dated as of December 20, 2000
MCM CAPITAL GROUP, INC.
CFSC CAPITAL CORP. VIII
Warrants to Purchase up to
621,576 shares of Common Stock
- 1 -
This WARRANT AGREEMENT, dated as of December 20, 2000 (this "Agreement"), is entered into by and
between MCM Capital Group, Inc., a Delaware corporation (the "Company"), and CFSC Capital Corp. VIII, a Delaware
A. MRC Receivables Corporation, a Delaware corporation ("Midland"), and a
wholly-owned subsidiary of the Company, has requested a $75,000,000 revolving credit facility
from Lender pursuant to terms of that certain Credit Agreement dated as of December 20, 2000
(the "Credit Agreement") in order to acquire certain consumer debt accounts.
B. To induce Lender to enter into the Credit Agreement, the Company has agreed to
issue to Lender, warrants to purchase up to 621,576 shares of common stock, $0.01 par value per
share, of the Company (the "Common Stock"), exercisable in accordance with the terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants hereinafter
set forth and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto hereby agree as follows:
Section 1.01. CERTAIN DEFINED TERMS. Unless the context otherwise requires, the following terms, when
used in this Agreement, shall have the respective meanings specified below:
"Affiliate" shall mean (i) with respect to any Person, a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and
(ii) with respect to any natural Person, (A) the spouse, parents and direct descendants of such Person, (B) the
estate, testamentary trust, trustees, executors, administrators, legatees or testamentary beneficiaries of such
Person, and (C) any trust established by such Person for the exclusive benefit of any of the foregoing Persons.
"Agreement" or "this Agreement" shall have the meaning specified in the preamble to this Agreement.
"Board" shall mean the board of directors of the Company.
"Borrowing Date" shall have the meaning specified in the Credit Agreement.
"Closing Date" shall have the meaning specified in the Credit Agreement.
"Common Stock" shall have the meaning specified in the recitals to this Agreement. "Company" shall have
the meaning specified in the preamble to this Agreement.
"Credit Agreement" shall have the meaning specified in the recitals to this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and
"Exercise Price" shall have the meaning specified in Section 3.01.
"Expiration Date" shall mean sixty (60) months following the date on which any Warrants
first become exercisable pursuant to Section 3.02 in this Agreement.
"Facility" shall have the meaning specified in the Credit Agreement.
"Fair Market Value" shall mean, with respect to any shares of Common Stock as of any date of
determination: (i) if such shares of Common Stock are not Publicly Traded, the fair value of such shares of
Common Stock (A) as determined reasonably and in good faith in the most recently completed arm's-length
transaction between the Company and an unaffiliated third party in which such determination is necessary and the
closing of which shall have occurred within the six months preceding such date of determination, or (B) if no
such transaction shall have occurred within such six-month period, then as determined in accordance with the
Valuation Criteria reasonably and in good faith by an Independent Financial Expert appointed by the Board and
consented to by Lender (such consent not to be unreasonably withheld); or (ii) if such shares of Common Stock
are Publicly Traded, the Market Price of such shares of Common Stock on the trading day immediately preceding
such date of determination.
"Holders" shall mean the registered holders from time to time of the Warrants and, unless otherwise
provided or indicated herein, the registered holders from time to time of the Underlying Common Stock.
"Independent Financial Expert" shall mean a nationally recognized investment banking firm (i) that does
not (and whose directors, officers, employees and affiliates do not) have a direct or indirect financial
interest in the Company or any of its Affiliates, and (ii) that is not, and none of whose directors, officer,
employees or Affiliates are, at the time it is called upon to render independent financial advice to the
Company, a promoter, director or officer of the Company or any of its Affiliates or an underwriter or placement
agent with respect to any of the securities of the Company or any of its Affiliates, nor have the Company or any
such directors, officers, employees or Affiliates acted in such capacity during the three year period prior
"Lender" shall have the meaning specified in the preamble to this Agreement.
