<PAGE> 1
As filed with the Securities and Exchange Commission on December 29, 1998
REGISTRATION NO.333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
F.Y.I. INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 75-2560895
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
3232 MCKINNEY AVENUE
SUITE 900
DALLAS, TEXAS 75204
(214) 953-7555
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
WARRANTS ISSUED TO EMPLOYEES
(Full title of the Plan)
ED H. BOWMAN, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
F.Y.I. INCORPORATED
3232 MCKINNEY AVENUE, SUITE 900
(214) 953-7555
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
COPIES TO:
CHRISTOPHER T. JENSEN, ESQ. MARGOT T. LEBENBERG, ESQ.
MORGAN, LEWIS & BOCKIUS LLP F.Y.I. INCORPORATED
101 PARK AVENUE 3232 MCKINNEY AVENUE
NEW YORK, NEW YORK 10178 SUITE 900
(212) 309-6000 DALLAS, TEXAS 75204
(214) 953-7555
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING AGGREGATE OFFERING REGISTRATION FEE
BE REGISTERED REGISTERED (1) PRICE PER SHARE PRICE (3)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per 457,600 $28.625(2) $13,098,800 $3,641.47
share
</TABLE>
(1) Pursuant to Rule 416(a), the number of shares being registered shall be
adjusted to include any additional shares which may become issuable as a
result of stock splits, stock dividends or similar transactions in
accordance with the anti-dilution provisions of the warrants granted to the
warrantholder.
(2) Calculated pursuant to Rule 457(h) for the purpose of calculating the
registration fee, based upon the price at which outstanding warrants may be
exercised.
(3) Calculated pursuant to Section 6(b) of the Securities Act of 1933 as
follows: Proposed Maximum Offering Price Per Share multiplied by .000278.
<PAGE> 3
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended, and the Introductory
Note to Part I of Form S-8.
I-1
<PAGE> 4
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously filed with the Securities and Exchange
Commission (the "Commission") by F.Y.I. Incorporated, a Delaware corporation
(the "Company"), are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, filed with the Commission on March 11, 1998.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998, filed with the Commission on May 11, 1998.
(c) The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1998, filed with the Commission on August 10, 1998.
(d) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998, filed with the Commission on November 13, 1998.
(e) The Company's Current Report on Form 8-K (dated March 17, 1998), filed
with the Commission on March 20, 1998.
(f) The description of the Common Stock, registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), contained in the
Company's Registration Statement on Form S-1 (Reg. No.33-98608) and
incorporated by reference in the Company's Registration Statement on Form 8-A
(File No.0-27444), including any amendments or reports filed for the purpose of
updating any such description.
In addition, all reports and other documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such reports and documents.
Any statement contained herein, or in a document, all or a portion of which
is incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-1
<PAGE> 5
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Amended and Restated Bylaws provide that the Company shall, to
the fullest extent permitted by Section 145 of the General Corporation Law of
the State of Delaware, as amended from time to time (the "DGCL"), indemnify its
officers and directors as permitted pursuant thereto.
Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In an action by or in the right of
the corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interest of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Article Seven of the Company's Amended and Restated Certificate of
Incorporation provides that the Company's directors will not be personally
liable to the Company or its stockholders for monetary damages resulting from
breaches of their fiduciary duty as directors except (a) for any breach of the
duty of loyalty to the Company or its stockholders, (b) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (c) under Section 174 of the DGCL, which makes directors liable for
unlawful dividends or unlawful stock repurchases or redemptions or (d) for
transactions from which directors derive improper personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (Registration No.
33-98608)).
4.2 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed with the
Commission on August 8, 1997).
4.3 Warrant issued to Mary D. Baker, dated October 27, 1998.
4.4 Warrant issued to Sharon Kelly, dated October 27, 1998.
4.5 Warrant issued to C. Stuart Haworth, dated October 27, 1998.
4.6 Warrant issued to Janet Thornton, dated October 27, 1998.
4.7 Warrant issued to Stephen D. Swartz, dated October 27, 1998.
4.8 Warrant issued to Hossein Borhani, dated October 27, 1998.
</TABLE>
II-2
<PAGE> 6
<TABLE>
<S> <C>
4.9 Warrant issued to George Desloge, dated October 27, 1998.
4.10 Warrant issued to Paul White, dated October 27, 1998.
4.11 Warrant issued to Kaye Hall, dated October 27, 1998.
5 Opinion of Morgan, Lewis & Bockius LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit
5).
24 Powers of Attorney (included on signature pages hereof).
</TABLE>
II-3
<PAGE> 7
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) of the Securities Act if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Company pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Dallas, State of Texas, on December 29, 1998.
F.Y.I. INCORPORATED
BY: /S/ ED H. BOWMAN, JR.
-----------------------------------------
ED H. BOWMAN, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POWERS OF ATTORNEY
Each person whose signature appears below hereby authorizes, appoints and
constitutes Ed H. Bowman, Jr. and Margot T. Lebenberg each of them singly, his
true and lawful attorneys-in-fact with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign and file any and all amendments to this report with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and he hereby ratifies and confirms all that
said attorneys-in-fact or any of them, or their substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas C. Walker Chairman of the Board and December 29, 1998
- ---------------------------- Chief Development Officer
Thomas C. Walker
/s/ Ed H. Bowman, Jr. Director, President and Chief December 29, 1998
- ---------------------------- Executive Officer
Ed H. Bowman, Jr. (Principal Executive Officer)
/s/ David Lowenstein Director, Executive Vice President December 29, 1998
- ---------------------------- and Treasurer
David Lowenstein
/s/ Timothy J. Barker Senior Vice President and December 29, 1998
- ---------------------------- Chief Financial Officer
Timothy J. Barker (Principal Financial and
Accounting Officer)
/s/ Donald F. Moorehead, Jr. Director December 29, 1998
- ----------------------------
Donald F. Moorehead, Jr.
