EXHIBIT 10.1
STOCK PURCHASE WARRANT
----------------------
This Stock Purchase Warrant ("Warrant") is issued this 29th day of August,
1997, by ENDEAVOR TECHNOLOGIES, INC., a Georgia corporation (the "Company"), to
SIRROM CAPITAL CORPORATION, a Tennessee corporation (SIRROM CAPITAL CORPORATION
and any subsequent assignee or transferee hereof are hereinafter referred to
collectively as "Holder" or "Holders").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of SIRROM CAPITAL
-------------------------
CORPORATION making a loan to the Company in an amount of Four Million and
no/100ths Dollars ($4,000,000) pursuant to the terms of a secured promissory
note of even date herewith (the "Note") and related loan agreement of even date
herewith (the "Loan Agreement"), and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company hereby
grants to Holder the right to purchase 557,490 shares of the Company's Common
Stock, Series D (the "Common Stock"), which the Company represents to equal 5%
of the shares of capital stock outstanding on the date hereof, calculated on a
fully diluted basis and assuming exercise of this Warrant ("Base Amount"),
provided that in the event that any portion of the indebtedness evidenced by the
Note is outstanding on the following dates, the Base Amount shall be increased
to the corresponding number set forth below:
DATE BASE AMOUNT
----------------------- -----------------------------------
August 31, 1999 676,105 shares, which the Company
represents to equal 6% of the
shares of the Company's capital
stock outstanding on the date
hereof calculated on a fully
diluted basis after exercise of
this Warrant
August 31, 2000 797,270 shares, which the Company
represents to equal 7% of the
shares of the Company's capital
stock outstanding on the date
hereof calculated on a fully
diluted basis after exercise of
this Warrant
August 31, 2001 921,070 shares, which the Company
represents to equal 8% of the
shares of the Company 's capital
stock outstanding on the date
hereof calculated on a fully
diluted basis after exercise of
this Warrant
In the event the Company fails to either (i) raise and receive an
additional One Million Dollars ($1,000,000) of equity, or (ii) prepay One
Million Dollars ($1,000,000) in principal amount of the Note, on or prior to
August 31, 1998, then the Base Amount automatically shall be increased by 1%.
Such increase automatically shall be effective on September 1, 1998, and the
number of shares of Common Stock described above shall be increased to reflect
such Base
Amount. In addition, if such Base Amount is increased, the number of
Shares and the applicable percentages set forth above with respect to the years
August 1, 1999, August 1, 2000 and August 1, 2001 shall be increased to 7%, 8%
and 9%, respectively, to reflect the increase in such Base Amount.
The shares of Common Stock issuable upon exercise of this Warrant are
hereinafter referred to as the "Shares." This Warrant shall be exercisable at
any time and from time to time from the date hereof until August 1, 2002.
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
--------------
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. EXERCISE. This Warrant may be exercised by the Holder hereof (but only
--------
on the conditions hereinafter set forth) as to all or any increment or
increments of One Hundred (100) Shares (or the balance of the Shares if fewer
than such number), upon delivery of written notice of intent to exercise to the
Company at the following address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ or such other address as the Company shall designate in a written notice
to the Holder hereof, together with this Warrant and payment to the Company of
the aggregate Exercise Price of the Shares so purchased. The Exercise Price
shall be payable, at the option of the Holder, (i) by certified or bank check,
(ii) by the surrender of the Note or portion thereof having an outstanding
principal balance equal to the aggregate Exercise Price or (iii) by the
surrender of a portion of this Warrant where the Shares subject to the portion
of this Warrant that is surrendered have a fair market value equal to the
aggregate Exercise Price. Upon exercise of this Warrant as aforesaid, the
Company shall as promptly as practicable, and in any event within fifteen (15)
days thereafter, execute and deliver to the Holder of this Warrant a certificate
or certificates for the total number of whole Shares for which this Warrant is
being exercised in such names and denominations as are requested by such Holder.
If this Warrant shall be exercised with respect to fewer than all of the Shares,
the Holder shall be entitled to receive a new Warrant covering the number of
Shares in respect of which this Warrant shall not have been exercised, which new
Warrant shall in all other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due any and all state and federal
issue taxes which may be payable in respect of the issuance of this Warrant or
the issuance of any Shares upon exercise of this Warrant.
