1
EXHIBIT 99.3
PAWNMART, INC.
8% CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT
THIS 8% CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
(this "AGREEMENT") is made as of August 19, 1999, by and between PawnMart, Inc.,
a Delaware corporation (the "CORPORATION"), and the entity identified on
Schedule 1 (the "PURCHASER").
RECITAL
The Purchaser desires to purchase from the Corporation, and the
Corporation desires to issue and sell to the Purchaser (a) 416,667 shares of 8%
Convertible Preferred Stock of the Corporation, par value $6.00 per share, at a
purchase price of $6.00 per share, for an aggregate purchase price of
$2,500,000.00 and (b) 312,500 Common Stock Purchase Warrants for an aggregate
purchase price of $312.00.
AGREEMENTS
In consideration of the recitals and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"AFFILIATE" as applied to any Person means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. The term "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of 10% or more of the
voting power (or in the case of a Person which is not a corporation, 10% or more
of the ownership interest, beneficial or otherwise) of such Person or the power
otherwise to direct or cause the direction of the management and policies of
that Person, whether through voting, by contract or otherwise. For purposes of
this paragraph, "voting power" of any Person means the total number of votes
which may be cast by the holders of the total number of outstanding shares of
stock of any class or classes of such Person in any election of directors of
such Person.
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"CERTIFICATE OF DESIGNATIONS" means the Certificate of Designations by
the Board of Directors of the Corporation of the Preferred Shares stating such
designations, preferences, limitations and relative rights as are applicable in
the form of Exhibit "A".
"CLOSING" means the closing of the sale and purchase of the Preferred
Shares and the Purchaser Warrants pursuant to this Agreement.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON SHARES" means shares of the common stock of the Corporation,
par value $.01 per share.
"INTERMEDIARY" means finder, broker, agent, financial advisor or other
intermediary.
"INVESTMENT" as applied to any Person means (a) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest of any other Person and (b)
any capital contribution by such Person to any other Person.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a governmental entity or any department, agency or political
subdivision thereof.
"PREFERRED SHARES" means the 8% Convertible Preferred Stock of the
Corporation, par value $6.00 per share, the sale of 416,667 shares of which to
the Purchaser is contemplated by this Agreement.
"PURCHASER WARRANTS" means those certain Common Stock Purchase
Warrants, the sale of 312,500 of which to the Purchaser is contemplated by this
Agreement the Purchaser to be issued pursuant to a Warrant Agreement in the form
of Exhibit "B".
"REGISTRATION AGREEMENT" means the Registration Agreement by and among
the Corporation and the Purchaser in the form of Exhibit "C", the entering into
of which is set forth as a condition to Closing by the Purchasers.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TRANSACTION SECURITIES" means the Preferred Shares, the Purchaser
Warrants, the Transaction Warrants and the Underlying Shares.
"TRANSACTION WARRANTS" means those certain warrants to purchase 90,000
Common Shares, to be issued pursuant to a Warrant Agreement in the form of
Exhibit "D".
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"UNDERLYING SHARES" means at any time (a) Common Shares then
outstanding which were issued upon conversion of Preferred Shares and/or
exercise of the Purchaser Warrants, (b) Common Shares then issuable upon
conversion of Preferred Shares then outstanding and/or exercise of the Purchaser
Warrants, and (c) Common Shares then outstanding which were issued as a dividend
or other distribution with respect to or in replacement of any other Underlying
Shares or any of the Preferred Shares; provided, however, that Underlying Shares
shall not include any shares which have been registered pursuant to the
Securities Act or sold to the public pursuant to Rule 144, promulgated by the
Commission under the Securities Act. For purposes of this Agreement, a Person
will be deemed to be a holder of Underlying Shares whenever such Person actually
owns such Underlying Shares or has the unqualified right to acquire such
Underlying Shares (by conversion or otherwise, but disregarding any legal
restrictions upon the exercise of such right), whether or not such acquisition
has actually been effected.
ARTICLE II
AUTHORIZATION AND SALE OF 8% CONVERTIBLE PREFERRED SHARES
2.1 Authorization. The Corporation will, prior to the Closing, (a)
cause the Certificate of Designations to be adopted and filed with the Secretary
of State of Delaware in the form of that attached hereto as Exhibit "A", (b)
authorize the issuance to the Purchaser of the Preferred Shares and the
Purchaser Warrants, (c) authorize the issuance of the Transaction Warrants to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., and (d) reserve sufficient shares of Common Shares for
issuance to the Purchaser upon conversion of the Preferred Shares and exercise
of the Purchaser Warrants and to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. of the Transaction
Warrants.
2.2 Sale of Preferred Shares and Purchaser Warrants to Purchaser.
Subject to the satisfaction of the terms and conditions herein set forth and in
reliance upon the respective representations and warranties of the parties set
forth herein or in any document delivered pursuant hereto, the Corporation
agrees to sell to Purchaser and Purchaser agrees to purchase from the
Corporation, at the Closing, the following securities:
(a) 416,667 Preferred Shares, for the aggregate purchase price of
$2,500,000.00; and
(b) 312,500 Purchaser Warrants for an aggregate purchase price of
$312.00.
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AND WARRANT PURCHASE AGREEMENT - Page 3
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ARTICLE III
CLOSING; DELIVERY; PAYMENT
3.1 Closing. The Closing will be held at the offices of Jakes Jordaan,
PLLC., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ as soon as practical
on the earlier of (a) after the Commission declared effective a registration
statement covering the Transaction Securities or (b) a determination is reached
that the issuance and sale of Transaction Securities is not required to be
registered with the Commission under the Securities Act.
3.2 Delivery. At the Closing, the Corporation will deliver to Purchaser
the following:
(a) a certificate for 416,667 Preferred Shares, duly executed and
registered in the name of Purchaser, against payment by such
Purchaser of the aggregate purchase price of $2,500,000.00,
and
(b) a Common Stock Purchase Warrant for the 312,500 Purchaser
Warrants, against payment by such Purchaser of the aggregate
purchase price of $312.00.
3.3 Payment. At the Closing, Purchaser will pay to the Corporation, by
wire transfer of funds to an account designated by the Corporation or by such
other means as may be acceptable to the Corporation.
ARTICLE IV
CONDITIONS TO CLOSING BY THE PURCHASERS
The obligation of Purchaser to purchase the Preferred Shares and the
Purchaser Warrants at the Closing is subject to the satisfaction of each of the
following conditions:
4.1 Representations and Warranties Correct. The representations and
warranties made by the Corporation in Article VI shall be true and correct in
all material respects when made, and shall be true and correct in all material
respects as of the Closing as if made at the Closing.
4.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation at or prior
to the Closing shall have been performed or complied with in all material
respects.
4.3 Compliance Certificate. At the Closing, the Corporation shall have
delivered to Purchasers a certificate of the Corporation, executed by its chief
executive officer, dated the date of Closing, certifying to the fulfillment of
the conditions specified in Sections 4.1 and 4.2 of this Agreement.
4.4 Secretary's Certificate. At the Closing, the Corporation shall have
delivered to the Purchaser copies of each of the following, in each case
certified to be in full force and effect on the date of the Closing by the
Secretary of the Corporation:
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(a) the Certificate of Designations as of the Closing
certified by the Secretary of State of the State of Delaware as of date
not more than ten days prior to the Closing;
(b) the bylaws of the Corporation; and
(c) resolutions of the Board of Directors of the Corporation,
adopting and authorizing the execution, delivery and performance of
this Agreement, the Registration Agreement, the Purchaser Warrant
Agreement, and the Transaction Warrant Agreement and the transactions
contemplated hereby and thereby, the issuance and sale of the Preferred
Shares, the Purchaser Warrants, the Transaction Warrants and the
reservation of the Common Shares issuable upon conversion of the
Preferred Shares and upon exercise of the Purchaser Warrants and the
Transaction Warrants.
4.5 Registration Agreement. At or prior to the Closing, the Corporation
shall have executed and delivered the Registration Agreement.
4.6 Purchaser Warrant Agreement. At or prior to the Closing, the
Corporation shall have executed and delivered the Purchaser Warrant Agreement.
4.7 Transaction Warrant Agreement. At or prior to the Closing, the
Corporation shall have executed and delivered the Transaction Warrant Agreement.
4.8 Legal Opinion. At the Closing, the Corporation shall have delivered
to the Purchaser the opinion of Jakes Jordaan, PLLC., counsel to the
Corporation, dated the date of the Closing, addressed to the Purchaser and in
the form of Exhibit "E".
4.9 Legal Investment. As of the Closing, the purchase of the Preferred
Shares and the Purchaser Warrants by Purchaser and the Transaction Warrants by
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. hereunder shall be legally permitted by all laws and
regulations to which either Purchaser, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc. and the Corporation
are subject.
4.10 Qualifications. As of the Closing, all authorizations, approvals
or permits of, or filings with any governmental authority, including state
securities or "Blue Sky" offices, that are required by law in advance of the
lawful sale and issuance of the Transaction Securities, shall have been duly
obtained by the Corporation, and shall be effective as of the Closing.
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ARTICLE V
CONDITIONS TO CLOSING BY THE CORPORATION
The obligation of the Corporation to sell the Transaction Securities at
the Closing is subject to the satisfaction of each of the following conditions:
5.1 Representations and Warranties Correct. The representations and
warranties made by the Purchaser in Article VII shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects as of the Closing as if made at the Closing.
5.2 Secretary's Certificate. At the Closing, the Purchaser shall have
delivered to the Corporation a copy of resolutions of its Trustee authorizing
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby and thereby, in each case certified to be in full force and
effect on the date of the Closing by the Trustee of Purchaser.
5.3 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Purchaser at or prior to
the Closing shall have been performed or complied with in all material respects.
5.4 Registration Agreement. At or prior to the Closing, the Purchaser
shall have executed and delivered the Registration Agreement.
5.5 Purchaser Warrant Agreement. At or prior to the Closing, the
Purchaser shall have executed and delivered the Purchaser Warrant Agreement.
5.6 Legal Investment. As of the Closing, the sale of the Preferred
Shares and the Purchaser Warrants by the Corporation to Purchaser hereunder
shall be legally permitted by all laws and regulations to which Purchaser and
the Corporation are subject.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Purchaser as
follows:
6.1 Organization and Standing. The Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Corporation has the requisite legal and corporate power to own all
the properties owned by it, and to conduct its business as presently being and
as proposed to be conducted by it. The Corporation is duly qualified to do
business in those jurisdictions where the ownership of its properties or the
conduct of its business requires such qualification and where the failure to
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AND WARRANT PURCHASE AGREEMENT - Page 6
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be qualified as a foreign corporation would have a material adverse effect upon
the financial condition, business or operations of the Corporation.
6.2 Corporate Power. The Corporation has all requisite legal and
corporate power to enter into this Agreement and the Registration Agreement, to
issue and sell the Preferred Shares, the Purchaser Warrants and the Common
Shares issuable upon conversion of the Preferred Shares and exercise of the
Purchaser Warrants and to carry out and perform its obligations under the terms
of this Agreement and the Registration Agreement.
6.3 Authorization. All corporate action on the part of the Corporation,
its directors and shareholders necessary for the authorization, execution,
delivery and performance by the Corporation of this Agreement, the Registration
Agreement, the Purchaser Warrant Agreement, and the Transaction Warrant
Agreement, and the consummation of the transactions contemplated hereby and
thereby, and for the authorization, issuance and delivery of the Transaction
Securities has been taken. This Agreement, the Registration Agreement, the
Purchaser Warrant Agreement, and the Transaction Warrant Agreement are legal,
valid and binding obligations of the Corporation, enforceable against the
Corporation in accordance with their terms, except as limited by bankruptcy,
insolvency or other laws affecting creditors' rights generally or by the
availability of equitable remedies.
