SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
[X] 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 31, 2000
LINC CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 000-23309
Delaware 06-0850149
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
303 East Wacker Drive, Suite 1000,
Chicago, Illinois 60601
(Address of principal executive offices)(Zip Code)
(312) 946-1000
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events.
On February 1, 2000, LINC Capital, Inc. (the "Company") issued a press
release announcing the placement of preferred stock. The Company completed
an initial closing of the private placement for up to $7.5 million in
Series A 8 percent cumulative redeemable preferred stock with detachable
warrants. The initial closing was for $5,625,000. Warrants to purchase
326,250 shares of the Company's common stock at $5.49 per share were issued
by the Company to investors. Additional warrants for up to 652,500 shares
may be issued on a pro rata basis through September 30, 2000, if the
preferred shares are not redeemed as a result of a change of control or a
refinancing prior to that time. Approximately 45 percent of the investment
in the preferred stock was made by the Company's management and the balance
by unrelated private and institutional investors. Details of the preferred
stock and warrants are contained in Exhibit 4.2 to this filing.
The Company also announced that it had renewed its revolving credit
facility until December 31, 2000 for $107 million. Details of the renewal
are contained in Exhibit 10.1 (e) to this filing.
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are being filed with this report:
4.2 (a) Offering of Units of Series A 8% Senior Cumulative Preferred Stock-
Stock Purchase Agreement
4.2 (b) Certificate of Designation of the Rights and Preferences of
Series A 8% Senior Cumulative Preferred Stock
4.2 (c) Stock Purchase Warrant and Registration Rights Agreement
10.1(e) Amendment No. 10 to Third Amended and Restated Loan Agreement
99.1 Press Release dated February 1, 2000
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, thereunto duly authorized.
LINC CAPITAL, INC.
Dated: March 15, 2000
By: /s/ Allen P. Palles
-------------------
Allen P. Palles
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
<PAGE>
Exhibit Index
The following exhibits are filed as part of this report:
Exhibit No. Item
4.2 (a) Offering of Units of Series A 8% Senior Cumulative
Preferred Stock -- Stock Purchase Agreement
4.2 (b) Certificate of Designation of the Rights
and Preferences of Series A 8% Senior Cumulative
Preferred Stock
4.2 (c) Stock Purchase Warrant and Registration
Rights Agreement
10.1(e) Amendment No. 10 to Third Amended and Restated
Loan Agreement
99.1 Press Release dated February 1, 2000
<PAGE>
Exhibit 4.2 (a)
LINC Capital, Inc.
Offering of
Units of
Series A 8 % Senior Cumulative Preferred Stock
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of January 31,
2000 by and between LINC Capital, Inc., a Delaware corporation (the
"Company"), and the undersigned Purchaser (the "Purchaser").
The parties hereto agree as follows:
Section 1. Subscription, Authorization, Closing and Commitment Fee.
1A. Authorization of the Series A Preferred. The Company has
authorized the issuance and sale to Purchaser of the number of shares
of Series A Preferred indicated on the Omnibus Signature Page provided
herewith by the Purchaser (the "Shares").
1B. Purchase and Sale of the Shares. At the Closing, subject to the
terms and conditions set forth herein, the Company shall sell to
Purchaser and Purchaser shall purchase from the Company, the Shares,
free of all Liens (other than transfer restrictions imposed by federal
or state securities laws), for a purchase price of $25,000.00 per
share (the "Purchase Price"). The undersigned Purchaser, intending to
be legally bound, hereby tenders this subscription and applies for the
purchase of the number of Shares indicated on the Omnibus Signature
Page provided herewith.
1C. The Closing and Termination of Sale and Purchase Obligation. The
closing of the purchase and sale of the Shares (the "Closing") shall
take place at the offices of Kirkland & Ellis, 200 E. Randolph Drive,
Chicago, Illinois 60601 five (5) days after receipt of written notice
to the Purchaser from the Company of its intention to sell the Shares
(the "Closing Notice"), provided, however, if the Company does not
provide a Closing Notice on or before March 31,2000, the Purchaser
shall have no further obligation to purchase, and the Company shall
have no further obligation to sell, the Shares hereunder or otherwise.
Section 2. Deliveries at Closing.
2A. The Company's Deliveries at Closing. At or before the Closing, the
Company shall deliver to counsel for Purchaser all of the following:
(i) certified copies of the resolutions duly adopted by the
board of directors of Company authorizing (a) the
performance of this Agreement and the Stock Purchase Warrant
by the Company, and (b) the consummation of all transactions
contemplated by this Agreement and the Stock Purchase
Warrant by the Company;
(ii) a certified copy of the Certificate of Incorporation of the
Company (the "Charter") as in effect at the Closing, a
certified copy of the by-laws of the Company as in effect at
the Closing, a certified copy of the Certificate of
Designation of the Series A Preferred and a certificate of
good standing of the Company from the State of Delaware
dated within 5 days of the Closing;
(iii) stock certificates for the Shares registered in Purchaser's
name; and
(iv) a counterpart of the Stock Purchase Warrant duly executed by
the Company covering an initial number of warrant shares
indicated on the Omnibus Signature Page provided herewith by
the Purchaser (the "Warrant Shares").
2B. Purchaser's Deliveries at the Closing. At or before the Closing,
Purchaser shall pay via wire transfer of immediately available funds
to a bank account designated by the Company an amount equal to the
Purchase Price.
2C. Notwithstanding anything to the contrary contained herein, it
shall be a condition precedent to the Purchaser's obligation to
proceed to closing hereunder that: (a) the Company shall have been
able to renew or refinance its senior credit facility, which matures
on January 31, 2000, on terms reasonably acceptable to the company;
and (b) the Company shall have received binding subscriptions for at
least two hundred shares of Series A Preferred from Accredited
Investors satisfying the Company's suitability standards.
<PAGE>
Section 3. Commitment Fee.
As a material inducement to cause the Purchaser to enter into this
Agreement, the Company shall pay to the Purchaser a commitment fee (the
"Commitment Fee") as follows:
(a) A Commitment Fee equal to 2% of the Purchase Price shall be paid
to the Purchaser not later than five (5) Business Days following the
receipt by the Company of binding subscriptions to purchase not less
than 200 shares of Series A Preferred; and
(b) An additional Commitment Fee equal to 2% of the Purchase Price
shall be paid to the Purchaser not later than April 5, 2000 in the
event that the Closing does not occur by March 31, 2000.
Section 4. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants as of the date hereof and as of the Closing as follows:
4A Organization and Power of Purchaser. If Purchaser is a corporation,
limited liability company or partnership, it is duly organized,
validly existing and in good standing under the laws of the state of
its organization and is qualified to do business in every jurisdiction
in which its ownership of property or conduct of business requires it
to qualify except where the failure to so qualify would not have a
material adverse effect upon the transactions contemplated by this
Agreement.
<PAGE>
4B Authorization; No Breach. The execution, delivery and performance
of this Agreement and the Stock Purchase Warrant have been duly
authorized by Purchaser. Each of this Agreement and the Stock Purchase
Warrant, when it is executed by the parties thereto, will constitute a
valid and binding obligation of Purchaser enforceable in accordance
with its respective terms except to the extent that the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws of
general application relating to or affecting the enforcement of
creditors' rights or by general principles of equity. The execution
and delivery by Purchaser of this Agreement and the Stock Purchase
Warrant and the purchase of the Shares hereunder and the fulfillment
of and compliance with the respective terms hereof and thereof by
Purchaser do not and shall not (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default
under, (iii) result in the creation of any Lien upon Purchaser's
securities or assets pursuant to, (iv) give any third party the right
to modify, terminate or accelerate any obligation under, (v) result in
a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing
with, any court or administrative or governmental body or agency
pursuant to, (A) the constituting documents of Purchaser, (B) any law,
statute, rule or regulation to which Purchaser is subject, or (C) any
material agreement or instrument, or any order, judgment or decree to
which Purchaser is subject, except in the case of (B) and (C) where
such conflict, default or violation would not have a material adverse
effect on Purchaser.
4C Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions
contemplated by this Agreement, based on any arrangement or agreement
binding upon Purchaser for which the Company or its Subsidiaries could
become liable. Purchaser shall pay, and hold the Company harmless
against, any liability, loss or expense (including, without
limitation, reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any such claim.
4D Purchaser's Investment Representations. The Purchaser understands
that the Shares and the Warrant Shares have not been registered under
the Securities Act, or under any other Federal or state law and that
the Company does not contemplate such a registration, except in
accordance with the Stock Purchase Warrant. Purchaser hereby
represents that it is acquiring the Shares purchased hereunder or
acquired pursuant hereto for its own account with the present
intention of holding such securities for purposes of investment, and
that it has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any
applicable state securities laws; provided that nothing contained
herein shall prevent Purchaser and subsequent holders of Shares and
Warrant Shares from transferring such securities in compliance with
the applicable federal and state securities laws.
<PAGE>
4E Suitability Standards.
(i) The Purchaser has read and meets the investor suitability
standards set forth in the Memorandum;
(ii) The Purchaser is able to bear the substantial economic risks
of an investment in the Shares and could afford a complete
loss of such investment. The Purchaser has adequate means of
providing for the Purchaser's current needs and possible
personal contingencies and has no need for liquidity of his
investment in the Shares. The Purchaser's overall commitment
to investments which are not readily marketable is not
disproportionate to the Purchaser's net worth, and the
Purchaser's investment in the Shares will not cause such
overall commitment to become excessive;
(iii) The Purchaser or the Purchaser's advisor has such knowledge,
sophistication and experience in financial and business
matters that he is capable of evaluating the merits and
risks of this investment, and has made such investigations
in connection herewith as have been deemed necessary or
desirable so as not to rely upon the Memorandum for legal,
tax, or economic advice related to this investment; and
(iv) The Purchaser has furnished to the Company an appropriate
Purchaser Questionnaire that has been completed and executed
by the Purchaser and the information in which remains true
and complete in all respects.
4F Purchaser's Investigation.
(i) The Purchaser and the Purchaser's advisers, if any, have
been furnished and have carefully read (a) the Memorandum
and (b) the documents, financial information and other
material which are Exhibits hereto and thereto or enclosed
herewith or therewith or otherwise supplied to the Purchaser
by the Company, and understands the risks and other
considerations relating to a purchase of the Shares,
including the risks set forth in the legends on the initial
pages of the Memorandum and under RISK FACTORS in the
Memorandum;
(ii) The Purchaser and the Purchaser's advisers, if any, have
been furnished all materials relating to the Company and all
matters set forth in the Memorandum which have been
requested, and have been afforded the opportunity to obtain
any additional information necessary to verify the accuracy
of any representations or information set forth in the
Memorandum and such materials; and
(iii) No oral or written representations have been made or oral or
written information furnished to the Purchaser or the
Purchaser's advisor(s) in connection with the offering of
the Shares which are in any way inconsistent with the
information stated in the Memorandum.
4G Purchaser's Acknowledgements
The Purchaser and the Purchaser's advisers are aware that:
(i) The Company is relying upon the representations and
warranties contained in this Purchase Agreement in
determining in part whether the Offering meets the exemption
from registration provided under the Securities Act and in
determining whether to accept the subscription tendered
hereby.
<PAGE>
(ii) The financial forecast and financial projections contained
in the Memorandum are estimates only and are subject to the
qualifications set forth therein and in the Memorandum, and
there can be no assurance of their accuracy. The Purchaser
understands that such forecast and financial projections
depict what would happen only upon the occurrence of certain
events, based on certain assumptions, without regard to
their likelihood of occurrence.
(iii) The subscription hereunder is irrevocable through March 31,
2000 and the Purchaser is not entitled to cancel, terminate
or revoke this Agreement or any agreements of the Purchaser
hereunder at any time prior to such date and that this
Agreement and such agreements shall survive the death or
dissolution of the Purchaser and shall be binding upon and
inure to the benefit of the Company, its successors and
assigns. If the Purchaser is more than one person, the
obligations of the Purchaser hereunder shall be joint and
several, and the agreements, representations, warranties and
acknowledgments herein contained shall be deemed to be made
by and be binding upon each such person and each such
person's heirs, executors, administrators, successors, legal
representatives and assigns.
4H. Restricted Securities
(i) General Provisions. The Purchaser hereby acknowledges that
the Restricted Securities to be received by such Purchaser
are transferable only pursuant to (a) public offerings
registered under the Securities Act, (b) Rule 144 or Rule
144A of the SEC (or any similar rule or rules then in force)
if such rule is available and (c) subject to the conditions
specified in Section 4H (ii) below, any other legally
available means of transfer.
(ii) Opinion Delivery In connection with the transfer of any
Restricted Securities (other than a transfer described in
Section 4H (i) (a) or (b) above), the holder thereof shall
deliver written notice to the Company describing in
reasonable detail the transfer or proposed transfer,
together with an opinion of Kirkland & Ellis or Barack
Ferrazzano Kirshbaum Perlman & Nagelberg or other counsel
which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that
such transfer of Restricted Securities may be effected
without registration of such Restricted Securities under the
Securities Act. In addition, if the holder of the Restricted
Securities delivers to the Company an opinion of Kirkland &
Ellis or Barack Ferrazzano Kirshbaum Perlman & Nagelberg or
such other counsel that no subsequent transfer of such
Restricted Securities shall require registration under the
Securities Act, the Company shall promptly upon such
contemplated transfer deliver new certificates for such
Restricted Securities which do not bear the Securities Act
legend set forth in Section 7D. If the Company is not
required to deliver new certificates for such Restricted
Securities not bearing such legend, the holder thereof shall
not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be
bound by the conditions contained in this Section and
Section 7D.
(iii) Rule 144A. Upon the request of the Purchaser, the Company
shall promptly supply to the Purchaser or its prospective
transferees all information regarding the Company required
to be delivered in connection with a transfer pursuant to
Rule 144A of the SEC.
(iv) Legend Removal. If any Restricted Securities become eligible
for sale pursuant to Rule 144(k)of the SEC, the Company
shall, upon the request of the holder of such Restricted
Securities, remove the legend set forth in Section 7D from
the certificates for such Restricted Securities.
<PAGE>
Section 5. Representations and Warranties of the Company. The Company hereby
represents and warrants as of the date hereof and as of the Closing as follows:
5A. Organization, Corporate Power and Licenses. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of Delaware and is qualified to do business in every
jurisdiction in which its ownership of property or conduct of business
requires it to qualify, except where the failure to so qualify would
not have a Material Adverse Effect. The Company possesses all
requisite corporate power and authority and all material licenses,
permits and authorizations necessary to own and operate its
properties, to carry on its businesses as now conducted and as
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement and the Stock Purchase Warrant.
5B. Capitalization and Related Matters.
(i) As of immediately before the Closing, the authorized capital
stock of the Company shall consist only of: (x) 1,000,000
shares of Series Preferred Stock, $.01 per share par value,
of which 600 shares have been designated "Series A 8% Senior
Cumulative Preferred Shares" and zero shares will be issued
and outstanding, and (y) 15,000,000 shares of Common Stock,
$.001 per share par value, of which 5,265,050 shares, plus
any shares issued upon the exercise of stock options after
December 31, 1999, will be issued and outstanding. As of the
Closing, all of the outstanding shares of the Company's
capital stock shall be validly issued, fully paid and
nonassessable.
(ii) There are no statutory or contractual stockholders'
preemptive rights or rights of refusal with respect to the
issuance of the Shares. Assuming Purchaser's representations
and warranties set forth in Section 4 and similar
representations by other purchasers in the Offering are true
and correct as of the date hereof, the Company has not
violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its
capital stock, and the offer, sale and issuance of the
Shares do not require registration under the Securities Act
or any applicable state securities laws.
5C. Authorization; No Breach. The execution, delivery and performance
of this Agreement and the Stock Purchase Warrant by the Company have
been duly authorized by the Company. Each of this Agreement and the
Stock Purchase Warrant, when it is executed by the parties thereto,
will constitute a valid and binding obligation of the Company
enforceable in accordance with its respective terms except to the
extent that the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws of general application relating to or
affecting the enforcement of creditors' rights or by general
principles of equity. The execution and delivery by the Company of
this Agreement and the Stock Purchase Warrant, the offering, sale and
issuance of the Shares hereunder (including compliance by the Company
with all terms of the Shares) and the fulfillment of and compliance
with the respective terms hereof and thereof by the Company do not and
shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii)
result in the creation of any Lien upon the Company's or any
Subsidiaries' securities or assets pursuant to, (iv) give any third
party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or
notice or declaration to, or filing with, any court or administrative
or governmental body or agency pursuant to, (A) the Certificate of
Incorporation of the Company, the Company's By-Laws or the
constituting documents of any Subsidiary of the Company, (B) any law,
statute, rule or regulation to which the Company or any Subsidiary of
the Company is subject, or (C) any material agreement or instrument,
or any order, judgment or decree to which the Company or any
Subsidiary of the Company is subject, except in the case of (B) and
(C) where such conflict, default or violation would not have a
Material Adverse Effect.
<PAGE>
5D. SEC Documents and Financial Statements. The Company has heretofore
delivered to Purchaser each of the following:
(i) Annual Report of the Company on Form 10-K as filed with the
SEC for the Company's fiscal year ended December 31, 1998;
and
(ii) Quarterly Report of the Company on Form 10-Q as filed with
the SEC for the fiscal quarter of the Company ended
September 30, 1999. Each of the foregoing documents (the
"SEC Reports") did not at the time it was filed with the SEC
nor as of the date hereof contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, or are now made,
respectively, not misleading. All of the financial
statements contained in the SEC Reports have been prepared
in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, fairly present in
all material respects the financial position of the Company
and its Subsidiaries as of such dates and the results of
operations and cash flows of the Company and the
Subsidiaries for such periods, and are consistent with the
books and records of the Company and its Subsidiaries;
provided, however, that the Most Recent Financial Statements
are subject to year-end adjustments (which year-end
adjustments would not, in the aggregate, be reasonably
expected to have a Material Adverse Effect on the Most
Recent Financial Statements) and lack footnotes and other
presentation items.