"Market Price" shall mean, with respect to any shares of Common Stock that are Publicly Traded, for any
specified trading day, (i) in the case of shares of Common Stock listed or admitted to trading on any securities
exchange or on the Nasdaq National Market or the Nasdaq SmallCap Market, the average closing price, or if no sale
takes place on that day, the average of the closing bid and asked prices, for the ten (10) trading days prior to
the specified date, (ii) in the case of shares of Common Stock not then listed or admitted to trading on any
securities exchange or on the Nasdaq National Market or the Nasdaq SmallCap Market, the average last reported
sale price, or if no sale takes place on that day, the average of the closing bid and asked prices, for the ten
(10) trading days prior to the specified date, as reported by a reputable quotation source designated by the
Company, and (iii) if there are no bid and asked prices reported during the ten (10) trading days prior to the
specified date, the Fair Market Value of such shares of Common Stock as determined as if such shares of Common
Stock were not Publicly Traded.
"Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust,
unincorporated organization or other entity or any government or political subdivision, agency or
instrumentality thereof, as well as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"Publicly Traded" shall mean, relative to any security, that such security is (i) listed on a domestic
securities exchange, (ii) quoted on the Nasdaq National Market or the Nasdaq SmallCap Market, or (iii) traded in
the domestic over-the-counter market, which trades are reported on the OTC Bulletin Board or reported by the
National Quotation Bureau, Incorporated.
"Rights" shall mean any "poison pill" or similar shareholder rights issued pursuant to a "poison pill"
shareholder rights plan or similar plan.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations
"Taxes" shall mean all transfer, stamp, documentary and other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect hereof in respect of any Warrant or any Warrant
Certificate, excluding, however, franchise taxes and taxes, assessments or charges levied or imposed on or
measured by the net income or receipts of any Person.
"Underlying Common Stock" shall mean the shares of Common Stock issuable or issued upon the exercise of
"Valuation Criteria" shall mean one or more valuation methods that the Independent Financial Expert or
the Board, as the case may be, in its professional or reasonable business judgment, as the case may be,
determines to be most appropriate for use in determining the Fair Market Value of any securities for which such
determination is required pursuant to this Agreement.
"Warrant Certificates" shall have the meaning specified in Section 2.01 of this Agreement.
"Warrants" shall mean the warrants issued to Lender as contemplated by this Agreement and the Credit
ORIGINAL ISSUE OF WARRANTS; TRANSFER
Section 2.01. FORM OF WARRANT CERTIFICATES. The Warrants shall be evidenced by certificates in
registered form only and substantially in the form attached hereto as Exhibit A (the "Warrant Certificates").
The Warrant Certificates shall be dated the date on which such certificates were signed by the Company and may
have such legends and endorsements typed, stamped, printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation applicable thereto, with any rule or regulation of any
securities exchange or association on which the Warrants may be listed, or to conform to customary usage.
Section 2.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. A Warrant Certificate evidencing Warrants
to purchase up to 621,576 shares of Common Stock, subject to Section 3.02 herein, shall be executed by the
Company and delivered to Lender on the Closing Date. The Warrant Certificates shall be executed on behalf of the
Company by one or more duly authorized officers of the Company.
Section 2.03. TRANSFER OF WARRANTS.
(a) Subject to clause (b) of this Section 2.03 and provided that all other
conditions regarding the transfer of the Warrants set forth in this Agreement have been satisfied,
each Warrant and the rights thereunder may be transferred by the Holder thereof by delivering to
the Company the Warrant Certificate evidencing such Warrant accompanied by a properly
completed assignment form (a form of which is attached to the form of Warrant Certificate
attached as Exhibit A to this Agreement). Within ten (10) Business Days of receipt of such
assignment form, the Company shall issue and deliver to the transferee, subject to clause (b)
below, a Warrant Certificate of like kind and tenor representing the transferred Warrants and to
the transferor a Warrant Certificate of like kind and tenor representing any Warrants evidenced
by such original certificate that are not being transferred. Each Warrant Certificate issued
pursuant to this Section 2.03 shall be substantially in the form of Exhibit A to this Agreement
and shall bear the restrictive legends set forth thereon (unless, with respect to the legend
regarding transfer under applicable securities laws, the Holder or transferee thereof supplies to
the Company an opinion of counsel, reasonably satisfactory to the Company, that the restrictions
described in such legend are no longer applicable to such Warrants).
(b) The transfer of Warrants shall be permitted only pursuant to a transaction
that complies with, or is exempt from, the provisions of the Securities Act and any applicable
provisions of state securities laws. The Company may require an opinion of counsel, reasonably satisfactory to
the Company, to such effect prior to the transfer of any Warrant.
EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY
Section 3.01. EXERCISE PRICE. The Holder of each Warrant Certificate, subject to the provisions of this
Agreement, is entitled to purchase one share of Common Stock for each Warrant represented thereby at an exercise
price of $1.00 per share, subject to adjustment as set forth in Article IV hereof (the "Exercise Price").
Section 3.02. EXERCISE OF WARRANTS. Subject to the terms and conditions set forth herein, the Warrants
to purchase 621,576 shares of Common Stock are not immediately exercisable, but will become exercisable, if
ever, in four tranches in the following manner:
(a) Warrants to purchase 155,394 shares of Common Stock become
immediately exercisable on the first Borrowing Date;
(b) Warrants to purchase an additional 155,394 shares of Common Stock
become immediately exercisable on the date on which Midland has drawn an aggregate of at
least $22,500,000 against the Facility;
(c) Warrants to purchase an additional 155,394 shares of Common Stock
become immediately exercisable on the date on which Midland has drawn an aggregate of at
least $45,000,000 against the Facility; and
(d) Warrants to purchase an additional 155,394 shares of Common Stock
become immediately exercisable on the date on which Midland has drawn an aggregate of at
least $67,500,000 against the Facility.
Section 3.03. EXPIRATION OF WARRANTS. The Warrants shall terminate and become void as of the close of
business on the Expiration Date.
Section 3.04. METHOD OF EXERCISE.
(a) To exercise a Warrant, the Holder thereof must surrender the Warrant Certificate
evidencing such Warrant to the Company, with a duly executed Form of Election to Purchase, a form of which is
attached hereto, and pay the Exercise Price for each share of Underlying Common Stock as to which Warrants are
then being exercised in full to the Company (i) by wire transfer of immediately available funds, or (ii) by
certified or official bank check, or (iii) by any combination of the foregoing. A Holder may exercise such
Warrant for the number of shares of Underlying Common Stock issuable upon exercise thereof as set forth in
Section 3.02, or any lesser number of whole shares of Underlying Common Stock. In the alternative, the Holder of
a Warrant Certificate may exercise its right to purchase all or a portion of the shares of Underlying Common
Stock subject to such Warrant Certificate, on a net basis,
such that, without the exchange of any funds, such Holder receives that number of shares of Common Stock
subscribed to pursuant to such Warrant Certificate less that number of shares of Common Stock having an
aggregate Fair Market Value at the time of exercise equal to the aggregate Exercise Price that would otherwise
have been paid by such Holder for the number of shares of Common Stock or fraction thereof subscribed to
pursuant to such Warrant Certificate (hereinafter, a "Net Cashless Exercise").
(b) Not later than the fifth Business Day following the later of (i) surrender of
any of the Warrant Certificates in conformity with the foregoing provisions, or (ii) payment by
the Holder of the full Exercise Price for the shares of Underlying Common Stock as to which
such Warrants are then being exercised, the Company shall transfer to the Holder of such
Warrant Certificate appropriate evidence of ownership of any shares of Underlying Common
Stock or other securities or property (including any money) to which the Holder is entitled,
registered or otherwise placed in, or payable to the order of, such name or names as may be
directed in writing by the Holder, and shall deliver such evidence of ownership and any other
securities or property (including any money) to the person or persons entitled to receive the
same, together with an amount in cash in lieu of any fraction of a share as provided in Section
4.04. If such Warrant Certificate is not exercised in full, the Company will issue to the Holder a
new Warrant Certificate exercisable for the number of shares of Underlying Common Stock as to
which such Warrant has not been exercised. Underlying Common Stock issued upon exercise of
a Warrant in the name of any person other than the registered holder of the Warrant shall be
subject to Sections 5.03 and 5.04 of this Agreement.
(c) Each person in whose name any certificate representing shares of
Underlying Common Stock is issued shall for all purposes be deemed to have become the holder
of record of such shares of Underlying Common Stock on the date on which the Warrant
Certificate was surrendered to the Company and payment of the Exercise Price therefor was
received by the Company, irrespective of the date of delivery of such certificate representing
shares of Underlying Common Stock.
