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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 23, 1998
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
(Exact name of registrant
as specified in its charter)
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Georgia 000-22571 58-1915632
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
495 Lovers Lane Road, Calhoun, Georgia 30701
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (706) 629-8682
(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
In December 1998, Professional Transportation Group Ltd., Inc., a
Georgia corporation (the "Company"), completed a private placement of $500,000
to two investors of 9% Convertible Debentures (the "Debentures") and warrants
for the purchase of up to 1.1 million shares of the Company's common stock,
1.0 million of which are at a discount to the Market Price (as defined below)
at the time of exercise (the "Call Warrants") and 100,000 of which are
exercisable at $3.50 per share. Proceeds from the transaction will permit the
Company to pay down its existing line of credit and to provide for working
capital.
Debenture Terms:
The Debentures mature on December 31, 2000 and bear interest at an
annual rate of 9%, payable quarterly in arrears. The investors may convert the
Debentures into shares of common stock at a 22% discount to the Market Price (as
defined below) on the conversion notice date. The Company may prepay the
Debentures at any time at premium of 22%.
Call Warrant Terms:
The Call Warrants permit the investors to purchase up to 1.0 million
shares of common stock which the Company may call at any time. The Call Warrants
are subject to various restrictions and conditions, including, among others,
minimum and maximum limits on the call, the provision that the Market Price of
the Company's common stock be at least $2.00 per share and that a registration
statement covering the common stock underlying the Call Warrants is effective.
The portion of the Call Warrants called by the Company may be exercised by the
Investor at a 12% discount to the "Market Price," defined as the average of the
lowest trade price of the Common Stock executed on any three trading days during
the sixteen trading days ending on the day prior to the redemption notice date.
In the event the Market Price is $4.00 or less, the exercise price is reduced to
22% below the Market Price.
The Call Warrants expire on December 31, 2001 and may be cancelled in
full by the Company at any time upon 30 days notice. The investors may exercise
the Call Warrants at an exercise price of $25.00 per share from November 1, 2001
until its expiration, or if the Company elects to cancel the Warrants in full.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL SCHEDULES AND EXHIBITS.
(c) Exhibits.
10.1 Debenture and Warrant Purchase Agreement, dated as of December 10,
1998, by and among AMRO International, S.A., John P. O'Shea and
the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROFESSIONAL TRANSPORTATION GROUP
LTD., INC.
By: /s/ Dennis A. Bakal
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Dennis A. Bakal
Chief Executive Officer
Dated: December 31, 1998
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EXHIBIT INDEX
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Exhibit
Number Exhibit Name
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10.1 Debenture and Warrant Purchase Agreement, dated as of December
10, 1998, by and among AMRO International, S.A., John P.
O'Shea and the Company.
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EXHIBIT 10.1
DEBENTURE AND WARRANT PURCHASE AGREEMENT
BETWEEN
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
AND
THE INVESTORS SIGNATORY HERETO
DEBENTURE AND WARRANT PURCHASE AGREEMENT dated as of December 10, 1998
(the "Agreement"), between AMRO International, S.A., a Panama corporation and
John P. O'Shea (each an "Investor" and together the "Investors"), and
Professional Transportation Group Ltd., Inc., a corporation organized and
existing under the laws of the State of Georgia (the "Company").
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investors,
and the Investors shall purchase pro-rata, as set forth on the signature page
hereof, (i) $500,000 principal amount of Convertible Debentures (as defined
below) and (ii) Warrants (as defined below) to purchase up to 1,100,000 shares
of the Common Stock (as defined below).
WHEREAS, such investments will be made in reliance upon the provisions
of Section 4(2) ("Section 4(2)") of the United States Securities Act of 1933, as
amended, and Regulation D ("Regulation D") and the other rules and regulations
promulgated thereunder (the "Securities Act"), and/or upon such other exemption
from the registration requirements of the Securities Act as may be available
with respect to any or all of the investments in the securities to be made
hereunder.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. "Capital Shares" shall mean the Common Stock and any shares of any
other class of common stock whether now or hereafter authorized, having the
right to participate in the distribution of earnings and assets of the Company.
Section 1.2. "Capital Shares Equivalents" shall mean any securities, rights, or
obligations that are convertible into or exchangeable for or give any right to
subscribe for any Capital Shares of the Company or any warrants, options or
other rights to subscribe for or purchase Capital Shares or any such convertible
or exchangeable securities.
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Section 1.3. "Closing" shall mean the closing of the purchase and sale of the
Convertible Debenture and Warrants pursuant to Section 2.1.
Section 1.4. "Closing Date" shall mean the date on which all conditions to the
Closing have been satisfied (as defined in Section 2.1 (a) hereto) and the
Closing shall have occurred.
Section 1.5. "Common Stock" shall mean the Company's common stock, no par value
per share.
Section 1.6. "Conversion Shares" shall mean the shares of Common Stock issuable
upon conversion of the Convertible Debenture.
Section 1.7. "Convertible Debenture(s)" shall mean the $500,000 aggregate
principal amount of Convertible Debentures in the form of Exhibit A hereto to be
issued to the Investors pursuant to this Agreement.
Section 1.8. "Damages" shall mean any loss, claim, damage, judgment, penalty,
deficiency, liability, costs and expenses (including, without limitation,
reasonable attorney's fees and disbursements and reasonable costs and expenses
of expert witnesses and investigation).
Section 1.9. "Effective Date" shall mean the date on which the SEC first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in the Registration Rights Agreement.
Section 1.10. "Escrow Agent" shall have the meaning set forth in the Escrow
Agreement.
Section 1.11. "Escrow Agreement" shall mean the Escrow Agreement in
substantially the form of Exhibit D hereto executed and delivered
contemporaneously with this Agreement.
Section 1.12. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Section 1.13. "Legend" shall mean the legend set forth in Section 9.1.
Section 1.14. "Market Price" on any given date shall mean the average of the
lowest prices on the Principal Market (as reported by Bloomberg L.P.) of the
Common Stock at which a trade is executed on any three (3) Trading Days during
the sixteen (16) Trading Day period ending on the Trading Day immediately prior
to the date for which the Market Price is to be determined.
Section 1.15. "Material Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, or financial condition of the Company that is
material and adverse to the Company and its subsidiaries and affiliates, taken
as a whole, and/or any condition, circumstance, or situation that would prohibit
or otherwise interfere with the ability of the
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Company to enter into and perform any of its obligations under this Agreement,
the Registration Rights Agreement, the Escrow Agreement, the Convertible
Debenture or the Warrant in any material respect.
Section 1.16. "Outstanding" when used with reference to shares of Common Stock
or Capital Shares (collectively the "Shares"), shall mean, at any date as of
which the number of such Shares is to be determined, all issued and outstanding
Shares, and shall include all such Shares issuable in respect of outstanding
scrip or any certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not mean any such Shares then
directly or indirectly owned or held by or for the account of the Company.
Section 1.17. "Person" shall mean an individual, a corporation, a partnership,
an association, a trust or other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
Section 1.18. "Principal Market" shall mean the American Stock Exchange, the New
York Stock Exchange, the NASDAQ National Market, or the NASDAQ Small-Cap Market,
whichever is at the time the principal trading exchange or market for the Common
Stock. The OTC Bulletin Board shall not be a Principal Market.
Section 1.19. "Purchase Price" shall mean five hundred five thousand dollars
($505,000) in the aggregate.
Section 1.20. "Registrable Securities" shall mean the Conversion Shares and the
Warrant Shares until the earliest to occur of: (i) the Registration Statement
has been declared effective by the SEC, and all Conversion Shares and Warrant
Shares have been disposed of pursuant to the Registration Statement, (ii) all
Conversion Shares and Warrant Shares have been sold under circumstances under
which all of the applicable conditions of Rule 144 (or any similar provision
then in force) under the Securities Act ("Rule 144") are met, (iii) all
Conversion Shares and Warrant Shares have been otherwise transferred to holders
who may trade such shares without restriction under the Securities Act, and the
Company has delivered a new certificate or other evidence of ownership for such
securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Conversion Shares and Warrant Shares may be sold
without any time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.
Section 1.21. "Registration Rights Agreement" shall mean the agreement regarding
the filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the Investor as of the Closing
Date in the form annexed hereto as Exhibit C.
Section 1.22. "Registration Statement" shall mean a registration statement on
Form S-3 (if use of such form is then available to the Company pursuant to the
rules of the SEC and, if not, on such other form promulgated by the SEC for
which the Company then qualifies and which counsel for the Company shall deem
appropriate, and which form shall be available for the resale
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of the Registrable Securities to be registered thereunder in accordance with the
provisions of this Agreement, the Registration Rights Agreement and in
accordance with the intended method of distribution of such securities), for the
registration of the resale by the Investor of the Registrable Securities under
the Securities Act.
Section 1.23. "Regulation D" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.24. "SEC" shall mean the United States Securities and Exchange
Commission.
Section 1.25. "Section 4(2)" shall have the meaning set forth in the recitals of
this Agreement.
Section 1.26. "Securities Act" shall have the meaning set forth in the recitals
of this Agreement.
Section 1.27. "SEC Documents" shall mean the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997 and each report, proxy
statement or registration statement filed by the Company with the SEC pursuant
to the Exchange Act or the Securities Act since the filing of such Annual Report
through the date hereof and available through the SEC's EDGAR system.
Section 1.28. "Shares" shall have the meaning set forth in Section 1.16.
Section 1.29. "Trading Day" shall mean any day during which the Principal Market
at such day shall be open for business.
Section 1.30. "Warrant(s)" shall mean the warrants substantially in the forms of
Exhibits B-1 and B-2 to be issued to the Investor hereunder. The Exhibit B-1
Warrants, for an aggregate of 1,000,000 shares, are redeemable as set forth in
Section 16 thereof. The Exhibit B-2 Warrants, for an aggregate of 100,000
shares, are non-redeemable and have an Exercise Price of $3.50 per share. Such
two forms of Warrants are sometimes referred to herein as the B-1 Warrants and
the B-2 Warrants for convenience.
Section 1.31. "Warrant Shares" shall mean all shares of Common Stock or other
securities issued or issuable pursuant to exercise of the Warrants.
ARTICLE II
PURCHASE AND SALE OF CONVERTIBLE DEBENTURES AND WARRANTS
Section 2.1. Investment.
(a) Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and each Investor, severally and not jointly, agrees to
purchase a Convertible Debenture
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and a B-1 Warrant and a B-2 Warrant at their pro-rata portion of the Purchase
Price on the Closing Date as follows:
(i) Upon execution and delivery of this Agreement, each Investor
shall deliver to the Escrow Agent immediately available funds
in the amount of the Purchase Price, and the Company shall
deliver the Convertible Debenture and the Warrant to the
Escrow Agent, in each case to be held by the Escrow Agent
pursuant to the Escrow Agreement.
(ii) Upon satisfaction of the conditions set forth in Section
2.1(b), the Closing ("Closing") shall occur at the offices of
the Escrow Agent at which the Escrow Agent (x) shall release
the Convertible Debenture and the Warrant to the appropriate
Investor and (y) shall release the Purchase Price (after all
fees have been paid as set forth in the Escrow Agreement) to
the Company, pursuant to the terms of the Escrow Agreement.
(b) The Closing is subject to the satisfaction of the following
conditions:
(i) acceptance and execution by the Company and by both Investors
of this Agreement and all Exhibits hereto;
(ii) delivery into escrow by each Investor of immediately available
funds in the amount of the Purchase Price of the Convertible
Debenture and the Warrant, as more fully set forth in the
Escrow Agreement;
(iii) all representations and warranties of each Investor contained
herein shall remain true and correct as of the Closing Date
(as a condition to the Company's obligations);
(iv) all representations and warranties of the Company contained
herein shall remain true and correct as of the Closing Date
(as a condition to each Investor's obligations);
(v) the Company shall have obtained all permits and qualifications
required by any state for the offer and sale of the
Convertible Debentures and Warrants, or shall have the
availability of exemptions therefrom;
(vi) the sale and issuance of the Convertible Debentures and
Warrants hereunder, and the proposed issuance by the Company
to each Investor of the Common Stock underlying the
Convertible Debenture and Warrants upon the conversion or
exercise thereof shall be legally permitted by all laws and
regulations to which the Investor and the Company are subject
and there shall be no ruling, judgment or writ of any court
prohibiting the transactions contemplated by this Agreement;
(vii) delivery of the original fully executed Convertible Debenture
and Warrant certificates to the Escrow Agent;
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(viii) receipt by each Investor of an opinion of Nelson Mullins Riley
& Scarborough, L.L.P., counsel to the Company, in the form of
Exhibit E hereto;
(ix) delivery to the Escrow Agent of the Irrevocable Instructions
to Transfer Agent in the form attached hereto as Exhibit F;
and
(x) delivery to each Investor of the Registration Rights
Agreement.
Section 2.2. Allocation. The Purchase Price shall be allocated $500,000 to the
Convertible Debentures and $5,000 to the Warrants.
Section 2.3. Liquidated Damages. The parties hereto acknowledge and agree that
the sum payable pursuant to the Registration Rights Agreement shall constitute
liquidated damages and not penalties. The parties further acknowledge that (a)
the amount of loss or damages likely to be incurred is incapable or is difficult
to precisely estimate, (b) the amounts specified in such Sections bear a
reasonable proportion and are not plainly or grossly disproportionate to the
probable loss likely to be incurred by the Investor in connection with the
failure by the Company to timely cause the registration of the Registrable
Securities and (c) the parties are sophisticated business parties and have been
represented by sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTORS
Each Investor, severally and not jointly, represents and warrants to the Company
that:
Section 3.1. Intent. The Investor is entering into this Agreement for its own
account and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Convertible Debenture, the Warrant, any
Conversion Shares or Warrant Shares to or through any person or entity;
provided, however, that by making the representations herein, the Investor does
not agree to hold such securities for any minimum or other specific term and
reserves the right to dispose of the Conversion Shares and Warrant Shares at any
time in accordance with federal and state securities laws applicable to such
disposition.
Section 3.2. Sophisticated Investor. The Investor is a sophisticated investor
(as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor
(as defined in Rule 501 of Regulation D), and Investor has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Convertible Debenture, the Warrant and the
underlying Common Stock. The Investor acknowledges that an investment in the
Convertible Debenture, the Warrant and the underlying Common Stock is
speculative and involves a high degree of risk.
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Section 3.3. Authority. This Agreement and each agreement attached as an Exhibit
hereto which is required to be executed by Investor has been duly authorized and
validly executed and delivered by the Investor and is a valid and binding
agreement of the Investor enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.
Section 3.4. Not an Affiliate. The Investor is not an officer, director or
"affiliate" (as that term is defined in Rule 405 of the Securities Act) of the
Company.
Section 3.5. Absence of Conflicts. The execution and delivery of this Agreement
and the agreements the forms of which are attached as Exhibits hereto and
executed by the Investor in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, and compliance with the
requirements thereof, will not violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Investor or (a) violate any
provision of any indenture, instrument or agreement to which Investor is a party
or is subject, or by which Investor or any of its assets is bound; (b) conflict
with or constitute a material default thereunder; (c) result in the creation or
imposition of any lien pursuant to the terms of any such indenture, instrument
or agreement, or constitute a breach of any fiduciary duty owed by Investor to
any third party; or (d) require the approval of any third-party (which has not
been obtained) pursuant to any material contract, agreement, instrument,
relationship or legal obligation to which Investor is subject or to which any of
its assets, operations or management may be subject.
Section 3.6. Disclosure; Access to Information. The Investor has received all
documents, records, books and other publicly available information pertaining to
Investor's investment in the Company that have been requested by the Investor.
Investor acknowledges that the Company is subject to the periodic reporting
requirements of the Exchange Act, and the Investor has reviewed or received
copies of all SEC Documents that have been requested by it.
Section 3.7. Manner of Sale. At no time was Investor presented with or solicited
by or through any leaflet, public promotional meeting, television advertisement
or any other form of general solicitation or advertising by the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors that:
Section 4.1. Organization of the Company. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of
Georgia and has all requisite corporate authority to own its properties and to
carry on its business as now being conducted. The Company does not have any
subsidiaries and does not own more that fifty percent (50%) of or control any
other business entity except as set forth in the SEC Documents. The Company is
duly qualified and is in good standing as a foreign corporation to do business
in every
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jurisdiction in which the nature of the business conducted or property owned by
it makes such qualification necessary, other than those in which the failure so
to qualify would not have a Material Adverse Effect.
