UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): January 30, 1998
JUMBOSPORTS INC.
(Exact name of registrant as specified in charter)
Florida 001-13322 52-1643157
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4701 W. Hillsborough Ave. Tampa, Florida 33614
(Adress of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (813) 886-9688
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
Effective January 20, 1998, JumboSports Inc., a Florida corporation
(the "Company"), entered into an Amendment Agreement (the "Amendment Agreement")
with Barnett Bank, N.A., NationsBank, N.A., and each of the persons designated
as "Lenders" in the Amendment Agreement. The Amendment Agreement amends that
certain Amended and Restated Credit Agreement, dated as of May 28, 1997 (the
"Existing Credit Agreement"), among the Company, each of the Company's
subsidiaries, the Lenders (as defined in the Existing Credit Agreement), Barnett
Bank, N.A., and NationsBank, N.A., by, among other things, (i) waiving existing
defaults under the Existing Credit Agreement, (ii) reducing over an 11-month
period the amount of credit available under the Existing Credit Agreement, (iii)
modifying certain financial covenants contained in the Existing Credit
Agreement, and (iv) providing for the issuance to the Lenders (as defined in the
Amendment Agreement) of warrants to purchase up to 500,000 shares of the common
stock, par value $.01 per share, of the Company (the exercise of such warrants
is contingent upon whether or not the credit facility is repaid by certain dates
before maturity). A copy of the Amendment Agreement is attached hereto as
Exhibit 10.1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) EXHIBITS
10.1 Amendment Agreement, dated as of January 30, 1998,
among JumboSports Inc., each of the Lenders (as
defined in the Amendment Agreement), Barnett Bank,
N.A., and NationsBank, N.A.
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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 hereunder duly authorized.
JUMBOSPORTS INC.
02/--/98 By: /s/ Raymond P. Springer
Date Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
JumboSports Inc.
Form 8-K
January 30, 1998
10.1 Amendment Agreement, dated as of January 30, 1998, among
JumboSports Inc., each of the Lenders (as defined in the
Amendment Agreement), Barnett Bank, N.A., and NationsBank, N..
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EXHIBIT 10.1
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT
This Amendment Agreement, dated as of January 30, 1998 (this "Agreement"),
is among JumboSports Inc., a Florida corporation (the "Borrower"), each of the
Lenders (as defined below) signatories hereto, Barnett Bank, N.A., as
Administrative Agent and Collateral Agent (the "Collateral Agent"), and
NationsBank, N.A. f/k/a NationsBank, N.A. (South), as Documentation Agent (the
"Documentation Agent").
RECITALS:
A. Pursuant to that certain Amended and Restated Credit Agreement,
dated as of May 28, 1997, among the Borrower, each of the Borrower's
Subsidiaries, as Guarantors, the lending and financial institutions party
thereto (the "Lenders"), the Collateral Agent and the Documentation Agent (as
heretofore amended or modified, the "Existing Credit Agreement"), the Lenders
agreed to make revolving loan and letter of credit facilities available to the
Borrower.
B. Pursuant to that certain Amendment and Forbearance Agreement (the
"Forbearance Agreement"), dated as of December 15, 1997, the Required Lenders
agreed inter alia to forbear through and including January 31, 1998 from
exercising available remedies with respect to the Borrower's violation of the
financial covenants set forth in Sections 7.2(a), (b) and (c) of the Existing
Credit Agreement as of the fiscal quarter ending October 31, 1997. The
Borrower's failure to comply with such covenants resulted in the occurrence of
Events of Default under the terms of the Existing Credit Agreement (the
"Existing Defaults").
C. The Borrower has requested that the Lenders waive the Existing
Defaults, amend prospectively the financial covenants set forth in Section 7.2
of the Existing Credit Agreement, and continue to make available to the Borrower
the Loans and Letters of Credit provided under the Existing Credit Agreement.
D. The Lenders are willing to waive the Existing Defaults and continue
to make available to the Borrower the Loans and Letters of Credit based upon and
subject to the terms and conditions specified in this Agreement.
NOW, THEREFORE, based upon the foregoing, and for good and valuable
consideration, the sufficiency and receipt of which is hereby acknowledged, the
parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its preamble
and recitals, have the following meanings:
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"Amended Credit Agreement" means the Existing Credit Agreement as
amended hereby.
"Consultant" means the individual or firm, who is reasonably
satisfactory to the Agents, retained by the Borrower to investigate,
evaluate and advise the Borrower concerning financial and operational
issues relating to the Borrower's business plan.
"Effective Date" shall have the meaning ascribed to such term in
Subpart 4.1.
SUBPART 1.2. Other Definitions. Unless otherwise defined herein or the
context otherwise requires, terms used in this Agreement, including its preamble
and recitals, have the meanings provided in the Amended Credit Agreement.
PART II
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Effective Date, the
Existing Credit Agreement is hereby amended in accordance with this Part II.
Except as so amended, the Existing Credit Agreement shall continue in full force
and effect.
SUBPART 2.1 Amendment to Existing Definitions. Article I of the Existing
Credit Agreement is amended by deleting in its entirety the existing definitions
of the following terms and replacing such terms, in the appropriate alphabetical
places, with the following new definitions:
"Borrowing Base Assets" means (a) at any date of determination prior
to August 28, 1998, the sum of (i) 55% of Eligible Inventory, plus (ii) 65%
of Eligible Real Estate, plus (iii) 55% of Eligible Equipment, and (b) at
any date of determination on or after August 28, 1998, the sum of (i) 55%
of Eligible Inventory plus (ii) 65% of Eligible Real Estate.
"EBITDA" means, for any period, with respect to the Credit Parties and
their Subsidiaries on a consolidated basis, the sum of (a) Net Income for
such period (excluding the effect of any extraordinary or other
non-recurring gains (including any gain from the sale of property) or
non-cash losses (including the one-time restructuring charge that was taken
in fiscal year 1997 in the amount of $88 million) outside of the ordinary
course of business) plus (b) an amount which, in the determination of Net
Income for such period has been deducted for (i) Interest Expense for such
period, (ii) total Federal, state, foreign or other income taxes for such
period and (iii) all depreciation and amortization for such period, all as
determined in accordance with GAAP.
"Revolving Committed Amount" means (a) from January 30, 1998 through
and including April 3, 1998, ONE HUNDRED EIGHTY MILLION DOLLARS
($180,000,000), (b) from April 4, 1998 through and including May 29, 1998,
ONE HUNDRED SIXTY MILLION DOLLARS ($160,000,000), (c) from May 30, 1998
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through and including July 31, 1998, ONE HUNDRED FORTY-FIVE MILLION DOLLARS
($145,000,000), (d) from August 1, 1998 through and including January 1,
1999, ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000), and (e) from
and after January 2, 1999, ONE HUNDRED TEN MILLION DOLLARS ($110,000,000),
or, in each instance and for any period, such lesser amount as the
Revolving Committed Amount may be reduced pursuant to Section 2.1(d) or
Section 3.3(c) hereof.
In addition, clause (vi) of the definition of "Eligible Inventory" is
amended so that such clause now reads in its entirety as follows:
(vi) inventory at a location leased by the applicable Credit Party
with respect to which the Collateral Agent shall not have received a
landlord's waiver and estoppel letter reasonably satisfactory to the
Collateral Agent, provided, however, that during the period from January
30, 1998 through and including April 3, 1998 only, such inventory shall not
be deemed ineligible if the Borrower and the Collateral Agent shall have
agreed on the amount of a reserve reducing the Borrower's availability by
an amount equal to three (3) months' rent (plus any common area maintenance
or other similar charges) applicable to the leased location where such
inventory is located,
The remainder of the definition of "Eligible Inventory" shall remain
unchanged.
SUBPART 2.2 Amendment to Section 3.3(b)(ii). Section 3.3(b)(ii) shall be
amended to read in its entirety as follows:
(ii) Asset Dispositions. Immediately upon receipt by a Credit Party or
any of its Subsidiaries of proceeds of any Asset Disposition, including
without limitation, the sale of any real property or equipment, the sale of
inventory from any "going out of business" sale or other inventory
dispositions outside the ordinary course of business, or the sale of any
store or any sale/leaseback transaction, the Borrower shall forward 100% of
all Net Cash Proceeds of such Asset Disposition to the Lenders as a
prepayment of the Loans (to be applied as set forth in Section 3.3(c)
below).
SUBPART 2.3 Amendment to Section 3.3(c). The second sentence of Section
3.3(c) of the Existing Credit Agreement shall be amended to read as follows:
All amounts required to be paid pursuant to Section 3.3(b)(ii) shall
be applied first to Revolving Loans (with a corresponding reduction in the
Revolving Committed Amount (other than those amounts received in connection
with the sale of inventory either through "going out of business" sales or
otherwise outside of the ordinary course of business, for which no
reduction shall be required)), second to Swing Line Loans, and third to a
cash collateral account in respect of LOC Obligations.
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SUBPART 2.4 Amendment to Section 3.4. Section 3.4 of the Existing Credit
Agreement shall be amended by adding a new Section 3.4(d) which reads in its
entirety as follows:
(d) Usage Fee. The Borrower agrees to pay to the Administrative Agent,
for the pro rata benefit of each Lender (based on each Lender's Revolving
Commitment Percentage of the Revolving Committed Amount) a fee equal to
0.5% per annum, calculated daily, of the amount by which the sum of the
outstanding principal amount of the Loans and the face amount of the
outstanding Letters of Credit exceeds (i) from February 1, 1998 through and
including May 1, 1998, the amount of $150,000,000, (ii) from May 2, 1998
through and including July 31, 1998, the amount of $130,000,000, and (iii)
from and after August 1, 1998, the amount of $110,000,000. Such fee shall
be due and payable in arrears on May 2, 1998, August 1, 1998, and on the
first Business Day of each fiscal quarter thereafter.
SUBPART 2.5 Amendment of Existing Section 7.1(c). Section 7.1(c) of the
Existing Credit Agreement shall be amended to read in its entirety as follows:
(c) Monthly Financial Statements. As soon as available and in any
event within 30 days after the end of each month of the Borrower, (i) a
consolidated balance sheet and income statement of the Borrower and its
Subsidiaries as at the end of such month together with related consolidated
statements of operations and retained earnings and of cash flows for such
month in each case setting forth in comparative form consolidated figures
for (A) the corresponding period of the preceding fiscal year and (B)
management's proposed budget for such period, and all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Agents, and accompanied by a certificate of
the chief financial officer of the Borrower to the effect that such monthly
financial statements fairly present in all material respects the financial
condition of the Borrower and its Subsidiaries and have been prepared in
accordance with GAAP, subject to changes resulting from audit and normal
year-end audit adjustments, and (ii) a statement and analysis of each
retail store's operations during such preceding month, such report being in
a form and detail reasonably acceptable to the Agents.