Section 3.05. CANCELLATION OF WARRANTS. The Company shall cancel any Warrant Certificate delivered to
it for exercise, in whole or in part, or delivered to it for transfer, exchange or substitution, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall destroy canceled Warrant Certificates. If the Company shall acquire any of the
Warrants, such acquisition shall not operate as a redemption or termination of the right represented by such
Warrants unless and until the Warrant Certificates evidencing such Warrants are surrendered to the Company for
Section 4.01. ADJUSTMENTS. The Exercise Price and the number of shares of Common Stock issuable upon
exercise of each Warrant shall be subject to adjustment from time to time as follows:
(a) Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications. In
the event that the Company shall (i) pay a dividend or make any other distribution with respect to
its Common Stock in shares of its capital stock, (ii) subdivide its outstanding Common Stock,
(iii) combine its outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a merger, consolidation or other business combination in
which the Company is the continuing corporation), then immediately prior to the record date for
such dividend or distribution, or the effective date of such subdivision or combination, the
Exercise Price and the number of shares of Common Stock issuable upon exercise of each
Warrant shall be adjusted so that the Holder of each Warrant shall thereafter be entitled to
receive the kind and number of shares of Common Stock or other securities of the Company that
such Holder would have owned or have been entitled to receive after the happening of any of the
events described above had such Warrant been exercised immediately prior to the happening of
such event or any record date with respect thereto, at an Exercise Price at which the Holder
would pay, in the aggregate, for the adjusted number of shares of Common Stock, the same
amount the Holder would have had to pay prior to the adjustment for the unadjusted number of
shares of Common Stock. An adjustment made pursuant to this Section 4.01 (a) shall become
effective immediately after the effective date of such event retroactive to the record date, if any,
for such event,
(b) Issuance of Common Stock, Rights, Options or Warrants at Lower Values.
(i) In the event that the Company shall issue or sell shares of Common Stock, or rights,
options, warrants or other securities convertible or exchangeable into shares of Common Stock, or 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 or exchangeable securities, by dividing (x) the total
amount of Consideration receivable by the Company in respect of the issuance and sale of such rights, options,
warrants or convertible or exchangeable securities, plus the total Consideration, if any, payable to the Company
upon exercise, conversion or exchange thereof, by (y) the total number of shares of Common Stock covered by such
rights, options, warrants or convertible or exchangeable securities) that is lower than the then Fair Market
Value per share of the Common Stock immediately prior to such sale or issuance, then the Exercise Price shall be
adjusted immediately thereafter by multiplying the Exercise Price in effect immediately prior to such issuance
or sale by a fraction, of which:
(1) the numerator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus the number of additional
shares of Common Stock the aggregate Consideration receivable by or payable to the
Company as described in 4.01(b)(i) above would purchase at the Fair Market Value per
share on the date of such issuance or sale; and
(2) the denominator shall be the number of shares Common Stock
outstanding immediately prior to such issuance or sale plus the number of additional
shares of Common Stock offered for subscription or purchase (including, in the case of
rights, options, warrants or convertible or exchangeable securities, the total number of
shares of Common Stock covered by such rights, options, warrants or convertible or
(ii) Upon an adjustment of the Exercise Price pursuant to 4.01(b)(i) above,
each Warrant shall then be exercisable for that number of shares of Common Stock (calculated to the nearest
hundredth of a share) equal to the product of the number of shares of Common Stock purchasable immediately prior
to such adjustment multiplied by the Exercise Price in effect immediately prior to such adjustment and dividing
that product by the Exercise Price in effect immediately after such adjustment.
(iii) In the event that the Company shall issue or sell shares of Common Stock or rights,
options, warrants or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock, for 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" receivable by or payable to the Company for purposes of this Section 4.01, the Board shall
determine, in good faith, the fair value of such property. In the event that the Company shall issue and sell
rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, together with one or more other securities as part of a unit at a price per
unit, then to determine the "price per share of Common Stock" and the "Consideration" receivable by or payable to
the Company for purposes of this Section 4.0 1, the Board shall determine, in good faith, the fair value of the
rights, options, warrants or convertible or exchangeable securities then being sold as part of such unit.
