EXHIBIT 10.17
SERIES A WARRANT
To Purchase Common Stock
of
FAMILY BOOKSTORES COMPANY, INC.
Warrant No. A-2
TABLE OF CONTENTS
Page
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3. Fractional Shares. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3. TRANSFER, DIVISION AND COMBINATION. . . . . . . . . . . . . . . . . . . . 6
3.1. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Division and Combination . . . . . . . . . . . . . . . . . . . . . . 6
3.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4. Maintenance of Books . . . . . . . . . . . . . . . . . . . . . . . . 7
4. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Stock Dividends, Subdivisions and Combinations . . . . . . . . . . . 7
4.2. Certain Other Distributions. . . . . . . . . . . . . . . . . . . . . 7
4.3. Issuance of Additional Shares of Common Stock. . . . . . . . . . . . 8
4.4. Issuance of Warrants, Options or Other Rights. . . . . . . . . . . .10
4.5. Issuance of Convertible Securities . . . . . . . . . . . . . . . . .10
4.6. Superseding Adjustment . . . . . . . . . . . . . . . . . . . . . . .11
4.7. Other Provisions Applicable to Adjustments under this Section. . . .12
4.8. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . .15
4.9. Other Action Affecting Common Stock. . . . . . . . . . . . . . . . .16
4.10.Taking of Record; Stock and Warrant Transfer Books . . . . . . . . .16
5. NOTICES TO WARRANT HOLDERS. . . . . . . . . . . . . . . . . . . . . . . .16
5.1. Notice of Adjustments. . . . . . . . . . . . . . . . . . . . . . . .16
5.2. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . .16
6. NO IMPAIRMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK;
REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
8. PUT RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(i)
Page
9. RESTRICTIONS ON TRANSFER. . . . . . . . . . . . . . . . . . . . . . . . .18
9.1. Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . .18
9.2. Buy and Sell Agreement . . . . . . . . . . . . . . . . . . . . . . .19
9.3. Consent to Transfer. . . . . . . . . . . . . . . . . . . . . . . . .19
9.4. Notice of Proposed Transfers; Requests for Registration. . . . . . .19
10. LOSS OR MUTILATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
11. FINANCIAL AND BUSINESS INFORMATION. . . . . . . . . . . . . . . . . . . .19
12. APPRAISAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
13. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . .20
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
14.1. Nonwaiver and Expenses. . . . . . . . . . . . . . . . . . . . .20
14.2. Notice Generally. . . . . . . . . . . . . . . . . . . . . . . .20
14.3. Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
14.4. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
14.5. Successors and Assigns. . . . . . . . . . . . . . . . . . . . .22
14.6. Office of the Company . . . . . . . . . . . . . . . . . . . . .22
14.7. Information . . . . . . . . . . . . . . . . . . . . . . . . . .22
14.8. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . .22
14.9. Severability. . . . . . . . . . . . . . . . . . . . . . . . . .22
14.10. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
14.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .22
EXHIBITS:
Exhibit A - Subscription Form
Exhibit B - Assignment Form
(ii)
NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE UNDERLYING SHARES
OF COMMON STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND NEITHER MAY BE OFFERED FOR SALE OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM
UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. THIS WARRANT AND THE WARRANT STOCK ISSUED HEREUNDER ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AS PROVIDED IN SECTION 9 HEREOF
SERIES A WARRANT
To Purchase Common Stock
of
FAMILY BOOKSTORES COMPANY, INC.
THIS IS TO CERTIFY THAT ELECTRA ASSOCIATES, INC., a Delaware
corporation ("ELECTRA"), or permitted and registered assigns (collectively
referred to herein as the "HOLDER"), is entitled, beginning on the Effective
Date and at any time prior to the Expiration Date, to purchase from FAMILY
BOOKSTORES COMPANY, INC., a Michigan corporation (the "COMPANY"), that number of
shares of Common Stock (as defined herein and subject to adjustment as provided
herein) equal to 2.69% of the number of shares of Common Stock outstanding on a
Fully Diluted basis, excluding shares issued pursuant to the Performance Plan,
on the date of issuance of this Warrant, at a purchase price equal to the
Current Warrant Price, which shall be initially equal to $.0l per share and
which is subject to adjustment as provided herein. This Warrant is issued in
connection with, and as consideration, in part, for, the Holder's purchase on
the date hereof of certain of the Company's Senior Subordinated Notes due May
17, 2003, together with this Series A Warrant and the other warrants referred to
in the Securities Purchase Agreement. Capitalized terms used but not otherwise
defined in this Warrant shall have the meanings ascribed to such terms in the
Securities Purchase Agreement.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than (i) Warrant
Stock, (ii) the shares of Common Stock issued by the Company pursuant to the
Performance Plan, (iii) shares of
Common Stock issuable to the holders of the Series B, Series C and Series D
warrants issued in connection with the transactions contemplated by the
Securities Purchase Agreement and (iv) shares of Common Stock issuable to the
holders of any Penalty Warrants issued in connection with the transactions
contemplated by the Securities Purchase Agreement.