Section 4.2. Authority. (i) The Company has the requisite corporate power and
corporate authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement, the Escrow Agreement, and the
Warrants and to issue the Convertible Debentures, the Conversion Shares, the
Warrants and the Warrant Shares pursuant to their respective terms, (ii) the
execution, issuance and delivery of this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Convertible Debentures and the Warrants by
the Company and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action and no further
consent or authorization of the Company or its Board of Directors or
shareholders is required, and (iii) this Agreement, the Registration Rights
Agreement, the Escrow Agreement, the Convertible Debentures and the Warrants
have been duly executed and delivered by the Company and at the Closing shall
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application. The Company
has duly and validly authorized and reserved for issuance shares of Common Stock
sufficient in number for the conversion of the Convertible Debentures (assuming
a Market Price of $1.00) and for the exercise of the Warrants. The Company
understands and acknowledges the potentially dilutive effect to the Common Stock
of the issuance of the Conversion Shares and, upon any Partial Redemption of the
B-1 Warrants, the Warrant Shares. The Company further acknowledges that its
obligation to issue Conversion Shares upon conversion of the Convertible
Debenture and Warrant Shares upon exercise of the Warrants in accordance with
this Agreement is absolute and unconditional regardless of the dilutive effect
that such issuance may have on the ownership interests of other shareholders of
the Company and notwithstanding the commencement of any case under 11 U.S.C. ss.
101 et seq. (the "Bankruptcy Code"). The Company shall not seek judicial relief
from its obligations hereunder except pursuant to the Bankruptcy Code. In the
event the Company is a debtor under the Bankruptcy Code, the Company hereby
waives to the fullest extent permitted any rights to relief it may have under 11
U.S.C. ss. 362 in respect of the conversion of the Convertible Debentures and
the exercise of the Warrants. The Company agrees, without cost or expense to the
Investor, to take or consent to any and all action necessary to effectuate
relief under 11 U.S.C. ss. 362.
Section 4.3. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, no par value per share, of which
3,867,850 shares are issued and outstanding as of December 10, 1998, 100,000
shares of preferred stock, no par value per share, of which no shares are issued
and outstanding, and 1,437,500 Redeemable Common Stock Purchase Warrants issued
and outstanding. Except for outstanding options to acquire a total of 1,308,420
shares of Common Stock as of October 31, 1998, there are no other outstanding
Capital Shares Equivalents. All of the outstanding shares of Common Stock of the
Company have been duly and validly authorized and issued and are fully paid and
non-assessable.
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Section 4.4. Common Stock. The Company has registered its Common Stock pursuant
to Section 12(g) of the Exchange Act and is in full compliance with all
reporting requirements of the Exchange Act, and the Company is in compliance
with all requirements for the continued listing or quotation of its Common
Stock, and such Common Stock is currently listed or quoted on the Principal
Market. As of the date hereof, the Principal Market is the Nasdaq SmallCap
Market and the Company has not received any notice regarding, and to its
knowledge there is no threat, of the termination or discontinuance of the
eligibility of the Common Stock for such listing.
Section 4.5. SEC Documents. The Company has delivered or made available to the
Investors true and complete copies of the SEC Documents. The Company has not
provided to the Investors any information that, according to applicable law,
rule or regulation, should have been disclosed publicly prior to the date hereof
by the Company, but which has not been so disclosed. As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act, and rules and regulations of the SEC promulgated thereunder
and the SEC Documents did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto at the time of such
inclusion. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position
of the Company as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments). Neither the Company nor any
of its subsidiaries has any material indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether due or
to become due) that would have been required to be reflected in, reserved
against or otherwise described in the financial statements or in the notes
thereto in accordance with GAAP, which was not fully reflected in, reserved
against or otherwise described in the SEC Documents, financial statements or the
notes thereto included in the SEC Documents or was not incurred in the ordinary
course of business consistent with the Company's past practices since the last
date of such financial statements.
Section 4.6. Exemption from Registration; Valid Issuances. Subject to the
accuracy of the Investor's representations in Article III, the sale of the
Convertible Debentures, the Conversion Shares, the Warrants and the Warrant
Shares will not require registration under the Securities Act and/or any
applicable state securities law. When issued and paid for in accordance with
each Warrant and each Convertible Debenture, the Conversion Shares and the
Warrant Shares will be duly and validly issued, fully paid, and non-assessable.
Neither the sales of the Convertible Debentures, the Conversion Shares, the
Warrants or the Warrant Shares pursuant to, nor the Company's performance of its
obligations under, this Agreement, the Registration Rights Agreement, the Escrow
Agreement, the Convertible Debentures, or the Warrants will (i) result in
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the creation or imposition by the Company of any liens, charges, claims or other
encumbrances upon the Convertible Debentures, the Conversion Shares, the Warrant
Shares or, except as contemplated herein, any of the assets of the Company, or
(ii) entitle the holders of Outstanding Capital Shares to preemptive or other
rights to subscribe to or acquire the Capital Shares or other securities of the
Company. The Convertible Debentures, the Conversion Shares, and the Warrant
Shares shall not subject the Investor to personal liability to the Company or
its creditors by reason of the possession thereof.
Section 4.7. No General Solicitation or Advertising in Regard to this
Transaction. Neither the Company nor any of its Affiliates (as defined in Rule
405 under the Securities Act) nor any person acting on its or their behalf (i)
has conducted or will conduct any general solicitation (as that term is used in
Rule 502(c) of Regulation D) or general advertising with respect to of the
Convertible Debentures or the Warrants, or (ii) made any offers or sales of any
security or solicited any offers to buy any security under any circumstances
that would require registration of the Convertible Debentures, the Conversion
Shares, the Warrants or the Warrant Shares under the Securities Act.
Section 4.8. Corporate Documents. The Company has furnished or made available to
the Investor true and correct copies of the Company's Articles of Incorporation,
as amended and in effect on the date hereof (the "Articles"), and the Company's
By-Laws, as amended and in effect on the date hereof (the "By-Laws").
Section 4.9. No Conflicts. Except as set forth on Schedule 4.9, the execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby, including without
limitation the issuance of the Convertible Debentures, the Conversion Shares,
the Warrants and the Warrant Shares, do not and will not (i) result in a
violation of the Company's Articles of Incorporation or By-Laws, (ii) conflict
with, or constitute a material default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material agreement,
indenture or instrument, or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party, or (iii)
result in a violation of any federal, state or local law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations) applicable to the Company or by which any material property or
asset of the Company is bound or affected, nor is the Company otherwise in
violation of, conflict with or default under any of the foregoing (except in
each case for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not have, individually or in the
aggregate, a Material Adverse Effect). The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
entity, except for possible violations that either singly or in the aggregate
would not have a Material Adverse Effect. The Company is not required under
federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Convertible Debentures or
the Warrants in accordance with the terms hereof (other than any SEC, Nasdaq
Stock Market or state securities filings that may be required to be made by the
Company subsequent to Closing, any registration statement that may be filed
pursuant hereto, and any shareholder approval required
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by the rules applicable to companies whose common stock trades on the Nasdaq
Stock Market); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of each Investor herein.
Section 4.10. No Material Adverse Change. Since September 30, 1998, no Material
Adverse Effect has occurred or exists with respect to the Company, except as
disclosed in the SEC Documents.
Section 4.11. No Undisclosed Events or Circumstances. Since September 30, 1998,
no event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, prospects, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the SEC Documents.
Section 4.12. No Integrated Offering. Other than pursuant to an effective
registration statement under the Securities Act, or pursuant to the issuance or
exercise of employee stock options, or pursuant to its discussion with the
Investors in connection with the transactions contemplated hereby, the Company
has not issued, offered or sold the Convertible Debentures, the Warrants or any
shares of Common Stock (including for this purpose any securities of the same or
a similar class as the Convertible Debentures, the Warrants or Common Stock, or
any securities convertible into a exchangeable or exercisable for the
Convertible Debentures or Common Stock or any such other securities) within the
six-month period next preceding the date hereof, and the Company shall not
permit any of its directors, officers or Affiliates directly or indirectly to
take, any action (including, without limitation, any offering or sale to any
person or entity of the Convertible Debentures, Warrants or shares of Common
Stock), so as to make unavailable the exemption from Securities Act registration
being relied upon by the Company for the offer and sale to the Investors of the
Convertible Debentures (and the Conversion Shares) or the Warrants (and the
Warrant Shares) as contemplated by this Agreement.
Section 4.13. Litigation and Other Proceedings. Except as disclosed in the SEC
Documents, there are no lawsuits or proceedings pending or, to the knowledge of
the Company, threatened, against the Company, nor has the Company received any
written or oral notice of any such action, suit, proceeding or investigation,
which could reasonably be expected to have a Material Adverse Effect. Except as
set forth in the SEC Documents and in Schedule 4.13, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the
Company, requested of any court, arbitrator or governmental agency which could
result in a Material Adverse Effect.
Section 4.14. No Misleading or Untrue Communication. The Company and, to the
knowledge of the Company, any person representing the Company, have not made, at
any time, any oral communication in connection with the offer or sale of the
Convertible Debentures and the Warrants which contained any untrue statement of
a material fact or omitted to state any material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
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Section 4.15. Material Non-Public Information. The Company has not disclosed to
either Investor any material non-public information that (i) if disclosed,
would, or could reasonably be expected to have, a material effect on the price
of the Common Stock or (ii) according to applicable law, rule or regulation,
should have been disclosed publicly by the Company prior to the date hereof but
which has not been so disclosed.
Section 4.16. Insurance. The Company maintains property and casualty, general
liability, workers' compensation, environmental hazard, personal injury and
other similar types of insurance with financially sound and reputable insurers
that is adequate, consistent with the Company's historical claims experience.
The Company has not received notice from, and has no knowledge of any threat by,
any insurer (that has issued any insurance policy to the Company) that such
insurer intends to deny coverage under or cancel, discontinue or not renew any
insurance policy presently in force.
Section 4.17. Tax Matters.
(a) The Company has filed all Tax Returns which it is required to file
under applicable laws, except where the failure to file any Tax Return would not
have a Material Adverse Effect on the Company; all such Tax Returns are true and
accurate and have been prepared in compliance with all applicable laws; the
Company has paid all Taxes due and owing by it (whether or not such Taxes are
required to be shown on a Tax Return) and have withheld and paid over to the
appropriate taxing authorities all Taxes which it is required to withhold from
amounts paid or owing to any employee, shareholder, creditor or other third
parties; and since December 31, 1997, the charges, accruals and reserves for
Taxes with respect to the Company (including any provisions for deferred income
taxes) reflected on the books of the Company are adequate to cover any Tax
liabilities of the Company if its current tax year were treated as ending on the
date hereof.
(b) No claim has been made by a taxing authority in a jurisdiction
where the Company does not file tax returns that such corporation is or may be
subject to taxation by that jurisdiction. There are no foreign, federal, state
or local tax audits or administrative or judicial proceedings pending or being
conducted with respect to the Company; no information related to Tax matters has
been requested by any foreign, federal, state or local taxing authority; and,
except as disclosed above, no written notice indicating an intent to open an
audit or other review has been received by the Company from any foreign,
federal, state or local taxing authority. There are no material unresolved
questions or claims concerning the Company's Tax liability. The Company (A) has
not executed or entered into a closing agreement pursuant to ss. 7121 of the
Internal Revenue Code or any predecessor provision thereof or any similar
provision of state, local or foreign law; or (B) has not agreed to or is
required to make any adjustments pursuant to ss. 481 (a) of the Internal Revenue
Code or any similar provision of state, local or foreign law by reason of a
change in accounting method initiated by the Company or any of its subsidiaries
or has any knowledge that the IRS has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to the
business or operations of the Company. The Company has not been a United States
real property holding corporation within the meaning of ss. 897(c)(2) of
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the Internal Revenue Code during the applicable period specified in ss.
897(c)(1)(A)(ii) of the Internal Revenue Code.
(c) The Company has not made an election under ss. 341(f) of the
Internal Revenue Code. The Company is not liable for the Taxes of another person
that is not a subsidiary of the Company under (A) Treas. Reg. ss. 1.1502-6 (or
comparable provisions of state, local or foreign law), (B) as a transferee or
successor, (C) by contract or indemnity or (D) otherwise. The Company is not a
party to any tax sharing agreement. The Company has not made any payments, is
obligated to make payments or is a party to an agreement that could obligate it
to make any payments that would not be deductible under ss. 280G of the Internal
Revenue Code.
(d) For purposes of this Section 4.17:
"IRS" means the United States Internal Revenue Service.
"Tax" or "Taxes" means federal, state, county, local, foreign,
or other income, gross receipts, ad valorem, franchise,
profits, sales or use, transfer, registration, excise,
utility, environmental, communications, real or personal
property, capital stock, license, payroll, wage or other
withholding, employment, social security, severance, stamp,
occupation, alternative or add-on minimum, estimated and other
taxes of any kind whatsoever (including, without limitation,
deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not.
"Tax Return" means any return, information report or filing
with respect to Taxes, including any schedules attached
thereto and including any amendment thereof.
Section 4.18. Property. Neither the Company nor any of its subsidiaries owns any
real property except as disclosed in the SEC Documents. Each of the Company and
its subsidiaries has good and marketable title to all personal property owned by
it, free and clear of all liens, encumbrances and defects except such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company; and,
except as set forth in Schedule 4.18, to the Company's knowledge any real
property and buildings held under lease by the Company as tenant are held by it
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and intended to be made of such
property and buildings by the Company.
Section 4.19. Intellectual Property. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct of its
business as now being conducted. To the Company's knowledge, except as disclosed
in the SEC Documents neither the Company nor any of its subsidiaries is
infringing upon or in conflict with any right of any other person with respect
to any Intangibles. Except as disclosed in the SEC Documents, no claims
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have been asserted by any person to the ownership or use of any Intangibles and
the Company has no knowledge of any basis for such claim.
Section 4.20. Internal Controls and Procedures. The Company maintains books and
records and internal accounting controls which provide reasonable assurance that
(i) all transactions to which the Company is a party or by which its properties
are bound are executed with management's authorization; (ii) the recorded
accounting of the Company's assets is compared with existing assets at regular
intervals; (iii) access to the Company's assets is permitted only in accordance
with management's authorization; and (iv) all transactions to which the Company
is a party or by which its properties are bound are recorded as necessary to
permit preparation of the financial statements of the Company in accordance with
U.S. generally accepted accounting principles.
Section 4.21. Payments and Contributions. Neither the Company nor any of its
directors, officers or, to its knowledge, other employees has (i) used any
Company funds for any unlawful contribution, endorsement, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment of Company funds to any foreign or domestic government
official or employee; (iii) violated or is in violation of any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other similar payment to any
person with respect to Company matters.
Section 4.22. No Misrepresentation. No representation or warranty of the Company
contained in this Agreement, any schedule, annex or exhibit hereto or any
agreement, instrument or certificate furnished by the Company to the Investors
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE V
COVENANTS OF THE INVESTORS
Each Investor, severally and not jointly, covenants and agrees with the Company
as follows:
Section 5.1. Compliance with Law. The Investor's trading activities with respect
to shares of the Company's Common Stock will be in compliance with all
applicable state and federal securities laws, rules and regulations and rules
and regulations of the Principal Market on which the Company's Common Stock is
listed.
Section 5.2. Short Sales. The Investor and its affiliates shall not engage in
short sales of the Company's Common Stock.
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ARTICLE VI
COVENANTS OF THE COMPANY
Section 6.1. Registration Rights. The Company shall cause the Registration
Rights Agreement to remain in full force and effect and the Company shall comply
in all material respects with the terms thereof.
Section 6.2. Reservation of Common Stock. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, shares of Common Stock for the purpose of
enabling the Company to issue the Conversion Shares and the Warrant Shares
pursuant to any conversion of the Convertible Debentures or exercise of the
Warrants; such amount of shares of Common Stock to be reserved shall be
calculated based upon a Market Price for the Common Stock under the terms of the
Debenture of $1.00. The number of shares so reserved from time to time, as
theretofore increased or reduced as hereinafter provided, may be reduced by the
number of shares actually delivered pursuant to any conversion of a Convertible
Debenture or exercise of a Warrant and the number of shares so reserved shall be
increased or decreased to reflect potential increases or decreases in the Common
Stock that the Company may thereafter be obligated to issue by reason of
adjustments to the Warrants.
Section 6.3. Listing of Common Stock. The Company hereby agrees to maintain the
listing of the Common Stock on a Principal Market, and as soon as permitted by
the rules of the Principal Market, to list the Conversion Shares and the Warrant
Shares on the Principal Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Principal Market, it will
include in such application the Conversion Shares and the Warrant Shares, and
will take such other action as is necessary or desirable in the opinion of
either Investor to cause the Common Stock to be listed on such other Principal
Market as promptly as possible. The Company will take all action to continue the
listing and trading of its Common Stock on a Principal Market (including,
without limitation, maintaining sufficient net tangible assets) and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of the Principal Market and shall provide each Investor with
copies of any correspondence to or from such Principal Market which questions or
threatens delisting of the Common Stock, within three (3) Trading Days of the
Company's receipt thereof, until the Investor has disposed of all of its
Registrable Securities. If required to maintain compliance with the listing
requirements of the Principal Market, particularly the "Corporate Governance"
rules of the Nasdaq SmallCap Market, the Company shall solicit proxies from its
shareholders in order to permit the Company to engage in Partial Redemptions of
all of the B-1 Warrants, or else to seek a waiver of such requirements from the
Nasdaq Stock Market. The Chief Executive Officer of the Company, by his
execution of this Agreement on behalf of the Company, agrees to vote his
personal shares of the Company's Common Stock in favor of any such proposal.
