<PAGE> 1
Exhibit 4.42
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VISION TWENTY-ONE, INC.
WARRANT AGREEMENT
Dated as of November 10, 2000
Re: CLASS A WARRANTS TO PURCHASE SHARES OF COMMON STOCK
CLASS B WARRANTS TO PURCHASE SHARES OF COMMON STOCK
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. DESCRIPTION OF WARRANTS AND COMMITMENT.................................................2
Section 1.1. Warrants to Purchase Common Stock......................................................2
Section 1.2. Closing Date...........................................................................3
Section 1.3. Failure to Deliver.....................................................................3
Section 1.4. Covenant to Increase Authorized Shares.................................................3
SECTION 2. CLOSING CONDITIONS.....................................................................3
Section 2.1. Closing Certificate....................................................................3
Section 2.2. Legal Opinions.........................................................................3
Section 2.3. Convertible Note Agreement.............................................................4
Section 2.4. Registration Rights Agreement..........................................................4
Section 2.5. Credit Agreement.......................................................................4
Section 2.6. Concurrent Issuance of Warrants........................................................4
Section 2.7. Consent of Holders of Other Securities and Shareholders................................4
Section 2.8. Satisfactory Proceedings...............................................................4
Section 2.9. Waiver of Conditions...................................................................4
SECTION 3. REPRESENTATIONS........................................................................4
Section 3.1. Representations of the Company.........................................................4
SECTION 4. DEFINITIONS............................................................................5
Section 4.1. Definitions............................................................................5
SECTION 5. MISCELLANEOUS..........................................................................6
Section 5.1. Notice from Agent......................................................................6
Section 5.2. Counterparts...........................................................................6
Section 5.3. Successors and Assigns.................................................................6
Section 5.4. Headings...............................................................................7
Section 5.5. Costs and Expenses.....................................................................7
Section 5.6. Governing Law..........................................................................7
Section 5.7. Severability of Provisions.............................................................7
Section 5.8. Submission to Jurisdiction; Waiver of Jury Trial.......................................7
Section 5.9. Loss, Theft, Etc. of Warrant...........................................................8
Section 5.10. Amendments.............................................................................8
Signatures........................................................................................................9
</TABLE>
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ATTACHMENTS TO WARRANT AGREEMENT:
Schedule I -- Names of Lenders
Schedule 2.7 -- Consents of Shareholders and Others
Exhibit A-1 -- Form of Class A Warrant
Exhibit A-2 -- Form of Class B Warrant
Exhibit B -- Representations and Warranties
Exhibit C -- Description of Closing Opinion of Counsel to the
Company
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VISION TWENTY-ONE, INC.
120 WEST FAYETTE STREET, SUITE 700
BALTIMORE, MD 21201
WARRANT AGREEMENT
Re: CLASS A WARRANTS TO PURCHASE SHARES OF COMMON STOCK
CLASS B WARRANTS TO PURCHASE SHARES OF COMMON STOCK
Dated as of
November 10, 2000
To the Lenders named in
Schedule I to this Agreement
Ladies and Gentlemen:
The undersigned, Vision Twenty-One, Inc., a Florida corporation (the
"Company"), agrees with the purchasers named in Schedule I to this Warrant
Agreement (the or this "Agreement") as follows:
PRELIMINARY STATEMENTS
A. Reference is hereby made to that certain Amended and Restated
Credit Agreement dated as of July 1, 1998, as amended, by and among the Company,
the Lenders, and the Agent (the "Original Credit Agreement"). The Company is
currently indebted to the Lenders in the aggregate amount of $63,928,986.76
under the Original Credit Agreement, of which $7,134,413 represents outstanding
principal under the revolving credit facility as revolving loans, $41,622,572.23
represents outstanding principal as term loans, $8,787,735.26 represents
outstanding principal as bridge loans and $6,384,266.27 (exclusive of interest
due on the current bridge loan and reimbursement for certain costs and expenses)
is outstanding representing accrued but unpaid interest and fees due under the
Original Credit Agreement at the pre-default rates therefor (any increase in the
accrued but unpaid amount thereof representing default rate pricing increases
being waived by the Lenders for the periods ending prior to the date hereof). In
addition, $10,000 of letters of credit remain outstanding under the Original
Credit Agreement.
B. The Company has requested that the amounts outstanding under
the Original Credit Agreement be restructured under the terms set forth in the
Amended and Restated Credit Agreement dated as of November 10, 2000 (as amended,
modified or restated from time to time, the "Credit Agreement"), that the
financial covenants be amended, that certain other terms and conditions provided
for in the Original Credit Agreement be amended, that for the sake of clarity
and convenience, that the Original Credit Agreement be restated in its entirety
as so amended,
<PAGE> 5
and that the unpaid fees and interest be converted into indebtedness evidenced
by the 7% Convertible Senior Secured Notes due October 31, 2003 issued pursuant
to the Convertible Note Agreement, dated as of November 10, 2000 (as amended,
modified or restated from time to time, the "Convertible Note Agreement") in the
aggregate principal amount of $6,385,000.
C. In consideration of each Lender entering into the Credit
Agreement and Convertible Note Agreement, the Company has also agreed to issue
to each Lender on the Closing Date pursuant to this Agreement (a) Class A
Warrants to purchase in the aggregate 4,104,000 shares (subject to adjustment as
provided in said warrants) of Common Stock of the Company (the "Class A
Warrants") and (b) Class B Warrants to purchase in the aggregate 4,104,000
shares (subject to adjustment as provided in said warrants) of Common Stock of
the Company (the "Class B Warrants" and, together with all Class A Warrants
being delivered to the Lenders, the "Warrants").
D. The parties hereto hereby agree that this Agreement shall
become effective as of the date hereof, upon the execution of this Agreement by
each of the parties hereto and fulfillment of the conditions precedent contained
in Section 2 hereof.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DESCRIPTION OF WARRANTS AND COMMITMENT.
Section 1.1. Warrants to Purchase Common Stock. In consideration
of, and as an inducement to, each Lender entering into the Credit Agreement and
Convertible Note Agreement, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Company will issue
to each Lender on the Closing Date:
(a) the Class A Warrants of the Company substantially in
the form attached hereto as Exhibit A-1 to purchase the number of
shares of Common Stock of the Company set forth opposite such Lender's
name in Schedule I hereto; and
(b) the Class B Warrants of the Company substantially in
the form attached hereto as Exhibit A-2 to purchase the number of
shares of Common Stock of the Company set forth opposite such Lender's
name in Schedule I hereto.
The number of shares which may be acquired upon the exercise of the Warrants and
the price per share are subject to adjustment in the manner and on the terms and
conditions set forth in the Warrants.
The Company and the Lenders agree that for U.S. federal income tax
purposes the aggregate amount of original issue discount is less than a de
minimus amount (as defined in the Treasury Regulations).
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The rights, powers and terms of and relating to the Common Stock will
be provided for in the Company's Articles of Incorporation as in effect on the
Closing Date, and as otherwise provided by the general corporation law of the
State of Florida.
Section 1.2. Closing Date. Delivery of the Warrants will be made
at the offices of Chapman and Cutler, 111 West Monroe Street, Chicago, Illinois
60603, on November 10, 2000 or such later date (not later than November 15,
2000) as shall mutually be agreed upon by the Company and the Lenders (the
"Closing Date"). The Warrants will be delivered to each Lender in the form of a
single Warrant, in the form of Exhibit A-1 and Exhibit A-2, as appropriate,
registered in such Lender's name or in the name of such Lender's nominee as such
Lender may specify at any time prior to the date fixed for delivery.
The obligations of the Lenders shall be several and not joint and no
Lender shall be liable or responsible for the acts or defaults of any other
Lender.
Section 1.3. Failure to Deliver. If, on the Closing Date, the
Company fails to tender to each Lender the Warrants to be issued on the Closing
Date or if the conditions to such Lender's obligation specified in Section 2
have not been fulfilled or waived by such Lender, such Lender may thereupon
elect to be relieved of all further obligations under this Agreement. Nothing in
this Section shall operate to relieve the Company from its obligations hereunder
or to waive any Lender's rights against the Company.
Section 1.4. Covenant to Increase Authorized Shares. The Company
agrees to use its best efforts to cause the requisite number of shareholders
required to approve and ratify under applicable state law an increase in the
number of authorized shares of capital stock of the Company by February 28,
2001, sufficient at all times to permit the Lenders to exercise the Warrants in
accordance with their terms.
SECTION 2. CLOSING CONDITIONS.
The obligations of each Lender to accept the Warrants will be subject
to the performance by the Company of its agreements hereunder which by the terms
hereof are to be performed at or prior to the time of delivery of the Warrants,
and to the following further conditions precedent:
Section 2.1. Closing Certificate. Such Lender shall receive a
certificate dated the Closing Date, signed by the chief financial officer, the
president or a vice president of the Company, the truth and accuracy of which
shall be a condition to such Lender's obligation to accept the Warrants proposed
to be issued to such Lender, to the effect that (i) the representations and
warranties of the Company set forth in Exhibit B hereto are true and correct on
and with respect to the Closing Date, (ii) the Company has performed all of its
obligations hereunder which are to be performed on or prior to the Closing Date,
and (iii) no Default or Event of Default has occurred and is continuing.
Section 2.2. Legal Opinions. Such Lender shall receive from
Shumaker, Loop & Kendrick, LLP, counsel for the Company, its opinion dated the
Closing Date, in form and substance satisfactory to such Lender, and covering
the matters set forth in Exhibit C hereto.
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Section 2.3. Convertible Note Agreement. The Convertible Note
Agreement shall be in full force and effect and all of the conditions precedent
contained in Section 2 thereof shall have been fulfilled to the satisfaction of
the Lenders.
Section 2.4. Registration Rights Agreement. The Registration
Rights Agreement shall have been duly executed by the parties thereto and
delivered substantially in the form attached to the Convertible Note Agreement
as Exhibit E.
Section 2.5. Credit Agreement. The Credit Agreement shall be in
full force and effect and all of the conditions precedent contained in Section 7
thereof shall have been fulfilled to the satisfaction of the Lenders.
Section 2.6. Concurrent Issuance of Warrants. On the Closing Date,
the Company shall have consummated the issuance of the entire amount of the
Warrants scheduled to be issued on the Closing Date pursuant to this Agreement.
Section 2.7. Consent of Holders of Other Securities and
Shareholders. On or prior to the Closing Date, except as disclosed in Schedule
2.7, any consent or approvals required to be obtained from any holder or holders
of any outstanding securities of the Company or any shareholder of the Company
which shall be necessary to permit the consummation of the transactions
contemplated hereby shall have been obtained and all such consents or amendments
shall be satisfactory in form and substance to such Lender and such Lender's
special counsel.
Section 2.8. Satisfactory Proceedings. All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to such Lender, and such Lender shall have received a copy
(executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
Section 2.9. Waiver of Conditions. If on the Closing Date the
Company fails to tender to any Lender the Warrants to be issued to such Lender
on such date or if the conditions specified in this SS.2 have not been
fulfilled, such Lender may thereupon elect to be relieved of all further
obligations under this Agreement. Without limiting the foregoing, if the
conditions specified in this SS.2 have not been fulfilled, such Lender may waive
compliance by the Company with any such condition to such extent as such Lender
may in its sole discretion determine.
SECTION 3. REPRESENTATIONS.
Section 3.1. Representations of the Company. The Company
represents and warrants that all representations and warranties set forth in
Exhibit B are true and correct as of the date hereof and are incorporated herein
by reference with the same force and effect as though herein set forth in full.