5E. Reports with the SEC. The Company and the Subsidiaries have made
all filing with the SEC which they are required to make (including,
without limitation, all required filings under the Securities Act and
the Securities Exchange Act of 1934, as amended), and have not
received any request from the SEC to file any amendment or supplement
to any of the reports filed with the SEC.
5F. Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement
binding upon the Company or any Subsidiary. The Company shall pay, and
hold Purchaser harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.
Section 6. Survival and Indemnification.
6A. Survival of Representations and Warranties. All representations
and warranties contained herein shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby and continue in full force and effect until 180
days after the Company delivers to Purchaser audited financial
statements of the Company and the Subsidiaries for the fiscal year
ended December 31, 1999.
6B. Indemnification. Notwithstanding anything herein to the contrary,
the Company shall not be liable for any inaccuracy of any
representation or warranty contained herein unless all such
inaccuracies, in the aggregate, shall have a Material Adverse Effect,
provided that for the purpose of determining any inaccuracy of a
representation or warranty, any qualification as to materiality or
Material Adverse Effect contained therein shall be ignored.
Section 7. Miscellaneous.
7A. Expenses. The Company shall pay all reasonable out-of-pocket fees
and expenses of the Company and the reasonable attorneys fees of
Barack Ferrazzano Kirshbaum Perlman & Nagelberg counsel to the
Purchaser incurred in connection with this Agreement, the Stock
Purchase Warrant and the transactions contemplated hereby and thereby.
7B. Consent to Amendments. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived and
the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, only if the Company has
obtained the prior written consent of the holders of a majority of the
issued and outstanding Series A Preferred. No other course of dealing
between the Company and Purchaser or any delay in exercising any
rights hereunder or under the Stock Purchase Warrant shall operate as
a waiver of any rights of any such holders.
<PAGE>
7C. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall bind and inure to the benefit of and be
enforceable by the Company and Purchaser and their respective
permitted successors and assigns, provided, however, that Purchaser
shall not assign this Agreement or any of the rights or interests
hereunder to any Person other than an Affiliate of Purchaser.
7D. Legends. Each certificate or instrument representing Restricted
Securities shall be imprinted with a legend in substantially the
following form:
"The securities represented by this certificate were originally issued
on [Closing Date] and have not been registered under the Securities
Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in
effect with respect to the securities under such act or an exemption
from registration under such act. The transfer of the securities
represented by this certificate is subject to the conditions specified
in the Purchase Agreement, dated as of January ___, 2000 and as
amended and modified from time to time, between the issuer (the
"Company") and certain investors, and the Company reserves the right
to refuse the transfer of such securities until such conditions shall
be satisfied by the Company and the holder hereof upon written request
and without charge."
7E. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
7F. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together shall
constitute one and the same Agreement.
7G. Descriptive Headings; Interpretation. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute
a substantive part of this Agreement. The use of the word "including"
in this Agreement shall be by way of example rather than by
limitation.
7H. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
<PAGE>
7I. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given (i) when
delivered personally to the recipient, (ii) on the next business day
following the date on which the same shall have been sent to the
recipient by reputable overnight courier service (charges prepaid),
(iii) when delivered via facsimile (with appropriate confirmation of
receipt), or (iv) on the fifth day following the date on which the
same shall have been mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such
notices, demands and other communications shall be sent to Purchaser
and to the Company at the addresses indicated below:
If to Purchaser:
AT THE ADDRESS SET FORTH FOR NOTICES TO PURCHASER IN THE OMNIBUS
SIGNATURE PAGE
If to the Company:
LINC Capital, Inc.
303 E. Wacker Drive, Suite
Chicago, Illinois 60601
FAX: 312-946-7304
Attention: Martin E. Zimmerman
with a copy to:
Kirkland & Ellis
200 E. Randolph Drive, 57th Floor
Chicago, Illinois 60601
FAX: 312-861-2200
Attention: Carter Emerson P.C.
or to such other address or to the attention of such other person as
the recipient party has specified by prior written notice to the
sending party.
7J. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties
hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
7K. Entire Agreement. This Agreement and the Stock Purchase Warrant
embody the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede and
preempt any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the
subject matter hereof in any way.
Section 8. Definitions
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such
particular Person, where "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a
Person whether through the ownership of voting securities, contract or
otherwise.
"Closing" has the meaning set forth in Section 1C hereof.
"Common Stock" means, collectively, the Company's Common
Stock, par value $.001 per share, and any capital stock of any class
of the Company hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of
the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the
Company.
"Company" has the meaning set forth in the preface hereof.
"GAAP" means United States generally accepted accounting
principles.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind.
"Material Adverse Effect" means any material adverse effect
on the business, financial condition, operations, results of
operations, employee relations, customer or supplier relations or
assets of the Company and its Subsidiaries, taken as a whole.
<PAGE>
"Memorandum" means the Confidential Private Placement
Memorandum of the Company dated as of January 2000 relating to the
offering of the Series A Preferred, as such Memorandum may be amended
or supplemented from time to time.
"Most Recent Financial Statements" means the unaudited
consolidated financial statements as of September 30, 1999 for the
Company and the Subsidiaries, which are contained in the Quarterly
Report of the Company on Form 10-Q as filed with the SEC for the
Company's fiscal quarter ended September 30, 1999.
"Offering" means the offering of shares of Series A
Preferred pursuant to the Memorandum.
"Omnibus Signature Page" means the Omnibus Signature Page
executed by the Purchaser pursuant to the Purchaser Questionaire
completed by the Purchaser, which Omnibus Signature Page shall
constitute Purchaser's execution of this Purchase Agreement and the
Stock Purchase Warrant.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
"Public Offering" means a sale of Common Stock to the public
in an offering pursuant to an effective registration statement filed
with the SEC pursuant to the Securities Act, as then in effect,
provided that a Public Offering shall not include an offering made in
connection with a business acquisition or combination or an employee
benefit plan. "Purchaser Questionaire" means that certain Purchaser
Questionaire completed by the Purchaser relating to Purchasers
suitability standards relating to an investment in the Shares.
"Restricted Securities" means (i) the Series A Preferred
issued hereunder, (ii) the Warrant Shares, (iii) the Stock Purchase
Warrant and (iv) any securities issued or distributed in respect of or
in substitution for any of the securities referred to in clauses (i),
(ii) or (iii) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities shall cease to be Restricted Securities
when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement
covering them, (b) been distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) promulgated under the Securities Act or become eligible
for sale pursuant to Rule 144(k) (or any similar provision then in
force) promulgated under the Securities Act or (c) been otherwise
transferred and new certificates for them not bearing the legend set
forth in Section 7D have been delivered by the Company in accordance
with Section 4H (ii). Whenever any particular securities cease to be
Restricted Securities, the holder thereof shall be entitled to receive
from the Company, without expense, new securities of like tenor not
bearing a Securities Act legend of the character set forth in Section
7D.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
"SEC" means the United States Securities and Exchange
Commission and any governmental body or agency succeeding to the
functions thereof.
"SEC Reports" has the meaning set forth in Section 5D.
"Series A Preferred" means the Series A 8% Senior Cumulative
Preferred Stock to be issued by the Company pursuant to the
Certificate of Designation of Rights and Preferences the form of which
is attached hereto as Exhibit A.
"Shares" has the meaning set forth in Section 1A hereof.
"Stock Purchase Warrant" means the Stock Purchase Warrant
and Registration Rights Agreement in the form of Exhibit B attached
hereto.
<PAGE>
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or
other business entity of which (i)-if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a
majority of partnership, association or other business entity gains or
losses or shall be or control the managing general partner of such
partnership, association or other business entity.
"Warrant Shares" has the meaning set forth in Section 2A
(iv) hereof.
[END OF PAGE]
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement on the date first written above.
LINC CAPITAL, INC.
By:
--------------------------
Name: Martin E. Zimmerman
Title: Chairman and CEO
THIS STOCK PURCHASE AGREEMENT WILL BE DEEMED TO HAVE BEEN
EXECUTED FOR ALL PURPOSES BY THE PURCHASER WHEN THE
PURCHASER SIGNS THE OMNIBUS SIGNATURE PAGE PROVIDED AS PART
OF THE APPLICABLE PURCHASER QUESTIONAIRE.
<PAGE>
LINC CAPITAL, INC.
CERTIFICATE OF DESIGNATION OF THE RIGHTS AND
PREFERENCES OF SERIES A 8 % SENIOR CUMULATIVE PREFERRED STOCK
Pursuant to the authority vested in the Board of Directors of LINC
Capital, Inc. (the "Board of Directors") by Section 2.A of Article
Fourth of the Company's Certificate of Incorporation (the
"Certificate"), the Board of Directors, by duly adopted resolution
dated January 17,2000 has duly designated 600 shares of the 1,000,000
authorized Series Preferred Shares of the Company as the "8% Series A
Cumulative Redeemable Preferred Shares" (the "Series A Preferred")
which shall possess the preferences, rights, restrictions, limitations
as to dividends, qualifications and terms and conditions of redemption
of shares as set forth in this Certificate of Designation. Certain
other capitalized terms used herein are defined in Section VII hereof.
Section I. Dividends.
Section 1A. General Obligation. When and as declared by the Company's
board of directors and to the extent permitted under the General
Corporation Law of Delaware, the Company shall pay preferential
dividends to the holders of the Series A Preferred as provided in this
Section-I. Except as otherwise provided herein, dividends on each
share of the Series A Preferred (a "Share") shall accrue on a daily
basis at the following rates:
(1) From and including the date of issuance to the earlier of
(a) December 31, 2000 or (b) any Redemption Date occurring
prior to January 1,2001, 8% per annum of the sum of the
Liquidation Value thereof plus all accumulated and unpaid
dividends thereon;
(2) From and including January 1, 2001 to the earlier of (a)
December 31, 2001 or (b) any Redemption Date occurring after
December 31, 2000, 10 % per annum of the sum of the
Liquidation Value thereof plus all accumulated and unpaid
dividends thereon; and
(3) From and including January 1, 2002 to and including any
Redemption Date occurring after December 31, 2001, 12 % per
annum of the sum of the Liquidation Value thereof plus all
accumulated and unpaid dividends thereon.
No dividends on shares of Series A Preferred shall be declared or
authorized by the Board of Directors or paid or set apart for payment
by the Company at such time as the terms and provisions of any
agreement of the Company, including any agreement relating to its
indebtedness, prohibits such authorization, payment or setting apart
for payment or provides that such authorization, payment or setting
apart for payment would constitute a breach thereof or a default
hereunder, or if such authorization or payment shall be restricted or
prohibited by law.
Notwithstanding the forgoing, such dividends shall accrue whether or
not they have been authorized or declared, whether or not such
authorization or declaration is prohibited by any agreement or would
constitute a breach thereof and whether or not there are profits,
surplus or other funds of the Company legally available for the
payment of dividends. Such dividends shall be cumulative such that all
accrued and unpaid dividends shall be fully paid or declared with
funds irrevocably set apart for payment before any dividend,
distribution or payment may be made with respect to any Junior
Securities.
The date on which the Company initially issues any Share shall be
deemed to be its "date of issuance" regardless of the number of times
transfer of such Share is made on the stock records maintained by or
for the Company and regardless of the number of certificates which may
be issued to evidence such Share.
<PAGE>
Section 1B. Dividend Reference Dates. To the extent not paid on April
1, July 1, October 1 and January 1 of each year, beginning April 1,
2000(the "Dividend Reference Dates"), all dividends which have accrued
on each Share outstanding during the three-month period (or other
period in the case of the initial Dividend Reference Date) ending upon
each such Dividend Reference Date shall be accumulated and shall
remain accumulated dividends with respect to such Share until paid.
For purposes of determining the dividend payable on April 1, 2000,
those Shares issued by the Company prior to February 1, 2000 shall
accrue dividends from January 1, 2000.
Section 1C. Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the Company pays less than
the total amount of dividends then accrued with respect to the Class A
Preferred, such payment shall be distributed ratably among the holders
of such class based upon the number of Shares of such class held by
each such holder.
Section II. Liquidation.
Section 2A. Liquidation Payment. Upon any liquidation, dissolution or
winding up of the Company, each holder of Series A Preferred shall be
entitled to be paid, before any distribution or payment is made upon
any Junior Securities, an amount in cash equal to the aggregate
Liquidation Value (plus all accrued and unpaid dividends) of all
Shares held by such holder, and the holders of Series A Preferred
shall not be entitled to any further payment. If upon any such
liquidation, dissolution or winding up of the Company, the Company's
assets to be distributed among the holders of the Series A Preferred
are insufficient to permit payment to such holders of the aggregate
amount which they are entitled to be paid, then the entire assets to
be distributed shall be distributed ratably among such holders based
upon the aggregate Liquidation Value (plus all accrued and unpaid
dividends) of the Series A Preferred held by each such holder. Prior
to the time of any liquidation, dissolution or winding up of the
Company, the Company shall declare for payment all accrued and unpaid
dividends with respect to the Series A Preferred. The Company shall
mail written notice of such liquidation, dissolution or winding up,
not less than 60 days prior to the payment date stated therein, to
each record holder of Series A Preferred. Except as provided in
section 2B below, neither the consolidation or merger of the Company
into or with any other entity or entities, nor the sale or transfer by
the Company of all or any part of its assets, nor the reduction of the
capital stock of the Company, shall be deemed to be a liquidation,
dissolution or winding up of the Company within the meaning of this
Section 2.
Section 2B. Merger or Consolidation. For purposes of this Section II,
the consolidation or merger of the Company and its Subsidiaries with
or into another entity or entities or a sale or transfer of
substantially all of the assets of the Company and its Subsidiaries on
a consolidated basis (measured by either book value in accordance with
generally accepted accounting principles consistently applied or fair
market value determined in the reasonable good faith judgment of the
Company's board of directors) in any transaction or series of
transactions (other than sales in the ordinary course of business)
shall be deemed to be a liquidation, dissolution and winding up of the
Company, and the holders of the Series A Preferred shall be entitled
to receive payment of the amounts payable with respect to the Series A
Preferred upon a liquidation, dissolution or winding up in
cancellation of their Shares upon the consummation of any such
transaction; provided that the foregoing provision shall not apply to
any merger or consolidation in which (i) the Company is the surviving
entity and (ii) the holders of the Company's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a
majority of the Company's board of directors immediately prior to the
merger or consolidation continue to own the Company's outstanding
capital stock possessing the voting power (under ordinary
circumstances) to elect a majority of the Company's board of directors
immediately after the merger.
<PAGE>
Section 2C. Priority of Series A Preferred.
So long as any Series A Preferred remains outstanding,
(i) neither the Company nor any Subsidiary shall redeem,
purchase or otherwise acquire directly or indirectly any
Junior Securities, nor shall the Company directly or
indirectly pay or declare any dividend or make any
distribution upon any Junior Securities, if at the time of
or immediately after any such redemption, purchase,
acquisition, dividend or distribution the Company has failed
to pay the full amount of dividends accrued on the Series A
Preferred or the Company has failed to make any redemption
of the Series A Preferred required hereunder.
(ii) the Company shall not issue any class or series of its
preferred stock that is senior to or pari passu with the
Series A Preferred as to payment of dividends, making of
distributions or liquidation preferences without the prior
written consent or affirmative vote (as a separate class) of
the holders of at least 50% of the Series A Preferred
outstanding at the time such action is taken.
Section III. Redemptions.
Section 3A. Scheduled Redemptions. The Company shall redeem all Shares
of Series A Preferred (or such lesser number then outstanding) on
January 31, 2005(the "Scheduled Redemption Date"), at a price per
Share equal to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon).
Section 3B. Optional Redemptions. The Company may at any time redeem
all or any portion of Class-A Preferred then outstanding. On any such
redemption, the Company shall pay a price per Share equal to the
Liquidation Value thereof plus all accrued and unpaid dividends
thereon. No redemption pursuant to this paragraph may be made for less
than ten (10) Shares (or such lesser number of Shares then
outstanding), and redemptions made pursuant to this paragraph shall
not relieve the Company of its obligation to redeem Shares on the
Scheduled Redemption Date.
Section 3C. Redemption After Public Offering. The Company shall, at
the request (by written notice given to the Company) of the holders of
at least 50% of the Series A Preferred outstanding at the time of such
request, apply at least 25% of the net cash proceeds from any Public
Offering remaining after deduction of all discounts, underwriters'
commissions and other reasonable expenses to redeem Shares of Series A
Preferred at a price per Share equal to the Liquidation Value thereof
(plus all accrued and unpaid dividends thereon). Such redemption shall
take place on a date fixed by the Company, which date shall be not
more than five days after the Company's receipt of such proceeds.
Redemptions of Shares pursuant to this paragraph shall not relieve the
Company of its obligation to redeem Shares on the Scheduled Redemption
Date.
Section 3D. Change in Ownership. If a Change in Ownership has occurred
or the Company obtains knowledge that a Change in Ownership is to
occur, the Company shall give prompt written notice of such Change in
Ownership describing in reasonable detail the definitive terms and
date of consummation thereof to each holder of Series A Preferred, but
in any event such notice shall not be given later than five days after
the occurrence of such Change in Ownership. The holder or holders of
the Series A Preferred then outstanding may require the Company to
redeem all or any portion of the Series A Preferred owned by such
holder or holders at a price per Share equal to the Liquidation Value
thereof (plus all accrued and unpaid dividends thereon) by giving
written notice to the Company of such election prior to the later of
(a) 21 days after receipt of the Company's notice and (b) five days
prior to the consummation of the Change in Ownership (the "Expiration
Date"). The Company shall give prompt written notice of any such
election to all other holders of Series A Preferred within five days
after the receipt thereof, and each such holder shall have until the
later of (a) the Expiration Date or (b) ten days after receipt of such
second notice to request redemption (by giving written notice to the
Company) of all or any portion of the Series A Preferred owned by such
holder. Upon receipt of such election(s), the Company shall be
obligated to redeem the aggregate number of Shares specified therein
on the later of (a) the occurrence of the Change in Ownership or
(b) five days after the Company's receipt of such election(s). If in
any case a proposed Change in Ownership does not occur, all requests
for redemption in connection therewith shall be automatically
rescinded. The term "Change in Ownership" means any sale or issuance
or series of sales and/or issuances of shares of the Company's capital
stock by the Company or any holders thereof which results in any
Person or group of affiliated Persons (other than the owners of Common
Stock as of the date of the Purchase Agreement) owning capital stock
of the Company possessing the voting power (under ordinary
circumstances) to elect a majority of the Company's board of
directors.