Section 6.4. Exchange Act Registration. The Company will cause its Common Stock
to continue to be registered under Section 12(b) or (g) of the Exchange Act,
will use its best efforts to comply in all material respects with its reporting
and filing obligations under the Exchange
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Act, and will not take any action or file any document (whether or not permitted
by the Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Act until each Investor has disposed of all of its Registrable
Securities.
Section 6.5. Legends. The certificates evidencing the Registrable Securities
shall be free of legends, except as set forth in Article IX.
Section 6.6. Corporate Existence. The Company will take all steps necessary to
preserve and continue the corporate existence of the Company.
Section 6.7. Consolidation; Merger. The Company shall not, at any time after the
date hereof, effect any merger or consolidation of the Company with or into, or
a transfer of all or substantially all of the assets of the Company to, another
entity (a "Consolidation Event") unless the resulting successor or acquiring
entity (if not the Company) assumes by written instrument or by operation of law
the obligation to deliver to the Investor such shares of stock and/or securities
as the Investor is entitled to receive pursuant to this Agreement.
Section 6.8. Private Offering Exemption. The sale of the Convertible Debenture
and the issuance of the Warrant Shares pursuant to exercise of the Warrant and
the Conversion Shares upon conversion of the Convertible Debenture shall be made
in accordance with the provisions and requirements of Section 4(2) of the
Securities Act and any applicable state securities law. The Company shall make
all necessary SEC and "blue sky" filings required to be made by the Company in
connection with the sale of the Securities to the Investors as required by all
applicable Laws, and shall provide a copy thereof to the Investors promptly
after such filing.
Section 6.9. Limitation on Future Financing. The Company agrees that it will not
enter into any sale of its securities for cash at a discount to Market Price
until the B-1 Warrants have been fully exercised, redeemed or the Termination
Date has passed, without the Investors' prior written consent, except (x)
pursuant to any (i) presently existing employee benefit plan which plan has been
approved by the Company's shareholders, (ii) compensatory plan for a full-time
employee or key consultant, or (iii) strategic partnership or other business
transaction, the principal purpose of which is not simply to raise money; or (y)
if the Market Price of the Common Stock is less than $2.00 for 30 out of 45
consecutive Trading Days, and the Investor does not agree in writing to provide
financing to the Company on terms offered by a bona fide third party within
three (3) Trading Days of notice from the Company setting forth the terms of
such proposed financing.
Section 6.10. Pro-Rata Redemptions of B-1 Warrants. The Company agrees that if
it engages in any total or partial redemption of a B-1 Warrant, it shall totally
or partially redeem the B-1 Warrants of both Investors pro-rata in each such
instance, in accordance with the relative numbers of B-1 Warrants issued to each
Investor at the Closing.
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ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival. The representations, warranties and covenants made by
each of the Company and each Investor in this Agreement, the annexes, schedules
and exhibits hereto and in each instrument, agreement and certificate entered
into and delivered by them pursuant to this Agreement, shall survive the Closing
and the consummation of the transactions contemplated hereby. In the event of a
breach or violation of any of such representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made shall
have all rights and remedies for such breach or violation available to it under
the provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.
Section 7.2. Indemnity. (a) The Company hereby agrees to indemnify and hold
harmless each Investor, its Affiliates and their respective officers, directors,
partners and members (collectively, the "Investor Indemnitees"), from and
against any and all Damages, in each case promptly as incurred by the Investor
Indemnitees and to the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact or breach of
any of the Company's representations or warranties contained in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Company
pursuant to this Agreement; or
(ii) any failure by the Company to perform in any material
respect any of its covenants, agreements, undertakings or obligations
set forth in this Agreement, the annexes, schedules or exhibits hereto
or any instrument, agreement or certificate entered into or delivered
by the Company pursuant to this Agreement.
(b) Each Investor, severally and not jointly, hereby agrees to
indemnify and hold harmless the Company, its Affiliates and their respective
officers, directors, partners and members (collectively, the "Company
Indemnitees"), from and against any and all Damages, and agrees to reimburse the
Company Indemnitees for reasonable all out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Company Indemnitees and to the extent arising out of or in
connection with:
(i) any misrepresentation, omission of fact, or breach of
any of the Investor's representations or warranties contained in this
Agreement, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Investor
pursuant to this Agreement; or
(ii) any failure by the Investor to perform in any
material respect any of its covenants, agreements, undertakings or
obligations set forth in this Agreement or any instrument, certificate
or agreement entered into or delivered by the Investor pursuant to this
Agreement.
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Section 7.3. Notice. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
Section 7.4. Direct Claims. In the event one party hereunder should have a claim
for indemnification that does not involve a claim or demand being asserted by a
third party, the Indemnified Party promptly shall deliver notice of such claim
to the Indemnifying Party. If the Indemnified Party disputes the claim, such
dispute shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association as set forth in
Article X. Judgment upon any award rendered by any arbitrators may be entered in
any court having competent jurisdiction thereof.
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ARTICLE VIII
DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION
Section 8.1. Due Diligence Review. Subject to Section 8.2, the Company shall
make available for inspection and review by each Investor, advisors to and
representatives of the Investors (who may or may not be affiliated with an
Investor and who are reasonably acceptable to the Company), any underwriter
participating in any disposition of the Registrable Securities on behalf of an
Investor pursuant to the Registration Statement, any such registration statement
or amendment or supplement thereto or any blue sky, Nasdaq or other filing, all
SEC Documents and other filings with the SEC, and all other publicly available
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees to supply all such publicly available information reasonably requested
by an Investor or any such representative, advisor or underwriter in connection
with such Registration Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or submitted by any of them),
prior to and from time to time after the filing and effectiveness of the
Registration Statement for the sole purpose of enabling such Investor and such
representatives, advisors and underwriters and their respective accountants and
attorneys to conduct initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.
Section 8.2. Non-Disclosure of Non-Public Information.
(a) The Company shall not disclose material non-public information to
the Investors, advisors to or representatives of the Investors unless prior to
disclosure of such information the Company identifies such information as being
non-public information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such
non-public information for review. Other than disclosure of any comment letters
received from the SEC staff with respect to the Registration Statement, the
Company may, as a condition to disclosing any non-public information hereunder,
require the Investors' advisors and representatives to enter into a
confidentiality agreement in form reasonably satisfactory to the Company and the
Investors.
(b) Nothing herein shall require the Company to disclose material
non-public information to the Investors or their advisors or representatives,
and the Company represents that it does not disseminate material non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts, provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, promptly notify the advisors and representatives of the
Investors and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein in light
of the circumstances in which they were made, not misleading.
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Nothing contained in this Section 8.2 shall be construed to mean that such
persons or entities other than the Investors (without the written consent of an
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of a material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
ARTICLE IX
LEGENDS; TRANSFER AGENT INSTRUCTIONS
Section 9.1. Legends. Unless otherwise provided below, each certificate
representing Registrable Securities will bear the following legend or equivalent
(the "Legend"):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED
OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR
NOT SUBJECT TO, SUCH REGISTRATION.
Section 9.2. Transfer Agent Instructions. Upon the execution and delivery
hereof, the Company is issuing to the transfer agent for its Common Stock (and
to any substitute or replacement transfer agent for its Common Stock upon the
Company's appointment of any such substitute or replacement transfer agent)
instructions in substantially the form of Exhibit F hereto. Such instructions
shall be irrevocable by the Company from and after the date hereof or from and
after the issuance thereof to any such substitute or replacement transfer agent,
as the case may be. It is the intent and purpose of such instructions, as
provided therein, to require the transfer agent for the Common Stock from time
to time upon transfer of Registrable Securities by the Investor to issue
certificates evidencing such Registrable Securities free of the Legend during
the following periods and under the following circumstances and without
consultation by the transfer agent with the Company or its counsel and without
the need for any further advice or instruction or documentation to the transfer
agent by or from the Company or its counsel or the Investor:
(a) at any time after the Effective Date, upon surrender of one or more
certificates evidencing Common Stock that bear the Legend, to the extent
accompanied by a notice
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requesting the issuance of new certificates free of the Legend to replace those
surrendered; provided that (i) the Registration Statement shall then be
effective; (ii) the Investor confirms to the transfer agent that it has sold,
pledged or otherwise transferred or agreed to sell, pledge or otherwise transfer
such Common Stock in a bona fide transaction to a third party that is not an
affiliate of the Company; and (iii) the Investor confirms to the transfer agent
that the Investor has complied with the prospectus delivery requirement.
(b) at any time upon any surrender of one or more certificates
evidencing Registrable Securities that bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing representations that (i) the
Investor is permitted to dispose of such Registrable Securities without
limitation as to amount or manner of sale pursuant to Rule 144(k) under the
Securities Act or (ii) the Investor has sold, pledged or otherwise transferred
or agreed to sell, pledge or otherwise transfer such Registrable Securities in
compliance with Rule 144.
Any of the notices referred to above in this Section 9.2 may be sent by
facsimile to the Company's transfer agent.
Section 9.3. No Other Legend or Stock Transfer Restrictions. No legend other
than the one specified in Section 9.1 has been or shall be placed on the share
certificates representing the Registrable Securities and no instructions or
"stop transfer orders," so called "stock transfer restrictions," or other
restrictions have been or shall be given to the Company's transfer agent with
respect thereto other than as expressly set forth in this Article IX.
Section 9.4. Investor's Compliance. Nothing in this Article shall affect in any
way the Investors' obligations under any agreement to comply with all applicable
securities laws upon resale of the Common Stock.
ARTICLE X
CHOICE OF LAW
Section 10.1. Governing Law/Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws. Any dispute under this Agreement
or any Exhibit attached hereto shall be submitted to arbitration under the
American Arbitration Association (the "AAA") in New York City, New York, and
shall be finally and conclusively determined by the decision of a board of
arbitration consisting of three (3) members (hereinafter referred to as the
"Board of Arbitration") selected as according to the rules governing the AAA.
The Board of Arbitration shall meet on consecutive business days in New York
City, New York, and shall reach and render a decision in writing (concurred in
by a majority of the members of the Board of Arbitration) with respect to the
amount, if any, which the losing party is required to pay to the other party in
respect of a claim filed. In connection with rendering its decisions, the Board
of Arbitration shall adopt and follow the laws of the State of New York. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30)
21
<PAGE> 22
calendar days following commencement of proceedings with respect thereto. The
Board of Arbitration shall cause its written decision to be delivered to all
parties involved in the dispute. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty (30) calendar day
period) shall be final, binding and conclusive on the parties to the dispute,
and entitled to be enforced to the fullest extent permitted by law and entered
in any court of competent jurisdiction. The non-prevailing party to any
arbitration (as determined by the Board of Arbitration) shall pay the expenses
of the prevailing party including reasonable attorney's fees, in connection with
such arbitration.
ARTICLE XI
ASSIGNMENT; ENTIRE AGREEMENT
Section 11.1. Assignment. Neither this Agreement nor any rights of the Investors
or the Company hereunder may be assigned by either party to any other person.
Notwithstanding the foregoing, (a) the provisions of this Agreement shall inure
to the benefit of, and be enforceable by, any permitted transferee of any of the
Convertible Debenture or Warrants purchased or acquired by each Investor
hereunder with respect to the Convertible Debenture or Warrants held by such
person, and (b) upon the prior written consent of the Company, which consent
shall not unreasonably be withheld or delayed, each Investor's interest in this
Agreement may be assigned at any time, in whole or in part, to any other person
or entity (including any affiliate of such Investor) who agrees to make the
representations and warranties contained in Article III and who agrees to be
bound by the covenants of Article V.
ARTICLE XII
NOTICES
Section 12.1. Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by reputable courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
22
<PAGE> 23
If to the Company: Professional Transportation Group Ltd., Inc.
495 Lovers Lane Road
Calhoun, GA 30701
Attention: Dennis A. Bakal
Telephone: (888) 999-1964
Facsimile: (706) 624-9698
with a copy to: Nelson Mullins Riley & Scarborough, L.L.P.
(shall not constitute notice) 999 Peachtree Street, N.E.
Suite 1400
Atlanta, GA 30309
Attention: Jon H. Klapper, Esq.
Telephone: (404) 817-6146
Facsimile: (404) 817-6050
if to the Investor:
as set forth on the signature page hereto.
with a copy to: Joseph A. Smith, Esq.
(shall not constitute notice) Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York
Telephone: (212) 351-4500
Facsimile: (212) 661-0989
Either party hereto may from time to time change its address or facsimile number
for notices under this Section 12.1 by giving written notice of such changed
address or facsimile number to the other party hereto as provided in this
Section 12.1.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Counterparts/ Facsimile/ Amendments. This Agreement may be
executed in multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument which shall
be enforceable against the parties actually executing such counterparts and all
of which together shall constitute one and the same instrument. Except as
otherwise stated herein, in lieu of the original documents, a facsimile
transmission or copy of the original documents shall be as effective and
enforceable as the original. This Agreement may be amended only by a writing
executed by all parties.
23
<PAGE> 24
Section 13.2. Entire Agreement. This Agreement, the agreements attached as
Exhibits hereto, which include, but are not limited to the Convertible
Debenture, the B-1 Warrant, the B-2 Warrant, the Escrow Agreement, and the
Registration Rights Agreement, set forth the entire agreement and understanding
of the parties relating to the subject matter hereof and supersedes all prior
and contemporaneous agreements, negotiations and understandings between the
parties, both oral and written relating to the subject matter hereof. The terms
and conditions of all Exhibits to this Agreement are incorporated herein by this
reference and shall constitute part of this Agreement as is fully set forth
herein.
Section 13.3. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that such severability shall be ineffective if
it materially changes the economic benefit of this Agreement to any party.
Section 13.4. Headings. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Section 13.5. Reporting Entity for the Common Stock. The reporting entity relied
upon for the determination of the trading price or trading volume of the Common
Stock on any given Trading Day for the purposes of this Agreement shall be
Bloomberg, L.P. or any successor thereto. The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.
Section 13.6. Replacement of Certificates. Upon (i) receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of a certificate representing the Convertible Debenture or any
Conversion Shares or Warrant or any Warrant Shares and (ii) in the case of any
such loss, theft or destruction of such certificate, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and amount to
the Company (which shall not exceed that required by the Company's transfer
agent in the ordinary course) or (iii) in the case of any such mutilation, on
surrender and cancellation of such certificate, the Company at its expense will
execute and deliver, in lieu thereof, a new certificate of like tenor.
Section 13.7. Fees and Expenses. Each of the Company and the Investors agrees to
pay its own expenses incident to the performance of its obligations hereunder,
except that the Company shall pay the fees, expenses and disbursements of
Investors' counsel in the amount of $15,000, and $500 for its services as Escrow
Agent for each Debenture Conversion and Warrant Exercise (as such terms are
defined in the Escrow Agreement), all as set forth in the Escrow Agreement.
Section 13.8. Brokerage. Each of the parties hereto represents that it has had
no dealings in connection with this transaction with any finder or broker who
will demand payment of any fee or commission from the other party. The Company
on the one hand, and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
person claiming brokerage commissions or finder's fees on account of services
purported to have been rendered on behalf of the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
24
<PAGE> 25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By: /s/ Dennis A. Bakal
-------------------------------------------
Dennis A. Bakal,
Chief Executive Officer
INVESTOR:
Address: AMRO International, S.A.
c/o Ultra Finance
Grossmunster Platz 26
Zurich CH8022 By: /s/ H. U. Bachofen
Switzerland -------------------------------
H. U. Bachofen, Director
Facsimile: 011-411-262-5515
Amount subscribed for
Debentures: $250,000 principal amount
B-1 Warrants: 500,000 shares
B-2 Warrants: 50,000 shares
Total purchase price: $252,500
Address: /s/ John P. O'Shea
c/o Westminster Securities, Inc. -------------------------------
19 Rector Street, Suite 1105 John P. O'Shea
New York, NY 10006
Telephone: (212) 480-2500
Facsimile: (212) 480-2549
Amount subscribed for
Debentures: $250,000 principal amount
B-1 Warrants: 500,000 shares
B-2 Warrants: 50,000 shares
Total purchase price: $252,500
25
<PAGE> 26
SCHEDULE 4.9
The Underwriting Agreement between the Company and Argent Securities,
Inc. ("Argent"), dated June 19, 1997, provides that the Company must obtain the
written consent of Argent in order to sell any of its capital stock or warrants
or rights to purchase capital stock within two years of the date of such
agreement. The Company has not obtained such written consent from Argent.
<PAGE> 27
SCHEDULE 4.13
In December 1998, the Company entered into a consent order with Mellon
U.S. Leasing, Inc. ("Mellon"), settling litigation that was pending between them
in the United States District Court for the Northern District of Georgia. The
consent order specifies that the Company will pay to Mellon a negotiated amount
over a six-month term without interest. The Company believes that the resolution
of the case on this basis was favorable.