6.4 Validity of Stock. The Preferred Shares, when issued, sold and
delivered in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid, non-assessable and free and clear of all liens,
charges, claims and encumbrances. The Common Shares issuable upon conversion of
the Preferred Shares and the Purchaser Warrants have been duly and validly
reserved and, upon issuance in accordance with the conversion provisions of the
Preferred Shares will be duly and validly issued, fully paid, non-assessable and
free and clear of all liens, charges, claims and encumbrances.
6.5 Public Disclosure. This Agreement, the Corporation's Registration
Statement on Form S-1, SEC Registration No. 333-70635, as amended, do not
contain any untrue statement of a material fact and do not omit to state a
material fact necessary in order to make the statements contained therein or
herein not misleading in the light of the circumstances under which they were
made.
6.6 Fees and Commissions. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., who shall be
paid at the Closing by the Corporation (a) a "finders fee" in amount equal to 6
percent of the purchase price of the Preferred Shares, (b) a "due diligence" fee
in amount equal to 2 percent of the purchase price of the Preferred Shares and
(c) to whom the Corporation shall issue the Transaction Warrants, the
Corporation has retained no Intermediary finder, broker, agent, financial
advisor or other intermediary (collectively "INTERMEDIARY") in connection with
the transactions contemplated by this Agreement, and the Corporation agrees to
indemnify and hold harmless the Purchaser from liability for any compensation to
any Intermediary and the fees and expenses of defending against such liability
or alleged liability.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser represents and warrants to the Corporation with respect to
itself as follows:
7.1 Purchase for Investment. Purchaser will acquire the Preferred
Shares and the Purchaser Warrants, and the Common Shares issuable upon
conversion of the Preferred Shares and exercise of the Purchaser Warrants, for
investment and not with a view to resale or for distributing all or any part
thereof in any transaction which would constitute a "distribution" within the
meaning of the Securities Act. The offering of the Preferred Shares and the
Purchaser Warrants to the Purchaser was made only through direct, personal
communication between the undersigned and a duly authorized representative of
the Corporation and not through public solicitation or advertising. Purchaser
acknowledges that the Preferred Shares, the Purchaser Warrants and the Common
Shares issuable upon conversion thereof have not been registered under the
Securities Act and, except as provided in the Registration Agreement, the
Corporation is under no obligation to file a registration statement with the
Commission with respect to the Preferred Shares, the Purchaser Warrants or the
Common Shares issuable upon conversion of the Preferred Shares.
7.2 Investor Qualifications. Such Purchaser (a) has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the Preferred Shares and the Purchaser
Warrants has the financial ability to assume the monetary risk associated
therewith; (b) is able to bear the complete loss of its investment in the
Preferred Shares and the Purchaser Warrants; (c) has received the Corporation's
Registration Statement and such other documents and information as it has
requested and has had the opportunity to ask questions of, and receive answers
from, the Corporation and its management concerning the Corporation and the
terms and conditions of the offering of the Preferred Shares and to obtain
additional information; (d) is an "accredited investor" as defined in Rule
501(a) of the Regulation D promulgated under the Securities Act; (e) is not an
entity formed solely to make this investment; and (f) is not relying upon any
statements or instruments made or issued by any other Person other than the
Corporation and its officers in making its decision to invest in the Preferred
Shares and the Purchaser Warrants.
7.3 Authorization. All action on the part of such Purchaser necessary
for the authorization, execution, delivery and performance by Purchaser of this
Agreement, the Registration Agreement and the Purchaser Warrant Agreement, and
the consummation of the transactions contemplated hereby and thereby, has been
taken.
7.4 Principal Place of Business. Purchaser's principal place of
business is set forth on Schedule 1.
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7.5 Fees and Commissions. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Inc., who shall be
paid at the Closing by the Corporation (a) a "finders fee" in amount equal to 6
percent of the purchase price of the Preferred Shares, (b) a "due diligence" fee
in amount equal to 2 percent of the purchase price of the Preferred Shares and
(c) to whom the Corporation shall issue the Transaction Warrants, the Purchaser
has not retained any Intermediary in connection with the transactions
contemplated by this Agreement, and the Purchaser agrees to indemnify and hold
harmless the Corporation from liability for any compensation to any Intermediary
and the fees and expenses of defending against such liability or alleged
liability.
7.6 Degree of Risk. That (i) it has been called to the Purchaser's
attention by those individuals with whom the Purchaser has dealt in connection
with an investment in the Corporation, that the Purchaser's investment in the
Corporation is speculative and involves a high degree of risk of loss by the
Purchaser of the Purchaser's entire investment in the Corporation and that the
Purchaser must bear the economic risk of such investment for an indefinite
period of time, (ii) the Purchaser is aware that no guarantees have been or can
be made respecting the future value, if any, of the Preferred Shares and the
Purchaser Warrants or the profitability or success of the business of the
Corporation, and (iii) no assurances are or have been made concerning the
distribution by the Corporation of dividends to the Purchaser of the Preferred
Shares.
ARTICLE VIII
COVENANTS OF THE CORPORATION
8.1 Use of Proceeds. The Corporation will use the proceeds from such
sale of the Preferred Stock to repay that certain Revolving Credit Note in the
initial principal amount of $2,300,000 payable to the order of Purchaser.
8.2 Legend. If the Transaction Securities are not registered with the
Commission under the 1933 Act, then, until (a) the Preferred Shares or the
common stock issued upon conversion, redemption or exercise thereof represented
by such certificate are effectively registered under the Securities Act, or (b)
the holder of such securities delivers to the Corporation a written opinion of
counsel to such holder to the effect that such legend is no longer necessary
under the Securities Act, the Corporation will cause each certificate
representing its securities to be stamped or otherwise imprinted with a legend
to substantially the following effect:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
thus may not be transferred unless so registered or unless an
exemption from registration is available."
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ARTICLE IX
COVENANTS OF THE PURCHASER
9.1 No Short Sale of Common Shares. From the date hereof until the
first anniversary of the Closing, the Purchaser or any of its Affiliates will
not, directly or indirectly, engage in any "short sale" of any Common Share or
encourage the "short sale" of Common Shares.
9.1 No Transfer. Without the prior written consent of the Corporation,
Purchaser will not sell, assign, encumber or otherwise transfer the Preferred
Shares or the Purchaser Warrants.
ARTICLE X
MISCELLANEOUS
10.1 Consent to Amendments; Waivers. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended or waived at
any time only by the written agreement of the Corporation and holders of not
less than a majority of the Preferred Shares then outstanding. Any waiver,
permit, consent or approval of any kind or character on the part of any such
holder of any provisions or conditions of this Agreement must be made in writing
and shall be effective only to the extent specifically set forth in such
writing.
10.2 Representations and Warranties. All representations and warranties
contained herein or made in writing by any party in connection herewith will
survive the execution and delivery of this Agreement and any investigation made
at any time by or on behalf of the Purchasers or holders of Preferred Shares,
the Purchaser Warrants or Underlying Shares for a period of one year.
10.3 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of the Purchaser or
holders of Preferred Shares or Underlying Shares are also for the benefit of,
and enforceable by, any subsequent holders of such shares, except any subsequent
holder who acquires any such security in a registered public offering or in a
sale to the public under Rule 144 promulgated by the Commission under the
Securities Act.
10.4 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
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10.5 Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part of
and shall not be utilized in interpreting this Agreement.
10.6 Notices. Any notices required or permitted to be sent hereunder
shall be delivered personally or mailed, certified mail, return receipt
requested, or delivered by overnight courier service to the following addresses,
or such other address as any party hereto designates by written notice to the
Corporation, and shall be deemed to have been given upon delivery, if delivered
personally, three days after mailing, if mailed, or one business day after
delivery to the courier, if delivered by overnight courier service:
If to the Corporation, to:
PawnMart, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇
With a copy to:
Jakes Jordaan, PLLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Jakes Jordaan
If to Purchaser, to the address set forth on Schedule I.
10.7 Governing Law. The validity, meaning and effect of this Agreement
shall be determined in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in that state.
10.8 Exhibits and Schedules. All exhibits and schedules hereto are an
integral part of this Agreement.
10.9 Final Agreement. This Agreement constitutes the final agreement of
the parties concerning the matters referred to herein, and supersedes all prior
agreements and understandings.
10.10 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument.
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10.11 Expenses. Each of the Purchasers and the Corporation shall bear
their own expenses in connection with the negotiation, execution and delivery of
the Agreement and all related agreements.
The parties hereto have executed this Agreement on the date first set
forth above.
CORPORATION:
PAWNMART, INC.,
A DELAWARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
Its: Chief Financial Officer
PURCHASER:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUSTEE
TRUST C OF THE ▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ FAMILY TRUST DATED 10/14/1994
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Its: trustee
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EXHIBITS AND SCHEDULES
Schedules
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1 Purchaser
Exhibits
--------
A Form of Certificate of
Designations
B Form of Purchaser Warrant Agreement
C Form of Registration Agreement
D Form of Transaction Warrant
Agreement
E Form of Opinion of Counsel to
the Corporation
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SCHEDULE 1
Name and Address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUSTEE
TRUST C OF THE ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ FAMILY TRUST DATED 10/14/1994
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT A
Form of Certificate of Designations
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CERTIFICATE OF DESIGNATIONS
OF THE
8% CONVERTIBLE PREFERRED STOCK
($6.00 PAR VALUE)
OF
PAWNMART, INC.
-------------------
Pursuant to section 151 of the
General Corporation Law of the State of Delaware
-------------------
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted on August __, 1999, by the Board of Directors (the "BOARD") of
PawnMart, Inc., a Delaware corporation (the "CORPORATION"), acting pursuant to
the provisions of section 141(c) of the General Corporation Law of the State of
Delaware:
RESOLVED, that pursuant to authority expressly granted to and
vested in the Board by provisions of the Certificate of Incorporation
of the Corporation, as amended (the "CERTIFICATE OF INCORPORATION"),
the issuance of a series of Preferred Stock, par value $6.00 per share,
which shall consist of 416,667 shares of Preferred Stock designated as
8% Convertible Preferred Stock, be, and the same hereby is, authorized,
and the Board hereby fixes the voting powers, designations, preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of the shares of
such series (in addition to the voting powers, designations,
preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof,
set forth in the Certificate of Incorporation that may be applicable to
the Preferred Stock) as follows:
Section 1. Designation; Amount.
The designation of such series of the Preferred Stock authorization by
this resolution shall be the 8% Convertible Preferred Stock (the "8% PREFERRED
STOCK"). The maximum number of shares of 8% Preferred Stock shall be 416,667.
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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Section 2. Dividends.
2.01 Dividend Amount. Holders of shares of 8% Preferred Stock will be
entitled to receive, when and as declared by the Board out of assets of the
Corporation legally available for payment, an annual dividend at the rate of 8
percent per annum, on the stated liquidated preference ($6.00 per share) (the
"DIVIDEND RATE"), payable in arrears in quarterly installments on last day of
each month of such applicable quarter (each a "DIVIDEND PAYMENT DATE").