(iv) Notwithstanding anything herein to the contrary, the provisions of this
Section 4.01(b) shall not apply to any of the following:
(A) the grant or issuance of restricted stock, options or other similar rights issued pursuant to employee
stock option plans, directors stock option plans or similar plans providing for options or
other similar rights to purchase Common Stock covering in the aggregate not in excess of
20% of the fully-diluted shares of Common Stock issued and outstanding from time to time,
or the issuance of shares upon exercise of any such options or other similar rights;
(B) the issuance of shares upon the exercise of options, warrants, convertible or exchangeable
securities, or similar securities that are convertible into Common Stock in accordance with their terms, that are
issued and outstanding as of the date of this Agreement;
(C) the issuance of any additional Warrants under this Agreement;
(D) the issuance of any Rights;
(E) the issuance of shares of capital stock pursuant to any stock dividend, stock split or
other distribution in respect of outstanding shares; and
(F) the issuance of Common Stock or securities convertible into Common Stock pursuant to an
underwritten offering (including, without limitation, any such securities issued pursuant to the underwriters'
(c) Issuance of Rights. In the event that the Company shall distribute any
Rights prior to the exercise or expiration of the Warrants, the Company shall make proper
provision so that each Holder who exercises a Warrant after the record date for such distribution
and prior to the expiration or redemption of the Rights shall be entitled to receive upon such
exercise, in addition to the shares of Common Stock issuable upon such exercise, a number of
Rights determined as follows: (A) if such exercise occurs on or prior to the date fixed for the
distribution to the holders of Rights of separate securities evidencing such Rights, the same
number of Rights to which a holder of a number of shares of Common Stock equal to the number
of shares of Underlying Common Stock issuable upon such exercise would have been entitled at
the time of such exercise in accordance with the terms and provisions applicable to the Rights,
and (B) if such exercise occurs after such distribution date, the same number of Rights to which a
holder of the number of shares of Underlying Common Stock into which the Warrant so
exercised was exercisable immediately prior to such distribution date would have been entitled
on the distribution date in accordance with the terms and provisions applicable to the Rights.
(d) Expiration Of Rights, Options and Conversion Privileges. Upon the
expiration of any rights, options, warrants or conversion or exchange privileges that have
previously resulted in an adjustment pursuant to Section 4.01(b), if any thereof shall not have
been exercised, the Exercise Price and the number of shares of Common Stock issuable upon the
exercise of each Warrant, upon such expiration, will be readjusted and shall thereafter, upon any
future exercise, be such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) 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 or exchange rights and (ii) 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 issuance, sale or grant of all such rights, options, warrants or conversion or exchange rights
whether or not exercised.
(e) De Minimis Adjustments. No adjustment in the number of shares of
Common Stock issuable hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent in the number of shares of Common Stock
purchasable upon an exercise of each Warrant; provided, however, that any adjustments which
by reason of this Section 4.01(e) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations shall be made to the nearest one-
tenth of a share.
Section 4.02. DETERMINATION OF ADJUSTMENT. Whenever there is an adjustment to the Exercise Price or the
number of shares of Common Stock issuable upon the exercise of each Warrant, as herein provided, a certificate
of an officer of the Company setting forth the number of shares of Common Stock issuable upon the exercise of
each Warrant, and the
adjusted Exercise Price, if applicable, after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such adjustment was
made (in reasonable detail), shall, absent demonstrable error, be conclusive evidence of such adjustment. The
Company shall be entitled to rely on such for the provisions of this Section 4.04, be issuable on the exercise
of any Warrant (or specified portion thereof), the Company shall pay an amount in cash calculated by it to be
equal to the certificate and shall exhibit the same from time to time to any Holder desiring an inspection
thereof during normal business hours.
Section 4.03. STATEMENT ON WARRANTS. Irrespective of any adjustment in the Exercise Price or the number
or kind of shares issuable upon the exercise of the Warrants, certificates evidencing 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 4.04. FRACTIONAL INTEREST. The Company shall not be required to issue fractional shares of
Common Stock 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 of Common Stock which shall be issuable upon such
exercise thereof shall be computed on the basis of the aggregate number of shares of Common Stock issuable on
exercise of the Warrants so presented. If any fraction of a share of Common Stock would, except then Fair Market
Value per share of Common Stock multiplied by such fraction computed to the nearest whole cent.
Section 5.01. WARRANT TRANSFER BOOKS.