3A. COVENANTS WITH RESPECT TO INCENTIVE STOCK OPTIONS. The Company shall
-------------------------------------------------
not grant any options, warrants, rights (including conversion or pre-emptive
rights) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock; provided, however, that the Company shall be
entitled to grant stock options or awards to purchase Common Stock of the
Company to full-time employees or independent sales representatives (including
independent contractors deemed important by the Company to the success of the
Company) of the Company for incentive based compensation purposes. The amount
of any such future options or awards which may be granted by the Company for
incentive based compensation purposes shall not in the aggregate exceed 7.5% of
the fully diluted Common
2
Stock outstanding at any time. Any such options or awards of capital stock for
purposes of incentive based compensation to full-time employees or independent
sales representatives (including independent contractors deemed important by the
Company to the success of the Company) shall be granted or sold at a price not
less than the fair market value of such Common Stock at the time of such grant
or sale.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
------------------------
following:
(a) Neither this Warrant nor the Shares have been registered under
the Securities Act of 1933, as amended ("Securities Act") or any state
securities laws ("Blue Sky Laws"). This Warrant has been acquired for
investment purposes and not with a view to distribution or resale and may
not be sold or otherwise transferred without (i) an effective registration
statement for such Warrant under the Securities Act and such applicable
Blue Sky Laws, or (ii) an option of counsel, which opinion and counsel
shall be reasonably satisfactory to the Company and its counsel, that
registration is not required under the Securities Act or under any
applicable Blue Sky Laws (the Company hereby acknowledges that ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, PLC is acceptable counsel). Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the same
manner and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND
MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER
THE ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH
SECURITIES ACTS AND SUCH APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER.
THIS WARRANT HAS BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE "GEORGIA SECURITIES ACT OF 1973,"
AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH
IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION
UNDER SUCH ACT.
The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect
the compliance of the issuance of this Warrant and any shares of Common
Stock issued upon exercise hereof with applicable federal and state
securities laws.
3
(b) The Company covenants and agrees that all Shares which may be
issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive rights,
if any, with respect thereto or to the issuance thereof. The Company shall
at all times reserve and keep available for issuance upon the exercise of
this Warrant such number of authorized but unissued shares of Common Stock
as will be sufficient to permit the exercise in full of this Warrant.
(c) The Company covenants and agrees that it shall not sell any shares
of the Company's capital stock at a price per share below the fair market
value of such shares, without the prior written consent of the Holder
hereof. In the absence of an established public market for the shares of
stock sold by the Company, fair market value shall be established by the
Company's board of directors in a commercially reasonable manner. The basis
for determination shall be provided in writing to the Holder hereof. In the
event that the Company sells shares of the Company's capital stock in
violation of this Section 4(c), the number of shares issuable upon exercise
of this Warrant shall be equal to the product obtained by multiplying the
number of shares issuable pursuant to this Warrant prior to such sale by
the quotient obtained by dividing (i) the fair market value of the shares
issued in violation of this Section 4(c) by (ii) the price at which such
shares were sold.
5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof,
-------------------
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the form hereof in the
name of the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS.
------------------------------------------------------------------
Except as otherwise provided herein, this Warrant does not confer upon the
Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock that are subject to this Warrant shall be deemed to
be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering. The Company shall not grant any preemptive
rights with respect to any of its capital stock without the prior written
consent of the Holder.
7. OBSERVATION RIGHTS. The Holder of this Warrant shall receive notice of
------------------
and be entitled to attend or may send a representative to attend all meetings of
the Company's Board of Directors in a non-voting observation capacity and shall
receive a copy of all correspondence and information delivered to the Company's
Board of Directors, from the date hereof until such time as the indebtedness
evidenced by the Note has been paid in full. (If at
4
any time there are multiple Holders, they may by majority vote based upon the
respective number of shares of Common Stock purchasable in connection with
exercise of their warrants, designate a single representative to attend meetings
of the Board of Directors.)
8. ADJUSTMENT UPON CHANGES IN STOCK.
--------------------------------
(a) If all or any portion of this Warrant shall be exercised subsequent
to any stock split, stock dividend, recapitalization, combination of shares
of the Company, or other similar event, occurring after the date hereof,
then the Holder exercising this Warrant shall receive, for the aggregate
price paid upon such exercise, the aggregate number and class of shares
which such Holder would have received if this Warrant had been exercised
immediately prior to such stock split, stock dividend, recapitalization,
combination of shares, or other similar event. If any adjustment under this
Section 8(a), would create a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares subject to
this Warrant shall be the next higher number of shares, rounding all
fractions upward. Whenever there shall be an adjustment pursuant to this
Section 8(a), the Company shall forthwith notify the Holder or Holders of
this Warrant of such adjustment, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated.