"Appraised Value" shall mean, in respect of any share of Common
Stock as of any date herein specified, the fair saleable value of such share
of Common Stock (determined without giving effect to a discount for (i) a
minority interest, (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the
Exchange Act or (iii) any restrictions on transfer) as of the last day of the
most recent fiscal month end prior to such date specified, based upon the
value of the Company as determined by the Company and the Holder in
reasonable good faith, and, if the Company and the Holder fail to so agree
within 20 Business Days, as determined by an investment banking firm selected
in accordance with the terms of Section 12.
"Business Day" shall mean any day that is not a Saturday or a Sunday
or a day on which commercial banks are required or authorized to be closed in
the City of New York.
"Closing Date" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
"Common Stock" shall mean (except where the context otherwise
indicates) the common stock, $1.00 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by Section 4.8.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for Additional
Shares
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of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the greater of (i) book value per share of
Common Stock as determined by the Company's financial statements for the most
recently ended fiscal quarter, and (ii) the Appraised Value per share of Common
Stock.
"Current Warrant Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date.
"Effective Date" shall mean November 17, 1994.
"Electra" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Expiration Date" shall mean November 17, 2004.
"Fully-Diluted" shall mean, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
shares of Common Stock outstanding at such date and all shares of Common Stock
issuable in respect of this Warrant increased by all common equivalent shares
issuable at any time pursuant to any stock options, warrants, convertible
securities, and any other security or instrument having the right to require
additional common shares to be issued at any time in the future, outstanding on
such date.
"GAAP" shall mean generally accepted accounting principles as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or statements by
such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Holder" shall have the meaning set forth in the first paragraph
hereof.
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"Other Property" shall have the meaning set forth in Section 4.8.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, corporation, limited liability organization, association,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated as of November 14, 1994, by and among the Company,
Electra and Electra Investment Trust P.L.C.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.2.
"Triggering Event" shall have the meaning ascribed to such term in the
Securities Purchase Agreement.
"Warrant" or "Warrants" shall mean this Warrant and all warrants
issued upon transfer, division or combination, or in exchange or substitution
therefor.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock received by the
holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE. From and after the Effective Date, and until
5:00 P.M. New York City time on the Expiration Date, the Holder may exercise
this Warrant, on any Business Day, for all or any part of the number of shares
of Common Stock purchasable hereunder; PROVIDED, HOWEVER, that if a Triggering
Event shall have occurred prior to the Expiration Date this Warrant shall
terminate as of the date of occurrence of such Triggering Event, unless
exercised as provided herein.
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In order to exercise this Warrant, in whole or in part, the Holder
shall deliver to the Company at its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at the office or agency designated by the
Company pursuant to Section 14.7, (i) a written notice of the Holder's
election to exercise this Warrant, which notice shall specify the number of
shares of Common Stock to be purchased, (ii) the Holder's check in payment of
the Warrant Price and (iii) this Warrant. Such notice shall be substantially
in the form of the subscription form appearing at the end of this Warrant as
EXHIBIT A, duly executed by the Holder or its agent or attorney. Upon
receipt thereof, subject to Section 9, the Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter,
execute or cause to be executed and delivered or cause to be delivered to
the Holder a certificate or certificates representing the aggregate number of
shares of Common Stock issuable upon such exercise, or, at the Company's
option, the number of shares of Common Stock issuable on such exercise,
together with cash in lieu of any fraction of a share, as hereinafter
provided. The stock certificate or certificates so delivered shall be, to
the extent possible, in such denomination or denominations as the Holder
shall request and shall be registered in the name of the Holder or, subject
to Section 9, such other name as shall be designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the
Holder or any other Person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes, as of the
date the notice, together with the cash or check and this Warrant, is
received by the Company as described above and all taxes, if any, required to
be paid prior to the issuance of such shares have been paid pursuant to
Section 2.2. If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates, deliver to
the Holder a new Warrant evidencing the rights of the Holder to purchase the
unpurchased shares of Common Stock called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or, at
the request of the Holder, appropriate notation may be made on this Warrant
and the same returned to the Holder.