Section 3.2. Representations of the Lenders. Each Lender,
severally but not jointly and severally, represents and warrants that:
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(a) it is accepting such Warrants for the purpose of investment
for its own account and not with a view to or for sale in connection with any
distribution thereof (except as may be required by applicable law); it being
understood, however, that the disposition of each Lender's property shall at all
times be and remain within its control;
(b) it understands that the Securities have not been registered
under the Securities Act, and may be resold only if registered pursuant to the
provisions of the Securities Act and any applicable state "blue sky" laws or if
an exemption from such registration is available, except under circumstances
where neither such registration nor such an exemption is required by law; and
(c) it is an "accredited investor" within the meaning of
Securities and Exchange Commission Rule 501 of Regulation D, as in effect on the
Closing Date.
SECTION 4. DEFINITIONS.
Section 4.1. Definitions. In addition to the terms defined in
other Sections of this Agreement, the following terms will mean:
"Agent" means Bank of Montreal, and any successor pursuant to Section
10.7 of the Convertible Note Agreement.
"Company" is defined in the introductory paragraph of this Agreement.
"Closing Date" is defined in SS.1.2.
"Common Stock" shall mean any class of capital stock of the Company now
or hereafter authorized, the right of which to share in distributions either of
earnings or assets of the Company is without limit as to any amount or
percentage; provided, however, that the shares of Common Stock deliverable upon
exercise of the Warrants shall include only the common stock, $0.001 per share
par value, of the Company authorized at the date hereof (or to be authorized as
contemplated in Section 1.4 of this Agreement) and any class of Common Stock
issued in substitution therefor.
"Credit Agreement" is defined in the preliminary paragraphs hereto.
"Disclosure Letter" means the written disclosure letter delivered to
the Agent and the Lenders by the Company on the date hereof referencing on its
face it is the disclosure letter being furnished pursuant to this Agreement.
"Lender" is defined in the introductory paragraph of this Agreement.
"Notes" means the $6,385,000 7% Convertible Senior Secured Notes due
October 31, 2003 issued pursuant to the Convertible Note Agreement.
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"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or agency or political
subdivision thereof.
"Plan of Restructuring" means the Company's plan of restructuring
described in the Disclosure Letter, including its plan to settle claims of its
creditors at an agreed-upon discount or by issuing equity interests in the
Company.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of the date of this Agreement, among the Company and the
Lenders.
"Security" has the same meaning as in Section 2(1) of the Securities
Act of 1933, as amended.
"Subsidiary" means, as to any particular parent corporation or
organization, any other corporation or organization more than 50% of the
outstanding Voting Stock of which is at the time directly or indirectly owned by
such parent corporation or organization or by any one or more other entities
which are themselves subsidiaries of such parent corporation or organization.
Unless otherwise identified herein, the term "Subsidiary" means a Subsidiary of
the Company or of any of its direct or indirect Subsidiaries.
"Voting Stock" of any Person means capital stock or other equity
interests of any class or classes (however designated) having ordinary power for
the election of directors or other similar governing body of such Person, other
than stock or other equity interests having such power only by reason of the
happening of a contingency.
SECTION 5. MISCELLANEOUS.
Section 5.1. Notice from Agent. Upon receipt of notice from any
holder of a Warrant that such holder intends to exercise its right to purchase
shares of Common Stock of the Company by exercising its Warrant, the Agent shall
promptly notify each other holder of Warrants in writing of such holder's
impending intent to exercise its Warrant.
Section 5.2. Counterparts. This Agreement may be executed in any
number of counterparts, and by the different parties hereto on separate
counterpart signature pages, and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
Section 5.3. Successors and Assigns. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of each of the Lenders and the benefit of their respective successors
and assigns, including any subsequent holder of any Warrant. The Company may not
assign any of its rights or obligations under this Agreement or any Warrant
without the written consent of all of the Lenders. The holders of the Warrants
may not assign their Warrants without the written consent of the Agent, which
consent shall not be unreasonably withheld.
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Section 5.4. Headings. Section headings used in this Agreement are
for reference only and shall not affect the construction of this Agreement.
Section 5.5. Costs and Expenses. The Company agrees to pay all
reasonable costs and out-of-pocket expenses of the Lenders in connection with
the preparation, negotiation, and administration of this Agreement and the
Warrants, including, without limitation, the reasonable fees and disbursements
of counsel to the Agent, in connection with the preparation and execution of
this Agreement and the Warrants, and any amendment, waiver or consent related
thereto, whether or not the transactions contemplated herein are consummated.
The Company agrees to pay to the Agent and each Lender, and any other holder of
any Warrant outstanding hereunder, all expenses reasonably incurred or paid by
such Lender or any such holder, including reasonable attorneys' fees and court
costs, in connection with any default or event of default by the Company
hereunder or in connection with the enforcement of this Agreement or the
Warrants.
The Company further agrees to indemnify the Agent, each Lender, and
their respective directors, officers and employees, against all losses, claims,
damages, penalties, judgments, liabilities and expenses (including, without
limitation, all reasonable expenses of litigation or preparation therefor,
whether or not the indemnified Person is a party thereto or any settlement
arrangement arising from or relating to any such litigation) which any of them
may pay or incur arising out of or relating to this Agreement or the Warrants or
any of the transactions contemplated thereby. The Company, upon demand by the
Agent or a Lender at any time, shall reimburse the Agent or such Lender for any
legal or other expenses incurred in connection with investigating or defending
against any of the foregoing (including any settlement costs relating to the
foregoing) except if the same is directly due to the gross negligence or willful
misconduct of the party to be indemnified. The obligations of the Company under
this Section shall survive the termination of this Agreement.
The Company will also pay and save each Lender harmless against any and
all liability with respect to stamp and other taxes, if any, which may be
payable in connection with the execution and delivery of this Agreement or the
Warrants, whether or not any Warrants are then outstanding.
Section 5.6. Governing Law. This Agreement and the Warrants, and
the rights and duties of the parties hereto, shall be construed and determined
in accordance with the internal laws of the State of Illinois.
Section 5.7. Severability of Provisions. Any provision of this
Agreement or the Warrants which is unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such unenforceability
without invalidating the remaining provisions hereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 5.8. Submission to Jurisdiction; Waiver of Jury Trial. The
Company hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement and the Warrants or the
transactions contemplated hereby or thereby. The Company irrevocably waives, to
the fullest
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<PAGE> 11
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum. THE COMPANY, THE AGENT AND EACH LENDER HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO ANY CONVERTIBLE LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
Section 5.9. Loss, Theft, Etc. of Warrant. In case any Warrant
shall become mutilated or be destroyed, lost or stolen, the Company, upon the
written request of the holder thereof, shall execute and deliver a new Warrant
in exchange and substitution for the mutilated certificate, or in lieu of and in
substitution for the Warrant so destroyed, lost or stolen. The applicant for a
substituted Warrant shall furnish to the Company such security or indemnity as
may be required by the Company to save it harmless from all risks resulting from
the delivery of the substitute Warrant, and the applicant shall also furnish to
the Company evidence to its satisfaction of the mutilation, destruction, loss or
theft of the applicant's certificate and of the ownership thereof. If any
original Lender or its nominee or any other institutional holder is the owner of
any mutilated, destroyed, lost or stolen certificate representing a Warrant,
then the affidavit of its President, Vice President, Second Vice President,
Assistant Vice President, Treasurer, Assistant Treasurer, Cashier, Assistant
Cashier, Secretary or Assistant Secretary in form reasonably satisfactory to the
Company setting forth the fact of destruction, loss or theft and such Lender's,
nominee's or other institutional holder's ownership of the Warrant at the time
of such mutilation, destruction, loss or theft shall be accepted as satisfactory
evidence thereof and no indemnity shall be required as a condition to execution
and delivery of a new Warrant other than the written agreement of such original
Lender, nominee or other institutional holder, in form reasonably satisfactory
to the Company, to indemnify the Company from all risks resulting from the
authentication and delivery of the substitute certificate.
Section 5.10. Amendments. This Agreement may, from time to time,
and at any time, be amended or supplemented by an instrument or instruments in
writing executed by the parties hereto.
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The execution hereof by the Lenders shall constitute a contract among
the Company and the Lenders for the uses and purposes hereinabove set forth.
This Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together only one agreement and all
signatures need not appear on any one counterpart.
VISION TWENTY-ONE, INC.
By: /s/ Mark Gordon
---------------------------------------
Name: Mark Gordon
Title: CEO
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Accepted as of the first date written above.
BANK OF MONTREAL, in its individual capacity
as a Lender and as Agent
By: /s/ Jack J. Kane
--------------------------------------------
Name: Jack J. Kane
Title: Director
Address:
115 South LaSalle Street
Chicago, Illinois 60603
Attention: Jack Kane
Telecopy: (312) 750-6057
Telephone: (312) 750-5900
<PAGE> 14
BANK ONE TEXAS, N.A.
By: /s/ Ronnie Kaplan
--------------------------------------------
Name: Ronnie Kaplan
Title: Vice President
Address:
One First National Plaza
Mail Code: IL1-0631
Chicago, IL 60670
Attention: Ronnie Kaplan
Telecopy: (312) 732-1775
Telephone: (312) 732-2733
<PAGE> 15
PACIFICA PARTNERS I, L.P.
By: Imperial Credit Asset
Management, as its Investment
Manager
By: /s/ Dean K. Kawai
--------------------------------------------
Name: Dean K. Kawai
Title: Vice President
Address:
c/o Imperial Credit Asset Management
150 South Rodeo Drive, Suite 230
Beverly Hills, CA 90212
Attention: Dean Kawai
Telecopy: (310) 246-3715
Telephone: (310) 246-3604
<PAGE> 16
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc., as its
Investment Manager
By: /s/ Charles E. LeMieux
--------------------------------------------
Name: Charles E. LeMieux, CFA
Title: Vice President
Address:
Pilgrim Prime Rate Trust
c/o Pilgrim Investments, Inc.
7337 East Doubletree Ranch Road
Scottsdale, AZ 85258-2034
Attention: Chuck Lemieux
Telecopy: (480) 477-2076
Telephone: (480) 477-3000
<PAGE> 17
PILGRIM AMERICA HIGH INCOME INVESTMENTS LTD.
By: Pilgrim Investments, Inc., as its
Investment Manager
By: /s/ Charles E. LeMieux
--------------------------------------------
Name: Charles E. LeMieux, CFA
Title: Vice President
Address:
Pilgrim Prime Rate Trust
c/o Pilgrim Investments, Inc.
7337 East Doubletree Ranch Road
Scottsdale, AZ 85258-2034
Attention: Chuck Lemieux
Telecopy: (480) 477-2076
Telephone: (480) 477-3000
<PAGE> 18
MERRILL LYNCH BUSINESS FINANCIAL SERVICES, INC.
By: /s/ Gary L. Stewart
--------------------------------------------
Name: Gary L. Stewart
Title: Vice President
Address:
222 North LaSalle Street, 17th Floor
Chicago, IL 60601
Attention: Gary Stewart
Telecopy: (312) 499-3252
Telephone: (312) 269-4423
<PAGE> 19
<TABLE>
<CAPTION>
CLASS A WARRANTS
NUMBER OF SHARES OF COMMON CLASS B WARRANTS
NAME AND ADDRESSES STOCK EXERCISABLE INTO NUMBER OF SHARES OF COMMON STOCK
OF LENDERS EXERCISABLE INTO
<S> <C> <C>
Bank of Montreal 2,139,005 4,104,000
Bank One Texas, N.A. 499,867
Pilgrim Prime Rate Trust 243,778
Pilgrim America High Income 243,778
Investments Ltd.
Pacifica Partners I, L.P. 487,555
Merrill Lynch Business 490,017
Financial Services, Inc.
TOTAL 4,104,000 4,104,000
</TABLE>
SCHEDULE I
(to Warrant Agreement)
<PAGE> 20
CONSENTS
The consent of the Company's shareholders has not been obtained for the
Plan of Restructuring and the issuance of the Company's equity securities,
options and warrants to its creditors in connection therewith, including the
issuance by the Company of a portion of the shares of its Common Stock necessary
for issuance upon conversion of the Notes issued pursuant to the Convertible
Note Agreement.