</TABLE>
II-5
<PAGE> 9
<TABLE>
<S> <C> <C>
/s/ G. Michael Bellenghi Director December 29, 1998
- ----------------------------
G. Michael Bellenghi
/s/ Gregory R. Melanson Director December 29, 1998
- ----------------------------
Gregory R. Melanson
/s/ Jonathan B. Shaw Director December 29, 1998
- ----------------------------
Jonathan B. Shaw
/s/ Michael J. Bradley Director December 29, 1998
- ----------------------------
Michael J. Bradley
/s/ Hon. Edward M. Rowell Director December 29, 1998
- ----------------------------
Hon. Edward M. Rowell
/s/ Kyle C. Kerbawy Director December 29, 1998
- ----------------------------
Kyle C. Kerbawy
</TABLE>
II-6
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1 (Registration No.
33-98608)).
4.2 Amended and Restated By-Laws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed with the
Commission on August 8, 1997).
4.3 Warrant issued to Mary D. Baker, dated October 27, 1998.
4.4 Warrant issued to Sharon Kelly, dated October 27, 1998.
4.5 Warrant issued to C. Stuart Haworth, dated October 27, 1998.
4.6 Warrant issued to Janet Thornton, dated October 27, 1998.
4.7 Warrant issued to Stephen D. Swartz, dated October 27, 1998.
4.8 Warrant issued to Hossein Borhani, dated October 27, 1998.
4.9 Warrant issued to George Desloge, dated October 27, 1998.
4.10 Warrant issued to Paul White, dated October 27, 1998.
4.11 Warrant issued to Kaye Hall, dated October 27, 1998.
5 Opinion of Morgan, Lewis & Bockius LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit
5).
24 Powers of Attorney (included on signature pages hereof).
</TABLE>
II-7
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 6
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to Mary D. Baker or
permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $28.625 per share (the
"Exercise Price"), 176,000 shares of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), subject to the provisions and upon the terms and
conditions herein set forth. The Exercise Price and the number of Warrant Shares
are subject to adjustment from time to time as provided in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on October
27, 1999 (the "Initial Exercise Date"); (ii) 20% of the underlying shares
on October 27, 2000 (the "Second Exercise Date"); (iii) 20% of the
underlying shares on October 27, 2001 (the "Third Exercise Date"); (iv)
20% of the underlying shares on October 27, 2002 (the "Fourth Exercise
Date"); and (v) 20% of the underlying shares on October 27, 2003 (the
"Fifth Exercise Date") to and including 5:00 P.M. New York City time on
October 27, 2008 (the "Expiration Date"). The Initial Exercise Date, the
Second Exercise Date, the Third Exercise Date, the Fourth Exercise Date
and the Fifth Exercise Date are hereinafter referred to, as applicable, as
the "Exercise Date." In addition, in the event of a Change in Control of
the Company, the right to exercise 100% of the underlying shares shall
immediately vest. A "Change in Control" shall be deemed to have occurred
if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities and
Exchange Act of 1934, as amended (the" Exchange Act")) of any voting
security of the Company and immediately after such acquisition such
Person is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all
of the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then
still in office (such directors becoming "Additional Original
Directors" immediately following their election) or (C) who are
elected to the Board and whose election, or nomination for election,
to the Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors and Additional Original Directors then still
in office (such directors also becoming "Additional Original
Directors" immediately following their election) (such individuals
being the "Continuing Directors"), cease for any reason to
constitute a majority of the members of the Board;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would
result in at least 75% of the total voting power represented by the
2
<PAGE> 3
voting securities of the surviving entity outstanding immediately
after such transaction being Beneficially Owned by at least 75% of
the holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each
such continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the
Company).
(b) The rights represented by this Warrant may be exercised by the
Warrantholder of record, in whole, or from time to time in part, by:
(i) surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed by
the Warrantholder of record and specifying the number of Warrant
Shares to be purchased, to the Company at the office of the Company
located at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate by
notice to the Warrantholder at the address of such Warrantholder
appearing on the books of the Company) during normal business hours
on any day (a "Business Day") other than a Saturday, Sunday or a day
on which the New York Stock Exchange is authorized to close or on
which the Company is otherwise closed for business (a "Nonbusiness
Day") on or after 9:00 A.M. New York City time on the Exercise Date
but not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M. on
the next succeeding Business Day, if the Expiration Date is a
Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified in
the Exercise Form (such payment may be made by the Warrantholder
directly or by a designated broker pursuant to the broker-assisted
cashless exercise program instituted by the Company, subject to
Section 1.5 herein) and
(iii) such documentation as to the identity and authority of
the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the
3
<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares specified
in the Exercise Form shall be delivered to the Warrantholder (or
designated broker, as the case may be) as promptly as practicable, and in
any event within 10 business days, thereafter. The stock certificates so
delivered shall be in denominations of at least 1,000 shares each or such
other denomination as may be specified by the Warrantholder and agreed
upon by the Company, and shall be issued in the name of the Warrantholder
or, if permitted by subsection 1.5 and in accordance with the provisions
thereof, such other name as shall be designated in the Exercise Form. If
this Warrant shall have been exercised only in part, the Company shall, at
the time of delivery of the certificates for the Warrant Shares, deliver
to the Warrantholder (or designated broker, as the case may be) a new
Warrant evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with this
Warrant. No adjustments or payments shall be made on or in respect of
Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to
the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to 5:00
P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Mary D. Baker's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Mary D. Baker's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Mary D. Baker's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Mary D. Baker's death, this Warrant may be exercised by Mary D. Baker's legal
representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
4
<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither this
Warrant nor any of the Warrant Shares, nor any interest or participation
in either, may be in any manner transferred or disposed of, in whole or in
part, except in compliance with applicable United States federal and state
securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued at
any time in exchange or substitution for any Warrant bearing such a legend
shall bear a legend similar in effect to the foregoing paragraph unless,
in the opinion of counsel for the Company, the Warrant and the Warrant
Shares need no longer be subject to the restriction contained herein. The
provisions of this subsection 1.5 shall be binding upon all subsequent
holders of this Warrant and the Warrant Shares, if any. Warrant Shares
transferred to the public as expressly permitted by, and in accordance
with, the provisions of this Warrant shall thereafter cease to be deemed
to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
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<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may be
purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue by reclassification
of its shares of Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger in
which the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of this Warrant shall be adjusted so that
the Warrantholder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have
owned or have been entitled to receive after the happening of any of the
events described above, had this Warrant been exercised immediately prior
to the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders of its
outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
6
<PAGE> 7
options or warrants than the then current market price per share of
Common Stock, or
(ii) distribute to all holders of its shares of Common Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus
and dividends or distributions referred to in paragraph (a) of this
subsection 5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, appropriate adjustments shall be
made to the number of Warrant Shares purchasable upon the exercise
of the Warrant and/or the Exercise Price in order to preserve the
relative rights and interests of the Warrantholders, such
adjustments to be made by the good faith determination of the Board
of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its option,
at any time during the term of the Warrants, reduce the then current Exercise
Price to any amount, consistent with applicable law, deemed appropriate by the
Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any cash
dividends shall be made during the term of this Warrant or upon the exercise of
this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
7
<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall file
a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Warrantholder and holders of Warrant
Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
8
<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares, addressed
to the address of such person appearing on the books of the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue of
this Warrant, be entitled to any rights of a stockholder of the Company, either
at law or in equity.
