WARRANT AGREEMENT dated as of November 12, 1996 between FAC Realty,
Inc., formerly Factory Stores of America, Inc., a Delaware corporation (the
"Corporation"), and National Union Fire Insurance Company of Pittsburgh
("Warrant Holder").
PRELIMINARY STATEMENT
The Corporation proposes to issue and sell to Warrant Holder pursuant
to the Note Purchase Agreement 20,000 Warrants, each Warrant representing the
right initially to purchase one share of Common Stock. The Corporation and
Warrant Holder desire to set forth in this Warrant Agreement the terms and
conditions of the Warrants to be issued pursuant to the terms of the Note
Purchase Agreement.
Accordingly, the parties hereto agree as follows.
1. DEFINITIONS. As used in this Warrant Agreement, the following terms
shall have the following meanings, unless the context otherwise
requires.
(a) "AGGREGATE CONSIDERATION RECEIVABLE" by the Corporation in
connection with the issuance of any shares of Common Stock (or
any rights, warrants, options or convertible or exercisable
securities entitling the holders thereof to subscribe for or
purchase any shares of Common Stock or any stock appreciation
rights entitling the holders thereof to any interest in an
increase in value, however measured, of shares of Common
Stock) means the sum of:
(i) the aggregate consideration paid to the Corporation
for such shares, rights, warrants, options or
convertible or exercisable securities and
(ii) the aggregate consideration or premiums stated in
such rights, warrants, options or convertible or
exercisable securities to be payable for the shares
of Common Stock covered thereby,
calculated in each case in accordance with section 11(f)
hereof. In case all or any portion of the consideration to be
received by the Corporation may be paid in a form other than
cash, the value of such consideration shall be determined in
good faith by the Board of Directors or a duly authorized
committee thereof (irrespective of the accounting treatment
thereof), and described in a resolution of the Board of
Directors or such committee.
(b) "BLACKACRE" shall mean Blackacre Bridge Capital, L.L.C., a
Delaware limited liability company.
(c) "BOARD OF DIRECTORS" shall mean the board of directors of the
Corporation.
(d) "BUSINESS DAY" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in New York, New York
are required by law to close.
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(e) "CAPITAL STOCK" shall mean any and all shares, rights to
purchase, warrants, options, convertible securities,
participations in or other equivalents of or interests (other
than security interests) in (however designated and whether
voting or nonvoting) corporate stock.
(f) "COMMON STOCK" means the Common Stock, par value $ 0.01 per
share, of the Corporation and, in the case of a
reclassification, recapitalization or other similar change in
such Common Stock or in the case of a consolidation or merger
of the Corporation with or into another Person, such
consideration to which a holder of a share of Common Stock
would have been entitled upon the occurrence of such event.
(g) "CORPORATION" means FAC Realty, Inc, a Delaware corporation.
(h) "EFFECTIVE PURCHASE PRICE PER SHARE" at which the Corporation
issues any shares of Common Stock (or any rights, warrants,
options or convertible or exercisable securities entitling the
holders thereof to subscribe for or purchase any shares of
Common Stock or any stock appreciation rights entitling the
holders thereof to any interest in an increase in value,
however measured, of shares of Common Stock) shall mean an
amount equal to the ratio of:
(i) the Aggregate Consideration Receivable by the
Corporation in connection with the issuance of such
shares of Common Stock (or any such rights, warrants,
options, convertible or exercisable securities or
stock appreciation rights) to
(ii) the number of shares of Common Stock so issued (or
issuable upon the exercise or conversion of such
rights, warrants, options, or convertible or
exercisable securities or the Common Stock
equivalent, as nearly as it may be calculated, of
such stock appreciation rights).
(i) "EXCHANGE PRICE PER SHARE" shall mean the $8.41, as such
amount may from time to time be adjusted in accordance with
the provisions of section 11 hereof.
(j) "EXCLUDED TRANSACTIONAL" means the issuance of any shares of
Capital Stock of the Corporation to employees or directors of
the Corporation under an employee benefit plan or arrangement
adopted by the Corporation; provided, however, in no event
shall the aggregate amount of such issuances exceed 10% of the
issued and outstanding shares of Capital Stock of the
Corporation on the date prior to the date of this Warrant
Agreement (calculated on a fully-diluted basis).
(k) "EXPIRATION DATE" shall mean April 3, 2003.
(l) "FAIR MARKET VALUE" of the Common Stock means, as of any date
the average of
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the daily closing prices of Common Stock for the 30
consecutive Trading Days next preceding the date prior to the
date in question. The closing price for each day shall be the
last sale price, or the closing bid price if no sale occurred,
of Common Stock on the New York Stock Exchange for trading.
(m) "XXXXXX" shall mean Xxxxxx Management Company, a Delaware
corporation.
