble.
17
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banking institutions in Charlotte, North Carolina or New
York, New York are authorized or required by law or executive order to be
closed.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as in effect on the date hereof.
"Commencement Date" has the meaning set forth in the Preamble.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act or the Exchange
Act.
"Common Stock" means, collectively, the Common Stock and any other class
of capital stock of the Company hereafter authorized having the right to share
in distributions either of earnings or assets without limit as to amount or
percentage.
"Company" has the meaning set forth in the Preamble.
"Convertible Securities" means evidences of indebtedness, shares of
stock or other securities (including, but not limited to options and warrants)
which are directly or indirectly convertible, exercisable or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Common Stock, either immediately or upon the onset of a specified
date or the happening of a specified event.
"Distribution" has the meaning set forth in Section 6(a)(i).
"Election to Purchase" has the meaning set forth in Section 2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Exempt Issuances" has the meaning set forth in Section 6.
"Exercise Amount" has the meaning set forth in Section 2(a).
"Exercise Price" has the meaning set forth in the Preamble.
"Expiration Date" has the meaning set forth in the Preamble.
"Fair Market Value Per Share" means as of a particular date the average
(weighted by daily trading volume) of the closing prices of the Common Stock
on all securities exchanges on which such security may be listed at the time,
or, if there has been no sales on any such exchange on any day, or, if on any
day such security is not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 P.M., New York Time, or,
if on any day such security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the
18
National Quotation Bureau, Incorporated or any similar successor organization,
in each such case averaged over a period of 20 days consisting of the day as
of which the "Fair Market Value Per Share" is being determined and the 19
consecutive Business Days prior to such day. If at any time the Common Stock
is not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Fair Market Value Per Share" shall be (a) the
fair market value of the Outstanding Common Stock based upon an arm's length
sale of the Company on such date (including its ownership interest in all
Persons) as an entirety, such sale being between a willing buyer and a willing
seller and determined without reference to any discount for minority interest,
restrictions on transfer, disparate voting rights among classes of capital
stock or lack of marketability with respect to capital stock divided by (b)
the aggregate number of shares of Outstanding Common Stock; provided, however,
that in no event shall "Fair Market Value Per Share be deemed to be less than
the applicable Exercise Price per share subject to proportional adjustment
upon the occurrence of an event specified in Section 6(a)(i). The Fair Market
Value Per Share shall be determined by members of the Board of Directors of
the Company in good faith within 10 days of any event for which such
determination is required and such determination (including the basis
therefor) shall be promptly provided to the Holder. Such determination shall
be binding on the Holder unless the Holder objects thereto in writing within
10 Business Days of receipt. In the event the Company and the Holder cannot
agree on the Fair Market Value Per Share within 10 Business Days of the date
of the Holder's objection, the Fair Market Value Per Share shall be determined
by a disinterested appraiser (which may be a national or regional investment
bank or national accounting firm) mutually selected by the Company and the
Holder, the fees and expenses of which shall be paid 50% by the Company and
50% by the Holder unless such determination results in a Fair Market Value Per
Share more than 110% of the Fair Market Value Per Share initially determined
by the Company in which case such fees and expenses shall be borne by the
Company. Any selection of a disinterested appraiser shall be made in good
faith within seven Business Days after the end of the last 10 Business Day
period referred to above and any determination of Fair Market Value Per Share
by a disinterested appraiser shall be made within 30 days of the date of
selection.
"Fully Diluted" means, with respect to the Common Stock, as of a
particular time the total outstanding shares of Common Stock as of such time,
determined by treating all warrants and options for Common Stock as having
been exercised and by treating all outstanding Convertible Securities as
having been so converted.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any
of the foregoing.
"Holder" means [_________________________] and its successors and
assigns.
"Legally Available Funds" means, with respect to any redemption of the
Warrant Securities pursuant to Section 11 hereof, the amount of funds of the
Company legally available for such redemption as required under the General
Corporation Law of the State of Delaware, as amended, or any comparable
provision of any succeeding law.