SUBPART 2.6 Addition of a New Section 7.1(m). Section 7.1(m) of the
Existing Credit Agreement shall be re-numbered as Section 7.1(n) and a new
subsection (m) shall be added to Section 7.1, such new subsection (m) reading in
its entirety as follows:
(m) Weekly Financial Reports. As soon as available and in any event
within five (5) days after the end of each calendar week, (i) a sales
report (presented in a department by department format) as of the end of
the immediately preceding week, including a month-to-date and year-to-date
budget analysis and comparisons to previous year's figures; (ii) a
store-by-store sales report as of the end of the immediately preceding
week, with month-to-date and year-to-date budget analysis and comparisons
to previous year's figures; (iii) a Borrowing Base Report, as of the end of
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the immediately preceding week substantially in the form of Exhibit 7.1(c)
and certified by the chief financial officer of the Borrower to be true and
correct as of the date thereof, (iv) a report summarizing the statement of
the Borrower's operations as of the end of the immediately preceding week,
with month-to-date, quarter-to-date, and year-to-date comparative analysis,
(v) a current listing, as of the end of the immediately preceding week, of
the Borrower's (and any other Credit Party's) accounts payables,
accompanied by an aging analysis of such payables, (vi) a reconciliation,
as of the end of the immediately preceding week, of all Net Sales Proceeds
and any other receipts by the Borrower (or any other Credit Party) from any
"going out of business" or other liquidation sales, accompanied by an
instruction form for the corresponding paydown of the Loans in accordance
with Section 3.3(b)(ii). All such reports and certificates required by this
section shall be (a) accompanied by a certificate of the chief financial
officer of the Borrower to the effect that such reports are true and
correct in all material respects, and (b) in such form and detail as is
reasonably acceptable to the Agents.
SUBPART 2.7 Amendment of Financial Covenants. Subsection (a) of Section 7.2
in the Existing Credit Agreement shall be amended to read in its entirety as
follows:
(a) Cash Flow Coverage Ratio. For each fiscal quarter ending after
January 31, 1999, the Cash Flow Coverage Ratio, measured for the 12-month
period ending as of the end of each such fiscal quarter, shall be greater
than or equal to 1.0 to 1.0.
Subsections (b) and (c) of Section 7.2 of the Existing Credit Agreement shall be
deleted and replaced by a new subsection (b) which reads in its entirety as
follows:
(b) EBITDA. The Borrower shall maintain EBITDA, calculated on a
cumulative basis for the four-quarter period ended as of the last day of
each of the following fiscal quarters, of not less than the amounts shown
below for the period corresponding thereto:
Period Amount
------ ------
1st Quarter 1998 $ 11,700,000
2nd Quarter 1998 $ 11,700,000
3rd Quarter 1998 $ 14,100,000
4th Quarter 1998 $ 17,000,000
1st Quarter 1999 $ 18,000,000
Subsection (d) of Section 7.2 in the Existing Credit Agreement shall be
re-numbered as Section 7.2(c), and all references to Section 7.2(c) in the
Existing Credit Agreement shall be deemed to be to Section 7.2(c) in the Amended
Credit Agreement.
SUBPART 2.8 Amendment to Section 7.12. Section 7.12 of the Existing Credit
Agreement is amended by adding the following sentences to the end of existing
Section 7.12:
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Without limiting the generality of the foregoing, the Credit Parties
shall permit and cooperate with a collateral review of the Borrowing Base
Assets to be conducted by the Agents, their representatives or designees,
at the Borrower's expense, with such review to be concluded on or before
February 15, 1998. The Collateral Agent may, in its sole discretion, use
its own employees or representatives to conduct such review, or,
alternatively, may engage accountants, auditors, or other third party
professionals to complete some or all of such review. The scope of such
review shall be based upon the standard practices of the Collateral Agent's
asset-based lending group as applied in the reasonable discretion of the
Collateral Agent.
SUBPART 2.9 Addition of a New Section 7.15. A new Section 7.15 shall be
added to the Existing Credit Agreement immediately following existing Section
7.14, reading in its entirety as follows:
7.15 Retention of Financial Consultant. The Borrower shall retain on
or before January 30, 1998, either as an officer or as an independent
financial consultant, an individual or firm reasonably satisfactory to the
Agents (the "Consultant"). The Borrower shall engage the Consultant for a
minimum of 180 days from January 30, 1998 to investigate, evaluate and
advise the Borrower concerning a wide range of financial and operational
issues relating to the Borrower's business plan. The exact scope of the
Consultant's services shall be agreed upon by the Borrower and the
Consultant, but must be reasonably satisfactory to the Agents. The Borrower
shall cause the Consultant (i) to meet periodically with the Agents at
their reasonable request to report upon the Consultant's findings and
recommendations, and (ii) to meet with the Lenders no less frequently than
once per quarter to report on the Consultant's findings and
recommendations. The Borrower shall pay all costs associated with its
retention of the Consultant. The Borrower shall not terminate the
Consultant's services, or deny the Consultant access to information
necessary to perform its services within the scope of its engagement, prior
to the expiration of such 180-day period. All reports and information
provided by the Consultant to the Agents or the Lenders shall be subject to
the confidentiality provisions of Section 11.17 hereof.
SUBPART 2.10 Amendment of Section 8.14. Section 8.14 of the Existing Credit
Agreement shall be amended to read in its entirety as follows:
8.14 Capital Expenditures.
The Credit Parties shall not make Capital Expenditures in cash
that would exceed, in the aggregate (a) during the fiscal year
("Fiscal Year 1998) of the Borrower ending closest to January 31,
1999, $7.7 million, and (b) from and after the end of Fiscal Year 1998
through and including the Revolving Loan Maturity Date, $6 million
plus 10% of the EBITDA earned during Fiscal Year 1998; it being
understood for the purposes of this Section 8.14 that "Capital
Expenditures in cash" shall mean all Capital Expenditures other than
those financed as permitted under Section 8.1(f).
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SUBPART 2.11 Amendment of Section 9.1(c). Section 9.1(c)(i) of the Existing
Credit Agreement shall be amended to read in its entirety as follows:
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.2, 7.3, 7.5, 7.6, 7.7,
7.10, 7.11, 7.12, 7.13, 7.14, 7.15 or 8.1 through 8.14 inclusive; or
PART III
WAIVER OF EXISTING DEFAULTS
Subject to the satisfaction of each of the conditions precedent specified
in Part IV of this Agreement, the Lenders hereby waive the Existing Defaults of
the Borrower under the Existing Credit Agreement. Such waiver shall only be
effective in this specific instance and shall not obligate the Lenders to waive
any other Default or Event of Default, now existing or hereafter arising.
PART IV
CONDITIONS TO EFFECTIVENESS
SUBPART 4.1 Effective Date. This Agreement shall be and become effective as
of the date hereof (the "Effective Date") when all of the conditions set forth
in this Subpart 4.1 shall have been satisfied.
SUBPART 4.1.1. Execution of Agreement. The Collateral Agent shall have
received original duly executed counterparts of this Agreement from the Borrower
and the Required Lenders.
SUBPART 4.1.2. Closing Certificate. The Collateral Agent shall have
received a certificate from the Borrower certifying that (i) no Default or Event
of Default exists as of the Effective Date other than the Existing Defaults, and
(ii) the representations and warranties of the Borrower made in or pursuant to
the Credit Documents are true in all material respects on and as of the
Effective Date.
SUBPART 4.1.3. Guarantors Consent. Each of the Guarantors shall have
executed the Consent included in the signature pages of this Agreement, and the
Collateral Agent shall have received such Consent executed by each Guarantor.
SUBPART 4.1.4. Amendment Fee. The Collateral Agent shall have received, for
the ratable benefit of the Lenders according to their respective Revolving Loan
Commitment Percentages, upon the Borrower's execution and delivery of this
Amendment, the Borrower's payment of $900,000, such amount representing the
first of three installment payments of an aggregate amendment fee equal to 1% of
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the Revolving Committed Amount as of January 31, 1998 (the "Amendment Fee"). The
entire Amendment Fee shall be fully earned by the Lenders upon the execution and
delivery of this Agreement by the Required Lenders. The Borrower shall pay the
Collateral Agent, for the ratable benefit of the Lenders, the second and third
installments of the Amendment Fee, each being in the aggregate amount of
$450,000, on May 2, 1998 and August 1, 1998 (or if earlier, in either instance,
the date of any refinancing of the Loans and termination of the Commitments).
The Amendment Fee shall constitute part of the Credit Party Obligations for all
purposes under the Credit Documents.
SUBPART 4.1.5. Warrants. As additional consideration for the Lenders'
execution and delivery of this Agreement, the Borrower shall issue to the
Lenders (or their respective designees) warrants (the "Warrants") to purchase in
the aggregate 500,000 shares of the Borrower's common stock, allocated pro rata
among the Lenders according to their respective Revolving Commitment
Percentages. The Warrants shall (i) be substantially in the form of Exhibit "A"
attached hereto, (ii) shall specify an exercise price of $0.01 per warrant
share, (iii) shall provide that the Warrants shall vest to the extent of 250,000
warrant shares on November 1, 1998 if the Loans have not been paid in full prior
to such date and the Commitments terminated, and (iv) shall provide that the
Warrants shall vest with respect to the remaining 250,000 warrant shares on
March 1, 1999 if the Loans have not been paid prior to that date and the
Commitments terminated.
SUBPART 4.1.6. Retention of Financial Consultant. The Borrower shall have
retained the Consultant and provided the Agents a copy of the Borrower's
engagement letter or agreement with the Consultant, and the Agents shall have
approved the scope of the Borrower's engagement for the Consultant.
SUBPART 4.1.7. Payment of Agents' Expenses. The Borrower shall reimburse
the Agents for their reasonable out-of-pocket expenses incurred in connection
with (i) their attendance at any meeting with the Borrower, (ii) the negotiation
and preparation of this Agreement, and (iii) all other costs and expenses
heretofore incurred by the Agents, including without limitation legal fees and
expenses, in connection with the negotiation, administration, amendment and
enforcement of any of the Credit Documents. Failure of either Agent to invoice
the Borrower by the date hereof for any such amounts shall not relieve the
Borrower of its obligation to pay promptly such reasonable expenses, but the
payment of any such expenses not invoiced to the Borrower by the date hereof
shall not constitute a condition precedent to the effectiveness of this
Agreement.
SUBPART 4.1.8. Corporate Action. The Borrower shall deliver to the Agents
certified copies of all corporate action taken by each Credit Party approving
this Agreement and each of the documents executed and delivered in connection
herewith (including, without limitation, a certificate setting forth the
resolutions of the Board of Directors of each Credit Party adopted in respect of
the transactions contemplated by this Agreement.)
