WARRANT AGREEMENT
-----------------
WARRANT AGREEMENT dated as of March 11, 1997, between CHECKERS DRIVE-IN
RESTAURANTS, INC., a Delaware corporation (the "Company"), and CHASEMELLON
SHAREHOLDER SERVICES. L.L.C., as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company proposes to issue warrants as hereinafter described
(the "Warrants") to purchase up to an aggregate of 5,100,000 shares (the
"Shares") of the common stock of the Company, par value $.001 per share (the
"Common Stock"), in connection with the settlement of certain litigation,
entitled XXXXXXX XXXXX, ET AL., V. CHECKERS DRIVE-IN RESTAURANTS, INC., ET AL.,
filed in the United States District Court for the Middle District of Florida,
Tampa Division, Case No. 94-282-CIV-T-17C; and
WHEREAS, the Company wishes the Warrant Agent to act on its behalf and the
Warrant Agent is willing to act in connection with the issuance, division,
transfer, exchange and exercise of Warrants;
NOW, THEREFORE, in consideration of the foregoing and for the purpose of
defining the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company, the Warrant Agent and the registered
owners of the Warrants (the "Holders"), the Company and the Warrant Agent hereby
agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT
The Company hereby appoints Warrant Agent to act as agent for the Company
in accordance with the instructions hereinafter in the Agreement set forth, and
the Warrant Agent hereby accepts such appointment.
SECTION 2. TRANSFERABILITY AND FORM OF WARRANT
2.1. Registration. The Warrants shall be numbered and shall be registered
in a Warrant Register. The Company and the Warrant Agent shall be entitled to
treat the Holder of any Warrant as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person, and shall not be liable for any
registration of transfer of Warrants which are registered or to be registered in
the name of a fiduciary or the nominee of a fiduciary unless made with actual
knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration of transfer, or with such knowledge of such facts
that its participation therein amounts to bad faith.
2.2. Transfer. The Warrants shall be transferable only on the books of the
Company maintained at the office of the Warrant Agent in Pittsburgh,
Pennsylvania, upon delivery thereof duly endorsed by a Holder or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment, or authority to transfer, with all signatures properly
guaranteed and accompanied by appropriate instructions for transfer. In all
cases of transfer by an attorney, the original letter of attorney, duly
approved, or an official copy thereof, duly certified, shall be deposited and
remain with the Warrant Agent. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated evidence of their
authority shall be produced, and may be required to be deposited and remain with
the Warrant Agent in its discretion. Upon any registration of transfer, the
Warrant Agent shall countersign and deliver new Warrants to the person entitled
thereto.
2.3. Form of Warrants. The text of the Warrants and of the form of
election to purchase Shares shall be substantially as set forth in Exhibit A
attached hereto. The price of Shares and the number of Shares issuable upon
exercise of Warrants are subject to adjustment upon the occurrence of certain
events, all as hereinafter provided. The Warrants shall be executed on behalf of
the Company by its President or one of its Vice Presidents, under its corporate
seal reproduced thereon attested by its Secretary or an Assistant Secretary. The
signature of any of these officers on the Warrants may be manual or facsimile.
Warrants bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold such
office on the date of this Agreement.
Warrants shall be dated as of the date of counter-signature thereof by the
Company either upon initial issuance or upon division, exchange, substitution,
or transfer.
2.4. Countersignature of Warrants. The Warrants shall be countersigned by
the Warrant Agent (or any successor to the Warrant Agent then acting as warrant
agent under this Agreement) and shall not be valid for any purpose unless so
countersigned. Warrants may be countersigned, however, by the Warrant Agent (or
by its successor as warrant agent hereunder) and may be delivered by the Warrant
Agent, notwithstanding that the persons whose manual or facsimile signatures
appear thereon as proper officers of the Company shall have ceased to be such
officers at the time of such countersignature, issuance, or delivery. The
Warrant Agent shall, upon written instructions of the President or Secretary of
-2-
the Company, countersign, issue and deliver Warrants entitling the Holders
thereof to purchase an amount not exceeding 5,100,000 Shares (subject to
adjustment pursuant to Section 10 hereof) and shall countersign and deliver
Warrants as otherwise provided in this Agreement.