(n) "NOTE PURCHASE AGREEMENT" shall mean that certain Note
Purchase Agreement, dated April 2,1996, by and among the
Corporation, Blackacre and Xxxxxx, as amended.
(o) "PERSON" means an individual, a corporation, a partnership, a
joint venture, an association, a joint-stock company, a trust,
a business trust, a government or any agency or any political
subdivision, any unincorporated organization, or any other
entity.
(p) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any successor federal statute.
(q) "SERIES A PREFERRED STOCK" means the Series A Convertible
Preferred Stock, $25.00 par value per share, of the
Corporation.
(r) "TRADING DAY" means, with any day on which the New York Stock
Exchange is open for business.
(s) "WARRANT AGREEMENT" shall mean this warrant agreement.
(t) "WARRANT CERTIFICATE" shall mean a certificate evidencing one
or more Warrants, substantially in the form of exhibit A
hereto.
(u) "WARRANT HOLDER" shall mean Blackacre, as the original
registered holder of the Warrants issued hereunder, and any
registered transferee of a Warrant Holder.
(v) "WARRANT OFFICE" shall mean the office or agency of the
Corporation at which the Warrant Register shall be maintained
and where the Warrants may be presented for exercise,
exchange, substitution and transfer, which office or agency
will be the office of the Corporation at 00000 Xxxxxxx
Xxxxxxx, Xxxxx 000, Xxxx Xxxxx Xxxxxxxx 00000, which office or
agency may be changed by the Corporation pursuant to notice in
writing to the Persons named in the Warrant Register as the
holders of the Warrants.
(w) "WARRANT REGISTER" shall mean the register, substantially
maintained by the Corporation at the Warrant Office.
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(x) "WARRANT SHARES" shall mean the shares of Common Stock issued
or issuable upon exercise of the Warrants, as the same may be
adjusted from time to time pursuant to section 11 hereof, and
any other shares of Capital Stock issued or issuable upon the
exercise of the Warrants pursuant to section 11 hereof.
(y) "WARRANTS" shall mean the warrants to purchase Common Stock
issued by the Corporation pursuant to this Warrant Agreement;
individually, a "Warrant."
2. REPRESENTATIONS AND WARRANTIES. The Corporation hereby represents and
warrants as follows:
(a) The Corporation is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware, has the corporate power and authority to conduct its
business as presently conducted, has the corporate power and
authority to execute and deliver this Warrant Agreement and
the Warrant Certificates, to issue the Warrants and to perform
its obligations under this Warrant Agreement and the Warrant
Certificates.
(b) The execution, delivery and performance by the Corporation of
this Warrant Agreement and the Warrant Certificates, the
issuance of the Warrants, and the issuance of the Warrant
Shares upon exercise of the Warrants have been duly authorized
by all necessary corporate action.
(c) This Warrant Agreement has been duly executed and delivered by
the Corporation and constitutes a legal, valid, binding and
enforceable obligation of the Corporation. When the Warrants
and Warrant Certificates have been issued as contemplated
hereby. The Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations
of the Corporation. The Warrant Shares, when issued upon
exercise of the Warrants in accordance with the terms hereof
will be duly authorized, validly issued, fully paid and
nonassessable. Statements in this section 2(c) as to validity,
binding effect and enforceability are subject to (i)
limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of
general application relating to or affecting the
enforceability of creditors' rights, including, without
limitation, limitations as to enforceability that may be
imposed under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy
Code, Article 10 of the New York Debtor Creditor Law or other
provisions of law relating to fraudulent transfers and
obligations and (ii) equitable principles limiting the
availability of equitable remedies.
3. NUMBER OF WARRANTS. The Corporation hereby agrees to issue and deliver
to Warrant Holder on the date hereof 20,000 Warrants and one or more
Warrant Certificates evidencing such Warrants.
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4. REGISTRATION, TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Corporation shall maintain at the Warrant Office the
Warrant Register for registration of the Warrants and Warrant
Certificates and transfers thereof. On the date hereof the
Corporation shall register the Warrants and Warrant
Certificates in the Warrant Register in the name of the
Warrant Holder. The Corporation may deem and treat the
registered holders of the Warrant Certificates as the absolute
owners thereof and the Warrants represented thereby
(notwithstanding any notation of ownership or other writing on
the Warrant Certificates made by any person) for the purpose
of any exercise thereof or any distribution to the Warrant
Holders thereof and for all other purposes, and the
Corporation shall not be affected by any notice to the
contrary.