(a) The Warrant Certificates shall be issued in registered form only. The
Company shall keep at its executive office a register in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as herein provided.
(b) Every Warrant Certificate surrendered for registration of transfer or
exchange shall (if so required by the Company) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Company, duly executed by the Holder
thereof or his attorney duly authorized in writing.
Section 5.02. NO STOCKHOLDER RIGHTS. Prior to the exercise of the Warrants, no holder of a Warrant
Certificate, as such, shall be entitled to vote or be deemed the holder of Common Stock or any other securities
of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained herein be
construed to confer upon any holder of a Warrant Certificate, as such, the rights of a stockholder of the Company
or the right to vote for the election of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, to exercise any preemptive right, to receive
notice of meetings or other actions affecting stockholders (except as specifically provided herein), or to
receive dividends or subscription rights or otherwise.
Section 5.03. RESTRICTIONS ON TRANSFER. The Holder of any Warrant Certificate, by acceptance thereof,
acknowledges and agrees that without limitation of the obligations set forth in Section 5.07, it shall be a
condition precedent to any transfer of the Warrant that each proposed transferee execute and deliver to the
Company the documentation required by such Section 5.07.
Section 5.04. NO REGISTRATION OF WARRANTS OR UNDERLYING COMMON STOCK UNDER SECURITIES LAWS; OTHER
(a) Neither the Warrants nor the Underlying Common Stock have been
registered under the Securities Act or any state securities laws.
(b) The Holder of any Warrant Certificate, by acceptance thereof, represents
that it is acquiring the Warrants to be issued to it for its own account and not with a view to the
distribution thereof, and agrees not to sell, transfer, pledge or hypothecate any Warrants or any
Underlying Common Stock unless (i) such transfer is made in connection with an effective
registration statement under the Securities Act and any applicable state securities laws or
(ii) such transaction is exempt from the registration requirements of the Securities Act, the rules
and regulations in effect thereunder and any applicable state securities laws and, if requested by
the Company, the Holder thereof has furnished the Company a satisfactory opinion of counsel
for such Holder to such effect.
(c) Each Holder of Warrants also hereby acknowledges that any exercise of
the Warrants may be subject to the filing requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and agrees to make any such required filings prior to
any such exercise.
Section 5.05. RESERVATION OF COMMON STOCK FOR ISSUANCE ON EXERCISE OF WARRANTS. The Company shall at
all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of
issue upon exercise of Warrants as herein provided, such number of shares of Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. All shares of Common Stock which shall be so issuable
shall, upon such issue and upon payment of the exercise price therefor as provided herein and in the applicable
Warrant Certificate, be duly and validly issued and fully paid and non-assessable.
Section 5.06. PAYMENT OF TAXES. The Company shall pay all Taxes that may be imposed on the Company or
on the Warrants or on any securities deliverable upon exercise of Warrants with respect thereto. The Company
shall not be required, however, to pay any Taxes or other charges imposed in connection with any transfer of any
certificate for shares of Common Stock or other securities underlying the Warrants or payment of cash, to any
person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant.
Section 5.07. CERTAIN PERSONS TO EXECUTE AGREEMENT. Without in any way limiting any transfer
restrictions contained elsewhere herein, no Holder shall sell or
otherwise transfer any Warrants held by such Holder, unless, prior to the consummation of any such sale or other
disposition, the person to whom such sale or other disposition is proposed to be made executes and delivers to
the Company an agreement, in form and substance satisfactory to the Company, whereby such prospective transferee
confirms that, with respect to the Warrants that are the subject of such sale or other disposition, it shall be
deemed to be a "Holder" for the purposes of this Agreement and agrees to be bound by all the terms of this
Agreement. Upon the execution and delivery by such prospective transferee of such agreement, and subject to all
applicable transfer restrictions, such prospective transferee shall be deemed a "Holder" for the purposes of
this Agreement, and shall have the rights and be subject to the obligations of a Holder hereunder with respect
to the Warrants held by such prospective transferee.
Section 5.08. PRIOR NOTICE OF DIVIDENDS. If the Company declares a dividend distribution to the
holders of the Company's Common Stock at any time there are outstanding Warrants held by the Holder that are
then exercisable, the Company will give the Holders notice of the declaration of the dividend at least thirty
days prior to the date on which the Company determines the dividend is to be paid. Such notice shall be sent to
the Holders in accordance with Section 6.02 below.