SECTION 3. EXCHANGE OF WARRANT CERTIFICATES
Warrant certificates may be exchanged for another certificate or
certificates entitling the Holder thereof to purchase a like aggregate number of
Shares as the certificate or certificates surrendered then entitle such Holder
to purchase. Any Holder of a Warrant desiring to exchange Warrant certificates
shall make such request in writing delivered to the Company, and shall
surrender, properly endorsed, the certificate or certificates evidencing the
Warrant or Warrants to be so exchanged. Thereupon, the Warrant Agent shall
countersign and deliver to the person entitled thereto a new Warrant certificate
or certificates, as the case may be, as so requested.
SECTION 4. TERM OF THE WARRANTS; REGISTRATION OF SHARES; EXERCISE
OF WARRANTS
The Warrants shall expire on December 22, 2000 (the "Expiration Date"),
unless extended pursuant to the terms of this Section 4.
On or before November 22, 2000, the Company shall file and have declared
effective by the Securities and Exchange Commission ("SEC") a registration
statement under the Securities Act of 1933 (the "Registration Statement")
registering the Shares underlying the Warrants for issuance upon exercise of the
Warrants, and the Company shall maintain the effectiveness of such Registration
Statement until the Expiration Date; PROVIDED, HOWEVER, that the Company will
have the right (a) to defer the initial filing or effectiveness for up to 90
days, or (b) after effectiveness, to suspend effectiveness of the Registration
Statement for up to 90 days if, in the good faith judgment of the board of
directors of the Company and upon the advice of counsel to the Company, such
delay in filing or requesting acceleration of effectiveness or such suspension
of effectiveness is necessary in light of the existence of material non-public
information (financial or otherwise) concerning the Company, disclosure of which
at the time is not, in the opinion of the board of directors of the Company upon
the advice of counsel, (A) otherwise required, and (B) in the best interests of
the Company. The date that the Registration Statement is declared effective by
the SEC is hereafter referred to as the "Effective Date." The Company will give
the holders of the Warrants notice of any suspension of effectiveness of the
Registration Statement. If the Registration Statement is not declared effective
-3-
at least thirty days prior to the Expiration Date, the Expiration Date shall be
extended by one day for each day after such date that the Registration Statement
is not effective. If the Registration Statement is suspended by the Company
after effectiveness, the Expiration Date shall be extended by one day for each
day that such effectiveness is suspended. The Company will pay all expenses
related to such registration.
Subject to the terms of this Agreement, each Holder shall have the right,
at any time during the period commencing on the Effective Date until 4:00 P.M.
New York time on the Expiration Date while the Registration Statement is in
effect and sales thereunder have not been suspended by the Company (the
"Exercise Period"), to purchase from the Company the number of fully paid and
nonassessable Shares to which the Holder may at the time be entitled to purchase
pursuant to such Warrants, upon surrender to the Company at the office of the
Warrant Agent of the certificate or certificates evidencing the Warrants to be
exercised, together with the form of election to purchase on the reverse thereof
duly completed and signed, and upon payment to the Warrant Agent of the Warrant
Price (as defined in and determined in accordance with the provisions of
Sections 9 and 10 hereof), for the number of Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Warrant Price shall be
made in cash or by certified or cashier's check.