<PAGE>
Redemptions made pursuant to this paragraph-3D shall not relieve the
Company of its obligation to redeem Series A Preferred on the
Scheduled Redemption Date pursuant to Section 3A hereof.
Section 3E. Redemption Payment. For each Share that is to be redeemed,
the Company shall be obligated on the Redemption Date to pay to the
holder thereof (upon surrender by such holder at the Company's
principal office of the certificate representing such Share) an amount
in immediately available funds equal to the Liquidation Value of such
Share (plus all accrued and unpaid dividends thereon). If the funds of
the Company legally available for redemption of Shares on any
Redemption Date are insufficient to redeem the total number of Shares
to be redeemed on such date, those funds which are legally available
shall be used to redeem the maximum possible number of Shares ratably
among the holders of the Shares to be redeemed based upon the
aggregate Liquidation Value of such Shares (plus all accrued and
unpaid dividends thereon) held by each such holder. At any time
thereafter when additional funds of the Company are legally available
for the redemption of Shares, such funds shall immediately be used to
redeem the balance of the Shares which the Company has become
obligated to redeem on any Redemption Date but which it has not
redeemed. Prior to the time of any redemption of Series A Preferred,
the Company shall declare for payment all accrued and unpaid dividends
with respect to the Shares that are to be redeemed.
Section 3F. Notice of Redemption. The Company shall mail written
notice of each redemption of Series A Preferred (other than a
redemption at the request of a holder or holders of such Series A
Preferred) to each record holder thereof not more than 60 nor less
than 30 days prior to the date on which such redemption is to be made;
provided that any redemption of Series A Preferred at the Company's
option which is to occur within one year after the issuance of such
Series A Preferred may be made on not less than 5 days notice prior to
the date on which such redemption is to be made. Upon mailing any
notice of redemption which relates to a redemption at the Company's
option, the Company shall become obligated to redeem the total number
of Shares specified in such notice at the time of redemption specified
therein. In case fewer than the total number of Shares represented by
any certificate are redeemed, a new certificate representing the
number of unredeemed Shares shall be issued to the holder thereof
without cost to such holder within three business days after surrender
of the certificate representing the redeemed Shares.
Section 3G. Determination of the Number of Each Holder's Shares to be
Redeemed. Except as otherwise provided herein, the number of Shares of
Series A Preferred to be redeemed from each holder thereof in
redemptions hereunder shall be the number of Shares determined by
multiplying the total number of Shares to be redeemed times a
fraction, the numerator of which shall be the total number of Shares
then held by such holder and the denominator of which shall be the
total number of Shares of such class then outstanding.
Section 3H. Dividends After Redemption Date. No Share is entitled to
any dividends accruing after the date on which the Liquidation Value
of such Share (plus all accrued and unpaid dividends thereon) is paid
to the holder thereof. On such date all rights of the holder of such
Share shall cease, and such Share shall not be deemed to be
outstanding.
Section 3I. Redeemed or Otherwise Acquired Shares. Any Shares which
are redeemed or otherwise acquired by the Company shall be canceled
and shall not be reissued, sold or transferred.
Section 3J. Other Redemptions or Acquisitions. Neither the Company nor
any Subsidiary shall redeem or otherwise acquire any Series A
Preferred, except as expressly authorized herein or pursuant to a
purchase offer made pro-rata to all holders of a particular class of
Series A Preferred on the basis of the number of Shares of such class
owned by each such holder.
Section IV. Events of Noncompliance.
Section 4A. Definition. An Event of Noncompliance shall be deemed to
have occurred if:
(i) the Company fails to pay on any Dividend Reference Date the
full amount of dividends then accrued on the Series A
Preferred, whether or not such payment is legally
permissible or is prohibited by any agreement to which the
Company is subject;
<PAGE>
(ii) the Company fails to make any redemption payment with
respect to the Series A Preferred which it is obligated to
make hereunder, whether or not such payment is legally
permissible or is prohibited by any agreement to which the
Company is subject;
(iii) the Company breaches or otherwise fails to perform or
observe any other covenant or agreement set forth herein or
in the Purchase Agreement, provided that no Event of
Noncompliance shall be deemed to have occurred under this
subparagraph (iii) if the Company establishes that (a) the
particular Event of Noncompliance has not been caused by
knowing or purposeful conduct by the Company or any
Subsidiary, (b) the Company has exercised, and continues to
exercise, best efforts to expeditiously cure the Event of
Noncompliance (if cure is possible), (c) the Event of
Noncompliance is not material to the financial condition,
operating results, operations, assets or business prospects
of the Company and its Subsidiaries, taken as a whole, and
(d) the Event of Noncompliance is not material to any
holder's investment in the Series A Preferred;
(iv) any representation or warranty contained in the Purchase
Agreement or required to be furnished to any holder of
Series A Preferred pursuant to the Purchase Agreement, or
any information contained in writing required to be
furnished by the Company or any Subsidiary to any holder of
Series A Preferred, is false or misleading in any material
respect on the date made or furnished and in the case of
such representations and warranties contained in the
Purchase Agreement, as of the Closing (as defined in the
Purchase Agreement); or
(v) the Company or any Subsidiary makes an assignment for the
benefit of creditors or admits in writing its inability to
pay its debts generally as they become due; or an order,
judgment or decree is entered adjudicating the Company or
any Subsidiary bankrupt or insolvent; or any order for
relief with respect to the Company or any Subsidiary is
entered under the Federal Bankruptcy Code; or the Company or
any material Subsidiary petitions or applies to any tribunal
for the appointment of a custodian, trustee, receiver or
liquidator of the Company or any Subsidiary or of any
substantial part of the assets of the Company or any
Subsidiary, or commences any proceeding (other than a
proceeding for the voluntary liquidation and dissolution of
a Subsidiary) relating to the Company or any Subsidiary
under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction; or any such petition or application
is filed, or any such proceeding is commenced, against the
Company or any Subsidiary and either (a) the Company or any
Subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein or (b) such
petition, application or proceeding is not dismissed within
60 days.
Section 4B. Consequences of Certain Events of Noncompliance.
(i) If an Event of Noncompliance of the type described in
subparagraph-4A has occurred and continues for a period of
30 days, the dividend rate on the Series A Preferred shall
increase effective as of the end of such 30 day period by an
increment of 1 percentage point until such time as no Event
of Noncompliance exists. Any increase of the dividend rate
resulting from the operation of this paragraph shall
terminate as of the close of business on the date on which
no Event of Noncompliance exists, subject to subsequent
increases pursuant to this paragraph.
(ii) If an Event of Noncompliance of the type described in
subparagraph-4A(iii) or (iv) has occurred and continues for
a period of 30 days, the holder or holders of a majority of
the Series A Preferred then outstanding may demand (by
written notice delivered to the Company) immediate
redemption of all or any portion of the Series A Preferred
owned by such holder or holders at a price per Share equal
to the Liquidation Value thereof (plus all accrued and
unpaid dividends thereon). The Company shall redeem all
Series A Preferred as to which rights under this paragraph
have been exercised within 15 days after receipt of the
initial demand for redemption; provided such redemption
payment by the Company shall be prohibited at such time as
the terms and provisions of any agreement of the Company,
including any agreement relating to its indebtedness,
prohibits such payment or setting apart for payment or
provides that such authorization, payment or setting apart
for payment would constitute a breach thereof or a default
thereunder, or if such payment shall be restricted or
prohibited by law.
(iii) If any Event of Noncompliance exists, each holder of Series
A Preferred shall also have any other rights that such
holder is entitled to under any contract or agreement at any
time and any other rights, which such holder may have
pursuant to applicable law.
<PAGE>
Section V. Voting Rights.
Except as otherwise provided herein and as otherwise required by law,
the Series A Preferred shall have no voting rights; provided that each
holder of Series A Preferred shall be entitled to notice of all
stockholders' meetings at the same time and in the same manner as
notice is given to the stockholders entitled to vote at such meeting.
Section 5A. Election of Directors. In the election of directors of the
Company, the holders of the Series A Preferred, voting separately as a
single class to the exclusion of all other classes of the Company's
capital stock and with each share of Series A Preferred entitled to
one vote, shall be entitled to elect one director to serve on the
Board of Directors until his successor is duly elected by the holders
of the Series A Preferred or he is removed from office by the holders
of the Series A Preferred (the "Series A Director"); provided,
however, all nominees for election to the position of the Series A
Director shall be acceptable to the nominating committee of the Board
of Directors in the exercise of such committee's reasonable business
judgment.
Section VI. Transfer and Replacement of Shares
Section 6A. Registration of Transfer. The Company shall keep at its
principal office a register for the registration of Series A
Preferred. Upon the surrender of any certificate representing Series A
Preferred at such place, the Company shall, at the request of the
record holder of such certificate, execute and deliver (at the
Company's expense) a new certificate or certificates in exchange
therefor representing in the aggregate the number of Shares
represented by the surrendered certificate. Each such new certificate
shall be registered in such name and shall represent such number of
Shares as is requested by the holder of the surrendered certificate
and shall be substantially identical in form to the surrendered
certificate, and dividends shall accrue on the Series A Preferred
represented by such new certificate from the date to which dividends
have been fully paid on such Series A Preferred represented by the
surrendered certificate.
Section 6B. Replacement. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the registered holder
shall be satisfactory) of the ownership and the loss, theft,
destruction or mutilation of any certificate evidencing Shares of any
class of Series A Preferred, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to
the Company (provided that if the holder is a financial institution or
other institutional investor its own agreement shall be satisfactory),
or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in
lieu of such certificate a new certificate of like kind representing
the number of Shares of such class represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue
on the Series A Preferred represented by such new certificate from the
date to which dividends have been fully paid on such lost, stolen,
destroyed or mutilated certificate.
Section VII. Definitions.
"Common Stock" means, collectively, the Company's Common
Stock, and any capital stock of any class of the Company hereafter
authorized which is not limited to a fixed sum or percentage of par or
stated value in respect to the rights of the holders thereof to
participate in dividends or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Junior Securities" means any of the Company's equity
securities other than the (a) Series A Preferred or (b) any class of
the Company's equity securities issued after the date hereof which
ranks in priority of liquidation and dividends on a pari passu basis
with the Series A Preferred.
"Liquidation Value" of any Share as of any particular date
shall be equal to $ 25,000.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
"Public Offering" means any offering by the Company of its
equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any
comparable statement under any similar federal statute then in force;
provided that for purposes of Section 3C hereof, a Public Offering
shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
<PAGE>
"Purchase Agreement" means the various Stock Purchase
Agreements by and among the Company and certain investors who have
purchased Series A Preferred from the Company, as such agreements may
from time to time be amended in accordance with its terms.
"Redemption Date" as to any Share means the date specified
in the notice of any redemption at the Company's option [or at the
holder's option] or the applicable date specified herein in the case
of any other redemption; provided that no such date shall be a
Redemption Date unless the Liquidation Value of such Share (plus all
accrued and unpaid dividends thereon) is actually paid in full on such
date, and if not so paid in full, the Redemption Date shall be the
date on which such amount is fully paid.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or
other business entity of which (i) if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a
majority of partnership, association or other business entity gains or
losses or shall be or control the managing general partner of such
partnership, association or other business entity.
Section VIII. Amendment and Waiver.
No amendment, modification or waiver shall be binding or effective
with respect to any provision of (i) Sections I through IV without the
prior written consent of the holders of at least 50% of the Series A
Preferred outstanding at the time such action is taken, (ii) Section
V, without the prior written consent of the holders of at least 67% of
the Class-A Preferred outstanding at the time such action is taken,
provided that no such action shall change (a) the rate at which or the
manner in which dividends on the Series A Preferred accrue or the
times at which such dividends become payable or the amount payable on
redemption of the Series A Preferred or (b) the times at which
redemption of Series A Preferred is to occur, without the prior
written consent of the holders of 100% of the Series A Preferred then
outstanding, and (c) the percentage required to approve any change
described in clauses (a) and (b) above, without the prior written
consent of the holders of at least 100% of the Series A Preferred; and
provided further that no change in the terms hereof may be
accomplished by merger or consolidation of the Company with another
corporation or entity unless the Company has obtained the prior
written consent of the holders of the applicable percentage of the
class or classes of the Series A Preferred then outstanding.
Section IX. Notices.
Except as otherwise expressly provided hereunder, all notices, demands
or other communications to be given or delivered under or by reason of
the provisions of this Certificate of Designation shall be in writing
and shall be deemed to have been given (i) when delivered personally
to the recipient, (ii) on the next business day following the date on
which the same shall have been sent to the recipient by reputable
overnight courier service (charges prepaid), (iii) when delivered via
facsimile (with appropriate confirmation of receipt), or (iv) on the
fifth day following the date on which the same shall have been mailed
to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other
communications shall be sent (i) to the Company, at its principal
executive offices and (ii) to any stockholder, at such holder's
address as it appears in the stock records of the Company (unless
otherwise indicated by any such holder).
<PAGE>
Exhibit 4.2 (c)
THIS WARRANT, AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY APPLICABLE STATE SECURITIES LAWS OR "BLUE SKY" LAWS, AND MAY NOT
BE TRANSFERRED UNLESS SO REGISTERED OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
LINC CAPITAL, INC.
STOCK PURCHASE WARRANT AND REGISTRATION RIGHTS AGREEMENT
Date of Issuance: [ ] Certificate No. W-[ ]
In connection with the Purchase Agreement and For Value Received, LINC
Capital, Inc., a Delaware corporation (the "Company"), hereby grants
to ______________ or its registered assigns (the "Registered Holder")
the right to purchase from the Company the number of shares of Warrant
Stock set forth in Section 2A hereof at a price per share of $______
(as adjusted from time to time hereunder, the "Exercise Price"). The
amount and kind of securities obtainable pursuant to the rights
granted hereunder and the purchase price for such securities are
subject to adjustment pursuant to the provisions contained in this
Stock Purchase Warrant and Registration Rights Agreement (this
"Warrant"). This Warrant shall not become effective unless and until
the Closing as defined in the Purchase Agreement (the "Closing")
occurs. The Warrant Stock may be registered under the Securities Act
pursuant to the terms hereof.
This Warrant is subject to the following provisions:
Section 1. Definitions. The following terms have meanings set forth below:
"Affiliate" of any particular Person means any other Person
controlling, controlled by or under common control with such
particular Person, where "control" means the possession, directly or
indirectly, of the power to direct the management and policies of a
Person whether through the ownership of voting securities, contract or
otherwise.
"Aggregate Exercise Price" has the meaning set forth in
Section 2C(i)(d)(1) hereof.
"Assignee" has the meaning set forth in Section 5A hereof.
"Assignment" has the meaning set forth in Section 2C(i)(c)
hereof.
"Base Price" has the meaning set forth in Section 3A(i)
hereof.
"Common Stock" means, collectively, the Company's Common
Stock, par value $.001 per share, and any capital stock of any class
of the Company hereafter authorized which is not limited to a fixed
sum or percentage of par or stated value in respect to the rights of
the holders thereof to participate in dividends or in the distribution
of assets upon any liquidation, dissolution or winding up of the
Company.
"Common Stock Deemed Outstanding" means, at any given time,
the number of shares of Common Stock actually outstanding at such
time, plus the number of shares of Common Stock deemed to be
outstanding pursuant to paragraphs 3B(i) and 3B(ii) hereof regardless
of whether the Options or Convertible Securities are actually
exercisable at such time.
"Company" has the meaning set forth in the preface hereof.
"Demand Registration" is defined in Section 11(a)(i).
"Demand Right" is defined in Section 11(a)(i).
"Convertible Securities" means any stock or securities
(directly or indirectly) convertible into or exchangeable for Common
Stock, except for any such stock or securities issued or granted
pursuant to the Company's 1997 Stock Option Plan (including any of its
component plans) as in effect on the Date of Issuance.
"Date of Issuance" means the date set forth in the preamble
hereto as the Date of Issuance.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended
"Exercise Agreement" has the meaning set forth in Section 2D
hereof.
"Exercise Period" has the meaning set forth in Section 2B
hereof.
<PAGE>
"Exercise Price" has the meaning set forth in the preamble
hereto.
"Exercise Time" has the meaning set forth in Section 2B
hereof.
"GAAP" means United States generally accepted accounting
principles.
"Incidental Registration" is defined in Section 11(b)(i).
"Incidental Registration Statement" is defined in Section
11(b)(i).
"Indemnified Company" is defined in Section 11(f)(ii).
"Indemnified Parties" is defined in Section 11(f)(ii).
"Indemnified Stockholder" is defined in Section 11(f)(i).
"Indemnifying Party" is defined in Section 11(g)(iii).
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind.
"Liquidating Dividend" has the meaning set forth in Section
4 hereof.
"Market Price" means, with respect to any security on any
date, (x) if such security is quoted on NASDAQ or listed on a national
securities exchange, the closing sales price of such security on
NASDAQ or a national securities exchange, as applicable, on the last
trading day prior to such date, and (y) if such security is not quoted
on NASDAQ or listed on a national securities exchange, the fair value
per share determined jointly by a recognized investment banking firm
jointly selected by the Company and the holders of a majority of the
Series A Preferred Warrants and the Warrant Stock, whose determination
shall be final and binding upon the Company and the Registered Holder
(and the fees and expenses of such recognized investment banker shall
be paid by the Company).
"Material Adverse Effect" has the meaning set forth in the
Purchase Agreement.
"NASDAQ" means National Association of Securities Dealers
Automated Quotations National Market System.
"Options" means any rights or options to subscribe for or
purchase Common Stock or Convertible Securities, except for any rights
or options to subscribe for or purchase Common Stock or Convertible
Securities issued or granted pursuant to the Company's 1997 Stock
Option Plan as in effect on the Date of Issuance.