(b) Subject to section 12 hereof, the Corporation shall register
the transfer of any outstanding Warrants in the Warrant
Register upon surrender of the Warrant Certificates evidencing
such Warrants to the Corporation at the Warrant Office,
accompanied (if so required by it) by a written instrument or
instruments of transfer in form satisfactory to it, duly
executed by the registered holder or holders thereof or by the
duly appointed legal representative thereof. Upon any such
registration of transfer, new Warrant Certificates evidencing
such transferred Warrants shall be issued to the transferee
and the surrendered Warrant Certificates shall be canceled. If
less than all the Warrants evidenced by Warrant Certificates
surrendered for transfer are to be transferred, new Warrant
Certificates shall be issued to the holder surrendering such
Warrant Certificates evidencing such remaining number of
Warrants.
(c) Warrant Certificates may be exchanged at the option of the
holders thereof when surrendered to the Corporation at the
Warrant Office, for another Warrant Certificate or other
Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates
surrendered for exchange shall be canceled.
(d) No charge shall be made for any such transfer or exchange
except for any tax or other governmental charge imposed in
connection therewith. Except as provided in section 12(b)(i)
hereof, each Warrant Certificate issued upon transfer or
exchange shall bear the legend set forth in sections 12(b)(i)
hereof if the Warrant Certificate presented for transfer or
exchange bore such legend.
5. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant Certificate
shall be mutilated, lost, stolen or destroyed, the Corporation shall
issue, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, a new Warrant
Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence
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satisfactory to the Corporation of such loss, theft or destruction of
such Warrant Certificate (which shall, in the case of a mutilated
Warrant Certificate, include the surrender thereof) and, if requested,
indemnity satisfactory to it. The Corporation acknowledges that a
written indemnity by the Warrant Holder shall be satisfactory to the
Corporation for such purpose. All expenses and reasonable charges
associated with procuring such indemnity and all stamp, tax and other
governmental duties that may be imposed in relation thereto shall be
borne by the holder of such Warrant Certificate. Each Warrant
Certificate issued in any such substitution shall bear the legend set
forth in section 12(b)(i) if the Warrant Certificate for which such
substitution was made bore such legend.
6. DURATION AND EXERCISE OF WARRANTS.
(a) The Warrants evidenced by a Warrant Certificate shall be
exercisable in whole or in part by the registered holder
thereof on any Business Day after the date hereof and on or
before 5:00 P.M., New York City time, on the Expiration Date.
Each Warrant not exercised by 5:00 p.m. New York City time, on
the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this
Warrant Agreement shall become void.
(b) Upon presentation to the Corporation at the Warrant Office of
the Warrant Certificate evidencing the Warrants to be
exercised, with the form of election to purchase attached
thereto duly completed and signed by the Warrant Holder, and
upon payment of an amount equal to the product of:
(i) the Exchange Price per Share and
(ii) the number of Warrant Shares being purchased,
in lawful money of the United States of America, the
Corporation shall issue and cause to be delivered to or upon
the written order of the registered holders of such Warrants
and in such name or names as such registered holder may
designate, a certificate for the Warrant Share or Warrant
Shares issued upon such exercise of the Warrants being
exercised. Any Persons so designated to be named therein shall
be deemed to have become Warrant Holders of record of such
Warrant Share or Warrant Shares as of the date of exercise of
such Warrants.
(c) If less than all of the Warrants evidenced by a Warrant
Certificate are exercised at any time, a new Warrant
Certificate or Certificates shall be issued for the remaining
number of Warrants evidenced by such Warrant Certificate. Each
new Warrant Certificate so issued shall bear the legend set
forth in section 12(b)(i) hereof if the Warrant Certificate
presented in connection with partial exercise thereof bore
such legend. All Warrant Certificates surrendered upon
exercise of Warrants shall be canceled.
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7. NO FRACTIONAL SHARES. The Corporation shall not be required to issue
fractional Warrant Shares upon exercise of the Warrants but shall pay
for any such fraction of a share an amount in cash equal to such
fraction of the Fair Market Value of a share of Common Stock.
8. PAYMENT OF TAXES. The Corporation will pay all taxes attributable to
the initial issuance of Warrant Shares upon the exercise of the
Warrants, provided that the Corporation shall not be required to pay
any income or other tax incurred by the holder of the Warrant
Certificate or the Warrant Shares upon exercise of the Warrants or
issuance of the Warrant Shares.
9. STOCK RIGHTS.
(a) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as conferring upon the
holders thereof any right to vote or to consent to or receive
notice as a stockholder in respect of the meetings of
stockholders or the election of directors of the Corporation
or any other matter or rights to receive dividends, or any
rights whatsoever as a stockholder of the Corporation.
(b) Nothing contained in this Warrant Agreement or in any of the
Warrant Certificates shall be construed as imposing any
obligation on the registered holders thereof to purchase any
securities or as imposing any liability on such Warrant
Holders as stockholders of the Corporation, whether such
obligation or liability is asserted by the Corporation or by
creditors of the Corporation.