9
<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this Agreement
are available only when at least a specified minimum number of Warrant Shares is
involved, such number shall be appropriately adjusted to reflect any stock
split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
10
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
11
<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ____________________________________.
Date _________________ Signature _________________________
12
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 7
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to Sharon Kelly or
permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $28.625 per share (the
"Exercise Price"), 132,000 shares of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), subject to the provisions and upon the terms and
conditions herein set forth. The Exercise Price and the number of Warrant Shares
are subject to adjustment from time to time as provided in Section 5.
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on October
27, 1999 (the "Initial Exercise Date"); (ii) 20% of the underlying shares
on October 27, 2000 (the "Second Exercise Date"); (iii) 20% of the
underlying shares on October 27, 2001 (the "Third
<PAGE> 2
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise Date,
the Fourth Exercise Date and the Fifth Exercise Date are hereinafter
referred to, as applicable, as the "Exercise Date." In addition, in the
event of a Change in Control of the Company, the right to exercise 100% of
the underlying shares shall immediately vest. A "Change in Control" shall
be deemed to have occurred if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities and
Exchange Act of 1934, as amended (the" Exchange Act")) of any voting
security of the Company and immediately after such acquisition such
Person is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all
of the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then
still in office (such directors becoming "Additional Original
Directors" immediately following their election) or (C) who are
elected to the Board and whose election, or nomination for election,
to the Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors and Additional Original Directors then still
in office (such directors also becoming "Additional Original
Directors" immediately following their election) (such individuals
being the "Continuing Directors"), cease for any reason to
constitute a majority of the members of the Board;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would
result in at least 75% of the total voting power represented by the
voting securities of the surviving entity outstanding immediately
after such transaction being Beneficially Owned by at least 75% of
the holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each
such continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the
Company).
<PAGE> 3
(b) The rights represented by this Warrant may be exercised by the
Warrantholder of record, in whole, or from time to time in part, by:
(i) surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed by
the Warrantholder of record and specifying the number of Warrant
Shares to be purchased, to the Company at the office of the Company
located at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate by
notice to the Warrantholder at the address of such Warrantholder
appearing on the books of the Company) during normal business hours
on any day (a "Business Day") other than a Saturday, Sunday or a day
on which the New York Stock Exchange is authorized to close or on
which the Company is otherwise closed for business (a "Nonbusiness
Day") on or after 9:00 A.M. New York City time on the Exercise Date
but not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M. on
the next succeeding Business Day, if the Expiration Date is a
Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified in
the Exercise Form (such payment may be made by the Warrantholder
directly or by a designated broker pursuant to the broker-assisted
cashless exercise program instituted by the Company, subject to
Section 1.5 herein) and
(iii) such documentation as to the identity and authority of
the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.
Certificates for the Warrant Shares specified in the Exercise Form shall
be delivered to the Warrantholder (or designated broker, as the case may
be) as promptly as practicable, and in any event within 10 business days,
thereafter. The stock certificates so delivered shall be in denominations
of at least 1,000 shares each or such other denomination as may be
specified by the Warrantholder and agreed upon by the Company, and shall
be issued in the name of the Warrantholder or, if permitted by subsection
1.5 and in accordance with the provisions thereof, such other name as
shall be designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of the
certificates for the Warrant Shares, deliver to the Warrantholder (or
designated broker, as the case may be) a new Warrant evidencing the rights
to purchase the remaining
<PAGE> 4
Warrant Shares, which new Warrant shall in all other respects be identical
with this Warrant. No adjustments or payments shall be made on or in
respect of Warrant Shares issuable on the exercise of this Warrant for any
cash dividends paid or payable to holders of record of Common Stock prior
to the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to 5:00
P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Sharon Kelly's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Sharon Kelly's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Sharon Kelly's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Sharon Kelly's death, this Warrant may be exercised by Sharon Kelly's legal
representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither this
Warrant nor any of the Warrant Shares, nor any interest or participation
in either, may be in any manner transferred or disposed of, in whole or in
part, except in compliance with applicable United States federal and state
securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued at
any time in exchange or substitution for any Warrant bearing such a legend
shall bear a legend similar in effect to the foregoing paragraph unless,
in the opinion of counsel for the Company, the Warrant and the Warrant
Shares need no longer be subject to the restriction contained herein. The
provisions of this subsection 1.5 shall be binding upon all subsequent
holders of this Warrant and the Warrant Shares, if any. Warrant Shares
transferred to the public as expressly permitted by, and in accordance
with, the
<PAGE> 5
provisions of this Warrant shall thereafter cease to be deemed to be
"Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant of like tenor in the name of the assignee named in
such instrument of assignment and this Warrant shall promptly be canceled. Upon
receipt by the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or
destruction, of such bond or indemnification as the Company may reasonably
require, and, in the case of such mutilation, upon surrender and cancellation of
this Warrant, the Company will execute and deliver a new Warrant of like tenor.