SCHEDULE 2.7
(to Warrant Agreement)
<PAGE> 21
================================================================================
This Warrant and the Common Stock issuable upon exercise hereof have not been
registered or qualified for sale under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be sold or transferred in the absence of an
effective registration statement under the Securities Act or an exemption from
registration thereunder. This Warrant and the Common Stock are also subject to
additional restrictions on transfer and certain other agreements set forth in a
Registration Rights Agreement dated as of November 10, 2000, a copy of which may
be obtained by the holder hereof without charge at the Company's principal place
of business.
CLASS A WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
VISION TWENTY-ONE, INC.
Void after October 31, 2010
No. AWR-____ [HOLDER'S PRO RATA PORTION OF ________] SHARES
================================================================================
Exhibit A-1
(to Warrant Agreement)
<PAGE> 22
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C> <C>
SECTION 1. EXERCISE OF WARRANT; ADJUSTMENT OF PER SHARE WARRANT PRICE............................. 2
Section 1.1. Exercise of Warrant.................................................................... 2
SECTION 2. RESERVATION OF COMMON STOCK............................................................ 3
SECTION 3. PROTECTION AGAINST DILUTION............................................................ 3
SECTION 4. MERGERS, CONSOLIDATIONS, SALES......................................................... 8
SECTION 5. DISSOLUTION OR LIQUIDATION............................................................. 9
SECTION 6. NOTICE OF EXTRAORDINARY DIVIDENDS...................................................... 9
SECTION 7. FRACTIONAL SHARES...................................................................... 9
SECTION 8. FULLY PAID STOCK; TAXES................................................................ 10
SECTION 9. CLOSING OF TRANSFER BOOKS.............................................................. 10
SECTION 10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES; COMPLIANCE WITH LAWS........... 10
SECTION 11. PARTIAL EXERCISE; ASSIGNMENT........................................................... 10
SECTION 12. DEFINITIONS............................................................................ 11
SECTION 13. LOST, STOLEN WARRANTS, ETC............................................................. 13
SECTION 14. WARRANT HOLDER NOT SHAREHOLDER......................................................... 13
SECTION 15. EXERCISE OF REMEDIES................................................................... 13
SECTION 16. NOTICES................................................................................ 13
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 17. SEVERABILITY.......................................................................... 14
SECTION 18. GOVERNING LAW......................................................................... 14
SECTION 19. INDEX AND CAPTIONS.................................................................... 14
</TABLE>
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THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THIS WARRANT AND THE COMMON STOCK ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 10, 2000, A COPY OF WHICH MAY
BE OBTAINED BY THE HOLDER HEREOF WITHOUT CHARGE AT THE COMPANY'S PRINCIPAL PLACE
OF BUSINESS.
No. AWR-____ [HOLDER'S PRO RATA PORTION OF ________] SHARES
CLASS A WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
VISION TWENTY-ONE, INC.
Void after October 31, 2010
THIS IS TO CERTIFY that, for value received and subject to the
provisions hereinafter set forth,
BANK OF MONTREAL
or assigns,
is entitled to purchase from Vision Twenty-One, Inc., a Florida corporation (the
"Company"), at any time on or after December 31, 2002 and to and including 5
P.M. C.D.T. OCTOBER 31, 2010 (the "Expiration Date"), [Holder's pro rata portion
of ________] shares of Common Stock of the Company, par value of $0.001 per
share, on the terms and conditions hereinafter set forth at a price equal to
$0.18 per share.
The aggregate price of the Common Stock shall be equal to the price per
share multiplied by the number of shares initially purchasable hereunder. The
aggregate price is herein sometimes referred to as the "Aggregate Warrant Price"
and is not subject to adjustment. The price per share is, however, subject to
adjustment as hereinafter provided (such price, or such price as last adjusted,
as the case may be, being herein referred to as the "per share Warrant Price").
The number of shares purchasable hereunder is likewise subject to adjustment as
<PAGE> 25
hereinafter provided. In addition, the number of shares purchasable hereunder is
limited under certain circumstances as provided under Section 1.1 hereof.
The terms which are capitalized herein shall have the meanings
specified in Section 12 unless the context shall otherwise require.
SECTION 1. EXERCISE OF WARRANT; ADJUSTMENT OF PER SHARE WARRANT PRICE.
Section 1.1. Exercise of Warrant. At any time and from time to
time on or after December 31, 2002 and on or prior to the Expiration Date,
subject to the conditions hereinafter set forth, this Warrant may be exercised
for all shares of Common Stock which may then be purchased hereunder, or for any
part of the shares of Common Stock which may then be purchased hereunder. If all
of the Obligations of the Company outstanding under the Loan Documents are paid
in full (in cash) on or prior to the Expiration Date, the amount of shares of
Common Stock that may by purchased by the holder hereof upon exercise of this
Warrant shall be limited to the percentage of the number of shares into which
this Warrant is initially exercisable (or, if previously exercised in part, such
number of shares into which this Warrant is then exercisable) set forth opposite
the respective date below on which all of such Obligations shall have been paid
in full (in cash):
ALL OBLIGATIONS PAID IN FULL PERCENTAGE OF THIS WARRANT THAT MAY BE
EXERCISED
Prior to December 31, 2002 0%
On or after December 31, 2002 12.5%
and prior to March 31, 2003
On or after March 31, 2003 50%
and prior to June 30, 2003
On or after June 30, 2003 75%
and prior to October 31, 2003
On or after October 31, 2003 100%
If the holder of this Warrant exercises its right to purchase shares of
Common Stock of the Company prior to the date in which all of the Obligations of
the Company under the Loan Documents shall have been paid in full, the number of
shares into which this Warrant is exercisable shall be limited to the percentage
set forth opposite the respective date above on which the holder hereof
exercises such right. Following any such exercise, the holder shall be entitled
to receive a new Warrant covering the remaining number of shares into which this
Warrant is exercisable in accordance with the provisions of the following
paragraph.
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<PAGE> 26
Upon any exercise of this Warrant, the holder shall surrender this
Warrant (with the subscription form at the end hereof duly executed) at the
principal office of the Company in Baltimore, Maryland. Payment for the shares
purchased by the holder pursuant to this Section 1.1 shall be made in funds
immediately available at the Company's office in Baltimore, Maryland. If this
Warrant is exercised in respect of less than all of the number of shares into
which this Warrant is initially exercisable (or, if previously exercised in
part, such number of shares into which this Warrant is then exercisable), the
holder hereof shall be entitled to receive a new Warrant covering the remaining
number of shares of Common Stock in respect of which this Warrant shall not have
been exercised; provided, however, that this Warrant and all rights and options
hereunder shall expire on the Expiration Date, and shall be wholly null and void
to the extent this Warrant is not exercised before it expires.
At least ten days prior to exercising this Warrant, the holder agrees
that it shall deliver written notice to the Agent of its impending intent to
exercise its Warrant, which notice shall specify the number of shares of Common
Stock to be received by such holder upon such exercise.
SECTION 2. RESERVATION OF COMMON STOCK.
The Company covenants and agrees that at all times from and after
February 28, 2001 and on or prior to the Expiration Date it will have
authorized, and in reserve solely for the purpose of delivery upon the exercise
of the rights represented by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by the
unexercised portion of this Warrant and such shares issuable upon the exercise
of this Warrant shall at no time have an aggregate par value which is in excess
of the Aggregate Warrant Price.
SECTION 3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares deliverable
hereunder shall be adjusted from time to time as hereinafter set forth:
A. Stock Dividends, Subdivisions and Combinations. If,
after the date hereof, the Company shall:
(1) pay a dividend or make a distribution in
shares of Common Stock to holders of its capital stock of any
class, or
(2) subdivide the outstanding shares of its
Common Stock into a larger number of shares, or
(3) combine the outstanding shares of its Common
Stock into a smaller number of shares, or
(4) issue by reclassification of its shares of
Common Stock any shares of Common Stock of the Company,
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<PAGE> 27
then the per share Warrant Price shall be adjusted to that price
determined by multiplying the per share Warrant Price in effect
immediately prior to such event by a fraction (i) the numerator of
which shall be the total number of outstanding shares of Common Stock
of the Company immediately prior to such event, and (ii) the
denominator of which shall be the total number of outstanding shares of
Common Stock of the Company immediately after such event. An adjustment
made pursuant to this paragraph A shall become effective immediately
after the 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.
B. Issuance of Additional Shares of Common Stock. If,
after the date hereof, the Company shall (except as hereinafter
provided) issue any Additional Shares of Common Stock for a
consideration (i) less than the per share Warrant Price then in effect,
or (ii) less than the Current Market Price of such shares then in
effect, then the per share Warrant Price upon each such issuance shall
be adjusted to that price determined by multiplying the per share
Warrant Price in effect immediately prior to such event by a fraction:
(1) if issued for a consideration per share less than the
Warrant Price per share of Common Stock then in effect:
(a) the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of shares of Common Stock which the aggregate
consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at the then effective
per share Warrant Price, and
(b) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of such Additional Shares of Common Stock so issued.
(2) if issued for a consideration per share less than the
Current Market Price per share of Common Stock:
(a) the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of full shares of Common Stock which the aggregate
consideration for the total number of such Additional Shares
of Common Stock so issued would purchase at the Current Market
Price per share, and
(b) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus the
number of such Additional Shares of Common Stock so issued.
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<PAGE> 28
If such Additional Shares of Common Stock shall be issued at a
price per share less than both the effective Warrant Price and the
Current Market Price per share of Common Stock, the Warrant Price
shall be adjusted in the manner which will result in the greatest
reduction of the Warrant Price. The provisions of this paragraph shall
not apply to any Additional Shares of Common Stock which are
distributed to holders of Common Stock as a stock dividend or
subdivision, for which an adjustment is provided for under paragraph A
above. No adjustment of the per share Warrant Price shall be made
under this paragraph upon the issuance of any Additional Shares of
Common Stock which are issued pursuant to the exercise of any warrants
or other subscription or purchase rights or pursuant to the exercise
of any conversion or exchange rights in any Convertible Securities, to
the extent such adjustment shall previously have been made (or
determined not to be required) upon the date of issuance of such
warrants or other rights or upon the date of issuance of such
Convertible Securities (or upon the date of issuance of any warrants
or other rights therefor) pursuant to paragraphs C or D of this SS.3.
C. Issuance of Warrants, Stock Options or Other Rights.
In case the Company shall issue any warrants, stock options or other
rights to subscribe for or purchase any Additional Shares of Common
Stock or to subscribe for or purchase any Convertible Securities and
the consideration per share for which Additional Shares of Common Stock
may at any time thereafter be issuable pursuant to such warrants, stock
options or other rights or pursuant to the terms of such Convertible
Securities shall be less than either (i) the Warrant Price in effect on
the date of grant of such warrants, stock options or other rights, or
(ii) the Current Market Price of such shares on the date of grant of
such warrants, stock options or other rights, then the Warrant Price
shall be adjusted as provided in paragraph B of this SS.3 on the basis
that (i) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such warrants, stock options or other rights
or necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and (ii) the
aggregate consideration for such maximum number of Additional Shares of
Common Stock shall be deemed to be the minimum consideration received
and receivable by the Company for the issuance of such Additional
Shares of Common Stock pursuant to such warrants, stock options or
other rights or pursuant to the terms of such Convertible Securities.
D. Issuance of Convertible Securities. In case the
Company shall issue any Convertible Securities and the consideration
per share for which Additional Shares of Common Stock may at any time
thereafter be issuable pursuant to the terms of such Convertible
Securities shall be less than either (i) the Warrant Price in effect on
the date of issuance of such Convertible Securities, or (ii) the
Current Market Price of such shares on the date of issuance of such
Convertible Securities, then the Warrant Price shall be adjusted as
provided in paragraph B above on the basis that (i) the maximum number
of Additional Shares of Common Stock necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have
been issued and (ii) the aggregate consideration for such maximum
number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company for the
issuance of such Additional Shares of Common Stock pursuant to the
terms of such
-5-
<PAGE> 29
Convertible Securities. No adjustment of the Warrant Price shall be
made under this paragraph upon the issuance of any Convertible
Securities which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, to the extent such
adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to paragraph C above.