Upon such surrender of Warrants and payment of the Warrant 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 number of full
Shares so purchased upon the exercise of such Warrants, together with cash, as
provided in Section 11 hereof, in respect of any fractional Shares otherwise
issuable upon such surrender. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall be
deemed to have become a holder of record of such Shares as of the date of the
surrender of such Warrants and payment of the Warrant Price, as aforesaid;
PROVIDED, HOWEVER, that if, at the date of surrender of such Warrants and
payment of such Warrant Price, the transfer books for the Shares or other class
of stock purchasable upon the exercise of such Warrants shall be closed, the
certificates for the Shares in respect of which such Warrants are then exercised
shall be issuable as of the date on which such books shall be next opened
(whether before or after the Expiration Date) and until such date the Company
shall be under no duty to deliver any certificate for such Shares; PROVIDED
FURTHER, HOWEVER, that the transfer books of record, unless otherwise required
by law, shall not be closed at any one time for a period longer than twenty
days. The rights of purchase represented by the Warrants shall be exercisable
during the Exercise Period, at the election of the Holders thereof, either in
-4-
full or from time to time in part and, in the event that a certificate
evidencing Warrants is exercised in respect of less than all of the Shares
specified therein during the Exercise Period, a new certificate evidencing the
remaining Warrant or Warrants will be issued, and the Warrant Agent is hereby
irrevocably authorized to countersign and to deliver the required new Warrant
certificates pursuant to the provisions of this Section and of Section 2.4
hereof and the Company, whenever required by the Warrant Agent, will supply the
Warrant Agent with Warrant certificates duly executed on behalf of the Company
for such purpose.
SECTION 5. PAYMENT OF TAXES
The Company will pay all documentary stamp taxes, if any, attributable to
the initial issuance of Shares issuable upon the exercise of Warrants; PROVIDED,
HOWEVER, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issuance or delivery
of any certificates for shares of Common Stock in a name other than that of the
registered holder of the Warrants in respect of which such shares are issued,
and in such case neither the Company nor the Warrant Agent shall be required to
issue or deliver any certificate for shares of Common Stock or any Warrant
certificate until the person requesting the same has paid to the Company the
amount of such tax or has established to the Company's satisfaction that such
tax has been paid.
SECTION 6. MUTILATED OR MISSING WARRANTS
In case any of the certificates evidencing the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant certificate, or in lieu of and substitution for the Warrant
certificate lost, stolen or destroyed, a new Warrant certificate of like tenor
and representing an equivalent right or interest; but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such loss, theft
or destruction of such warrant and indemnity, if requested, also satisfactory to
them. Applicants for such substitute Warrant certificate shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.
SECTION 7. RESERVATION OF SHARES
There have been reserved, and the Company shall at all times keep
reserved, out of its authorized Common Stock a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the outstanding Warrants. The Transfer Agent for the Common Stock (the "Transfer
Agent") and every subsequent transfer agent for any shares of the Company's
-5-
capital stock issuable upon the exercise of any of the rights of purchase
aforesaid will be irrevocably authorized and directed at all times to reserve
such number of authorized shares as shall be requisite for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent for
the Common Stock and with every subsequent transfer agent for any shares of the
Company's Capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is irrevocably authorized to
requisition from time to time from such Transfer Agent such stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such Transfer Agent with
duly executed stock certificates for such purpose and will provide or otherwise
make available any cash which may be payable as provided in Section 11 hereof.
All Warrants surrendered in the exercise of the rights thereby evidenced shall
be cancelled by the Warrant Agent and shall thereafter be delivered to the
Company. Promptly after the date of expiration of the Warrants, the Warrant
Agent shall certify to the Company the aggregate number of Warrants then
outstanding, and thereafter no share shall be subject to reservation in respect
of such Warrants.
SECTION 8. PURCHASE OR REDEMPTION OF WARRANTS BY THE COMPANY
8.1. Purchase of Warrants The Company shall have the right, except as
limited by law, other agreements or herein, to purchase or otherwise acquire
Warrants at such times, in such manner and for such consideration as it may deem
appropriate; PROVIDED, HOWEVER, that the Company shall not have any right to
redeem any or all of the Warrants or require the sale of the same by any Holder.
8.2. Cancellation of Warrants. In the event the Company shall purchase or
otherwise acquire Warrants, the same shall thereupon be delivered to the Warrant
Agent and be cancelled by it and retired. The Warrant Agent shall cancel any
Warrant surrendered for exchange, substitution, transfer, or exercise in whole
or in part.
SECTION 9. WARRANT PRICE
The price (the "Warrant Price") per share at which Shares shall be
purchasable upon exercise of Warrants shall be $1.375, subject to adjustment
pursuant to Section 10 hereof.