SUBPART 4.1.9. Documentation. The Lenders and the Collateral Agent shall
have received all information, and such counterpart originals or such certified
or other copies of such originals, as they may reasonably request, and all legal
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matters incident to the transactions contemplated by this Agreement shall be
satisfactory to the counsel for the Lenders. Without limiting the generality of
the foregoing, the Borrower shall provide to the Agents, for informational
purposes, true and complete copies of all appraisals conducted by or for General
Electric Capital Corporation (or any of its agents, professionals or
representatives) of any of the assets of any of the Credit Parties.
SUBPART 4.1.10 Legal Opinion. The Agents shall have received an opinion of
counsel to the Credit Parties, reasonably satisfactory in form and substance to
the Agents, opining as to inter alia the due authorization, validity, and
enforceability of this Agreement and of the Warrants issued by the Borrower
pursuant to this Agreement.
PART V
MISCELLANEOUS
SUBPART 5.1 Cross-References. References in this Agreement to any Part or
Subpart are, unless otherwise specified, to such Part or Subpart of this
Agreement.
SUBPART 5.2 Instrument Pursuant to Existing Credit Agreement. This
Agreement is a document executed pursuant to the Existing Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Existing Credit
Agreement.
SUBPART 5.3 Credit Documents. The Borrower hereby confirms and agrees that
the Credit Documents are, and shall continue to be, in full force and effect,
except as amended hereby, except that, on and after the Effective Date,
references in each Credit Document to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Existing Credit Agreement
shall mean the Amended Credit Agreement.
SUBPART 5.4. Representations and Warranties. The Borrower hereby represents
and warrants that (i) it has the requisite corporate power and authority to
execute, deliver and perform this Agreement, (ii) it is duly authorized to, and
has been authorized by all necessary corporate action, to execute, deliver and
perform this Agreement, (iii) it has no claims, counterclaims, offsets, or
defenses to the Credit Documents and the performance of its obligations
thereunder, or if the Borrower has any such claims, counterclaims, offsets, or
defenses to the Credit Documents or any transaction related to the Credit
Documents, the same are hereby waived, relinquished and released in
consideration of the Lenders' execution and delivery of this Agreement, (iv) the
representations and warranties contained in Section 6 of the Existing Credit
Agreement are, subject to the limitations set forth therein, true and correct in
all material respects on and as of the date hereof as though made on and as of
such date (except for those which expressly relate to an earlier date or those
which relate to specific schedules, the changes to which do not represent a
Material Adverse Effect), (v) no event of default under any other agreement,
document or instrument to which the Borrower is a party will occur as a result
of the transactions contemplated hereby, and (vi) as of the date of this
Agreement, no Event of Default (or any event or condition which, but for the
lapse of time or the giving of notice, would constitute an "event of default"
under Section 9.1 of the Existing Credit Agreement or the Amended Credit
Agreement) exists except for the Existing Defaults.
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SUBPART 5.5. Costs and Expenses. The Borrower hereby agrees to pay on
demand all costs and expenses (including without limitation the reasonable fees
and expenses of counsel to the Agents) incurred by the Agents in connection with
the negotiation, preparation, execution, and delivery of this Agreement and the
enforcement or preservation of any rights and remedies of the Lenders and the
Collateral Agent hereunder (including without limitation any such fees and
expenses subsequently incurred by the Lenders and/or the Collateral Agent in any
bankruptcy or insolvency proceeding involving the Borrower).
SUBPART 5.6. Counterparts, Effectiveness, Etc. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SUBPART 5.7. Captions. The captions in this Agreement are inserted only as
a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or any provision hereof.
SUBPART 5.8 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
SUBPART 5.9. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized officers as of the day and year
first above written.
THE BORROWER: JUMBOSPORTS INC.,
a Florida corporation
/s/ Raymond P. Springer
Executive Vice President and
Chief Financial Officer
THE LENDERS: BARNETT BANK, N.A.,
individually in its capacity as a
Lender and in its capacity as
Administrative Agent and
Collateral Agent
/s/ Robert W. Mullins
Group Manager Special Assets
NATIONSBANK, N.A. f/k/a
NationsBank, N.A. (South),
individually in its capacity as a
Lender and in its capacity as
Documentation Agent
/s/ DeWitt W. King, III
Senior Vice President
[Signatures Continued]
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HIBERNIA NATIONAL BANK
/s/ Frank J. Crifasi
Vice President
U.S. BANK NATIONAL
ASSOCIATION (f/k/a United States
National Bank of Oregon)
/s/ Dennis C. McCormick
Vice President
THE SUMITOMO BANK, LIMITED
/s/ M. Phillip Freeman
Vice President
/s/ Allen L. Harvell, Jr
Vice President & Manager
NATIONAL BANK OF CANADA
/s/ E. Lynn Forgosh
Group Vice President
/s/ L. Curnyn
Vice President
[Signatures Continued]
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LTCB TRUST COMPANY
/s/ Philip A. Marsden
Senior Vice President
FIRST AMERICAN NATIONAL BANK
/s/ Samuel M. Ballesteros
Senior Vice President
THE SAKURA BANK, LIMITED
/s/ Hiroyasu Imanishi
Vice President & Senior Manager
SUNTRUST BANK, TAMPA BAY
/s/ Jason Lloyd
Vice President
PNC BANK, N.A.
/s/ Thomas J. McCool
Senior Vice President
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CONSENT TO AGREEMENT
Each of the undersigned, as a party to one or more of the Credit Documents,
hereby acknowledges the execution and delivery of the Amendment Agreement dated
as of January 30, 1998, hereby confirms and agrees that each Credit Document to
which it is a party is, and shall continue to be, in full force and effect, and
hereby ratifies and confirms in all respects its obligations thereunder. This
Consent may be executed by the parties hereto in counterparts, each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same instrument.
SPORTS & RECREATION HOLDINGS OF PA, INC.
/s/ Raymond P. Springer
Evecutive Vice President
GUIDE SERIES, INC.
/s/ Raymond P. Springer
Vice President
CONSTRUCTION RESOLUTION, INC.
/s/ Raymond P. Springer
Vice President
SPORTS & RECREATION, INC.
/s/ Raymond P. Springer
Executive Vice President
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Exhibit "A"
Form of Common Stock Warrant
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OFFERED FOR SALE UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION IN
REASONABLY ACCEPTABLE FORM AND SCOPE TO THE COMPANY OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH
ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS. THE OFFERING OF THIS SECURITY HAS
NOT BEEN REVIEWED OR APPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE'S SECURITIES ADMINISTRATOR. THIS WARRANT IS ALSO SUBJECT
TO CERTAIN ADDITIONAL TRANSFER RESTRICTIONS PROVIDED FOR HEREIN.
Dated: January 30, 1998
WARRANT
To Purchase an Aggregate of __________ Shares of Common Stock (subject to
adjustment) of JUMBOSPORTS INC.
Expiring January 30, 2008
THIS TO CERTIFY THAT, for value received, [NAME OF LENDER] or any
registered assigns ("Holder") is entitled to purchase from JUMBOSPORTS INC., a
Florida corporation (the "Company"), at any time or from time to time after 9:00
a.m., Tampa, Florida time, on or after (i) November 1, 1998, with respect to
________ shares, as such number shall be adjusted from time to time in
accordance with Article IV hereof (collectively, the "Initial Shares") and (ii)
March 1, 1999, with respect to _______ shares, as such number shall be adjusted
from time to time in accordance with Article IV hereof (collectively, the
"Additional Shares"), and prior to 5:00 p.m., Tampa, Florida time, on January
30, 2008, at the place where the Warrant Agency is located, at the Exercise
Price, the aggregate number of shares of common stock, par value $0.01 per share
(the "Common Stock"), of the Company shown above, subject to adjustment as
provided in Article IV hereof and termination as provided in Section 1.6 hereof,
and upon the other terms and conditions hereinafter provided, and is entitled
also to exercise the other appurtenant rights, powers and privileges hereinafter
described.
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This Warrant is one of one or more warrants (the "Warrants") of the same
form and having the same terms as this Warrant, entitling the holders to
purchase up to an aggregate of 500,000 shares of Common Stock, originally issued
on the date hereof. The Warrants have been issued by the Company pursuant to the
Amendment Agreement dated as of January 30, 1998 among the Company, the Lenders
listed on the signature pages thereof, Barnett Bank, N.A. as Collateral Agent
for such Lenders and NationsBank, N.A. as Documentation Agent, amending the
Credit Agreement.
Certain terms used in this Warrant are defined in Article VI.
ARTICLE I
EXERCISE OF WARRANT
1.1 Method of Exercise. To exercise this Warrant with respect to any
shares of Common Stock as to which this Warrant is then exercisable in whole or
in part, the Holder shall deliver on any Business Day to the Company at the
Warrant Agency (a) this Warrant, (b) a written notice of the Holder's election
to exercise this Warrant, which notice shall specify the number of shares of
Common Stock to be purchased (which shall be a whole number of shares if for
less than all the shares then issuable hereunder), the denominations of the
share certificate or certificates desired and the name or names in which such
certificates are to be registered, and (c) payment of the Exercise Price with
respect to such shares. Such payment may be made, at the option of the Holder,
by (a) cash, certified or bank cashier's check or wire transfer in an amount
equal to the product of (i) the Exercise Price times (ii) the number of Warrant
Shares as to which this Warrant is being exercised, or (b) by permitting the
Company to retain the number of Warrant Shares as to which this Warrant is being
exercised equal to the number of Warrant Shares having a value, based on the
Closing Price on the trading day immediately prior to the date of such exercise,
equal to the product of (i) the Exercise Price times (ii) the number of Warrant
Shres as to which this Warrant is being exercised.
The Company shall, as promptly as practicable and in any event within seven
days after receipt of such notice and payment, (i) forward a copy of such notice
to all other Warrantholders, and (ii) execute and deliver or cause to be
executed and delivered, in accordance with such notice, a certificate or
certificates representing the aggregate number of shares of Common Stock
specified in said notice together with cash in lieu of any fractions of a share
as provided in Section 1.3. The share certificate or certificates so delivered
shall be in such denominations as may be specified in such notice, and shall be
issued in the name of the Holder or such other name or names as shall be
designated in such notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of shares, as of the
date the aforementioned notice and payment is received by the Company. If this
Warrant shall have been exercised only in part, the Company shall, at the time
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of delivery of such certificate or certificates, deliver to the Holder a new
Warrant evidencing the right to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the Holder.