E. Other Provisions Applicable to Adjustments Under this
Section. The following provisions shall be applicable to the making of
adjustments in the per share Warrant Price hereinbefore provided in
this SS.3.
(1) Computation of Consideration. To the extent
that any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for a cash
consideration, the consideration received by the Company shall
be deemed to be the amount of the cash received by the Company
therefor, or, if such Additional Shares of Common Stock or
Convertible Securities or warrants or other rights are offered
by the Company for subscription, the subscription price, or,
if such Additional Shares of Common Stock or Convertible
Securities or warrants or other rights are sold to
underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of
any compensation, discounts or expenses paid or incurred by
the Company for and in the underwriting of, or otherwise in
connection with the issue thereof.
To the extent that such issuance shall be for a
consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration
shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the
Company.
The consideration for any Additional Shares of Common
Stock issuable pursuant to any warrants or other rights to
subscribe for or purchase the same shall be the consideration
received by the Company for issuing such warrants or other
rights, plus the additional consideration payable to the
Company upon the exercise of such warrants or other rights.
The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Company for issuing
any warrants or other rights to subscribe for or purchase such
Convertible Securities plus the consideration paid or payable
to the Company in respect of the subscription for or purchase
of such Convertible Securities, plus the additional
consideration, if any, payable to the Company upon the
exercise of the right of conversion or exchange in such
Convertible Securities.
In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividend upon any class of equity
securities other than Common Stock the Company shall be
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<PAGE> 30
deemed to have received for such Additional Shares of Common
Stock or Convertible Securities consideration equal to the
amount of such dividend so paid or satisfied.
(2) Readjustment of Warrant Price. Subject to
the provisions of the second sentence of this paragraph E(2),
upon the expiration of the right to convert or exchange any
Convertible Securities, or upon the expiration of any rights,
options or warrants, or upon any increase in the minimum
consideration receivable by the Company for the issuance of
Additional Shares of Common Stock pursuant to such Convertible
Securities, rights, options or warrants, if any such
Convertible Securities shall not have been converted or
exchanged, or if any such rights, options or warrants shall
not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding by reason of the fact that
they were issuable upon conversion or exchange of any such
Convertible Securities or upon exercise of any such rights,
options or warrants shall no longer be computed as set forth
above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but
reflecting any other adjustments in the Warrant Price made
pursuant to the provisions of this SS.3 after thE issuance of
such Convertible Securities, rights, options or warrants) had
the adjustment of the Warrant Price made upon the issuance or
sale of such Convertible Securities or the issuance of such
rights, options or warrants been made on the basis of the
issuance only of the number of Additional Shares of Common
Stock actually issued upon conversion or exchange of such
Convertible Securities or upon the exercise of such rights,
options or warrants, or upon the basis of such increased
minimum consideration, as the case may be, and thereupon only
the number of Additional Shares of Common Stock actually so
issued or the number thereof issuable upon the basis of such
increased minimum consideration shall be deemed to have been
issued and only the consideration actually received or such
increased minimum consideration receivable by the Company
(computed as provided in subparagraph E(1) of this SS.3) shall
be deemed to have beeN received by the Company. No such
readjustment of the Warrant Price shall be made unless the
Warrant Price was adjusted under the provisions of paragraph C
above at the time such rights, options or warrants were
issued.
F. Extraordinary Dividends. In case the Company shall
declare a dividend upon its Common Stock (except a dividend payable in
shares of Common Stock referred to in Subparagraph A(1) of this SS.3 oR
a dividend payable in warrants, rights or Convertible Securities
referred to in paragraph C or D of this SS.3) payable otherwise than
out of retained earnings, the Warrant Price in effect immediately prior
to thE declaration of such dividend shall be reduced by an amount
equal, in the case of a dividend in cash, to the amount thereof payable
per share of Common Stock to the extent otherwise than out of retained
earnings or, in the case of any other dividend, to the fair value
thereof per share of Common Stock as determined in good faith by the
Board of Directors of the Company, provided that in no event shall the
Warrant Price be reduced to less than one cent ($.01) per share. For
the purposes of the foregoing, a dividend payable other than in
-7-
<PAGE> 31
cash or capital stock of the Company shall be considered payable out of
retained earnings only to the extent that such retained earnings are
charged an amount equal to the fair value of such dividend as
determined by the Board of Directors of the Company. Such reduction
shall take effect as of the date on which a record is taken for the
purpose of such dividend or if a record is not taken, the date as of
which the holders of the Common Stock of record entitled to such
dividend are to be determined. Appropriate readjustment of the Warrant
Price shall be made in the event that any dividend referred to in this
paragraph F shall be lawfully abandoned.
G. Adjustment of Number of Shares Purchasable. Upon each
adjustment of the per share Warrant Price, the number of shares of
Common Stock purchasable hereunder shall be adjusted by dividing the
Aggregate Warrant Price by the per share Warrant Price in effect
immediately following such adjustment.
H. Minimum Adjustment. Except as hereinafter provided,
no adjustment of the Warrant Price hereunder shall be made if such
adjustment results in a change of the Warrant Price then in effect of
less than one cent ($.01) per share. Any adjustment of less than one
cent ($.01) per share of any Warrant Price shall be carried forward and
shall be made at the time of and together with any subsequent
adjustment which, together with adjustment or adjustments so carried
forward, amounts to one cent ($.01) per share or more. However, upon
conversion of this Warrant, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Warrant
Price up to and including the date upon which this Warrant is
converted.
I. Notice of Adjustments. Whenever the Warrant Price
shall be adjusted pursuant to this ss.3, the Company shall promptly
deliver a certificate signed by the President or a Vice President and
bY the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company, setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors
of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
SECTION 4. MERGERS, CONSOLIDATIONS, SALES.
In the case of any consolidation or merger of the Company with another
entity, or the sale of all or substantially all of its assets to another entity,
or any reorganization or reclassification of the Common Stock or other equity
securities of the Company, then, as a condition of such consolidation, merger,
sale, reorganization or reclassification, lawful and adequate provision shall be
made whereby the holder of this Warrant shall thereafter have the right to
receive upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore purchasable hereunder
such shares of stock, securities or assets as may (by virtue of such
consolidation, merger, sale, reorganization or reclassification) be issued or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore so purchasable hereunder had such consolidation, merger, sale,
reorganization or reclassification not taken
-8-
<PAGE> 32
place. The fair market value of such securities shall be determined by a
nationally recognized investment banking firm reasonably satisfactory to the
holder. The cost of any such determination shall be borne by the Company. The
Company shall not effect any such consolidation, merger or sale, unless prior to
or simultaneously with the consummation thereof, the successor entity (if other
than the Company) resulting from such consolidation or merger or the entity
purchasing such assets shall assume by written instrument executed and mailed or
delivered to the holder of this Warrant, the obligation to deliver to such
holder such shares of stock, securities, cash or other assets as, in accordance
with the foregoing provisions, such holder may be entitled to receive.
SECTION 5. DISSOLUTION OR LIQUIDATION.
In the event of any proposed distribution of the assets of the Company
in dissolution or liquidation except under circumstances when the foregoing
Section 4 shall be applicable, the Company shall mail notice thereof to the
holder of this Warrant and shall make no distribution to shareholders until the
expiration of 30 days from the date of mailing of the aforesaid notice and, in
any such case, the holder of this Warrant may exercise the purchase rights with
respect to this Warrant within 30 days from the date of mailing such notice and
all rights herein granted not so exercised within such 30-day period shall
thereafter become null and void.
SECTION 6. NOTICE OF EXTRAORDINARY DIVIDENDS.
If the Board of Directors of the Company shall declare any dividend or
other distribution on its Common Stock except out of earned surplus or by way of
a stock dividend payable on its Common Stock, the Company shall mail notice
thereof to the holder of this Warrant not less than 30 days prior to the record
date fixed for determining shareholders entitled to participate in such dividend
or other distribution and the holder of this Warrant shall not participate in
such dividend or other distribution or be entitled to any rights on account or
as a result thereof unless and to the extent that this Warrant is exercised
prior to such record date. The provisions of this paragraph shall not apply to
distributions made in connection with transactions covered by Section 4.
SECTION 7. FRACTIONAL SHARES.
In the event that any exercise of this Warrant would result in the
issuance by the Company of a fractional share of Common Stock, the Company shall
pay to the holder of this Warrant upon such exercise an amount in cash equal to
the market price, as determined by the Company, of one whole share of the Common
Stock multiplied by such fractional share.
SECTION 8. FULLY PAID STOCK; TAXES.
The Company covenants and agrees that the shares of Common Stock to be
delivered on the exercise of the purchase rights herein provided for shall, at
the time of such delivery, be validly issued and be fully paid and
nonassessable. The Company further covenants and agrees that it will pay when
due and payable any and all Federal and State transfer, stamp, excise or
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<PAGE> 33
similar taxes which may be payable in respect of this Warrant or any Common
Stock upon the exercise of the purchase rights herein provided for pursuant to
the provisions hereof as well as all other expenses payable in connection with
the preparation, execution and delivery of any stock certificates upon exercise
of this Warrant, regardless of the name or names in which such stock
certificates shall be registered.
SECTION 9. CLOSING OF TRANSFER BOOKS.
The right to exercise this Warrant shall not be suspended during any
period that the stock transfer books of the Company for its Common Stock may be
closed. The Company shall not be required, however, to deliver certificates of
its Common Stock upon such exercise while such books are duly closed for any
purpose, but the Company may postpone the delivery of the certificates for such
Common Stock until the opening of such books, and they shall, in such case, be
delivered promptly upon the opening thereof, or as soon as practicable
thereafter.
SECTION 10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
This Warrant and the Common Stock issued upon the exercise hereof shall
not be transferable except upon the conditions specified in the Registration
Rights Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act and any applicable State securities laws in
respect of the transfer of this Warrant or any such Common Stock.
SECTION 11. PARTIAL EXERCISE; ASSIGNMENT.
If this Warrant is exercised in part only, the holder hereof shall be
entitled to receive a new Warrant covering the Applicable Percentage of Common
Stock in respect of which this Warrant shall not have been exercised as provided
in Section 1.1. If this Warrant is exercised in part, this Warrant shall be
surrendered at the principal office of the Company in Baltimore, Maryland (with
the partial assignment form at the end hereof duly executed), and thereupon a
new Warrant shall be issued to the holder hereof covering the Applicable
Percentage of Common Stock to which such holder shall be entitled.
This Warrant may be transferred or assigned in whole or in part, but
only with the prior written consent of the Agent, which consent shall not be
unreasonably withheld.
SECTION 12. DEFINITIONS.
In addition to the terms defined elsewhere in this Warrant, the
following terms have the following respective meanings:
The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Borrower on or after the date hereof except:
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<PAGE> 34
(i) shares of Common Stock to be issued upon conversion of the
Notes;
(ii) shares of Common Stock to be issued upon the exercise of the
Warrants;
(iii) up to 2,250,000 shares of Common Stock to be issued upon the
exercise of options granted after the Closing Date pursuant to an incentive
stock option plan;
(iv) up to 6,500,000 shares of Common Stock to be issued in
connection with strategic opportunities which the board of directors of the
Company believes to be in the best interest of the Company and its shareholders;
and
(v) up to 11,194,000 shares of Common Stock (as such number shall
be appropriated adjusted by the board of directors of the Company for stock
splits, dividends, combinations and other similar events) to be issued on or
before February 28, 2001 or to be issued upon exercise of options granted before
February 28, 2001 in connection with, and as an express part of, the
consummation of the Plan of Restructuring.
The term "Agent" shall mean Bank of Montreal or any successor agent
under the Credit Agreement.
The term "Aggregate Warrant Price" shall mean, as of the date of any
determination, the amount computed as provided in the first paragraph of this
Warrant.