Dividends on the 8% Preferred Stock will be cumulative and shall accrue from the
date of issuance of each such share. Dividends will be payable to holders of
record as they appear on the stock books of the Corporation on such record
dates, not more than 20 days nor less than ten (10) days preceding the payment
dates thereof, as may be fixed by the Board. The holders of shares of the 8%
Preferred Stock shall not be entitled to any dividends other than cash dividends
as provided for in this Section 2. Any dividends not declared or paid to holders
of 8% Preferred Stock when due, because the Corporation lacks the legal surplus
and the use of corporate funds for payment of the dividend would result in
liability of directors or officers of the Corporation, or because the use of the
corporate funds for payment of such dividends is otherwise prohibited by law or
contract, then such dividends shall remain payable until such time that the
Corporation shall have the legal surplus to pay such dividends and/or is no
longer contractually prohibited from making such payment. At the time the
Corporation shall have such legal surplus and/or is no longer contractually
prohibited from making such payment, the dividends shall become immediately due
and payable.
2.02 Restrictions on Other Dividends. Unless full cumulative dividends
on the 8% Preferred Stock have been paid, no dividends other than in Common
Stock (as hereinafter defined) of the Corporation may be paid or declared and
set aside for payment or other distribution made upon the Common Stock or on any
other stock of the Corporation ranking junior to the 8% Preferred Stock as to
dividends. Dividends payable for any partial dividend period shall be calculated
on the basis of a three hundred sixty-day (360-day) year of twelve (12)
thirty-day (30-day) months.
Section 3. Liquidation Rights.
The shares of 8% Preferred Stock shall rank prior to the shares of
Common Stock and the shares of any other class of stock of the Corporation
ranking junior to the 8% Preferred Stock upon liquidation, so that in the event
of any liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of the 8% Preferred Stock shall be
entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other such junior stock, an amount equal to $6.00 per share (the "LIQUIDATION
PREFERENCE" of a share of 8% Preferred Stock). After payment of the full amount
of the Liquidation Preference and such dividends, the holders of shares of 8%
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation. If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of 8% Preferred Stock shall
be insufficient to pay in full the preferential amount aforesaid, then such
assets, or the proceeds thereof, shall be distributable among such holders
ratably in accordance with the respective amounts that would be payable on such
shares if all amounts payable thereon were payable in full. For the purposes
hereof, neither a consolidation or merger of the Corporation with or into any
other
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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corporation, nor a merger of any other corporation with or into the Corporation,
nor a sale or transfer of all or any part of the Corporation's assets for cash
or securities shall be considered a liquidation, dissolution or winding up of
the Corporation.
4. Conversion Rights.
Section 4.01 Conversion Rights
(a) Conversion Privilege.
Subject to and upon compliance with the provisions of Section 4, each
share of 8% Preferred Stock shall, at the option of the holder, be convertible
as follows:
(i) No share of 8% Preferred Stock shall be convertible until
after 18 months after the date of issuance.
(ii) after 18 months from the date of issuance until 36 months from
the date of issuance of the share of 8% Preferred Stock, each
share of 8% Preferred Stock shall be convertible, into that
number of fully paid and non-assessable shares of Common Stock
obtained by dividing six dollars ($6.00) per share of 8%
Preferred Stock being converted by the Conversion Price,
determined as hereinafter provided, and by surrender of such
shares so to be converted, such surrender to be made in the
manner provided in Section 4.02; provided, however, that the
right to convert shares called for redemption pursuant to
Section 7 shall terminate at the close of business on the
fifth (5th) business day prior to the date fixed for such
redemption, unless the Corporation shall default in making
payment of the amount payable upon such redemption. The price
at which Common Stock shall be delivered upon conversion in
accordance with this Section 4(a)(ii) (the "CONVERSION PRICE")
shall be the lower of:
(a) Six Dollars ($6.00), or
(b) 80 percent of the average closing sale price
of the Common Stock for the immediately
preceding 25 trading days of the Common
Stock on the NASDAQ market (or, if not
listed on the NASDAQ market, the
Corporations primary trading market). As
used herein, the term "Common Stock" shall
mean the common stock, $.01 par value, of
the Corporation as the same exists at the
date of this Certificate of Designations or
as such stock may be constituted from time
to time; and
(iii) after 36 months from the date of issuance, each share of 8%
Preferred Stock shall be convertible, into that number of
fully paid and non-assessable shares of Common Stock obtained
by dividing (X) six dollars ($6.00) per share of 8% Preferred
Stock being converted by (Y) an amount equal to 66 2/3 percent
of the average closing sale price of the Common Shares for the
immediately preceding 25 trading days of the
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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Common Shares on the NASDAQ market (or, if not listed on the
NASDAQ market, on the Corporations primary trading market).
(b) Mandatory Conversion. Each share of 8% Preferred Stock shall
automatically be converted into shares of Common Stock at the then-effective
Conversion Price immediately upon the date specified by the vote or written
consent or agreement of holders of a majority of the shares of such series.
Section 4.02 Conversion Procedure.
To convert shares of 8% Preferred Stock, a Holder must:
(1) deliver a completed and signed written notice of election to
convert specifying the number (in whole shares) of the shares
of 8% Preferred Stock to be converted and the name or names in
which such holder wishes the certificate or certificates for
shares of Common Stock to be issued to the conversion agent
for the 8% Preferred Stock appointed for such purpose by the
Corporation (the "CONVERSION AGENT");
(2) surrender the certificate representing such shares of 8%
Preferred Stock to the Conversion Agent; and
(3) furnish appropriate endorsement and transfer documents, in
form satisfactory to the Corporation, duly executed by the
holder or such holder's duly authorized attorney.
The date on which the Holder satisfies all such requirements is the
"CONVERSION DATE". As soon as practicable thereafter, the Corporation shall
deliver through the Conversion Agent a certificate for the number of shares of
Common Stock issuable upon such conversion and a check for any fractional shares
of Common Stock. The person in whose name the certificate is registered or in
whose name the shares of Common Stock are issued if other than the registered
Holder of such shares of 8% Preferred Stock shall be treated as a shareholder of
record of the Corporation on and after the Conversion Date.
Upon surrender of a certificate representing shares of 8% Preferred
Stock that is converted in part, the Corporation shall issue and the Conversion
Agent shall authenticate for the Holder a new certificate representing shares of
8% Preferred Stock equal in number to the unconverted portion of the shares of
8% Preferred Stock surrendered.
If the last day on which shares of 8% Preferred Stock may be converted
is a Legal Holiday (as defined below) in a place where a Conversion Agent is
located, the shares of 8% Preferred Stock may be surrendered to that Conversion
Agent on the next succeeding day that is not a Legal Holiday. A "LEGAL HOLIDAY"
is a Saturday, a Sunday, or a day on which banking institutions in the relevant
jurisdiction are not required to be open.
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Section 4.03 Corporation to Provide Stock.
The Corporation shall at all times reserve and have available, free
from preemptive rights, enough shares of Common Stock to permit the conversion
of the shares of 8% Preferred Stock.
Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value, if any, of the shares of Common Stock
issuable upon conversion of the shares of 8% Preferred Stock, the Corporation
will take all corporate action that may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and legally issue shares of
such Common Stock at such adjusted Conversion Price.
All shares of Common Stock that may be issued upon conversion of the
shares of 8% Preferred Stock shall be validly issued, fully paid and
nonassessable.
Section 4.04 Adjustment for Change in Capital Stock.
If the Corporation:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares of Common Stock;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares of Common Stock;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of
its capital stock,
then the Conversion Price and the number of shares of Common Stock to be
received immediately prior to such action shall be adjusted so that the Holder
of shares of 8% Preferred Stock thereafter converted may receive the number of
shares of capital stock of the Corporation that such Holder would have owned
immediately following such action if such Holder had converted the shares of 8%
Preferred Stock immediately prior to such action.
The adjustment shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification.
Section 4.05 Notice of Adjustment.
Whenever the Conversion Price is adjusted, the Corporation shall
promptly mail to stockholders of the 8% Preferred Stock a notice of the
adjustment.
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Section 4.06 Rights Upon Consolidation or Merger.
If either of the following shall occur, namely:
(1) any consolidation or merger to which the Corporation is party,
other than a consolidation or merger in which corporation is a
continuing corporation and that does not result in any
reclassification of, or change (other than a change in par
value or from par value to no par value or from no par value
to par value, or as a result of a subdivision or combination)
in, outstanding shares of Common Stock; or
(2) any sale or conveyance to another corporation of the assets of
the Corporation as an entirety or substantially as an
entirety, then the Board shall, by resolution (a copy of which
shall be filed with the Conversion Agent) adopted with respect
thereto, provide (i) that the holder of each share of the 8%
Preferred Stock then outstanding shall have the right to
convert such share into the kind and amount of shares of stock
and other securities and property (including cash) receivable
upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of shares of
Common Stock issuable upon conversion of such share of the 8%
Preferred Stock immediately prior to such reclassification,
change, consolidation, merger, sale or conveyance, and (ii)
that there be adjustments thereafter as nearly equivalent as
may be practicable to the adjustments provided for in this
Section 4. The provisions of this Section shall similarly
apply to successive reclassification, changes, consolidations,
mergers, sales or conveyances.
Section 4.06 Corporation Determination Final.
Any determination that the Corporation or the Board of Directors must
make pursuant to Section 4 is conclusive.
Section 5. Status of Converted or Redeemed Shares.
Upon any conversion or redemption of shares of 8% Preferred Stock, the
shares of 8% Preferred Stock so converted or redeemed shall have the status of
authorized and unissued shares of preferred stock, and the number of shares of
preferred stock that the Corporation shall have authority to issue shall not be
decreased by the conversion or redemption of shares of 8% Preferred Stock;
provided, however, such converted or redeemed shares may not be reissued as
shares of 8% Preferred Stock.
Section 6. Voting Rights.
Each share of shares of 8% Preferred Stock shall be entitled to one
vote per share, voting together with the holders of the Common Stock, on all
matters submitted to a vote of stockholders, in addition to any voting rights to
which they may be entitled under the laws of the State of Delaware.
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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Section 6.01 Special Voting Rights.
So long as any shares of the 8% Preferred Stock remain outstanding, the
Corporation will not, either directly or indirectly or through merger or
consolidation with any other corporation, without the affirmative vote of the
holders of a majority of the 8% Preferred Stock then outstanding, amend, alter
or repeal any of the provisions of the Certificate of Incorporation (including
this resolution) so as to affect adversely the preferences, special rights or
powers of the 8% Preferred Stock.
Section 7. Redemption at Option of Corporation.
Section 7.01 Redemption.
(a) General. The 8% Preferred Stock may be redeemed as a whole, or
from time to time, in part, as follows:
(i) until 36 months from the date of issuance of such
share of 8% Preferred Stock until, upon not less
than thirty (30) nor more than sixty (60) days prior
notice mailed to the holders of the 8% Preferred
Stock to be redeemed, in cash at the a redemption
price per share of 8% Preferred Stock of $7.20
effective on the date fixed for redemption (the
"Redemption Date"). If less than all the outstanding
8% Preferred Stock are to be redeemed, the 8%
Preferred Stock to be redeemed shall be selected by
the Company and shall be either (i) selected by lot
in such manner as the Company may determine, or (ii)
a pro rata proportion of the 8% Preferred Stock of
all holders; or
(ii) after 36 months from the date of issuance of such
share of 8% Preferred Stock, upon not less than
thirty (30) nor more than sixty (60) days prior
notice mailed to the holders of the 8% Preferred
Stock to be redeemed, in cash at the a redemption
price per share of of 8% Preferred Stock of $6.00
effective on the date fixed for redemption (the
"Redemption Date"). If less than all the outstanding
8% Preferred Stock are to be redeemed, the 8%
Preferred Stock to be redeemed shall be selected by
the Company and shall be either (i) selected by lot
in such manner as the Company may determine, or (ii)
a pro rata proportion of the 8% Preferred Stock of
all holders.