(b) If all or any portion of this Warrant shall be exercised subsequent
to any merger, consolidation, exchange of shares, separation,
reorganization or liquidation of the Company, or other similar event,
occurring after the date hereof, as a result of which shares of Common
Stock shall be changed into the same or a different number of shares of the
same or another class or classes of securities of the Company or another
entity, or the holders of Common Stock are entitled to receive cash or
other property, then the Holder exercising this Warrant shall receive, for
the aggregate price paid upon such exercise, the aggregate number and class
of shares, cash or other property which such Holder would have received if
this Warrant had been exercised immediately prior to such merger,
consolidation, exchange of shares, separation, reorganization or
liquidation, or other similar event. If any adjustment under this Section
8(b) would create a fractional share of Common Stock or a right to acquire
a fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares subject to this Warrant shall be the
next higher number of shares, rounding all fractions upward. Whenever there
shall be an adjustment pursuant to this Section 8(b), the Company shall
forthwith notify the Holder or Holders of this Warrant of such adjustment,
setting forth in reasonable detail the event requiring the adjustment and
the method by which such adjustment was calculated.
9. PUT AGREEMENT.
-------------
(a) The Company hereby irrevocably grants and issues to Holder the
right and option to sell to Company (the "Put") this Warrant for a period
of 30 days after August
5
1, 2002, at a purchase price (the "Purchase Price") equal to the Fair
Market Value (as hereinafter defined) of the shares of Common Stock
issuable to Holder upon exercise of this Warrant.
(b) The Company shall pay to the Holder, in cash or certified or
cashier's check, the Purchase Price in exchange for the delivery to the
Company of this Warrant within thirty (30) days of the receipt of written
notice, addressed as set forth in Section 3 hereto, from the Holder of its
intention to exercise the Put.
(c) The Fair Market Value of the shares of Common Stock of the Company
issuable pursuant to this Warrant shall be determined as follows:
(i) The Company and the Holder shall each appoint an
independent, experienced appraiser who is a member of a recognized
professional association of business appraisers. The two appraisers shall
determine the value of the shares of Common Stock which would be issued
upon the exercise of the Warrant, assuming that the sale would be between
a willing buyer and a willing seller, both of whom have full knowledge of
the financial and other affairs of the Company, and neither of whom is
under any compulsion to sell or to buy.
(ii) If the higher of the two appraisals is not more than 10%
more than the lower of the appraisals, the Fair Market Value shall be the
average of the two appraisals. If the higher of the two appraisals is 10%
or more than the lower of the two appraisals, then a third appraiser
shall be appointed by the two appraisers, and if they cannot agree on a
third appraiser, the American Arbitration Association shall appoint the
third appraiser. The third appraiser, regardless of whom appoints him or
her, shall have the same qualifications as the first two appraisers.
(iii) The Fair Market Value after the appointment of the third
appraiser shall be the mean of the three appraisals.
(iv) The fees and expenses of the appraisers shall be paid one-
half by the Company and one-half by the Holder.
10. REGISTRATION.
------------
(a) The Company and the holders of the Shares agree that if at any time
after the date hereof the Company shall propose to file a registration
statement with respect to any of its Common Stock on a form suitable for a
secondary offering, it will give notice in writing to such effect to the
registered holder(s) of the Shares at least thirty (30) days prior to such
filing, and, at the written request of any such registered holder, made
within ten (10) days after the receipt of such notice, will include therein
at the Company's cost and expense (including the fees and expenses of a
single law firm serving as counsel to such holder(s), but excluding
underwriting discounts,
6
commissions and filing fees attributable to the Shares included therein)
such of the Shares as such holder(s) shall request; provided, however, that
if the offering being registered by the Company is underwritten and if the
representative of the underwriters certifies in writing that the inclusion
therein of the Shares would materially and adversely affect the sale of the
securities to be sold by the Company thereunder, then the Company shall be
required to include in the offering only that number of securities,
including the Shares, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities
so included to be apportioned pro rata among all selling shareholders
according to the total amount of securities entitled to be included therein
owned by each selling shareholder, but in no event shall the total amount
of Shares included in the offering be less than the number of securities
included in the offering by any other single selling shareholder unless all
of the Shares are included in the offering).