The Company shall pay all expenses, stamp, documentary and similar taxes and
other charges payable in connection with the preparation, issuance and delivery
of share certificates and new Warrants, except that, if share certificates or
new Warrants shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes payable as a result of such
transfer shall be paid by the Holder at the time of delivery of the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.2 Shares to be Fully Paid and Nonassessable. All shares of Common Stock
issued upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable and, if such Common Stock is then quoted on the New York Stock
Exchange ("NYSE") or listed on any other national securities exchange (as
defined in the Exchange Act), shall, to the extent permitted under the
applicable rules of such exchange or NYSE, be duly quoted or listed thereon, as
the case may be.
1.3 No Fractional Shares Required to be Issued. The Company shall not be
required to issue fractions of shares of Common Stock upon exercise of this
Warrant. If any fraction of a share would, but for this Section, be issuable
upon final exercise of this Warrant, in lieu of such fractional share, the
Company shall pay to the Holder in cash an amount equal to the same fraction of
the Fair Market Value of the Company per share of outstanding Common Stock on
the Business Day immediately prior to the date of such exercise.
1.4 Legend. Each certificate for shares of Common Stock issued upon
exercise of this Warrant shall bear the following legend:
"This security has not been registered under the Securities Act of
1933, as amended, and may not be sold or offered for sale unless registered
or qualified under said Act and any applicable state securities laws or
unless the Company receives an opinion in reasonably acceptable form and
scope to the Company of counsel reasonably satisfactory to the Company that
registration, qualification or other such actions are not required under
any such laws or that an exemption from such registration is available. The
offering of this security has not been reviewed or approved by the United
States Securities and Exchange Commission or by any state's securities
administrator. This security is also subject to certain additional transfer
restrictions provided for in the Warrant, the exercise of which resulted in
the original issuance of this security, a copy of which restrictions shall
be furnished to the holder hereof by the Company upon written request and
without charge."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public offering pursuant to a registration statement under the Securities
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Act) shall also bear such legend unless, in the opinion of counsel selected by
the Holder of such certificate (who may be an employee of such holder) and
reasonably acceptable to the Company, the securities represented thereby need no
longer be subject to restrictions on resale under the Securities Act.
1.5 Reservation; Authorization; Capitalization. The Company has duly
reserved, and will keep available for issuance upon exercise of the Warrants,
the total number of Warrant Shares deliverable from time to time upon exercise
of all Warrants from time to time outstanding. The Company will not take any
actions during the term of this Warrant that would result in any adjustment of
the number of shares of Common Stock issuable upon the exercise of this Warrant
if (i) the total number of shares of Common Stock issuable after such action
upon exercise of this Warrant, (ii) all shares of Common Stock issued and
outstanding and (iii) all shares then issuable (y) upon the exercise of all
Options and (z) upon the conversion or exchange of all Convertible Securities,
would exceed the total number of shares of Common Stock then authorized for
issuance by the Company. The Company will not change the Common Stock from par
value $0.01 per share to any higher par value which exceeds the Exercise Price
then in effect, and will reduce the par value of the Common Stock upon any event
described in Article IV that provides for an increase in the number of shares of
Common Stock subject to purchase upon exercise of this Warrant, in inverse
proportion to and effective at the same time as such number of shares is
increased; provided that such adjustment shall only be made in the event that
such increase in the number of shares, together with all other such increases
after the date hereof would, but for the proviso to Section 4.1, cause the
aggregate Exercise Price of all Warrants (without giving effect to any exercise
thereof) to be greater than $100,000. Any such reduction to the par value will
take into account, to the extent not accounted for in previous such reductions
to par value, all previous increases in the number of shares pursuant to Article
IV. The issuance of the Warrant Shares has been duly and validly authorized and,
when issued and sold in accordance with the Warrants, the Warrant Shares will be
duly and validly issued, fully paid and non-assessable. As of the date of the
initial issuance of this Warrant, the Company had outstanding (i) no more than
20,420,000 shares of Common Stock, par value $.01 per share value, (ii) no
shares of Non-VotingVoting Common Stock, (iii) 4 1/2% Convertible Subordinated
Notes Due 2000, currently convertible into shares of Common Stock, (iv) certain
options and warrants to acquire additional shares of Common Stock as heretofore
disclosed in public filings by the Company, and (v) no other shares of capital
stock or any securities convertible into or exchangeable for shares of capital
stock or any rights, options or warrants to purchase any shares of capital stock
or any securities convertible into or exchangeable for shares of capital stock.
Neither the issuance of this Warrant nor the issuance of Warrant Shares upon
exercise of this Warrant violates or conflicts with the Company's articles of
incorporation or bylaws or any agreement to which the Company is a party.
1.6 Special Provision Regarding Termination. In the event that the Company
shall pay in full in immediately available funds before November 1, 1998 the
entire outstanding principal amount of the Loans and the outstanding amount of
all other Credit Party Obligations for the payment of money (other than
indemnity obligations not yet due and payable) and no Commitments shall remain
in effect, the Warrants shall terminate without becoming exercisable with
respect to any of the Initial Shares or the Additional Shares and shall be of no
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<PAGE>
further cause or effect. In the event that the Company shall pay in full in
immediately available funds on or after November 1, 1998 and before March 1,
1999 the entire outstanding principal amount of the Loans and the outstanding
amount of all other Credit Party Obligations for the payment of money (other
than indemnity obligations not yet due and payable) and no Commitments shall
remain in effect, the Warrants shall terminate in respect of any of the
Additional Shares and shall be of no further cause or effect with respect to
such shares.
1.7 Redemption of Unexercised Warrants.During the period from November 1,
1998 through and including December 30, 1998, to the extent that the Holder has
not exercised this Warrant, the Company may, at the election of the Company,
repurchase from the Holder, and, in such event, the Holder shall sell to the
Company, this Warrant at a cash price equal to the product of (x) the number of
shares of Common Stock for which such Warrant is or may become exerisable
(including without limitation, the Initial Shares and the Additional Shares)
multiplied by (y) the average Closing Price of the Common Stock for the twenty
(20) trading days prior to the date of such acquisition. For purposes hereof,
the date of acquisition shall mean the date, on or prior to December 30, 1998,
upon which the Company pays to the Holder, in immediately available United
States funds, such purchase price. The Company shall provide the Holder at least
fifteen (15) days prior written notice of its election to repurchase the
unexercised Warrants pursuant to this provision. No such repurchase rights shall
exist on or after December 31, 1998.
ARTICLE II
WARRANT AGENCY;
TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANTS
2.1 Warrant Agency. As long as any Warrant remains outstanding, the Company
shall perform the obligations of and be the warrant agency with respect to the
Warrants (the "Warrant Agency") at its address for notices set forth in Section
11.01 of the Credit Agreement or at such other address as the Company shall
specify by notice to all Warrantholders.
2.2 Ownership of Warrant. The Company shall deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any person
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until due presentment of this Warrant for registration of
transfer as provided in this Article II.
2.3 Transfer of Warrant. The Company agrees to maintain at the Warrant
Agency books for the registration of transfers of the Warrants, and transfer of
this Warrant and all rights hereunder shall be registered, in whole or in part,
on such books, upon surrender of this Warrant at the Warrant Agency, together
with (i) a written assignment of this Warrant duly executed by the Holder or its
duly authorized agent or attorney, with (if the Holder is a natural person)
signatures guaranteed by a bank or trust company or a broker or dealer
registered with the NYSE or NASDAQ, (ii) an opinion in reasonably acceptable
form and scope to the Company of counsel reasonably satisfactory to the Company
that such transfer is in compliance with all applicable federal or state
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securities laws, and (iii) funds sufficient to pay any transfer taxes payable
upon such transfer. Upon 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 denominations specified in the instrument of assignment
(which shall be whole numbers of shares only) and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled. The Company shall permit the Warrant
Securityholders to inspect the warrant registration books from time to time
during normal business hours at the Warrant Agency.
2.4 Division or Combination of Warrants. This Warrant may be divided or
combined with other Warrants upon presentment hereof and of any Warrant or
Warrants with which this Warrant is to be combined at the Warrant Agency,
together with a written notice specifying the names and denominations (which
shall be whole numbers of shares only) in which the new Warrant or Warrants are
to be issued, signed by the holders hereof and thereof or their respective duly
authorized agents or attorneys. Subject to compliance with Section 2.3 as to any
transfer or assignment which may be involved in the 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.
2.5 Loss, Theft, Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company (it being understood and agreed that if the holder
of such Warrant is the Person named in the first paragraph of this Warrant, then
a written agreement of indemnity given by such Person alone shall be
satisfactory to the Company and no further security shall be required) or, in
the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of shares of Common Stock, which new
Warrant shall bear any legend required to be borne by the Warrant being
replaced.
2.6 Expenses of Delivery of Warrants. The Company shall pay all expenses,
stamp, documentary and similar taxes (other than transfer taxes) and other
charges payable in connection with the preparation, issuance and delivery of the
Warrants.
ARTICLE III
CERTAIN RIGHTS
3.1 Determination of Fair Market Value. Subject to Section 3.2 hereof, each
determination of Fair Market Value hereunder shall be made in good faith by the
Company. Upon each determination of Fair Market Value by the Company hereunder,
the Company shall promptly give notice thereof to all Warrantholders, setting
forth in reasonable detail the calculation of such Fair Market Value and the
method and basis of determination thereof (the "Company Determination").
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3.2 Contest and Appraisal Rights.
(a) If the holders of Warrants entitling such holders to purchase a
majority of the Common Stock subject to purchase upon exercise of Warrants
at the time outstanding and fully vested (exclusive of Warrants then owned
by the Company or any Subsidiary (as defined in the Credit Agreement) or
Affiliate (as defined in the Credit Agreement) thereof) (the "Required
Interest") disagree with the Company Determination and by notice to the
Company given within 30 days after receipt of notice of the Company
Determination (an "Appraisal Notice") elect to dispute the Company
Determination, such dispute shall be resolved as set forth in subsection
(b) of this Section.
(b) The Company shall within 30 days after an Appraisal Notice shall
have been given pursuant to subsection (a) of this Section engage an
investment bank or other qualified appraisal firm reasonably acceptable to
the Required Interest (the "Appraiser") to make an independent
determination of Fair Market Value (the "Appraiser Determination"). The
Appraiser Determination shall be final and binding on the Company and all
Warrantholders. The costs of conducting the appraisal shall be borne solely
by the Company.
3.3 Financial Statements and Other Information. Promptly upon transmission
thereof, the Company will deliver to the Holder copies of any and all financial
statements, proxy statements, notices and other reports as it may send to its
public stockholders and copies of all registration statements and all reports
which it files with the Securities and Exchange Commission (or any governmental
body or agency succeeding to its functions).