<PAGE> 28
SCHEDULE 4.18
(Exceptions to Leases of Real Property and Building)
The Company is the tenant of certain premises known as 495
Lovers Lane, Calhoun, Georgia pursuant to a lease agreement dated as of June 1,
1998 between the Company as tenant and Charles Prater and Lynwood Warmack as
landlord. Messrs. Prater and Warmack held record title to the premises at that
time, which they acquired from CTI Properties, Inc. ("CTI Properties") in
December 1974.
In October 1998, certain creditors of CTI Properties commenced an
involuntary bankruptcy action against it in the United States Bankruptcy Court
for the Northern District of Georgia (Rome Division). The bankruptcy trustee for
CTI Properties alleges that neither Mr. Prater nor Mr. Warmack held title to the
premises, and that accordingly there can be no valid lease between them and the
Company.
The Company has filed an action with the Bankruptcy Court to interplead
its monthly rent into the Bankruptcy Court while there remains an issue as to
the ownership of the premises.
<PAGE> 29
EXHIBIT A
9% CONVERTIBLE DEBENTURE
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE SECURITIES ARE
RESTRICTED AND MAY NOT BE OFFERED, SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
No. A- US $ xx ,000
---- --------
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
9% CONVERTIBLE DEBENTURE DUE DECEMBER 31, 2000
THIS DEBENTURE is issued by PROFESSIONAL TRANSPORTATION GROUP LTD.,
INC., a corporation organized and existing under the laws of the State of
Georgia (the "Company") and is designated as its 9% Convertible Debenture Due
December 31, 2000.
FOR VALUE RECEIVED, the Company promises to pay to ________________,
______________________, or permitted assigns (the "Holder"), the principal sum
of ____ Hundred Thousand and 00/100 (US $___,000) Dollars on December 31, 2000
(the "Maturity Date") and to pay interest on the principal sum outstanding from
time to time quarterly in arrears at the rate of 9% per annum accruing from the
date of initial issuance. Accrual of interest shall commence on the first
business day to occur after the date of initial issuance and continue until
payment in full of the principal sum has been made or duly provided for.
Quarterly interest payments shall be due and payable on July 1, October 1,
January 1 and April 1 of each year, commencing with April 1, 1999. If any
interest payment date or the Maturity Date is not a business day in the State of
New York, then such payment shall be made on the next succeeding business day.
Subject to the provisions of Paragraph 4 below, the interest on this Debenture
is payable at the option of the Company, in cash or in shares of Common Stock of
the Company ("Common Stock") valued at the Conversion Price (as defined herein)
on the interest payment date, at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder from time to
time. The Company will pay the principal of and any accrued but unpaid interest
due upon this Debenture on the Maturity Date, less any amounts required by law
to be deducted, to the registered holder of this Debenture as of the tenth day
prior to the Maturity Date and addressed to such holder at the last address
appearing on the Debenture Register. The forwarding of the required number of
shares of Common Stock determined pursuant to the provisions of Paragraph 4
below, shall constitute a payment of principal and interest hereunder and shall
satisfy and discharge the liability for principal and interest on this Debenture
to the extent of the sum represented by the equivalent Conversion Price value of
such shares of Common Stock (as defined in Paragraph 3 below) plus any amounts
so deducted.
This Debenture is subject to the following additional provisions:
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<PAGE> 30
1. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
2. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture, the Company may require, prior to issuance of a new
Debenture in the name of such other person, that it receive reasonable transfer
documentation including a legal opinion that the issuance of the Debenture in
such other name does not and will not cause a violation of the Act or any
applicable state securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary. This
Debenture has been executed and delivered pursuant to the Debenture and Warrant
Purchase Agreement dated as of December 10, 1998 between the Company and the
original Holder (the "Purchase Agreement"), and is subject to the terms and
conditions of the Purchase Agreement, which are, by this reference, incorporated
herein and made a part hereof. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth for such terms in the Purchase
Agreement.
3. The Holder of this Debenture is entitled, at its option, to convert
at any time commencing on the date hereof, the principal amount of this
Debenture or any portion thereof, together with accrued but unpaid interest,
provided that the portion of the principal amount so converted is Five Thousand
Dollars (US $5,000) or a multiple thereof (unless if at the time of such
election to convert the aggregate principal amount of this Debenture is less
than Five Thousand Dollars (US $5,000), then the whole amount thereof) into
shares of Common Stock of the Company ("Conversion Shares") at a conversion
price for each share of Common Stock ("Conversion Price") equal to 78% of the
Market Price at the Conversion Date (as defined in Section 8 hereof), but in no
event shall the Conversion Price be less than $1.00 per share or greater than
$5.00 per share (adjusted for any Common Stock dividend, split or reverse split
effected after the date of this Debenture). The term "Market Price" shall have
the meaning set forth in the Purchase Agreement.
4. The entire unpaid balance of this Debenture and accrued interest
thereon outstanding on the Maturity Date hereof shall automatically convert into
Common Stock at the Conversion Price on the Maturity Date.
5. The Company may, at any time and from time to time, prepay all or
any portion of the outstanding principal amount of this Debenture and all
accrued but unpaid interest thereon upon five (5) Business Days' prior written
notice to the Holder. Such prepayment shall be an amount equal to 122% of the
then-outstanding principal balance, plus all accrued but unpaid interest. The
Holder shall be entitled to convert this Debenture at any time prior to the
prepayment date set forth in such notice of prepayment.
6. Notwithstanding anything to the contrary contained herein, in the
event that a conversion (when aggregated with all prior conversions of portions
of this Debenture and any other Convertible Debenture issued pursuant to the
Agreement and all shares of Common Stock issuable upon exercise of the B-1
Warrants (as defined in the Agreement)) requires the Company to issue a number
of shares of Common Stock which would exceed 19.9% of the number of shares of
Common Stock issued and outstanding on the date of this Debenture, the Company
shall issue only such number of shares of Common
2
<PAGE> 31
Stock as shall not exceed such limit and shall pay the Holder cash in the amount
of the Market Price for the number of shares of Common Stock in excess of such
number of shares into which this Debenture (or the portion thereof then being
converted) is then convertible at the Conversion Price, unless the Company has
obtained shareholder approval for such issuance pursuant to the rules of The
Nasdaq Stock Market, or as otherwise permitted by The Nasdaq Stock Market.
7. In the event that the Market Price of the Common Stock is less than
$4.00 per share on any Conversion Date, the Company may elect to deliver to the
Holder in consideration of any such conversion cash, Conversion Shares or any
combination thereof. The amount of cash to be delivered shall equal the Market
Price of the number of shares of Common Stock as would have been issued at the
Conversion Price upon such conversion. The Company's ability to deliver cash as
full or partial conversion consideration in accordance with this Section 7 shall
be conditioned on the Company's delivery of notice to the Holder of such
election by the Company no later than twenty-four (24) hours following the
Company's receipt of a Notice of Conversion. The Holder shall then have a
further twenty-four (24) hour period in which to withdraw his Notice of
Conversion, or else the Holder shall be deemed to have accepted such alternative
cash consideration.
8. Conversion shall be effectuated by surrendering this Debenture to
the Escrow Agent (only if such Conversion will convert all outstanding
principal) together with the form of conversion notice attached hereto as
Exhibit A (the "Notice of Conversion"), executed by the Holder of this Debenture
evidencing such Holder's intention to convert this Debenture or a specified
portion (as above provided) hereof. Interest accrued or accruing from the date
of issuance to the date of conversion shall, at the option of the Company, be
paid in cash as set forth above or in Common Stock upon conversion at the
Conversion Price on the Conversion Date. No fraction of a share or scrip
representing a fraction of a share will be issued on conversion, but the number
of shares issuable shall be rounded down to the nearest whole share. The date on
which Notice of Conversion is given (the "Conversion Date") shall be deemed to
be the date on which the Holder faxes the Notice of Conversion duly executed, to
the Company and to the Escrow Agent. Facsimile delivery of the conversion notice
shall be accepted by the Company at facsimile number (706) 624-9698 Attn.:
Dennis Bakal, and by the Escrow Agent at the facsimile number set forth in the
Escrow Agreement. Certificates representing Common Stock upon conversion will be
delivered to the Escrow Agent within five (5) business days from the date the
Notice of Conversion is delivered to the Company and the Escrow Agent.
9. No provision of this Debenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of,
and interest on, this Debenture at the time, place, and rate, and in the coin or
currency or shares of Common Stock, herein prescribed. This Debenture is a
direct obligation of the Company.
10. No recourse shall be had for the payment of the principal of, or
the interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, employee, officer or
director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
11. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth
3
<PAGE> 32
above into the kind and amount of stock, securities or property receivable upon
such merger, consolidation, sale or transfer by a holder of the number of shares
of Common Stock into which this Debenture might have been converted immediately
before such merger, consolidation, sale or transfer, subject to adjustments
which shall be as nearly equivalent as may be practicable.
12. This Debenture shall be governed by and construed in accordance
with the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
13. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture and same shall continue for a
period of five (5) days; or
b. Any of the representations or warranties made by the Company
herein, in the Purchase Agreement, the Registration Rights
Agreement, or in any agreement, certificate or financial or
other written statements heretofore or hereafter furnished by
the Company in connection with the execution and delivery of
this Debenture or the Purchase Agreement shall be false or
misleading in any material respect at the time made; or
c. The Company fails to issue shares of Common Stock to the
Holder or to cause its Transfer Agent to issue shares of
Common Stock upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this
Debenture, fails to transfer or to cause its Transfer Agent to
transfer any certificate for shares of Common Stock issued to
the Holder upon conversion of this Debenture as and when
required by this Debenture or the Registration Rights
Agreement, and such transfer is otherwise lawful, or fails to
remove any restrictive legend or to cause its Transfer Agent
to transfer any certificate or any shares of Common Stock
issued to the Holder upon conversion of this Debenture as and
when required by this Debenture, the Purchase Agreement or the
Registration Rights Agreement and such legend removal is
otherwise lawful, and any such failure shall continue uncured
for five (5) business days; or
d. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under the Purchase
Agreement, the Registration Rights Agreement or this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after written notice from the Holder of such
failure; or
e. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment for
the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or consent to the appointment of
a trustee, liquidator or receiver for its or for a substantial
part of its property or business; or
4
<PAGE> 33
f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty
(60) days after such appointment; or
g. Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company and shall not be
dismissed within sixty (60) days thereafter; or
h. Any money judgment, writ or warrant of attachment, or similar
process in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of sixty
(60) days (or such later period for payment as any such
judgment may specify) or in any event later than five (5) days
prior to the date of any proposed sale thereunder; or
i. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60)
days after such institution or the Company shall by any action
or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding; or
j. The Company shall have its Common Stock suspended or delisted
from trading on an exchange or the Nasdaq market for in excess
of two Trading Days;
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, anything herein or
in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law;
provided, that any payment of this Debenture in connection with an Event of
Default (other than a delisting of its Common Stock pursuant to clause (j.)) may
be made, at the Company's election, in cash or in shares of Common Stock, in
such number as would be issued at the Conversion Price on the date the Debenture
becomes due and payable. Notwithstanding the foregoing, payment of the principal
of and accrued interest on this Debenture shall be subordinated to the prior
right to payment of SouthTrust Bank, N.A. and its successors and assigns,
pursuant to all presently existing credit agreements and arrangements between
the Company and such bank, including any amounts which may be drawn by the
Company in the future pursuant to an existing revolving line of credit or other
future obligation to lend by such bank upon the occurrence of future events or
conditions. The Holder, by acceptance hereof, acknowledges that no cash payments
of principal or interest will be made to Holder without the consent of
SouthTrust Bank until and unless all credit arrangements between the Company and
such bank have been satisfied in full.
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<PAGE> 34
14. Nothing contained in this Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: December ___, 1998
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:
-----------------------------------------
Dennis A. Bakal
Chief Executive Officer
Attest:
- -----------------------
6
<PAGE> 35
EXHIBIT A
NOTICE OF CONVERSION*
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $
________________ of the principal amount of the above Debenture No. ___ into
Shares of Common Stock of PROFESSIONAL TRANSPORTATION GROUP LTD., INC. (the
"Company") according to the conditions hereof, as of the date written below.
Date of Conversion
-------------------------------------------------------------
Applicable Conversion Price
----------------------------------------------------
Accrued Interest through Date of Conversion $ .
------------------
Number of Shares to be Issued:
-------------------
Signature
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[Name]
Address:
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-----------------------------------------------------------------------
* This Notice of Conversion must be received by the Company's Escrow Agent by
the third Trading Day following the Date of Conversion, and, if such conversion
represents the remaining principal balance of the Debenture, the original
Debenture.
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<PAGE> 36
EXHIBIT B-1
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS WARRANT NOR THE SHARES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT
FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase xxx,000 Shares of Common Stock of
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
THIS CERTIFIES that, for value received, __________________ (the
"Holder"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, at any time on or after November 1, 2001 (the "Initial Exercise
Date") and on or prior to the close of business on December 31, 2001 (the
"Termination Date") but not thereafter, to subscribe for and purchase from
PROFESSIONAL TRANSPORTATION GROUP LTD., INC., a Georgia corporation (the
"Company"), up to _____________ (xxx,000) shares (the "Warrant Shares") of
Common Stock, no par value per share of the Company (the "Common Stock"). The
purchase price of one share of Common Stock (the "Exercise Price") under this
Warrant shall be Twenty-five Dollars ($25.00). The Exercise Price and the number
of shares for which the Warrant is exercisable shall be subject to adjustment as
provided herein. This Warrant is being issued in connection with the Debenture
and Warrant Purchase Agreement between the Holder and the Company dated as of
December 10, 1998 (the "Agreement") and is subject to its terms and conditions.
In the event of any conflict between the terms of this Warrant and the
Agreement, the Agreement shall control. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth for such terms in the
Agreement.
<PAGE> 37
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
holder hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant. Except as provided in Section 4 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date, and before the close of
business on the Termination Date, or such earlier date on which this Warrant may
terminate as provided elsewhere in this Warrant, by the surrender of this
Warrant and the Notice of Exercise Form annexed hereto duly executed, at the
office of the Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address of
such holder appearing on the books of the Company) and upon payment of the
Exercise Price of the shares thereby purchased by wire transfer or cashier's
check drawn on a United States bank, the holder of this Warrant shall be
entitled to receive a certificate for the number of shares of Common Stock so
purchased. Certificates for shares purchased hereunder shall be delivered to the
holder hereof within three (3) business days after the date on which this
Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to have
been issued, and Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by Holder, if
any, pursuant to Section 5 prior to the issuance of such shares, have been paid.
If this Warrant shall have been exercised in part, the Company shall, at the
time of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be
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<PAGE> 38
directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that upon any transfer
involving the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its shareholder books
or records in any manner which prevents the timely exercise of this Warrant.
7. Transfer, Division and Combination. (a) Subject to compliance with
any applicable securities laws (and provision to the Company of an opinion of
counsel for the assignor of this Warrant), transfer of this Warrant and all
rights hereunder, in whole or in part, shall be registered on the books of the
Company to be maintained for such purpose, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and, if required, such payment,
the Company shall execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees and in the denomination specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. A Warrant, if properly assigned, may be exercised by a new Holder for
the purchase of shares of Common Stock without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by Holder or its agent or attorney. Subject to compliance
with Section 7(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
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<PAGE> 39
(c) The Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books
for the registration and the registration of transfer of the Warrants.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, the Warrant Shares so purchased
shall be and be deemed to be issued to such holder as the record owner of such
shares as of the close of business on the later of the date of such surrender or
payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
certificate or any stock certificate relating to the Warrant Shares, and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it, and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such
Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares. (a)
Stock Splits, etc. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the happening of any of the following. In case the
Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (iii) combine its outstanding shares of Common
Stock into a smaller number of shares of Common Stock or (iv) issue any shares
of its capital stock in a reclassification of the Common Stock, then the number
of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the holder of this Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which he would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. Upon each such adjustment of the kind
and number of Warrant Shares or other securities of the Company which are
purchasable hereunder, the holder of this Warrant shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per such Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment. An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.
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<PAGE> 40
(b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the holder of this Warrant shall have the right thereafter
to receive, upon exercise of this Warrant, the number of shares of common stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 11. For purposes of
this Section 11, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 11 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
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<PAGE> 41
12. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
13. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or property) after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such notice, in absence of
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
14. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the record date for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
the holders of Common Stock shall be entitled to any such dividend, distribution
or right, and the amount and character thereof, and (ii) the date on which any
such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up is to take place and the
time, if any such time is to be fixed, as of which the holders of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon such disposition, dissolution, liquidation or
winding up. Each such written notice shall be sufficiently given if addressed to
Holder at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17(d).
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<PAGE> 42
15. Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of Nasdaq or any domestic
securities exchange upon which the Common Stock may be listed.
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
Before taking any action which would cause an adjustment reducing the
current Exercise Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Exercise Price.