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon
the exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable, and the Company shall pay all expenses
in connection with, and all taxes and other governmental charges that may be
imposed with respect to, the issuance or delivery thereof, unless such taxes
or charges are income taxes or otherwise imposed upon income or revenues of
the Holder.
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2.3. FRACTIONAL SHARES. The Company shall not be required to issue
a fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company may, as provided in
Section 2.1, pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to Section 9, transfer of this Warrant and
all rights hereunder, in whole or in part, shall be registered on the books
of the Company to be maintained for such purpose, upon surrender of this
Warrant at the principal office of the Company referred to in Section 2.1 or
the office or agency designated by the Company pursuant to Section 14.7,
together with a written assignment of this Warrant substantially in the form
of EXHIBIT B hereto duly executed by the Holder or its agent or attorney.
Upon such surrender, the Company shall, subject to Section 9, execute and
deliver a new Warrant or Warrants in the name of the assignee or assignees
and in the denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised
by a new Holder for the purchase of shares of Common Stock without having a
new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant
may be divided or combined with other Warrants upon presentation thereof at
the aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued
and signed by the Holder or its agent or attorney. Subject to Section 3.1
and Section 9, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver the
new Warrant or Warrants and pay all expenses, taxes and other charges payable
in connection with the preparation, issuance and delivery of such Warrants,
unless such taxes or charges are income taxes or otherwise imposed upon
income or revenues of the Holder, or arise because of the domicile of the
Holder.
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3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, and the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time as
set forth in this Section 4. The Company shall give each Holder notice of
any event which requires an adjustment pursuant to this Section 4 at the time
of such event.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any
time the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in or to
receive any other distribution of Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record holder
of the same number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the occurrence of such event would own or be
entitled to receive after the occurrence of such event, and (ii) the Current
Warrant Price shall be adjusted to equal the product of (A) the Current
Warrant Price prior to the occurrence of such event multiplied by (B) a
fraction, the numerator of which is the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment and
the denominator of which is the number of shares for which this Warrant is
exercisable immediately after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive any dividend or other distribution of:
(a) cash (other than a regular cash dividend payable out of
surplus or net profits legally available for the payment of
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dividends under the laws of the jurisdiction of incorporation of the
Company),
(b) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other
than cash, Convertible Securities or Additional Shares of Common
Stock), or
(c) any warrants, options or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock),
then (i) the number of shares of Common Stock for which this warrant is
exercisable shall be adjusted to equal the product of (A) the number of shares
of Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by (B) a fraction, the numerator of which shall be the
Current Market Price per share of Common Stock at the date of taking such record
and the denominator of which shall be such Current Market Price per share of
Common Stock minus the amount allocable to one share of Common Stock of any such
cash so distributable and of the fair value (as determined pursuant to Section
4.7(a), including as to an opinion from an investment banking firm) of any and
all such evidences of indebtedness, shares of stock, other than securities or
property or warrants or other subscription or purchase rights so distributable;
and (ii) the Current Warrant Price shall be adjusted to equal (A) the Current
Warrant Price multiplied by (B) a fraction, the numerator of which shall be the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment and the denominator of which shall be the
number of shares for which this Warrant is exercisable immediately after such
adjustment. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) if at any
time the Company shall (except as hereinafter provided) issue or sell any
Additional Shares of Common Stock, in exchange for consideration in an amount
per Additional Share of Common Stock
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which is less than the Current Warrant Price at the time the Additional
Shares of Common Stock are issued, then (i) the Current Warrant Price as to
the number of shares for which this Warrant is exercisable prior to such
adjustment shall be reduced to a price determined by dividing (A) an amount
equal to the sum of (x) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing
Current Warrant Price plus (y) the consideration, if any, received by the
Company upon such issue or sale, by (B) the total number of shares of Common
Stock outstanding immediately after such issue or sale; and (ii) the number
of shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product of (A) the Current Warrant Price in effect
immediately prior to such issue or sale multiplied by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such issue or sale, and dividing the product thereof by the Current
Warrant Price resulting from the adjustment made pursuant to clause (i) above.