The term "Common Stock" as used herein shall include any class of
capital stock of the Company now or hereafter authorized, the right of which to
share in distributions either of earnings or assets of the Company is without
limit as to any amount or percentage; provided, however, that the shares of
Common Stock deliverable upon the exercise of the rights granted under this
Warrant shall include only Common Stock of the Company, par value of $0.001 per
share, authorized at the date hereof (or to be authorized as contemplated in
Section 1.4 of the Warrant Agreement) and any class of Common Stock issued in
substitution therefor.
The term "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for additional shares of Common Stock, either immediately or upon the arrival of
a specified date or the happening of a specified event.
The term "Convertible Note Agreement" shall mean the Convertible Note
Agreement dated as of November 10, 2000, between the Company and certain
institutional investors named therein, as the same may be amended, modified or
restated from time to time.
The term "Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of November 10 , 2000, among the Company and the financial
institutions party thereto, as the same may be amended, modified or restated
from time to time, and
The term "Current Market Price" means with respect to shares of Common
Stock shall be, as of the date of any determination thereof, deemed to be the
average of the daily Market
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<PAGE> 35
Prices per share for the five consecutive trading days immediately preceding the
date of determination. The Market Price for each day of such five trading day
period shall be (i) if the Common Stock shall at the time be listed or admitted
to unlisted trading privileges on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), on the basis of the last reported sale
price regular way of the Common Stock on the composite tape on each such trading
day upon which such a sale shall have been effected (or if no sale takes place
on any such day on such exchange, the average of the closing bid and asked
prices on such day as officially quoted on such exchange), or (ii) if the Common
Stock shall at the time be listed or admitted to unlisted trading privileges on
the New York Stock Exchange, on the basis of the last reported sale price
regular way of the Common Stock on the composite tape (or if no sale takes place
on any such day on such exchange, the average of the closing bid and asked
prices on such day as officially quoted on such exchange), or (iii) if the
Common Stock at the time be not listed on either the NASDAQ or the New York
Stock Exchange, the average of the highest reported bid and lowest reported
asked prices of the Common Stock in the over-the-counter market on each such
Business Day, as reported by NASDAQ or similar organization if NASDAQ is no
longer reporting such information. In the event the Market Price of the Common
Stock cannot be determined in accordance with the immediately preceding
sentence, the fair market price shall be determined in good faith by the Board
of Directors (which determination shall be reasonably satisfactory to the
Holders holding more than 66-2/3% in the aggregate of the shares of Common Stock
issuable upon exercise of all Warrants).
The term "Loan Documents" shall mean the Credit Agreement, the
Convertible Note Agreement and the Warrant Agreement, and all other security
agreements, registration rights agreements or other instruments executed and
delivered in connection therewith.
The term "Obligations" shall mean all notes, letters of credit,
indemnities and all other obligations of the Company outstanding under the Loan
Documents.
The term "Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of November 10, 2000, among the Company and the
institutional investors named therein.
The term "Related Warrant" shall mean the other Class A Warrants
similar to this Warrant which were initially issued pursuant to the terms and
provisions of the Warrant Agreement.
The term "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar statute, and the rules and regulations of the Securities
Exchange Commission thereunder, all as the same shall be in effect at the time.
The term "Warrant Agreement" shall mean the Warrant Agreement dated as
of November 10, 2000, between the Company and certain institutional investors
named therein, as the same may be amended, modified or restated from time to
time.
-12-
<PAGE> 36
The term "Warrants" as used herein shall mean this Warrant and the
Related Warrants and all warrants hereafter issued in exchange or substitution
for this Warrant or any Related Warrants.
SECTION 13. LOST, STOLEN WARRANTS, ETC.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company may issue a new Warrant of like date, tenor and denomination and deliver
the same in exchange and substitution for and upon surrender and cancellation of
the mutilated Warrant, or in lieu of the Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Company of the loss, theft or
destruction of such Warrant, and upon receipt of indemnity satisfactory to the
Company. If an institutional holder is the owner of any such lost, stolen or
destroyed Warrant, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its ownership of
such Warrant at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant other than the written
agreement of such owner to indemnify the Company.
SECTION 14. WARRANT HOLDER NOT SHAREHOLDER.
This Warrant does not confer upon the holder hereof any right to vote
or to consent or to receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof as hereinbefore provided.
SECTION 15. EXERCISE OF REMEDIES.
In the event that the Company shall fail to observe any provision
contained in this Warrant, the Holder hereof and/or any Holder of Common Stock
issued hereunder, as the case may be, may enforce its rights hereunder by suit
in equity, by action at law, or by any other appropriate proceedings in aid of
the exercise of any power granted in this Warrant and, without limiting the
foregoing, said Holder shall be entitled to the entry of a decree for specific
performance and to such other and further relief as such court may decree.
SECTION 16. NOTICES.
All communications provided for hereunder shall be in writing and, if
to the holder of this Warrant, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to the holder hereof at such address as such holder may designate
to the Company in writing, and if to the Company, delivered or mailed by
registered or certified mail or overnight courier, or by facsimile
communication, to the Company at 120 West Fayette Street, Suite 700, Baltimore,
Maryland 21201, Attention: Chief Financial Officer, or to such other address as
the Company may designate to the holder hereof in writing; provided, however,
that a notice to the holder by overnight air courier shall only be effective if
delivered to such holder at a street address designated for such purpose in
accordance with this
-13-
<PAGE> 37
Section, and a notice to such holder by facsimile communication shall only be
effective if made by confirmed transmission to such holder at a telephone number
designated for such purpose in accordance with this Section and promptly
followed by delivery of such notice by registered or certified mail or overnight
air courier, as set forth above. The person in whose name any Warrant shall be
registered shall be deemed and treated as the owner and holder thereof for all
purposes of this Warrant.
SECTION 17. SEVERABILITY.
Should any part of this Warrant for any reason be declared invalid,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in force and effect as if this Warrant had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties hereto that they would have executed and accepted
the remaining portion of this Warrant without including therein any such part,
parts or portion which may, for any reason, be hereafter declared invalid.
SECTION 18. GOVERNING LAW.
This Warrant shall be governed by and construed in accordance with
Illinois law.
SECTION 19. INDEX AND CAPTIONS.
The index and the descriptive headings of the various sections of this
Warrant are for convenience only and shall not affect the meaning or
construction of the provisions hereof.
-14-
<PAGE> 38
IN WITNESS WHEREOF, Vision Twenty-One, Inc., has caused this Warrant to
be signed by its President or one of its Vice Presidents and its Secretary or
one of its Assistant Secretaries and this Warrant to be dated November 10, 2000.
VISION TWENTY-ONE, INC.
By
--------------------------------
President
By
---------------------------
Secretary
-15-
<PAGE> 39
SUBSCRIPTION
VISION TWENTY-ONE, INC.
The undersigned, ____________________, pursuant to the provisions of
the within Warrant, hereby elects to purchase ________ shares of Common Stock of
Vision Twenty-One, Inc., a Florida corporation, covered by the within Warrant.
Signature
-----------------------------------
Address
------------------------------------
Dated:
---------------------
-16-
<PAGE> 40
ASSIGNMENT
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto ____________________ the within Warrant and all rights evidenced
thereby and does irrevocably constitute and appoint ____________________,
attorney, to transfer the said Warrant on the books of the within-named Company.
-----------------------------------
Dated:
---------------------
PARTIAL ASSIGNMENT IN CONNECTION WITH PARTIAL EXERCISE
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto ____________________ that portion of the within Warrant and the
rights evidenced thereby which will on the date hereof entitle the holder to
purchase ________ shares of Common Stock of Vision Twenty-One, Inc., a Florida
corporation, and does hereby irrevocably constitute and appoint
____________________, attorney, to transfer that part of the said Warrant on the
books of the within-named Company.
-----------------------------------
Dated:
---------------------
<PAGE> 41
================================================================================
This Warrant and the Common Stock issuable upon exercise hereof have not been
registered or qualified for sale under the Securities Act of 1933, as amended
(the "Securities Act"), and may not be sold or transferred in the absence of an
effective registration statement under the Securities Act or an exemption from
registration thereunder. This Warrant and the Common Stock are also subject to
additional restrictions on transfer and certain other agreements set forth in a
Registration Rights Agreement dated as of November 10, 2000, a copy of which may
be obtained by the holder hereof without charge at the Company's principal place
of business.
CLASS B WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
VISION TWENTY-ONE, INC.
Void after October 31, 2010
No. BWR-____ [HOLDER'S PRO RATA PORTION OF _________] SHARES
================================================================================
Exhibit A-2
(to Warrant Agreement)
<PAGE> 42
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1 EXERCISE OF WARRANT; ADJUSTMENT OF PER SHARE WARRANT PRICE.................................. 2
Section 1.1 Exercise of Warrant......................................................................... 2
SECTION 2 RESERVATION OF COMMON STOCK................................................................. 2
SECTION 3 PROTECTION AGAINST DILUTION................................................................. 2
SECTION 4 MERGERS, CONSOLIDATIONS, SALES.............................................................. 8
SECTION 5 DISSOLUTION OR LIQUIDATION.................................................................. 8
SECTION 6 NOTICE OF EXTRAORDINARY DIVIDENDS........................................................... 8
SECTION 7 FRACTIONAL SHARES........................................................................... 9
SECTION 8 FULLY PAID STOCK; TAXES..................................................................... 9
SECTION 9 CLOSING OF TRANSFER BOOKS................................................................... 9
SECTION 10 RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES; COMPLIANCE WITH LAWS................ 9
SECTION 11 PARTIAL EXERCISE; ASSIGNMENT................................................................ 9
SECTION 12 DEFINITIONS................................................................................ 10
SECTION 13 LOST, STOLEN WARRANTS, ETC................................................................. 12
SECTION 14 WARRANT HOLDER NOT SHAREHOLDER............................................................. 12
</TABLE>
<PAGE> 43
<TABLE>
<S> <C> <C>
SECTION 15. EXERCISE OF REMEDIES....................................................................... 12
SECTION 16. NOTICES.................................................................................... 13
SECTION 17. SEVERABILITY............................................................................... 13
SECTION 18. GOVERNING LAW.............................................................................. 13
SECTION 19. INDEX AND CAPTIONS......................................................................... 13
</TABLE>
-ii-
<PAGE> 44
THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THIS WARRANT AND THE COMMON STOCK ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
REGISTRATION RIGHTS AGREEMENT DATED AS OF NOVEMBER 10, 2000, A COPY OF WHICH MAY
BE OBTAINED BY THE HOLDER HEREOF WITHOUT CHARGE AT THE COMPANY'S PRINCIPAL PLACE
OF BUSINESS.
No. BWR-_____ [HOLDER'S PRO RATA PORTION OF _______] SHARES
CLASS B WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
VISION TWENTY-ONE, INC.
Void after October 31, 2010
THIS IS TO CERTIFY that, for value received and subject to the
provisions hereinafter set forth,
BANK OF MONTREAL
or assigns,
is entitled to purchase from Vision Twenty-One, Inc., a Florida corporation (the
"Company"), at any time from and after the date of this Warrant to and including
5 P.M. C.D.T. OCTOBER 31, 2010 (the "Expiration Date"), [Holder's pro rata
portion of ________] shares of Common Stock of the Company, par value of $0.001
per share, on the terms and conditions hereinafter set forth at a price equal to
$0.18 per share.
The aggregate price of the Common Stock shall be equal to the price per
share multiplied by the number of shares initially purchasable hereunder. The
aggregate price is herein sometimes referred to as the "Aggregate Warrant Price"
and is not subject to adjustment. The price per share is, however, subject to
adjustment as hereinafter provided (such price, or such price as last adjusted,
as the case may be, being herein referred to as the "per share Warrant Price").
The number of shares purchasable hereunder is likewise subject to adjustment as
hereinafter provided. In addition, the number of shares purchasable hereunder is
limited under certain circumstances as provided under Section 1.1 hereof.