"Ownership Percentage" means, with respect to any holder of
Registrable Securities, a percentage equal to the product of (a) a
fraction, the numerator of which is the sum of (i) the number of
Common Shares owned by such holder, and (ii) the number of Common
Shares issuable upon the exercise of any Stock Purchase Warrant or
Option owned by such holder, and the denominator of which is the sum
of (x) the number of shares of the Company's outstanding Common
Shares, and (y) the number of Common Shares issuable upon the exercise
of all Stock Purchase Warrants or Options owned by any of the holders
of Registrable Securities, multiplied by (b) 100.
"Organic Change" has the meaning set forth in Section 3D
hereof.
"Person" means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision
thereof.
"Public Offering" means a sale of Common Stock to the public
in an offering pursuant to an effective registration statement filed
with the SEC pursuant to the Securities Act, as then in effect,
provided that a Public Offering shall not include an offering made in
connection with a business acquisition or combination or an employee
benefit plan.
"Public Sale" means a sale of Common Stock pursuant to a
Public Offering or a Rule 144 Sale.
"Proceeding" is defined in Section 7(f)(iii).
"Purchase Agreement" means the Purchase Agreement, dated as
of January __, 2000, by and between the Company and the Registered
Holder.
"Purchase Rights" has the meaning set forth in Section 5
hereof.
<PAGE>
"Purchaser" has the meaning set forth in Section 2B(i)(A)
hereof.
"Registered Holder" has the meaning set forth in the
preamble hereto.
"Registrable Securities" means any Warrant Stock issued or
issuable upon exercise of (a) this Warrant or (b) any other Series A
Preferred Warrant, except such Warrant Stock that has been Transferred
in a Public Sale.
"Registration Notice" is defined in Section 11(a)(i).
"Registration Request" is defined in Section 11(a)(i).
"Registration Statement" means any registration statement of
the Company under which any of the Registrable Securities are included
therein pursuant to the provisions of this Agreement, including the
prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"Requesting Holders" is defined in Section 11(a)(i).
"Rule 144 Sale" means a sale of Common Stock to the public
through a broker, dealer or market maker pursuant to the provisions of
Rule 144 adopted under the Securities Act (or any successor rule or
regulation).
"Requirement Notice" has the meaning set forth in Section 5A
hereof.
"S-3 Demand Registration" is defined in Section 11(j)(i).
"S-3 Registration Notice" is defined in Section 11(j)(i).
"S-3 Registration Request" is defined in Section 11(j)(i).
"S-3 Requesting Holders" is defined in Section 11(j)(i).
"Sale of the Company" means, whether in a single transaction
or in a series of related transactions, (i) a sale of all or
substantially all of the assets of the Company and its Subsidiaries on
a consolidated basis, or (ii) the transfer or other disposition of
more than 50% of the outstanding Common Stock (in each case whether
accomplished by stock purchase, asset purchase, merger,
recapitalization, reorganization or other transaction).
"Series A Preferred Warrant" means any warrant to purchase
the Common Stock of the Company issued in connection with the purchase
and sale of the Company's Series A 8% Redeemable Preferred Stock,
including, but not limited to this Stock Purchase Warrant provided
that if there is a change such that the securities issuable upon
exercise of such warrant are issued by an entity other than the
Company or there is a change in the type or class of securities so
issuable, then the term "Series A Preferred Warrant" shall mean one
share of the security issuable upon exercise of such warrant if such
security is issuable in shares, or shall mean the smallest unit in
which such security is issuable if such security is not issuable in
shares.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
"SEC" means the United States Securities and Exchange
Commission and any governmental body or agency succeeding to the
functions thereof.
"Stock Option Plans" means the 1997 Company's Stock Option
Plan and any other plan of the Company approved by the Company's
stockholders pursuant to which the Company issues options, stock
appreciation rights, restricted stock or other stock based
compensation to officers, employees, directors or consultants of the
Company or any of its Subsidiaries.
"Stock Purchase Warrant" means, collectively, this Warrant,
and any subsequent stock purchase warrant or stock purchase warrants
issued pursuant to or in connection with this Warrant.
<PAGE>
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or
other business entity of which (i)-if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a
partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a
majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a
majority of partnership, association or other business entity gains or
losses or shall be or control the managing general partner of such
partnership, association or other business entity.
"Transfer" means, with respect to any Warrant Stock, the
gift, sale, assignment, transfer, pledge, hypothecation or other
disposition (whether for or without consideration and whether
voluntary, involuntary or by operation of law) of such Warrant Stock
or any interest therein.
"Warrant Stock" means the Company's Common Stock, par value
$.001 per share issuable upon exercise of this Stock Purchase Warrant
or any other Series A Preferred Warrant; provided that if there is a
change such that the securities issuable upon exercise of this Stock
Purchase Warrant are issued by an entity other than the Company or
there is a change in the type or class of securities so issuable, then
the term "Warrant Stock" shall mean one share of the security issuable
upon exercise of this Stock Purchase Warrant if such security is
issuable in shares, or shall mean the smallest unit in which such
security is issuable if such security is not issuable in shares.
"Warrant Stock Holder" means a holder of Warrant Stock,
including but not limited to the Registered Holder.
Section 2. Number of Shares of Warrant Stock and Exercise.
2A. Number of Shares of Warrant Stock. The Registered Holder is hereby
granted the right to purchase from the Company, the number of shares
of Warrant Stock set forth on Schedule 1 attached hereto effective as
of the Closing. The right to purchase additional shares of Warrant
Stock is hereby granted to the Registered Holder in the amounts and as
of the dates set forth on Schedule 1 in the event that the Sale of the
Company has not occurred prior to any such date.
2B. Exercise Period. The Registered Holder may exercise, in whole or
in part (but not as to a fractional share of Warrant Stock), the
purchase rights represented by this Warrant at any time and from time
to time after the Date of Issuance to and including December 31, 2007
(as may be extended pursuant to Section 2C(vi) hereof, the "Exercise
Period").
Section 2C.Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when the
Company has received all of the following items (the
"Exercise Time"):
(a) a completed Exercise Agreement, executed by the
Person exercising all or part of the purchase rights
represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
Purchaser, an assignment (an "Assignment") in the form
set forth in Exhibit II hereto evidencing the assignment
of this Warrant to the Purchaser, in which case the
Registered Holder shall have complied with the
provisions set forth in Section 5A hereof; and
(d) either (1) a check or wire transfer payable to the
Company in an amount equal to the product of the
Exercise Price multiplied by the number of shares of
Warrant Stock being purchased upon such exercise (the
"Aggregate Exercise Price"),(2) with the prior approval
of the Company (which shall not be unreasonably
withheld), the surrender to the Company of Series A
Preferred of the Company having a Liquidation Value plus
accrued and unpaid dividends thereon, if any, equal to
the Aggregate Exercise Price of the Warrant Stock being
purchased upon such exercise or (3) with the prior
approval of the Company (which shall not be unreasonably
withheld), a written notice to the Company that the
Purchaser is exercising the Warrant (or a portion
thereof) by authorizing the Company to withhold from
issuance a number of shares of Warrant Stock issuable
upon such exercise of the Warrant which when multiplied
by the Market Price of the Common Stock is equal to the
Aggregate Exercise Price (and such withheld shares shall
no longer be issuable under this Warrant).
<PAGE>
(ii) Certificates for shares of Warrant Stock purchased upon
exercise of this Warrant shall be delivered by the Company
to the Purchaser within five business days after the date of
the Exercise Time. Unless this Warrant has expired or all of
the purchase rights represented hereby have been exercised,
the Company shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly
represented by this Warrant which have not expired or been
exercised and shall, within such five-business day period,
deliver such new Warrant to the Person designated for
delivery in the Exercise Agreement.
(iii) The Warrant Stock issuable upon the exercise of this Warrant
shall be deemed to have been issued to the Purchaser at the
Exercise Time, and the Purchaser shall be deemed for all
purposes to have become the record holder of such Warrant
Stock at the Exercise Time.
(iv) The issuance of certificates for shares of Warrant Stock
upon exercise of this Warrant shall be made without charge
to the Registered Holder or the Purchaser for any issuance
tax in respect thereof or other cost incurred by the Company
in connection with such exercise and the related issuance of
shares of Warrant Stock. Each share of Warrant Stock
issuable upon exercise of this Warrant shall, upon payment
of the Exercise Price therefor, be fully paid and
nonassessable and free from all Liens with respect to the
issuance thereof.
(v) The Company shall not close its books against the transfer
of this Warrant or of any share of Warrant Stock issued or
issuable upon the exercise of this Warrant in any manner
which interferes with the timely exercise of this Warrant.
(vi) The Company and the Registered Holder or Purchaser, as
applicable, shall use their best efforts to make any filings
with any governmental body, NASDAQ or any stock exchange in
which the Warrant Stock is listed or obtain any approvals of
any governmental body, NASDAQ, any stock exchange in which
the Warrant Stock is listed or the stockholders of the
Company required prior to or in connection with any exercise
of this Warrant within a reasonable period of time. The
Exercise Period shall be extended to the extent necessary to
allow such filings to be made and such approvals to be
obtained. The costs and expenses (including reasonable
attorneys' fees) associated with any filing or approval
required shall be paid by the Company.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection
with a Public Offering or the Sale of the Company, the
exercise of any portion of this Warrant may, at the election
of the holder hereof, be conditioned upon the consummation
of the Public Offering or the Sale of the Company in which
case such exercise shall not be deemed to be effective until
the consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Warrant Stock
solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Warrant Stock issuable
upon the exercise of all outstanding Warrants. The Company
shall take all such actions as may be necessary to assure
that all such shares of Warrant Stock may be so issued
without violation of any applicable law or governmental
regulation or any requirements of any domestic securities
exchange upon which shares of Warrant Stock may be listed
(except for official notice of issuance which shall be
immediately delivered by the Company upon each such
issuance). The Company shall not take any action which would
cause the number of authorized but unissued shares of
Warrant Stock to be less than the number of such shares
required to be reserved hereunder for issuance upon exercise
of the Warrants.
Section 2D. Exercise Agreement. Upon any exercise of this Warrant, the
exercise agreement (the "Exercise Agreement") shall be substantially
in the form set forth in Exhibit I hereto, except that if the shares
of Warrant Stock are not to be issued in the name of the Person in
whose name this Warrant is registered, the Exercise Agreement shall
also state the name of the Person to whom the certificates for the
shares of Warrant Stock are to be issued, and if the number of shares
of Warrant Stock to be issued does not include all the shares of
Warrant Stock purchasable hereunder, it shall also state the name of
the Person to whom a new Warrant for the unexercised portion of the
rights hereunder is to be delivered. Such Exercise Agreement shall be
dated the actual date of execution thereof.
<PAGE>
Section 3. Adjustment of Exercise Price and Number of Shares. In order
to prevent dilution of the rights granted under this Warrant, the
Exercise Price shall be subject to adjustment from time to time as
provided in this Section 3, and the number of shares of Warrant Stock
obtainable upon exercise of this Warrant shall be subject to
adjustment from time to time as provided in this Section 3.
Section 3A. Adjustment of Exercise Price and Number of Shares upon
Issuance of Common Stock.
(i) Except as set forth in Section 3A(iii), if and whenever the
Company issues or sells, or in accordance with Section 3B is
deemed to have issued or sold, any shares of Common Stock
for a gross consideration per share (not net of discounts
and commissions to underwriters) less than either (A) the
Exercise Price (as such amount is proportionately adjusted
for stock splits, stock combinations, stock dividends and
recapitalizations affecting the Common Stock after the Date
of Issuance, the "Base Price") or (B) the Market Price of
the Common Stock determined as of the date of such issue or
sale, then immediately upon such issue or sale the Exercise
Price shall be reduced to whichever of the following
Exercise Prices is lower:
(a) the Exercise Price determined by dividing (1) the
sum of (x) the product derived by multiplying the
Exercise Price in effect immediately prior to such
issue or sale by the number of shares of Common
Stock Deemed Outstanding immediately prior to such
issue or sale, plus (y) the gross consideration
(not net of discounts and commissions to
underwriters), if any, received by the Company
upon such issue or sale, by (2) the number of
shares of Common Stock Deemed Outstanding
immediately after such issue or sale; or (b) the
Exercise Price determined by multiplying the
Exercise Price in effect immediately prior to such
issue or sale by a fraction, the numerator of
which shall be the sum of (1) the number of shares
of Common Stock Deemed Outstanding immediately
prior to such issue or sale multiplied by the
Market Price of the Common Stock determined as of
the date of such issuance of sale, plus (2) the
gross consideration (not net of discounts and
commissions to underwriters), if any, received by
the Company upon such issue or sale, and the
denominator of which shall be the product derived
by multiplying the Market Price of the Common
Stock by the number of shares of Common Stock
Deemed Outstanding immediately after such issue or
sale.
(ii) Upon each such adjustment of the Exercise Price hereunder,
the number of shares of Warrant Stock acquirable upon
exercise of this Warrant shall be adjusted to the number of
shares determined by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of
shares of Warrant Stock acquirable upon exercise of this
Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from
such adjustment.
(iii) Notwithstanding the foregoing, there shall be no adjustment
to the Exercise Price or the number of shares of Warrant
Stock obtainable upon exercise of this Warrant with respect
to (w) the issuance and sale of Common Stock, or the
granting of any rights or options to subscribe for or
purchase Common Stock or Convertible Securities, pursuant to
an acquisition by the Company or any Subsidiary, (x) the
granting of any rights or option to subscribe for or
purchase Common Stock or Convertible Securities pursuant to
the Company's 1997 Stock Option Plan, (y) the exercise of
such rights and options or (z) the issuance and sale of
Common Stock pursuant to the 1997 Stock Option Plan.
Section 3B. Effect on Exercise Price of Certain Events. For purposes
of determining the adjusted Exercise Price under Section 3A, the
following shall be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
grants or sells any Options and the price per share for
which Common Stock is issuable upon the exercise of such
Options, or upon conversion or exchange of any Convertible
Securities issuable upon exercise of such Options, is less
than either (a) the Base Price in effect immediately prior
to the time of the granting or sale of such Options or (b)
the Market Price determined as of such time, then 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 Securities
issuable upon the exercise of such Options, shall be deemed
to be outstanding and to have been issued and sold by the
Company at such time for such price per share. For purposes
of this Section 3B(i), the "price per share for which Common
<PAGE>
Stock is issuable upon exercise of such Options or upon
conversion or exchange of such Convertible Securities" is
determined by dividing (A) the total amount, if any,
received or receivable by the Company as consideration for
the granting or sale 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 such Options which are exercisable into Convertible
Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the
issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock issuable upon exercise of
such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options. No further adjustment of the Exercise Price shall
be made upon the actual issuance of such Common Stock or of
such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock
upon conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities and the
price per share for which Common Stock is issuable upon
conversion or exchange thereof is less than either (a) the
Base Price in effect immediately prior to the time of such
issue or sale or (b) the Market Price determined as of such
time, then the maximum number of shares of Common Stock
issuable upon conversion or exchange of such Convertible
Securities shall be deemed to be outstanding and to have
been issued and sold by the Company for such price per
share. For the purposes of this Section 3B(ii), the "price
per share for which Common Stock is issuable upon conversion
or exchange thereof" is determined by dividing:
(A) the total amount received or receivable by the
Company as consideration for the issue or sale 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
(B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all
such Convertible Securities.
No further adjustment of the Exercise Price shall be made
upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities, and if any such
issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustments of the
Exercise Price had been or are to be made pursuant to other
provisions of this Section 3B, no further adjustment of the
Exercise Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Options, the additional
consideration, if any, payable upon the issue, conversion or
exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or
exchangeable for Common Stock changes at any time, the
Exercise Price in effect at the time of such change shall be
adjusted immediately to the Exercise Price which would have
been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed
purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially
granted, issued or sold and the number of shares of Warrant
Stock shall be correspondingly adjusted. For purposes of
this Section 3B, if the terms of any Option or Convertible
Security which was outstanding as of the date of issuance of
this Warrant are changed in the manner described in the
immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable
upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such change;
provided that no such change shall at any time cause the
Exercise Price hereunder to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the
termination of any right to convert or exchange any
Convertible Securities without the exercise of such Option
or right, the Exercise Price then in effect and the number
of shares of Warrant Stock acquirable hereunder shall be
adjusted immediately to the Exercise Price and the number of
shares which would have been in effect at the time of such
expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to
such expiration or termination, never been issued. For
purposes of this Section 3B, the expiration or termination
of any Option or Convertible Security which was outstanding
as of the date of issuance of this Warrant shall not cause
the Exercise Price hereunder to be adjusted unless, and only
to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been
issued after the date of issuance of this Warrant.
<PAGE>
(v) Calculation of Consideration Received. If any Common Stock,
Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the
consideration received therefor shall be deemed to be the
net amount received by the Company therefor. In case any
Common Stock, Options or Convertible Securities are issued
or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company
shall be the fair value of such consideration, except where
such consideration consists of securities, in which case the
amount of consideration received by the Company shall be the
Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued
to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity the
amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common
Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or
securities shall be determined jointly by the Company and
the Registered Holder. If such parties are unable to reach
agreement within a reasonable period of time, such fair
value shall be determined by a recognized investment banking
firm jointly selected by the Company and the holders of a
majority of the Series A Preferred Warrants. The
determination of such recognized investment banker shall be
final and binding on the Company and the Registered Holder
of the Warrants, and the fees and expenses of such
recognized investment banker shall be paid by the Company.
(vi) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options
by the parties thereto, the Options shall be deemed to have
been issued for such consideration as the Board of Directors
of the Company reasonably determines.
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned
or held by or for the account of the Company or any
Subsidiary, and the disposition of any shares so owned or
held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Company takes a record of the holders of
Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common
Stock, Options or in Convertible Securities or (B) to
subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
3C. Subdivision or Combination of Common Stock. If the Company at any
time subdivides (by any stock split, stock dividend, recapitalization
or otherwise) one or more classes of its outstanding shares of Common
Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced
and the number of shares of Warrant Stock obtainable upon exercise of
this Warrant shall be proportionately increased. If the Company at any
time combines (by reverse stock split or otherwise) one or more
classes of its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect immediately prior to
such combination shall be proportionately increased and the number of
shares of Warrant Stock obtainable upon exercise of this Warrant shall
be proportionately decreased.