Section 5.09. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the
Holders that as of the date of this Agreement:
(i) The Company is a corporation duly organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation, and has the requisite corporate power and authority to own and operate
its properties and to carry on its business as now conducted.
(ii) The Company has full power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized by
all necessary action on the part of Company. This Agreement has been duly executed and delivered by the Company.
This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance
with its terms and conditions, except as such enforceability may be limited by applicable laws relating to
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors'
rights generally or by general equitable principles and rules of law governing specific performance or estoppel,
and except to the extent that injunctive or other equitable relief is within the discretion of a court of
(iii) The Company is authorized to issue 50,000,000 shares of Common Stock, $0.01 par value, and
5,000,000 shares of preferred stock, $.01 par value. As of December 19, there were outstanding 7,191,131 shares
of Common Stock, no shares of preferred Stock, and warrants to purchase 578,571 shares of Common Stock,
excluding the Warrants.
(iv) The Underlying Common Stock, when issued in accordance with the terms and provisions of this
Agreement, will be duly authorized, validly issued, fully paid and nonassessable.
. ARTICLE VI
Section 6.01. EXPENSES. All costs and expenses, including, without limitation, fees and disbursements
of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Company.
Section 6.02. NOTICES. All notices, requests, claims, demands and other communications hereunder shall
be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, or by courier service, cable, telecopy, telegram, or registered or certified mail (postage
prepaid, return receipt requested) to the respective parties hereto at their addresses set forth on the
signature pages to this Agreement (or at such other address for a party hereto as shall be specified in a notice
given in accordance with this Section 6.02).
Section 6.03. HEADINGS. The descriptive headings contained in this Agreement are for convenience of
reference only and shall not affect in any way the meaning, construction or interpretation of this Agreement.
Section 6.04. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
Section 6.05. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant Certificate is lost, stolen,
mutilated or destroyed, the Company in its discretion may issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and substitution for the Warrant Certificate
lost, stolen or destroyed, and upon receipt of a proper affidavit or other evidence satisfactory to the Company
(and surrender of any mutilated Warrant Certificate) and bond of indemnity in form and amount and with corporate
surety satisfactory to the Company in each instance protecting the Company, a new Warrant Certificate of like
tenor and exercisable for an equivalent number of shares of Common Stock as the Warrant Certificate so lost,
stolen, mutilated or destroyed. Any such new Warrant Certificate shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant Certificate
at any time shall be enforceable by anyone. An applicant for such a substitute Warrant Certificate also shall
comply with such other reasonable regulations and pay such other reasonable charges as the Company may
prescribe. All Warrant Certificates shall be held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement of lost, stolen, mutilated or destroyed Warrant
Certificates, and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement
of negotiable instruments or other securities without their surrender.
Section 6.06. ENTIRE AGREEMENT. This Agreement and the documents referred to herein constitute the
entire agreement of the parties hereto with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, between or among the parties with respect to the subject
Section 6.07. NO THIRD PARTY BENEFICIARIES. This Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and permitted assigns. Nothing in this
Agreement, whether express or implied, is intended to or shall confer upon any person other than the parties
hereto and their respective successors and permitted assigns, any legal or equitable right, benefit or remedy of
any nature whatsoever, under or by reason of this Agreement.
Section 6.08. AMENDMENT; WAIVER. This Agreement may not be amended, modified, supplemented or waived
except by an instrument in writing signed by, or on behalf of, the Company and holders of more than 50% of the
outstanding Warrants or, in the case of a waiver, the party to be bound thereby (which, in the case of the
Holders of the Warrants, shall require Holders of more than 50% of the outstanding Warrants).
Section 6.09. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS OF EACH PARTY ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED IN
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF
Section 6.10. COUNTERPARTS. This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
Section 6.11. SPECIFIC PERFORMANCE. Each Holder shall have the right to specific performance by the
Company of the provisions of this Agreement, in addition to any other remedies that it may have at law or in
equity. The Company hereby irrevocably waives, to the extent that it may do so under applicable law, any defense
based on the adequacy of a remedy at law which may be asserted as a bar to the remedy of specific performance in
any action brought against the Company for specific performance of this Agreement by the Holders of the Warrants
or the Underlying Common Stock.