If a notice of redemption has been given pursuant to Section 7.01(b)
and if, on or before the Redemption Date, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, for the pro rata benefit of the holders of the 8% Preferred Stock
so called for redemption, then, notwithstanding that any certificates for such
8% Preferred Stock have not been surrendered for cancellation, on the close of
business on the Redemption Date the holders of such 8% Preferred Stock shall
cease to be securityholders with respect to such 8% Preferred Stock and shall
have no interest in or claims against the Company by virtue thereof and shall
have no voting or other rights with respect to such 8% Preferred Stock, except
the right to receive the moneys payable upon such redemption, without interest
thereon, upon surrender (and endorsement, if required by the Company) of their
certificates, and the 8% Preferred Stock evidenced thereby shall no longer be
outstanding. Subject to applicable escheat laws, any moneys so set aside by the
Company and unclaimed at the end of two years from the redemption
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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date shall revert to the general funds of the Company, after which reversion the
holders of such 8% Preferred Stock so called for redemption shall look only to
the general funds of the Company for the payment of the amounts payable upon
such redemption. Any interest accrued on funds so deposited shall be paid to the
Company from time to time.
(b) Notice. Not less than thirty (30) nor more than sixty (60)
days prior to the Redemption Date, a notice shall be given by
first class mail, postage prepaid, to the holders of record of
the 8% Preferred Stock at their respective addresses as the
same shall appear on the books of the Company, specifying the
Redemption Date, and the place where certificates for 8%
Preferred Stock are to be surrendered, but neither failure to
mail such notice, nor any defect therein or in the mailing
thereof, to any particular holder shall affect the sufficiency
of the notice or the validity of the proceedings for
redemption with respect to the other holders. Any notice that
was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder
receives the notice. Notwithstanding the foregoing, if notice
of redemption has been given pursuant to this Section 7.01 and
any holder of 8% Preferred Stock shall, prior to the close of
business on the last business day preceding the redemption
date, give written notice to the Company pursuant to Section
4.02 of the conversion of any or all of the 8% Preferred Stock
to be redeemed that are held by such holder, accompanied by a
certificate or certificates for such 8% Preferred Stock, duly
endorsed or assigned to the Company, then such redemption
shall not become effective as to such 8% Preferred Stock to be
converted and such conversion shall become effective as
provided in Section 4.02 hereof.
Section 8. Actions not Requiring Consent.
No consent of the holders of the 8% Preferred Stock shall be required
for (a) the creation of any indebtedness of any kind of the Corporation, (b) the
creation, or increase or decrease in the amount, of any class or series of stock
of the Corporation or (c) any increase or decrease in the amount of authorized
Common Stock or any increase, decrease or change in the par value thereof or in
any other terms thereof.
Section 9. Permitted Amendments.
The Board reserves the right by subsequent amendment of this resolution
from time to time to increase or decrease the number of shares that constitute
the 8% Preferred Stock (but not below the number of shares thereof then
outstanding) and in other respects to amend this resolution within the
limitations provided by law, this resolution and the Certificate of
Incorporation.
Section 10. No Preemptive Rights.
The holders of shares of the 8% Preferred Stock shall have no
preemptive rights, including preemptive rights with respect to any shares of
capital stock or other securities of the Corporation convertible into or
carrying rights or options to purchase any such shares.
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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
made under the seal of the Corporation and signed effective as of the day of the
___ day of _______, 1999.
PAWNMART, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
ATTEST:
--------------------------
Name:
---------------------
Title: Secretary
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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EXHIBIT B
Form of Purchaser Warrant Agreement
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NO. VOID AFTER ____________ , 2004
----------------
312,500 WARRANTS
PURCHASER WARRANT AGREEMENT
Common Stock Purchase Warrant
of PawnMart, Inc.
RECITALS
WHEREAS, the holder hereof (the "Registered Holder") is the holder of
certain Warrant(s) to initially purchase 312,500 shares of Common Stock of
PawnMart, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Company, proposes to offer and sell a maximum of: (a)
416,667 shares of 8% Convertible Preferred Stock, par value $6.00 per share, at
a purchase price of $6.00 per share (the "Preferred Stock"), for an aggregate
purchase price of $2,500,000 and (b) 312,500 Common Stock Purchase Warrants (the
"Warrants") for an aggregate purchase price of $312, pursuant to a purchase
agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
The Registered Holder is the owner of 312,500 Warrants. Each Warrant
initially entitles the Registered Holder to purchase, subject to the terms and
conditions set forth herein, one fully paid and nonassessable share of Common
Stock, $.01 par value the Company, at any time between date hereof and the
Expiration Date (as hereinafter defined) upon the presentation and surrender of
this Warrant Certificate with the Election to Purchase on the reverse hereof
duly executed, at the corporate office of the Company, accompanied by payment of
$5.00, subject to adjustment (the "Exercise Price"), in lawful money of the
United States of America in cash or by check made payable to the Company.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on
_______________, 2004. If such date shall in the State of New York be a holiday
or a day on which the banks are authorized to close, then the Expiration Date
shall mean 5:00 p.m. (New York time) the next following day which in the State
of New York is not a holiday or a day on which banks are authorized to close.
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1. Exercise of Warrants. Each registered holder of Warrants shall have the
right, which right may be exercised as set forth herein, to purchase from the
Company, and the Company shall issue and sell to such registered holder of
Warrants, the number of fully paid and nonassessable shares of Common Stock
specified herein, upon surrender to the Company, with the form of election to
purchase duly completed and signed, and upon payment to the Company of the
Exercise Price for the number of shares of Common Stock in respect of which such
Warrants are then exercised. Payment of such Exercise Price may be made in cash
or by certified check, bank draft, or postal or express money order, payable in
United States dollars, to the order of the Company. Upon such surrender of
Warrants and payment of the Exercise Price as aforesaid, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the registered holder of such Warrants and in such name or names as
such registered holder may designate, a certificate or certificates for the
number of full shares of Common Stock so purchased upon the exercise of such
Warrants. Such certificates shall be deemed to have been issued, and any person
so designated to be named therein shall be deemed to have become a holder of
record of such Common Stock, as of the date of surrender of such Warrants and
payment of the Exercise Price, as aforesaid; provided, however, that if, at the
date of surrender of such Warrants and the payment of such Exercise Price, the
transfer books for the Common Stock purchasable upon the exercise of such
Warrants shall be closed, the certificates for the Common Stock in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened, and until such date the Company shall be under
no duty to deliver any certificate for such shares; provided further, however,
that the transfer books aforesaid, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 days. The right of
purchase represented by the Warrants shall be exercisable, at the election of
the registered holders thereof, either as an entirety or, from time to time, for
only part of the Common Stock specified therein, and in the event that any
Warrant is exercised in respect of less than all of the Common Stock specified
therein at any time prior to the date of expiration of the Warrants, a new
Warrant or Warrants will be issued for the remaining number of Common Stock
specified in the Warrant so surrendered.
Notwithstanding anything contained herein to the contrary, no Warrant
may be exercised if the issuance of Common Stock in connection therewith would
constitute a violation of the registration provisions of federal or state
securities laws.
Upon 30 days prior written notice to the holder of the Warrants, the
Company shall have the right to reduce the exercise price and/or extend the term
of the Warrants in compliance with the requirements of Rule 13e-4 to the extent
applicable.
The "Exercise Price" of the Warrants shall mean $5.00, as specified
herein until the occurrence of a recapitalization or reclassification that,
pursuant to the provisions hereof, shall require an increase or decrease in the
exercise price of the Warrants, and thereafter shall mean said price as adjusted
from time to time in accordance with the provisions hereof. No such adjustment
shall be made unless such adjustment would change the then purchase price per
share by ten cents ($.10) or more; provided, however, that all adjustments not
so made shall be deferred and made when the aggregate thereof would change the
then purchase price per share by ten cents ($.10) or more. No adjustment made
pursuant to any provision hereof shall have the effect of increasing the total
consideration payable upon exercise of any of the Warrants.
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2. Adjustments in Certain Cases. In case the Company shall at any time prior to
the exercise or termination of any of the Warrants effect a recapitalization or
reclassification of such character that its Common Stock shall be changed into
or become exchangeable for a larger or smaller number of shares, then, upon the
effective date thereof, the number of shares of Common Stock that the holders of
the Warrants shall be entitled to purchase upon exercise thereof shall be
increased or decreased, as the case may be, in direct proportion to the increase
or decrease in such number of shares of Common Stock by reason of such
recapitalization or reclassification, and the purchase price per share of such
recapitalize or reclassified Common Stock shall, in the case of an increase in
the number of shares, be proportionately decreased and, in the case of a
decrease in the number of shares, be proportionately increased.
In case the Company shall at any time prior to the exercise or
termination of any of the Warrants distribute to holders of its Common Stock
cash, evidences of indebtedness, or other securities or assets, other than as
dividends or distributions payable out of current or accumulated earnings, then,
in any such case, the holders of the Warrants shall be entitled to receive, upon
exercise thereof, with respect to each share of Common Stock issuable upon such
exercise, the amount of cash or evidences of indebtedness or other securities or
assets that such holder would have been entitled to receive with respect to the
Common Stock as a result of the happening of such event, had the Warrants been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (without giving effect to any restriction upon such
exercise).
In case the Company shall at any time prior to the exercise or
termination of any of the Warrants consolidate or merge with any other
corporation or transfer all or substantially all of its assets to any other
corporation preparatory to a dissolution, then the Company shall, as a condition
precedent to such transaction, cause effective provision to be made so that the
holders of the Warrants, upon the exercise thereof after the effective date of
such transaction, shall be entitled to receive the kind and amount of shares,
evidences of indebtedness, and/or other property receivable on such transaction
by a holder of the number of shares of Common Stock as to which the Warrants
were exercisable immediately prior to such transaction (without giving effect to
any restriction upon such exercise); and, in any such case, appropriate
provision shall be made with respect to the rights and interests of the holders
thereof to the effect that the provisions of the Warrants shall thereafter be
applicable (as nearly as may be practicable) with respect to any shares,
evidences of indebtedness, or other securities or assets thereafter deliverable
upon exercise of the Warrants.
Whenever the number of shares of Common Stock or other types of
securities or assets purchasable upon exercise of any of the Warrants shall be
adjusted as provided herein, the Company shall forthwith obtain and file with
its corporate records a certificate or letter from a firm of independent public
accountants of recognized standing setting forth the computation and the
adjusted number of shares of Common Stock or other securities or assets
purchasable hereunder resulting from such adjustments, and a copy of such
certificate or letter shall be mailed to each of the registered holders of the
Warrants. Any such certificate or letter shall be conclusive evidence as to the
correctness of the adjustment or adjustments referred to therein and shall be
available for inspection by the holders of the Warrants on any day during normal
business hours.
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In the event that at any time as a result of an adjustment made
pursuant hereto the holders of the Warrants shall become entitled to purchase
upon exercise thereof shares, evidences of indebtedness, or other securities or
assets (other than Common Stock), then, wherever appropriate, all references
herein to Common Stock shall be deemed to refer to and include such shares,
evidences of indebtedness, or other securities or assets, and thereafter the
number of such shares, evidences of indebtedness, or other securities or assets
shall be subject to adjustment from time to time in a manner and upon terms as
nearly equivalent as practicable to the provisions hereof.
3. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrants and indemnity, if requested, also satisfactory to
them. Applicants for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
4. Reservation of Common Stock. Prior to the issuance of any Warrants, there
shall have been reserved, and the Company shall at all times keep reserved out
of the authorized and unissued Common Stock, a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the Warrants, and the transfer agent for the Common Stock and every subsequent
transfer agent for any of the Company's Common Stock issuable upon the exercise
of any of the rights of purchase aforesaid are hereby irrevocably authorized and
directed at all times to reserve such number of authorized and unissued Common
Stock as shall be requisite for such purpose. The Company agrees that all Common
Stock issued upon exercise of the Warrants shall be, at the time of delivery of
the certificates representing such Common Stock, validly issued and outstanding,
fully paid and nonassessable. The Company will supply the transfer agent with
duly executed stock certificates for such purpose. All Warrants surrendered in
the exercise of the rights thereby evidenced shall be canceled and such canceled
Warrants shall constitute sufficient evidence of the number of shares of Common
Stock that have been issued upon the exercise of such Warrants. All Warrants
surrendered for transfer, exchange or partial exercise shall be canceled by the
Company.
5. No Rights as Stockholder. Prior to the exercise of any Warrant represented
hereby, the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company.
Prior to due presentment for registration of transfer hereof, the
Company may deem and treat the Registered Holder as the absolute owner hereof
and of each Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized officer
of the Company) for all purposes and shall not be affected by any notice to the
contrary, except as provided herein.
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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6. Requested and Incidental Registration. The Company hereby grants the
Registered Holder registration rights as set forth in the Registration Rights
Agreement between the Company and the Registered Holder dated ________________,
1999.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
conflicts of laws principles thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers hereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated as of: ___________, 1999
PAWNMART, INC.
By:
-----------------------------
Name:
-----------------------
Title:
----------------------
COUNTERSIGNED:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, TRUSTEE
TRUST C OF THE ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
FAMILY TRUST DATED 10/14/1994
By:
------------------------------
Name:
----------------------
Title:
---------------------
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT - Page 30
31
ELECTION TO PURCHASE
(To be signed only upon exercise of Warrant)
TO: PawnMart, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
The undersigned, the Holder of Warrant Certificate Number ____ (the
"Warrant"), representing ______________ Common Stock Purchase Warrants of
PawnMart, Inc. (the "Company"), which Warrant Certificate is being delivered
herewith, hereby irrevocably elects to exercise the purchase right provided by
the Warrant Certificate for, and to purchase thereunder, _____________ shares of
Common Stock of the Company, and herewith makes payment of $____________
therefor, and requests that the certificates for such securities be issued in
the name of, and delivered to, ____________________ whose address is
______________________, all in accordance with the Warrant Certificate.
Dated:_______________
----------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant Certificate)
----------------------------------
----------------------------------
----------------------------------
(Address)
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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(FORM OF ASSIGNMENT)
(To be exercised by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED______________________________________________________________
hereby sells, assigns and transfers unto________________________________________
(Print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
________________________________________________ Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, and full
power of substitution.
Dated: Signature:
-----------------------
-----------------------------------
(Signature must conform in all
respects to name of holder as
specified on the fact of the
Warrant Certificate)
------------------------------------
(Insert Social Security or
Other Identifying Number of
Assignee)
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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EXHIBIT C
Form of Registration Agreement
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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34
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of _______________,
1999 (this "Agreement"), by and between PawnMart, Inc., a Delaware corporation
(the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee of TRUST C of THE ▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ FAMILY TRUST DATED 10/14/1994 (the "Investor").
1. Background. The Company and the Investor have entered into that
certain PawnMart, Inc. 8% Convertible Preferred Stock and Warrant Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"). In order to
induce the Investor to enter into and consummate the transactions contemplated
by the Purchase Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this
Registration Rights Agreement is a condition to the execution and delivery of,
and Closing under, the Purchase Agreement.
2. Definitions. Capitalized terms used but not defined herein shall
have the respective meanings given to them in the Purchase Agreement. As used
herein, unless the context otherwise requires, the following terms have the
following respective meanings:
"Incidental Registration" is defined in Section 3.2.
"Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 3, including, without
limitation, all registration, filing and applicable fees of the Commission,
stock exchange or NASD registration and filing fees and all listing fees and
fees with respect to the inclusion of securities in NASDAQ (as defined in
Section 3.3(j)), all fees and expenses of complying with state securities or
blue sky laws (including fees and disbursements of counsel to the underwriters
or the Investor in connection with "blue sky" qualification of the Registrable
Securities and determination of their eligibility for investment under the laws
of the various jurisdictions), all word processing, duplicating and printing
expenses, all messenger and delivery expenses, the fees and disbursements of
counsel for the Company and of its independent public accountants including the
expenses of "cold comfort" letters required by or incident to such registration,
all fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, all transfer taxes, and the fees and expenses of one
counsel to the Investor; provided, however, that Registration Expenses shall
exclude and the Investor shall pay underwriters' fees and underwriting discounts
and commissions in respect of the Registrable Securities being registered.
"Registrable Securities" means any Warrant Shares and any Common
Shares issued upon conversion of the Preferred Shares. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
(a) when a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with such registration statement, (b) when
such securities shall have been otherwise transferred, new certificates for them
not bearing a legend restricting further transfer under the Securities Act shall
have been delivered by the Company and subsequent public distribution of them
shall not require registration of them under the Securities Act, (c) when such
securities are sold pursuant to Rule 144 (or similar rule adopted by the
Commission) under the Securities Act, or (d) when such securities cease to be
outstanding.
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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"Requested Registration" is defined in Section 3.1(a).
"Requisite Percentage of Investor" means Investor of Registrable
Securities who hold a majority of the total Warrant Shares and Primary Shares
(counted as a single group) that are then be held by all Investor (assuming that
the then exercisable portion of the First Option (if any) and the then
exercisable portion of the Second Option (if any) had been exercised for Warrant
Shares).
"Warrant Shares" means the shares of Common Stock or other
equity securities issued or issuable upon exercise of Common Stock Warrants.
3. Registration Under Securities Act, etc.
3.1 Requested Registrations.
(a) Request for Registration. Subject to the
limitations imposed by Sections 3.1(c), on one occasion, the Investor shall have
the right to require the Company to file a registration statement under the
Securities Act covering all or any part of their respective Registrable
Securities, by delivering a written request therefor to the Company specifying
the number and amount of Registrable Securities and the intended method of
distribution thereof. Any such request pursuant to this Section 3.1(a) is
referred to herein as a "Requested Registration." Once the investor has
exercised his The Company shall give prompt written notice of each Requested
Registration to all other holders of record of Registrable Securities, and
thereupon the Company shall use its best efforts to effect the registration
under the Securities Act so as to permit promptly the sale, in accordance with
the intended method of distribution, of the Registrable Securities which the
Company has been so requested to register in the Requested Registration and all
other Registrable Securities which the Company has been requested to register by
the holders thereof by written request given to the Company within 30 days after
the giving of such written notice by the Company.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 3.1 in connection
with an underwritten offering by the Investor of Registrable Securities, no
securities other than Registrable Securities shall be included among the
securities covered by such registration unless (i) Investor shall have consented
in writing to the inclusion therein of such other securities and (ii) such
inclusion shall be permitted only to the extent that it is pursuant to and
subject to the terms of the underwriting agreement or arrangements and the
inclusion of such securities will not have a material adverse effect on the
offering (including, without limitation, on the pricing of the offering).
(c) Limitations on Requested Registrations; Expenses.
The rights of the holder of Registrable Securities to request Requested
Registrations pursuant to Section 3.1(a) are subject to the following
limitations: (i) the Company shall not be obligated to effect a Requested
Registration having an aggregate anticipated offering price of less than
U.S.$2,000,000 unless such offering shall cover all remaining Registrable
Securities; (ii) the offering of Registrable Securities requested to be
registered pursuant to Section 3.1(a) shall be pursuant to a firm commitment
underwritten offering; (iii) the Company shall not be obligated to effect a
Requested Registration within six months after the effective date of any other
registration of securities (other than pursuant to a registration on Form S-8 or
any successor or similar form which is then in effect); (iv) the
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT - Page 35
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Company will pay all Registration Expenses only in connection with the Requested
Registration of Registrable Securities pursuant to this Section 3.1 that have
become effective under the Securities Act; n any particular jurisdiction in
which the Corporation would be required to execute, and (v) after the
Corporation has initiated one such registration pursuant to this section
(counting for these purposes only registrations which have been declared or
ordered effective).
(d) Registration Statement Form. Registrations under
this Section 3.1 shall be on Form S-3 or any successor form, if permitted, or
such appropriate registration form of the Commission as shall be selected by the
Company and as shall be reasonably acceptable to the Requisite Percentage of
Investor. The Company agrees to include in any such registration statement all
information which, in the opinion of counsel to the Investor and counsel to the
Company, is required to be included.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 3.1 shall not be deemed to have been effected
(including for purposes of paragraph (c) of this Section 3.1) (i) unless a
registration statement with respect thereto has become effective and has been
kept continuously effective for a period of at least 90 days (or such shorter
period which shall terminate when all the Registrable Securities covered by such
registration statement have been sold pursuant thereto), (ii) if, after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other Governmental
Authority or court for any reason not attributable to the Investor and has not
thereafter become effective, or (iii) if the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Investor.
(f) Selection of Underwriters. The managing
underwriter or underwriters of each underwritten offering of the Registrable
Securities so to be registered shall be selected by the Investor (and shall be
reasonably acceptable to the Company).
(g) Cutbacks in Requested Registration. If the
managing underwriter of any underwritten offering shall advise the Investor in
such offering that the Registrable Securities covered by the registration
statement cannot be sold in such offering within a price range acceptable to the
Investor, then the Investor shall have the right to notify the Company in
writing that they have determined that the registration statement be abandoned
or withdrawn, in which event the Company shall abandon or withdraw such
registration statement (and, at the option of the Investor, he shall either (i)
reimburse the Company for its expenses incurred in connection with such
abandoned or withdrawn registration statement or (ii) allow the Company to count
such abandoned or withdrawn registration statement as one of the three Requested
Registrations under Section 3.1(c)(iv)). If the managing underwriter of any
underwritten offering shall advise the Company in writing (with a copy to each
Participating Holder) that, in its opinion, the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Investor, the Company will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering, Registrable Securities requested to be
included in such registration, pro rata among the Investor requesting such
registration in accordance with the number of Warrant Shares held by (or
issuable to) the Investor so requested to
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT - Page 36
37
be registered, and any securities of the Company included in such registration
pursuant to Section 3.1(b) shall be reduced proportionately.
(h) Postponement. The Company shall be entitled once
in any six-month period to postpone for a reasonable period of time (but not
exceeding 90 days) the filing of any registration statement required to be
prepared and filed by it pursuant to this Section 3.1 if the Company determines,
in its reasonable judgment, that such registration and offering would interfere
with any financing, corporate reorganization or other material transaction or
development involving the Company or any subsidiary or would require premature
disclosure thereof, and promptly gives the holders of Registrable Securities
requesting registration thereof pursuant to this Section 3.1 written notice of
such determination, containing a statement of the reasons for such postponement
and an approximation of the anticipated delay. If the Company shall so postpone
the filing of a registration statement, the Investor shall have the right to
withdraw the request for registration by giving written notice to the Company
within 20 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted toward the number of
Requested Registrations (including for purposes of paragraph (c) of this Section
3.1).
3.2 Incidental Registration.
(a) Incidental Registration. If, at any time, the
Company proposes or is required to register any of its equity securities or
securities convertible into or exchangeable for equity securities under the
Securities Act (other than pursuant to registrations on such form or similar
form(s) solely for registration of securities in connection with an employee
benefit plan or dividend reinvestment plan) (an "Incidental Registration"), the
Company will give prompt written notice to all holders of record of Registrable
Securities of its intention to so register its securities and of such holders'
rights under this Section 3.2. Upon the written request of any holder of
Registrable Securities made within 20 days following the receipt of any such
written notice (which request shall specify the maximum number of Registrable
Securities intended to be disposed of by such holder and the intended method of
distribution thereof), the Company will use its best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the holders thereof together with
any other securities the Company is obligated to register pursuant to incidental
registration rights of other security holders of the Company. No registration
effected under this Section 3.2 shall relieve the Company of its obligation to
effect any Requested Registration under Section 3.1.