The term "Warrant" as used herein includes any Warrants issued in substitution
or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
<PAGE> 6
5. Certain Adjustments. The Exercise Price at which Warrant Shares may be
purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue by reclassification
of its shares of Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger in
which the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of this Warrant shall be adjusted so that
the Warrantholder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have
owned or have been entitled to receive after the happening of any of the
events described above, had this Warrant been exercised immediately prior
to the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders of its
outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
options or warrants than the then current market price per share of
Common Stock, or
(ii) distribute to all holders of its shares of Common Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus
and dividends or distributions referred to in paragraph (a) of this
subsection 5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, appropriate adjustments shall be
made to the number of Warrant Shares purchasable upon the exercise
of the Warrant and/or the Exercise Price in order to preserve the
relative rights and interests of the Warrantholders, such
adjustments to be made by the good faith determination of the Board
of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its option,
at any time during the term of the Warrants, reduce the then current Exercise
Price to any
<PAGE> 7
amount, consistent with applicable law, deemed appropriate by the Board of
Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any cash
dividends shall be made during the term of this Warrant or upon the exercise of
this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
6. Registration Rights. On or prior to October 27, 1999 Company shall file
a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
<PAGE> 8
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Warrantholder and holders of Warrant
Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
<PAGE> 9
(b) if to any Warrantholder or holder of Warrant Shares, addressed
to the address of such person appearing on the books of the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue of
this Warrant, be entitled to any rights of a stockholder of the Company, either
at law or in equity.
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this Agreement
are available only when at least a specified minimum number of Warrant Shares is
involved, such number shall be appropriately adjusted to reflect any stock
split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
<PAGE> 11
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ____________________________________.
Date _________________ Signature _________________________
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 8
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to C. Stuart
Haworth or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company, at
$28.625 per share (the "Exercise Price"), 39,600 shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), subject to the provisions
and upon the terms and conditions herein set forth. The Exercise Price and the
number of Warrant Shares are subject to adjustment from time to time as provided
in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on October
27, 1999 (the "Initial Exercise Date"); (ii) 20% of the underlying shares
on October 27, 2000 (the "Second Exercise Date"); (iii) 20% of the
underlying shares on October 27, 2001 (the "Third Exercise Date"); (iv)
20% of the underlying shares on October 27, 2002 (the "Fourth Exercise
Date"); and (v) 20% of the underlying shares on October 27, 2003 (the
"Fifth Exercise Date") to and including 5:00 P.M. New York City time on
October 27, 2008 (the "Expiration Date"). The Initial Exercise Date, the
Second Exercise Date, the Third Exercise Date, the Fourth Exercise Date
and the Fifth Exercise Date are hereinafter referred to, as applicable, as
the "Exercise Date." In addition, in the event of a Change in Control of
the Company, the right to exercise 100% of the underlying shares shall
immediately vest. A "Change in Control" shall be deemed to have occurred
if:
(i) any person, other than the Company or an employee benefit
plan of the Company, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities and
Exchange Act of 1934, as amended (the" Exchange Act")) of any voting
security of the Company and immediately after such acquisition such
Person is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all
of the then-outstanding voting securities of the Company;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then
still in office (such directors becoming "Additional Original
Directors" immediately following their election) or (C) who are
elected to the Board and whose election, or nomination for election,
to the Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors and Additional Original Directors then still
in office (such directors also becoming "Additional Original
Directors" immediately following their election) (such individuals
being the "Continuing Directors"), cease for any reason to
constitute a majority of the members of the Board;
(iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a
reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would
result in at least 75% of the total voting power represented by the
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<PAGE> 3
voting securities of the surviving entity outstanding immediately
after such transaction being Beneficially Owned by at least 75% of
the holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each
such continuing holder relative to other such continuing holders not
substantially altered in the transaction; or
(iv) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., 50% or more of the total assets of the
Company).
(b) The rights represented by this Warrant may be exercised by the
Warrantholder of record, in whole, or from time to time in part, by:
(i) surrender of this Warrant, accompanied by either the
Exercise Form annexed hereto, or if the Warrantholder decides to
exercise the Warrant pursuant to the broker-assisted cashless
exercise program instituted by the Company, an applicable exercise
form provided by the Company (the "Exercise Form") duly executed by
the Warrantholder of record and specifying the number of Warrant
Shares to be purchased, to the Company at the office of the Company
located at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate by
notice to the Warrantholder at the address of such Warrantholder
appearing on the books of the Company) during normal business hours
on any day (a "Business Day") other than a Saturday, Sunday or a day
on which the New York Stock Exchange is authorized to close or on
which the Company is otherwise closed for business (a "Nonbusiness
Day") on or after 9:00 A.M. New York City time on the Exercise Date
but not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M. on
the next succeeding Business Day, if the Expiration Date is a
Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House Funds,
of the Exercise Price for the number of Warrant Shares specified in
the Exercise Form (such payment may be made by the Warrantholder
directly or by a designated broker pursuant to the broker-assisted
cashless exercise program instituted by the Company, subject to
Section 1.5 herein) and
(iii) such documentation as to the identity and authority of
the Warrantholder as the Company may reasonably request.