16. Redemption by the Company.
(a) In Entirety. The entire unexercised portion of this Warrant may
be redeemed by the Company in whole, but not in part, at any time upon thirty
(30) days' prior written notice to the Holder, upon payment to Holder of the
pro-rata share of the original $5,000 purchase price of this Warrant remaining
unexercised on the date of redemption. In such case, Section 16(b) of this
Warrant shall be inapplicable. The Holder shall be entitled to exercise this
Warrant in accordance with its terms at any time prior to the expiration of such
thirty day notice period.
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<PAGE> 43
(b) In Part. This Warrant may also be redeemed in part, from time
to time by the Company (a "Partial Redemption"), upon the following terms and
conditions:
(i) Each Partial Redemption shall require at least five (5)
Trading Days' advance written notice to the Holder, specifying the date on which
such Partial Redemption shall occur (the "Partial Redemption Date") and the
number of Warrants to be redeemed. The Holder shall be entitled to exercise the
Warrants to be redeemed until 5:00 pm Eastern time on the date specified in such
notice as the redemption date, following the procedures set forth in the Escrow
Agreement. The date that notice of a Partial Redemption is given is referred to
herein as a "Partial Redemption Notice Date."
(ii) No Partial Redemption may be made when the Market Price
of the Company's Common Stock (as defined in the Agreement) is less than $2.00.
(iii) No Partial Redemption may be made at any time when the
Principal Market for the Common Stock is the OTC Bulletin Board sponsored by
Nasdaq.
(iv) No Partial Redemption may be made unless there is an
effective registration statement on the effective date of such Partial
Redemption which will permit the immediate resale by the Holder of the Warrant
Shares to be issued upon exercise of this Warrant.
(v) No Partial Redemption Date shall occur within twenty (20)
Trading Days of any other Partial Redemption Date.
(vi) No Partial Redemption shall be for a portion of the
Warrant representing a number of Warrant Shares, the aggregate Exercise Price of
which (determined as of the Partial Redemption Notice Date) is less than One
Hundred Thousand Dollars ($100,000) nor more than the number of Warrant Shares
whose aggregate Exercise Price is determined by the following formula:
Average Stock Price: Average of the closing prices on the
Principal Market (so long as the Principal
Market is an exchange or the Nasdaq National
Market, and the average of the closing bid
prices otherwise) for the five (5)
consecutive Trading Days immediately prior
to the Partial Redemption Notice Date.
Average Trading Volume: Average daily trading volume for the Common
Stock on all markets during the five (5)
consecutive Trading Days immediately prior
to the Partial Redemption Notice Date.
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<PAGE> 44
<TABLE>
<S> <C>
Maximum aggregate Exercise 20% of (Average Stock Price*(Average
Price of Warrant Shares Trading Volume*22));
to be redeemed:
</TABLE>
unless the maximum aggregate Exercise Price of the shares which could be
redeemed under this formula is less than $100,000, in which case the minimum
Partial Redemption shall be $50,000.
Further, no Partial Redemption may be made, if, upon exercise by the Holder of
that portion of this Warrant being called for Partial Redemption by the Company,
such exercise would cause the Holder to be deemed the beneficial owner of 9.9%
or more of the Company's Common Stock for purposes of Section 16(b) under the
Exchange Act, or any rules or court interpretations thereunder, whether in
existence on the date of issuance of this Warrant or coming into existence at
any time thereafter through the Termination Date. In the event of any dispute as
to whether the Holder may be deemed to be the beneficial owner of 9.9% or more
of the Common Stock for purposes of said Section 16(b), the Holder shall be
entitled to receive an opinion of counsel for the Company that such proposed
Partial Redemption will not cause the Holder to be deemed to be the beneficial
owner of 9.9% or more of the Common Stock for purposes of Section 16(b). The
Holder shall provide such counsel with such information about the Holder's
interests in the Company as shall be reasonably necessary for counsel to render
such opinion. The cost of such opinion shall be the sole responsibility of the
Company.
(vii) No Partial Redemption shall be permitted if, after
giving effect to such Partial Redemption (and assuming that Holder will exercise
this Warrant for the number of Warrant Shares subject to such Partial
Redemption), the number of shares of Common Stock issued by the Company pursuant
to all prior Partial Redemptions of all Warrants issued pursuant to the
Agreement, plus the number of Conversion Shares issued or, if not then fully
converted, issuable upon conversion of the Convertible Debentures issued
pursuant to the Agreement, plus the number of Warrant Shares to be issued
pursuant to such Partial Redemption, would exceed 19.9% of the number of shares
of Common Stock of the Company issued and outstanding on the date of the
Agreement, unless the Company has received the specific approval of its
shareholders for the transactions contemplated by the Agreement, as required by
the rules of the Nasdaq Stock Market, Inc. or of any other exchange on which the
Company's Common Stock may then be listed, or the application of such rule to
the Company from the transactions contemplated by the Agreement has been waived
in writing by such market or exchange.
(viii) No Partial Redemption Date shall occur on or after
August 31, 2001.
(ix) Upon any Partial Redemption, the Exercise Price shall be
adjusted by the Company to equal 78% of the Market Price (as defined in the
Agreement) on the Partial Redemption Notice Date (if the Market Price on such
date is $4.00 or less) or to equal 88% of the Market Price on the Partial
Redemption Notice Date (if the Market Price on such date is greater than $4.00),
but in no event shall such adjustment cause the Exercise Price to exceed $25.00.
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<PAGE> 45
(x) Any portion of the Warrant called for Partial Redemption
and not exercised in accordance with the terms hereof shall thereafter be void
and of no further force and effect.
17. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of New York without regard to its conflict of law, principles or
rules, and be subject to arbitration pursuant to the terms set forth in the
Agreement.
(b) Restrictions. The holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws and by the
Agreement.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof, shall give rise
to any liability of Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
(f) Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder or holder of Warrant Shares.
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<PAGE> 46
(h) Cooperation. The Company shall cooperate with Holder in
supplying such information as may be reasonably necessary for Holder to complete
and file any information reporting forms presently or hereafter required by the
SEC as a condition to the availability of an exemption from the Securities Act
for the sale of any Warrant or any Warrant Shares.
(i) Indemnification. The Company agrees to indemnify and hold
harmless Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of any failure by the
Company to perform or observe in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Warrant; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's negligence,
bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
(j) Amendment. This Warrant may be modified or amended or the
provisions hereof waived only with the written consent of the Company and the
Holder.
(k) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
(l) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Dated: December _____, 1998
PROFESSIONAL TRANSPORTATION GROUP LTD.,
INC.
By:
--------------------------------------
Dennis A. Bakal,
Chief Executive Officer
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<PAGE> 47
NOTICE OF EXERCISE
To: PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock (the "Common Stock"), of PROFESSIONAL TRANSPORTATION GROUP LTD.,
INC. pursuant to the terms of the attached Warrant, and tenders herewith payment
of the exercise price in full, together with all applicable transfer taxes, if
any.
(2) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
-----------------------------------------
(Name)
-----------------------------------------
(Address)
-----------------------------------------
Dated:
-------------------------------------
Signature
<PAGE> 48
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
whose address is
- ---------------------------------------------
- ---------------------------------------------------------------.
- ---------------------------------------------------------------
Dated:
----------------,--------
Holder's Signature:
----------------------------------
Holder's Address:
------------------------------------
------------------------------------
Signature Guaranteed:
--------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
2
<PAGE> 49
EXHIBIT B-2
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THIS WARRANT NOR THE
SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT
AND UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Purchase xxx,000 Shares of Common Stock of
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
THIS CERTIFIES that, for value received, __________________
(the "Holder"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, at any time on or after the date of issuance of this
Warrant (the "Initial Exercise Date") and on or prior to the close of business
on December 31, 2001 (the "Termination Date") but not thereafter, to subscribe
for and purchase from PROFESSIONAL TRANSPORTATION GROUP LTD., INC., a Georgia
corporation (the "Company"), up to _____________ (xxx,000) shares (the "Warrant
Shares") of Common Stock, no par value per share of the Company (the "Common
Stock"). The purchase price of one share of Common Stock (the "Exercise Price")
under this Warrant shall be Three Dollars and Fifty Cents ($3.50). The Exercise
Price and the number of shares for which the Warrant is exercisable shall be
subject to adjustment as provided herein. This Warrant is being issued in
connection with the Debenture and Warrant Purchase Agreement between the Holder
and the Company dated as of December 10, 1998 (the "Agreement") and is subject
to its terms and conditions. In the event of any conflict between the terms of
this Warrant and the Agreement, the Agreement shall control. Capitalized terms
used and not otherwise defined herein shall have the meanings set forth for
such terms in the Agreement.
<PAGE> 50
1. Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by
the holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant together with the Assignment Form annexed hereto properly
endorsed.
2. Authorization of Shares. The Company covenants that all shares of
Common Stock which may be issued upon the exercise of rights represented by
this Warrant will, upon exercise of the rights represented by this Warrant, be
duly authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant. Except as provided in Section 4 herein,
exercise of the purchase rights represented by this Warrant may be made at any
time or times on or after the Initial Exercise Date, and before the close of
business on the Termination Date, or such earlier date on which this Warrant
may terminate as provided elsewhere in this Warrant, by the surrender of this
Warrant and the Notice of Exercise Form annexed hereto duly executed, at the
office of the Company (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address
of such holder appearing on the books of the Company) and upon payment of the
Exercise Price of the shares thereby purchased by wire transfer or cashier's
check drawn on a United States bank, the holder of this Warrant shall be
entitled to receive a certificate for the number of shares of Common Stock so
purchased. Certificates for shares purchased hereunder shall be delivered to
the holder hereof within three (3) business days after the date on which this
Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to
have been exercised and such certificate or certificates shall be deemed to
have been issued, and Holder or any other person so designated to be named
therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by Holder, if
any, pursuant to Section 5 prior to the issuance of such shares, have been
paid. If this Warrant shall have been exercised in part, the Company shall, at
the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to
purchase the unpurchased shares of Common Stock called for by this Warrant,
which new Warrant shall in all other respects be identical with this Warrant.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without charge to
the holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the holder of this Warrant or in such name or names as may be
2
<PAGE> 51
directed by the holder of this Warrant; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the holder of this Warrant, this Warrant when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the holder hereof; and provided further, that upon any transfer
involving the issuance or delivery of any certificates for shares of Common
Stock, the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6. Closing of Books. The Company will not close its shareholder books
or records in any manner which prevents the timely exercise of this Warrant.
7. Transfer, Division and Combination. (a) Subject to compliance with
any applicable securities laws (including the provision to the Company of an
opinion of counsel for the assignor of this Warrant), transfer of this Warrant
and all rights hereunder, in whole or in part, shall be registered on the books
of the Company to be maintained for such purpose, upon surrender of this
Warrant at the principal office of the Company, together with a written
assignment of this Warrant substantially in the form attached hereto duly
executed by Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new Holder for the purchase of shares of Common Stock
without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with
a written notice specifying the names and denominations in which new Warrants
are to be issued, signed by Holder or its agent or attorney. Subject to
compliance with Section 7(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3
<PAGE> 52
(c) The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 7.
(d) The Company agrees to maintain, at its aforesaid office,
books for the registration and the registration of transfer of the Warrants.
8. No Rights as Shareholder until Exercise. This Warrant does not
entitle the holder hereof to any voting rights or other rights as a shareholder
of the Company prior to the exercise hereof. Upon the surrender of this Warrant
and the payment of the aggregate Exercise Price, the Warrant Shares so
purchased shall be and be deemed to be issued to such holder as the record
owner of such shares as of the close of business on the later of the date of
such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant. The Company
represents and warrants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant certificate or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and upon surrender and cancellation of such Warrant or
stock certificate, if mutilated, the Company will make and deliver a new
Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc. If the last or appointed day
for the taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action may be
taken or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares. (a)
Stock Splits, etc. The number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the happening of any of the following. In case the
Company shall (i) pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock to holders of its outstanding Common
Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
number of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock, then the
number of Warrant Shares purchasable upon exercise of this Warrant immediately
prior thereto shall be adjusted so that the holder of this Warrant shall be
entitled to receive the kind and number of Warrant Shares or other securities
of the Company which he would have owned or have been entitled to receive had
such Warrant been exercised in advance thereof. Upon each such adjustment of
the kind and number of Warrant Shares or other securities of the Company which
are purchasable hereunder, the holder of this Warrant shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per such Warrant Share or other
security obtained by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment. An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.
4
<PAGE> 53
(b) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the
Company), or sell, transfer or otherwise dispose of all or substantially all
its property, assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of
any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or acquiring
corporation ("Other Property"), are to be received by or distributed to the
holders of Common Stock of the Company, then the holder of this Warrant shall
have the right thereafter to receive, upon exercise of this Warrant, the number
of shares of common stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and Other Property receivable upon
or as a result of such reorganization, reclassification, merger, consolidation
or disposition of assets by a holder of the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to such event. In case
of any such reorganization, reclassification, merger, consolidation or
disposition of assets, the successor or acquiring corporation (if other than
the Company) shall expressly assume the due and punctual observance and
performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the Company) in order to
provide for adjustments of shares of Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 11. For purposes of this Section 11,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any
such stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe
for or purchase any such stock. The foregoing provisions of this Section 11
shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.
5
<PAGE> 54
12. Voluntary Adjustment by the Company. The Company may at any time
during the term of this Warrant, reduce the then current Exercise Price to any
amount and for any period of time deemed appropriate by the Board of Directors
of the Company.
13. Notice of Adjustment. Whenever the number of Warrant Shares or
number or kind of securities or other property purchasable upon the exercise of
this Warrant or the Exercise Price is adjusted, as herein provided, the Company
shall promptly mail by registered or certified mail, return receipt requested,
to the holder of this Warrant notice of such adjustment or adjustments setting
forth the number of Warrant Shares (and other securities or property)
purchasable upon the exercise of this Warrant and the Exercise Price of such
Warrant Shares (and other securities or property) after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. Such notice,
in absence of manifest error, shall be conclusive evidence of the correctness
of such adjustment.
14. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
consolidation or merger of the Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of the
Company to, another corporation or,
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the record date for such dividend,
distribution or right or for determining rights to vote in respect of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, liquidation or winding up, and (ii) in the case of any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, at least 30 days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on which
the holders of Common Stock shall be entitled to any such dividend,
distribution or right, and the amount and character thereof, and (ii) the date
on which any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up is to take
place and the time, if any such time is to be fixed, as of which the holders of
Common Stock shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such disposition, dissolution,
liquidation or winding up. Each such written notice shall be sufficiently given
if addressed to Holder at the last address of Holder appearing on the books of
the Company and delivered in accordance with Section 17(d).
6
<PAGE> 55
15. Authorized Shares. The Company covenants that during the period
the Warrant is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of Nasdaq or any domestic
securities exchange upon which the Common Stock may be listed.
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the rights of
Holder against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take
all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain
all such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
Before taking any action which would cause an adjustment reducing
the current Exercise Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Exercise Price.
16. INTENTIONALLY OMITTED.
17. Miscellaneous.
(a) Jurisdiction. This Warrant shall be binding upon any successors
or assigns of the Company. This Warrant shall constitute a contract under the
laws of New York without regard to its conflict of law, principles or rules,
and be subject to arbitration pursuant to the terms set forth in the Agreement.
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<PAGE> 56
(b) Restrictions. The holder hereof acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws and by
the Agreement.
(c) Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice Holder's rights, powers or
remedies, notwithstanding all rights hereunder terminate on the Termination
Date. If the Company fails to make, when due, any payments provided for
hereunder, or fails to comply with any other provision of this Warrant, the
Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(d) Notices. Any notice, request or other document required or
permitted to be given or delivered to the holder hereof by the Company shall be
delivered in accordance with the notice provisions of the Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of
affirmative action by Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of Holder hereof, shall give
rise to any liability of Holder for the purchase price of any Common Stock or
as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
(f) Remedies. Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws,
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall
be enforceable by any such Holder or holder of Warrant Shares.
(h) Cooperation. The Company shall cooperate with Holder in
supplying such information as may be reasonably necessary for Holder to
complete and file any information reporting forms presently or hereafter
required by the SEC as a condition to the availability of an exemption from the
Securities Act for the sale of any Warrant or any Warrant Shares.
(i) Indemnification. The Company agrees to indemnify and hold
harmless Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or
asserted against Holder in any manner relating to or arising
8
<PAGE> 57
out of any failure by the Company to perform or observe in any material respect
any of its covenants, agreements, undertakings or obligations set forth in this
Warrant; provided, however, that the Company will not be liable hereunder to
the extent that any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses or
disbursements are found in a final non-appealable judgment by a court to have
resulted from Holder's negligence, bad faith or willful misconduct in its
capacity as a stockholder or warrantholder of the Company.
(j) Amendment. This Warrant may be modified or amended or the
provisions hereof waived only with the written consent of the Company and the
Holder.
(k) Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.
9
<PAGE> 58
(1) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.
Dated: December , 1998
-----
PROFESSIONAL TRANSPORTATION GROUP LTD.,
INC.