3D. Certain Events. If any event occurs of the type contemplated by
the provisions of this Section 3 but not expressly provided for by
such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features (except in each case pursuant to the Stock Option Plans
(including any of their component plans), then the Company's Board of
Directors shall make an appropriate adjustment in the Exercise Price
and the number of shares of Warrant Stock obtainable upon exercise of
this Warrant so as to protect the rights of the Registered Holder;
provided that no such adjustment shall increase the Exercise Price or
decrease the number of shares of Warrant Stock obtainable as otherwise
determined pursuant to this Section 3.
3E. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered
Holder, setting forth in reasonable detail and certifying
the calculation of such adjustment.
<PAGE>
(ii) The Company shall give written notice to the Registered
Holder at least 20 days prior to the date on which the
Company closes its books or takes a record (A) with respect
to any dividend or distribution upon the Common Stock, (B)
with respect to any pro rata subscription offer to holders
of Common Stock or (C) for determining rights to vote with
respect to any Organic Change, Sale of the Company,
dissolution or liquidation.
(iii) The Company shall also give written notice to the Registered
Holder at least 20 days prior to the date on which any
Organic Change, dissolution or liquidation shall take place.
Section 4. Liquidating Dividends. If the Company declares or pays a
dividend upon the Common Stock payable otherwise than in cash out of
earnings or earned surplus (determined in accordance with GAAP) except
for a stock dividend payable in shares of Common Stock (a "Liquidating
Dividend"), then the Company shall pay to the Registered Holder at the
time of payment thereof the Liquidating Dividend which would have been
paid to the Registered Holder on the Warrant Stock (after netting out
the Aggregate Exercise Price) had this Warrant been fully exercised
immediately prior to the date on which a record is taken for such
Liquidating Dividend, or, if no record is taken, the date as of which
the record holders of Common Stock entitled to such dividends are to
be determined.
Section 5. Company's Right to Require Exercise.
5A. Requirement Notice. Subject to Section 5B, if on any date during
the Exercise Period and after December 31, 2000 the daily average of
the closing sales prices of a share of Common Stock quoted on NASDAQ
equals or exceeds the greater of two times the Exercise Price or
$10.00 per share (as such amount is proportionately adjusted for stock
splits, stock combinations, stock dividends and recapitalizations
affecting the Warrant Stock after the Date of Issuance) for the 20
consecutive trading days immediately prior to such date, the Company
may, by giving written notice (the "Requirement Notice") to the
Registered Holder within three business days of such date, require the
Registered Holder to exercise, in whole or in part (but not as to a
fractional share of Warrant Stock), the purchase rights represented by
this Warrant within 15 business days of receipt of the Requirement
Notice; provided, however such 15 business day period shall be
extended to the extent necessary for the Company and the Registered
Holder to make any filings with any governmental body, NASDAQ or any
stock exchange in which the Warrant Stock is listed or obtain any
approvals of any governmental body, NASDAQ, any stock exchange in
which the Warrant Stock is listed or the stockholders of the Company
required prior to or in connection with any exercise of this Warrant.
Except as explicitly set forth in this Section 5, the exercise of this
Warrant shall follow the procedures set forth in Section 2C.
Notwithstanding anything in this Section 5 to the contrary, the
Registered Holder can satisfy its obligations under this Section 5 by
assigning this Warrant pursuant to Section 2C (i)(c) to another Person
(the "Assignee") within 10 business days of receipt of the Requirement
Notice, so long as the Assignee exercises the assigned Warrant within
10 business days of such assignment; provided, however such 10
business day period shall be extended to the extent necessary for the
Company and the Assignee to make any filings with any governmental
body, NASDAQ or any stock exchange in which the Warrant Stock is
listed or obtain any approvals of any governmental body, NASDAQ, any
stock exchange in which the Warrant Stock is listed or the
stockholders of the Company required prior to or in connection with
any exercise of the assigned Warrant.
5B. No Manipulation. Each of the parties hereto hereby agrees that
neither it nor any of its Affiliates shall take any action or omit to
take any action which increases or decreases the daily closing sales
price of a share of Warrant Stock quoted on NASDAQ for the primary
purpose of affecting whether or not the Company shall have the right
to require the Registered Holder to exercise, in whole or in part, the
purchase rights represented by this Warrant.
Section 6. No Voting Rights; Limitations of Liability. This Warrant
shall not entitle the holder hereof to any voting rights or other
rights as a stockholder of the Company. No provision hereof, in the
absence of affirmative action by the Registered Holder to purchase
Warrant Stock, and no enumeration herein of the rights or privileges
of the Registered Holder shall give rise to any liability of such
holder for the Exercise Price of Warrant Stock acquirable by exercise
hereof or as a stockholder of the Company.
Section 7. Warrant Transferable. Subject to federal and state securities
laws, this Warrant and all rights hereunder are transferable,
in whole or in part, without charge to the Registered Holder, upon
surrender of this Warrant with a properly executed Assignment at
the address of the Company set forth in Section 16.
<PAGE>
Section 8. Sale of the Company. Notwithstanding anything herein to the
contrary, prior to the consummation of a Sale of the Company, the
Registered Holder shall be given the option, in its sole discretion,
to either (x) exercise this Warrant prior to the consummation of the
Sale of the Company and participate in such sale as a holder of such
class of Common Stock, or (y) upon the consummation of the Sale of the
Company, receive in exchange for this Warrant consideration equal to
the amount determined by multiplying (1) the same amount of
consideration per share of a class of Common Stock received by holders
of such class of Common Stock in connection with the Sale of the
Company less the Exercise Price by (2) the number of shares of such
class of Common Stock represented by this Warrant (the "Warrant
Gain"); provided, however in the event that a Registered Holder
exercises the option permitted by sub-clause (y) of this Section 8,
the Warrant Gain shall not be less than $2.00 multiplied by the number
of shares of such class of Common Stock represented by this Warrant.
Section 9. Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Registered Holder at
the address of the Company set forth in Section 16, for new Warrants
of like tenor representing in the aggregate the purchase rights
hereunder, and each of such new Warrants shall represent such portion
of such rights as is designated by the Registered Holder at the time
of such surrender. The date the Company initially issues this Warrant
shall be deemed to be the "Date of Issuance" hereof regardless of the
number of times new certificates representing the unexpired and
unexercised rights formerly represented by this Warrant shall be
issued. Each holder of a new Warrant shall have the rights and
privileges of the Registered Holder of this Warrant as provided
herein.
Section 10. Replacement. Upon receipt of evidence reasonably satisfactory to
the Company (an affidavit of the Registered Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing this Warrant, and in the case
of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company, or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the same rights represented by
such lost, stolen, destroyed or mutilated certificate and dated the
date of such lost, stolen, destroyed or mutilated certificate.
Section 11. Registration Rights for Warrant Stock.
(a) Demand Registration.
(i) Each Warrant Stock Holder who holds Registrable Securities
shall have the right (the "Demand Right") to request
registration under the Securities Act of all or any portion
of the Registrable Securities held by it (in each case,
referred to herein as the "Requesting Holders") by
delivering a written notice to the Company at any time after
January 31, 2001, which notice identifies the Requesting
Holders and specifies the number of Registrable Securities
to be included in such registration (the "Registration
Request"). The Company will give prompt written notice of
such Registration Request (the "Registration Notice") to all
other Warrant Stock Holders and will thereupon use its
reasonable best efforts to effect the registration (a
"Demand Registration") under the Securities Act on any form
available to the Company of:
(x) the Registrable Securities requested to be
registered by the Requesting Holders; and
(y) all other Registrable Securities which the Company
has received a written request from another
Warrant Stock Holder to register within 30 days
after the Registration Notice is given.
The Company shall be obligated to effect one Demand Registration;
provided however, the Company shall not be obligated to effect such
Demand Registration unless not less than 66.67% of all holders of
Registrable Securities have requested such Demand Registration.
(ii) A registration undertaken by the Company at the request of
the Requesting Holders will not count as a Demand
Registration if, pursuant to the applicable Demand Right,
the Requesting Holders fail to register and sell at least
50% of the Registrable Securities requested to be included
in such registration by the Requesting Holders.
<PAGE>
(iii) If the sole or managing underwriter of a Demand Registration
advises the Company in writing that in its opinion the
number of Registrable Securities and other securities
requested to be included exceeds the number of Registrable
Securities and other securities which can be sold in such
offering without adversely affecting the distribution of the
securities being offered, the price that will be paid in
such offering or the marketability thereof, subject to the
rights of any other Person to whom registration rights have
been granted by the Company, the Company will include in
such registration the greatest number of Registrable
Securities proposed to be registered by the Requesting
Holders which in the opinion of such underwriter can be sold
in such offering without adversely affecting the
distribution of the securities being offered, the price that
will be paid in such offering or the marketability thereof,
ratably among the Requesting Holders proposing to register
based on each such Requesting Holders Ownership Percentage.
(iv) The Company may decline to effect a Demand Registration for
up to 120 days if such Demand Registration would (a)
interfere with any financing arrangement that the Company is
in the process of completing or (b) would, in the reasonable
judgment of the Board of Directors of the Company, require
premature disclosure of an event or condition relating to
the Company.
(b) Incidental Registration.
(i) At any time the Company proposes to register any Common
Shares under the Securities Act (other than pursuant to
Section 11(a) or in connection with a business acquisition
or combination or an employee benefit plan), whether in
connection with a primary or secondary offering, the Company
will give written notice to each holder of Registrable
Securities at least thirty (30) days prior to the initial
filing of such Registration Statement with the SEC of its
intent to file such Registration Statement and of such
holder's rights under this Section 11(b). Upon the written
request of any holder of Registrable Securities made within
twenty (20) days after any such notice is given (which
request shall specify the Registrable Securities intended to
be disposed of by such holder), the Company will use its
reasonable best efforts to effect the registration (an
"Incidental Registration") under the Securities Act of all
Registrable Securities which the Company has been so
requested to register by the holders thereof; provided,
however, 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 Incidental Registration (each an
"Incidental Registration Statement") ,the Company shall
determine for any reason 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, (x) in the
case of a determination not to register, the Company shall
be relieved of its obligation to register any Registrable
Securities under this Section 11(b)in connection with such
registration (but not from its obligation to pay the
expenses incurred in connection therewith), and (y) in the
case of a determination to delay registration, the Company
shall be permitted to delay registering any Registrable
Securities under this Section 11(b) during the period that
the registration of such other securities is delayed.
(ii) If the sole or managing underwriter of a registration
advises the Company in writing that in its opinion the
number of Registrable Securities and other securities
requested to be included exceeds the number of Registrable
Securities and other securities which can be sold in such
offering without adversely affecting the distribution of the
securities being offered, the price that will be paid in
such offering or the marketability thereof, the Company will
include in such registration the Registrable Securities and
other securities of the Company in the following order of
priority:
(x) first, the greatest number of securities of the
Company proposed to be included in such
registration by the Company for its own account
which in the opinion of such underwriter can be so
sold; and
(y) second, after all securities that the Company
proposes to register for its own account have been
included, the greatest amount of Registrable
Securities requested to be registered by the
holders of Registrable Securities of which in the
opinion of such underwriter can be sold in such
offering without adversely affecting the
distribution of the securities being offered, the
price that will be paid in such offering or the
marketability thereof, ratably among the holders
proposing to register based on each such holder's
Ownership Percentage.
<PAGE>
(c) Holdback Agreements.
(i) The Registered Holder agrees that if requested in connection
with an underwritten offering made pursuant to this Section
11 by the managing underwriter or underwriters of such
underwritten offering, such Registered Holder will not
effect any Public Sale or distribution of any of the
securities being registered or any securities convertible or
exchangeable or exercisable for such securities (except as
part of such underwritten offering), during the period
beginning 10 days prior to, and ending 180 days after, the
closing date of each underwritten offering made pursuant to
such Registration Statement (or for such shorter period as
to which the managing underwriter or underwriters may
agree).
(ii) The Company agrees not to effect any Public Sale or
distribution of its Common Stock, or any securities
convertible into or exchangeable or exercisable for such
Common Stock, during the seven days prior to and during the
180-day period beginning on the effective date of any
underwritten Demand Registration (or for such shorter period
as to which the managing underwriter or underwriters may
agree), except as part of such Demand Registration or in
connection with any employee benefit or similar plan, any
dividend reinvestment plan, or a business acquisition or
combination.
(d) Registration and Maintenance Procedures.
In connection with the registration of any Registrable Securities
and/or any other Registration Statement, the Company shall, to the
extent applicable, at its own expense, as promptly as reasonably
possible:
(i) Prepare and file with the SEC a Registration Statement or
Registration Statements on a form available for the sale of
the Registrable Securities by the holders thereof in
accordance with the intended method of distribution thereof,
and use its reasonable best efforts to cause each such
Registration Statement to become effective;
(ii) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as
may be necessary to keep such Registration Statement
continuously effective for a period ending on the earlier of
(x) 90 days from the effective date and (y) such time as all
of such securities have been disposed of in accordance with
the intended method of disposition thereof; and cause the
related prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder
applicable to it with respect to the disposition of all
securities covered by such Registration Statement as so
amended or in such prospectus as so supplemented;
(iii) Notify the Requesting Holders promptly (but in any event
within two business days), and confirm such notice in
writing, (A) when a prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (B) of the
issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary
prospectus, (C) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with
sales of Registrable Securities the Company becomes aware
that the representations and warranties of the Company
contained in any agreement (including any underwriting
agreement) contemplated by Section 11(d)(viii) cease to be
true and correct in all material respects,(D) of the receipt
by the Company of any notification with respect to the
suspension of the qualification or exemption from
qualification of a Registration Statement or any of the
Registrable Securities for offer or sale in any
jurisdiction, (E) if the Company becomes aware of the
happening of any event that makes any statement made in such
Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires
the making of any changes in such Registration Statement,
prospectus or documents so that, in the case of such
Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of
the prospectus, it will not contain any untrue statement of
a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
<PAGE>
(iv) Use its reasonable best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use
of a prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, and, if any such
order is issued, to obtain the withdrawal of any such order
at the earliest possible moment;
(v) Deliver to each Requesting Holder and the underwriters, if
any, without charge, as many copies of the prospectus or
prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such Persons may
reasonably request; and, the Company hereby consents to the
use of such prospectus and each amendment or supplement
thereto by each of the Requesting Holders and the
underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by
such prospectus and any amendment or supplement thereto;
(vi) Prior to any public offering of Registrable Securities, to
use its reasonable best efforts to register or qualify, and
cooperate with the Requesting Holders, the underwriters, if
any, the sales agents and their respective counsel in
connection with the registration or qualification (or
exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the
securities or "blue sky" laws of such jurisdictions within
the United States as necessary;
(vii) Upon the occurrence of any event contemplated by Section
11(d)(iii)(E), as promptly as practicable prepare a
supplement or post-effective amendment to the Registration
Statement or a supplement to the related prospectus or any
document incorporated or deemed to be incorporated therein
by reference, or file any other required document so that,
as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such prospectus will not
contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(viii) Enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and take
all such other actions as are reasonably requested by the
managing or sole underwriter in order to expedite or
facilitate the registration or the disposition of such
Registrable Securities, and in such connection, (A) make
such representations and warranties to the underwriters,
with respect to the business of the Company and its
Subsidiaries, and the Registration Statement, prospectus and
documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when
requested; (B) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the
managing underwriters), addressed to the underwriters
covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters
as may be reasonably requested by underwriters; (C) obtain
"cold comfort" letters and updates thereof from the
independent certified public accountants of the Company(and,
if necessary, any other independent certified public
accountants of any Subsidiary of the Company or of any
business acquired by the Company for which financial
statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each
of the underwriters, such letters to be in customary form
and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten
offerings; and (D) if an underwriting agreement is entered
into, the same shall contain indemnification provisions and
procedures no less favorable to the Requesting Holders than
those set forth in Section 11(g)(or such other provisions
and procedures acceptable to holders of a majority of the
Registrable Securities covered by such Registration
Statement and the managing underwriters or agents) with
respect to all parties to be indemnified pursuant to Section
11(f). The above shall be done at each closing under such
underwriting agreement, or as and to the extent required
thereunder;
<PAGE>
(ix) Comply with all applicable rules and regulations of the SEC
and make generally available to its stockholders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal
year) (x) commencing at the end of any fiscal quarter in
which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and
(y) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of
the Company after the effectiveness of a Registration
Statement, which statements shall cover said 12-month
periods; and
(x) Use its reasonable best efforts to cause all such
Registrable Securities covered by such Registration
Statement to be designated as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 or
listed on the principal securities exchange on which Common
Stock is then listed (if any).
The Company may require each Requesting Holder as to which any
registration is being effected to furnish to the Company such
information regarding such Requesting Holder and the distribution of
such Registrable Securities as the Company may, from time to time,
reasonably request in writing; provided that such information shall be
used only in connection with such registration. The Company may
exclude from such registration the Registrable Securities of any
Requesting Holder who unreasonably fails to furnish such information
promptly after receiving such request. Each Requesting Holder agrees
that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 11(d)(iii)(B),
11(d)(iii)(D) or 11(d)(iii)(E),such Requesting Holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or prospectus until such Requesting Holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by Section 11(d), or until such Requesting Holder is
advised in writing by the Company that the use of the applicable
prospectus may be resumed, and has received copies of any amendments
or supplements thereto.