<PAGE> 45
The terms which are capitalized herein shall have the meanings
specified in Section 12 unless the context shall otherwise require.
SECTION 1. EXERCISE OF WARRANT; ADJUSTMENT OF PER SHARE WARRANT PRICE.
Section 1.1. Exercise of Warrant. At any time and from time to time
from and after the date of this Warrant and on or prior to the Expiration Date,
subject to the conditions hereinafter set forth, this Warrant may be exercised
for all shares of Common Stock which may then be purchased hereunder, or for any
part of the shares of Common Stock which may then be purchased hereunder.
Upon any exercise of this Warrant, the holder shall surrender this
Warrant (with the subscription form at the end hereof duly executed) at the
principal office of the Company in Baltimore, Maryland. Payment for the shares
purchased by the holder pursuant to this Section 1.1 shall be made in funds
immediately available at the Company's office in Baltimore, Maryland. If this
Warrant is exercised in respect of less than all of the number of shares into
which this Warrant is initially exercisable (or, if previously exercised in
part, such number of shares into which this Warrant is then exercisable), the
holder hereof shall be entitled to receive a new Warrant covering the remaining
number of shares of Common Stock in respect of which this Warrant shall not have
been exercised; provided, however, that this Warrant and all rights and options
hereunder shall expire on the Expiration Date, and shall be wholly null and void
to the extent this Warrant is not exercised before it expires.
At least ten days prior to exercising this Warrant, the holder agrees
that it shall deliver written notice to the Agent of its impending intent to
exercise its Warrant, which notice shall specify the number of shares of Common
Stock to be received by such holder upon such exercise.
SECTION 2. RESERVATION OF COMMON STOCK.
The Company covenants and agrees that at all times from and after
February 28, 2001 and on or prior to the Expiration Date it will have
authorized, and in reserve solely for the purpose of delivery upon the exercise
of the rights represented by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by the
unexercised portion of this Warrant and such shares issuable upon the exercise
of this Warrant shall at no time have an aggregate par value which is in excess
of the Aggregate Warrant Price.
SECTION 3. PROTECTION AGAINST DILUTION.
The per share Warrant Price and the number of shares deliverable
hereunder shall be adjusted from time to time as hereinafter set forth:
A. Stock Dividends, Subdivisions and Combinations. If,
after the date hereof, the Company shall:
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<PAGE> 46
(1) pay a dividend or make a distribution in shares of
Common Stock to holders of its capital stock of any class, or
(2) subdivide the outstanding shares of its Common Stock
into a larger number of shares, or
(3) combine the outstanding shares of its Common Stock
into a smaller number of shares, or
(4) issue by reclassification of its shares of Common
Stock any shares of Common Stock of the Company,
then the per share Warrant Price shall be adjusted to that price determined by
multiplying the per share Warrant Price in effect immediately prior to such
event by a fraction (i) the numerator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately prior to such
event, and (ii) the denominator of which shall be the total number of
outstanding shares of Common Stock of the Company immediately after such event.
An adjustment made pursuant to this paragraph A shall become effective
immediately after the 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.
B. Issuance of Additional Shares of Common Stock. If, after the
date hereof, the Company shall (except as hereinafter provided) issue any
Additional Shares of Common Stock for a consideration (i) less than the per
share Warrant Price then in effect, or (ii) less than the Current Market Price
of such shares then in effect, then the per share Warrant Price upon each such
issuance shall be adjusted to that price determined by multiplying the per share
Warrant Price in effect immediately prior to such event by a fraction:
(1) if issued for a consideration per share less than the Warrant
Price per share of Common Stock then in effect:
(a) the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of shares of Common
Stock which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at the then
effective per share Warrant Price, and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock plus the number of such
Additional Shares of Common Stock so issued.
(2) if issued for a consideration per share less than the Current
Market Price per share of Common Stock:
-3-
<PAGE> 47
(a) the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of such
Additional Shares of Common Stock plus the number of full shares of
Common Stock which the aggregate consideration for the total number of
such Additional Shares of Common Stock so issued would purchase at the
Current Market Price per share, and
(b) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock plus the number of such
Additional Shares of Common Stock so issued.
If such Additional Shares of Common Stock shall be issued at a price
per share less than both the effective Warrant Price and the Current Market
Price per share of Common Stock, the Warrant Price shall be adjusted in the
manner which will result in the greatest reduction of the Warrant Price. The
provisions of this paragraph shall not apply to any Additional Shares of Common
Stock which are distributed to holders of Common Stock as a stock dividend or
subdivision, for which an adjustment is provided for under paragraph A above. No
adjustment of the per share Warrant Price shall be made under this paragraph
upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights or pursuant to the exercise of any conversion or exchange rights in any
Convertible Securities, to the extent such adjustment shall previously have been
made (or determined not to be required) upon the date of issuance of such
warrants or other rights or upon the date of issuance of such Convertible
Securities (or upon the date of issuance of any warrants or other rights
therefor) pursuant to paragraphs C or D of this SS.3.
C. Issuance of Warrants, Stock Options or Other Rights. In case
the Company shall issue any warrants, stock options or other rights to subscribe
for or purchase any Additional Shares of Common Stock or to subscribe for or
purchase any Convertible Securities and the consideration per share for which
Additional Shares of Common Stock may at any time thereafter be issuable
pursuant to such warrants, stock options or other rights or pursuant to the
terms of such Convertible Securities shall be less than either (i) the Warrant
Price in effect on the date of grant of such warrants, stock options or other
rights, or (ii) the Current Market Price of such shares on the date of grant of
such warrants, stock options or other rights, then the Warrant Price shall be
adjusted as provided in paragraph B of this SS.3 on the basis that (i) the
maximum number of Additional Shares of Common Stock issuable pursuant to all
such warrants, stock options or other rights or necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and (ii) the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of such
Additional Shares of Common Stock pursuant to such warrants, stock options or
other rights or pursuant to the terms of such Convertible Securities.
-4-
<PAGE> 48
D. Issuance of Convertible Securities. In case the Company shall
share for which Additional Shares of Common Stock may at any time thereafter be
issuable pursuant to the terms of such Convertible Securities shall be less than
either (i) the Warrant Price in effect on the date of issuance of such
Convertible Securities, or (ii) the Current Market Price of such shares on the
date of issuance of such Convertible Securities, then the Warrant Price shall be
adjusted as provided in paragraph B above on the basis that (i) the maximum
number of Additional Shares of Common Stock necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued and (ii) the aggregate consideration for such maximum number of
Additional Shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Company for the issuance of such
Additional Shares of Common Stock pursuant to the terms of such Convertible
Securities. No adjustment of the Warrant Price shall be made under this
paragraph upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants or other subscription or purchase
rights therefor, to the extent such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to paragraph C
above.
E. Other Provisions Applicable to Adjustments Under this Section.
The following provisions shall be applicable to the making of adjustments in the
per share Warrant Price hereinbefore provided in this SS.3.
(1) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities shall be issued
for a cash consideration, the consideration received by the Company
shall be deemed to be the amount of the cash received by the Company
therefor, or, if such Additional Shares of Common Stock or Convertible
Securities or warrants or other rights are offered by the Company for
subscription, the subscription price, or, if such Additional Shares of
Common Stock or Convertible Securities or warrants or other rights are
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in any such
case excluding any amounts paid or receivable for accrued interest or
accrued dividends and without deduction of any compensation, discounts
or expenses paid or incurred by the Company for and in the underwriting
of, or otherwise in connection with the issue thereof.
To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided,
the amount of such consideration shall be deemed to be the fair value
of such consideration as determined in good faith by the Board of
Directors of the Company.
The consideration for any Additional Shares of Common Stock
issuable pursuant to any warrants or other rights to subscribe for or
purchase the same shall be the consideration received by the Company
for issuing such warrants or other rights, plus the additional
consideration payable to the Company upon the
-5-
<PAGE> 49
exercise of such warrants or other rights. The consideration for any
Additional Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by the
Company for issuing any warrants or other rights to subscribe for or
purchase such Convertible Securities plus the consideration paid or
payable to the Company in respect of the subscription for or purchase
of such Convertible Securities, plus the additional consideration, if
any, payable to the Company upon the exercise of the right of
conversion or exchange in such Convertible Securities.
In case of the issuance at any time of any Additional Shares
of Common Stock or Convertible Securities in payment or satisfaction of
any dividend upon any class of equity securities other than Common
Stock the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities consideration equal to
the amount of such dividend so paid or satisfied.
(2) Readjustment of Warrant Price. Subject to the
provisions of the second sentence of this paragraph E(2), upon the
expiration of the right to convert or exchange any Convertible
Securities, or upon the expiration of any rights, options or warrants,
or upon any increase in the minimum consideration receivable by the
Company for the issuance of Additional Shares of Common Stock pursuant
to such Convertible Securities, rights, options or warrants, if any
such Convertible Securities shall not have been converted or exchanged,
or if any such rights, options or warrants shall not have been
exercised, the number of shares of Common Stock deemed to be issued and
outstanding by reason of the fact that they were issuable upon
conversion or exchange of any such Convertible Securities or upon
exercise of any such rights, options or warrants shall no longer be
computed as set forth above, and the Warrant Price shall forthwith be
readjusted and thereafter be the price which it would have been (but
reflecting any other adjustments in the Warrant Price made pursuant to
the provisions of this SS.3 after the issuance of such Convertible
Securities, rights, options or warrants) had the adjustment of the
Warrant Price made upon the issuance or sale of such Convertible
Securities or the issuance of such rights, options or warrants been
made on the basis of the issuance only of the number of Additional
Shares of Common Stock actually issued upon conversion or exchange of
such Convertible Securities or upon the exercise of such rights,
options or warrants, or upon the basis of such increased minimum
consideration, as the case may be, and thereupon only the number of
Additional Shares of Common Stock actually so issued or the number
thereof issuable upon the basis of such increased minimum consideration
shall be deemed to have been issued and only the consideration actually
received or such increased minimum consideration receivable by the
Company (computed as provided in subparagraph E(1) of this SS.3) shall
be deemed to have been received by the Company. No such readjustment of
the Warrant Price shall be made unless the Warrant Price was adjusted
under the provisions of paragraph C above at the time such rights,
options or warrants were issued.
-6-
<PAGE> 50
F. Extraordinary Dividends. In case the Company shall
declare a dividend upon its Common Stock (except a dividend payable in
shares of Common Stock referred to in Subparagraph A(1) of this SS.3 or
a dividend payable in warrants, rights or Convertible Securities
referred to in paragraph C or D of this SS.3) payable otherwise than
out of retained earnings, the Warrant Price in effect immediately prior
to the declaration of such dividend shall be reduced by an amount
equal, in the case of a dividend in cash, to the amount thereof payable
per share of Common Stock to the extent otherwise than out of retained
earnings or, in the case of any other dividend, to the fair value
thereof per share of Common Stock as determined in good faith by the
Board of Directors of the Company, provided that in no event shall the
Warrant Price be reduced to less than one cent ($.01) per share. For
the purposes of the foregoing, a dividend payable other than in cash or
capital stock of the Company shall be considered payable out of
retained earnings only to the extent that such retained earnings are
charged an amount equal to the fair value of such dividend as
determined by the Board of Directors of the Company. Such reduction
shall take effect as of the date on which a record is taken for the
purpose of such dividend or if a record is not taken, the date as of
which the holders of the Common Stock of record entitled to such
dividend are to be determined. Appropriate readjustment of the Warrant
Price shall be made in the event that any dividend referred to in this
paragraph F shall be lawfully abandoned.
G. Adjustment of Number of Shares Purchasable. Upon each
adjustment of the per share Warrant Price, the number of shares of
Common Stock purchasable hereunder shall be adjusted by dividing the
Aggregate Warrant Price by the per share Warrant Price in effect
immediately following such adjustment.