10. RESERVATION AND ISSUANCE OR WARRANT SHARES.
(a) The Corporation will at all times that Warrants
remain outstanding have authorized, and reserve and
keep available, free from preemptive rights, for the
purpose of enabling it to satisfy any obligation to
issue Warrant Shares upon the exercise of the
Warrants, the number of shares of Common Stock
deliverable upon exercise of all outstanding
Warrants.
(b) The Corporation will take any corporate action which
may be necessary in order that the Corporation may
validly and legally issue fully paid and
nonassessable Warrant Shares at the Exchange Price
per Share.
(c) The Corporation covenants that all Warrant Shares
will, upon issuance in accordance with the terms of
this Warrant Agreement and the Corporation's
certificate of incorporation, be fully paid and
nonassessable and free from all taxes with respect to
the issuance thereof and from all liens, charges and
security interests (other than any created by or on
behalf of any Warrant).
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11. ADJUSTMENT OF EXCHANGE PRICE PER SHARE.
(a) Prior to the Expiration Date, the Exchange Price per
Share is subject to adjustment from time to time in
the manner provided in this section 11 upon the
occurrence of any of the events enumerated in this
section 11.
(b) In the event that the Corporation shall at any time
after the date hereof:
(i) declare a dividend or make a distribution
on the Common Stock payable in shares of
Common Stock,
(ii) subdivide or reclassify outstanding shares
of Common Stock into a greater number of
shares,
(iii) combine shares of its outstanding Common
Stock into a smaller number of shares,
(iv) declare a dividend or distribution on the
Common Stock in shares of any series of its
Capital Stock other than Common Stock, or
(v) issue by reclassification of any shares of
its outstanding Common Stock, shares of any
series of its Capital Stock or obligation
of the Corporation or other property,
then the exercise privilege and the Exchange Price
per Share in effect immediately prior thereto shall
be adjusted so that the Warrant Holder of Warrant
Shares thereafter surrendered for exercise shall be
entitled to receive the number of shares of Common
Stock or other Capital Stock and/or property of the
Corporation which such Warrant Holder would have been
entitled to receive after the happening of any of the
events described above had such Warrants been
exercised immediately prior to the happening of such
event or any record date with respect thereto. Such
adjustment shall become effective immediately after
the applicable record date in the case of a dividend
or distribution and shall become effective
immediately after the effective date in the case of a
subdivision, combination or reclassification. Such
adjustments shall be made successively whenever any
event referred to above shall occur.
(c) If the Corporation shall at any time after the date
hereof issue any shares of Common Stock (or any
rights, warrants, options or convertible or
exercisable securities entitling the holders thereof
to subscribe for or purchase any shares of Common
Stock or any stock appreciation rights entitling the
holders thereof to any interest in an increase in
value, however measured, of shares
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of Common Stock) for an Effective Purchase Price per
Share less than the Exchange Price per Share in
effect immediately prior to the date of such
issuance, then the Exchange Price per Share shall be
adjusted to equal the ratio of:
(i) the sum of:
(A) the product of:
(1) the number of shares of
Common Stock outstanding
immediately prior to such
issuance and
(2) the Exchange Price per Share
in effect immediately prior
to such issuance and
(B) the Aggregate Consideration
Receivable by the Corporation in
connection with such issuance to
(ii) the sum of:
(A) the number of shares of Common Stock
outstanding immediately prior to
such issuance and
(B) the number of additional shares of
Common Stock to be so issued
(including the number of shares
underlying such rights, warrants,
options or convertible or
exercisable securities).
Such adjustment shall be made successively whenever
any shares, rights, warrants, options, convertible or
exercisable securities or stock appreciation rights
are issued at an Effective Purchase Price per Share
that is less than the Exchange Price per Share in
effect on the date of such issuance. To the extent
that any such rights, warrants, options, convertible
or exercisable securities or stock appreciation
rights expire without having been converted or
exercised, the Exchange Price per Share then in
effect shall be readjusted to the Exchange Price per
Share which then would be in effect if such rights,
options, warrants, convertible or exercisable
securities or stock appreciation rights had not been
issued, but such readjustment shall not affect the
number of shares of Common Stock or other shares of
Capital Stock delivered upon any conversion or
exercise prior to the date such readjustment is made.
If the Corporation shall at any time after the date
hereof issue any shares of Common Stock (or any
rights, warrants, options or convertible or
exercisable securities entitling the holders thereof
to subscribe for or purchase any shares of Common
Stock, or any stock appreciation rights entitling the
holders
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thereof to any interest in an increase in value,
however measured, of shares of Common Stock) in an
Excluded Transaction the Exchange Price per Share in
effect immediately prior to the date of such issuance
shall not be adjusted hereunder as a result of such
Excluded Transaction.