(b) Abandonment or Delay. If, at any time after the
Company has giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, the Company shall determine not to register
or to delay registration of such securities, the Company may, at its election,
give written notice of such determination and its reasons therefor to all
holders of record of Registrable Securities and (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
any obligation of the Company to pay the Registration Expenses in connection
therewith) , without prejudice, however, to the rights of any holder or holders
of Registrable Securities entitled to do so to request that such registration be
effected as a registration under Section 3.1, and (ii) in the case of a
determination to delay registering, shall be permitted to delay registering any
Registrable Securities for the same period as the delay in registering such
other securities.
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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(c) Holder's Right to Withdraw. Each holder of
Registrable Securities shall have the right to withdraw its request for
inclusion of its Registrable Securities in any registration statement pursuant
to this Section 3.2 at any time by giving written notice to the Company of its
request to withdraw.
(d) Unlimited Number of Registrations; Expenses.
There is no limitation on the number of Incidental Registrations which the
Company is obligated to effect pursuant to this Section 3.2. The Company will
pay all Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 3.2.
(e) Underwriters' Cutback in Incidental
Registrations. If the managing underwriter of any underwritten offering shall
inform the Company by letter of its belief that the number of Registrable
Securities requested to be included in such registration would materially
adversely affect such offering, then the Company will include in such
registration, first, the securities proposed by the Company to be sold for its
own account and, second, the Registrable Securities and all other securities of
the Company to be included in such registration to the extent of the number and
type which the Company is so advised can be sold in (or during the time of) such
offering, pro rata among the Investor and such other holders requesting such
registration in accordance with the number of Warrant Shares held by (or
issuable to) the Investor and each such other holder so requested to be
registered.
(f) Plan of Distribution. Any participation by
holders of Registrable Securities in a registration by the Company shall be in
accordance with the Company's plan of distribution.
3.3 Registration Procedures. If and whenever the Company is required to use its
best efforts to effect the registration of any Registrable Securities under the
Securities Act as provided in Sections 3.1 or 3.2 hereof, the Company will as
expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect
such registration (and shall include all financial statements
required by the Commission to be filed therewith) and
thereafter use its best efforts to cause such registration
statement to become effective; provided, however, that before
filing such registration statement (including all exhibits) or
any amendment or supplement thereto or comparable statements
under securities or blue sky laws of any jurisdiction, the
Company shall furnish such documents to the Investor, their
counsel, and each underwriter, if any, participating in the
offering of the Registrable Securities and its counsel; and
provided, further, however, that the Company may discontinue
any registration of its securities which are not Registrable
Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) notify each Participating Holder of the
Commission's requests for amending or supplementing the
registration statement and the prospectus, and prepare and
file with the Commission such amendments and supplements to
such registration statement and the prospectus used in
connection therewith as may be necessary to keep such
registration statement effective and to comply with the
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provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such
registration statement for such period as shall be required
for the disposition of all of such Registrable Securities,
provided, that such period need not exceed 90 days;
(c) furnish, without charge, to each Participating
Holder such number of conformed copies of such registration
statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements
of the Securities Act, and such other documents, as such
Participating Holder may reasonably request;
(d) use its best efforts (i) to register or qualify
all Registrable Securities and other securities covered by
such registration statement under such securities or blue sky
laws of such States of the United States of America where an
exemption is not available and as the Investor shall
reasonably request, (ii) to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and (iii) to take any other
action which may be reasonably necessary or advisable to
enable such Investor to consummate the disposition in such
jurisdictions of the securities to be sold by such Investor,
except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for
the requirements of this subsection (d) be obligated to be so
qualified or to consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state or
foreign governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and counsel
to the Investor to consummate the disposition of such
Registrable Securities;
(f) furnish to the Investor and each underwriter, if
any, participating in the offering of the securities covered
by such registration statement, a signed counterpart of
(i) an opinion of outside counsel (or inside
counsel if satisfactory to each underwriter) for the
Company, and
(ii) a "comfort" letter signed by the
independent public accountants who have certified the
Company's financial statements included or
incorporated by reference in such registration
statement,
covering substantially the same matters with respect
to such registration statement (and the prospectus included
therein) and, in the case of the accountants' comfort letter,
with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
of issuer's counsel and in
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the
dates such opinions and comfort letters are customarily dated)
and, in the case of the legal opinion, such other legal
matters, and, in the case of the accountants' comfort letter,
such other financial matters, as the Investor, or the
underwriters, may reasonably request;
(g) promptly notify the Investor and each managing
underwriter, if any, participating in the offering of the
securities covered by such registration statement (i) when
such registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to such registration statement has
been filed, and, with respect to such registration statement
or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission for
amendments or supplements to such registration statement or
the prospectus related thereto or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or
the initiation of any proceedings for that purpose; (iv) of
the receipt by the Company of any notification with respect to
the suspension of the qualification of any of the Registrable
Securities for sale under the securities or blue sky laws of
any jurisdiction or the initiation of any proceeding for such
purpose; (v) at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, upon
discovery that, or upon the happening of any event as a result
of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading, in the light of the circumstances
under which they were made, and in the case of this clause
(v), at the request of the Investor, promptly prepare and
furnish to it and each managing underwriter, if any,
participating in the offering of the Registrable Securities a
reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they
were made; and (vi) at any time when the representations and
warranties of the Company contemplated by Section 3.4(a)
hereof cease to be true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve
months beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder, and
promptly furnish to the Investor a copy of any amendment or
supplement to such registration statement or prospectus;
(i) provide and cause to be maintained a transfer
agent and registrar (which, in each case, may be the Company)
for all Registrable Securities covered by
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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such registration statement from and after a date not later
than the effective date of such registration;
(j) use its best efforts to cause all Registrable
Securities covered by such registration statement to be listed
on a national securities exchange or to secure designation of
all such Registrable Securities as a National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
"national market system security" within the meaning of Rule
11Aa2-1 of the Commission, in each case to the extent the
shares of the Company's Common Stock are so listed or
designated;
(k) deliver promptly to counsel to the Investor and
each underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between
the Commission and the Company, its counsel or auditors and
all memoranda relating to discussions with the Commission or
its staff with respect to such registration statement;
(l) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the
registration statement; and
(m) make available its employees and personnel and
otherwise provide reasonable assistance to the underwriters
(taking into account the needs of the Company's businesses) in
their marketing of Registrable Securities.
The Company may require the Investor as to the Registrable Securities of whom
any registration is being effected to furnish the Company such information
regarding such holder and the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees that upon receipt
of any notice from the Company of the happening of any event of the kind
described in subsection (g) (iii) or (v) of this Section 3.3, the Participating
Holder will forthwith discontinue such holder's disposition of Registrable
Securities pursuant to the registration statement relating to such Registrable
Securities until, in the case of subsection (g)(iii) of this Section 3.3, such
stop order is removed or proceedings therefor terminated, and, in the case of
subsection (g)(v) of this Section 3.3, such holder's receipt of the copies of
the supplemented or amended prospectus contemplated by subsection (g)(v) of this
Section 3.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such holder's possession, of the prospectus relating to such Registrable
Securities current at the time of receipt of such notice.
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3.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by Investor pursuant to a
registration requested under Section 3.1, the Company will use its best efforts
to enter into an underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance and form to
the Company, each such holder and the underwriters and to contain such
representations and warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including, without limitation,
indemnities to the effect and to the extent provided in Section 3.6 hereof. The
Investor will cooperate with the Company in the negotiation of the underwriting
agreement and will give consideration to the reasonable suggestions of the
Company regarding the form thereof. The Investor shall be party to such
underwriting agreement and may, at his option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of the Investor and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of the Investor. The Investor shall not
be required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's ownership of and title to the Registrable
Securities, such holder's intended method of distribution and any other
representations required by law, and any liability of the Investor to any
underwriter or other person under such underwriting agreement shall be limited
to liability arising from misstatements in or omissions from its representations
and warranties and shall be limited to an amount equal to the net proceeds that
the Investor derives from such registration.
(b) Incidental Underwritten Offerings. If the Company
proposes to register any of its securities under the Securities Act as
contemplated by Section 3.2 hereof and such securities are to be distributed by
or through one or more underwriters, the Company will, if requested by the
Investor, use its best efforts to arrange for such underwriters to include all
the Registrable Securities to be offered and sold by the Investor among the
securities of the Company to be distributed by such underwriters. The Investor
shall be party to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such Investor and that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Investor. The Investor shall not
be required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's ownership of and title to the Registrable
Securities, such holder's intended method of distribution and any other
representations required by law, and any liability of the Investor to any
underwriter or other person under such underwriting agreement shall be limited
to liability arising from misstatements in or omissions from its representations
and warranties and shall be limited to an amount equal to the net proceeds that
the Investor derives from such registration.
3.5 Preparation; Reasonable Investigation. In connection with the preparation
and filing of each registration statement under the Securities Act pursuant to
this Agreement, the Company will give the Investor, their underwriters, if any,
and their respective counsel and accountants the opportunity to participate in
the preparation of such registration statement, each prospectus included
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therein or filed with the Commission, and, to the extent practicable, each
amendment thereof or supplement thereto, and give each of them such access to
its books and records and such opportunities to discuss the business of the
Company with its officers and employees and the independent public accountants
who have certified its financial statements as shall be necessary, in the
opinion of such holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
3.6 Indemnification.
(a) Indemnification by the Company. In the event of
any registration of any securities of the Company under the Securities Act, the
Company will, and hereby does, indemnify and hold harmless, to the fullest
extent permitting by law, the Investor, its directors, officers, partners,
agents and affiliates or general and limited partners (and the directors,
officers, employees, stockholders and affiliates thereof), and each other Person
who participates as an underwriter in the offering or sale of such securities
and each other Person, if any, who controls the Investor or any such underwriter
within the meaning of the Securities Act, against any losses, claims, damages,
or liabilities, joint or several (or actions or proceedings, whether commenced
or threatened) to which the Investor or any such director, officer, partner,
agent or affiliate or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, together
with the documents incorporated by reference therein, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, and the Company will reimburse the Investor and
each such director, officer, partner, agent or affiliate, or general or limited
partner, underwriter and controlling Person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding; provided, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of the
Investor or underwriter, as the case may be, specifically stating that it is for
use in the preparation thereof; and provided, further, that the Company shall
not be liable to any Person who participates as an underwriter in the offering
or sale of Registrable Securities or any other Person, if any, who controls such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such Person's failure to send or give
a copy of the final prospectus, as the same may be then supplemented or amended,
to the Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
regardless of any investigation made by or on behalf of the
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Investor or any such director, officer, partner, agent or affiliate or
controlling Person and shall survive the transfer of such securities by the
Investor.