SECTION 10. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES
The number and kind of securities purchasable upon the exercise of each
Warrant and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
-6-
10.1. Adjustments. The number of Shares purchasable upon the exercise of
each Warrant and the Warrant Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common Stock
or make a distribution in shares of Common Stock, (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company,
the number of Shares purchasable upon exercise of each Warrant immediately prior
thereto shall be adjusted so that the Holder of each Warrant shall be entitled
to receive the kind and number of Shares or other securities of the Company
which he would have owned or have been entitled to receive after the happening
of any of such event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
(b) In case the Company shall issue rights, options or warrants to all or
substantially all holders of its shares of Common Stock, without any charge to
such holders, entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date mentioned below than the
current market price per share of Common Stock (as defined in paragraph (d)
below), the number of Shares thereafter purchasable upon the exercise of each
Warrant shall be determined by multiplying the number of Shares theretofore
purchasable upon exercise of each Warrant by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights, options or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights, options or warrants plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered would purchase at such current market price. Such adjustment shall be
made whenever such rights, options or warrants are issued, and shall become
effective retroactively immediately after the record date for the determination
of stockholders entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to all or substantially all
holders of its shares of Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions out of earnings) or rights, options
or warrants or convertible securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in paragraph (b)
-7-
above) then in each case the number of Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number of shares
theretofore purchasable upon exercise of the Warrant by a fraction, of which the
numerator shall be the then current market price per share of Common Stock (as
defined in paragraph (d) below) on the date of such distribution, and of which
the denominator shall be such current market price per share of Common Stock,
less the then fair value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the assets
or evidences of indebtedness so distributed or of such subscription rights,
options or warrants, or of such convertible securities applicable to one share
of Common Stock. Such adjustment shall be made whenever any such distribution is
made, and shall become effective on the date of distribution retroactive to the
record date for the determination of the stockholders entitled to receive such
distribution.
(d) For the purposes of this Agreement, the current market price per share
of Common Stock of the Company at any date shall be deemed to be (i) if the
shares of Common Stock are traded in the over-the-counter market and not on any
national securities exchange and not in the NASDAQ National Market System, the
average of the mean between the bid and asked prices per share, as reported by
The National Quotation Bureau, Inc., or an equivalent generally accepted
reporting service, for the five (5) consecutive trading days immediately
preceding the date for which the determination of current market price is to be
made, or, (ii) if the shares of Common Stock are traded on a national securities
exchange or in the NASDAQ National Market System, the average daily per share
closing price on the principal national securities exchange on which they are so
listed or in the NASDAQ National Market System, as the case may be, for the five
(5) consecutive trading days immediately preceding the date for which the
determination of current market price is to be made. The closing price referred
to in clause (ii) above shall be the last reported sales price or, in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices, in either case on the national securities exchange on
which the shares of Common Stock are then listed or in the NASDAQ National
Market System.
(e) No adjustment in the number of Shares purchasable hereunder shall be
required unless such adjustment would require an increase or decrease of at
least 1 percent in the number of Shares purchasable upon the exercise of each
Warrant; PROVIDED, HOWEVER, that any adjustments which by reason of this
paragraph (e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(f) Whenever the number of Shares purchasable upon the exercise of each
Warrant is adjusted, as herein provided, the Warrant Price per Share payable
-8-
upon exercise of each Warrant shall be adjusted by multiplying such Warrant
Price immediately prior to such adjustment by a fraction, of which the numerator
shall be the number of Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and of which the denominator shall be the
number of Shares so purchasable immediately thereafter.