H. Minimum Adjustment. Except as hereinafter provided,
no adjustment of the Warrant Price hereunder shall be made if such
adjustment results in a change of the Warrant Price then in effect of
less than one cent ($.01) per share. Any adjustment of less than one
cent ($.01) per share of any Warrant Price shall be carried forward and
shall be made at the time of and together with any subsequent
adjustment which, together with adjustment or adjustments so carried
forward, amounts to one cent ($.01) per share or more. However, upon
conversion of this Warrant, the Company shall make all necessary
adjustments (to the nearest cent) not theretofore made to the Warrant
Price up to and including the date upon which this Warrant is
converted.
I. Notice of Adjustments. Whenever the Warrant Price
shall be adjusted pursuant to this SS.3, the Company shall promptly
deliver a certificate signed by the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company, setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Board of Directors
of the Company made any determination hereunder), by first class mail
postage prepaid to each Holder.
-7-
<PAGE> 51
SECTION 4. MERGERS, CONSOLIDATIONS, SALES.
In the case of any consolidation or merger of the Company with another
entity, or the sale of all or substantially all of its assets to another entity,
or any reorganization or reclassification of the Common Stock or other equity
securities of the Company, then, as a condition of such consolidation, merger,
sale, reorganization or reclassification, lawful and adequate provision shall be
made whereby the holder of this Warrant shall thereafter have the right to
receive upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore purchasable hereunder
such shares of stock, securities or assets as may (by virtue of such
consolidation, merger, sale, reorganization or reclassification) be issued or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore so purchasable hereunder had such consolidation, merger, sale,
reorganization or reclassification not taken place. The fair market value of
such securities shall be determined by a nationally recognized investment
banking firm reasonably satisfactory to the holder. The cost of any such
determination shall be borne by the Company. The Company shall not effect any
such consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor entity (if other than the Company) resulting
from such consolidation or merger or the entity purchasing such assets shall
assume by written instrument executed and mailed or delivered to the holder of
this Warrant, the obligation to deliver to such holder such shares of stock,
securities, cash or other assets as, in accordance with the foregoing
provisions, such holder may be entitled to receive.
SECTION 5. DISSOLUTION OR LIQUIDATION.
In the event of any proposed distribution of the assets of the Company
in dissolution or liquidation except under circumstances when the foregoing
Section 4 shall be applicable, the Company shall mail notice thereof to the
holder of this Warrant and shall make no distribution to shareholders until the
expiration of 30 days from the date of mailing of the aforesaid notice and, in
any such case, the holder of this Warrant may exercise the purchase rights with
respect to this Warrant within 30 days from the date of mailing such notice and
all rights herein granted not so exercised within such 30-day period shall
thereafter become null and void.
SECTION 6. NOTICE OF EXTRAORDINARY DIVIDENDS.
If the Board of Directors of the Company shall declare any dividend or
other distribution on its Common Stock except out of earned surplus or by way of
a stock dividend payable on its Common Stock, the Company shall mail notice
thereof to the holder of this Warrant not less than 30 days prior to the record
date fixed for determining shareholders entitled to participate in such dividend
or other distribution and the holder of this Warrant shall not participate in
such dividend or other distribution or be entitled to any rights on account or
as a result thereof unless and to the extent that this Warrant is exercised
prior to such record date. The provisions of this paragraph shall not apply to
distributions made in connection with transactions covered by Section 4.
-8-
<PAGE> 52
SECTION 7. FRACTIONAL SHARES.
In the event that any exercise of this Warrant would result in the
issuance by the Company of a fractional share of Common Stock, the Company shall
pay to the holder of this Warrant upon such exercise an amount in cash equal to
the market price, as determined by the Company, of one whole share of the Common
Stock multiplied by such fractional share.
SECTION 8. FULLY PAID STOCK; TAXES.
The Company covenants and agrees that the shares of Common Stock to be
delivered on the exercise of the purchase rights herein provided for shall, at
the time of such delivery, be validly issued and be fully paid and
nonassessable. The Company further covenants and agrees that it will pay when
due and payable any and all Federal and State transfer, stamp, excise or similar
taxes which may be payable in respect of this Warrant or any Common Stock upon
the exercise of the purchase rights herein provided for pursuant to the
provisions hereof as well as all other expenses payable in connection with the
preparation, execution and delivery of any stock certificates upon exercise of
this Warrant, regardless of the name or names in which such stock certificates
shall be registered.
SECTION 9. CLOSING OF TRANSFER BOOKS.
The right to exercise this Warrant shall not be suspended during any
period that the stock transfer books of the Company for its Common Stock may be
closed. The Company shall not be required, however, to deliver certificates of
its Common Stock upon such exercise while such books are duly closed for any
purpose, but the Company may postpone the delivery of the certificates for such
Common Stock until the opening of such books, and they shall, in such case, be
delivered promptly upon the opening thereof, or as soon as practicable
thereafter.
SECTION 10. RESTRICTIONS ON TRANSFERABILITY OF WARRANTS AND SHARES;
COMPLIANCE WITH LAWS.
This Warrant and the Common Stock issued upon the exercise hereof shall
not be transferable except upon the conditions specified in the Registration
Rights Agreement, which conditions are intended to insure compliance with the
provisions of the Securities Act and any applicable State securities laws in
respect of the transfer of this Warrant or any such Common Stock.
SECTION 11. PARTIAL EXERCISE; ASSIGNMENT.
If this Warrant is exercised in part only, the holder hereof shall be
entitled to receive a new Warrant covering the Applicable Percentage of Common
Stock in respect of which this Warrant shall not have been exercised as provided
in Section 1.1. If this Warrant is exercised in part, this Warrant shall be
surrendered at the principal office of the Company in Baltimore, Maryland (with
the partial assignment form at the end hereof duly executed), and thereupon a
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<PAGE> 53
new Warrant shall be issued to the holder hereof covering the Applicable
Percentage of Common Stock to which such holder shall be entitled.
This Warrant may be transferred or assigned in whole or in part, but
only with the prior written consent of the Agent, which consent shall not be
unreasonably withheld.
SECTION 12. DEFINITIONS.
In addition to the terms defined elsewhere in this Warrant, the
following terms have the following respective meanings:
The term "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Borrower on or after the date hereof except:
(i) shares of Common Stock to be issued upon conversion of the
Notes;
(ii) shares of Common Stock to be issued upon the exercise of the
Warrants;
(iii) up to 2,250,000 shares of Common Stock to be issued upon the
exercise of options granted after the Closing Date pursuant to an incentive
stock option plan;
(iv) up to 6,500,000 shares of Common Stock to be issued in
connection with strategic opportunities which the board of directors of the
Company believes to be in the best interest of the Company and its shareholders;
and
(v) up to 11,194,000 shares of Common Stock (as such number shall
be appropriated adjusted by the board of directors of the Company for stock
splits, dividends, combinations and other similar events) to be issued on or
before February 28, 2001 or to be issued upon exercise of options granted before
February 28, 2001 in connection with, and as an express part of, the
consummation of the Plan of Restructuring.
The term "Agent" shall mean Bank of Montreal or any successor agent
under the Credit Agreement.
The term "Aggregate Warrant Price" shall mean, as of the date of any
determination, the amount computed as provided in the first paragraph of this
Warrant.
The term "Common Stock" as used herein shall include any class of
capital stock of the Company now or hereafter authorized, the right of which to
share in distributions either of earnings or assets of the Company is without
limit as to any amount or percentage; provided, however, that the shares of
Common Stock deliverable upon the exercise of the rights granted under this
Warrant shall include only Common Stock of the Company, par value of $0.001 per
share, authorized at the date hereof (or to be authorized as contemplated in
Section 1.4 of the Warrant Agreement) and any class of Common Stock issued in
substitution therefor.
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<PAGE> 54
The term "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for additional shares of Common Stock, either immediately or upon the arrival of
a specified date or the happening of a specified event.
The term "Convertible Note Agreement" shall mean the Convertible Note
Agreement dated as of November 10, 2000, between the Company and certain
institutional investors named therein, as the same may be amended, modified or
restated from time to time.
The term "Credit Agreement" shall mean the Amended and Restated Credit
Agreement dated as of November 10, 2000, among the Company and the financial
institutions party thereto, as the same may be amended, modified or restated
from time to time, and
The term "Current Market Price" means with respect to shares of Common
Stock shall be, as of the date of any determination thereof, deemed to be the
average of the daily Market Prices per share for the five consecutive trading
days immediately preceding the date of determination. The Market Price for each
day of such five trading day period shall be (i) if the Common Stock shall at
the time be listed or admitted to unlisted trading privileges on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ"), on the
basis of the last reported sale price regular way of the Common Stock on the
composite tape on each such trading day upon which such a sale shall have been
effected (or if no sale takes place on any such day on such exchange, the
average of the closing bid and asked prices on such day as officially quoted on
such exchange), or (ii) if the Common Stock shall at the time be listed or
admitted to unlisted trading privileges on the New York Stock Exchange, on the
basis of the last reported sale price regular way of the Common Stock on the
composite tape (or if no sale takes place on any such day on such exchange, the
average of the closing bid and asked prices on such day as officially quoted on
such exchange), or (iii) if the Common Stock at the time be not listed on either
the NASDAQ or the New York Stock Exchange, the average of the highest reported
bid and lowest reported asked prices of the Common Stock in the over-the-counter
market on each such Business Day, as reported by NASDAQ or similar organization
if NASDAQ is no longer reporting such information. In the event the Market Price
of the Common Stock cannot be determined in accordance with the immediately
preceding sentence, the fair market price shall be determined in good faith by
the Board of Directors (which determination shall be reasonably satisfactory to
the holders of the Warrants holding more than 66-2/3% in the aggregate of the
shares of Common Stock issuable upon exercise of all Warrants).
The term "Loan Documents" shall mean the Credit Agreement, the
Convertible Note Agreement and the Warrant Agreement, and all other security
agreements, registration rights agreements or other instruments executed and
delivered in connection therewith.
The term "Obligations" shall mean all notes, letters of credit,
indemnities and all other obligations of the Company outstanding under the Loan
Documents.
The term "Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of November 10, 2000, among the Company and the
institutional investors named therein.
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<PAGE> 55
The term "Related Warrant" shall mean the other Class B Warrants
similar to this Warrant which were initially issued pursuant to the terms and
provisions of the Warrant Agreement.
The term "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar statute, and the rules and regulations of the Securities
Exchange Commission thereunder, all as the same shall be in effect at the time.
The term "Warrant Agreement" shall mean the Warrant Agreement dated as
of November 10, 2000, between the Company and certain institutional investors
named therein, as the same may be amended, modified or restated from time to
time.
The term "Warrants" as used herein shall mean this Warrant and the
Related Warrants and all warrants hereafter issued in exchange or substitution
for this Warrant or any Related Warrants.
SECTION 13. LOST, STOLEN WARRANTS, ETC.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company may issue a new Warrant of like date, tenor and denomination and deliver
the same in exchange and substitution for and upon surrender and cancellation of
the mutilated Warrant, or in lieu of the Warrant lost, stolen or destroyed, upon
receipt of evidence satisfactory to the Company of the loss, theft or
destruction of such Warrant, and upon receipt of indemnity satisfactory to the
Company. If an institutional holder is the owner of any such lost, stolen or
destroyed Warrant, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its ownership of
such Warrant at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant other than the written
agreement of such owner to indemnify the Company.
SECTION 14. WARRANT HOLDER NOT SHAREHOLDER.
This Warrant does not confer upon the holder hereof any right to vote
or to consent or to receive notice as a shareholder of the Company, as such, in
respect of any matters whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise hereof as hereinbefore provided.
SECTION 15. EXERCISE OF REMEDIES.