(d) If the Corporation shall at any time after the date
hereof distribute to all holders of its Common Stock
any of its assets or debt securities, or rights,
options, warrants or convertible or exercisable
securities of the Corporation (including securities
issued for cash) but excluding distributions of
Capital Stock referred to in section 11(b) hereof,
then the Exchange Price per Share shall be adjusted
to equal the Exchange Price per Share in effect
immediately prior to such distribution less an amount
equal to the then fair market value (as reasonably
determined by the Board of Directors, in good faith
and as described in a resolution of the Board of
Directors) of the portion of the assets or debt
securities of the Corporation so distributed or of
such rights, options, warrants or convertible or
exchangeable securities applicable to one share of
Common Stock.
Such adjustment shall become effective immediately
after the record date for the determination of shares
entitled to receive such distribution. Such
adjustment shall be made successively whenever any
event listed above shall occur. Notwithstanding the
foregoing, no adjustment of the Exchange Price per
Share shall be made upon the distribution to holders
of Common Stock of such rights, options, warrants,
convertible securities, assets or debt securities if
the plan or arrangement under which such rights,
options, warrants, convertible securities, assets or
debt securities are issued provides for their
issuance to Warrant Holders of shares of Common Stock
in the same pro rata amounts upon exercise thereof.
(e) In any case in which this section 11 provides that
shall become effective immediately after a record
date for an event, the Corporation may defer until
the occurrence of such event:
(i) issuing to the Warrant Holder of any shares
of Common Stock subject to an exercise after
such record date and before the occurrence
of such event the additional shares of
Common Stock issuable upon such exercise by
reason of the adjustment required by such
event over and above the Common Stock
issuable upon such exercise before giving
effect to such adjustment, and
(ii) paying to such Warrant Holder any amount in
cash in lieu of any fractional share of
Common Stock pursuant to section 7.
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(f) For purposes of any computations of Aggregate
Consideration Receivable or other consideration
pursuant to this section 11, the following shall
apply:
(i) in the case of the issuance of shares of
Capital Stock for cash the consideration
shall be the amount of cash, provided that
in no case shall any deduction be made
discounts or other expenses incurred by the
corporation for any underwriting of the
issue or otherwise in connection therewith;
and
(ii) in the case of the issuance of shares of
Capital Stock for a consideration in whole
or in part other than cash, the
consideration other than cash shall be
deemed to be the fair market value thereof
as reasonably determined in good faith by
the Board of Directors or a duly authorized
committee thereof (irrespective of the
accounting treatment thereof), and described
in a resolution of the Board of Directors or
such committee.
(g) If after an adjustment a Warrant Holder may, upon
exercise of this Warrant in whole or in part, receive
shares of two or more classes of Capital Stock of the
Corporation, the Corporation shall determine on a
fair basis the allocation of the adjusted Exchange
Price per Share between the classes of Capital Stock.
After such allocation, the Exchange Price per Share
of each class of Capital Stock shall thereafter be
subject to adjustment on terms comparable to those
applicable to Common Stock in this section 11.
(h) In no event shall an adjustment pursuant to this
section 11 reduce the Exchange Price per Share below
the then par value, if any, of the shares of Common
Stock issuable upon exercise of this Warrant.
(i) No adjustment in the Exchange Price Per Share shall
be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in
the Exchange Price Per Share then in effect.
(j) If there shall occur:
(i) any reclassification or change of
outstanding shares of Common Stock issuable
upon exercise of this Warrant (other than a
change in par value or from par value to no
par value, or from no par value to par
value, or as a result of a subdivision or
combination),
(ii) any consolidation or merger of the
Corporation with or into another Person
shall be effected as a result of which
holders of Common Stock issuable upon
exercise of this Warrant shall be entitled
to
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receive stock, securities or other property
or assets (including cash) with respect to
or in exchange for such Common Stock, or
(iii) any sale or conveyance of the properties and
assets of the Corporation as, or
substantially as, an entirety to any other
Person, each Warrant Share shall be
convertible into the kind and amount of
shares of stock and other securities or
property or assets (including cash)
receivable upon such reclassification,
change, consolidation, merger, sale or
conveyance by a holder of the number of
shares of Common Stock issuable upon
exercise of this Warrant immediately prior
to such reclassification, change,
consolidation, merger, sale or conveyance.
In any such case, appropriate adjustments
which shall be as nearly equivalent as may
be practicable to the adjustments provided
for in this section 11.
If this section 11(i) applies with respect
to a transaction, sections 11(b), (c) and
(d) hereof shall not apply with respect to
that transaction. The above provisions of
this section 11(i) shall similarly apply to
successive reclassifications,
consolidations, mergers and sales.
(k) Notice to Warrant Holders Prior to Certain
Actions.