(g) In case the Company shall sell and issue shares of Common Stock, or
rights, options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock, at a price per share of Common
Stock (determined in the case of such rights, options, warrants or convertible
securities, by dividing (i) the total amount received or receivable by the
Company in consideration of the sale and issuance of such rights, options,
warrants or convertible securities, plus the total consideration payable to the
Company upon exercise or conversion thereof, by (ii) the total number of shares
of Common Stock covered by such rights, options, warrants or convertible
securities) lower than the Fair Market Value (as defined in paragraph (h) below)
for the Common Stock immediately prior to the date upon which the Company enters
into a binding agreement to sell and issue such securities, then the Warrant
Price shall be reduced to a price (calculated to the nearest cent) determined by
dividing (i) an amount equal to the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such sale and issuance multiplied by the
then existing Warrant Price, plus (2) the consideration received by the Company
upon such sale and issuance, by (ii) the total number of shares of Common Stock
outstanding immediately after such sale and issuance; PROVIDED, HOWEVER, that
adjustments pursuant to this paragraph (g) shall only be made if such sale or
issuance is to an officer, director or other affiliate of the Company, or any
relative of any of the above, and if no adjustment for such sale or issuance is
made pursuant to paragraph (c) above. The number of Shares purchasable upon the
exercise of each Warrant shall be that number determined by multiplying the
number of Shares issuable upon exercise immediately prior to such adjustment by
a fraction, of which the numerator is the Warrant Price in effect immediately
prior to such an adjustment and the denominator is the Warrant Price as so
adjusted. For the purposes of such adjustments, the shares of Common Stock which
the holders of any such rights, options, warrants or convertible securities
shall be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such sale and issuance and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants or convertible
securities, plus the consideration or premiums stated in such rights, options,
warrants, or convertible securities to be paid for the shares of Common Stock
covered thereby. In case the Company shall sell and issue shares of Common
Stock, or rights, options, warrants, or convertible securities containing the
-9-
right to subscribe for or purchase shares of Common Stock, for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then in determining the "price per share of Common Stock" and the "consideration
received by the Company" for purposes of the first sentence of this paragraph
(g), the Board of Directors shall determine, in its discretion, the fair value
of said property and such determination, if made in good faith, shall be binding
upon all Holders of Warrants. There shall be no adjustment of the Warrant Price
pursuant to this paragraph (g) if the amount of such adjustment would be less
than $.05 per Share; PROVIDED, HOWEVER, that any adjustment which by reason of
this provision is not required to be made shall be carried forward and taken
into account in any subsequent adjustment.
(h) For the purposes of this Agreement, the Fair Market Value per share of
Common Stock of the Company at any date shall be deemed to be (i) for shares of
Common Stock that will be freely transferable by the holder thereof upon
issuance by the Company, the current market price as defined in paragraph (d)
above, and (ii) for shares of Common Stock that will not be freely transferable
by the holder thereof upon issuance by the Company, the fair value as determined
by the Board of Directors of the Company, taking into account the time period
during which the transfer of such shares will be restricted, and the conditions
and limitations on their transfer. Such determination, if made in good faith,
shall be binding upon all Holders of Warrants.
(i) Whenever the number of Shares purchasable upon the exercise of each
Warrant or the Warrant Price of such Shares is adjusted, as herein provided, the
Company shall cause the Warrant Agent to promptly mail by first class mail,
postage prepaid, to each Holder of a Warrant or Warrants notice of such
adjustment or adjustments together with a certificate of a firm or independent
public accountants selected by the Board of Directors of the Company (who may be
the regular accountants employed by the Company) setting forth the number of
Shares purchasable upon the exercise of each Warrant and the Warrant Price of
such Shares after such adjustment and the computation by which such adjustment
was made. Such certificate shall be conclusive evidence of the correctness of
such an adjustment. The Warrant Agent shall be entitled to rely on such
certificate and shall be under no duty or responsibility with respect to any
such certificate, except to exhibit the same, from time to time, to any holder
of a Warrant or Warrants desiring an inspection thereof during reasonable
business hours. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holders of Warrants to determine whether any facts exist
which may require any adjustment of the Warrant Price or the number of Shares or
other stock or property purchasable or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed in making
such adjustment.