19
"Material Adverse Effect" means a material adverse effect upon the
business, assets or condition (financial or otherwise) of the Company and its
Subsidiaries, taken as a whole.
"Outstanding Common Stock" of the Company means, as of the date of
determination, the sum (without duplication) of the following: (a) the number
of shares of Common Stock then outstanding at the date of determination, (b)
the number of shares of Common Stock then issuable upon the exercise of the
Warrant (as such number of shares may be adjusted pursuant to the terms
hereof) and (c) the number of shares of Common Stock then issuable upon the
exercise or conversion of Convertible Securities and any warrants, options or
other rights to subscribe for or purchase Common Stock or Convertible
Securities (but excluding any unvested options and securities not then
exercisable for or convertible into Common Stock).
"Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof, or other entity of any kind and includes any successor
(by merger or otherwise) of such entity.
"Principal Office" means the Company's principal office as set forth in
Section 18 hereof or such other principal office of the Company in the United
States of America the address of which first shall have been set forth in a
notice to the Holder.
"Put Notice" has the meaning set forth in Section 12(a).
"Put Price Per Share" has the meaning set forth in Section 12(c).
"Put Redemption Date" has the meaning set forth in Section 12(a).
"Put Redemption Price" has the meaning set forth in Section 12(c).
"Put Redemption Price Calculation Date" has the meaning set forth in
Section 12(c).
"Registration Rights Agreement" means the Registration Rights Agreement
of even date between the Company, the Holder and the other investors listed on
the signature pages thereto, as amended, modified or supplemented from time to
time.
"Regulatory Requirement" has the meaning set forth in Section 5(c).
"Required Holders" means the holders of at least 51% of the Warrant
Securities then outstanding determined on a Fully Diluted basis.
"Restrictions on Purchase" means the occurrence of any of the following
at the time of the closing of a redemption under Section 12: (i) the purchase
of the Warrant Securities is prohibited by the Restructure Agreement (unless
such prohibition has been expressly waived by the requisite lenders
thereunder) or (ii) the Borrower would not have sufficient Legally Available
Funds to redeem the Warrant Securities.
20
"Restructure Agreement" means the Restructure Agreement dated as of
April 11, 2003 between the Company as borrower, certain subsidiaries as
guarantors, Bank of America, N.A. as agent and the lenders listed on the
signature pages thereto, and as amended, modified or supplemented from time to
time.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Stock Combination" has the meaning set forth in Section 6(a)(i)(C).
"Stock Dividend" has the meaning set forth in Section 6(a)(i)(A).
"Stock Option Plan" means the Stock Option Plan of the Company as in
effect on the date hereof, and any and all stock options issued pursuant
thereto.
"Stock Subdivision" has the meaning set forth in Section 6(a)(i)(B).
"Subsidiary" means, as to a Person, any corporation, partnership or
other entity of which more than 50% of the outstanding capital stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other managers of such corporation, partnership or other
entity is at the time, directly or indirectly, owned by or otherwise
controlled by such Person.
"Warrant" has the meaning set forth in Section 1(a).
"Warrant Securities" means the Warrant and the Warrant Shares,
collectively.
"Warrant Shares" means (a) the shares of Common Stock issued or issuable
upon exercise of this Warrant in accordance with its terms and (b) all other
shares of the Company's capital stock issued with respect to such shares by
way of stock dividend, stock split or other reclassification or in connection
with any merger, consolidation, recapitalization or other reorganization
affecting the Company's capital stock.
SECTION 14. Survival of Provisions. Notwithstanding the full exercise by
the Holder of its rights to purchase Common Stock hereunder, the provisions of
Sections 5(c), 5(d) and 9 through 23 of this Warrant shall survive such
exercise and the Expiration Date until such time as the rights of the Required
Holders to have the Company redeem all Warrant Securities held by the Holder
have expired or been fully exercised.