(b) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, in exchange
for consideration in an amount per Additional Share of Common Stock which is
less than the Current Market Price at the time the Additional Shares of
Common Stock are issued, then (i) the number of shares of Common Stock for
which this Warrant is exercisable shall be adjusted to equal the product of
(A) the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such issue or sale multiplied by (B) a
fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately after such issue or sale and the denominator of
which shall be the sum of (x) number of shares of Common Stock outstanding
immediately prior to such issue or sale plus (y) the number of shares which
the aggregate offering price of the total number of such Additional Shares of
Common Stock would purchase at the then Current Market Price; and (ii) the
Current Warrant Price as to the number of shares for which this Warrant is
exercisable prior to such adjustment shall be adjusted by multiplying (A)
such Current Warrant Price by (B) a fraction, the numerator of which shall be
the number of shares for which this Warrant is exercisable immediately prior
to such issue or sale and the denominator of which shall be the number of
shares of Common Stock for which this Warrant is exercisable immediately
after such issue or sale.
(c) If at any time the Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, in exchange for
consideration in an amount per Additional Share of Common Stock which is less
than the Current Warrant Price and the Current Market Price at the time the
Additional Shares of
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Common Stock are issued, the adjustment required under this Section 4.3 shall
be made in accordance with the formula in paragraph (a) or (b) above which
results in the lower Current Warrant Price following such adjustment. The
provisions of paragraphs (a) and (b) of Section 4.3 shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.1 or Section 4.2. No adjustment of the number of
shares of Common Stock for which this Warrant shall be exercisable shall be
made under paragraph (a) or (b) of this Section 4.3 upon the issuance of any
Additional Shares of Common Stock which are issued pursuant to the exercise
of any warrants or other subscription or purchase rights or pursuant to the
exercise of any conversion or exchange rights in any Convertible Securities,
if any such adjustment shall previously have been made upon the issuance of
such warrants or other rights or upon the issuance of such Convertible
Securities (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4.4 or Section 4.5.
4.4. ISSUANCE OF WARRANTS, OPTIONS OR OTHER RIGHTS. If at any time
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any
manner (whether directly or by assumption in a merger in which the Company is
the surviving corporation) issue or sell, any warrants, options or other
rights to subscribe for or purchase any Additional Shares of Common Stock or
any Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which
Common Stock is issuable upon the exercise of such warrants, options or other
rights or upon conversion or exchange of such Convertible Securities shall be
less than the Current Warrant Price or the Current Market Price in effect
immediately prior to such issue or sale, then the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall be adjusted
as provided in Section 4.3 on the basis that the maximum number of Additional
Shares of Common Stock issuable pursuant to all such warrants, options or
other rights or necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such warrants, options
or other rights. No further adjustment of the Current Warrant Price shall be
made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants, options or other rights or upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the
Company shall take a record of the holders of its Common Stock
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for the purpose of entitling them to receive a distribution of, or shall in
any manner (whether directly or by assumption in a merger in which the
Company is the surviving corporation) issue or sell, any Convertible
Securities, whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange shall be less than the Current
Warrant Price or Current Market Price in effect immediately prior to the time
of such issue or sale, then the number of Shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding
and the Company shall have received all of the consideration payable
therefor, if any, as of the date of actual issuance of such Convertible
Securities. No adjustment of the number of shares for which this Warrant is
exercisable and the Current Warrant Price shall be made under this Section
4.5 upon the issuance of any Convertible Securities which are issued pursuant
to the exercise of any warrants,
options or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such
warrants, options or other rights pursuant to Section 4.4. No further
adjustments of the number of Shares for which this Warrant is exercisable and
the Current Warrant Price shall be made upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities and, if any
issue or sale of such Convertible Securities is made upon exercise of any
warrant, option or other right to subscribe for or to purchase any such
Convertible Securities for which adjustments of the number of Shares for
which this warrant is exercisable and the Current Warrant Price have been or
are to be made pursuant to other provisions of Section 4, no further
adjustments of the number of Shares for which this warrant is exercisable and
the Current Warrant Price shall be made by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment
of the number of shares of Common Stock for which this Warrant is exercisable
and of the Current Warrant Price shall have been made pursuant to Section 4.4
or Section 4.5 as the result of any issuance of warrants, options, rights or
Convertible Securities, such warrants, options or rights, or the right of
conversion or exchange of such Convertible Securities, shall expire, and all
or a portion of such warrants, options or rights or the right of conversion
or exchange with respect to all or a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, then such
previous adjustment shall be rescinded and annulled and the Additional Shares