-10-
(j) For the purpose of this subsection 10.1, the term "Shares of Common
Stock" shall mean (i) the class of stock designed as the Common Stock of the
Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this subsection 10.1, the Holders of a Warrant or
Warrants shall become entitled to purchase any securities of the Company other
than Shares of Common Stock, thereafter the number of such other securities so
purchasable upon exercise of each Warrant and the Warrant Price of such
securities shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent a practicable to the provisions with respect to the
Shares contained in paragraphs (a) through (h), inclusive, above, and the
provisions of Sections 4, 7, 11, and 12, paragraphs (i) through (k) of Section
10.1, inclusive, and subsections 10.2 through 10.5, inclusive, with respect to
the Shares shall apply on like terms to any such other securities.
(k) Upon the expiration of any rights, options, warrants or conversion
privileges, if any thereof shall not have been exercised, the number of Shares
purchasable upon exercise of a Warrant and the Warrant Price to the extent the
Warrant shall not then have been exercised, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had it been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (1) the only shares of Common Stock so issued were
the shares of Common Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion rights and (2) such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise plus the consideration, if any,
actually received by the Company for the issuance, sale or grant of all of such
rights, options, warrants or conversion rights whether or not exercised;
PROVIDED, HOWEVER, that no such readjustment shall have the effect of increasing
the Warrant Price by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale or grant of such rights,
options, warrants or convertible rights.
10.2. No Adjustment for Dividends. Except as provided in subsection 10.1,
no adjustment in respect of any dividends shall be made during the terms of the
Warrants or upon the exercise of the Warrants.
10.3. No Adjustment in Certain Cases. No adjustments shall be made in
connection with the issuance of Shares of Common Stock in connection with the
issuance of Shares upon exercise of Warrants.
-11-
10.4. Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrant Agent
an agreement that each Holder of a Warrant shall have the right thereafter upon
payment of the Warrant Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of Shares and other
securities and property which he would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had such Warrant been exercised immediately prior to such action. Such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 10. The Company
shall mail by first class mail, postage prepaid, to the Holder of each Warrant,
notice of the execution of any such agreement. The provisions of this subsection
10.4 shall similarly apply to successive consolidations, mergers, sales or
conveyances. The Warrant Agent shall be under no duty or responsibility to
determine the correctness of any provisions contained in any such agreement
relating either to the kind or amount of Shares of stock or other securities or
property receivable upon exercise of Warrants or with respect to the method
employed and provided therein for any adjustments.
10.5. Statement on Warrants. Irrespective of any adjustments in the
Warrant Price or the number or kind of Shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of Shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
SECTION 11. FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Shares on the
exercise of Warrants. If more than one Warrant shall be presented for exercise
in full at the same time by the same Holder, the number of full Shares which
shall be issuable upon the exercise thereof shall be computed on the basis of
the aggregate number of Shares represented by the Warrants so presented. If any
fraction of a Share would, except for the provisions of this Section 11, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to the current market price per Share
(as defined in Section 9(d) above) multiplied by such fraction.
-12-
SECTION 12. NO RIGHT AS STOCKHOLDERS; NOTICES TO WARRANT HOLDERS
Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders or their transferees the right to vote
or receive dividends or to consent or to receive notice as stockholders in
respect of any meetings of stockholders for the election of directors of the
Company or any other matter, or any rights whatsoever as stockholders of the
Company. If, however, at any time prior to the expiration of the Warrants and
prior to their exercise, any of the following events shall occur:
(a) Any action which would require an adjustment pursuant to subsections
10.1 or 10.4, or
(b) a dissolution, liquidation, or winding up of the Company (other than
in connection with a consolidation, merger, or sale of all or
substantially all of its property, assets, and business as an
entirety) shall be proposed;
then in any one or more of said events, the Company shall (a) give notice in
writing of such event to the Holders as provided in Section 18 hereof and (b)
cause notice of such event to be published once in one or more newspapers
printed in the English language and in general circulation in the cities of New
York, New York and Clearwater, Florida. Failure to publish or mail such notice
or any defect therein or in the publication or mailing thereof shall not affect
the validity of any action taken in connection with such dividend, distribution,
or subscription rights, or proposed dissolution, liquidation or winding up.