ARTICLE IV
ANTIDILUTION PROVISIONS
4.1 General. The Exercise Price and the number of shares of Common Stock
(or other securities or property) issuable upon exercise of this Warrant shall
be subject to adjustment from time to time upon the occurrence of certain events
as provided in this Article IV; provided that notwithstanding anything to the
contrary herein, the Exercise Price shall not be adjusted to an amount less than
the par value of the Common Stock, as such par value is reduced from time to
time in accordance with Section 1.5.
4.2 Common Stock Reorganization. If the Company shall subdivide its
outstanding shares of Common Stock (or any class thereof) into a greater number
of shares or consolidate its outstanding shares of Common Stock (or any class
thereof) into a smaller number of shares (any such event being called a "Common
Stock Reorganization"), then (a) the Exercise Price shall be adjusted, effective
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immediately after the effective date of such Common Stock Reorganization, to a
price determined by multiplying the Exercise Price in effect immediately prior
to such effective date by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on such effective date before giving
effect to such Common Stock Reorganization and the denominator of which shall be
the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (b) the number of shares of Common Stock
subject to purchase upon exercise of this Warrant shall be adjusted, effective
at such time, to a number determined by multiplying the number of shares of
Common Stock subject to purchase immediately before such Common Stock
Reorganization by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding after giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding immediately before such Common Stock Reorganization.
4.3 Common Stock Distribution.
(a) If the Company shall issue, sell or otherwise distribute any
shares of Common Stock, other than pursuant to this Warrant or a Common
Stock Reorganization (which is governed by Section 4.2 hereof) (any such
event, including any event described in paragraphs (b) and (c) below, being
herein called a "Common Stock Distribution"), for a consideration per share
less than the Fair Market Value of the Company per share of outstanding
Common Stock on a Fully Diluted Basis on the date of such Common Stock
Distribution (before giving effect to such Common Stock Distribution),
then, effective upon such Common Stock Distribution, the Exercise Price
shall be reduced (but in no event increased), if such consideration per
share shall be less than such Fair Market Value per share, to the lowest of
the prices (calculated to the nearest one thousandth of one cent)
determined as provided in clauses (i), (ii) and (iii) below:
(i) if the Company shall receive any consideration for the Common
Stock issued, sold or distributed, in such Common Stock Distribution,
the consideration per share of Common Stock received by the Company
upon such issue, sale or distribution;
(ii) by dividing (A) an amount equal to the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such Common
Stock Distribution multiplied by the then existing Exercise Price plus
(2) the consideration, if any, received by the Company upon such
Common Stock Distribution by (B) the total number of shares of Common
Stock outstanding immediately after such Common Stock Distribution;
and
(iii) by multiplying the Exercise Price in effect immediately
prior to such Common Stock Distribution by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such Common Stock Distribution
multiplied by such Fair Market Value per share on the date of such
Common Stock Distribution, plus (B) the consideration, if any,
received by the Company upon such Common Stock Distribution, and the
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denominator of which shall be the product of (1) the total number of
shares of Common Stock outstanding immediately after such Common Stock
Distribution multiplied by (2) such Fair Market Value per share on the
date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment to
the Exercise Price pursuant to the foregoing provisions of this
paragraph (a), including by operation of paragraph (b) or (c) below,
then, effective at the time such adjustment is made, the number of
shares of Common Stock subject to purchase upon exercise of this
Warrant shall be increased to a number determined by multiplying the
number of shares of Common Stock subject to purchase immediately
before such Common Stock Distribution by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding
immediately after giving effect to such Common Stock Distribution and
the denominator of which shall be the sum of the number of shares
outstanding immediately before giving effect to such Common Stock
Distribution (both calculated on a Fully Diluted Basis) plus the
number of shares of Common Stock which the aggregate consideration
received by the Company with respect to such Common Stock Distribution
would purchase at the Fair Market Value of the Company per share of
outstanding Common Stock on a Fully Diluted Basis on the date of such
Common Stock Distribution (before giving effect to such Common Stock
Distribution). In computing adjustments under this paragraph,
fractional interests in Common Stock shall be taken into account to
the nearest one-thousandth of a share.
The provisions of this paragraph (a), including by operation of
paragraph (b) or (c) below, shall not operate to increase the Exercise
Price or reduce the number of shares of Common Stock subject to
purchase upon exercise of this Warrant.
(b) If the Company shall issue, sell, distribute or otherwise grant in
any manner (including by assumption) any rights to subscribe for or to
purchase, or any warrants or options for the purchase of Common Stock or
any stock or securities convertible into or exchangeable for Common Stock
(such rights, warrants or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities"), whether or not such Options or the rights to
convert or exchange any such Convertible Securities in respect of such
Options are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities in respect of such
Options (determined by dividing (i) the aggregate amount, if any, received
or receivable by the Company as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus, in the
case of Options to acquire Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the issuance or
sale of such Convertible Securities and upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Fair Market Value of the Company per
share of outstanding Common Stock on a Fully Diluted Basis on the date of
granting such Options (before giving effect to such grant), then, for
purposes of paragraph (a) above, the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion
or exchange of the total maximum amount of such Convertible
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Securities issuable upon the exercise of such Options shall be deemed to have
been issued as of the date of granting of such Options and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraph (d) below, no additional adjustment of
the Exercise Price shall be made upon the actual exercise of such Options or
upon conversion or exchange of such Convertible Securities.
(c) If the Company shall issue, sell or otherwise distribute
(including by assumption) any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon such conversion
or exchange (determined by dividing (i) the aggregate amount received or
receivable by the Company as consideration for the issuance, sale or
distribution of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Fair Market Value of the
Company per share of outstanding Common Stock on a Fully Diluted Basis on
the date of such issuance, sale or distribution (before giving effect to
such issuance, sale or distribution), then, for purposes of paragraph (a)
above, the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed
to have been issued as of the date of the issuance, sale or distribution of
such Convertible Securities and thereafter shall be deemed to be
outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraph (d) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion
or exchange of such Convertible Securities.
(d) If (i) the purchase price provided for in any option referred to
in paragraph (b) above or the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred to
in paragraph (b) or (c) above or the rate at which any Convertible
Securities referred to in paragraph (b) or (c) above are convertible into
or exchangeable for Common Stock shall change at any time (other than under
or by reason of provisions designed to protect against dilution upon an
event which results in a related adjustment pursuant to this Article IV),
or (ii) any of such Options or Convertible Securities shall have
terminated, lapsed or expired, then the Exercise Price then in effect shall
forthwith be readjusted (effective only with respect to any exercise of
this Warrant after such readjustment) to the Exercise Price which would
then be in effect had the adjustment made upon the issuance, sale,
distribution or grant of such Options or Convertible Securities been made
based upon such changed purchase price, additional consideration or
conversion rate, as the case may be (in the case of any event referred to
in clause (i) of this paragraph (d)) or had such adjustment not been made
(in the case of any event referred to in clause (ii) of this paragraph
(d)).
(e) If the Company shall pay a dividend or make any other distribution
upon any capital stock of the Company payable in Common Stock, Options or
Convertible Securities, then, for purposes of paragraph (a) above, such
Common Stock, Options or Convertible Securities shall be deemed to have
been issued or sold without consideration.
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(f) If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for cash, the consideration received
therefor shall be deemed to be the amount received by the Company therefor,
after deduction therefrom of any expenses incurred in connection therewith.
If any shares of Common Stock, Options or Convertible Securities shall be
issued sold or distributed for a consideration other than cash, the amount
of the consideration other than cash received by the Company shall be
deemed to be the Fair Market Value of such consideration, after deduction
of any expenses incurred in connection therewith. If any shares of Common
Stock, Options or Convertible Securities shall be issued in connection with
any merger in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the Fair Market Value of such
portion of the assets and business of the non-surviving corporation as
shall be attributable to such Common Stock, Options or Convertible
Securities, as the case may be. If any Options shall be issued in
connection with the issuance and sale of other securities of the Company,
together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such
Options shall be deemed to have been issued without consideration.
4.4 Special Dividends. If the Company shall issue or distribute to any
holder or holders of shares of Common Stock evidences of indebtedness, any other
securities of the Company or any cash, property or other assets (excluding a
Common Stock Reorganization or a Common Stock Distribution), whether or not
accompanied by a purchase, redemption or other acquisition of shares of Common
Stock (any such nonexcluded event being herein called a "Special Dividend"), (a)
the Exercise Price shall be decreased, effective immediately after the effective
date of such Special Dividend, to a price determined by multiplying the Exercise
Price then in effect by a fraction, the numerator of which shall be the Fair
Market Value of the Company per share of outstanding Common Stock as of such
effective date less any cash and the then Fair Market Value of any evidences of
indebtedness, securities or property or other assets issued or distributed in
such Special Dividend with respect to one share of Common Stock, and the
denominator of which shall be such Fair Market Value per share and (b) the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock subject to purchase immediately before such Special
Dividend by a fraction, the numerator of which shall be the Exercise Price in
effect immediately before such Special Dividend and the denominator of which
shall be the Exercise Price in effect immediately after such Special Dividend. A
reclassification of Common Stock (other than a change in par value, or from par
value to no par value or from no par value to par value) into shares of Common
Stock and shares of any other class of stock shall be deemed a distribution by
the Company to the holders of such Common Stock of such shares of such other
class of stock and, if the outstanding shares of Common Stock shall be changed
into a larger or smaller number of shares of Common Stock as part of such
reclassification, a Common Stock Reorganization.
4.5 Capital Reorganizations. If there shall be any consolidation or merger
to which the Company is a party, other than a consolidation or a merger of which
the Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a Common Stock Reorganization) in,
outstanding shares of Common Stock, or any sale or conveyance of the property of
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the Company as an entirety or substantially as an entirety, or any
recapitalization of the Company (any such event being called a "Capital
Reorganization"), then, effective upon the effective date of such Capital
Reorganization, the Holder shall no longer have the right to purchase Common
Stock, but shall have instead the right to purchase, upon exercise of this
Warrant, the kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive pursuant to such Capital Reorganization if this Warrant had
been exercised immediately prior to the effective date of such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall (a)
execute and deliver to each Warrantholder and to the Warrant Agency an agreement
as to the Warrantholder's rights in accordance with this Section 4.5, providing,
to the extent of any right to purchase equity securities hereunder, for
subsequent adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Article IV and (b) provide each Regulation Y
Holder with an opinion of counsel reasonably satisfactory to such Regulation Y
Holder and such other assurances as any Regulation Y Holder may reasonably
request to the effect that the ownership and exercise by any Regulation Y Holder
of this Warrant after giving effect to such Capital Reorganization shall not be
prohibited by the BHC Act or the regulations thereunder. The provisions of this
Section 4.5 shall similarly apply to successive Capital Reorganizations.