(i) If:
(A) The Corporation shall take
any action that would
require an adjustment in
the Exchange Price per
Share pursuant to section
11 hereof; or
(B) any event described in
section 11(j) hereof shall
occur; or
(C) the voluntary or
involuntary dissolution,
liquidation or winding-up
of the Corporation shall
occur;
the Corporation shall cause notice
of such proposed action or event to
be mailed to each Warrant Holder at
its address appearing on the Warrant
Register of the Corporation, as
promptly as possible but in any
event no later than the later of (x)
the date 15 days prior to the record
date for such proposed action or the
effective date of such event or (y)
the date on which the Corporation
first publicly announces such
proposed action or event.
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(ii) In any event, such notice shall
specify:
(A) the date on which a record
is to be taken for the
purpose of such action, or,
if a record is not to be
taken, the date as of which
the holders of record of
Common Stock are to be
determined, or
(B) the date on which such
proposed event is expected
to become effective, and
the date as of which it is
expected that holders of
record of Common Stock
shall be entitled to
exchange their Common Stock
for securities or other
property deliverable upon
such event.
(l) Irrespective of any adjustments in the number or kind
of shares purchasable upon the exercise of the
Warrant, Warrant Certificates theretofore or
thereafter issued may continue to express the same
number and kind of shares as are stated on the
Warrant Certificates initially issuable pursuant to
this Warrant Agreement
12. SEC REGISTRATION; RESTRICTIONS ON TRANSFER; SUBSEQUENT TRANSFEREES AS
THIRD PARTY BENEFICIARIES.
(a) The Warrant Holder (i) represents that it is acquiring the
Warrants for its own account for investment and not with a
view to any distribution or public offering within the
meaning of the Securities Act, (ii) acknowledges that the
Warrants and the Warrant Shares issuable upon exercise
thereof have not been registered under the Securities Act or
any state securities laws and (iii) agrees that it will not
sell or otherwise transfer any of its Warrants or Warrant
Shares except upon the terms and conditions specified herein,
provided that the Warrant Holders may sell the Warrants
or the Warrant Shares purchased upon exercise of the Warrants
in one or more private transactions not requiring
registration under the Securities Act.
(b) (i) Except as otherwise provided in section 12(c) hereof,
each Warrant Certificate and each certificate for the
Warrant Shares issued to a Warrant Holder shall include
a legend in substantially the following form (with such
changes therein as may be appropriate to reflect whether
such legend refers to Warrants or Warrant Shares),
provided that such legend shall not be required if such
transfer is being made in connection with a sale which
is exempt from registration pursuant to Rule 144 under
the Securities Act or if the opinion of counsel referred
to in section 12(c) hereof is to the further effect
that neither such legend nor the restrictions on
transfer in this section 12 is required in order to
ensure compliance with the Securities Act:
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THE [WARRANTS/SHARES] REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT OR LAWS. SUCH
[WARRANTS/SHARES] MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH
THE CONDITIONS SPECIFIED IN AND ARE SUBJECT TO OTHER
PROVISIONS OF THE WARRANT AGREEMENT DATED AS OF APRIL 3,1996,
AS AMENDED BETWEEN THE CORPORATION AND THE WARRANT HOLDER, A
COMPLETE AND CORRECT COPY OF WHICH IS AVAILABLE FOR INSPECTION
AT THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE
FURNISHED TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
(ii) Each certificate for the Warrant Shares issued to a
Warrant Holder shall also include a legend in
substantially the following form:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER FOR THE PURPOSE OF THE
CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED. SUBJECT TO CERTAIN PROVISIONS OF THE CORPORATION'S
SECOND RESTATED CERTIFICATE OF INCORPORATION, NO PERSON MAY
BENEFICIALLY OWN SHARES OF EQUITY STOCK IN EXCESS OF 9.8% (OR
SUCH GREATER PERCENTAGE AS MAY BE DETERMINED BY THE BOARD OF
DIRECTORS OF THE CORPORATION) OF THE OUTSTANDING CAPITAL STOCK
OF THE CORPORATION (UNLESS SUCH PERSON IS AN EXISTING HOLDER)
AND NO PERSON (OTHER THAN AN EXISTING HOLDER WHO
CONSTRUCTIVELY OWNS IN EXCESS OF 9.8% OF THE EQUITY STOCK
IMMEDIATELY FOLLOWING THE CONSUMMATION OF THE INITIAL PUBLIC
OFFERING) MAY CONSTRUCTIVELY OWN SHARES OF EQUITY STOCK IN
EXCESS OF 9.5% OF THE OUTSTANDING CAPITAL STOCK OF THE
CORPORATION. ANY PERSON WHO ATTEMPTS TO BENEFICIALLY OWN OR
CONSTRUCTIVELY OWN SHARES OF EQUITY STOCK IN EXCESS OF THE
ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. ALL
CAPITALIZED TERMS IN THIS LEGEND HAVE THE MEANINGS DEFINED IN
THE CORPORATION'S SECOND RESTATED CERTIFICATE OF
INCORPORATION, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO
REQUESTS. IF THE RESTRICTIONS ON TRANSFER ARE VIOLATED, THE
SHARES OF COMMON STOCK REPRESENTED HEREBY WILL BE
AUTOMATICALLY CONVERTED
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INTO SHARES OF EXCESS STOCK WHICH WILL BE HELD IN TRUST BY THE
CORPORATION.