SECTION 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS;
INSPECTION OF WARRANT AGREEMENT
The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of the Shares through the exercise of such
Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by Holders of Warrants
during normal business hours at its office at 0 Xxxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx. The Company shall supply the Warrant Agent from time
to time with such numbers of copies of this Agreement as the Warrant Agent may
request.
SECTION 14. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT
Any corporation into which the Warrant Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
-13-
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further action on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as successor Warrant
Agent under the provisions of Section 16 hereof. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, any of the Warrants shall have been countersigned but not delivered,
any such successor to the Warrant Agent may countersign such Warrants either in
the name of the predecessor Warrant Agent or in the name of the successor
Warrant Agent; and in all such cases Warrants shall have the full force provided
in the Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignatures under its prior name and
deliver Warrants so countersigned; and in case at that time any of the Warrants
shall not have been countersigned, the Warrant Agent may countersign such
Warrants either in its prior name or in its changed name; and in all such cases
such Warrants shall have the full force provided in the Warrants and in this
Agreement.
SECTION 15. CONCERNING THE WARRANT AGENT
The Warrant Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the Holders of Warrants, by their acceptance thereof, shall be bound:
15.1. The statements contained herein and in the Warrants shall be taken
as statements of the Company and the Warrant Agent assumes no responsibility for
the correctness of any of the same except such as describe the Warrant Agent or
action taken by it. The Warrant Agent assumes no responsibility with respect to
he distribution of the Warrants except as herein otherwise provided.
15.2. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
15.3. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents, or employees or for any loss to the Company resulting
-14-
from such neglect or misconduct provided reasonable care shall have been
exercised in the selection and continued employment thereof.
15.4. The Warrant Agent may consult at any time with legal counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
15.5. Whenever in the performance of its duties under the Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or matter be
provided or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proven and
established by a certificate signed by the President or a Vice President or the
Treasurer or the Secretary of the Company and delivered to the Warrant Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
15.6. The Company agrees to pay the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the performance of its duties
under the Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charge of any kind and nature incurred by the
Warrant Agent in the performance of its duties under this Agreement. The Company
shall indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs, and counsel fees, for anything done or
omitted by the Warrant Agreement in the performance of its duties under this
Agreement except as a result of the Warrant Agent's negligence or bad faith. In
no case will the Warrant Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Warrant Agent has been advised of the possibility
of such damages.
15.7. The Warrant Agent shall be under no obligation to institute any
action, suit, or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Holders of Warrants shall furnish the
Warrant Agent with reasonable security and indemnity for any costs and expenses
which may be incurred, but this provision shall not affect the power of the
Warrant Agent to take such action as the Warrant Agent may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit or
-15-
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the Warrants, as their respective rights or interests may appear.
15.8. The Warrant Agent and any stockholder, director, officer or employee
of the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
15.9. The Warrant Agent shall act hereunder solely as agent, and its
duties shall be determined solely by the provisions hereof. The Warrant Agent
shall not be liable for anything which it may do or refrain from doing in
connection with this Agreement except for its own negligence or bad faith.
15.10. The Warrant Agent will not incur any liability or responsibility to
the Company or to any Holder of any Warrant for any action taken in reliance on
any notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument reasonably believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
15.11. The Warrant Agent shall not be under any responsibility in respect
of the validity of this Warrant Agreement or the execution and delivery hereof
(except the due execution hereof by the Warrant Agent) or in respect of the
validity or execution of any Warrant (except its countersignature thereof); nor
shall the Warrant Agent by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Shares
(or other stock) to be issued pursuant to this Warrant Agreement or any Warrant,
or as to whether any Shares (or other stock) will when issued be validly issued,
fully paid and nonassessable, or as to the Warrant Price or the number or amount
of Shares or other securities or other property issuable upon exercise of any
Warrant.
15.12. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board or the President or a Vice President or the Secretary or
the Treasurer of the Company, and to apply such officers for advice or
instructions in connection with its duties, and shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officers.