4.6 Adjustment Rules. Any adjustments pursuant to this Article IV shall be
made successively whenever an event referred to herein occurs, except that,
notwithstanding any other provision of this Article IV, no adjustment shall be
made to the number of shares of Common Stock to be delivered to each
Warrantholder (or to the Exercise Price) if such adjustment represents less than
1% of the number of shares previously required to be so delivered, but any
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any adjustments
so carried forward shall amount to 1% or more of the number of shares to be so
delivered. No adjustment shall be made pursuant to this Article IV in respect of
(a) the issuance of options or warrants to acquire shares of Common Stock to
employees, officers or directors of the Company pursuant to employee stock
ownership plans or other benefit plans, or the exercise of any such options or
warrants, provided that the aggregate amount of all such Common Stock and Common
Stock for which such options or warrants are exercisable does not exceed 5% of
the Common Stock on a Fully Diluted Basis on the date hereof and (b) the
issuance from time to time of any Warrants or shares of Common Stock upon the
exercise of any of the Warrants. If the Company takes a record of the holders of
its Common Stock for any purpose referred to in this Article IV, then (i) such
record date shall be deemed to be the date of the issuance, sale, distribution
or grant in question and (ii) if the Company shall legally abandon such action
prior to effecting such action, no adjustment shall be made pursuant to this
Article IV in respect of such action.
4.7 Proceedings Prior to Any Action Requiring Adjustment. As a condition
precedent to the taking of any action which would require an adjustment pursuant
to this Article IV, the Company shall take any action which may be reasonably
necessary, including obtaining regulatory approvals or exemptions, in order that
(a) the Company may thereafter validly and legally issue as fully paid and
nonassessable all shares of Common Stock which any Warrantholder is entitled to
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receive upon exercise of a Warrant and (b) the ownership and exercise of any
Warrant by any Regulation Y Holder shall not be prohibited by the BHC Act or the
regulations thereunder.
4.8 Notice of Adjustment. Not less than 10 nor more than 30 days prior to
the record date or effective date, as the case may be, of any action which
requires or might require an adjustment or readjustment pursuant to this Article
IV, the Company shall give notice to each Warrantholder of such event,
describing such event in reasonable detail and specifying the record date or
effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give notice to each
Warrantholder of such adjustment and computation promptly after such adjustment
becomes determinable.
ARTICLE V
REGISTRATION RIGHTS
5.1 Registration on Request.
(a) Subject to Section 5.1(g), at any time or from time to time on or
after December 31, 1998, upon the written request of the holder or holders
of a majority of all outstanding Conversion Shares and Warrants (such
majority determined, for purposes of this Section 5.1, by calculating the
number of Conversion Shares for which such Warrants are then exercisable)
(the "Initiating Holders"), requesting that the Company effect the
registration under the Securities Act of all or part of such Initiating
Holders' Registrable Securities and specifying the intended method of
disposition thereof, the Company will promptly give written notice of such
requested registration to all holders of Warrants and Registrable
Securities, and thereupon the Company will use its best efforts to effect
the registration under the Securities Act of:
(i) the Registrable Securities which the Company has been so
requested to register by such Initiating Holders for disposition in
accordance with the intended method of disposition stated in such
request;
(ii) all other Registrable Securities the holders of which shall
have made a written request to the Company for registration thereof
within 30 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of
such Registrable Securities); and
(iii) all shares of Common Stock which the Company may elect to
register in connection with the offering of Registrable Securities
pursuant to this Section 5.1, whether for its own account or for the
account of a holder of Common Stock, all to the extent requisite to
permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities and the additional
shares of Common Stock, if any, to be so registered, provided that the
Warrant Securityholders as a class shall be entitled to not more than
two registrations upon request pursuant to this Section 5.1.
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(b) Registrations under this Section 5.1 shall be on such appropriate
registration form of the Commission (i) as shall be selected by the Company and
(ii) as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in their
request for such registration. The Company agrees to include in any such
registration statement all information which holders of Registrable Securities
being registered shall reasonably request.
(c) The Company will pay all Registration Expenses in connection with the
registrations requested pursuant to this Section 5.1, provided that, in
addition, the Company shall pay all Registration Expenses in connection with any
registration upon request pursuant to which less than 50% of the Registrable
Shares requested to be registered by such Initiating Holders are registered, but
no such registration shall be counted as a requested registration for purposes
of this Section 5.1.
(d) A registration requested pursuant to this Section 5.1 shall not be
deemed to have been effected (i) unless a registration statement with respect
thereto has become effective; provided that a registration which does not become
effective after the Company has filed a registration statement with respect
thereto solely by reason of the refusal to proceed by the Initiating Holders
(other than a refusal to proceed based upon the advice of counsel relating to a
matter with respect to the Company) shall be deemed to have been effected by the
Company at the request of the Initiating Holders unless the Initiating Holders
shall have elected to pay all Registration Expenses in connection with such
registration, (ii) if, after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason, other than
by reason of some act or omission by any Warrantholder or Warrant
Securityholder, or (iii) the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in connection with such
registration are not satisfied, other than by reason of some act or omission by
any Warrantholder or Warrant Securityholder.
(e) If a requested registration pursuant to this Section 5.1 involves an
underwritten offering, the underwriter or underwriters thereof shall be selected
by the holders of at least a majority (by a number of shares) of the Registrable
Securities as to which registration has been requested and shall be reasonably
acceptable to the Company.
(f) If a requested registration pursuant to this Section 5.1 involves an
underwritten offering, and the managing underwriter shall advise the Company
(with a copy of any such notice to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration (including securities proposed to
be sold for the account of the Company) exceeds the number which can be sold in
such offering within a price range acceptable to the Initiating Holders, the
Company will include in such registration, to the extent of the number which the
Company is so advised can be sold in such offering, (i) first, Registrable
Securities requested to be included in such registration by the holder or
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holders of Registrable Securities, pro rata among such holders requesting such
registration on the basis of the number of such securities requested to be
included by such holders, (ii) second, all shares proposed to be included by the
Company in such registration and (iii) third, all shares other than Registrable
Shares (any such shares with respect to any registration, "Other Shares")
requested to be included in such registration by the holder or holders thereof.
(g) The Company may suspend any registration requested pursuant to this
Section 5.1 one time per registration for a single period of up to 90 days upon
notice to the Initiating Holders that, in the good faith determination of the
Board of Directors of the Company, the registration and sale at such time of the
Registrable Securities requested to be so registered would not be in the best
interests of the Company. No registration shall be requested pursuant to this
Section 5.1 during the period from the date of the notice to the Warrant
Securityholders pursuant to Section 5.2(a) of the Company's intention to
register securities until the expiration of the lockup period specified in
Section 5.4(b), or, if earlier, the date of the Company's notice pursuant to the
proviso to the second sentence of Section 5.2(a).
5.2 Incidental Registration.
(a) If the Company at any time proposes to register any of its securities
under the Securities Act (other than (x) by a registration on Form S-4 or S-8 or
any successor or similar forms or (y) pursuant to Section 5.1) whether for its
own account or for the account of the holder or holders of any Other Shares, it
will each such time give prompt written notice to all Warrant Securityholders of
its intention to do so and of such holders' rights under this Section 5.2. Upon
the written request of any such holder made within 20 days after the receipt of
any such notice (which request shall specify the Registrable Securities intended
to be disposed of by such holder and the intended method of disposition
thereof), the Company will use its best efforts to effect the registration under
the Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof, to the extent requisite to permit
the disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered, by inclusion of such
Registrable Securities in the registration statement which covers the securities
which the Company proposes to register; provided that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason either not to register
or to delay registration of such securities, the Company may, at its election,
give written notice of such determination to each holder of Registrable
Securities and, thereupon, (i) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith), without prejudice, however, to
the rights of any Warrant Securityholder or Warrant Securityholders entitled to
do so to request that such registration be effected as a registration under
Section 5.1, and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 5.2 shall relieve the Company of its obligation to
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effect any registration upon request under Section 5.1, nor shall any such
registration hereunder be deemed to have been effected pursuant to Section 5.1.
The Company will pay all Registration Expenses in connection with each
registration of Registrable Securities pursuant to this Section 5.2.
(b) If the Company at any time proposes to register any of its securities
under the Securities Act as contemplated by Section 5.2 and such securities are
to be distributed by or through one or more underwriters, the Company will, if
requested by any holder of Registrable Securities as provided in this Section
5.2, use its best efforts to arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters, provided that if the managing
underwriter of such underwritten offering shall inform the Company and holders
of the Registrable Securities requesting such registration and all other holders
of any other shares of Common Stock which shall have exercised, in respect of
such underwritten offering, registration rights comparable to the rights under
this Section 5.2 by letter of its belief that inclusion in such distribution of
all or a specified number of such securities proposed to be distributed by such
underwriters would interfere with the successful marketing of the securities
being distributed by such underwriters (such letter to state the basis of such
belief and the approximate number of such Registrable Securities and such Other
Shares proposed so to be registered which may be distributed without such
effect), then the Company may, upon written notice to all holders of such
Registrable Securities and holders of such Other Shares, reduce pro rata (if and
to be extent stated by such managing underwriter to be necessary to eliminate
such effect) the number of such Registrable Securities and Other Shares the
registration of which shall have been requested by each holder thereof so that
the resultant aggregate number of such Registrable Securities and Other Shares
so included in such registration, together with the number of securities to be
included in such registration for the account of the Company, shall be equal to
the number of shares stated in such managing underwriter's letter.