Such Warrant Shares shall be deemed by the Company to be issued to
the Warrantholder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been
surrendered and payment made for the
3
<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares specified
in the Exercise Form shall be delivered to the Warrantholder (or
designated broker, as the case may be) as promptly as practicable, and in
any event within 10 business days, thereafter. The stock certificates so
delivered shall be in denominations of at least 1,000 shares each or such
other denomination as may be specified by the Warrantholder and agreed
upon by the Company, and shall be issued in the name of the Warrantholder
or, if permitted by subsection 1.5 and in accordance with the provisions
thereof, such other name as shall be designated in the Exercise Form. If
this Warrant shall have been exercised only in part, the Company shall, at
the time of delivery of the certificates for the Warrant Shares, deliver
to the Warrantholder (or designated broker, as the case may be) a new
Warrant evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with this
Warrant. No adjustments or payments shall be made on or in respect of
Warrant Shares issuable on the exercise of this Warrant for any cash
dividends paid or payable to holders of record of Common Stock prior to
the date as of which the Warrantholder shall be deemed to be the record
holder of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to 5:00
P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of C. Stuart Haworth's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of C. Stuart Haworth's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If C. Stuart Haworth's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
C. Stuart Haworth's death, this Warrant may be exercised by C. Stuart Haworth's
legal representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
4
<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither this
Warrant nor any of the Warrant Shares, nor any interest or participation
in either, may be in any manner transferred or disposed of, in whole or in
part, except in compliance with applicable United States federal and state
securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued at
any time in exchange or substitution for any Warrant bearing such a legend
shall bear a legend similar in effect to the foregoing paragraph unless,
in the opinion of counsel for the Company, the Warrant and the Warrant
Shares need no longer be subject to the restriction contained herein. The
provisions of this subsection 1.5 shall be binding upon all subsequent
holders of this Warrant and the Warrant Shares, if any. Warrant Shares
transferred to the public as expressly permitted by, and in accordance
with, the provisions of this Warrant shall thereafter cease to be deemed
to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
5
<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may be
purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of Common
Stock or make a distribution in shares of Common Stock (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue by reclassification
of its shares of Common Stock other securities of the Company (including
any such reclassification in connection with a consolidation or merger in
which the Company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of this Warrant shall be adjusted so that
the Warrantholder shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which he would have
owned or have been entitled to receive after the happening of any of the
events described above, had this Warrant been exercised immediately prior
to the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders of its
outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date for the
determination of stockholders entitled to receive such rights,
6
<PAGE> 7
options or warrants than the then current market price per share of
Common Stock, or
(ii) distribute to all holders of its shares of Common Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus
and dividends or distributions referred to in paragraph (a) of this
subsection 5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock, appropriate adjustments shall be
made to the number of Warrant Shares purchasable upon the exercise
of the Warrant and/or the Exercise Price in order to preserve the
relative rights and interests of the Warrantholders, such
adjustments to be made by the good faith determination of the Board
of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its option,
at any time during the term of the Warrants, reduce the then current Exercise
Price to any amount, consistent with applicable law, deemed appropriate by the
Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any cash
dividends shall be made during the term of this Warrant or upon the exercise of
this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
7
<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall file
a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Warrantholder and holders of Warrant
Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
8
<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares, addressed
to the address of such person appearing on the books of the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue of
this Warrant, be entitled to any rights of a stockholder of the Company, either
at law or in equity.
9
<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this Agreement
are available only when at least a specified minimum number of Warrant Shares is
involved, such number shall be appropriately adjusted to reflect any stock
split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
10
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
11
<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ____________________________________.
Date _________________ Signature _________________________
12
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 9
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to Janet Thornton
or permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $28.625 per share (the
"Exercise Price"), 30,800 shares of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), subject to the provisions and upon the terms and
conditions herein set forth. The Exercise Price and the number of Warrant Shares
are subject to adjustment from time to time as provided in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
2
<PAGE> 3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
3
<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Janet Thornton's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Janet Thornton's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Janet Thornton's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Janet Thornton's death, this Warrant may be exercised by Janet Thornton's legal
representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
4
<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
5
<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
6
<PAGE> 7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
7
<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
8
<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
9
<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
10
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
11
<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby irrevocably
elects to exercise the right, represented by this Warrant, to purchase
__________ of the Warrant Shares and herewith tenders payment for such Warrant
Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ___________________________________.
Date _________________ Signature _________________________
12
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 10
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to Stephen D.
Swartz or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company, at
$28.625 per share (the "Exercise Price"), 26,400 shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), subject to the provisions
and upon the terms and conditions herein set forth. The Exercise Price and the
number of Warrant Shares are subject to adjustment from time to time as provided
in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
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<PAGE> 3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
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<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Stephen D. Swartz's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Stephen D. Swartz's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Stephen D. Swartz's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Stephen D. Swartz's death, this Warrant may be exercised by Stephen D. Swartz's
legal representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
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<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
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<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
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<PAGE> 7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
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<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
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<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
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<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
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<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
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<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby irrevocably
elects to exercise the right, represented by this Warrant, to purchase
__________ of the Warrant Shares and herewith tenders payment for such Warrant
Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ____________________________________.
Date _________________ Signature _________________________
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<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 11
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration, F.Y.I.
Incorporated, a Delaware corporation (the "Company"), grants to Hossein Borhani
or permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $28.625 per share (the
"Exercise Price"), 17,600 shares of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), subject to the provisions and upon the terms and
conditions herein set forth. The Exercise Price and the number of Warrant Shares
are subject to adjustment from time to time as provided in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
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<PAGE> 3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
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<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Hossein Borhani's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Hossein Borhani's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Hossein Borhani's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Hossein Borhani's death, this Warrant may be exercised by Hossein Borhani's
legal representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
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<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
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<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
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<PAGE> 7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
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<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
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<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
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<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
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<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
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<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby irrevocably
elects to exercise the right, represented by this Warrant, to purchase
__________ of the Warrant Shares and herewith tenders payment for such Warrant
Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ____________________________________.
Date _________________ Signature _________________________
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<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 12
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to George
Desloge or permitted registered assigns (the "Warrantholder" or
"Warrantholders"), the right to subscribe for and purchase from the Company, at
$28.625 per share (the "Exercise Price"), 13,200 shares of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"), subject to the provisions
and upon the terms and conditions herein set forth. The Exercise Price and the
number of Warrant Shares are subject to adjustment from time to time as provided
in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
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<PAGE> 3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
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<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of George Desloge's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of George Desloge's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If George Desloge's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
George Desloge's death, this Warrant may be exercised by George Desloge's legal
representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
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<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
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<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
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<PAGE> 7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
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<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
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<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
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<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
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<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
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<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ___________________________________.