By:
------------------------------------------
Dennis A. Bakal,
Chief Executive Officer
10
<PAGE> 59
NOTICE OF EXERCISE
To: PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
(1) The undersigned hereby elects to purchase ________ shares of
Common Stock (the "Common Stock"), of PROFESSIONAL TRANSPORTATION GROUP LTD.,
INC. pursuant to the terms of the attached Warrant, and tenders herewith
payment of the exercise price in full, together with all applicable transfer
taxes, if any.
(2) Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name as
is specified below:
----------------------------------------
(Name)
----------------------------------------
(Address)
----------------------------------------
Dated:
------------------------------
Signature
<PAGE> 60
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
_______________________________________________ whose address is
__________________________________________________________________.
__________________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.
2
<PAGE> 61
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of the 10th day of December, 1998,
between AMRO INTERNATIONAL, S.A., a Panama corporation, John P. O'Shea (each a
"Holder"), and PROFESSIONAL TRANSPORTATION GROUP LTD., INC., a corporation
incorporated under the laws of the State of Georgia (the "Company").
WHEREAS, simultaneously with the execution and delivery of this
Agreement, the Holders are purchasing from the Company, pursuant to a
Convertible Debenture and Warrant Purchase Agreement dated the date hereof (the
"Purchase Agreement"), $500,000 principal amount of Convertible Debentures and
Warrants to purchase up to 1,100,000 shares of the Company's Common Stock
(terms not defined herein shall have the meanings ascribed to them in the
Purchase Agreement); and
WHEREAS, the Company desires to grant to the Holders the registration
rights set forth herein with respect to the shares of Common Stock issuable
upon conversion of the Convertible Debentures and shares of Common Stock
issuable upon exercise of the Warrants (hereinafter referred to as the "Stock"
or "Securities" of the Company).
NOW, THEREFORE, the parties hereto mutually agree as follows:
Section 1. Registrable Securities. As used herein the term
"Registrable Security" means the Securities until (i) the Registration
Statement has been declared effective by the Commission, and all Securities
have been disposed of pursuant to the Registration Statement, (ii) all
Securities have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act ("Rule 144") are met, (iii) all Securities have been otherwise
transferred to holders who may trade such Securities without restriction under
the Securities Act, and the Company has delivered a new certificate or other
evidence of ownership for such Securities not bearing a restrictive legend or
(iv) such time as, in the opinion of counsel to the Company, all Securities may
be sold without any time, volume or manner limitations pursuant to Rule 144(k)
(or any similar provision then in effect) under the Securities Act. The term
"Registrable Securities" means any and/or all of the securities falling within
the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be deemed
to be made in the definition of "Registrable Security" as is appropriate in
order to prevent any dilution or enlargement of the rights granted pursuant to
this Agreement.
Section 2. Restrictions on Transfer. The Holder acknowledges and
understands that prior to the registration of the Securities as provided
herein, the Securities are "restricted securities" as defined in Rule 144
promulgated under the Act. The Holder understands that no disposition or
transfer of the Securities may be made by Holder in the absence of (i) an
opinion of counsel to the Holder that such transfer may be made without
registration under the Securities Act or (ii) such registration.
With a view to making available to the Holder the benefits of Rule 144
under the Securities Act or any other similar rule or regulation of the
Commission that may at
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<PAGE> 62
any time permit the Holder to sell securities of the Company to the public
without registration ("Rule 144"), the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule 144;
and
(b) file with the Commission in a timely manner all reports and
other documents required to be filed by the Company pursuant to Section 13 or
15(d) under the Exchange Act; and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of any Holder, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.
Section 3. Registration Rights With Respect to the Securities.
(a) The Company agrees that it will prepare and file with the
Securities and Exchange Commission ("Commission"), within thirty (30) days
after the Closing Date, a registration statement (on Form S-3, or other
appropriate registration statement) under the Securities Act (the "Registration
Statement"), at the sole expense of the Company (except as provided in Section
3(c) hereof), in respect of all holders of Securities, so as to permit a public
offering and resale of the Securities under the Act.
The Company shall use its best efforts to cause the Registration
Statement to become effective within ninety (90) days from the Closing Date,
or, if earlier, within five (5) days of SEC clearance to request acceleration
of effectiveness. The number of shares designated in the Registration Statement
to be registered shall include all the Warrant Shares and the number of shares
of Common Stock which would be issued upon conversion of the Convertible
Debentures assuming a Market Price of $1.00 per share of Common Stock, and
shall include appropriate language regarding reliance upon Rule 416 to the
extent permitted by the Commission. The Company will notify Holder of the
effectiveness of the Registration Statement within one Trading Day of such
event.
(b) The Company will maintain the Registration Statement or
post-effective amendment filed under this Section 3 hereof effective under the
Securities Act until the earlier of (i) the date that none of the Convertible
Debentures, the Warrants or the Securities are or may become issued and
outstanding, (ii) the date that all of the Securities have been sold pursuant
to the Registration Statement, (iii) the date the holders thereof receive an
opinion of counsel to the Company, which counsel shall be reasonably acceptable
to the Holder, that the Securities may be sold under the provisions of Rule 144
without limitation as to volume, (iv) all Securities have been otherwise
transferred to holders who may trade such shares without restriction under the
Securities Act, and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive legend, or
(v) all Securities may be sold without any time, volume or manner limitations
pursuant to Rule 144(k) or any similar provision then in effect under the
Securities Act in the opinion of counsel to the Company, which counsel shall be
reasonably acceptable to the Holders (the "Effectiveness Period").
(c) All fees, disbursements and out-of-pocket expenses and costs
incurred by the Company in connection with the preparation and filing of the
Registration Statement under subparagraph 3(a) and in complying with applicable
securities and Blue Sky laws (including, without limitation, all attorneys'
fees of the Company) shall be borne by the Company. The Holder shall bear the
cost of underwriting and/or brokerage discounts, fees and
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commissions, if any, applicable to the Securities being registered and the fees
and expenses of its counsel. The Holder and its counsel shall be provided with
and shall have a reasonable period, not to exceed three (3) Trading Days, to
review the proposed Registration Statement or any amendment thereto, prior to
filing with the Commission, and the Company shall provide each Holder with
copies of any comment letters received from the Commission with respect thereto
within two (2) Trading Days of receipt thereof. The Company shall make
reasonably available for inspection by each Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and
any attorney, accountant or other agent retained by such Holder or any such
underwriter all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by such Holder or any such underwriter, attorney,
accountant or agent in connection with the Registration Statement, in each
case, as is customary for similar due diligence examinations; provided,
however, that all records, information and documents that are designated in
writing by the Company, in good faith, as confidential, proprietary or
containing any material non-public information shall be kept confidential by
such Holder and any such underwriter, attorney, accountant or agent (pursuant
to an appropriate confidentiality agreement in the case of any such Holder or
agent), unless such disclosure is made pursuant to judicial process in a court
proceeding (after first giving the Company an opportunity promptly to seek a
protective order or otherwise limit the scope of the information sought to be
disclosed) or is required by law, or such records, information or documents
become available to the public generally or through a third party not in
violation of an accompanying obligation of confidentiality; and provided
further that, if the foregoing inspection and information gathering would
otherwise disrupt the Company's conduct of its business, such inspection and
information gathering shall, to the maximum extent possible, be coordinated on
behalf of the Holders and the other parties entitled thereto by one firm of
counsel designed by and on behalf of the majority in interest of Holders and
other parties. The Company shall qualify any of the securities for sale in such
states as such Holder reasonably designates and shall furnish indemnification
in the manner provided in Section 6 hereof. However, the Company shall not be
required to qualify in any state which will require an escrow or other
restriction relating to the Company and/or the sellers, or which will require
the Company to qualify to do business in such state or require the Company to
file therein any general consent to service of process. The Company at its
expense will supply the Holders with copies of the Registration Statement and
the prospectus included therein and other related documents in such quantities
as may be reasonably requested by the Holders.
(d) The Company shall not be required by this Section 3 to
include a Holder's Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Holder and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Holder and the Company)
the proposed offering or other transfer as to which such registration is
requested is exempt from applicable federal and state securities laws and would
result in all purchasers or transferees obtaining securities which are not
"restricted securities", as defined in Rule 144 under the Securities Act.
(e) In the event that (i) the Registration Statement to be filed
by the Company pursuant to Section 3(a) above is not filed with the Commission
within thirty (30) days from the Closing Date, (ii) the Registration Statement
is not declared effective by the Commission within ninety (90) days from the
Closing Date (120 days if the Commission requires the Registration Statement to
be filed or re-filed on a form other than Form S-3) or (iii) the Registration
Statement is not maintained as effective by the Company for the period set
forth in Section 3(b) above (each a "Registration Default") then the Company
will pay Holder (pro
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rated on a daily basis), as liquidated damages for such failure and not as a
penalty two and one-half percent (2.5%) of the aggregate market value of shares
of Common Stock purchased from the Company (including the Conversion Shares
which would be issuable upon conversion of the Convertible Debenture on any
date of determination) and held by the Holder for every month or portion
thereof thereafter until the Registration Statement has been filed, and in the
event of late effectiveness (in case of clause (ii) above) or lapsed
effectiveness (in the case of clause (iii) above), two one-half percent (2.5%)
of the aggregate market value of shares of Common Stock purchased from the
Company and held by the Holder for every month or portion thereof thereafter
(regardless of whether one or more such Registration Defaults are then in
existence) until the Registration Statement has been declared effective. Such
payment of the liquidated damages shall be made to the Holder in cash, within
five (5) calendar days of demand, provided, however, that the payment of such
liquidated damages shall not relieve the Company from its obligations to
register the Securities pursuant to this Section. The market value of the
Common Stock for this purpose shall be the closing price (or last trade, if so
reported) on the Principal Market for each day during such Registration
Default. Notwithstanding anything to the contrary contained herein, a failure
to maintain the effectiveness of the Registration Statement or the ability of a
Holder to use the Registration Statement to effect resales of Securities during
the period after 45 days and within 90 days from the end of the Company's
fiscal year resulting solely from the need to update the Company's financial
statements contained or incorporated by reference in the Registration Statement
shall not constitute a Registration Default and shall not trigger the accrual
of liquidated damages hereunder.
If the Company does not remit the damages to the Holder as set
forth above, the Company will pay the Holder reasonable costs of collection,
including attorneys fees, in addition to the liquidated damages. The
registration of the Securities pursuant to this provision shall not affect or
limit Holder's other rights or remedies as set forth in this Agreement.
(f) No provision contained herein shall preclude the Company
from selling securities pursuant to any Registration Statement in which it is
required to include Securities pursuant to this Section 3.
(g) If at any time or from time to time after the effective date
of the Registration Statement, the Company notifies the Holder in writing of
the existence of a Potential Material Event (as defined in Section 3(h) below),
the Holder shall not offer or sell any Securities or engage in any other
transaction involving or relating to Securities, from the time of the giving of
notice with respect to a Potential Material Event until such Holder receives
written notice from the Company that such Potential Material Event either has
been disclosed to the public or no longer constitutes a Potential Material
Event; provided, however, that the Company may not so suspend the right to such
holders of Securities for more than twenty (20) days in the aggregate (or such
greater period, not to exceed 90 days in the aggregate, as may be required to
prepare and file audited financial statements of a company or business
acquired) during any twelve month period, during the periods the Registration
Statement is required to be in effect. If a Potential Material Event shall
occur prior to the date the Registration Statement is filed, then the Company's
obligation to file the Registration Statement shall be delayed without penalty
for not more than twenty (20) days (or such greater period, not to exceed 90
days in the aggregate, as may be required to prepare and file audited financial
statements of a company or business acquired). The Company must give Holder
notice in writing at least two (2) Trading Days prior to the first day of the
blackout period.
(h) "Potential Material Event" means any of the following: (a)
the possession by the Company of material information not ripe for disclosure
in a registration
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statement, as determined in good faith by the Chief Executive Officer or the
Board of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of the
Company; or (b) any material engagement or activity by the Company which would,
in the good faith determination of the Chief Executive Officer or the Board of
Directors of the Company, be adversely affected by disclosure in a registration
statement at such time, which determination shall be accompanied by a good
faith determination by the Chief Executive Officer or the Board of Directors of
the Company that the Registration Statement would be materially misleading
absent the inclusion of such information.
Section 4. Cooperation with Company. Each Holder will cooperate
with the Company in all respects in connection with this Agreement, including
timely supplying all information reasonably requested by the Company (which
shall include all information regarding the Holder and proposed manner of sale
of the Registrable Securities required to be disclosed in the Registration
Statement) and executing and returning all documents reasonably requested in
connection with the registration and sale of the Registrable Securities and
entering into and performing its obligations under any underwriting agreement,
if the offering is an underwritten offering, in usual and customary form, with
the managing underwriter or underwriters of such underwritten offering. Nothing
in this Agreement shall obligate the Holder to consent to be named as an
underwriter in the Registration Statement. The obligation of the Company to
register the Registrable Securities shall be absolute and unconditional as to
those Securities which the Commission will permit to be registered without
naming the Holder as an underwriter, notwithstanding that such Registrable
Securities may be limited to only those Conversion Shares issuable upon
conversion of the Convertible Debentures.
Section 5. Registration Procedures. If and whenever the Company
is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Act, the Company
shall (except as otherwise provided in this Agreement), as expeditiously as
possible, subject to the Holders' assistance and cooperation as reasonably
required:
(a) (i) prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Act with respect
to the sale or other disposition of all securities covered by such registration
statement whenever the Holder of such Registrable Securities shall desire to
sell or otherwise dispose of the same (including prospectus supplements with
respect to the sales of securities from time to time in connection with a
registration statement pursuant to Rule 415 promulgated under the Act) and (ii)
take all lawful action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, not misleading and
(B) the Prospectus forming part of the Registration Statement, and any
amendment or supplement thereto, does not at any time during the Registration
Period include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) (i) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide
draft copies thereof to the Holders and reflect in such documents all such
comments as the Holders (and their counsel) reasonably may propose
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<PAGE> 66
respecting the Selling Shareholders and Plan of Distribution sections (or
equivalents) and (ii) furnish to each Holder such numbers of copies of a
prospectus including a preliminary prospectus or any amendment or supplement to
any prospectus, as applicable, in conformity with the requirements of the Act,
and such other documents, as such Holder may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by such
Holder;
(c) register and qualify the Registrable Securities covered
by the Registration Statement under such other securities or blue sky laws of
such jurisdictions as the Holders shall reasonably request (subject to the
limitations set forth in Section 3(d) above), and do any and all other acts and
things which may be necessary or advisable to enable each Holder to consummate
the public sale or other disposition in such jurisdiction of the securities
owned by such Holder, except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified or to file therein any general consent to
service of process;
(d) list such Registrable Securities on the American Stock
Exchange, other national securities exchange, the NASDAQ National Market or the
NASDAQ Small-Cap Market, on which the Common Stock of the Company is then
listed, if the listing of such Registrable Securities is then permitted under
the rules of such exchange or Nasdaq;
(e) notify each Holder of Registrable Securities covered by
the Registration Statement, at any time when a prospectus relating thereto
covered by the Registration Statement is required to be delivered under the
Act, of the happening of any event of which it has knowledge as a result of
which the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and the Company
shall prepare and file a curative amendment under Section 5(a) as quickly as
commercially possible;
(f) as promptly as practicable after becoming aware of such
event, notify each Holder who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(g) cooperate with the Holders who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Holders reasonably may request and registered in such names as the Holders may
request; and, within three Trading Days after a Registration Statement which
includes Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Holders whose
Registrable Securities are included in such Registration Statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;
(h) take all such other lawful actions reasonably necessary
to expedite and facilitate the disposition by the Holders of their Registrable
Securities in accordance with the intended methods therefor provided in the
prospectus which are customary for issuers to perform under the circumstances;
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(i) in the event of an underwritten offering, promptly
include or incorporate in a Prospectus supplement or post-effective amendment
to the Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably object
and make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after it is notified of the matters to be
included or incorporated in such Prospectus supplement or post-effective
amendment; and
(j) maintain a transfer agent and registrar for its Common
Stock.