(e) Registration Expenses. All fees and expenses incident to the
performance of or compliance by the Company with the provisions of
Section 11 shall be borne by the Company, whether or not any
Registration Statement is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of compliance with state
securities or "blue sky" laws), (ii) reasonable messenger, telephone
and delivery expenses, (iii) fees and disbursements of counsel for the
Company, (iv) fees and disbursements of all independent certified
public accountants referred to in Section 11(e)(viii),(v)
underwriters' fees and expenses (excluding discounts, commissions, or
fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals relating to the distribution of the
Registrable Securities, which shall be paid by the Requesting Holders
to the extent they relate solely to the Registrable Securities), (vi)
Securities Act liability insurance, if the Company so desires such
insurance, (vii) internal expenses of the Company, (viii) the expense
of any annual audit, (ix) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities
exchange, and (x) the fees and expenses of any Person, including
special experts, retained by the Company. In connection with any
Demand Registration or Incidental Registration hereunder, the Company
shall reimburse the holders of the Registrable Securities being
registered in such registration for the reasonable fees and
disbursements of not more than one counsel chosen by the Company and
other reasonable out-of-pocket expenses of the Requesting Holders
incurred in connection with the registration of the Registrable
Securities.
(f) Indemnification; Contribution.
(i) The Company shall, without limitation as to time, indemnify
and hold harmless, to the full extent permitted by law, each
Requesting Holder, the officers, directors, members, agents
and employees of each of them, each Person who controls each
such Person (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), the
officers, directors, agents and employees of each such
controlling person and any financial or investment adviser
(each, an "Indemnified Stockholder"), to the fullest extent
lawful, from and against any and all losses, claims,
<PAGE>
damages, liabilities, actions or proceedings (whether
commenced or threatened)reasonable costs (including, without
limitation, reasonable costs of preparation and reasonable
attorneys' fees) and reasonable expenses (including
reasonable expenses of investigation) (collectively,
"Losses"), as incurred, arising out of or based upon any
untrue or alleged untrue statement of a material fact
contained in any Registration Statement, prospectus or form
of prospectus or in any amendment or supplements thereto or
in any preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent
that such untrue or alleged untrue statement is contained
in, or such omission or alleged omission is required to be
contained in, any information so furnished in writing by the
Company to such Requesting Holder expressly for use in such
Registration Statement or prospectus and that such statement
or omission was reasonably relied upon by such Requesting
Holder in preparation of such Registration Statement,
prospectus or form of prospectus; provided, however, that
the Company shall not be liable in any such case to the
extent that the Company has furnished in writing to such
Requesting Holder within a reasonable period of time prior
to the filing of any such Registration Statement or
prospectus or amendment or supplement thereto information
expressly for use in such Registration Statement or
prospectus or any amendment or supplement thereto which
corrected or made not misleading, information previously
furnished to such Requesting Holder, and such Requesting
Holder failed to include such information therein; provided,
further, however, that the Company shall not be liable to
any Person who participates as an underwriter in the
offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter (s) within the
meaning of the Securities Act to the extent that any such
Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if (A) such Person failed
to send or deliver a copy of the prospectus with or prior to
the delivery of written confirmation of the sale by such
Person to the Person asserting the claim from which such
Losses arise, (B) the prospectus would have corrected such
untrue statement or alleged untrue statement or such
omission or alleged omission,and(C) the Company has complied
with its obligations under Section 11(d)(iii). Each
indemnity and reimbursement of costs and expenses shall
remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified
Stockholder.
(ii) In connection with any Registration Statement in which a
holder of Registrable Securities is participating, such
holder, or an authorized officer of such holder, shall
furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any
Registration Statement or prospectus and agrees, severally
and not jointly, to indemnify, to the full extent permitted
by law, the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or
employees of such controlling persons (each, an "Indemnified
Company", and together with the Indemnified Stockholders,
the "Indemnified Parties"), from and against all Losses, as
incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any
Registration Statement, prospectus or form of prospectus or
in any amendment or supplements thereto or in any
preliminary prospectus, or arising out of or based upon any
omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such
untrue or alleged untrue statement is contained in, or such
omission or alleged omission is required to be contained in,
any information so furnished in writing by such holder to
the Company expressly for use in such Registration Statement
or prospectus and that such statement or omission was
reasonably relied upon by the Company in preparation of such
Registration Statement, prospectus or form of prospectus;
provided, however, that such holder shall not be liable in
any such case to the extent that such holder has furnished
in writing to the Company within a reasonable period of time
prior to the filing of any such Registration Statement or
prospectus or amendment or supplement thereto information
<PAGE>
expressly for use in such Registration Statement or
prospectus or any amendment or supplement thereto which
corrected or made not misleading, information previously
furnished to the Company, and the Company failed to include
such information therein. In no event shall the liability of
any Requesting Holder hereunder be greater in amount than
the after-tax dollar amount of the proceeds (net of payment
of all expenses) received by such Requesting Holder upon the
sale of the Registrable Securities giving rise to such
indemnification obligation. Such indemnity shall remain in
full force and effect regardless of any investigation made
by or on behalf of such Indemnified Company.
(iii) Any Indemnified Party shall give prompt notice to the party
or parties from which such indemnity is sought (the
"Indemnifying Parties") of the commencement of any action,
suit, proceeding or investigation or written threat thereof
(a "Proceeding") with respect to which such Indemnified
Party seeks indemnification or contribution pursuant hereto;
provided, however, that the failure to so notify the
Indemnifying Parties shall not relieve the Indemnifying
Parties from any obligation or liability except to the
extent that the Indemnifying Parties have been prejudiced
materially by such failure. The Indemnifying Parties shall
have the right, exercisable by giving written notice to an
Indemnified Party promptly after the receipt of written
notice from such Indemnified Party of such Proceeding, to
assume, at the Indemnifying Parties' expense, the defense of
any such Proceeding, with counsel reasonably satisfactory to
such Indemnified Party; provided, however, that an
Indemnified Party or Indemnified Parties (if more than one
such Indemnified Party is named in any Proceeding) shall
have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Indemnified Parties
unless: (x) the Indemnifying Parties agree to pay such fees
and expenses; (y) the Indemnifying Parties fail promptly to
assume the defense of such Proceeding or fail to employ
counsel reasonably satisfactory to such Indemnified Party or
Indemnified Parties; or (z) the named parties to any such
Proceeding (including any impleaded parties) include both
such Indemnified Party or Indemnified Parties and the
Indemnifying Parties, and there may be one or more defenses
available to such Indemnified Party or Indemnified Parties
that are different from or additional to those available to
the Indemnifying Parties, in which case, if such Indemnified
Party or Indemnified Parties notifies the Indemnifying
Parties in writing that it elects to employ separate counsel
at the expense of the Indemnifying Parties, the Indemnifying
Parties shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the
Indemnifying Parties, it being understood, however, that,
unless there exists a conflict among Indemnified Parties,
the Indemnifying Parties shall not, in connection with any
one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of
the same general allegations or circumstances, be liable for
the fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or Indemnified Parties.
Whether or not such defense is assumed by the Indemnifying
Parties, such Indemnifying Parties or Indemnified Party or
Indemnified Parties will not be subject to any liability for
any settlement made without its or their consent (but such
consent will not be unreasonably withheld). The Indemnifying
Parties shall not consent to entry of any judgment or enter
into any settlement which (A) provides for other than
monetary damages without the consent of the Indemnified
Party or Indemnified Parties (which consent shall not be
unreasonably withheld or delayed) or (B) does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Parties
of a release, in form and substance satisfactory to the
Indemnified Party or Indemnified Parties, from all liability
in respect of such Proceeding for which such Indemnified
Party would be entitled to indemnification hereunder.
(iv) If the indemnification provided for in this Section 11(f) is
unavailable to an Indemnified Party or is insufficient to
hold such Indemnified Party harmless for any Losses in
respect of which this Section 11(f) would otherwise apply by
its terms, then each applicable Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall have a joint
and several obligation to contribute to the amount paid or
payable by such Indemnified Party as a result of such
<PAGE>
Losses, in such proportion as is appropriate to reflect the
relative fault of and relative benefit to the Indemnifying
Party, on the one hand, and such Indemnified Party, on the
other hand, in connection with the actions, statements or
omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of
such Indemnifying Party, on the one hand, and Indemnified
Party, on the other hand, shall be determined by reference
to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a
material fact, has been taken by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party,
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by
a party as a result of any Losses shall be deemed to include
any legal or other fees or expenses incurred by such party
in connection with any Proceeding, to the extent such party
would have been indemnified for such expenses if the
indemnification provided for in Section 11(f)(i) or
11(f)(ii) was available to such party. The parties hereto
agree that it would not be just and equitable if
contribution pursuant to this Section 11(f)(iv) were
determined by pro-rata allocation or by any other method of
allocation that does not take account of the equitable
considerations referred to in this Section 11(f)(iv).
Notwithstanding the provisions of this Section 11(f)(iv), an
Indemnifying Party that is a Requesting Holder shall not be
required to contribute any amount in excess of the amount by
which the net after-tax proceeds received by such
Indemnifying Party exceeds the amount of any damages that
such Indemnifying Party has otherwise been required to pay
by reasons of such untrue or alleged untrue statement or
omission or alleged 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.
(g) Rule 144 Sales. The Company shall file the reports required to be
filed by it under the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, and will take such
further action as any Warrant Stock Holder may reasonably request, all
to the extent required from time to time to enable such Warrant Stock
Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by
Rule 144. Upon the request of any Warrant Stock Holder, the Company
shall deliver to such Warrant Stock Holder a written statement as to
whether it has complied with such requirements.
(h) No Participation. No holder of Registrable Securities may
participate in any underwritten registration hereunder unless such
holder (x) agrees to sell such holder's Registrable Securities on the
basis provided in any underwriting arrangements approved by the
Persons entitled hereunder to approve such arrangements and (y)
completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(i) No Inconsistent Agreements. The Company has not and will not,
enter into any agreement with respect to the Company's securities that
is inconsistent with the rights granted to the Registered Holder in
this Section 11 or otherwise conflicts with the provisions hereof.
(j) S-3 Demands.
(i) So long as the Company is permitted under the Securities Act
to register securities on Form S-3, holders of Registrable
Securities shall have the right to request registration on
Form S-3 of all or any portion of the Registrable Securities
held by such holders (in each case, referred to herein as
the "S-3 Requesting Holders") by delivering a written notice
to the Company at any time after January 31, 2001, which
notice identifies the S-3 Requesting Holders and specifies
the number of Registrable Securities to be included in such
registration (the "S-3 Registration Request"). The Company
will give prompt written notice of such S-3 Registration
Request (the "S-3 Registration Notice") to all other holders
of Registrable Securities and will thereupon use its
reasonable best efforts to effect the registration (a "S-3
Demand Registration") on Form S-3 of:
(x) the Registrable Securities requested to be
registered by the S-3 Requesting Holders; and
<PAGE>
(y) all other Registrable Securities which the Company
has received a written request from another
stockholder to register within 30 days after the
S-3 Registration Notice is given.
The Company shall be obligated to effect an unlimited number
of S-3 Demand Registrations; provided however, the Company
shall not be obligated to effect such S-3 Demand
Registration unless not less than 66.67% of all holders of
Registrable Securities have requested such S-3 Demand
Registration. S-3 Demand Registrations shall not constitute
a Demand Registration.
(ii) If the sole or managing underwriter of a S-3 Demand
Registration advises the Company in writing that in its
opinion the number of Registrable Securities and other
securities requested to be included exceeds the number of
Registrable Securities and other securities which can be
sold in such offering without adversely affecting the
distribution of the securities being offered, the price that
will be paid in such offering or the marketability thereof,
the Company will include in such registration the greatest
number of Registrable Securities proposed to be registered
by the Requesting Holders which in the opinion of such
underwriter can be sold in such offering without adversely
affecting the distribution of the securities being offered,
the price that will be paid in such offering or the
marketability thereof, ratably among the stockholders
proposing to register based on each such Stockholder's
Ownership Percentage.
(iii) The Company may decline to effect an S-3 Demand Registration
for up to 120 days if such S-3 Demand Registration would (a)
interfere with any financing arrangement that the Company is
in the process of completing or (b) would, in the reasonable
judgment of the Board of Directors of the Company, require
premature disclosure of an event or condition relating to
the Company.
Section 12. Amendment and Waiver. Except as otherwise provided herein, no
amendment or waiver of any provision of this Agreement shall be
effective against the Company, the Registered Holder or Warrant Stock
Holder unless such amendment or waiver is approved in writing by the
Company, Warrant Stock Holder and the Registered Holder, provided
however, an amendment or waiver of the provisions of Section 11 hereof
shall be effective against the Company, the Registered Holder and any
Warrant Stock Holder if approved in writing by the Company and the
holders of at least a majority of the then-outstanding Registrable
Securities. The failure of any party to enforce any provision of this
Agreement shall not be construed as a waiver of such provision and
shall not affect the right of such party thereafter to enforce each
provision of this Agreement in accordance with its terms.
Section 13. Severability. If any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
Section 14. Entire Agreement. Except as otherwise expressly set forth herein,
this document with the Purchase Agreement embodies the complete
agreement and understanding among the parties hereto with respect to
the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof
in any way.
Section 15. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by the Company and the Registered Holder
and their respective permitted successors and assigns so long as such
Registered Holders and their respective permitted successors and
assigns hold this Warrant or Warrant Stock.
<PAGE>
Section 16. Notices. Any notice provided for in this Warrant shall be in
writing and shall be either personally delivered, or sent via
facsimile, or mailed first class mail (postage prepaid) or sent by
reputable overnight courier service (charges prepaid) to such Person
as follows:
if to the Company:
LINC Capital, Inc.
303 E. Wacker Drive, Suite 1000
Chicago, Illinois 60601
Fax: 703-834-5718
Attention: Martin E. Zimmerman
with a copy to:
Kirkland & Ellis
320 E. Randolph Drive 58th Floor
Chicago, Illinois 60601
FAX: 312-861-2200
Attention: Carter Emerson, Esq.
if to the Registered Holder:
AT THE PLACE PROVIDED FOR RECEIPT OF NOTICES PROVIDED
BY THE REGISTERED HOLDER IN THE OMNIBUS SIGNATURE PAGE.
or at such address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending
party. Notices will be deemed to have been given hereunder when
delivered personally or sent via facsimile (against receipt therefor),
five business days after deposit in the U.S. mail and one business day
after deposit with a reputable overnight courier service.
Section 12. Amendment and Waiver. Except as otherwise provided herein,
the provisions of this Warrant may be amended and the Company may take
any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the
written consent of the Registered Holder.
Section 13. Descriptive Headings; Governing Law. The descriptive
headings of the several sections of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The
corporation laws of the State of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders.
All other questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by the internal
law of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of Delaware.
Section 15. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
Section 16. Remedies. The Company and the Registered Holders shall be
entitled to enforce their rights under this Agreement specifically to
recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in their favor.
The parties hereto agree and acknowledge that money damages may not be
an adequate remedy for any breach of the provisions of this Agreement
and that the Company or any Registered Holder may in its sole
discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief
(without posting a bond or other security) in order to enforce or
prevent any violation of the provisions of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Stock Purchase Warrant
to be signed and attested by its duly authorized officers under its
corporate seal and to be dated the Date of Issuance hereof.
LINC CAPITAL,INC.
By: ___________________________________
Name: Martin E. Zimmerman
Title: Chairman and CEO
[Corporate Seal]
Attest:
------------------------------------
James Froberg, Secretary
THIS STOCK PURCHASE WARRANT AND REGISTRATION RIGHTS
AGREEMENT WILL BE DEEMED TO HAVE BEEN EXECUTED FOR ALL
PURPOSES BY THE PURCHASER WHEN THE PURCHASER SIGNS THE
OMNIBUS SIGNATURE PAGE PROVIDED WITH THE APPLICABLE
PURCHASER QUESTIONAIRE.
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE OF ISSUANCE:
Purchaser:
By: _______________________________________
<PAGE>
EXERCISE AGREEMENT
Dated: _____________
The undersigned, pursuant to the provisions set forth in the attached Stock
Purchase Warrant (Certificate No. W-____), hereby agrees to subscribe for the
purchase of ______ shares of the Warrant Stock covered by such Stock Purchase
Warrant and makes payment herewith in full therefor at the price per share
provided by such Stock Purchase Warrant. A certificate for such shares of
Warrant Stock shall be made in the name of _______________________, and shall be
mailed to the following address: ___________________________. [A new stock
purchase warrant for the unexercised portion of the rights under the attached
Stock Purchase Warrant shall be issued in the name of _____________________, and
shall be mailed to the following address: - ---------------------------------.]
Name of Registered Holder: ___________________________
Signature: _______________________________________
Name: _______________________________________
Title: _______________________________________
<PAGE>
ASSIGNMENT
Dated: ______________
FOR VALUE RECEIVED, _________________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Stock Purchase
Warrant (Certificate No. W-_____) with respect to the number of shares of the
Warrant Stock covered thereby set forth below, unto:
Names of Assignee
Address___________________________ No. of Shares- -----------------
Name of Assignor: ___________________________________
Signature:___________________________________
Name: ___________________________________
Title: ___________________________________
<PAGE>
Schedule 1
STOCK PURCHASE WARRANT AND REGISTRATION RIGHTS AGREEMENT
Number of Warrant Shares
One Preferred Share
Certificate No. W - _____
Registered Holder ________________________
Number of Shares of Warrant Stock
Effective on the Closing 1,088
January 31, 2000 362
February 29, 2000 363
March 31, 2000 362
April 30, 2000 363
May 31, 2000 362
June 30, 2000 362
July 31, 2000 363
August 31, 2000 362
September 30, 2000 363
<PAGE>
AMENDMENT NO. 10
TO
THIRD AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDMENT, dated as of January 31, 2000 ("Amendment No. 10"), is
by and among LINC CAPITAL, INC. (formerly known as Scientific Leasing Inc.), a
Delaware corporation (the "Borrower"), the banks from time to time party thereto
(each a "Bank" and collectively, the "Banks"), and FLEET BANK, N.A. as agent for
the Banks (in such capacity, together with its successors in such capacity, the
"Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, the Banks and the Agent are parties to a Third
Amended and Restated Loan Agreement dated as of July 22, 1997 (as amended,
supplemented, restated or otherwise modified from time to time, including as
amended hereby, the "Loan Agreement");
WHEREAS, the Borrower has requested certain further amendments to the
Loan Agreement including: (a) an extension of the Commitment Termination Date
until December 31, 2000, (b) a decrease in the amount of the Temporary
Commitment, and (c) amendments to the interest rate provisions, certain
financial covenants, and certain other provisions thereof;
WHEREAS, the Borrower and Connor Capital Corporation, a subsidiary of
the Borrower ("Connor"), wish to clarify certain matters relating to the Loan
Agreement;
WHEREAS, one Bank is terminating its Commitment, one Bank may be
decreasing its Commitment and a new bank may be joining the bank group as a
Bank; and
WHEREAS, capitalized terms used and not otherwise defined herein shall
have the meanings specified in the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and for good and
valuable consideration the receipt of which is hereby acknowledged, the
Borrower, Connor, the Banks and the Agent agree as follows:
Article I. Amendments to Loan Agreement.