(b) Whenever the Company undertakes to effect the registration of any
of the Shares, the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange Commission
(the "Commission") a registration statement covering such Shares and use
its best efforts to cause such registration statement to be declared
effective by the Commission as expeditiously as possible and to keep such
registration effective until the earlier of (A) the date when all Shares
covered by the registration statement have been sold or (B) two hundred
seventy (270) days from the effective date of the registration statement;
provided, that before filing a registration statement or prospectus or
any amendment or supplements thereto, the Company will furnish to each
Holder of Shares covered by such registration statement and the
underwriters, if any, copies of all such documents proposed to be filed
(excluding exhibits, unless any such person shall specifically request
exhibits), which documents will be subject to the review of such Holders
and underwriters, and the Company will not file such registration
statement or any amendment thereto or any prospectus or any supplement
thereto (including any documents incorporated by reference therein) with
the Commission if (A) the underwriters, if any, shall reasonably objet to
such filing or (B) information in such registration statement or
prospectus concerning a particular selling Holder has changed and such
Holder or the underwriters, if any, shall reasonably object.
(ii) Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be
necessary to keep such registration statement effective during the period
referred to in Section 10(b)(i) and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement, and cause the prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed with
the Commission pursuant to Rule 424 under the Securities Act.
7
(iii) Furnish to the selling Holder(s) such numbers of copies of
such registration statement, each amendment thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), each supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of the Shares
owned by them.
(iv) Use its best efforts to register and qualify under such
other securities laws of such jurisdictions as shall be reasonably
requested by any selling Holder and do any and all other acts and things
which may be reasonably necessary or advisable to enable such selling
Holder to consummate the disposition of the Shares owned by such Holder, in
such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to qualify to
transact business or to file a general consent to service of process in any
such states or jurisdictions.
(v) Promptly notify each selling Holder of the happening of any
event as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading and, at the request
of any such Holder, the Company will prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
Shares, such prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading.
(vi) Provide a transfer agent and registrar for all such Shares
not later than the effective date of such registration statement.
(vii) Enter into such customary agreements (including
underwriting agreements in customary form for a primary offering) and take
all such other actions as the underwriters, if any, reasonably request in
order to expedite or facilitate the disposition of such Shares (including,
without limitation, effecting a stock split or a combination of shares).
(viii) Make available for inspection by any selling Holder or any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
selling Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers,
directors, employees and independent accountants of the Company to supply
all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement.
8
(ix) Promptly notify the selling Holder(s) and the underwriters,
if any, of the following events and (if requested by any such person)
confirm such notification in writing: (A) the filing of the prospectus or
any prospectus supplement and the registration statement and any
amendment or post-effective amendment thereto and, with respect to the
registration statement or any post-effective amendment thereto, the
declaration of the effectiveness of such documents, (B) any requests by
the Commission for amendments or supplements to the registration
statement or the prospectus or for additional information, (C) the
issuance or threat of issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose and (D) the receipt by the
Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the
initiation or threat of initiation of any proceeding for such purposes.
(x) Make every reasonable effort to prevent the entry of any
order suspending the effectiveness of the registration statement and
obtain at the earliest possible moment the withdrawal of any such order,
if entered.
(xi) Cooperate with the selling Holder(s) and the underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing the Shares to be sold and not bearing any restrictive
legends, and enable such Shares to be in such lots and registered in such
names as the underwriters may request at least two (2) business days
prior to any delivery of the Shares to the underwriters.
(xii) Provide a CUSIP number for all the Shares not later than the
effective date of the registration statement.