Section 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Holder and each person, if any, who controls such Holder within the meaning of
the Securities Act ("Distributing Holder") against any losses, claims, damages
or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees), to which the Distributing
Holder may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, or any related
preliminary prospectus, final prospectus or amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished to the
Company by the Distributing Holder, specifically for use in the preparation
thereof. This Section 6(a) shall not inure to the benefit of any Distributing
Holder with respect to any person asserting such loss, claim, damage or
liability who purchased the Registrable Securities which are the subject
thereof if the Distributing Holder failed to send or give (in violation of the
Securities Act or the rules and regulations promulgated thereunder) a copy of
the prospectus contained in such Registration Statement to such person at or
prior to the written confirmation to such person of the sale of such
Registrable Securities, where the Distributing Holder was obligated to do so
under the Securities Act or the rules and regulations promulgated thereunder.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Distributing Holder agrees that it will indemnify
and hold harmless the Company, and each officer, director of the Company or
person, if any, who controls the Company within the meaning of the Securities
Act, against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) to which
the Company or any such officer, director or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, or any related preliminary
prospectus, final prospectus or amendment or supplement thereto, or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission
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was made in the Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Distributing Holder, specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which the Distributing
Holder may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which it may have to any
indemnified party except to the extent of actual prejudice demonstrated by the
indemnifying party. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified,
assume the defense thereof, subject to the provisions herein stated and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless the indemnifying
party shall not pursue the action to its final conclusion. The indemnified
party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the
Distributing Holder, the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has
been specifically authorized in writing by the indemnifying party, or (ii) the
named parties to any such action (including any impleaded parties) include both
the Distributing Holder and the indemnifying party and the Distributing Holder
shall have been advised by such counsel that there may be one or more legal
defenses available to the indemnifying party different from or in conflict with
any legal defenses which may be available to the Distributing Holder (in which
case the indemnifying party shall not have the right to assume the defense of
such action on behalf of the Distributing Holder, it being understood, however,
that the indemnifying party shall, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable only
for the reasonable fees and expenses of one separate firm of attorneys for the
Distributing Holder, which firm shall be designated in writing by the
Distributing Holder). No settlement of any action against an indemnified party
shall be made without the prior written consent of the indemnified party, which
consent shall not be unreasonably withheld.
Section 7. Contribution. In order to provide for just and equitable
contribution under the Securities Act in any case in which (i) the indemnified
party makes a claim for indemnification pursuant to Section 6 hereof but is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that the express provisions of Section 6 hereof
provide for indemnification in such case, or (ii) contribution under the
Securities Act may be required on the part of any indemnified party, then the
Company and the applicable Distributing Holder shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(which shall, for all purposes of this Agreement, include, but not be limited
to, all reasonable
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<PAGE> 69
costs of defense and investigation and all reasonable attorneys' fees), in
either such case (after contribution from others) on the basis of relative
fault as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or the applicable Distributing Holder on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Distributing Holder agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Notwithstanding any other provision of this Section 7, in no event shall any
(i) Holder be required to undertake liability to any person under this Section
7 for any amounts in excess of the dollar amount of the proceeds to be received
by such Holder from the sale of such Holder's Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) pursuant to
any Registration Statement under which such Registrable Securities are to be
registered under the Securities Act and (ii) underwriter be required to
undertake liability to any person hereunder for any amounts in excess of the
aggregate discount, commission or other compensation payable to such
underwriter with respect to the Registrable Securities underwritten by it and
distributed pursuant to the Registration Statement.
Section 8. Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a Trading Day during normal business hours where such notice
is to be received), or the first Trading Day following such delivery (if
delivered other than on a Trading Day during normal business hours where such
notice is to be received) or (b) on the second Trading Day following the date
of mailing by reputable courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
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If to the Company: PROFESSIONAL TRANSPORTATION GROUP
LTD., INC.
495 Lovers Lane Road
Calhoun, GA 30701
Attention: Dennis A. Bakal
Telephone: (888) 999-1964
Fax: (706) 624-9698
with a copy to: Jon H. Klapper, Esq.
(shall not constitute notice) Nelson Mullins Riley & Scarborough, L.L.P.
999 Peachtree Street, N.E.
Suite 1400
Atlanta, GA 30309
Telephone: (404) 817-6146
Fax: (404) 817-6050
If to the Investor:
AMRO International, S.A.
c/o Ultra Finance
Grossmunster Platz 26
Zurich CH8022
Switzerland
Telephone: 011-
Fax: 011-411-262-5515
John P. O'Shea
c/o Westminster Securities, Inc.
19 Rector Street, Suite 1105
New York, New York 10006
Telephone: (212) 480-2500
Fax: (212) 480-2549
with a copy to: Joseph A. Smith, Esq.
(shall not constitute notice) Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York
Telephone: (212) 351-4500
Fax: (212) 661-0989
Either party hereto may from time to time change its address or facsimile
number for notices under this Section 8 by giving at least ten (10) days' prior
written notice of such changed address or facsimile number to the other party
hereto.
Section 9. Assignment. This Agreement is binding upon and inures to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns. The rights granted the Holders under this Agreement may be
assigned to any purchaser of substantially all of the Registrable Securities
(or the rights thereto) from a Holder, as otherwise permitted by the Purchase
Agreement. In the event of a transfer of the rights granted under this
Agreement, the Holder agrees that the Company may require that the transferee
comply with reasonable conditions as determined in the discretion of the
Company.
Section 10. Additional Covenants of the Company. The Company agrees
that at such time as it meets all the requirements for the use of Securities
Act Registration Statement on Form S-3 it shall file all reports and
information required to be filed by it with the Commission in a timely manner
and take all such other action so as to maintain such eligibility for the use
of such form.
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Section 11. Counterparts/Facsimile. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all
of which, when together shall constitute but one and the same instrument, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. In lieu of the original, a
facsimile transmission or copy of the original shall be as effective and
enforceable as the original.
Section 12. Remedies. The remedies provided in this Agreement are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared
invalid, illegal, void or unenforceable.
Section 13. Conflicting Agreements. The Company shall not enter into
any agreement with respect to its securities that is inconsistent with the
rights granted to the holders of Registrable Securities in this Agreement or
otherwise prevents the Company from complying with all of its obligations
hereunder.
Section 14. Headings. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 15. Governing Law, Arbitration. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made in New York by persons domiciled in New York City
and without regard to its principles of conflicts of laws. Any dispute under
this Agreement shall be submitted to arbitration under the American Arbitration
Association (the "AAA") in New York City, New York, and shall be finally and
conclusively determined by the decision of a board of arbitration consisting of
three (3) members (hereinafter referred to as the "Board of Arbitration")
selected as according to the rules governing the AAA. The Board of Arbitration
shall meet on consecutive Trading Days in New York City, New York, and shall
reach and render a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the amount, if any, which
the losing party is required to pay to the other party in respect of a claim
filed. In connection with rendering its decisions, the Board of Arbitration
shall adopt and follow the laws of the State of New York. To the extent
practical, decisions of the Board of Arbitration shall be rendered no more than
thirty (30) calendar days following commencement of proceedings with respect
thereto. The Board of Arbitration shall cause its written decision to be
delivered to all parties involved in the dispute. Any decision made by the
Board of Arbitration (either prior to or after the expiration of such thirty
(30) calendar day period) shall be final, binding and conclusive on the parties
to the dispute, and entitled to be enforced to the fullest extent permitted by
law and entered in any court of competent jurisdiction. The non-prevailing
party to any arbitration (as determined by the Board of Arbitration) shall pay
the expenses of the prevailing party, including reasonable attorneys' fees, in
connection with such arbitration.
Section 16. Severability. If any provision of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceablity shall not affect any other
11
<PAGE> 72
provision hereof and this Agreement shall be construed as if such invalid or
unenforceable provision had never been contained herein.
Section 17. Capitalized Terms. All capitalized terms not otherwise
defined herein shall have the meaning assigned to them in the Purchase
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, on the day and year first above written.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:
----------------------------------------
Dennis A. Bakal,
Chief Executive Officer
AMRO INTERNATIONAL, S.A.
By-----------------------------------------
H. U. Bachofen,
Director
-------------------------------------------
John P. O'Shea
12
<PAGE> 73
EXHIBIT D
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is made as of December
10, 1998, by and among PROFESSIONAL TRANSPORTATION GROUP LTD., INC., a
corporation incorporated under The laws of the State of Georgia (the
"Company"), AMRO International, S.A., and John P. O'Shea (each of AMRO and
O'Shea being an "Investor"), and Epstein Becker & Green, P.C., (the "Escrow
Agent"). Capitalized terms used but not defined herein shall have the meanings
set forth in the Debenture and Warrant Purchase Agreement referred to in the
first recital.
W I T N E S S E T H:
WHEREAS, each Investor will be purchasing from the Company a
Convertible Debenture (the "Debenture") and Warrants to purchase, in the
aggregate, up to 1,100,000 shares of Common Stock, at the purchase price set
forth in the Debenture and Warrant Purchase Agreement (the "Purchase
Agreement") dated the date hereof between the Investors and the Company, which
will be issued as per the terms contained herein and in the Purchase Agreement;
and
WHEREAS, it is intended that the purchase of the securities be
consummated in accordance with the requirements set forth by Regulation D
promulgated under the Securities Act of 1933, as amended; and
WHEREAS, the Company and the Investors have requested that the
Escrow Agent hold the Purchase Price in escrow until the Escrow Agent has
received the certificates representing the Debentures, the Warrants and certain
other closing documents specified herein, and has further requested that upon
each exercise of Warrant, and each conversion of a Debenture, the Escrow Agent
hold the relevant documents and the applicable exercise price pending receipt
of certificates representing the securities issuable upon such exercise and/or
conversion;
NOW, THEREFORE, in consideration of the covenants and mutual
promises contained herein and other good and valuable consideration, the
receipt and legal sufficiency of which are hereby acknowledged and intending to
be legally bound hereby, the parties agree as follows:
ARTICLE 1
TERMS OF THE ESCROW FOR THE DEBENTURE AND THE WARRANT
1.1 The parties hereby agree to establish an escrow account with
the Escrow Agent whereby the Escrow Agent (i) shall hold the funds for the
purchase of the Debentures and the Warrants at the Closing as contemplated by
the Purchase Agreement, and (ii) shall hold the relevant documents and a
applicable Exercise Price pending receipt of certificates representing the
securities upon each exercise of a Warrant, and each conversion of a Debenture.
<PAGE> 74
1.2 At the Closing, upon Escrow Agent's receipt of the Purchase
Price into its attorney trustee account, it shall notify the Company, or the
Company's designated attorney or agent, of the amount of funds it has received
into its account.
1.3 At the Closing, the Company, upon receipt of said notice,
shall deliver to the Escrow Agent the certificates representing the Debenture
and the B-1 Warrant and the B-2 Warrant to be issued to the Investor together
with:
(i) the original executed Registration Rights Agreement in the
form of Exhibit C to the Purchase Agreement;
(ii) Instructions to Transfer Agent in the form of Exhibit F to
the Purchase Agreement;
(iii) the original executed opinion of Nelson Mullins Riley &
Scarborough, L.L.P., in the form of Exhibit E to the
Purchase Agreement.
Escrow Agent shall then communicate with the Company to confirm
the validity of the issuance of the Debenture and the Warrant. In the event
that the foregoing items are not in the Escrow Agent's possession within three
(3) Trading Days of the Escrow Agent notifying the Company that the Escrow
Agent has custody of the Purchase Price, then each Investor shall have the
right to demand the return of said sum.
1.4 At the Closing, once Escrow Agent confirms the validity of
the issuance of the Debenture and the Warrant by means of its receipt of a
Release Notice in the form attached hereto as Exhibit X executed by the Company
and each Investor, it shall immediately wire that amount of funds necessary to
purchase the Debenture and the Warrant per the written instructions of the
Company net of legal and administrative costs of fifteen thousand dollars
($15,000) to Epstein Becker & Green, P.C. ("EB&G"), 250 Park Avenue, New York,
NY 10177.
Once the funds (as set forth above) have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Debenture
certificates, the Warrants, the Registration Rights Agreement and the opinion
of counsel delivered as per instructions from the Investors and to deliver the
Instructions to Transfer Agent to the Transfer Agent.
1.5 (a) Each time the Company shall send a notice of partial
redemption of the B-1 Warrants to the Investors as provided in the B-1 Warrants
and the Purchase Agreement it shall send a copy, by facsimile, to the Escrow
Agent.
(b) Each time an Investor shall exercise a Warrant or any portion
thereof, and/or convert the Debenture or any portion thereof, the Investor
shall send the Notice of Exercise and/or Notice of Conversion, as applicable,
to the Company, and shall send the applicable exercise price of the Warrant
with a copy of the Notice of Exercise and/or Notice of Conversion, together
with the original Debenture, original Warrant (if such conversion or exercise
will constitute the final conversion of the Debenture or exercise of the
Warrant), to the Escrow Agent.
<PAGE> 75
(c) Each time an Investor shall exercise a Warrant or any portion
thereof, and/or convert the Debenture or any portion thereof, the Company
promptly, but no later than three (3) Trading Days after receipt of the
Conversion Notice and/or Exercise Notice from the Investor, shall send to the
Escrow Agent (i) certificates representing Conversion Shares and/or Warrant
Shares issuable upon conversion of the Debentures and/or exercise of the
Warrant registered in the name of the Investor or its designee.
(d) Upon receipt of the certificates representing Conversion Shares
and/or Warrant Shares issuable upon conversion of the Debenture, and/or
exercise of the Warrant, the Escrow Agent shall communicate with the Company to
confirm the validity of the issuance of the Conversion Shares and/or Warrant
Shares. In the event that the foregoing items are not in the Escrow Agent's
possession within five (5) Trading Days of the date the Investor's Notice of
Conversion and/or Notice of Exercise is received by the Company, then the
Investor shall have the right to demand, by notice, the return of the Exercise
Price and the Warrant, and/or the Debenture and the Notice of Exercise or
Conversion shall be deemed cancelled. In the event the certificates
representing such Conversion Shares and/or Warrant Shares are timely received
by the Escrow Agent (timely receipt meaning receipt during the five-day period
described in the previous sentence, or, if later, receipt prior to receipt by
the Escrow Agent of a written demand from the Investor for return of the
Exercise Price, Warrant and/or Debenture), and upon the Escrow Agent's
confirmation of the validity of the issuance of the Conversion Shares and/or
Warrant Shares by means of its receipt of a Release Notice consistent with the
form attached hereto as Exhibit X executed by the Company and the Investor, it
shall immediately wire the Exercise Price of the Warrant (if a Warrant is being
exercised) deposited by the Investor per the written instructions of the
Company, net of Five Hundred dollars ($500) escrow expenses to the Escrow
Agent.
The Escrow Agent shall cumulate its escrow expenses from each conversion of a
Debenture until the next exercise of a Warrant. Once the funds (as set forth
above) have been sent per the Company's instructions, the Escrow Agent shall
then arrange to have the certificates representing the Conversion Shares and/or
Warrant Shares delivered to the Investor. Upon the final conversion of the
Debenture or final exercise of the Warrant, the Escrow Agent shall return the
original Debenture, or original Warrant, as applicable, to the Company.
ARTICLE 2
MISCELLANEOUS
2.1 No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension
of time for performance of any obligation or act shall be deemed any extension
of the time for performance of any other obligation or act.
2.2 All notices or other communications required or permitted
hereunder shall be in writing, and shall be sent by fax, overnight courier,
registered or certified mail, postage prepaid, return receipt requested, and
shall be deemed received upon receipt thereof, as follows:
<PAGE> 76
(a) Professional Transportation Group Ltd., Inc.
495 Lovers Lane Road
Calhoun, GA 30702
Attention: Chief Executive Officer
Telephone: (888) 999-1964
Facsimile: (706) 629-9698;
with a copy to:
(which shall not Nelson Mullins Riley & Scarborough, L.L.P.
constitute notice) 999 Peachtree Street, N.E.
Suite 1400
Atlanta, GA 30309
Attn: Jon H. Klapper, Esq.
Telephone: (404) 817-6146
Facsimile: (404) 817-6050
or to such other person at such other place as the Company shall designate to
the Investor in writing;
(b) if to Escrow Agent, to
Epstein Becker & Green, P.C.
250 Park Avenue
New York, NY 10177
Attn: Joseph A. Smith
Telephone: (212)351-4924
Facsimile: (212) 661-0989
(c) if to the Investor:
AMRO International, S.A.
c/o Ultra Finance
Grossmunster Platz 26
Zurich CH 8022
Switzerland
Telephone: 011-
Facsimile: 011-411-262-5515
John P. O'Shea
c/o Westminister Securities, Inc.
19 Rector Street, Suite 1105
New York, New York 10006
Telephone: (212) 480-2500
Facsimile: (212) 480-2549
2.3 This Escrow Agreement shall be binding upon and shall inure
to the benefit of the permitted successors and permitted assigns of the parties
hereto.
<PAGE> 77
2.4 This Escrow Agreement is the final expression of, and
contains the entire agreement between, the parties with respect to the subject
matter hereof and supersedes all prior understandings with respect thereto.
This Escrow Agreement may not be modified, changed, supplemented or terminated,
nor may any obligations hereunder be waived, except by written instrument
signed by the parties to be charged or by its agent duly authorized in writing
or as otherwise expressly permitted herein.
2.5 Whenever required by the context of this Escrow Agreement,
the singular shall include the plural and masculine shall include the feminine.
This Escrow Agreement shall not be construed as if it had been prepared by one
of the parties, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to Articles are to this Escrow Agreement.
2.6 The parties hereto expressly agree that this Escrow
Agreement shall be governed by, interpreted under and construed and enforced in
accordance with the laws of the State of New York. Any action to enforce,
arising out of, or relating in any way to, any provisions of this Escrow
Agreement shall brought through the American Arbitration Association at the
designated locale of New York, New York as is more fully set forth in the
Purchase Agreement.