This Amendment No. 10 shall be deemed to be an amendment and
supplement to the Loan Agreement, and shall not be construed in any way as a
replacement therefor. All of the terms and provisions of this Amendment No. 10,
including, without limitation, the representations and warranties set forth
herein, are hereby incorporated by reference into the Loan Agreement as if such
terms and provisions were set forth in full therein. The Loan Agreement is
hereby amended, upon the satisfaction of the conditions precedent set forth in
Section 6.1 hereof, in the following respects, with such amendments to become
effective on the date first above written except as otherwise indicated:
1.1 Section 1.1, "Definitions", is amended to add the following new
definitions where alphabetically appropriate:
"Amendment No. 10" - Amendment No. 10 dated as of January 31, 2000, to
the Third Amended and Restated Loan Agreement.
"Charged Off Account" - any Contract or Account Receivable that was
charged off by the Borrower or any Subsidiary after December 31, 1999.
Delinquent Account Receivable" - Account Receivable that is more than
31 days past due in the making of a scheduled payment thereunder.
"Delinquent Contract" - any Contract that is more than 31 days past
due in the making of a scheduled payment thereunder.
<PAGE>
"Delinquency Ratio" - a fraction, expressed as a percentage, the
numerator of which is equal to (a) the sum of (i) the Gross Contract
Balance of Delinquent Contracts and Delinquent Accounts Receivable
owned and managed by the Borrower and its Subsidiaries as of the last
day of any calendar month and (ii) the Gross Contract Balance of all
Charged Off Accounts as of the end of any calendar month less (b) the
sum of (iii) the amount of any increase in the Adjusted Tangible Net
Worth of the Borrower and any of its Subsidiaries occurring after
December 31, 1999 in excess of $5,000,000, which increase results from
the issuance, on terms and conditions satisfactory to the Agent in all
respects, of an equity security or subordinated debt instrument,
having terms satisfactory to the Agent in all respects, of the
Borrower or any Subsidiary of the Borrower and (iv) the aggregate
amount of all Recoveries after December 31, 1999 and the denominator
of which is the sum of the Gross Contract Balance of all Contracts and
Accounts Receivable and the Gross Contract Balance of all Charged Off
Accounts owned or managed by the Borrower and its Subsidiaries as of
the end of such calendar month.
"EBITDA" - for any period, as to any Person, on a consolidated basis,
the excess of (a) without duplication, the sum of (i) Net Income for
such period plus (ii) amortization and depreciation for such period
plus (iii) interest on all Indebtedness for such period plus (iv)
taxes accrued for such period over (b) the net amount of items which
are classified as extraordinary items for such period; as to all of
the foregoing, as determined in accordance with GAAP, consistently
applied.
"Gross Contract Balances" - the total balance of the scheduled
payments and Residual Values remaining due under the terms of any
Contract or Account Receivable.
"Leverage Ratio" - With respect to LCI and its Subsidiaries on a
consolidated basis, for any period, the ratio of (a) Total Recourse
Liabilities for such period to (b) Adjusted Tangible Net Worth for
such period.
"Net Income" - for any period, the net income (or loss) of the
Borrower and its Subsidiaries on a consolidated basis after provision
for or benefit from income and franchise taxes determined in
accordance with GAAP.
"Net Preferred Offering Proceeds" - with respect to the Preferred
Offering, the aggregate amount of cash received by LCI in connection
with the Preferred Offering (whether as initial consideration or
through payment or disposition of deferred consideration) after
deducting therefrom only (without duplication) (a) reasonable and
customary brokerage commissions, underwriting fees and discounts,
legal fees, finder's fees and other direct expenses actually paid, and
(b) the amount of taxes payable in connection with or as a result of
such transaction.
"Preferred Offering" - the proposed offering for sale by LCI of 300
shares of its Series A 8% Redeemable Preferred Stock having a par
value of $0.01 per share, as more fully described on Schedule A
annexed hereto.
"Recoveries" - the proceeds from any Contract or Account Receivable or
the related collateral recovered after such Contract or Account
Receivable was charged off in accordance with the Borrower's charge
off procedures as in effect on the date of Amendment No. 10.
1.2 The definition of "Adjusted Tangible Net Worth" in Section 1.1 is
amended to add the parenthetical "(including 100% of the Net Preferred Offering
Proceeds)" immediately before the proviso included therein.
1.3 The definition of "Applicable Margin" in Section 1.1 is amended to
replace the grid appearing therein with the following:
Applicable Margin Applicable Margin
for for
Leverage Ratio Prime Rate Loans Eurodollar Loans
less than 3.50:1 .15% 1.50%
3.50:1 or greater .25% 1.75%
1.4 The definition of "Commitment Termination Date" in Section 1.1 is
amended to replace the date "January 31, 2000" with the date "December 31,
2000".
1.5 The definition of "Temporary Commitment" in Section 1.1 is amended
to replace the amount "Fifteen Million Dollars ($15,000,000)" with the amount
"Seven Million Five Hundred Thousand Dollars ($7,500,000)".
<PAGE>
1.6 The definition of "Borrowing Base" in Section 1.2 shall be amended
to add a new clause (v) to subparagraph "(c)", "Residual Value Clause" to read
as follows:
and (v) in no event shall the Post-Computation Amount
included under this clause (c) in respect of Residual Values owned by
either LCI or a Foreign Leasing Subsidiary exceed Six Million Dollars
($6,000,000) in the aggregate;
1.7 Section 1.2(2), "Certain Concentration Limits", is amended to add
the words "relating to Emerging Growth Companies" after the words "Unfunded
Eligible Contracts" in the last paragraph thereof.
1.8 Section 2.4, "Fees", is amended to add a new subsection (d) to
read:
(d) In the event that the Obligations shall have been repaid
in full and the Commitments terminated by the Borrowers at any time
prior to June 30, 2000, the Borrowers shall pay to the Agent for the
ratable benefit of the Banks a fee equal to 0.15% (fifteen basis
points) of each Bank's Commitment as of the date of such repayment and
termination, which fee shall be in addition to any other fees
otherwise due and payable under the Loan Documents.
1.9 Article 3, "Representations and Warranties", is amended to add a
new Section 3.31 to read as follows:
Section 3.31 Connor Assets.
As of the date of Amendment No 10, Connor Capital
Corporation, a wholly-owned Subsidiary of LCI, owns no properties or
assets of any nature whatsoever, whether tangible or intangible,
except as set forth on Schedule C annexed to such Amendment No. 10.
1.10 Section 6.9, "Financial Covenants", is amended (a) to restate
subsection "(b)" to read
(b) With respect to LCI and its Subsidiaries on a consolidated basis,
at all times maintain a maximum Leverage Ratio not in excess of 4:1;
and (b) to include a new subsection "(c)" to read as follows:
(c) With respect to LCI and its Subsidiaries, on a consolidated basis,
have a ratio as at the end of each fiscal quarter set forth below for
the three month period then ended of (i) EBITDA for such quarter to
(ii) the sum of all interest on Indebtedness and all cash dividends
paid by LCI and its Subsidiaries during such quarter at least equal to
the amount set forth below opposite such quarter:
Quarter ended Minimum Ratio
December 31, 1999 1.10:1
March 31, 2000 1.10:1
June 30, 2000 1.25:1
September 30, 2000 1.25:1
December 31, 2000 1.30:1
and to add a new subsection "(e)" to read as follows:
(e) with respect to LCI and its Subsidiaries, on a consolidated basis,
have an average Delinquency Ratio as of the last day of each month for
the three month period then ended, commencing as of March 31, 2000, of
not more than seven percent (7%). The Borrower shall provide to the
Agent such information and reports as the Agent may request (in
addition to those required to be provided under Section 5.11 of this
Agreement) to demonstrate compliance with this provision.
1.11 Article 6, "Affirmative Covenants", is amended to add a new
Section 6.23 to read as follows:
Section 6.23 Net Income
The Borrower and its Subsidiaries, on a consolidated basis,
shall have Net Income for fiscal year ending December 31, 1999 (as
shown on the Borrower's audited Financial Statements for such period)
of not less than negative One Million Dollars ($1,000,000).
1.12 Section 7.9, "Investments", is amended (a) to restate subsection
"(d)" to read as follows:
(d) Investments in the form of secured or unsecured loans to
officers of any of the Borrowers but only to the extent outstanding on
the date of Amendment No. 10;
and (b) to replace the word "; and" at the end of subsection "f" with
a period and to delete subsection "(g)".
<PAGE>
1.13. Section 7.22, "Certain Inactive Subsidiaries", is amended to
read as follows:
Section 7.22 Certain Inactive Subsidiaries.
Permit or suffer any Subsidiary (including Connor Capital
Corporation) other than LINC Capital, Ltd., LINC Receivables
Corporation, LINC Receivables 1999 Corporation, LINC Equipment Finance
Corporation, LINC Equipment Receivables One LLC, and such other
financing vehicle subsidiaries as the Agent may approve in writing, to
engage in any business activities or to acquire any assets (other than
immaterial assets not exceeding $250,000 in the aggregate in market
value) or have any Investments or incur any Indebtedness or
liabilities except in order to maintain corporate existence and except
as otherwise in existence on the date of this Agreement as set forth
on Exhibit D or on Exhibit T annexed hereto, and, with respect to
Connor Capital Corporation, Schedule C to Amendment No. 10.
1.14 Section 8.2, "Covenants", is amended to read as follows"
Section 8.2 Covenants
Failure to perform or observe any of the agreements of any
of the Borrowers or the subsidiaries contained in Section 6.9 or 6.17
or Article 7 hereof; provided however if such failure results from
failure to observe Section 6.9(e), such failure shall not be an Event
of Default thereunder if within sixty (60) days following such
failure, the Adjusted Tangible Net Worth of the Borrower and its
Subsidiaries is increased as a result of the issuance, on terms and
conditions satisfactory to the Agent in all respect, of an equity
security or subordinated debt instrument, having terms satisfactory to
the Agent in all respects, by the Borrower or any Subsidiary of the
Borrower in an amount sufficient to remedy such failure.
1.15. Clause (a) (ii) of Section 8.9, "Ownership of Stock of the
Borrowers" is amended to read as follows:
(ii) Martin Zimmerman, Allen Palles and Robert Laing in the
aggregate shall, without the prior written consent of the Banks, cease
to beneficially own and control at least thirty-five percent (35%) of
the voting power of the voting stock (having ordinary voting rights
for the election of directors) of LCI, or Martin Zimmerman
individually shall, without the prior written consent of the Banks,
cease beneficially to own and control at least fifteen percent (15%)
of the voting power of the voting stock (having ordinary voting rights
for the election of directors of LCI); except that, upon at least ten
(10) days' prior written notice to the Agent, Martin Zimmerman or
Allen Palles or Robert Laing may transfer shares of LCI that are
otherwise subject to the minimum ownership and control restrictions
set forth in this subsection (ii) to his children or spouse or trusts
for the benefit of any of them so long as (A) Martin E. Zimmerman
continues at all times to have voting control with respect to such
stock of LCI; (B) prior to any such transfer to children, spouse, or
trusts, any such aforementioned transferee of Martin Zimmerman and
Allen Palles and Robert Laing agrees in writing not to make any
further transfers and to be bound by the provisions and prohibitions
set forth in this Section 8.9(b)(ii) and to assume the obligations of
the transferor thereunder, and (C) a legend is placed on any stock
certificates transferred to any children, spouse or trusts to such
effect.
1.16 Section 8.13, "Stock Ownership" is amended to read as follows:
Section 8.13 Stock Ownership and Change of Control.
(a) Without the prior written consent of the Banks, any
Person (other than Allen Palles or Martin Zimmerman) shall acquire
(together with its Affiliates) ownership or control of shares of
capital stock of LCI having forty percent (40%) or more of the
ordinary voting power to elect LCI's Board of Directors; or
(b) During any period of twelve (12) consecutive calendar
months, individuals who at the beginning of such period constituted
LCI's board of directors (together with any new directors whose
election by LCI's board of directors or whose nomination for election
by LCI's stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason other than death or
disability to constitute a majority of the directors then in office.
1.17.Article 8, "Events of Default" is amended to add a new Section
8.14 to read as follows:
<PAGE>
Section 8.14 Non-Renewal of Liquidity Facility.
The facility made available pursuant to the LINC Liquidity
Agreement dated as of May 5, 1999 by and among Blue Keel Funding LLC,
Fleet Bank N.A. as Agent and certain banks party thereto, shall
terminate or fail to be renewed for any reason, and shall not be
replaced, at the time of such termination or non-renewal, by a
replacement facility satisfactory to the Agent in all respects.
Article II. Deletion of Connor Capital Corporation as a Borrower.
2.1 Notwithstanding the references to "Connor Capital Corporation" or
"Connor" in Amendment No. 9, Connor (a) shall not be deemed to be a
party to Amendment No. 9 or to the Loan Agreement, (b) is not a
"Borrower" under the Loan Agreement, and (c) has no rights under the
Loan Agreement. Accordingly, all references to Connor in Amendment No.
9 shall be void and have no force or effect, and the Borrower shall
execute and deliver to each of the Banks (other than First Union
National Bank (formerly known As Corestates Bank, N.A., and
hereinafter call "First Union") as provided in Article III hereof) a
Note (each a "New Note", and collectively, the "New Notes")
substantially in the form attached to the Loan Agreement as Exhibit
B-1 in replacement of the promissory notes dated November 1, 1999,
executed by each of the Borrower and Connor (each an "Old Note", and
collectively, the Old Notes"), whereupon each of the Banks (other than
First Union) shall mark its Old Note "replaced by Replacement Note"
and return it to the Borrower.
2.2 Each of the Borrower and Connor hereby represents and warrants to
the Banks that Connor has not borrowed any funds or incurred any
obligations under the Loan Agreement since the date of Amendment No.
9, and that such representation and warranty shall be deemed to be a
representation and warranty made in the Loan Agreement for purposes of
Section 8.5 of the Loan Agreement. Nothing set forth in this Article
II shall affect the rights and obligations of LCI as the Borrower
under the Loan Agreement or Amendment No. 9.
Article III. Resignation of Bank; Possible Addition of New Bank and Decrease of
Existing Commitment of Bank; Decrease in Temporary Commitment.
3.1 The parties hereto hereby acknowledge and confirm that on the date
hereof, (a) the Loans owing to First Union together with all accrued
interest thereon and any other sums due and owing to First Union under
the Loan Agreement and the other Loan Documents, shall be repaid, or
paid, as the case may be, in full by the Borrower, and First Union
shall thereupon cease to be a Bank under the Loan Agreement, and shall
cease to have any rights or obligations under the Loan Agreement or
under any other Loan Documents except such rights as expressly survive
the termination of the Loan Agreement and the other Loan Documents,
and (b) the Temporary Commitment shall be reduced from Fifteen Million
Dollars ($15,000,000) to Seven Million Five Hundred Thousand Dollars
($7,500,000).
3.2 After taking into effect the resignation of First Union and the
reduction of the Temporary Commitment, the Total Commitment of the
Banks shall be decreased from One Hundred Seventeen Million Dollars
($117,000,000) to One Hundred Seven Million Dollars ($107,000,000).
The amount of each Bank's Commitment as a result of such decrease
shall be as set forth under the heading "New Commitment" set forth in
Schedule B annexed to this Amendment No. 10.
3.3 In order to effect the foregoing, the Banks shall, on the date
hereof, make appropriate adjustments among themselves in order that
the amount of Loans outstanding to the Borrower from any Bank under
the Loan Agreement is, in principal amount (as of the date hereof), in
the same proportion to the outstanding aggregate principal amount of
all Loans that such Bank's Commitment bears to the aggregate of all
the Banks' Commitments, after giving effect to the resignation of
First Union from the Bank group and the reduction of the Temporary
Commitment. The Borrower and each of the other Loan Parties agrees and
consents to the terms of this Section 3.3, and the Borrower confirms
and agrees that it shall be liable to pay any and all amounts of the
type referred to in Section 2.20 of the Loan Agreement which may arise
in connection with this Amendment, the resignation of First Union from
the Bank group and/or the reduction of the Temporary Commitment.
3.4 Upon First Union 's receipt of an amount equal to its outstanding
Loans and accrued interest, First Union shall return to the Borrower
the promissory note made payable by the Borrower and Connor to First
Union marked "Discharged by Substitution of Notes in favor of other
Banks under Loan Agreement".
<PAGE>
3.5 In order to evidence the Temporary Loans by the Temporary Lender
under the Temporary Commitment as amended hereby, the Borrower shall
execute and deliver to the Temporary Lender a new note substantially
in the form attached to the Loan Agreement as Exhibit B-2 reflecting
the Temporary Commitment amount as amended hereby, dated the date
hereof and otherwise duly completed (hereinafter, the "New Temporary
Note"). Upon execution and delivery by the Borrower of the New
Temporary Note, the Agent shall cause the Temporary Note being
replaced by the New Temporary Note to be marked "Replaced by New
Temporary Note", and returned to the Borrower.