of Common Stock which were deemed to have been issued by virtue of the
computation
-11-
made in connection with the adjustment so rescinded and annulled shall no
longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such warrants,
options or rights or Convertible Securities on the basis of (a) treating the
number of Additional Shares of Common Stock or other property, if any,
theretofore actually issued or issuable pursuant to the previous exercise of
any such warrants, options or rights or any such right of conversion or
exchange, as having been issued on the date or dates of any such exercise and
for the consideration actually received and receivable therefor, and (b)
treating any such warrants, options or rights or any such Convertible
Securities which then remain outstanding as having been granted or issued
immediately after the time of such increase of the consideration per share
for which shares of Common Stock or other property are issuable under such
warrants, options or rights or other Convertible Securities, whereupon a new
adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price shall be made, which new adjustment
shall supersede the previous adjustment so rescinded and annulled.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants, options or other rights to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities shall be issued for cash
consideration, the consideration received by the Company therefor shall be
the amount of the cash received by the Company, or, if such Additional Shares
of Common Stock or Convertible Securities are offered by the Company for
subscription, the subscription price, or, if such Additional Shares of Common
Stock or Convertible Securities are sold to underwriters or dealers for
public offering without a subscription offering, the public offering price
(in any such case subtracting any amounts paid or receivable for accrued
interest or accrued dividends and without taking into account any
compensation, discounts or expenses paid or incurred by the Company for and
in the underwriting of, or otherwise in connection with, the issuance
thereof). To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith by the
Board of Directors of the Company. In case any Additional Shares of Common
Stock or
-12-
any Convertible Securities or any warrants, options or other rights
to subscribe for or purchase such Additional Shares of Common Stock or
Convertible Securities shall be issued in connection with any merger in which
the Company issues any securities, the amount of consideration therefor shall
be deemed to be the fair value, as determined in good faith by the Board of
Directors of the Company, of such portion of the assets and business of the
nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants, options or other rights, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to
any warrants, options or other rights to subscribe for or purchase the same
shall be the consideration received by the Company for issuing such warrants,
options or other rights plus the additional consideration payable to the
Company upon exercise of such warrants, options or other rights. The
consideration for any Additional Shares of Common Stock issuable pursuant to
the terms of any Convertible Securities shall be the consideration received
by the Company for issuing warrants, options or other rights to subscribe for
or purchase such Convertible Securities, plus the consideration paid or
payable to the Company in respect of the subscription for or purchase of such
Convertible Securities, plus the additional consideration, if any, payable to
the Company upon the exercise of the right of conversion or exchange of such
Convertible Securities. In case of the issuance at any time of any
Additional Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a consideration equal to
the amount of such dividend so paid or satisfied.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number
of shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision
or combination of shares of the Common Stock, as provided for in Section
4.1) up to, but not beyond the date of exercise if such adjustment either by
itself or with other adjustments not previously made, will, based on a good
faith determination of the Board of Directors of the Company, add or subtract
less than an amount equal to 1% of the Common Stock outstanding immediately
prior to the making of such adjustment. Any adjustment representing a change
of less than such minimum amount (except as aforesaid) which is postponed
shall be carried forward and made as soon as such adjustment, together with
other adjustments required by this Section 4 and not previously made, would
result in a
-13-
minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close
of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/10th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(e) ESCROW OF WARRANT STOCK. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the
event for which such record is taken, and the Holder exercises this Warrant,
any Additional Shares of Common Stock issuable upon exercise by reason of
such adjustment shall be deemed the last shares of Common Stock for which
this Warrant is exercised (notwithstanding any other provision to the
contrary herein) and such shares or other property shall be held in escrow
for the Holder by the Company to be issued to the Holder upon and to the
extent that the event actually takes place, upon payment of the then Current
Warrant Price. Notwithstanding any other provision to the contrary herein, if
the event for which such record was taken fails to occur or is rescinded,
then such escrowed shares shall be cancelled by the Company and escrowed
property returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of
Directors of the Company shall be required to make determination in good
faith of the fair value of any item under this Section 4, such determination
may be challenged in good faith by the Holder, and if, upon the expiration of
20 Business Days, the Holder and the Company fail to agree as to such fair
value, after reasonable, good faith negotiation, any dispute shall be
resolved by an investment banking firm selected by the Company and reasonably
acceptable to such Holder (or, if more than one Warrant is outstanding, to
holders of a majority of Warrant Stock issuable upon exercise of the
Warrants). The Company shall bear 80%, and the Holder shall bear 20%, of
the cost of such firm.