Date _________________ Signature _________________________
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<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 13
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to Paul
White or permitted registered assigns (the "Warrantholder" or "Warrantholders"),
the right to subscribe for and purchase from the Company, at $28.625 per share
(the "Exercise Price"), 13,200 shares of the Company's Common Stock, par value
$0.01 per share (the "Common Stock"), subject to the provisions and upon the
terms and conditions herein set forth. The Exercise Price and the number of
Warrant Shares are subject to adjustment from time to time as provided in
Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
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<PAGE> 3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
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<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Paul White's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Paul White's employment with the
Company for no good reason or with cause, even if this Warrant has vested as of
such date, this Warrant shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. If Paul White's
employment is terminated prior to the vesting of this Warrant, this Warrant
shall cease to be exercisable and shall become void and all rights of the
Warrantholder hereunder shall cease. Subject to the foregoing, in the event of
Paul White's death, this Warrant may be exercised by Paul White's legal
representative through the Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
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<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
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<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
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<PAGE> 7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
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<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
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<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
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<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
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<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
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<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ___________________________________.
Date _________________ Signature _________________________
12
<PAGE> 1
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED AND THE TERMS
AND CONDITIONS HEREOF. THE HOLDER OF THIS WARRANT AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 P.M. NEW YORK CITY TIME, OCTOBER 27, 2008
****************************************
No. 14
WARRANT
to
PURCHASE COMMON STOCK
of
F.Y.I. INCORPORATED
****************************************
This certifies that, for good and valuable consideration,
F.Y.I. Incorporated, a Delaware corporation (the "Company"), grants to Kaye Hall
or permitted registered assigns (the "Warrantholder" or "Warrantholders"), the
right to subscribe for and purchase from the Company, at $28.625 per share (the
"Exercise Price"), 8,800 shares of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), subject to the provisions and upon the terms and
conditions herein set forth. The Exercise Price and the number of Warrant Shares
are subject to adjustment from time to time as provided in Section 5.
<PAGE> 2
1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.
1.1 Duration and Exercise of Warrant.
(a) This Warrant may be exercised to purchase (i) 20% of the
underlying shares from and after 9:00 A.M. New York City time on
October 27, 1999 (the "Initial Exercise Date"); (ii) 20% of the
underlying shares on October 27, 2000 (the "Second Exercise Date");
(iii) 20% of the underlying shares on October 27, 2001 (the "Third
Exercise Date"); (iv) 20% of the underlying shares on October 27, 2002
(the "Fourth Exercise Date"); and (v) 20% of the underlying shares on
October 27, 2003 (the "Fifth Exercise Date") to and including 5:00 P.M.
New York City time on October 27, 2008 (the "Expiration Date"). The
Initial Exercise Date, the Second Exercise Date, the Third Exercise
Date, the Fourth Exercise Date and the Fifth Exercise Date are
hereinafter referred to, as applicable, as the "Exercise Date." In
addition, in the event of a Change in Control of the Company, the right
to exercise 100% of the underlying shares shall immediately vest. A
"Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or an employee
benefit plan of the Company, acquires directly or indirectly
the Beneficial Ownership (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the" Exchange
Act")) of any voting security of the Company and immediately
after such acquisition such Person is, directly or indirectly,
the Beneficial Owner of voting securities representing 50% or
more of the total voting power of all of the then-outstanding
voting securities of the Company;
(ii) the individuals (A) who, as of the closing date
of the Initial Public Offering, constitute the Board (the
"Original Directors") or (B) who thereafter are elected to the
Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of
the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following
their election) or (C) who are elected to the Board and whose
election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the
Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional
Original Directors" immediately following their election)
(such individuals being the "Continuing Directors"), cease for
any reason to constitute a majority of the members of the
Board;
(iii) the stockholders of the Company shall approve a
merger, consolidation, recapitalization, or reorganization of
the Company, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not sought or obtained, other than any
such transaction which would result in at least 75% of the
total voting power represented by the
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<PAGE> 3
voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by
at least 75% of the holders of outstanding voting securities
of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or
(iv) the stockholders of the Company shall approve a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or a
substantial portion of the Company's assets (i.e., 50% or more
of the total assets of the Company).
(b) The rights represented by this Warrant may be exercised by
the Warrantholder of record, in whole, or from time to time in part,
by:
(i) surrender of this Warrant, accompanied by either
the Exercise Form annexed hereto, or if the Warrantholder
decides to exercise the Warrant pursuant to the
broker-assisted cashless exercise program instituted by the
Company, an applicable exercise form provided by the Company
(the "Exercise Form") duly executed by the Warrantholder of
record and specifying the number of Warrant Shares to be
purchased, to the Company at the office of the Company located
at 3232 McKinney Avenue, Suite 900, Dallas, Texas 75204 (or
such other office or agency of the Company as it may designate
by notice to the Warrantholder at the address of such
Warrantholder appearing on the books of the Company) during
normal business hours on any day (a "Business Day") other than
a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is
otherwise closed for business (a "Nonbusiness Day") on or
after 9:00 A.M. New York City time on the Exercise Date but
not later than 5:00 P.M. on the Expiration Date (or 5:00 P.M.
on the next succeeding Business Day, if the Expiration Date is
a Nonbusiness Day),
(ii) delivery of payment to the Company in cash or by
certified or official bank check in New York Clearing House
Funds, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form (such payment may be made by
the Warrantholder directly or by a designated broker pursuant
to the broker-assisted cashless exercise program instituted by
the Company, subject to Section 1.5 herein) and
(iii) such documentation as to the identity and
authority of the Warrantholder as the Company may reasonably
request.