(b) Indemnification by the Investor. As a condition
to including any Registrable Securities in any registration statement, the
Company shall have received an undertaking satisfactory to it from the Investor
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subsection (a) of this Section 3.6) the Company, each director and
officer of the Company, and each other Person, if any, who controls the Company
within the meaning of the Securities Act, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, but only if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by the Investor specifically stating
that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided, however, that the liability of such indemnifying party
under this Section 3.6(b) shall be limited to the amount of net proceeds
received by such indemnifying party in the offering giving rise to such
liability. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such securities
by the Investor.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subsections of this Section 3.6,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided, however, that the failure of any
indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under the preceding subsections of this
Section 3.6, except to the extent that the indemnifying party is materially
prejudiced by such failure to give notice, and shall not relieve the
indemnifying party from any liability which it may have to the indemnified party
otherwise than under this Section 3.6. In case any such action or proceeding is
brought against an indemnified party, the indemnifying party shall be entitled
to participate therein and, unless in the opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
or proceeding include both the indemnified party and the indemnifying party and
if in the opinion of outside counsel to the indemnified party there may be legal
defenses available to such indemnified party and/or other indemnified parties
which are different from or in addition to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to defend such action or proceeding on behalf of such indemnified party
or parties, provided, further, that the indemnifying party shall be obligated to
pay for only one counsel for all indemnified parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation (unless the first
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proviso in the preceding sentence shall be applicable). No indemnifying party
shall be liable for any settlement of any action or proceeding effected without
its written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 3.6 shall for any reason be held by a court to be unavailable to
an indemnified party under subsection (a) or (b) hereof in respect of any loss,
claim, damage or liability, or any action in respect thereof, then, in lieu of
the amount paid or payable under subsection (a) or (b) hereof, the indemnified
party and the indemnifying party under subsection (a) or (b) hereof shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating the
same), (i) in such proportion as is appropriate to reflect the relative fault of
the Company and the Investor which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as shall be appropriate to reflect not only the relative
fault but also the relative benefits received by the Company and the Investor
from the offering of the securities covered by such registration statement as
well as any other relevant equitable considerations. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 3.6(d) were to be determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to above. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The Investor's obligations to contribute as provided in this
subsection (d) are several and not joint in proportion to the relative value of
their respective Registrable Securities covered by such registration statement.
In addition, no Person shall be obligated to contribute hereunder any amounts in
payment for any settlement of any action or claim effected without such Person's
consent, which consent shall not be unreasonably withheld. Notwithstanding
anything in this subsection (d) to the contrary, no indemnifying party (other
than the Company) shall be required to contribute any amount in excess of the
net proceeds received by such party from the sale of the Registrable Securities
in the offering to which the losses, claims, damages or liabilities of the
indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 3.6 (with appropriate modifications) shall be given by the Company and
the Investor with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any governmental
authority other than the Securities Act. The indemnification agreements
contained in this Section 3.6 shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have pursuant to
law or contract and shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the transfer of any of the Registrable Securities by the
Investor.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 3.6 shall be made by periodic payments of
the amount thereof during the
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course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
3.7 Certain Rights of the Investor If Named in a Registration Statement. If any
statement contained in a registration statement under the Securities Act or in
any filing under the state securities laws of any jurisdiction refers to the
Investor by name or otherwise as the holder of any securities of the Company,
then the Investor shall have the right to require (i) the insertion therein of
language, in form and substance satisfactory to the Investor, to the effect that
the holding by the Investor of such securities does not necessarily make the
Investor a "controlling person" of the Company within the meaning of the
Securities Act and is not to be construed as a recommendation by the Investor of
the investment quality of the Company's debt or equity securities covered
thereby and that such holding does not imply that the Investor will assist in
meeting any future financial requirements of the Company or (ii) in the event
that such reference to the Investor by name or otherwise is not, in the
reasonable judgment of the Investor as advised by its counsel, required by the
Securities Act or any of the rules and regulations promulgated thereunder, or
any state securities laws of any jurisdiction, the deletion of the reference to
such Investor.
3.8 Unlegended Certificates. In connection with the offering of any Registrable
Securities registered pursuant to this Article 3, the Company shall (i)
facilitate the timely preparation and delivery to Investor and the underwriters,
if any, participating in such offering, of unlegended certificates representing
ownership of such Registrable Securities being sold in such denominations and
registered in such names as requested by such Investor or such underwriters and
(ii) instruct any transfer agent and registrar of such Registrable Securities to
release any stop transfer orders with respect to any such Registrable
Securities.
3.9 Limitation on Sale or Distribution of Other Securities. The Company hereby
agrees that, if it shall previously have received a request for registration
pursuant to Section 3.1 or 3.2 hereof, and if such previous registration shall
not have been withdrawn or abandoned, (i) the Company shall not effect any
public or private offer, sale or other distribution of its securities or effect
any registration of any of its equity securities under the Securities Act
(subject to the provisions of Section 3.2 hereof) (other than a registration on
Form S-8 or any successor or similar form which is then in effect), whether or
not for sale for its own account, until a period of 90 days (or such shorter
period as the Investor shall agree) shall have elapsed from the effective date
of such previous registration (and the Company shall so provide in any
registration rights agreements hereafter entered into with respect to any of its
securities); and (ii) the Company shall use its best efforts to cause each
holder of its equity securities purchased from the Company at any time after the
date of this Agreement other than in a public offering to agree not to effect
any public sale or distribution of any such securities during such period,
including a sale pursuant to Rule 144 under the Securities Act.
3.10 No Required Sale. Nothing in this Agreement shall be deemed to create an
independent obligation on the part of any Participating Holder to sell any
Registrable Securities pursuant to any effective registration statement.
4. Rule 144. The Company shall take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144, or (b) any similar rule or regulation
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hereafter adopted by the Commission including, without limiting the generality
of the foregoing, filing on a timely basis all reports required to be filed by
the Exchange Act. Upon the request of any holder of Registrable Securities, the
Company will deliver to such holder a written statement as to whether it has
complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
consent of the Company and the Investor. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, in
each case only if the Company shall have obtained the written consent to such
action or omission to act of the Investor. Each holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any consent
authorized by this Section 5, whether or not such Registrable Securities shall
have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election in writing delivered to the
Company (accompanied by a written acknowledgment of, and consent to, such
election by such nominee), be treated as the holder of such Registrable
Securities for purposes of any request or other action by any holder or holders
of Registrable Securities pursuant to this Agreement or any determination of any
number or percentage of shares of Registrable Securities held by any holder or
holders of Registrable Securities contemplated by this Agreement. If the
beneficial owner of any Registrable Securities so elects to be treated as the
holder of such Registrable Securities, the Company may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Securities.
7. Notices. All communications provided for hereunder shall be
personally delivered or sent by telecopier (and confirmed by telephone) or by a
reputable overnight courier, and shall be addressed as follows:
(a) if to the Investor, addressed to it in the manner set forth in the Purchase
Agreement, or at such other address as it shall have furnished to the Company in
writing;
(b) if to any other holder of Registrable Securities, at the address that such
holder shall have furnished to the Company in writing, or, until any such other
holder so furnishes to the Company an address, then to and at the address of the
last holder of such Registrable Securities who has furnished an address to the
Company; or
(c) if to the Company, addressed to it in the manner set forth in the Purchase
Agreement, or at such other address as the Company shall have furnished to each
holder of Registrable Securities at the time outstanding.
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by the
Company. This Agreement and/or the registration and other rights contained
herein (including these assignment rights) may be assigned by the Investor to
any one or more transferees or distributees of all or part of such Investor's
Registrable Securities. A holder of Registrable Securities shall be permitted,
in connection with a transfer or disposition of Registrable Securities, to
impose conditions or constraints on the ability of the transferee, as a holder
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of Registrable Securities, to request a registration pursuant to Section 3.1 and
shall provide the Company with copies of such conditions or constraints and the
identity of such transferees. Notwithstanding the foregoing, this Agreement
and/or the registration and other rights contained herein may not be assigned to
a transferee or distributee who, immediately following such transfer or
distribution, owns less than one percent of the Company's outstanding Common
Stock.
9. Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement
(including the indemnification provisions thereof), the successful party shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
10. No Inconsistent Agreements. The Company will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company has not previously entered into any agreement with respect to its
securities granting any registration rights to any Person other than the
registration rights granted pursuant to this Agreement. The rights granted to
the holders of Registrable Securities hereunder do not in any way conflict with
and are not inconsistent with any other agreements to which the Company is a
party or by which it is bound. The Company further agrees that if any other
registration rights agreement entered into after the date of this Agreement with
respect to any of its securities contains terms which are more favorable to, or
less restrictive on, the other party thereto than the terms and conditions
contained in this Agreement are (insofar as they are applicable) to the
Investor, then the terms and conditions of this Agreement shall immediately be
deemed to have been amended without further action by the Company or any of the
holders of Registrable Securities so that such holders shall be entitled to the
benefit of any such more favorable or less restrictive terms or conditions.
11. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
12. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Delaware,
without regard to the conflicts of laws principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Delaware and the United
States of America located in Wilmington, Delaware for any action or proceeding
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any action or proceeding relating thereto
except in such courts). Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action or
proceeding arising out of this Agreement or the transactions contemplated hereby
in the courts of the State of Delaware or the United States of America located
in Wilmington, Delaware, and hereby further irrevocably and
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unconditionally waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought in an
inconvenient forum. The Company hereby waives any right it may have to a trial
by jury in respect of any action, proceeding or litigation directly or
indirectly arising out of, under or in connection with, this Agreement.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
PAWNMART, INC.
By:
-----------------------------------
Name:
--------------------------
Title:
-------------------------
INVESTOR:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUSTEE
TRUST C OF THE ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
FAMILY TRUST DATED 10/14/1994
By:
-----------------------------------
Name:
--------------------------
Title:
-------------------------
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EXHIBIT D
Form of Transaction Warrant Agreement
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NO. VOID AFTER _____________, 2004
----------
90,000 WARRANTS
TRANSACTION WARRANT AGREEMENT
Warrant to Purchase Shares of Common Stock
of PawnMart, Inc.
RECITALS
WHEREAS, the holder hereof (the "Registered Holder") is the holder of
certain Warrant(s) to initially purchase 90,000 shares of Common Stock of
PawnMart, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Company, proposes to offer and sell a maximum of: (a) 416,667
shares of 8% Convertible Preferred Stock, par value $6.00 per share, at a
purchase price of $6.00 per share (the "Preferred Stock"), for an aggregate
purchase price of $2,500,000 and (b) 312,500 Common Stock Purchase Warrants (the
"Warrants") for an aggregate purchase price of $312.00, pursuant to a purchase
agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
The Registered Holder is the owner of 90,000 Warrants. Each Warrant
initially entitles the Registered Holder to purchase, subject to the terms and
conditions set forth herein, one fully paid and nonassessable share of Common
Stock, $.01 par value the Company, at any time between date hereof and the
Expiration Date (as hereinafter defined) upon the presentation and surrender of
this Warrant Certificate with the Election to Purchase on the reverse hereof
duly executed, at the corporate office of the Company, accompanied by payment of
$3.60, subject to adjustment (the "Exercise Price"), in lawful money of the
United States of America in cash or by check made payable to the Company.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on
___________, 2004. If such date shall in the State of New York be a holiday or a
day on which the banks are authorized to close, then the Expiration Date shall
mean 5:00 p.m. (New York time) the next following day which in the State of New
York is not a holiday or a day on which banks are authorized to close.