SECTION 15. Delays, Omissions and Indulgences. It is agreed that no delay
or omission to exercise any right, power or remedy accruing to the Holder upon
any breach or default of the Company under this Warrant shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach or default, or any acquiescence therein, or of or in any similar breach
or default thereafter
21
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. It
is further agreed that any waiver, permit, consent or approval of any kind or
character on the Holder's part of any breach or default under this Warrant, or
any waiver on the Holder's part of any provisions or conditions of this
Warrant must be in writing and that all remedies, either under this Warrant,
or by law or otherwise afforded to the Holder, shall be cumulative and not
alternative.
SECTION 16. Rights of Transferees. Subject to Section 8, the rights
granted to the Holder hereunder of this Warrant shall pass to and inure to the
benefit of all subsequent transferees of all or any portion of the Warrant
(provided that the Holder and any transferee shall hold such rights in
proportion to their respective ownership of the Warrant and Warrant Shares)
until extinguished pursuant to the terms hereof.
SECTION 17. Captions. The titles and captions of the Sections and other
provisions of this Warrant are for convenience of reference only and are not
to be considered in construing this Warrant.
SECTION 18. Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopy,
overnight courier service or personal delivery:
22
(a) if to the Company:
Personnel Group of America, Inc.
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
with a copy to:
Xxxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b) if to the Holder:
____________________________________
____________________________________
____________________________________
Attn:_______________________________
Telecopy:___________________________
with a copy to:
Xxxxx & Xxx Xxxxx PLLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 00
Xxxxxxxxx, XX 00000-0000
Attention: X. Xxxxx XxXxxxxx, Esq.
Telecopy: 000-000-0000
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
SECTION 19. Successors and Assigns. This Warrant shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, provided that the
23
Company shall have no right to assign its rights, or to delegate its
obligations, hereunder without the prior written consent of the Holder.
SECTION 20. Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.
SECTION 21. Governing Law. This Warrant is to be construed and enforced
in accordance with and governed by the laws of the State of Delaware and
without regard to the principles of conflicts of law of such state.
SECTION 22. Entire Agreement. This Warrant, the Registration Rights
Agreement and the Restructure Agreement are intended by the parties as a final
expression of their agreement and are intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.
SECTION 23. Rules of Construction. Unless the context otherwise requires
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Warrant. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
[Remainder of Page Intentionally Omitted.]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and
executed in its corporate name by its duly authorized officers and its
corporate seal to be affixed hereto as of the date below written.
DATED:__________________ PERSONNEL GROUP OF AMERICA, INC.
By:
----------------------------
Name:
Title:
25
EXHIBIT A
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NOTICE OF EXERCISE
To: _____________________
_____________________
_____________________
1. The undersigned, pursuant to the provisions of the attached Warrant,
hereby elects to exercise this Warrant with respect to ________ shares of
Common Stock (the "Exercise Amount"). Capitalized terms used but not otherwise
defined herein have the meanings ascribed thereto in the attached Warrant.
2. The undersigned herewith tenders payment for such shares in the
following manner (please check type, or types, of payment and indicate the
portion of the Exercise Price to be paid by each type of payment):
______ Exercise for Cash
______ Exercise for Common Stock
______ Cashless Exercise
3. Please issue a certificate or certificates representing the shares
issuable in respect hereof under the terms of the attached Warrant, as
follows:
___________________________________________
(Name of Record Holder/Transferee)
and deliver such certificate or certificates to the following address:
___________________________________________
(Address of Record Holder/Transferee)
4. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
5. If the Exercise Amount is less than all of the shares of Common Stock
purchasable hereunder, please issue a new warrant representing the remaining
balance of such shares, as follows:
___________________________________________
(Name of Record Holder/Transferee)
and deliver such warrant to the following address:
___________________________________________
(Address of Record Holder/Transferee)
___________________________________________
(Signature)
__________________________
(Date)
Schedule 1
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