5.3 Registration Procedures. (a) If and whenever the Company is required to
effect the registration of any Registrable Securities under the Securities Act
as provided in Sections 5.1 and 5.2, the Company shall, as expeditiously as
possible:
(i) prepare and (within 60 days after the end of the period
within which requests for registration may be given to the Company or
in any event as soon thereafter as possible; provided that, in the
case of a registration pursuant to Section 5.1, such filing to be made
within 60 days after the initial request of an Initiating Holder of
Registrable Securities or in any event as soon thereafter as possible)
file with the Commission the requisite registration statement to
effect such registration (including such audited financial statements
as may be required by the Securities Act) and thereafter use its best
efforts to cause such registration statement to become and remain
effective; provided further that the Company may discontinue any
registration of its securities which are not Registrable Securities at
any time prior to the effective date of the registration statement
relating thereto; provided further that before filing such
registration statement or any amendments thereto, the Company will
furnish to the counsel selected by the holders of Registrable
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Securities which are to be included in such registration copies of all
such documents proposed to be filed, which documents will be subject
to the review of such counsel;
(ii) prepare and file with the Commission such amendments and
supplements to such 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
Securities Act with respect to the disposition of all securities
covered by such registration statement until the earlier of (x) in the
case of a registration pursuant to Section 5.1, the expiration of 120
days after such registration statement becomes effective, or (y) in
the case of a registration pursuant to Section 5.2, the expiration of
90 days after such registration statement becomes effective;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement and each underwriter, if any, of the
securities being sold by such seller such number of conformed copies
of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number
of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and such other
documents, as such seller and underwriter, if any, may reasonably
request in order to facilitate the public sale or other disposition of
the Registrable Securities owned by such seller;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under blue sky or similar laws of such jurisdictions as any seller
thereof and any underwriter of the securities being sold by such
seller shall reasonably request, to keep such registrations or
qualifications in effect for so long as such registration statement
remains in effect, and take any other action which may be reasonably
necessary or advisable to enable such seller and underwriter to
consummate the disposition in such jurisdictions of the securities
owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subdivision (iv) be obligated to be so qualified,
to subject itself to taxation in any such jurisdiction or to consent
to general service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities;
(vi) if such registration involves an underwritten offering,
furnish to each seller of Registrable Securities a signed counterpart,
addressed to such seller and the underwriters, if any, of
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(x) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement),
reasonably satisfactory in form and substance to such seller, and
(y) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the
closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in
opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of securities;
(vii) notify the holders of Registrable Securities and the
managing underwriter or underwriters, if any, promptly and confirm
such advice in writing promptly thereafter:
(A) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment
to the registration statement has been filed, and, with respect
to the registration statement or any post-effective amendment
thereto, when the same has become effective;
(B) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or
for additional information;
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration or the
initiation of any proceedings by any Person for that purpose; and
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation or threat of any proceeding for
such purpose;
(viii) notify each seller of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon the Company's
discovery that, or upon the happening of any event as a result of which,
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the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
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 at the request of any such seller promptly prepare and
furnish to such seller and each underwriter, if any, a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not 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 not misleading in the
light of the circumstances then existing;
(ix) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible moment;
(x) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first full calendar quarter after the effective date of
such registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;
(xi) make available for inspection by a representative of the holders
of Registrable Securities participating in the offering, any underwriter
participating in any disposition pursuant to the registration and any
attorney or accountant retained by such selling holders or underwriter
(each, an "Inspector"), all financial and other records, pertinent
corporate documents and properties of the Company (the "Records"), and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with
such registration; provided that the Company shall not be required to
comply with this subdivision (xi) if there is a reasonable likelihood, in
the judgment of the Company, that such delivery could result in the loss of
any attorney-client privilege related thereto; and provided further that
Records which the Company determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not be disclosed by
the Inspectors (other than to any holder of Registrable Securities
participating in the offering, and if disclosed to any such holder shall
not be disclosed by such holder) unless (x) such Records have become
generally available to the public or (y) the disclosure of such Records may
be necessary or appropriate (A) to comply with any law, rule, regulation or
order applicable to any such Inspectors or holder of Registrable
Securities, (B) in response to any subpoena or other legal process or (C)
in connection with any litigation to which such Inspectors or any holder of
Registrable Securities is a party (provided that the Company is provided
with reasonable notice of such proposed disclosure and a reasonable
opportunity to seek a protective order or other appropriate remedy with
respect to such Records);
(xii) provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
Registration Statement;
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(xiii) use its best efforts to list all Registrable Securities covered
by such registration statement on any securities exchange on which any of
the Common Stock is then listed; and
(xiv) use its best efforts to provide a CUSIP number for the
Registrable Securities, not later than the effective date of the
registration.
The Company may require each seller of Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing for purposes of preparing the
relevant registration statement and amendments and supplements thereto.
(b) Each holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in subdivision
(viii) of Section 5.3(a), such holder will forthwith discontinue such
holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (viii) of Section 5.3(a). In the event the
Company shall give any such notice, the periods specified in subdivision
(ii) of Section 5.3(a) shall be extended by the length of the period from
and including the date when each seller of any Registrable Securities
covered by such registration statement shall have received such notice to
the date on which each such seller has received the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of
Section 5.3(a).
(c) If any such registration or comparable statement refers to any
holder of Registrable Securities by name or otherwise as the holder of any
securities of the Company, then such holder shall have the right to
require, in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar federal
statute then in force, the deletion of the reference to such holder.
5.4. Underwritten Offerings.
(a) If requested by the underwriters for any underwritten offering by
holders of Registrable Securities pursuant to a registration requested
under Section 5.1, the Company will enter into an underwriting agreement
with such underwriters for such offering, such agreement to be satisfactory
in substance and form to the Company, each such holder and the
underwriters, and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements of
such type, including, without limitation, indemnities to the effect and to
the extent provided in Section 5.5. The holders of the Registrable
Securities will cooperate with the Company in the negotiation of the
underwriting agreement; provided, that no holder of Registrable Securities
included in any underwritten registration shall be required to make any
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representations or warranties to the Company or the underwriters other than
representations and warranties regarding such holder and such holder's
intended method of distribution.
(b) Each holder of the Registrable Securities agrees by acquisition of
its Registrable Securities not to sell, make any short sale of, loan, grant
any option for the purchase of, effect any public sale or distribution of
or otherwise dispose of any equity securities of the Company, during the
ten days prior to and the 90 days after the effective date of any
underwritten registration pursuant to Section 5.1 or 5.2 has become
effective, except as part of such underwritten registration, whether or not
such holder participates in such registration, and except as otherwise
permitted by the managing underwriter of such underwriting (if any). Each
holder of the Registrable Securities agrees that the Company may instruct
its transfer agent to place stop transfer notations in its records to
enforce this Section 5.4(b).
(c) The Company agrees (x) not to sell, make any short sale of, loan,
grant any option for the purchase of, effect any public sale or
distribution of or otherwise dispose of its equity securities or securities
convertible into or exchangeable or exercisable for any of such securities
during the ten days prior to and the 90 days after the effective date of
any registration pursuant to Section 5.1 or 5.2 has become effective,
except (i) as part of such registration, (ii) pursuant to registrations on
Form S-4 or S-8 or any successor or similar forms thereto or (iii) as
otherwise permitted by the managing underwriter of such offering (if any),
and (y) to use all reasonable efforts to cause each holder of its equity
securities or any securities convertible into or exchangeable or
exercisable for any of such securities, in each case purchased from the
Company at any time after the date of this Agreement (other than in a
public offering) to agree not to sell, make any short sale of, loan; grant
any option for the purchase of, effect any public sale or distribution of
or otherwise dispose of such securities during such period except as part
of such underwritten registration.
(d) No Person may participate in any underwritten offering hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved, subject to the terms
and conditions hereof, by the Person or a majority of the Persons entitled
to approve such arrangements and (ii) completes and executes all
agreements, questionnaires, indemnities and other documents (other than
powers of attorney) required under the terms of such underwriting
arrangements.
5.5 Indemnification.
(a) The Company agrees to indemnify and hold harmless each holder of
Registrable Securities whose Registrable Securities are covered by any
registration statement, its directors and officers and each other Person,
if any, who controls such holder within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to
which any such indemnified party may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities
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Act, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company will reimburse each such indemnified party for any legal or any
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding;
provided that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such holder specifically for use in the
preparation thereof; provided, however, that the indemnification contained
in this paragraph (a) with respect to any preliminary prospectus shall not
inure to the benefit of any holder of Registrable Securities whose
Registrable Securities are covered by such registration statement (or to
the benefit of any person controlling such holder) on account of any such
loss, claim, damage, liability or expense arising from the sale of the
shares to any person if a copy of the final prospectus shall not have been
delivered or sent to such person within the time required by the Securities
Act, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in such preliminary
prospectus was corrected in the final prospectus. In addition, the Company
shall indemnify any underwriter of such offering and each other Person, if
any, who controls any such underwriter within the meaning of the Securities
Act in substantially the same manner and to substantially the same extent
as the indemnity herein provided to each Indemnified Party. Such indemnity
shall remain in full force and effect regardless of any investigation made
by or on behalf of such holder or any such director, officer, underwriter
or controlling person and shall survive the transfer of such securities by
such holder.
(b) Each prospective seller of Registrable Securities hereunder shall
indemnify and hold harmless (in the same manner and to the same extent as
set forth in subdivision (a) of this Section 5.5) the Company, each
director of the Company, each officer of the Company and each other person,
if any, who controls the Company within the meaning of the Securities Act,
with respect to any statement or alleged statement in or omission or
alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereof, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
seller specifically for use in the preparation of such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement. Any such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer of such securities by such seller. The amount payable by any
prospective seller of Registrable Securities with respect to the
indemnification set forth in this subsection (b) in connection with any
offering of securities will not exceed the amount of net proceeds received
by such prospective seller pursuant to such offering.
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(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action or proceeding involving a claim referred to in
the preceding subdivisions of this Section 5.5, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such
action; provided that the failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subdivisions of this Section 5.5, except to
the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified, to the extent that the indemnifying
party may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement of any such action which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect to such claim or
litigation. No indemnified party shall consent to entry of any judgment or
enter into any settlement of any such action the defense of which has been
assumed by an indemnifying party without the consent of such indemnifying
party.
Notwithstanding the provisions of this subdivision (c), no holder of
Registrable Securities or underwriter shall be required to contribute any
amount in excess of the amount by which (i) in the case of any such holder,
the net proceeds received by such holder from the sale of Registrable
Securities or (ii) in the case of an underwriter, the total price at which
the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any
damages that such holder or underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. 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.
5.6 Rule 144. (a) If the Company shall have filed a registration statement
pursuant to Section 12 of the Exchange Act or a registration statement pursuant
to the Securities Act, the Company will file with the Commission in a timely
manner the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
and will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any holder of Registrable Securities, the Company will deliver to such holder
a written statement as to whether it has complied with such requirements.
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(b) Notwithstanding any other provision of this Article V to the contrary,
the Company shall not be obligated to register the offer and sale of any
Registrable Securities pursuant to this Agreement at any time when the holder
thereof may sell all of the Registrable Securities held by such holder under
Rule 144 without limitation as to volume.
ARTICLE VI
DEFINITIONS
The following terms, as used in this Warrant, have the following
meanings:
"Additional Shares" has the meaning set forth in the first paragraph of
this Warrant.
"Appraisal Notice" has the meaning set forth in Section 3.2(a).
"Appraiser" has the meaning set forth in Section 3.2(b).
"Appraiser Determination" has the meaning set forth in Section 3.2(b).
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means any day on which the principal national securities
exchange on which the Common Stock is listed or admitted to trading is open for
business.
"Capital Reorganization" has the meaning set forth in Section 4.5.
"Closing Price" on any day means the reported last sales price regular way
of the Common Stock as reported on the New York Stock Exchange or, if no such
reported sale occurs on such day, the average of the closing bid and asked
prices regular way on such day.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Commitments" has the meaning ascribed to such term in the Credit
Agreement.
"Common Stock" has the meaning ascribed to such term in the second
paragraph of this Warrant.