-14-
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where there is a change in or distribution with respect to the
Common Stock of the Company other than a subdivision, combination or exchange
otherwise provided for herein), or sell, transfer or otherwise dispose of all
or substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation (herein referred to as "OTHER
PROPERTY"), are to be received by or distributed to the holders of Common
Stock of the Company, then each Holder shall have the right thereafter to
receive, upon exercise of such Warrant, the number of shares of common stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of
such reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of
each and every term and condition of this Warrant to be performed and
observed by the Company and all the obligations and liabilities hereof,
subject to such modifications as may be deemed appropriate (as determined in
good faith by resolution of the Board of Directors of the Company) in order
to provide for adjustments of shares of the Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 4. For purposes of this Section
4.8 "common stock of the successor or acquiring corporation" shall include
stock of such corporation of any class which is not preferred as to dividends
or assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event, and any warrants,
options or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.8 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
-15-
4.9. OTHER ACTION AFFECTING COMMON STOCK. In case at any time or
from time to time the Company shall take any action in respect of its Common
Stock, other than action described in this Section 4, then, unless such
action will not have a material adverse effect upon the rights of the Holder,
the number of shares of Common Stock or other stock for which this warrant is
exercisable and/or the purchase price thereof shall be adjusted in such
manner as may be equitable in the circumstances.
4.10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In
the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. The Company will not at any time close its stock
transfer books or warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
5. NOTICES TO WARRANT HOLDERS
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of
Common Stock for which this Warrant is exercisable, or whenever the price at
which a share of such Common Stock may be purchased upon exercise of this
Warrant, shall be adjusted pursuant to Section 4, the Company shall forthwith
prepare a certificate to be executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and specifying the Current Warrant Price and the number of
shares of Common Stock for which this Warrant is exercisable after giving
effect to such adjustment or change. The Company shall promptly cause a
signed copy of such certificate to be delivered to the Holder in accordance
with Section 14.2. The Company shall keep at its office or agency designated
pursuant to Section 14.7 copies of all such certificates and cause the same
to be available for inspection at said office during normal business hours by
the Holder or any prospective purchaser of a Warrant designated by the Holder
thereof.
5.2. NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be
entitled to the same rights to receive notice of corporate action as any
holder of Common Stock.
6. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger,
-16-
dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of
this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of the Holder against impairment.
Without limiting the generality of the foregoing, the Company will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant.
Upon the request of the Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to the Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
The Company shall at all times reserve and keep available for
issuance upon the exercise of this Warrant such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the exercise
in full of all outstanding warrants. The Company covenants that all shares
of Common Stock which shall be so issuable, when issued upon exercise of any
Warrant and payment therefor in accordance with the terms of such Warrant,
shall be duly and validly issued and fully paid and nonassessable.
Before taking any action which would cause an adjustment reducing
the Current Warrant Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take
any and all corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of such
Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in
the Current Warrant Price, the Company shall obtain all authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance
upon exercise of Warrants require registration or qualification with any
governmental authority under any federal or state law (otherwise than as
provided in Section 9) before such
-17-
shares may be so issued, the Company will in good faith, as expeditiously as
possible and at its own expense, endeavor to cause such shares to be duly
registered or qualified, as the case may be.
8. PUT RIGHTS
The Holder shall have the right to require the Company to repurchase
all or any portion of the Warrants held by the Holder upon the terms and as
provided in paragraph 13B of the Securities Purchase Agreement.