(xiii) Prior to the effectiveness of the registration statement and
any post-effective amendment thereto and at each closing of an
underwritten offering, (A) make such representations and warranties to
the selling Holder(s) and the underwriters, if any, with respect to the
Shares and the registration statement as are customarily made by issuers
in primary underwritten offerings; (B) use its best efforts to obtain
"cold comfort" letters and updates thereof from the Company's independent
certified public accountants addressed to the selling Holders and the
underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters by
underwriters in connection with primary underwritten offerings; (C)
delivery such documents and certificates as may be reasonably requested
(1) by the holders of a majority of the Shares being sold, and (2) by the
underwriters, if any, to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company; and (D) obtain opinions of
counsel to the Company and updates thereof (which counsel and which
opinions shall be reasonably satisfactory to the underwriters, if any),
covering the matters customarily covered in opinions requested in
underwritten offerings and such other
9
matters as may be reasonably requested by the selling Holders and
underwriters or their counsel. Such counsel shall also state that no
facts have come to the attention of such counsel which cause them to
believe that such registration statement, the prospectus contained
therein, or any amendment or supplement thereto, as of their respective
effective or issue dates, contains any untrue statement of any material
fact or omits to state any material fact necessary to make the statements
therein not misleading (except that no statement need be made with
respect to any financial statements, notes thereto or other financial
data or other expertized material contained therein). If for any reason
the Company's counsel is unable to give such opinion, the company shall
so notify the Holders of the Shares and shall use its best efforts to
remove expeditiously all impediments to the rendering of such opinion.
(xiv) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commissions, and make generally available to
its security holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act, no later than forty-five (45) days
after the end of any twelve-month period (or ninety (90) days, if such
period is a fiscal year) (A) commencing at the end of any fiscal quarter
in which the Shares are sold to underwriters in a firm or best efforts
underwritten offering, or (B) if not sold to underwriters in such an
offering, beginning with the first month of the first fiscal quarter of
the Company commencing after the effective date of the registration
statement, which statements shall cover such twelve-month periods.
(c) After the date hereof, the Company shall not grant to any holder of
securities of the Company any registration rights which have a priority
greater than or equal to those granted to Holders pursuant to this Warrant
without the prior written consent of the Holder(s).
(d) The Company's obligations under Section 10(a) above with respect to
each holder of Shares are expressly conditioned upon such holder's
furnishing to the Company in writing such information concerning such
holder and the terms of such holder's proposed offering as the Company
shall reasonably request for inclusion in the registration statement. If
any registration statement including any of the Shares if filed, then the
Company shall indemnify each holder thereof (and each underwriter for such
holder and each person, if any, who controls such underwriter within the
meaning of the Securities Act) from any loss, claim, damage or liability
arising out of, based upon or in any way relating to any untrue statement
of a material fact contained in such registration statement or any omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except for any such
statement or omission based on information furnished in writing by such
holder of the Shares expressly for use in connection with such registration
statement; and such holder shall indemnify the Company (and each of its
officers and directors who has signed such registration statement, each
director, each person, if any, who controls the Company within the meaning
of the Securities Act, each underwriter for
10
the Company and each person, if any, who controls such underwriter within
the meaning of the Securities Act) and each other such holder against any
loss, claim, damage or liability arising from any such statement or
omission which was made in reliance upon information furnished in writing
to the Company by such holder of the Shares expressly for use in connection
with such registration statement.
(e) For purposes of this Section 10, all of the Shares shall be deemed
to be issued and outstanding.
11. CERTAIN NOTICES. In case at any time the Company shall propose to:
---------------
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in stock or make
any special dividend or other distribution to the holders of its Common
Stock;
(c) offer for subscription to the holders of any of its Common Stock any
additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the Company, or
consolidate, merge or otherwise combine with, or sell of all or
substantially all of its assets to, another corporation;
(e) voluntarily or involuntarily dissolve, liquidate or wind up of the
affairs of the Company; or
(f) redeem or purchase any shares of its capital stock or securities
convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least twenty
(20) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in
respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, and (ii) in the case
of such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least twenty (20) days' prior
written notice of the date when the same shall take place. Any notice
required by clause (i) shall also specify, in the case of any such
dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto, and any notice required
by clause (ii) shall specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the
case may be.
11
12. RIGHTS OF CO-SALE.
-----------------
(a) Co-Sale Right. None of the holders of Common Stock who are involved
-------------
in the management of the Company ("Management Shareholder") shall enter
into any transaction that would result in the sale by such Management
Shareholder of any Common Stock now or hereafter owned by it, unless prior
to such sale such Management Shareholder shall give notice to Holder of its
intention to effect such sale in order that Holder may exercise its rights
under this Section 12 as hereinafter described. Such notice shall set forth
(i) the number of shares to be sold by such Management Shareholder, (ii)
the principal terms of the sale, including the price at which the shares
are intended to be sold, and (iii) an offer by such Management Shareholder
to use such Management Shareholder's best efforts to cause to be included
with the shares to be sold by such Management Shareholder in the sale, on a
share-by-share basis and on the same terms and conditions, the Shares
issuable or issued to Holder pursuant this Warrant.