"Common Stock Distribution" has the meaning set forth in Section 4.3(a).
"Common Stock Reorganization" has the meaning set forth in Section 4.2.
"Company" has the meaning set forth in the first paragraph of this Warrant.
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"Company Determination" has the meaning set forth in Section 3. 1.
"Conversion Shares" means (i) any shares of Common Stock or other
securities issued upon the exercise of any Warrants and (ii) any securities
issued with respect to any of such shares or other securities referred to in
clause (i) upon the conversion thereof into other securities or by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise;
provided that any of such securities shall cease to be Conversion Shares when
such securities shall have (x) been disposed of pursuant to a Public Sale or (y)
ceased to be outstanding.
"Convertible Securities" has the meaning set forth in Section 4.3(b).
"Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of May 28, 1997, among the Company, the Lenders signatories
thereto, Barnett Bank, N.A. as Administrative Agent and NationsBank, N.A. as
Documentation Agent, as amended or modified from time to time.
"Credit Party Obligations" has the meaning ascribed to such term in the
Credit Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any successor Federal statute, and the rules and regulations of the Securities
and Exchange Commission (or its successor) thereunder, all as the same shall be
in effect at the time.
"Exercise Price" means initially $.0l per share, as adjusted from time to
time in accordance with the terms hereof.
"Fair Market Value" as at any date of determination means the fair market
value of the business or property or services in question as of such date, as
determined in good faith by the Board of Directors of the Company or otherwise
in accordance with Section 3.2 hereof. The Fair Market Value of the Company as
at any date of determination shall be the Market Price on such date multiplied
by the number of shares of Common Stock then outstanding.
"Fully Diluted Basis" means, with respect to any determination or
calculation, that such determination or calculation is performed on a fully
diluted basis determined in accordance with generally accepted accounting
principles as in effect from time to time.
"Holder" has the meaning set forth in the first paragraph of this Warrant.
"Initial Shares" has the meaning set forth in the first paragraph of this
Warrant.
"Initiating Holders" has the meaning set forth in Section 5.1 hereof.
"Loan" has the meaning ascribed to such term in the Credit Agreement.
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"Market Price" as at any date of determination means the average of the
daily Closing Prices of a share of Common Stock for the shorter of (i) the 20
consecutive Business Days ending on the most recent Business Day prior to the
Time of Determination and (ii) the period commencing on the date next succeeding
the first public announcement of the issuance, sale, distribution, grant or
exercise in question through such most recent Business Day prior to the Time of
Determination. "Time of Determination" means the time and date of the earliest
of (x) the determination of the stockholders entitled to receive such issuance,
sale, distribution or grant, and (y) the commencement of "ex-dividend" trading
in respect thereof.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means the Nasdaq Stock Market.
"Options" has the meaning set forth in Section 4.3(b).
"Other Shares" has the meaning set forth in Section 5.1.
"Person" means any natural person, corporation, limited liability company,
limited partnership, general partnership, joint stock company, joint venture,
association, company, trust, bank, trust company, land trust, business trust or
other organization, whether or not a legal entity, and any government agency or
political subdivision thereof.
"Public Sale" means any sale of Common Stock to the public pursuant to an
offering registered under the Securities Act or to the public through a broker,
dealer or market maker pursuant to the provisions of Rule 144 (or any successor
provision then in effect) adopted under the Securities Act.
"Registrable Securities" means any Warrants or Conversion Shares until the
date (if any) on which such Conversion Shares shall have been transferred or
exchanged and new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
them shall not require registration or qualification of them under the
Securities Act or any similar state law then in force.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 5.1 through 5.5 hereof, including (i)
all registration, filing and NASD fees, (ii) all fees and expenses of complying
with securities or blue sky laws, (iii) all word processing, duplicating and
printing expenses, (iv) all messenger and delivery expenses, (v) the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits of "cold comfort"
letters required by or incident to such performance and compliance, (vi) the
fees and disbursements of any one legal firm retained by the holder or holders
of more than 50% of the Registrable Securities being registered (or, in the case
of any registration effected pursuant to Section 5.1, as the Initiating Holders
shall have selected to represent all holders of the Registrable Securities being
registered), (vii) premiums and other costs of policies of insurance (if any)
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against liabilities arising out of the public offering of the Registrable
Securities being registered if the Company desires such insurance and (viii) any
fees and disbursements of underwriters customarily paid by issuers or sellers of
securities, but not including underwriting discounts and commissions and
transfer taxes, if any, provided that, in any case where Registration Expenses
are not to be borne by the Company, such expenses shall not include (i) salaries
of the Company personnel or general overhead expenses of the Company, (ii)
auditing fees, (iii) premiums or other expenses relating to liability insurance
required by underwriters of the Company or (iv) other expenses for the
preparation of financial statements or other data, to the extent that any of the
foregoing either is normally prepared by the Company in the ordinary course of
its business or would have been incurred by the Company had no public offering
taken place.
"Regulation Y Holder" means the Holder or a holder of Warrant Shares, if
such Holder or holder of Warrant Shares is a bank holding company within the
meaning of the BHC Act or a subsidiary thereof subject to Regulation Y under the
BHC Act.
"Regulatory Change" means, with respect to any Regulation Y Holder, (i) any
change on or after the date hereof in United States federal or state or foreign
laws or regulations (including the BHC Act and Regulation Y thereunder); (ii)
the adoption on or after the date hereof of any interpretation or ruling
applying to such Regulation Y Holder, individually or as a member of a class,
under any United States federal or state or foreign laws or regulations by any
court or governmental or regulatory authority charged with the interpretation or
administration thereof; or (iii) the modification on or after the date hereof of
any agreement or commitment with any such governmental or regulatory authority
that is applicable to or binding upon such Regulation Y Holder.
"Required Interest" has the meaning set forth in Section 3.2(a).
"Securities Act" means the Securities Act of 1933, as amended, and any
successor Federal statute and the rules and regulations of the Securities and
Exchange Commission (or its successors) thereunder, all as the same shall be in
effect from time to time.
"Special Dividend" has the meaning set forth in Section 4.4.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, association or other business entity of which more than 50% of the
total voting power of shares of stock or other interests therein entitled to
vote in the election of members of the board of directors, partnership
committee, board of managers or trustees or other managerial body thereof is at
the time owned or controlled, directly or indirectly, by such Person or one or
more of the other Subsidiaries of such Person or a combination thereof. Unless
otherwise specified, "Subsidiary" means a Subsidiary of the Company and
"Subsidiaries" means all Subsidiaries of the Company.
"Warrant Agency" has the meaning set forth in Section 2.1.
"Warrant Securityholder" means at any time any Warrantholder or any holder
of Conversion Shares.
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"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrants.
"Warrantholder" means a holder of a Warrant.
"Warrants" has the meaning set forth in the second paragraph of this
Warrant.
All references herein to "days" shall mean calendar days unless otherwise
specified.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. Notices and other communications provided for herein must be
in writing and may be given by mail, courier, confirmed telex or facsimile
transmission and shall, unless otherwise expressly required, be deemed given
when received or, if mailed, four Business Days after being deposited in the
United States mail with postage prepaid and properly addressed. In the case of
the Holder, such notices and communications shall be addressed to its address as
shown on the books maintained by the Warrant Agency, unless the Holder shall
notify the Warrant Agency that notices and communications should be sent to a
different address (or telex or facsimile number), in which case such notices and
communications shall be sent to the address (or telex or facsimile number)
specified by the Holder.
7.2 Waivers; Amendments. No failure or delay of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No notice
or demand on the Company in any case shall entitle the Company to any other or
future notice or demand in similar or other circumstances. The rights and
remedies of the Holder are cumulative and not exclusive of any rights or
remedies which it would otherwise have. The provisions of this Warrant may be
amended, modified or waived with (and only with) the written consent of the
Company and the holders of Warrants entitling such holders to purchase a
majority of the Common Stock subject to purchase upon exercise of such Warrants
at the time outstanding (exclusive of Warrants then owned by the Company or any
Subsidiary (as defined in the Credit Agreement) or Affiliate (as defined in the
Credit Agreement) thereof); provided, however, that no such amendment,
modification or waiver shall, without the written consent of the holders of all
Warrants at the time outstanding, (a) change the number of shares of Common
Stock subject to purchase upon exercise of this Warrant, the Exercise Price or
provisions for payment thereof or (b) amend, modify or waive the provisions of
this Section or Article III, IV, V or Section 1.5.
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Any such amendment, modification or waiver effected pursuant to and in
accordance with the provisions of this Section or the applicable provisions of
the Credit Agreement shall be binding upon the holders of all Warrants and
Warrant Shares, upon each future holder thereof and upon the Company. In the
event of any such amendment, modification or waiver, the Company shall give
prompt notice thereof to all holders of Warrants and Warrant Shares and, if
appropriate, notation thereof shall be made on all Warrants thereafter
surrendered for registration of transfer or exchange.
7.3 GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW).
7.4 Transfer; Covenants to Bind Successor and Assigns. All covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company or the Holder shall bind its successors and assigns, whether so
expressed or not. This Warrant shall be transferable and assignable by the
Holder hereof in whole or from time to time in part to any other Person, subject
to the restrictions on transferability contained herein and under the applicable
securities laws, and the provisions of this Warrant shall be binding upon and
inure to the benefit of the Holder hereof and its successors and assigns.
7.5 Severability. In case any one or more of the provisions contained in
this Warrant shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
7.6 Section Headings. The section headings used herein are for convenience
of reference only, are not part of this Warrant and are not to affect the
construction of or be taken into consideration in interpreting this Warrant.
7.7 Tax Basis. The Company and the Holder agree pursuant to Proposed
Treasury Regulation Section 1.1273-2 that, for Federal income tax purposes, the
aggregate purchase price for the Warrants is Ten Thousand Dollars ($10,000.00).
Neither the Company nor the Holder hereof shall voluntarily take any action
inconsistent with the agreement set forth in this Section 7.7.
7.8 Right to Specific Performance. The Company acknowledges and agrees that
in the event of any breach of the foregoing covenants and agreements, the Holder
would be irreparably harmed and could not be made whole only by the award of
monetary damages. Accordingly, the Company agrees that the Holder, in addition
to any other remedy to which the Holder may be entitled at law or equity, will
be entitled to seek and obtain an award of specific performance of any of the
foregoing covenants and agreements.
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7.9 Warrant as Credit Document. This Warrant shall constitute a Credit
Document within the meaning of the Credit Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized, and its
corporate seal to be hereunto affixed, attested by its Secretary or an Assistant
Secretary, all as of the day and year first above written.
JUMBOSPORTS INC.
(CORPORATE SEAL)
By:
Name:
Title:
Attest:
Name:
Title:
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