Such Warrant Shares shall be deemed by the Company to be
issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for the
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<PAGE> 4
Warrant Shares as aforesaid. Certificates for the Warrant Shares
specified in the Exercise Form shall be delivered to the Warrantholder
(or designated broker, as the case may be) as promptly as practicable,
and in any event within 10 business days, thereafter. The stock
certificates so delivered shall be in denominations of at least 1,000
shares each or such other denomination as may be specified by the
Warrantholder and agreed upon by the Company, and shall be issued in
the name of the Warrantholder or, if permitted by subsection 1.5 and in
accordance with the provisions thereof, such other name as shall be
designated in the Exercise Form. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of
the certificates for the Warrant Shares, deliver to the Warrantholder
(or designated broker, as the case may be) a new Warrant evidencing the
rights to purchase the remaining Warrant Shares, which new Warrant
shall in all other respects be identical with this Warrant. No
adjustments or payments shall be made on or in respect of Warrant
Shares issuable on the exercise of this Warrant for any cash dividends
paid or payable to holders of record of Common Stock prior to the date
as of which the Warrantholder shall be deemed to be the record holder
of such Warrant Shares.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to
5:00 P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Nonbusiness Day), this Warrant, or any new Warrant issued
pursuant to Section 1.1, shall cease to be exercisable and shall become void and
all rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable, and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Exercise Date.
1.3 Exercise Upon Termination. Upon termination of Kaye Hall's
employment with the Company for good reason or without cause, this Warrant may
be exercised to the extent it has vested as of such date and to and including
the Expiration Date. Upon termination of Kaye Hall's employment with the Company
for no good reason or with cause, even if this Warrant has vested as of such
date, this Warrant shall cease to be exercisable and shall become void and all
rights of the Warrantholder hereunder shall cease. If Kaye Hall's employment is
terminated prior to the vesting of this Warrant, this Warrant shall cease to be
exercisable and shall become void and all rights of the Warrantholder hereunder
shall cease. Subject to the foregoing, in the event of Kaye Hall's death, this
Warrant may be exercised by Kaye Hall's legal representative through the
Expiration Date.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
4
<PAGE> 5
1.5 Transfer Restriction and Legend.
(a) Without limiting the generality of the foregoing, neither
this Warrant nor any of the Warrant Shares, nor any interest or
participation in either, may be in any manner transferred or disposed
of, in whole or in part, except in compliance with applicable United
States federal and state securities laws.
(b) Each certificate for Warrant Shares and any Warrant issued
at any time in exchange or substitution for any Warrant bearing such a
legend shall bear a legend similar in effect to the foregoing paragraph
unless, in the opinion of counsel for the Company, the Warrant and the
Warrant Shares need no longer be subject to the restriction contained
herein. The provisions of this subsection 1.5 shall be binding upon all
subsequent holders of this Warrant and the Warrant Shares, if any.
Warrant Shares transferred to the public as expressly permitted by, and
in accordance with, the provisions of this Warrant shall thereafter
cease to be deemed to be "Warrant Shares" for purposes hereof.
1.6 Divisibility of Warrant. This Warrant may be divided into warrants
representing one Warrant Share or multiples thereof, upon surrender at the
principal office of the Company on any Business Day, without charge to any
Warrantholder, except as provided below. The Warrantholder will be charged for
reasonable out-of-pocket costs incurred by the Company in connection with the
division of this Warrant into Warrants representing fewer than one thousand
(1,000) Warrant Shares. Upon any such division, and, if permitted by subsection
1.5 and in accordance with the provisions thereof, the Warrants may be
transferred of record to a name other than that of the Warrantholder of record;
provided, however, that the Warrantholder shall be required to pay any and all
transfer taxes with respect thereto.
2. Reservation and Listing of Shares, Etc. All Warrant Shares which are
issued upon the exercise of the rights represented by this Warrant shall, upon
issuance and payment of the Exercise Price, be validly issued, fully paid and
nonassessable and free from all taxes, liens, security interests, charges and
other encumbrances with respect to the issue thereof other than taxes in respect
of any transfer occurring contemporaneously with such issue. During the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of this
Warrant, and shall at its expense use its best efforts to procure such listing
thereof (subject to official notice of issuance) as then may be required on all
stock exchanges on which the Common Stock is then listed or on the Nasdaq
National Market. The Company shall, from time to time, take all such action as
may be required to assure that the par value per share of the Warrant Shares is
at all times equal to or less than the then effective Exercise Price.
3. Exchange, Loss or Destruction of Warrant. If permitted by subsection
1.5 or 1.6 and in accordance with the provisions thereof, upon surrender of this
Warrant to the Company with a duly executed instrument of assignment and funds
sufficient to pay any transfer tax, the
5
<PAGE> 6
Company shall, without charge, execute and deliver a new Warrant of like tenor
in the name of the assignee named in such instrument of assignment and this
Warrant shall promptly be canceled. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
4. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in subsections 1.1 and 1.5 or in Section 3.
5. Certain Adjustments. The Exercise Price at which Warrant Shares may
be purchased hereunder, and the number of Warrant Shares to be purchased upon
exercise hereof, are subject to change or adjustment as follows:
5.1 The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock (ii)
subdivide its outstanding shares of Common Stock into a greater number
of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv)
issue by reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the
surviving corporation), the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted so that the Warrantholder
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall:
(i) issue rights, options or warrants to all holders
of its outstanding Common Stock, without any charge to such
holders, entitling them to subscribe for or purchase shares of
Common Stock at a price per share which is lower at the record
date for the determination of stockholders entitled to receive
such rights,
6
<PAGE> 7
options or warrants than the then current market price per
share of Common Stock, or
(ii) distribute to all holders of its shares of
Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of
consolidated earnings or earned surplus and dividends or
distributions referred to in paragraph (a) of this subsection
5.1) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, appropriate adjustments
shall be made to the number of Warrant Shares purchasable upon
the exercise of the Warrant and/or the Exercise Price in order
to preserve the relative rights and interests of the
Warrantholders, such adjustments to be made by the good faith
determination of the Board of Directors of the Company.