2.7 The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, each Investor and
the Escrow Agent.
2.8 The Escrow Agent shall be obligated only for the performance
of such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith, and any act done or omitted by the Escrow Agent
pursuant to the advice of the Escrow Agent's attorneys-at-law shall be
conclusive evidence of such good faith.
2.9 The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other person
or corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of
any court. In case the Escrow Agent obeys or complies with any such order,
judgment or decree, the Escrow Agent shall not be liable to any of the parties
hereto or to any other person, firm or corporation by reason of such decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.
2.10 The Escrow Agent shall not be liable in any respect on
account of the identity, authorization or rights of the parties executing or
delivering or purporting to execute or deliver the Purchase Agreement or any
documents or papers deposited or called for thereunder.
2.11 The Escrow Agent shall be entitled to employ such legal
counsel and other experts as the Escrow Agent may deem necessary properly to
advise the Escrow Agent in
<PAGE> 78
connection with the Escrow Agent's duties hereunder, may rely upon the advice
of such counsel, and may pay such counsel reasonable compensation therefor. THE
ESCROW AGENT HAS ACTED AS LEGAL COUNSEL FOR THE INVESTORS, AND MAY CONTINUE TO
ACT AS LEGAL COUNSEL FOR THE INVESTORS, FROM TIME TO TIME, NOTWITHSTANDING ITS
DUTIES AS THE ESCROW AGENT HEREUNDER. THE COMPANY CONSENTS TO THE ESCROW AGENT
IN SUCH CAPACITY AS LEGAL COUNSEL FOR THE INVESTORS AND WAIVES ANY CLAIM THAT
SUCH REPRESENTATION REPRESENTS A CONFLICT OF INTEREST ON THE PART OF THE ESCROW
AGENT. THE COMPANY UNDERSTANDS THAT THE INVESTORS AND THE ESCROW AGENT ARE
RELYING EXPLICITLY ON THE FOREGOING PROVISION IN ENTERING INTO THIS ESCROW
AGREEMENT.
2.12 The Escrow Agent's responsibilities as escrow agent
hereunder shall terminate if the Escrow Agent shall resign by written notice to
the Company and the Investors. In the event of any such resignation, the
Investors and the Company shall appoint a successor Escrow Agent.
2.13 If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
2.14 It is understood and agreed that should any dispute arise
with respect to the delivery and/or ownership or right of possession of the
documents or the escrow funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed in the Escrow Agent's sole discretion (1) to
retain in the Escrow Agent's possession without liability to anyone all or any
part of said documents or the escrow funds until such disputes shall have been
settled either by mutual written agreement of the parties concerned by a final
order, decree or judgment or a court of competent jurisdiction after the time
for appeal has expired and no appeal has been perfected, but the Escrow Agent
shall be under no duty whatsoever to institute or defend any such proceedings
or (2) to deliver the escrow funds and any other property and documents held by
the Escrow Agent hereunder to a state or federal court having competent subject
matter jurisdiction and located in the State and City of New York in accordance
with the applicable procedure therefor.
<PAGE> 79
2.15 The Company and the Investors agree jointly and severally
to indemnify and hold harmless the Escrow Agent and its partners, employees,
agents and representatives from any and all claims, liabilities, costs or
expenses in any way arising from or relating to the duties or performance of
the Escrow Agent hereunder or the transactions contemplated hereby or by the
Purchase Agreement other than any such claim, liability, cost or expense to the
extent the same shall have been determined by final, unappealable judgment of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the Escrow Agent.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of December 10, 1998.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:
-----------------------------------
INVESTOR:
AMRO INTERNATIONAL, S.A.
By:
-----------------------------------
H. U. Bachofen, Director
--------------------------------------
John P. O'Shea
ESCROW AGENT:
EPSTEIN BECKER & GREEN, P.C.
By:
-----------------------------------
<PAGE> 80
EXHIBIT X TO
ESCROW AGREEMENT
RELEASE NOTICE
The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of
December 10, 1998, among Professional Transportation Group Ltd., Inc., AMRO
International, S.A., John P. O'Shea and Epstein Becker & Green, P.C., as Escrow
Agent (the "Escrow Agreement"; capitalized terms used herein and not defined
shall have the meaning ascribed to such terms in the Escrow Agreement), hereby
notify the Escrow Agent that each of the conditions precedent to the purchase
and sale of the Convertible Debenture and Warrant set forth in the Debenture
and Warrant Purchase Agreement have been satisfied. The Company and the
undersigned Investor hereby authorize the release by the Escrow Agent of the
funds and documents to be released at the Closing as described in the Escrow
Agreement.
This Release Notice shall not be effective until executed by the
Company and the Investor.
This Release Notice may be signed in one or more counterparts,
each of which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Release
Notice to be duly executed and delivered as of this __ day of December 1998.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:
---------------------
Name:
Title:
INVESTOR:
By:
---------------------
Name:
Title:
<PAGE> 81
EXHIBIT E
FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL
[Date]
Address
Re: Debenture and Warrant Purchase Agreement between AMRO International,
S.A., John P. O'Shea and Professional Transportation Group Ltd., Inc.
Ladies and Gentlemen:
This opinion is furnished to you pursuant to the Debenture and Warrant
Purchase Agreement by and among AMRO International, S.A. and John P. O'Shea
(the "Investors") and Professional Transportation Group Ltd., Inc., a Georgia
corporation (the "Company"), dated as of December 10, 1998 (the "Purchase
Agreement"), which provides for the issuance and sale by the Company of (i)
$500,000 principal amount of Convertible 9% Debentures and (ii) Warrants to
purchase up to 1,100,000 shares of the Common Stock of the Company. All terms
used herein have the meanings defined for them in the Purchase Agreement unless
otherwise defined herein.
We have acted as counsel for the Company in connection with the
negotiation of the Purchase Agreement, the Warrant, the Convertible Debenture,
the Registration Rights Agreement between the Investor and the Company, dated
as of December 10, 1998 (the "Registration Rights Agreement"), and the Escrow
Agreement between the Investors, the Company and Epstein Becker & Green, P.C.,
dated as of December 10, 1998 (the "Escrow Agreement", and together with the
Purchase Agreement, the Warrant, the Convertible Debenture and the Registration
Rights Agreement, the "Agreements"). As counsel, we have made such legal and
factual examinations and inquiries as we have deemed advisable or necessary for
the purpose of rendering this opinion. In addition, we have examined, among
other things, originals or copies of such corporate records of the Company,
certificates of public officials and such other documents and questions of law
that we consider necessary or advisable for the purpose of rendering this
opinion. In such examination we have assumed the genuineness of all signatures
on original documents, the authenticity and completeness of all documents
submitted to us as originals, the conformity to original documents of all
copies submitted to us as copies thereof, the legal capacity of natural
persons, and the due execution and delivery of all documents (except as to due
execution and delivery by the Company) where due execution and delivery are a
prerequisite to the effectiveness thereof.
As used in this opinion, the expression "to our knowledge" refers to
the current actual knowledge of the attorneys of this firm who have worked on
matters for the Company solely in connection with the Agreements and the
Warrant and the transactions contemplated thereby.
For purposes of this opinion, we have assumed that you have all
requisite power and authority, and have taken any and all necessary corporate
action, to execute and deliver the Agreements, and we are assuming that the
representations and warranties made by the Investor in the Agreements and
pursuant thereto are true and correct.
<PAGE> 82
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia and has all requisite
power and authority (corporate and other) to carry on its business and to own,
lease and operate its properties and assets as described in the Company's SEC
Documents. To our knowledge, the Company does not have any subsidiaries and
does not own more than fifty percent (50%) of the outstanding capital stock of
or control any other business entity other than as disclosed in the SEC
Documents. The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the Company
owns or leases property, other than those in which the failure so to qualify
would not have a Material Adverse Effect.
2. The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Agreements and the Warrant and
to issue the Debentures, the Conversion Shares, the Warrants and the Warrant
Shares. The execution and delivery of the Agreements by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or shareholders is
required. Each of the Agreements has been duly executed and delivered, and the
Debentures and the Warrants have each been duly executed, issued and delivered
by the Company and each of the Agreements, the Debentures and the Warrants
constitutes valid and binding obligations of the Company enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, or similar
laws relating to, or affecting generally the enforcement of, creditors' rights
and remedies or by other equitable principles of general application.
3. Except as set forth in the Agreements, the execution, delivery and
performance of the Agreements by the Company and the consummation by the
Company of the transactions contemplated thereby, including, without
limitation, the issuance of the Debentures, the Conversion Shares, the Warrants
and the Warrant Shares, do not and will not (i) result in a violation of the
Company's Articles of Incorporation or By-Laws; (ii) to our knowledge, conflict
with, or constitute a material default (or an event that with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party; or (iii)
result in a violation of any federal or state law, rule or regulation
applicable to the Company or by which any property or asset of the Company is
bound or affected, except for such violations as would not, individually or in
the aggregate, have a Material Adverse Effect. To our knowledge, the Company is
not in violation of any terms of its Articles of Incorporation or Bylaws.
4. The issuance of the Debentures, the Conversion Shares and the
Warrants in accordance with the Purchase Agreement, and the issuance of the
Warrant Shares in accordance with the Warrants, will be exempt from
registration under the Securities Act of 1933, as amended. When so issued, the
Conversion Shares and the Warrant Shares will be duly and validly issued, fully
paid and nonassessable, and free of any liens, encumbrances and preemptive or
similar rights contained in the Company's Articles of Incorporation or Bylaws
or, to our knowledge, in any agreement to which the Company is party.
5. To our knowledge, except as disclosed in the SEC Documents and as
set forth in the Agreements, there are no claims, actions, suits, proceedings
or investigations that are pending against the Company or its properties, or
against any officer or director of the Company in his or her capacity as such,
nor has the Company received any written threat of any such claims, actions,
suits, proceedings, or investigations. To our knowledge, the Company is not a
party to or subject to the provisions of any order, writ, injunction, judgment
or decree of any court or government agency or instrumentality.
<PAGE> 83
6. To our knowledge, there are no outstanding options, warrants,
calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any right
to subscribe for or acquire any shares of Common Stock or contracts,
commitments, understanding, or arrangements by which the Company is or may
become bound to issue additional shares of Common Stock, or securities or
rights convertible or exchangeable into shares of Common Stock, except as
described in the Agreement or the SEC Documents.
7. The issuance of the Debentures, the Conversion Shares, the
Warrants and the Warrant Shares will not violate the applicable listing
agreement between the Company and any securities exchange or market on which
the Company's securities are listed.
8. The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock, no par value per share, and 100,000 shares of Preferred
Stock, no par value per share, none of which shares of Preferred Stock have
been designated as to preferences and none of which shares are issued and
outstanding.
This opinion is furnished to the Investors solely for their benefit
in connection with the transactions described above and may not be relied upon
by any other person or for any other purpose without our prior written consent.
Very truly yours,
<PAGE> 84
EXHIBIT F
INSTRUCTIONS TO TRANSFER AGENT
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
_______________, 1998
Reliance Trust Company
3384 Peachtree Road, N.E.
Suite 900
Atlanta, GA 30326
Attn: Jerry W. Dawson
Dear Sirs:
Reference is made to the Debenture and Warrant Purchase Agreement and all
Exhibits thereto (the "Agreement") dated as of December 10, 1998, between AMRO
International, S.A. and John P. O'Shea (the "Investors") and Professional
Transportation Group Ltd., Inc. (the "Company"). Pursuant to the Agreement, and
subject to the terms and conditions set forth in the Agreement, the Investors
have agreed to purchase from the Company, and the Company has agreed to sell to
the Investors, Convertible Debentures and Warrants to purchase up to 1,000,000
shares of the Company's Common Stock, and the Company has issued to the
Investors (i) Convertible Debentures in the principal amount of $500,000 in the
aggregate (the "Debentures"), and (ii) Warrants to purchase 1,000,000 shares of
Common Stock (the "Warrants"). As a condition to the effectiveness of the
Agreement, the Company has agreed to issue to you, as the transfer agent for
the Common Stock (the "Transfer Agent"), these instructions relating to the
Common Stock to be issued to the Investors (or a permitted assignee) pursuant
to the Agreement upon conversion of the Debenture or upon exercise of the
Warrant. All capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Agreement.
1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND
Pursuant to the Agreement and the Registration Rights Agreement, the
Company is required to prepare and file with the Commission, and maintain the
effectiveness of, a registration statement or registration statements
registering the resale of the Common Stock to be acquired by the Investors (i)
upon exercise of the Warrants and (ii) upon conversion of the Debentures, all
as provided in the Registration Rights Agreement. The Company will advise the
Transfer Agent in writing of the effectiveness of any such registration
statement promptly upon its being declared effective. The Transfer Agent shall
be entitled to rely on such advice and shall assume that such registration
statement remains in effect unless the Transfer Agent is otherwise advised in
writing by the Company, and the Transfer Agent shall not be required to
independently confirm the continued effectiveness of such registration
statement. In the circumstances set forth in the following two paragraphs, the
Transfer Agent shall deliver to the appropriate Investor certificates
representing Common Stock not bearing the Legend without requiring further
advice or instruction or additional documentation from the Company or its
counsel or the Investor or its counsel or any other party (other than as
described in such paragraphs).
(a) At any time after the effective date of the applicable
registration statement (provided that the Company has not informed the Transfer
Agent in writing that such registration statement is not effective) upon any
surrender of one or more certificates evidencing Common Stock which bear the
Legend, to the extent accompanied by a notice requesting the issuance of new
certificates free of the Legend to replace those surrendered, in such names and
in such denominations as the Investor may request, provided that in
<PAGE> 85
connection with any such event, the Investor (or its permitted assignee) shall
confirm in writing to the Transfer Agent that (i) the Investor has sold,
pledged or otherwise transferred or agreed to sell, pledge or otherwise
transfer such Common Stock in a bona fide transaction to a third party that is
not an affiliate of the Company; and (ii) the Investor confirms to the transfer
agent that the Investor has complied with the prospectus delivery requirement.
(b) In the event a registration statement is not filed by the
Company, or for any reason the registration statement which is filed by the
Company is not declared effective by the Securities and Exchange Commission the
Investor, or its permitted assignee, or its broker confirms to the Transfer
Agent that (i) the Investor has beneficially owned the shares of Common Stock
for at least one year, (ii) counting the shares surrendered as being sold upon
the date the unlegended Certificates would be delivered to the Investor (or the
Trading Day immediately following if such date is not a Trading Day), the
Investor will not have sold more than the greater of (a) one percent (1%) of
the total number of outstanding shares of Common Stock or (b) the average
weekly trading volume of the Common Stock for the preceding four weeks during
the three months ending upon such delivery date (or the Trading Day immediately
following if such date is not a Trading Day), and (iii) the Investor has
complied with the manner of sale and notice requirements of Rule 144 under the
Securities Act; or
(c) The Investor (or its permitted assignee) shall represent that it
is permitted to dispose of such shares of Common Stock without limitation as to
amount or manner of sale pursuant to Rule 144(k) under the Securities Act. Any
advice, notice, or instructions to the Transfer Agent required or permitted to
be given hereunder may be transmitted via facsimile to the Transfer Agent's
facsimile number of (404) 261-5715.
2. MECHANICS OF DELIVERY OF CERTIFICATES REPRESENTING COMMON STOCK
In connection with any conversion of the Debenture or exercise of a Warrant
pursuant to which an Investor acquires Common Stock under the Agreement, the
Transfer Agent is hereby instructed to deliver to the Investor, certificates
representing Common Stock (with or without the Legend, as appropriate) as
promptly as possible upon receipt by the Transfer Agent of a copy of the Notice
of Conversion (in the case of the Debenture) or Notice of Exercise (in the case
of the Warrant) from the Investor, and to deliver such certificates to the
Escrow Agent, in the case of original issuance, and in the case of subsequent
transfer, if the Transfer Agent is able to deliver such Common Stock to the
Investor's account pursuant to the DWAC system of the Depository Trust Company,
the Transfer Agent shall make delivery pursuant to such system and provide the
Investor with confirmation thereof in lieu of such Common Stock certificates.
3. FEES OF TRANSFER AGENT; INDEMNIFICATION
The Company agrees to pay the Transfer Agent for all fees incurred in
connection with these Irrevocable Instructions. The Company agrees to indemnify
the Transfer Agent and its officers, employees and agents, against any losses,
claims, damages or liabilities, joint or several, to which it or they become
subject based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions, other than as a result of the
Transfer Agent's gross negligence or willful misconduct.
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4. THIRD PARTY BENEFICIARY
The Company and the Transfer Agent acknowledge and agree that the
Investors are each an express third party beneficiary of these Irrevocable
Instructions and shall be entitled to rely upon, and enforce, the provisions
thereof.
PROFESSIONAL TRANSPORTATION GROUP LTD., INC.
By:
-----------------------------------------
Dennis A. Bakal,
Chief Executive Officer
AGREED:
Reliance Trust Company
By:
------------------------
Name: Jerry W. Dawson
Title:
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