(c) Each Warrant Holder wishing to effect such a transfer of any
Warrant or Warrant Shares shall furnish to the Corporation an
agreement by the transferee thereof that it is taking and
holding the same subject to the terms and conditions specified
herein and a written opinion of such Warrant Holder's counsel,
in form reasonably satisfactory to the Corporation to the
effect that the proposed transfer may be effected without
registration under the Securities Act and any applicable state
securities laws.
(d) The restrictions set forth in this section 12 shall terminate
and cease to be effective with respect to any Warrants or
Warrant Shares registered under the Securities Act or upon
receipt by the Corporation of an opinion of counsel, in form
reasonably satisfactory to the Corporation, to the effect that
compliance with such restrictions is not necessary in order to
comply with the Securities Act and any applicable state
securities laws with respect to the transfer of the Warrants
and/or the Warrant Shares. Whenever such restrictions shall so
terminate the holder of such Warrants and/or Warrant Shares
shall be entitled to receive from the Corporation, without
expense (other than transfer taxes, if any), Warrant
Certificates or certificates for such Warrant Shares not
bearing the legend set forth in section 12(b)(i) hereof which
the Corporation will rescind any transfer restrictions
relating thereto.
(e) It is the intention of the parties hereto that each Warrant
Holder who acquires Warrants by transfer be a third party
beneficiary, to the extent of Warrants acquired and held by
such Warrant Holder, of the provisions of this Warrant
Agreement that bestow rights on Warrant Holders.
13. AMENDMENTS AND WAIVERS. Any provision of this Warrant Agreement may be
amended, supplemented, waived, discharged or terminated by a written
instrument signed by the Corporation and the holders of not less than a
majority of the outstanding Warrants, provided that the Exchange Price
per Share may not be increased by amendment, the number of Warrant
Shares issuable upon exercise of the Warrants may not be reduced by
amendment and this section 13 may not be changed by amendment except
with the unanimous consent of the holders of all outstanding Warrants.
14. SPECIFIC PERFORMANCE. The holders of the Warrants shall have the right
to specific performance by the Corporation of the provisions of this
Warrant Agreement. The Corporation 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
Corporation for specific performance of this Warrant Agreement by the
holders of the Warrants.
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15. NOTICES.
(a) Any notice or demand permitted or required to be given or made
by the holders or the holders of Warrant Shares to or on the
Corporation pursuant to this Warrant Agreement shall be
sufficiently given or made if delivered personally or by
telecopy (if the sender on the same day sends a confirming
copy of such notice by a nationally recognized overnight
delivery service, postage prepaid), or if sent by certified or
registered mail or a nationally recognized overnight delivery
service postage prepaid, addressed to the Corporation at the
Warrant Office.
(b) Any notice permitted or required to be given by the
Corporation to the holders or the holders of Warrant Shares
shall be sufficiently given or made if delivered personally or
by telecopy (if the sender on the same day sends a confirming
copy of such notice by a recognized overnight delivery
service, postage prepaid), or if sent by certified or
registered mail or a nationally recognized overnight delivery
service, postage prepaid, addressed to such holder as such
holder's name and address shall appear on the Warrant Register
or the Common Stock registry of the Corporation, as the case
may be.
16. BINDING EFFECT. This Warrant Agreement shall be binding upon and inure
to the sole and exclusive benefit of the Corporation and the Warrant
Holder, and their respective successors and assigns.
17. CONTINUED VALIDITY. A holder of Warrant Shares shall continue to be
entitled with respect to such Warrant Shares to all rights and subject
to all obligations to which it would have been entitled or subject as a
holder under sections 13 through 20 hereof.
18. COUNTERPARTS. This Warrant Agreement may be executed in one or more
separate counterparts and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
19. NEW YORK LAW. THIS WARRANT AGREEMENT AND EACH WARRANT
CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
20. BENEFITS OF THIS AGREEMENT. Nothing in this Warrant Agreement shall be
construed to give any Person other than the Corporation and the Warrant
Holder any legal or equitable right. remedy or claim under this Warrant
Agreement except as expressly set forth herein.
[Balance of Page Intentionally Left Blank]
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IN WITNESS WHEREOF the parties hereto have caused this Warrant
Agreement to be duty executed and delivered by their proper and duly authorized
officers, as of the date and year first above written.
FAC REALTY, INC.
By: /s/ X. Xxxxxxx Xxxxxx
Name: C Xxxxxxx Xxxxxx
Title: President and Chief
Operating Officer
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH
By : /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
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EXERCISABLE ONLY ON OR BEFORE
APRIL 3, 0000
XXXXXXX XXXXXX XX XXXXXXX, INC.