9. RESTRICTIONS ON TRANSFER
The Warrants and the Warrant Stock may not be transferred or
assigned before satisfaction of the conditions specified in this Section 9,
which are intended, among other purposes, to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant
or any Warrant Stock. The Holder, by acceptance of this Warrant, agrees to be
bound by the provisions of this Section 9.
9.1. RESTRICTIVE LEGEND. This Warrant, and all shares of Warrant
Stock issued upon exercise hereof, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
AND THE WARRANT STOCK ISSUED
HEREUNDER ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS PROVIDED IN
SECTION 9 HEREOF."
In addition, all shares of Warrant Stock issued upon the initial exercise of
this Warrant shall bear a legend in substantially the following form:
IN ADDITION TO THE FOREGOING RESTRICTIONS ON TRANSFER, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH
THE TERMS OF A CERTAIN BUY AND SELL AGREEMENT DATED AS OF NOVEMBER 14,
1994, A COPY OF WHICH IS ON FILE WITH THE COMPANY. ANY ATTEMPTED
SALE, TRANSFER, ASSIGNMENT, PLEDGE OR OTHER DISPOSITION IN VIOLATION
OF THE TERMS OF THE BUY AND SELL AGREEMENT IS VOID.
-18-
9.2. BUY AND SELL AGREEMENT. The Warrant Stock is subject to the
terms of a Buy and Sell Agreement dated as of November 14, 1994, a copy of which
is on file with the Company. No shares of Warrant Stock may be sold,
transferred, assigned, pledged or otherwise disposed of except in accordance
therewith.
9.3. CONSENT TO TRANSFER. The Holder of this Warrant shall not
transfer, assign, or otherwise dispose, or permit the transfer, assignment or
other disposition by it, of this Warrant or any Warrant Stock, or any
interest therein, to any person (including any Electra Transferee, Permitted
Person, or any other transferee), other than the Company or any Shareholder,
unless the transferee agrees in a writing satisfactory to the Company: (i)
that it will not transfer or permit the transfer of this Warrant or any
shares of Common Stock so acquired or any interest therein to any Person
(other than the Company or any Shareholder) without the prior written consent
of the Company and (ii) that it will be bound by the transfer restrictions
set forth in this Section 9.3. The consent required in clause (i) of the
immediately preceding sentence may be withheld by the Company only if, in the
Company's reasonable opinion, the transferee (x) competes directly or
indirectly with the Company or (y) may be expected to have a significant
adverse effect on the Company's Christian-based mission or image. Any
transfer in violation of this Section 9.3 shall be void. Any stock
certificate for shares subject to the transfer restrictions set forth in this
Section 9.3 shall include a legend reflecting the restrictions on transfer
set forth in this Section 9.3. For purposes of this Section 9.3, the terms
"Electra Transferee", "Permitted Person" and "Shareholder" shall have the
respective meanings assigned to such terms in the Buy and Sell Agreement.
The Company may deny consent to a transfer of this Warrant if the proposed
transfer would cause the total number of Holders of this and all other
Warrants, including the Series B, Series C, Series D, and the Penalty
Warrants, to exceed 10, except for any proposed intra-company transfers by
and among Electra or any of its Affiliates.
9.4. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.
Prior to any Transfer of any Warrant, the holder of such Warrant shall give
five days' prior written notice ("a TRANSFER NOTICE") to the Company of such
holder's intention to effect such Transfer, including a description of the
manner and circumstances of the proposed Transfer and, if requested by the
Company, an opinion from counsel to such holder that the proposed Transfer of
such Warrant may be effected without registration under the Securities Act.
After delivery of the Transfer Notice, the holder shall be entitled to
Transfer such Warrant in accordance with the terms of the Transfer Notice.
Each Warrant issued upon
-19-
such Transfer shall bear the restrictive legend set forth in Section 9.1,
unless such legend is not required in order to ensure compliance with the
Securities Act.
10. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and, in case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (it being understood and agreed that the
written agreement of Electra and subsequent institutional transferees, if any,
shall be sufficient indemnity) and, in case of mutilation, upon surrender and
cancellation hereof, the Company will execute and deliver in lieu hereof a new
Warrant of like tenor in replacement.
11. FINANCIAL AND BUSINESS INFORMATION
The Company will deliver or cause to be delivered to each Holder, as
provided in paragraph 6A of the Securities Purchase Agreement, certain financial
information, financial analyses, notices, reports, statements and certificates,
all to the extent and in the manner provided therein.