Section 6.12. FILINGS. The Company shall, at its own expense and to the extent it is reasonably able to
do so, promptly execute and deliver, or cause to be executed and delivered, to any Holder of Warrants all
applications, certificates, instruments and other documents that such
Holder may reasonably request in connection with the obtaining of any consent, approval.
qualification or authorization of any Federal, state or local government (or any agency or commission thereof)
necessary or appropriate in connection with, or for the effective exercise of, any Warrants then held by such
Holder, in each case subject to such confidentiality obligations as the Company may reasonably impose on such
Holder; provided, however, that the Company shall not be required to qualify to do business in, or provide a
general consent to service of process in, any jurisdiction in which it is not already qualified to do business
and shall not be required to register the Warrants or the Underlying Common Stock under any Federal or state
securities laws except as otherwise required under any registration rights agreement (or similar agreement) to
which the Company may be a party from time to time.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
MCM CAPITAL GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx III
Name: Xxxx X. Xxxxxxx III,
CFSC CAPITAL CORP. VIII
By: /s/ Xxxxxxxx X. Xxxxxx
Name:____Greggory S. Haugen___________
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, AND NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE
ISSUER, UNLESS (i) SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE
STATE SECURITIES LAWS AND, IF REQUESTED BY THE COMPANY, THE HOLDER THEREOF HAS FURNISHED THE COMPANY A
SATISFACTORY OPINION OF COUNSEL FOR SUCH HOLDER TO SUCH EFFECT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS CERTIFICATE
ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN A WARRANT AGREEMENT, DATED AS
OF DECEMBER _, 2000, AS THEREAFTER AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, COPIES OF
WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE ISSUER. NO REGISTRATION OF TRANSFER OF SUCH
SECURITIES WILL BE MADE ON THE BOOKS OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED
MCM CAPITAL GROUP, INC.
Dated as of________,_____
WARRANTS TO PURCHASE _________ SHARES OF COMMON STOCK
Number of Warrants: _________
MCM CAPITAL GROUP, INC., a corporation organized and existing under the laws of the State of Delaware
(the "Company"), hereby certifies that, for value received, CFSC CAPITAL CORP. VIII or its registered assigns,
is the registered holder of the number of Warrants set forth above (the "Warrants"). Each Warrant shall entitle
the registered holder thereof (the "Holder"), subject to the provisions contained herein and in the Warrant
dated as of December__________, 2000 (as thereafter amended, modified or supplemented, the "Warrant
Agreement") by and between the Company and the Lender (as defined therein), to receive from
the Company one share of Common Stock, par value $0.01 per share, of the Company ("Common Stock") at an exercise
price of $1.00 per share, subject to adjustment upon the occurrence of certain events as more fully described in
Article IV of the Warrant Agreement. The Warrants shall be exercisable in the manner described in Article III of
the Warrant Agreement and shall terminate and become void as of the close of business on the Expiration Date, as
such term is defined in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with the Warrant Agreement, and is subject
to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder
of this Warrant Certificate consents by acceptance hereof, which applicable terms and provisions are hereby
incorporated herein by reference and made a part hereof. Reference is hereby made to the Warrant Agreement for a
full statement of the respective rights, limitations of rights, duties and obligations thereunder of the Company
and the Holders of the Warrants.
The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Warrant,
is subject to adjustment as provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of Warrants shall, upon such
issuance and upon payment of the Exercise Price in accordance with the terms set forth in the Warrant Agreement,
be duly and validly issued and fully paid and non-assessable.
In order to exercise a Warrant, the Holder hereof must surrender this Warrant Certificate at the office
of the Company, with the Form of Election to Purchase attached hereto appropriately completed and duly executed
by the Holder hereof, all subject to the terms and conditions hereof and of the Warrant Agreement.
All capitalized terms used in this Warrant Certificate that are not defined herein shall have the
meanings assigned to them in the Warrant Agreement.
Copies of the Warrant Agreement are on file at the office of the Company and may be obtained by writing
to the Company at MCM Capital Group, Inc., 0000 Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: Secretary.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be executed by its officers
thereunto duly authorized as of the date first written above.
MCM CAPITAL GROUP, INC.
Name: Xxxx X. Xxxxxxx III