(b) Rejection of Co-Sale Offer. If Holder has not accepted such offer
--------------------------
in writing within a period of ten (10) days from the date of receipt of the
notice, then such Management Shareholder shall thereafter be free for a
period of ninety (90) days to sell the number of shares specified in such
notice, at a price no greater than the price set forth in such notice and
on otherwise no more favorable terms to such Management Shareholder than as
set forth in such notice, without any further obligation to Holder in
connection with such sale. In the event that such Management Shareholder
fails to consummate such sale within such ninety-day period, the shares
specified in such notice shall continue to be subject to this Section.
(c) Acceptance of Co-Sale Offer. If Holder accepts such offer in
---------------------------
writing within ten (10) day period, such acceptance shall be irrevocable
unless such Management Shareholder shall be unable to cause to be included
in his sale the number of Shares of stock held by Holder and set forth in
the written acceptance. In that event, such Management Shareholder and
Holder shall participate in the sale equally, with such Management
Shareholder and Holder each selling half the total number of such shares to
be sold in the sale.
13. ARTICLE AND SECTION HEADINGS. Numbered and titled article and section
----------------------------
headings are for convenience only and shall not be construed as amplifying or
limiting any of the provisions of this Warrant.
14. NOTICE. Any and all notices, elections or demands permitted or
------
required to be made under this Warrant shall be in writing, signed by the party
giving such notice, election or demand and shall be delivered personally,
telecopied, telexed, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery or telecopy or three (3) business days after the date of mailing (or
the next business day after delivery to
12
such courier service), as the case may be, shall be the date of such notice,
election or demand. For the purposes of this Warrant:
The Address of Holder Sirrom Capital Corporation
is: Suite 200
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No. 615/726-1208
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, PLC
Suite 1900
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: A. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy No. 615/726-3185
The Address of Company Endeavor Technologies, Inc.
is: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No. 404/705-0749
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No. 404/817-6050
15. SEVERABILITY. If any provisions(s) of this Warrant or the
------------
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Warrant and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
16. ENTIRE AGREEMENT. This Warrant between the Company and Holder
----------------
represents the entire agreement between the parties concerning the subject
matter hereof, and all oral discussions and prior agreement are merged herein.
17. GOVERNING LAW AND AMENDMENTS. This Warrant shall be construed and
----------------------------
enforced under the laws of the State of Tennessee applicable to contracts to be
wholly performed in such State. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
13
18. COUNTERPARTS. This Warrant may be executed in any number of
------------
counterparts and by different parties to this Warrant in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same Warrant.
19. JURISDICTION AND VENUE. The Company hereby consents to the
----------------------
jurisdiction of the courts of the State of Tennessee and the United States
District Court for the Middle District of Tennessee, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising out of any of
its obligations arising under this Agreement or with respect to the transactions
contemplated hereby, and expressly waives any and all objections it may have as
to venue in any of such courts.
20. EQUITY PARTICIPATION. This Warrant is issued in connection with the
--------------------
Loan Agreement. It is intended that this Warrant constitute an equity
participation under and pursuant to T.C.A. (S) ▇▇-▇▇-▇▇▇, et seq. and that
------
equity participation be permitted under said statutes and not constitute
interest on the Note. If under any circumstances whatsoever, fulfillment of any
obligation of this Warrant, the Loan Agreement, or any other agreement or
document executed in connection with the Loan Agreement, shall violate the
lawful limit of any applicable usury statute or any other applicable law with
regard to obligations of like character and amount, then the obligation to be
fulfilled shall be reduced to such lawful limit, such that in no event shall
there occur, under this Warrant, the Loan Agreement, or any other document or
instrument executed in connection with the Loan Agreement, any violation of such
lawful limit, but such obligation shall be fulfilled to the lawful limit. If any
sum is collected in excess of the lawful limit, such excess shall be applied to
reduce the principal amount of the Note.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
COMPANY: ENDEAVOR TECHNOLOGIES, INC.,
-------
a Georgia corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Title:Chairman/Chief Executive Officer
----------------------------------
HOLDER: SIRROM CAPITAL CORPORATION, a Tennessee
------
corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title:Vice President
----------------------------------
14
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Warrant to be executed as of the date first above written for the purpose of
agreeing to the terms and conditions of Section 12 hereof.
MANAGEMENT
----------
SHAREHOLDER: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------- -----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
15