12. APPRAISAL
If the Company and the Holder fail to agree as to the Appraised
Value per share of Common Stock, after reasonable, good faith negotiation,
upon the expiration of 20 Business Days, the determination of the Appraised
Value per share of Common Stock shall be made by an investment banking firm
satisfactory to both the Company and the Holder (or, if there is more than
one Warrant outstanding, to holders of a majority of the Warrant Stock
issuable upon exercise of the Warrants). The Company shall retain such
investment banking firm as may be necessary for the determination of
Appraised Value required by the terms of this Warrant, and the Company shall
bear 80%, and the Holder shall bear 20%, of the cost of such firm.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by the
Holder to purchase shares of Common Stock, and no enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of such
Holder for the purchase price of any Common Stock or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
-20-
14. MISCELLANEOUS
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay
or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice the Holder's rights,
powers or remedies. If the Company fails to make, when due, any payments
provided for hereunder, or fails to comply with any provision of this Warrant,
the Company shall pay to the Holder such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys'
fees, incurred by the Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address appearing on the books of the Company maintained for such purpose;
(b) If to the Company at:
Family Bookstores Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
Grand Rapids, Michigan 49530
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
900 Old Kent Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Grand Rapids, Michigan 49503-2489
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent approval, declaration delivery or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, with receipt acknowledged, or three (3) Business
Days
-21-
after the same shall have been postmarked in the United States mail.
14.3. VOTING. If requested by the Holder hereof, and to the
extent permitted by law, the Company shall take all action to entitle the
Holder to vote with the Common Stock of the Company that number of votes
equal to the number of shares of Common Stock issuable from time to time upon
exercise of this Warrant on any matters upon which the holders of Common
Stock are entitled to vote; PROVIDED, that the rights of the Holder hereunder
shall not duplicate any rights of the Holder to vote with the Common Stock as
may be provided under the Shareholders' Agreement.
14.4. REMEDIES. Each holder of this Warrant and any Warrant Stock
issuable upon exercise of this Warrant, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The
Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of Section 9
of this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
14.5. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure
to the benefit of and be binding upon the successors of the Company and the
successors and assigns of Electra or any other holder hereof. The provisions
of this Warrant are intended to be for the benefit of all holders from time
to time of this Warrant, and shall be enforceable by any such holder.
14.6. OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which may
be the principal executive offices of the Company) where the Warrants may be
presented for exercise, registration of transfer, division or combination as
provided in this warrant.
14.7. INFORMATION. The Company shall cooperate with each Holder
of a Warrant and each holder of Warrant Stock in supplying such information
as may be reasonably requested by such holder to comply with any filings or
information reporting forms presently or hereafter required as a condition to
the availability of an exemption from the Securities Act for the sale of any
Warrant or Warrant Stock.
14.8. AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder (or, if there is more than one Warrant
-22-
outstanding, to holders of a majority of the Warrant Stock issuable upon
exercise of the Warrants).
14.9. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant.
14.10. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.11. GOVERNING LAW. This Warrant shall be governed by the laws
of the State of New York, without regard to the provisions thereof relating
to conflict of laws, except to the extent matters herein are governed by the
Michigan Business Corporation Act, under which the Company is incorporated.
-23-
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered by an officer thereunto duly authorized, as of the ___
day of November, 1994.
FAMILY BOOKSTORES COMPANY, INC.
By:
----------------------------------------
Name:
Title:
-24-
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ________ shares of Common Stock of
FAMILY BOOKSTORES COMPANY, INC., and herewith makes payment therefor, all at
the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased
(and any securities or other property issuable upon such exercise) be issued
in the name of and delivered to
_______________________________________________ whose address is
_____________________________________________ and, if such shares of Common
Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
Dated: ______________________
_______________________________________
(Name of Registered Owner)
_______________________________________
(Signature of Registered Owner)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
NOTE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or any change whatsoever.
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Number of Shares
Name and Address of Assignee of Common Stock
---------------------------- ----------------
and does hereby irrevocably constitute and appoint _________________________
attorney-in-fact to register such transfer on the books of FAMILY BOOKSTORES
COMPANY, INC. maintained for the purpose, with full power of substitution in the
premises.
Dated: __________________
_________________________________________
(Registered Owner)
NOTE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or any change whatsoever. Transfer is subject to restrictions as
provided in the Warrant.