Warrant Certificate
This Warrant Certificate is one of the Warrant Certificates referred to
in the Warrant Agreement dated as of November 17,1996 (the "Warrant Agreement")
between FAC Realty. Inc. (formerly Factory Stores of America, Inc.), a Delaware
corporation (the Corporation"), and National Union Fire Insurance Company of
Pittsburgh ("Warrant Holder"). The Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitations, obligations, duties and immunities
thereunder of the Corporation and the holders. Terms defined in the Warrant
Agreement and used herein have the same meanings herein as therein.
This Warrant Certificate certifies that Warrant Holder, or registered
assigns, is the registered holder of 20,000 Warrants to purchase shares of
Common Stock of the Corporation. Each Warrant entitles the registered holder,
but only subject to the conditions set forth herein and in the Warrant
Agreement, to purchase from the Corporation on or prior to 5:00 PM, New York
City time, on the Expiration Date, one fully paid and nonassessable share of
Common Stock (subject to adjustment as described below) at a price equal to the
Exchange Price per Share.
The Exchange Price per Share shall be payable in lawful money of the
United States of America. The Warrants represented by this certificate may be
exercised by surrender of this Warrant Certificate, along with an executed copy
of the annexed Form of Election to Purchase and payment of the applicable
Exchange Price per Share at the office of the Corporation at 0000 Xxx Xxxxx
Xxxx, XxXxxx, Xxxxxxxx 00000, or such other address as the Corporation may
specify in writing to the registered holder of the Warrants evidenced hereby.
The Exchange Price per Share and the number of shares of Common Stock
purchasable upon exercise of the Warrants is subject to adjustment prior to the
Expiration Date as set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 PM, New York City time, on the
Expiration Date and (except as otherwise provided in the Warrant Agreement) all
rights of the registered holders of the Warrants shall cease after 5:00 PM, New
York City time, on the Expiration Date.
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The Corporation may deem and treat the registered holders of the
Warrants evidenced hereby as the absolute owners thereof (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof and of any distribution to the holders hereof and for all
other purposes, and the Corporation shall not be affected by any notice to the
contrary.
Warrant Certificates, when surrendered at the Warrant Office by the
registered holder hereof in person or by a legal representative duly authorized
in writing, may be exchanged, in the manner and subject to the limitations
provided in the Warrant Agreement, but without payment of any service charge,
for another Warrant Certificate or Warrant Certificates of like tenor evidencing
in the aggregate a like number of Warrants.
Upon due presentment for registration of transfer of this Warrant
Certificate at the Warrant Office, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued in exchange for this Warrant Certificate to the
transferee(s) and, if less than all the Warrants evidenced hereby are to be
transferred, to the registered holder hereof, subject to the limitations
provided in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
No holder of this Warrant Certificate shall be deemed to be the holder
of Common Stock or any other securities of the Corporation that may at any time
be issuable on the exercise hereof for any purpose, nor shall anything contained
in the Warrant Agreement or herein be construed to confer upon the holder of
this Warrant Certificate as such any of the rights of a stockholder of the
Corporation or any right to vote for the election of directors or upon any
matter submitted to stockholder at any meeting hereof, or to give or withhold
consent to any corporate action (whether upon any reorganization, issuance of
stock, reclassification or conversion of stock change of par value, or exchange
of stock to no par value, consolidation, merger. conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise, until this Warrant Certificate shall have been exercised and the
Common Stock issuable upon the exercise hereof shall have become issuable as
provided in the Warrant Agreement.
[Balance of Page Intentionally Left Blank)
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IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate
to be signed by its duly authorized officers and has caused its corporate seal
to be affixed hereunto.
FAC REALTY, INC.
By: /s/ X. Xxxxxxx Xxxxxx
Name: X. Xxxxxxx Xxxxxx
Title: President and Chief
Operating Officer
(CORPORATE SEAL)
ATTEST
Assistant Secretary
-20-
ANNEX TO FORM OF WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise, in accordance
with section 6(b) of the Warrant Agreement, Warrants, representing the right to
purchase
shares of Common Stock, and herewith tenders payment for such
Shares of Common Stock to the order of the Corporation in the amount of $ as
payment of the exercise price in accordance with the terms hereof.
The undersigned requests that a certificate for such shares of Common
Stock be registered in the name of whose address is and that such certificate be
delivered to whose address is . If said number of shares of Common Stock is less
than all of the shares of Common Stock purchasable hereunder under the method of
exercise selected, the undersigned hereby requests that a new Warrant
Certificate representing the remaining balance of the shares of Common Stock be
registered in the name of whose address is
and that such Warrant
Certificate be delivered to whose address is
.
Signature:
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.)
Date:
-21-