IN THE EVENT THAT THE COMPANY SHALL FAIL TO OBSERVE ANY PROVISION
CONTAINED IN THIS WARRANT, THE HOLDER HEREOF AND/OR ANY HOLDER OF COMMON STOCK
ISSUED HEREUNDER, AS THE CASE MAY BE, MAY ENFORCE ITS RIGHTS HEREUNDER BY SUIT
IN EQUITY, BY ACTION AT LAW, OR BY ANY OTHER APPROPRIATE PROCEEDINGS IN AID OF
THE EXERCISE OF ANY POWER GRANTED IN THIS WARRANT AND, WITHOUT LIMITING THE
FOREGOING, SAID HOLDER
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<PAGE> 56
SHALL BE ENTITLED TO THE ENTRY OF A DECREE FOR SPECIFIC PERFORMANCE AND TO SUCH
OTHER AND FURTHER RELIEF AS SUCH COURT MAY DECREE.
SECTION 16. NOTICES.
All communications provided for hereunder shall be in writing and, if
to the holder of this Warrant, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to the holder hereof at such address as such holder may designate
to the Company in writing, and if to the Company, delivered or mailed by
registered or certified mail or overnight courier, or by facsimile
communication, to the Company at 120 West Fayette Street, Suite 700, Baltimore,
Maryland 21201, Attention: Chief Financial Officer, or to such other address as
the Company may designate to the holder hereof in writing; provided, however,
that a notice to the holder by overnight air courier shall only be effective if
delivered to such holder at a street address designated for such purpose in
accordance with this Section, and a notice to such holder by facsimile
communication shall only be effective if made by confirmed transmission to such
holder at a telephone number designated for such purpose in accordance with this
Section and promptly followed by delivery of such notice by registered or
certified mail or overnight air courier, as set forth above. The person in whose
name any Warrant shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes of this Warrant.
SECTION 17. SEVERABILITY.
Should any part of this Warrant for any reason be declared invalid,
such decision shall not affect the validity of any remaining portion, which
remaining portion shall remain in force and effect as if this Warrant had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties hereto that they would have executed and accepted
the remaining portion of this Warrant without including therein any such part,
parts or portion which may, for any reason, be hereafter declared invalid.
SECTION 18. GOVERNING LAW.
This Warrant shall be governed by and construed in accordance with
Illinois law.
SECTION 19. INDEX AND CAPTIONS.
The index and the descriptive headings of the various sections of this
Warrant are for convenience only and shall not affect the meaning or
construction of the provisions hereof.
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<PAGE> 57
IN WITNESS WHEREOF, Vision Twenty-One, Inc., has caused this Warrant to
be signed by its President or one of its Vice Presidents and its Secretary or
one of its Assistant Secretaries and this Warrant to be dated November 10, 2000.
VISION TWENTY-ONE, INC.
By
-----------------------------------------
President
By
------------------------------
Secretary
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<PAGE> 58
FORMS
Warrant to Purchase Common Stock
- antidilution provisions based on either warrant price or current market
SUBSCRIPTION
VISION TWENTY-ONE, INC.
The undersigned, ____________________, pursuant to the provisions of
the within Warrant, hereby elects to purchase ____ shares of Common Stock of
Vision Twenty-One, Inc., a Florida corporation, covered by the within Warrant.
Signature
-----------------------------
Address
-------------------------------
Dated:
-------------------------
<PAGE> 59
ASSIGNMENT
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto ____________________ the within Warrant and all rights evidenced
thereby and does irrevocably constitute and appoint ____________________,
attorney, to transfer the said Warrant on the books of the within-named Company.
---------------------------------------
Dated:
------------------------------
PARTIAL ASSIGNMENT IN CONNECTION WITH PARTIAL EXERCISE
FOR VALUE RECEIVED ____________________ hereby sells, assigns and
transfers unto ____________________ that portion of the within Warrant and the
rights evidenced thereby which will on the date hereof entitle the holder to
purchase _____ shares of Common Stock of Vision Twenty-One, Inc., a Florida
corporation, and does hereby irrevocably constitute and appoint
____________________, attorney, to transfer that part of the said Warrant on the
books of the within-named Company.
---------------------------------------
Dated:
------------------------------
<PAGE> 60
EXHIBIT B
(to Warrant Agreement)
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Lenders as follows:
1. Corporate Organization and Authority. The Company,
(a) is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties and to
carry on its business as now conducted and as presently proposed to be
conducted except where the failure to obtain such licenses or permits
would not have a material adverse effect on the condition (financial or
otherwise) of the Company or on the ability of the Company to perform
its obligations under the Agreement and the Warrants; and
(c) is duly licensed or qualified and is in good standing
as a foreign corporation in each jurisdiction wherein the nature of the
business transacted by it or the nature of the property owned or leased
by it makes such licensing or qualification necessary except where the
failure to be so licensed or qualified would not have a material
adverse effect on the condition (financial or otherwise) of the Company
or on the ability of the Company to perform its obligations under the
Agreement or the Warrants.
2. Authorized Capital Stock. The authorized capital stock of the
Company consists of (i) 50,000,000 shares of Common Stock, par value $0.001 per
share, of which 13,969,260 shares are outstanding on the date hereof and all of
said outstanding shares are duly authorized, validly issued, fully paid and
non-assessable and (ii) 10,000,000 shares of Preferred Stock, par value $0.001
per share, of which zero shares will be issued and outstanding on the Closing
Date and all of said outstanding shares will be duly authorized, validly issued,
fully paid and non-assessable when issued. The Company does not have outstanding
any warrants, options, Convertible Securities or other rights for the purchase
or acquisition of shares of its Common Stock other than the Notes, the Warrants
and the rights providing for the purchase of 2,270,213 shares of Common Stock as
described in Annex A attached hereto. The Board of Directors of the Borrower has
duly reserved for issuance upon (i) conversion of the Notes' 4,104,000 shares of
Common Stock. The Board of Directors of the Borrower has not reserved for
issuance upon conversion of the Notes 4,104,000 shares of Common Stock and has
not reserved any shares of Common Stock exercise of the Warrants. As of the
Closing Date, the aggregate amount of shares of Common Stock issuable upon the
exercise of the Class A Warrants and the Class B Warrants represent, in the
aggregate, 6% of the outstanding shares of Common Stock of the Company on a
fully diluted basis. No shareholder of the Company or any other Person is
entitled to preemptive or similar rights with respect to the shares of Common
Stock which are issuable upon exercise of the Warrants and, if and when issued
upon exercise of the Warrants, such shares will be validly issued, fully paid
and non-assessable shares (plus increases in such number of shares as shall be
required following the occurrence of certain dilutive events giving rise to
reductions in the per share warrant price).
<PAGE> 61
3. Full Disclosure. No other written statement furnished to any
Lender by or on behalf of the Company in connection with the negotiation of the
issuance of the Warrants, contains any untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact peculiar to the Company which the
Company has not disclosed to each Lender in writing which materially affects
adversely or, so far as the Company can now foresee, will materially affect
adversely the properties, business, prospects, profits or condition (financial
or otherwise) of the Company.
4. Issuance is Legal and Authorized. The issuance of the Warrants
and compliance by the Company with all of the provisions of the Agreement and
the Warrants:
(a) are within the corporate powers of the Company;
(b) will not violate any provisions of any law or any
order of any court or governmental authority or agency and will not
conflict with or result in any breach of any of the terms, conditions
or provisions of, or constitute a default under the Articles of
Incorporation or Bylaws of the Company or any indenture or other
agreement or instrument to which the Company is a party or by which it
may be bound or result in the imposition of any liens or encumbrances
on any property of the Company; and
(c) have been duly authorized by proper corporate and
shareholder action on the part of the Company, executed and delivered
by the Company, and the Agreement and the Warrants constitute the
legal, valid and binding obligations, contracts and agreements of the
Company enforceable in accordance with their respective terms;
provided, however, shareholder approval authorizing the increase in the
authorized shares of the Borrower's Capital Stock required for the
exercise of all Warrants into common stock shall be obtained in
connection with the Plan of Restructuring on or before February 28,
2001.
5. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of the
Agreement or the Warrants or compliance by the Company with any of the
provisions of the Agreement or the Warrants.
6. Compliance with Law. The Company is (a) not in violation of
any law, ordinance, franchise, governmental rule or regulation to which it is
subject or (b) has not failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of its property or to the
conduct of its business, which violation or failure to obtain would materially
adversely affect the business, prospects, profits, properties or condition
(financial or otherwise) of the Company or impair the ability of the Company to
perform its obligations contained in the Agreement and the Warrants. The Company
is not in default with respect to any order of any court or governmental
authority or arbitration board or tribunal.
B-2
<PAGE> 62
ANNEX A
<TABLE>
<S> <C>
Existing Warrants as described on Exhibit A to this Annex A: 974,803
Existing Incentive Stock Options
Employee Plan 1,215,411
Affiliated Plan 79,999
---------
Total 2,270,213
</TABLE>
<PAGE> 63
DESCRIPTION OF CLOSING OPINION OF COUNSEL
TO THE COMPANY
The closing opinion of Shumaker, Loop & Kendrick, LLP called for by
SS.2.2 of the Warrant Agreement, shall be dated the Closing Date and addressed
to the Lenders, shall be satisfactory in scope and form to the Lenders and shall
be to the effect that:
1. The Company is a corporation, duly incorporated,
validly existing and in good standing under the laws of the State of
Florida, has the corporate power and the corporate authority to execute
and perform the Warrant Agreement and to issue the Warrant and has the
full corporate power and the corporate authority to conduct the
activities in which it is now engaged and is duly licensed or qualified
and is in good standing as a foreign corporation in each jurisdiction
in which the character of the properties owned or leased by it or the
nature of the business transacted by it makes such licensing or
qualification necessary except where the failure to be so licensed or
qualified would not have a material adverse effect on the condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole or on the ability of the Company to perform its obligations under
the Warrant Agreement or the Warrants.
2. The Warrant Agreement has been duly authorized by all
necessary corporate action on the part of the Company, have been duly
executed and delivered by the Company and constitutes the legal, valid
and binding contracts of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance
and similar laws affecting creditors' rights generally, and general
principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
3. The Warrants have been duly authorized by all
necessary corporate action on the part of the Company, and the Warrants
being delivered on the date hereof have been duly executed and
delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar
laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law).
4. No approval, consent or withholding of objection on
the part of, or filing, registration or qualification with, any
governmental body, Federal or state, is necessary in connection with
the execution and delivery of the Warrant Agreement or the Warrants.
5. The issuance and sale of the Warrants and the
execution, delivery and performance by the Company of the Warrant
Agreement do not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation
or imposition of any lien upon any of the property of the Company
pursuant to the provisions of the Articles of Incorporation or Bylaws
of the Company or any agreement or other instrument known to such
counsel to which the Company is a party or by which the Company may be
bound.
EXHIBIT C
(to Warrant Purchase Agreement)
<PAGE> 64
6. The issuance, sale and delivery of the Warrants under
the circumstances contemplated by the Warrant Agreement do not, under
existing law, require the registration of the Warrants under the
Securities Act of 1933, as amended, or the qualification of an
indenture under the Trust Indenture Act of 1939, as amended.
7. The Company has duly authorized Common Stock
consisting of _________ shares of Common Stock, $___ per share par
value, of which _________ shares have been issued and are outstanding.
All such outstanding shares have been duly and validly issued and are
fully paid and non-assessable.
8. The shares issued upon exercise of the Warrants when
issued in accordance with the terms of the Warrants will be duly
authorized, fully paid, validly issued and nonassessable shares of the
Company.
9. None of the transactions contemplated by the Warrant
Agreement including, without limitation, the use of the proceeds from
the issuance of the Warrants will violate or result in a violation of
Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulation issued pursuant thereto, or Regulations U, T and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R., Chap. II.
The opinion of Shumaker, Loop & Kendrick, LLP shall cover such other
matters relating to the sale of the Notes as the Lenders may reasonably request.
With respect to matters of fact on which such opinion is based, such counsel
shall be entitled to rely on appropriate certificates of public officials and
officers of the Company.
C-2