1. Exercise of Warrants. Each registered holder of Warrants shall have the
right, which right may be exercised as set forth herein, to purchase from the
Company, and the Company shall issue and sell to such registered holder of
Warrants, the number of fully paid and nonassessable shares of Common Stock
specified herein, upon surrender to the Company, with the form of election to
purchase duly completed and signed, and upon payment to the Company of the
Exercise Price for the number of shares of Common Stock in respect of which such
Warrants are then exercised. Payment of such Exercise Price may be made in cash
or by certified check, bank draft, or postal or
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express money order, payable in United States dollars, to the order of the
Company. Upon such surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the registered holder of such Warrants
and in such name or names as such registered holder may designate, a certificate
or certificates for the number of full shares of Common Stock so purchased upon
the exercise of such Warrants. Such certificates shall be deemed to have been
issued, and any person so designated to be named therein shall be deemed to have
become a holder of record of such Common Stock, as of the date of surrender of
such Warrants and payment of the Exercise Price, as aforesaid; provided,
however, that if, at the date of surrender of such Warrants and the payment of
such Exercise Price, the transfer books for the Common Stock purchasable upon
the exercise of such Warrants shall be closed, the certificates for the Common
Stock in respect of which such Warrants are then exercised shall be issuable as
of the date on which such books shall next be opened, and until such date the
Company shall be under no duty to deliver any certificate for such shares;
provided further, however, that the transfer books aforesaid, unless otherwise
required by law, shall not be closed at any one time for a period longer than 20
days. The right of purchase represented by the Warrants shall be exercisable, at
the election of the registered holders thereof, either as an entirety or, from
time to time, for only part of the Common Stock specified therein, and in the
event that any Warrant is exercised in respect of less than all of the Common
Stock specified therein at any time prior to the date of expiration of the
Warrants, a new Warrant or Warrants will be issued for the remaining number of
Common Stock specified in the Warrant so surrendered.
Notwithstanding anything contained herein to the contrary, no Warrant may
be exercised if the issuance of Common Stock in connection therewith would
constitute a violation of the registration provisions of federal or state
securities laws.
Upon 30 days prior written notice to the holder of the Warrants, the
Company shall have the right to reduce the exercise price and/or extend the term
of the Warrants in compliance with the requirements of Rule 13e-4 to the extent
applicable.
The "Exercise Price" of the Warrants shall mean $3.60, as specified herein
until the occurrence of a recapitalization or reclassification that, pursuant to
the provisions hereof, shall require an increase or decrease in the exercise
price of the Warrants, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions hereof. No such adjustment shall
be made unless such adjustment would change the then purchase price per share by
ten cents ($.10) or more; provided, however, that all adjustments not so made
shall be deferred and made when the aggregate thereof would change the then
purchase price per share by ten cents ($.10) or more. No adjustment made
pursuant to any provision hereof shall have the effect of increasing the total
consideration payable upon exercise of any of the Warrants.
2. Adjustments in Certain Cases. In case the Company shall at any time prior to
the exercise or termination of any of the Warrants effect a recapitalization or
reclassification of such character that its Common Stock shall be changed into
or become exchangeable for a larger or smaller number of shares, then, upon the
effective date thereof, the number of shares of Common Stock that the holders of
the Warrants shall be entitled to purchase upon exercise thereof shall be
increased or decreased, as the case may be, in direct proportion to the increase
or decrease in such number of shares of Common Stock by reason of such
recapitalization or reclassification, and the purchase price per share of such
recapitalize or reclassified Common Stock shall, in the case of an increase in
the
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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number of shares, be proportionately decreased and, in the case of a decrease in
the number of shares, be proportionately increased.
In case the Company shall at any time prior to the exercise or termination
of any of the Warrants distribute to holders of its Common Stock cash, evidences
of indebtedness, or other securities or assets, other than as dividends or
distributions payable out of current or accumulated earnings, then, in any such
case, the holders of the Warrants shall be entitled to receive, upon exercise
thereof, with respect to each share of Common Stock issuable upon such exercise,
the amount of cash or evidences of indebtedness or other securities or assets
that such holder would have been entitled to receive with respect to the Common
Stock as a result of the happening of such event, had the Warrants been
exercised immediately prior to the record date or other date fixing shareholders
to be affected by such event (without giving effect to any restriction upon such
exercise).
In case the Company shall at any time prior to the exercise or termination
of any of the Warrants consolidate or merge with any other corporation or
transfer all or substantially all of its assets to any other corporation
preparatory to a dissolution, then the Company shall, as a condition precedent
to such transaction, cause effective provision to be made so that the holders of
the Warrants, upon the exercise thereof after the effective date of such
transaction, shall be entitled to receive the kind and amount of shares,
evidences of indebtedness, and/or other property receivable on such transaction
by a holder of the number of shares of Common Stock as to which the Warrants
were exercisable immediately prior to such transaction (without giving effect to
any restriction upon such exercise); and, in any such case, appropriate
provision shall be made with respect to the rights and interests of the holders
thereof to the effect that the provisions of the Warrants shall thereafter be
applicable (as nearly as may be practicable) with respect to any shares,
evidences of indebtedness, or other securities or assets thereafter deliverable
upon exercise of the Warrants.
Whenever the number of shares of Common Stock or other types of securities
or assets purchasable upon exercise of any of the Warrants shall be adjusted as
provided herein, the Company shall forthwith obtain and file with its corporate
records a certificate or letter from a firm of independent public accountants of
recognized standing setting forth the computation and the adjusted number of
shares of Common Stock or other securities or assets purchasable hereunder
resulting from such adjustments, and a copy of such certificate or letter shall
be mailed to each of the registered holders of the Warrants. Any such
certificate or letter shall be conclusive evidence as to the correctness of the
adjustment or adjustments referred to therein and shall be available for
inspection by the holders of the Warrants on any day during normal business
hours.
In the event that at any time as a result of an adjustment made pursuant
hereto the holders of the Warrants shall become entitled to purchase upon
exercise thereof shares, evidences of indebtedness, or other securities or
assets (other than Common Stock), then, wherever appropriate, all references
herein to Common Stock shall be deemed to refer to and include such shares,
evidences of indebtedness, or other securities or assets, and thereafter the
number of such shares, evidences of indebtedness, or other securities or assets
shall be subject to adjustment from time to time in a manner and upon terms as
nearly equivalent as practicable to the provisions hereof.
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3. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrants and indemnity, if requested, also satisfactory to
them. Applicants for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
4. Reservation of Common Stock. Prior to the issuance of any Warrants, there
shall have been reserved, and the Company shall at all times keep reserved out
of the authorized and unissued Common Stock, a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
the Warrants, and the transfer agent for the Common Stock and every subsequent
transfer agent for any of the Company's Common Stock issuable upon the exercise
of any of the rights of purchase aforesaid are hereby irrevocably authorized and
directed at all times to reserve such number of authorized and unissued Common
Stock as shall be requisite for such purpose. The Company agrees that all Common
Stock issued upon exercise of the Warrants shall be, at the time of delivery of
the certificates representing such Common Stock, validly issued and outstanding,
fully paid and nonassessable. The Company will supply the transfer agent with
duly executed stock certificates for such purpose. All Warrants surrendered in
the exercise of the rights thereby evidenced shall be canceled and such canceled
Warrants shall constitute sufficient evidence of the number of shares of Common
Stock that have been issued upon the exercise of such Warrants. All Warrants
surrendered for transfer, exchange or partial exercise shall be canceled by the
Company.
5. No Rights as Stockholder. Prior to the exercise of any Warrant represented
hereby, the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company.
Prior to due presentment for registration of transfer hereof, the Company
may deem and treat the Registered Holder as the absolute owner hereof and of
each Warrant represented hereby (notwithstanding any notations of ownership or
writing hereon made by anyone other than a duly authorized officer of the
Company) for all purposes and shall not be affected by any notice to the
contrary, except as provided herein.
6. Piggyback Registration. If, at any time from the date hereof and prior to the
Expiration Date the Company prepares and files a new registration statement,
under the Securities Act of 1933, as amended (the "Act"), otherwise registers
securities under the Act (collectively the "Registration Documents") as to any
of its securities under the Act (other than under a registration statement
pursuant to Form S-8 or Form S-4 or small business issue equivalent), it will
give written notice by registered mail, at least 5 days prior to the filing of
each such Registration Document to the Registered Holder of its intention to do
so. If the Registered Holder notifies the Company within 5 days after receipt of
any such notice of its or their desire to include any such shares of Common
Stock issued or issuable upon exercise of the Warrants (the "Registrable
Securities") in such proposed Registration Documents, the Company shall afford
the Registered Holder the opportunity
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
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to have any Registrable Securities registered under such Registration Documents
or any other available Registration Document.
Notwithstanding the provisions of this Section 6, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 6 (irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to the conflicts of
laws principles thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers hereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: ___________, 1999
PAWNMART, INC.
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
COUNTERSIGNED:
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT - Page 55
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ELECTION TO PURCHASE
(To be signed only upon exercise of Warrant)
TO: PawnMart, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
The undersigned, the Holder of Warrant Certificate Number ____ (the
"Warrant"), representing ______________ Common Stock Purchase Warrants of
PawnMart, Inc. (the "Company"), which Warrant Certificate is being delivered
herewith, hereby irrevocably elects to exercise the purchase right provided by
the Warrant Certificate for, and to purchase thereunder, _____________ shares of
Common Stock of the Company, and herewith makes payment of $____________
therefor, and requests that the certificates for such securities be issued in
the name of, and delivered to, _________________________ whose address is
____________________ , all in accordance with the Warrant Certificate.
Dated:_______________
------------------------------
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant Certificate)
------------------------------
------------------------------
------------------------------
(Address)
PAWNMART INC. 8% CONVERTIBLE PREFERRED STOCK
AND WARRANT PURCHASE AGREEMENT - Page 56
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(FORM OF ASSIGNMENT)
(To be exercised by the registered holder if such
holder desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED______________________________________________________________
hereby sells, assigns and transfers unto________________________________________
(Print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
________________________________________________ Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, and full
power of substitution.
Dated: Signature:
-----------------------
--------------------------------
(Signature must conform in all
respects to name of holder as
specified on the fact of the
Warrant Certificate)
--------------------------------
(Insert Social Security or
Other Identifying Number of
Assignee)
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EXHIBIT E
Form of Opinion of Counsel to the Corporation
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[JAKES JORDAAN, PLLC LETTERHEAD]
August __, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, INC.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
We have acted as counsel to PawnMart, Inc., a Delaware corporation (the
"Company"), in connection with the private placement (the "Private Placement")
of (a) 416,667 shares of 8% Convertible Preferred Stock, par value $6.00 per
share, at a purchase price of $6.00 per share (the "Preferred Stock"), for an
aggregate purchase price of $2,500,000 and (b) 312,500 Common Stock Purchase
Warrants (the "Purchaser Warrants") for an aggregate purchase price of $312, of
the Company pursuant to that certain PawnMart, Inc. 8% Convertible Preferred
Stock and Warrant Purchase Agreement (the "Purchase Agreement"). In connection
with the Private Placement, we have acted as counsel to PawnMart, Inc. in the
issuance of 90,000 common stock purchase warrants (the "Broker Warrants") to
▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc., the broker-dealer. The Preferred Stock, Purchaser Warrants
and Broker Warrants are collectively referred to herein as the "Securities."
We have examined the originals or photocopies or certified copies of
such records of the Company, certificates of officers of the Company and public
officials, and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures (except for those of representatives
of the Company), the authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as certified copies
or photocopies and the authenticity of the originals of such latter documents.
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Based on our examination mentioned above and such other investigation as we have
deemed necessary, we are of the opinion that:
LEGALITY OF THE CORPORATION
The Company has been duly incorporated and is validly existing
as a corporation under the laws of Delaware, its jurisdiction of
incorporation, with full corporate power and authority to conduct its
business; and
AUTHORIZATION OF THE ISSUANCE OF THE SECURITIES
The Securities of the Company to be issued and outstanding
have been duly authorized by the Company's Board of Directors and are,
or when issued, delivered and paid for, will be validly issued, fully
paid and non-assessable
Neither this opinion nor any part hereof may be delivered to, used or
relied upon by any other person or for any other purpose without our prior
written consent.
Very truly yours,
-----------------------
Jakes Jordaan
cc. ▇▇▇ ▇▇▇▇▇
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