3.6 The parties acknowledge and agree that Mercantile/First Star Bank
("Mercantile") may become a member of the Bank group; provided,
however, that (a) Mercantile's commitment under the Loan Agreement
shall not exceed Fifteen Million Dollars ($15,000,000), (b) the
aggregate Commitment of all of the Banks shall not exceed One Hundred
Seven Million Dollars ($107,000,00), and accordingly, the Commitment
of Fleet Bank N.A. ("Fleet") may be reduced in such amount as shall be
necessary to cause the aggregate Commitments of all of the Banks to
not exceed such limitation, and (c) each of the following conditions
precedent shall have been satisfied as determined by the Agent no
later than such date as shall be 15 Business Days after the date
hereof:
(i) Mercantile shall have delivered to the Agent an
undertaking pursuant to which it shall (1) confirm that it has
received a copy of the Loan Agreement, together with copies of such
financial statements and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
become a Bank under the Loan Agreement, (2) agree that it will
independently and without reliance upon the Agent or any Bank other
than itself, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decision
in taking or not taking action under the Loan Agreement, (3)
acknowledge that neither the Agent nor any Bank makes any
representation or warranty nor does the Agent or any Bank assume any
responsibility with respect to (A) any statements, warranties or
representations made in or in connection with the Loan Agreement or
any other instrument or document furnished pursuant thereto or (B) the
financial condition of the Borrower or any other Loan Party, or the
performance or observance by the Borrower or any other Loan Party of
any of its Obligations under the Loan Agreement or any other
instrument or document furnished pursuant thereto, (4) appoint and
authorize the Agent to take such action as its agent on its behalf and
to exercise such powers under the Loan Agreement as are delegated to
the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, and (5) agree that it will perform in
accordance with their terms all of the obligations which, by the terms
of the Loan Agreement, are required to be performed by it as a Bank;
(ii) Mercantile shall have delivered to the Agent a
signature page to the Loan Agreement which shall evidence Mercantile's
agreement to be bound by the terms of the Loan Agreement, and all
other Loan Documents, and which signature page shall be attached to
the Loan Agreement behind those of the existing members of the Bank
group;
(iii) The Borrower shall have executed and delivered to the
Agent a promissory note in substantially the form of Exhibit B-1 to
the Loan Agreement payable to the order of (1) Mercantile (the
"Mercantile Note") in the face amount of Mercantile's Commitment under
the Loan Agreement which Commitment shall not exceed Fifteen Million
Dollars ($15,000,000), and (2) if necessary, Fleet (the "Fleet Note",
and together with the Mercantile Note, the "Contingent Notes") in the
face amount of Fleet's Commitment under the Loan Agreement as reduced
by the addition of Mercantile as a Bank;
(iv) The Agent shall have delivered to each of the Banks a
revised schedule reflecting the Banks' respective Commitments taking
into account the addition of Mercantile, and if appropriate, the
decrease in Fleet's Commitment; and
(v) The Borrower shall have paid to Mercantile a fee in an
amount to be agreed by the Borrower and Mercantile.
<PAGE>
The date upon which the forgoing conditions precedent shall have been
satisfied shall be the "Satisfaction Date". Promptly after the
Satisfaction Date, the Agent shall send written notice thereof to each
of the Banks, and effective three Business Days after delivery of such
notice, (a) Mercantile shall be deemed to have become a "Bank" under
the Loan Agreement, (b) the Agent shall deliver the Mercantile Note
and the Fleet Note as directed by Mercantile and Fleet, respectively,
and (c) the Banks shall make appropriate adjustments among themselves
in order that the amount of Loans outstanding to the Borrower from any
Bank under the Loan Agreement is, in principal amount, in the same
proportion to the outstanding aggregate principal amount of all Loans
that such Bank's Commitment bears to the aggregate Commitments of all
of the Banks, after giving effect to the addition of Mercantile as a
Bank. The Borrower and each of the other Loan Parties agrees and
consents to the terms of this Section 3.6, and the Borrower confirms
and agrees that it shall be liable to pay any and all amounts of the
type referred to in Section 2.20 of the Loan Agreement which may arise
in connection with this Amendment and the addition of Mercantile to
the Bank group. . Article IV. Consent to Preferred Offering.
Subject to the satisfaction by the Borrower of the conditions
precedent set forth in Article VI hereof, the Banks hereby consent to
the Borrower's consummation of the Preferred Offering as the terms of
such Offering are described in Schedule A annexed hereto
notwithstanding any provision in the Loan Agreement which may
otherwise prohibit the consummation by the Borrower of such
transactions and waives any Default or Event of Default under the Loan
Agreement which would otherwise result solely from the consummation by
the Borrower of such transactions, such waiver to be granted only for
the specific circumstances provided for herein.
Article V. Representations and Warranties.
5.1 The Borrower represents and warrants to the Agent and the Banks,
as of the date hereof, as follows:
(a) The Borrower is duly organized and validly existing
under the laws of its state of organization and has the power to own
its assets and to transact the business in which it is presently
engaged and in which it proposes to be engaged.
(b) The Borrower is in good standing in its state of
incorporation and in each state in which it is qualified to do
business. There are no jurisdictions in which the character of the
properties owned by the Borrower or in which the transaction of the
business of the Borrower as now conducted requires or will require the
Borrower to qualify to do business, except jurisdictions in which the
failure to so qualify would not have a material adverse effect on the
Collateral in the Borrowing Base or on the business, operations,
financial condition, or properties of the Borrower.
(c) The Borrower has the power (a) to execute and deliver
this Amendment No. 10, each of the New Notes (which New Notes shall
hereinafter include the New Temporary Note), and the Contingent Notes,
the other Loan Documents contemplated hereby and each document,
agreement instrument or other writing to be executed and delivered by
the Borrower in connection with the Preferred Offering (collectively,
the "Offering Documents"), and to perform the Loan Agreement as
amended hereby, the other Loan Documents contemplated hereby, and each
of the Offering Documents, and (b) to consummate the Preferred
Offering in accordance with the terms and conditions described on
Schedule A annexed hereto and the Offering Documents. No consent or
approval of any Person (including, without limitation, any stockholder
of the Borrower), no consent or approval of any landlord or mortgagee,
no waiver of any Lien or right of distraint or other similar right and
no consent, license, approval, authorization or declaration of any
governmental authority, bureau or agency, is or will be required in
connection with (a) the execution or delivery by the Borrower of this
Amendment No. 10, each of the New Notes and the Contingent Notes, any
of the other Loan Documents contemplated hereby, or any of the
Offering Documents or (b) the consummation by the Borrower of the
Preferred Offering.
(d) This Amendment No. 10, each of the New Notes and the
Contingent Notes, each of the other Loan Documents contemplated
hereby, and Offering Document has been or will be duly executed and
delivered by the Borrower party thereto and each constitutes or will
constitute the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms, except that the remedy of
specific performance and other equitable remedies are subject to
judicial discretion and except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or
other similar laws, now or hereafter in effect, relating to or
affecting the enforcement of creditors' rights generally.
<PAGE>
(e) The execution and delivery by the Borrower of this
Amendment No. 10, each of the New Notes and the Contingent Notes, each
of the other Loan Documents contemplated hereby and each of the
Offering Documents, and the performance by the Borrower under each of
the aforementioned documents, and the consummation by the Borrower of
the Preferred Offering, does not and will not violate any provision of
law (including, without limitation, the Williams Act, Sections 13 and
14 of the Securities and Exchange Act of 1934, and the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and Regulations
U, G and X of the Board of Governors of the Federal Reserve System and
the rules and regulations promulgated thereunder) and does not and
will not conflict with or result in a breach of any order, writ,
injunction, ordinance, resolution, decree, or other similar document
or instrument of any court or governmental authority, bureau or
agency, domestic or foreign, or any certificate of incorporation or
by-laws of or applicable to the Borrower or create (with or without
the giving of notice or lapse of time, or both) a default under or
breach of any agreement, instrument, document, bond, note or indenture
to which the Borrower is a party, or by which it is bound or any of
its properties or assets is affected, or result in the imposition of
any Lien of any nature whatsoever upon any of the properties or assets
owned by or used in connection with the business of the Borrower or
any other Loan Party, except for the Liens created and granted
pursuant to the Security Documents or otherwise permitted under the
Loan Agreement.
(f) All of the properties and assets owned by the Borrower
and each of the Subsidiaries and all of the properties and assets
owned by any other Loan Party which properties or assets are covered
by a Security Document executed by such Loan Party are owned by each
of them, respectively, free and clear of any Lien of any nature
whatsoever, except as provided for in the Security Documents and as
permitted by Section 7.2 of the Loan Agreement. The Liens which have
been created and granted by the Security Documents constitute valid
perfected Liens on the properties and assets covered by such Security
Documents, subject to no prior or equal Lien except as permitted by
Section 7.2 of the Loan Agreement.
(g) The Liens granted pursuant to the Security Documents
secure, without limitation, the Obligations under the Loan Agreement
as amended by this Amendment No. 10, whether or not so stated in the
Security Documents. The terms "Obligations" as used in the Security
Documents (or any other term used therein to refer to the
Indebtedness, liabilities and obligations of the Borrower to the Banks
or the Agent) include, without limitation, Indebtedness, liabilities
and obligations to the Banks and the Agent under the Loan Agreement as
amended by this Amendment No. 10.
Article VI. Conditions.
6.1 Conditions. The amendments and consent set forth in Articles I,
II, III, and IV above shall be subject to the fulfillment by the
Borrower, in a manner satisfactory to the Agent, of all of the
conditions precedent set forth in this Section 6.1:
(a) The Borrower and each of the Banks shall have executed
and delivered to the Agent this Amendment No. 10, and the Borrower
shall have executed and delivered to each Bank its respective New Note
or Notes.
(b) (i) The representations and warranties contained in
Article V of this Amendment No. 10 and in each other agreement,
instrument, certificate or other writing delivered to the Agent or any
Bank pursuant hereto or to the Loan Agreement shall be correct on and
as of the date hereof (after giving effect to the waivers included
herein) as though made on and as of such date, and (ii)-no Default or
Event of Default shall have occurred and be continuing on the date
hereof; and execution and delivery of this Amendment No. 10 shall
constitute confirmation by the Borrower of the truth and accuracy and
satisfaction of the conditions of this Section 6.1.
(c) The Agent shall have received copies of the resolutions
of the board of directors of the Borrower, certified as true, correct
and complete by an officer thereof, authorizing the execution and
delivery of this Amendment No. 10, the New Notes, the Contingent Notes
and the Offering Documents.
(d) The Agent shall have received in form and substance
satisfactory to the Agent a certificate of an authorized officer of
each of the Borrower certifying the names and true signatures of the
officer authorized to sign this Amendment No. 10 and each of the other
documents contemplated hereby together with evidence of the incumbency
of such authorized officer.
<PAGE>
(e) The Borrower shall have paid to each Bank, in addition
to any other fees otherwise due and payable under the Loan Documents,
an amendment fee in consideration of the agreement of the Banks to the
terms hereof in an amount equal to 0.20% (twenty basis points) of such
Bank's Commitment as of the date hereof.
(f) The Borrower shall have received Net Offering Proceeds
at least equal to Five Million Dollars ($5,000,000).
(g) The Agent shall have received an opinion, in form and
substance satisfactory to the Agent, of Allen P. Palles, Esq. or James
Froberg, Esq., counsel to the Borrower as to such matters relating to
this Amendment No. 10 as the Agent may reasonably request.
(h) The Borrower shall have (a) paid all fees and expenses
of counsel to the Agent incurred in connection herewith, and (b)
otherwise complied in all respects with the terms hereof and of any
other agreement, document, instrument or other writing to be delivered
by the Borrower in connection herewith.
(i) All legal matters incident to this Amendment No. 10
shall be reasonably satisfactory to the Agent and counsel to the
Agent.
Article VII. Miscellaneous.
7.1 The Loan Agreement and the other agreements to which the Borrower
is a party delivered in connection herewith or with the Loan Agreement
are, and shall continue to be, in full force and effect, and are
hereby ratified and confirmed in all respects, except that on and
after the effectiveness of this Amendment No. 10 (a) all references in
the Loan Agreement to "this Agreement", "hereto", "hereof",
"hereunder" or words of like import referring to the Loan Agreement
shall mean the Loan Agreement as amended hereby, (b) all references in
the Loan Agreement, the Security Documents or any other agreement,
instrument or document executed and delivered in connection therewith
to (i) the "Loan Agreement", "thereto", "thereof", "thereunder" or
words of like import referring to the Loan Agreement shall mean the
Loan Agreement as amended hereby, and (ii) the "Loans" (or any other
term or terms used in any of such documents to describe or refer to
Loans made by the Banks to the Borrower under the Loan Agreement)
shall be deemed to refer to Loans made by the Banks to the Borrower
pursuant to the Loan Agreement as amended hereby.
7.2 The Loan Agreement, the Security Documents and all agreements,
instruments and documents executed and delivered in connection with
any of the foregoing shall each be deemed amended hereby to the extent
necessary, if any, to give effect to the provisions of this Amendment
No. 10. Except as so amended hereby, the Loan Agreement and the other
Loan Documents shall remain in full force and effect in accordance
with their respective terms. The execution and delivery of this
Amendment No. 10 by the Borrower, the Banks and the Agent shall not
waive or be deemed to waive any default which has occurred or which
may be occurring in respect of the Loan Agreement, and each of the
waivers granted hereunder shall be effective only in the specific
instance and for the purpose for which given. All of the terms and
provisions of this Amendment No. 10 are hereby incorporated by
reference into the Loan Agreement as if such terms and provisions were
set forth in full therein.
7.3 The miscellaneous provisions under Article 10 of the Loan
Agreement, together with the definitions of all terms used therein,
and all other Sections of the Loan Agreement to which such Sections
refer are hereby incorporated by reference as if the provisions
thereof were set forth in full herein.
7.4 This Amendment No. 10 may be executed in counterparts by the
parties hereto, and each such counterpart shall be considered an
original, and all such counterparts shall constitute one and the same
instrument. Signatures transmitted by facsimile shall be deemed as
effective as manually executed originals.
7.5 THIS AMENDMENT NO. 10 SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 10 to Third Amended and Restated Loan Agreement to be
duly executed as of the date first above written.
LINC CAPITAL, INC. (formerly known
as SCIENTIFIC LEASING, INC.),
as Borrower
By_________________________________
Name:
Title:
FLEET BANK, N.A. (formerly NATWEST
BANK N.A.) as Agent and as a Bank
By_________________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By_________________________________
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION
(formerly known as LASALLE NATIONAL BANK)
By_________________________________
Name:
Title:
[Signature Page to Amendment No. 10 Under
LINC Capital Third Amended and Restated Loan Agreement]
<PAGE>
BANK ONE, NA (formerly known as THE FIRST
NATIONAL BANK OF CHICAGO)
By_________________________________
Name:
Title:
EUROPEAN AMERICAN BANK
By_____________________________
Name:
Title:
KEY BANK NATIONAL ASSOCIATION
By: _______________________________
Name:
Title:
NATIONAL CITY BANK
By: _________________________________
Name:
Title:
The undersigned executes
this Amendment No. 10 solely
for the purpose of agreeing
to the terms and conditions of
Article II hereof.
CONNOR CAPITAL CORPORATION,
By_________________________________
Name:
Title:
<PAGE>
[Signature Page to Amendment No. 10 Under
LINC Capital Third Amended and Restated Loan Agreement]
<PAGE>
Schedule A
Terms of Preferred Stock Offering
on file with Agent
Schedule B
Bank New Commitment
Fleet Bank, N.A. $29,000,000
Union Bank of California, N.A. $10,000,000
First Union National Bank $0
LaSalleBank National Association $15,000,000
Bank One NA $10,000,000
European American Bank $ 8,000,000
Key Bank National Association $18,000,000
National City Bank $17,000,000
Total $107,000,000
Bank Temporary Commitment
Fleet Bank N.A. $7,500,000
<PAGE>
Schedule C
Assets of Connor Capital Corporation
none
<PAGE>
Exhibit 99.1
COMPANY: FINANCIAL RELATIONS
BOARD:
Martin E. Zimmerman Eileen O'Brien Marilyn Windsor Alicia De Costa
Chairman & CEO SVP, Investor Relations General Inquiries Analyst Inquiries
312-946-1000 312-946-1000 x7478 312-640-6692 312-640-6780
FOR IMMEDIATE RELEASE
Tuesday, February 1, 2000
LINC CAPITAL ANNOUNCES PLACEMENT OF PREFERRED STOCK
AND RENEWAL OF CREDIT FACILITY
CHICAGO, February 1, 2000-LINC Capital, Inc. (Nasdaq: LNCC), a specialty finance
company, announced the initial closing of $5,625,000 of 8 percent redeemable
preferred stock, as well as renewal of the company's credit facility.
The company announced that it has completed an initial closing of the private
placement for up to $7.5 million in Series A 8 percent cumulative redeemable
preferred stock with detachable warrants. The initial closing was for
$5,625,000. Warrants to purchase 326,250 shares of the company's common stock at
$5.49 per share were issued by the company to investors. Additional warrants for
up to 652,500 shares may be issued on a pro rata basis through September 30,
2000, if the preferred shares are not redeemed as a result of a change of
control or a refinancing prior to that time. Approximately 45 percent of the
investment in the preferred stock was made by the company's management and the
balance by unrelated private and institutional investors.
LINC also announced that it had renewed its revolving credit facility until
December 31, 2000 for $107 million. In addition to its revolving credit
facility, the company has a $289 million commercial paper conduit facility that
also provides funding for its lease originations. At December 31, 1999, $155.8
million of the total available facilities were unused.
Martin E. Zimmerman, chairman and chief executive officer, commented, "We are
pleased to announce the initial closing of a preferred stock placement and the
renewal of our credit facility for $107 million. As previously announced, we are
continuing to work with U. S. Bancorp Piper Jaffray to study strategic
alternatives to enhance future shareholder value and continue to be optimistic
about the outcome of this process."
LINC Capital, Inc. provides equipment leasing and other asset based financing to
equipment vendors and growth companies specializing in the telecom/computer
networking, information technology and healthcare markets. It also distributes,
rents and leases analytical instruments.
Certain statements in this news release constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance of or achievement
of LINC Capital, Inc. to be materially different from any future results,
performance or achievement expressed or implied in such forward-looking
statements.
Visit the LINC Capital website at www.linccapital.com