-16-
SECTION 16. CHANGE OF WARRANT AGENT
The Warrant Agent may resign and may be discharged from its duties under
this Agreement by giving to the Company thirty days' notice in writing. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of
thirty days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent or by
the Holder of a Warrant (who shall with such notice submit his Warrant for
inspection by the Company), then the Holder of any Warrant may apply to any
court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or
such a court, shall be a bank or trust company in good standing, incorporated
under the laws of the United States of America or any state thereof and having
at the time of its appointment as Warrant Agent a combined capital and surplus
of at least $50,000,000. After appointment, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent
any property at the time held by it hereunder, and execute and deliver any
further reassurance, conveyance, act or deed necessary for the purpose. Failure
to file any notice provided for in this Section 16, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Warrant Agent or the appointment of the successor warrant agent, as the
case may be. In the vent of such resignation or removal, the successor warrant
agent shall mail, first class, to each Holder, written notice of such removal or
resignation and the name and address of such successor Warrant Agent.
SECTION 17. IDENTITY OF TRANSFER AGENT
Forthwith upon the appointment of any subsequent Transfer Agent for the
Company's Shares of Common Stock, or any other Shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such Transfer Agent at least twenty days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution, or
subscription rights, or for the determination of stockholders entitled to vote
on such proposed dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be.
-17-
SECTION 18. NOTICES
(a) Any notice pursuant to this Agreement by the Company or by the Holder
of any Warrant to the Warrant Agent, or by the Warrant Agent or by the Holder of
any Warrant to the Company, shall be in writing and shall be deemed to have been
duly delivered on the business day after the date sent, if sent by recognized
overnight courier service or on the fifth day after the date sent, if mailed by
first-class certified mail, postage prepaid and return receipt requested, as
follows:
(i) If to the Company, to:
Checkers Drive-In Restaurants, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
with a copy to:
Xxxx X. Xxxxx, Esquire
Xxxxxxxx, Loop & Xxxxxxxx
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
(ii) If to the Warrant Agent, to:
ChaseMellon Shareholder Services, L.L.C.
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Each party hereto may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance with the
foregoing to the other party.
(b) Any notice mailed pursuant to this Agreement by the Company or the
Warrant Agent to the Holders of Warrants shall be in writing and shall be deemed
to have been duly given if mailed, postage prepaid, to such Holders at their
respective addresses on the books of the Warrant Agent.
SECTION 19. SUPPLEMENTS AND AMENDMENTS
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement, without the approval of any Holders of Warrants, in order
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
-18-
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not be inconsistent with the provisions of the Warrants and which
shall not adversely affect the interest of the Holders of Warrants.
SECTION 20. SUCCESSORS
All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Holders shall bind and inure to the benefit of their
respective successors and assigns thereunder.
SECTION 21. MERGER OR CONSOLIDATION OF THE COMPANY
The Company will not merge or consolidate with or into any other
corporation unless the corporation resulting from such merger or consolidation
(if not the Company) shall expressly assume, by supplemental agreement
satisfactory in form to the Warrant Agent and duly executed and delivered to the
Warrant Agent, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
SECTION 22. APPLICABLE LAW
This Agreement and each Warrant issued hereunder shall be deemed to be a
contract made under the laws of the state of Delaware and for all purposes shall
be construed in accordance with the laws of said state.
SECTION 23. BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrant Agent, and the Holders of
Warrants any legal or equitable right, remedy or claim under this Agreement and
this Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the Holders of Warrants.
SECTION 24. COUNTERPARTS
This Agreement may be executed in any number of counterparts and each such
counterpart shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
SECTION 25. CAPTIONS
The captions of Sections and paragraphs of this Agreement have been
inserted for convenience only and shall have no substantive effect.
-19-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
CHECKERS DRIVE-IN RESTAURANTS, INC.
Attest:
By: /S/ XXXXXX X. XXXXX
---------------------------
Xxxxxx X. Xxxxx
/S/ XXXXX X. XXXXXX
----------------------------
Xxxxx X. Xxxxxx, Secretary
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., as Warrant Agent
By: /S/ XXXXXXX XXXXXX
---------------------------
Authorized Signatory
-20-