5.2 Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount, consistent with applicable law, deemed appropriate
by the Board of Directors of the Company.
5.3 Notice of Adjustment. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail first class, postage prepaid, to all Warrantholders,
notice of such adjustment.
5.4 No Adjustment for Cash Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
5.5 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all of the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with the Warrantholders an agreement that the Warrantholders shall have
the right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of this Warrant the kind and
amount of shares and other securities and property which such holder would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale, transfer or lease had this Warrant been exercised
immediately prior to such action; provided, however, that no adjustment in
respect of cash dividends, interest or other income on or from such shares or
other securities and property shall be made during the term of this Warrant or
upon the exercise of this Warrant. Such agreement shall provide for adjustments,
which shall be as nearly equivalent as practicable to the adjustments provided
for in this Section 5. The provisions of this subsection 5.5 shall apply
similarly to successive consolidations, mergers, sales, transfers or leases.
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<PAGE> 8
6. Registration Rights. On or prior to October 27, 1999 Company shall
file a registration statement covering the Warrant Shares on a Form S-8, which
registration statement shall be effective upon the filing thereof. The Company
shall use its best efforts to keep such Form S-8 current and effective until the
earlier of the Expiration Date or the date this Warrant has been exercised in
full.
The Company shall have sole control in connection with the preparation,
filing, amending and supplementing of any registration statement, including the
right to withdraw the same or delay the effectiveness thereof when, in the sole
judgment of the Board of Directors of the Company, the pendency of such
registration statement or the effectiveness thereof would impose an undue burden
upon the ability of the Company to proceed with any other material financing for
its own account or any material corporate transaction, including, but not
limited to, a reorganization, recapitalization, merger, consolidation or
material acquisition of the securities or assets of another firm or corporation;
and the Company shall be required to file a new registration statement or to
proceed with such actions as reasonably may be required to cause the
registration statement to become effective within a reasonable time after the
consummation of the event or transaction which required such withdrawal or
delay.
7. Miscellaneous.
7.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to this Warrant and the
Warrant Shares.
7.2 Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company, the Warrantholder and holders of
Warrant Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
7.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
7.4 Section and Other Headings. The section and other headings
contained in this Warrant are for reference purposes only and shall not be
deemed to be a part of this Warrant or to affect the meaning or interpretation
of this Warrant.
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<PAGE> 9
7.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
and execute and deliver all such other certificates, instruments and/or
documents (including without limitation, such proxies and/or powers of attorney
as may be necessary or appropriate) as any party hereto may, at any time and
from time to time, reasonably request in connection with the performance of any
of the provisions of this Warrant.
7.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
(a) if to the Company, addressed to:
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Attention: Margot T. Lebenberg
(b) if to any Warrantholder or holder of Warrant Shares,
addressed to the address of such person appearing on the books of the
Company.
Except as otherwise provided herein, all such demands, requests,
notices and other communications shall be deemed to have been received on the
date of personal delivery thereof or on the third Business Day after the mailing
thereof.
7.7 Separability. Any term or provision of this Warrant which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
7.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with paragraph (d) of subsection 5.1) of a share of such stock as of the date of
such exercise.
7.9 Rights of the Holder. The Warrantholder shall not, solely by virtue
of this Warrant, be entitled to any rights of a stockholder of the Company,
either at law or in equity.
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<PAGE> 10
7.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
7.11 Effect of Stock Splits, etc. Whenever any rights under this
Agreement are available only when at least a specified minimum number of Warrant
Shares is involved, such number shall be appropriately adjusted to reflect any
stock split, stock dividend, combination of securities into a smaller number of
securities or reclassification of stock.
10
<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
F.Y.I. INCORPORATED
By: /s/ Ed H. Bowman, Jr.
-----------------------
Name: Ed H. Bowman, Jr.
Title: President and
Chief Executive Officer
Dated: October 27, 1998
11
<PAGE> 12
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned, the record holder of this Warrant, hereby
irrevocably elects to exercise the right, represented by this Warrant, to
purchase __________ of the Warrant Shares and herewith tenders payment for such
Warrant Shares to the order of F.Y.I. INCORPORATED, in the amount of $_______ in
accordance with the terms of this Warrant. The undersigned requests that a
certificate for such Warrant Shares be registered in the name of
_________________________________ and that such certificate be delivered to
_________________________ whose address is ____________________________________.
Date _________________ Signature _________________________
12
<PAGE> 1
December 28, 1998
F.Y.I. Incorporated
3232 McKinney Avenue
Suite 900
Dallas, Texas 75204
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to F.Y.I. Incorporated, a Delaware corporation
(the "Company"), in connection with the preparation and filing with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), of a Registration Statement on Form S-8 (the
"Registration Statement") relating to the registration by the Company of 457,600
shares (the "Shares") of the Company's Common Stock, $.01 par value per share,
to be issued pursuant to warrants granted to employees of the Company
(the "Warrants").
In so acting, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of (a) the Amended and Restated
Certificate of Incorporation of the Company, (b) the Amended and Restated
By-Laws of the Company, (c) a good standing certificate dated as of a recent
date from the State of Delaware, (d) the Warrants and (e) such other documents,
records, certificates and other instruments of the Company as in our judgment
are necessary or appropriate for purposes of this opinion.
Based on the foregoing, we are of the following opinion:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.
2. The Shares, when issued in accordance with the terms of the
Warrants and for consideration not less than par value per Share, will be duly
authorized, validly issued, fully paid and non-assessable.
We are expressing the opinions above as members of the Bar of the State
of New York and express no opinion as to any law other than the General
Corporation Law of the State of Delaware.
We consent to the use of this opinion as an exhibit to the Registration
Statement. In giving such opinion, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
MORGAN, LEWIS & BOCKIUS LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8 our report dated February
20, 1998, included in F.Y.I. Incorporated's Annual Report on Form 10-K for the
year ended December 31, 1997, and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
December 28, 1998
