EXHIBIT 2
WARRANT AGREEMENT
dated as of October 31, 2000
between
MCM CAPITAL GROUP, INC.
and
CTW FUNDING, LLC
for
Warrants to Purchase up to
100,000 shares of Common Stock
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of October 31, 2000 (this "Agreement") is
entered into by and between MCM Capital Group, Inc., a Delaware corporation (the
"Company"), and CTW Funding, LLC, a Delaware limited liability company
("Lender").
RECITALS:
A. Midland Credit Management, Inc., a Kansas corporation ("Midland"), and a
wholly-owned subsidiary of the Company, has requested a $2,000,000 revolving
line of credit from Lender pursuant to terms of that certain Credit and Security
Agreement dated as of October 31, 2000 (the "Credit Agreement").
B. To induce Lender to enter into the Credit Agreement, the Company has
agreed to issue to Lender, warrants to purchase up to 100,000 shares of
commonstock, $0.01 par value per share, of the Company (the "Common Stock");
50,000 to be issued on the Closing Date (as that term is defined in the Credit
Agreement), and 50,000 to be issued on the Initial Draw Date (as that term is
defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and covenants hereinafter set forth and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. Unless the context otherwise requires,
the following terms, when used in this Agreement, shall have the respective
meanings specified below:
"Affiliate" shall have the meaning specified in the Credit Agreement.
"Agreement" or "this Agreement" shall have the meaning specified in the
preamble to this Agreement.
"Board" shall mean the board of directors of the Company.
"Closing Date" shall have the meaning specified in the Credit Agreement.
"Common Stock" shall have the meaning specified in the recitals to this
Agreement.
"Company" shall have the meaning specified in the preamble to this
Agreement.
"Credit Agreement" shall have the meaning specified in the recitals to this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exercise Price" shall have the meaning specified in Section 3.01.
"Expiration Date" shall be October 31, 2005.
"Fair Market Value" shall mean, with respect to any shares of Common Stock
as of any date of determination: (i) if such shares of Common Stock are not
Publicly Traded, the fair value of such shares of Common Stock (A) as determined
reasonably and in good faith in the most recently completed arm's-length
transaction between the Company and an unaffiliated third party in which such
determination is necessary and the closing of which shall have occurred within
the six months preceding such date of determination, or (B) if no such
transaction shall have occurred within such six-month period, then as determined
in accordance with the Valuation Criteria reasonably and in good faith by an
Independent Financial Expert appointed by the Board and consented to by Lender
(such consent not to be unreasonably withheld); or (ii) if such shares of Common
Stock are Publicly Traded, the Market Price of such shares of Common Stock on
the trading day immediately preceding such date of determination; provided,
however, that with respect to shares of Common Stock issuable upon the exercise
of options under a stock option plan or the issuance of shares of Common Stock
under an employee stock incentive plan, the Fair Market Value of such shares
shall be determined in accordance with the applicable provisions of such plan
(if any).
"Holders" shall mean the registered holders from time to time of the
Warrants and, unless otherwise provided or indicated herein, the registered
holders from time to time of the Underlying Common Stock.
"Independent Financial Expert" shall mean a nationally recognized
investment banking firm (i) that does not (and whose directors, officers,
employees and affiliates do not) have a direct or indirect financial interest in
the Company or any of its Affiliates, and (ii) that is not, and none of whose
directors, officer, employees or Affiliates are, at the time it is called upon
to render independent financial advice to the Company, a promoter, director or
officer of the Company or any of its Affiliates or an underwriter or placement
agent with respect to any of the securities of the Company or any of its
Affiliates, nor have the Company or any such directors, officers, employees or
Affiliates acted in such capacity during the three year period prior thereto.
"Initial Draw Date" means the date on which the Company first draws funds
against the Credit Facility (as that term is defined in the Credit Agreement).
"Lender" shall have the meaning specified in the preamble to this
Agreement.
"Market Price" shall mean, with respect to any shares of Common Stock that
are Publicly Traded, for any specified trading day, (i) in the case of shares of
Common Stock listed or admitted to trading on any securities exchange or on the
Nasdaq National Market or the Nasdaq
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SmallCap Market, the average closing price, or if no sale takes place on that
day, the average of the closing bid and asked prices, for the ten (10) trading
days prior to the specified date, (ii) in the case of shares of Common Stock not
then listed or admitted to trading on any securities exchange or on the Nasdaq
National Market or the Nasdaq SmallCap Market, the average last reported sale
price, or if no sale takes place on that day, the average of the closing bid and
asked prices, for the ten (10) trading days prior to the specified date, as
reported by a reputable quotation source designated by the Company, and (iii) if
there are no bid and asked prices reported during the ten (10) trading days
prior to the specified date, the Fair Market Value of such shares of Common
Stock as determined as if such shares of Common Stock were not Publicly Traded.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization or other entity or any
government or political subdivision, agency or instrumentality thereof, as well
as any syndicate or group that would be deemed to be a person under Section
13(d)(3) of the Exchange Act.
"Publicly Traded" shall mean, relative to any security, that such security
is (i) listed on a domestic securities exchange, (ii) quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market, or (iii) traded in the domestic
over-the-counter market, which trades are reported on the OTC Bulletin Board or
reported by the National Quotation Bureau, Incorporated.
"Rights" shall mean any "poison pill" or similar shareholder rights issued
pursuant to a "poison pill" shareholder rights plan or similar plan.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Taxes" shall mean all transfer, stamp, documentary and other similar
taxes, assessments or charges levied by any governmental or revenue authority in
respect hereof in respect of any Warrant or any Warrant Certificate, excluding,
however, franchise taxes and taxes, assessments or charges levied or imposed on
or measured by the net income or receipts of any Person.
"Underlying Common Stock" shall mean the shares of Common Stock issuable or
issued upon the exercise of the Warrants.
"Valuation Criteria" shall mean one or more valuation methods that the
Independent Financial Expert or the Board, as the case may be, in its
professional or reasonable business judgment, as the case may be, determines to
be most appropriate for use in determining the Fair Market Value of any
securities for which such determination is required pursuant to this Agreement.
"Warrant Certificates" shall have the meaning specified in Section 2.01 of
this Agreement.
"Warrants" shall mean the warrants issued to Lender (i) on the Closing
Date; and (ii) the Initial Draw Date, in each case, as contemplated by this
Agreement and the Credit Agreement.
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ARTICLE II
ORIGINAL ISSUE OF WARRANTS; TRANSFER
Section 2.01. FORM OF WARRANT CERTIFICATES. The Warrants shall be evidenced
by certificates in registered form only and substantially in the form attached
hereto as Exhibit A (the "Warrant Certificates"), shall be dated the date on
which signed by the Company and may have such legends and endorsements typed,
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation
applicable thereto, with any rule or regulation of any securities exchange or
association on which the Warrants may be listed, or to conform to customary
usage.
Section 2.02. EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. A Warrant
Certificate evidencing Warrants to purchase 50,000 shares of Common Stock shall
be executed by the Company and delivered to Lender on the Closing Date. An
additional Warrant Certificate evidencing Warrants to purchase 50,000 shares of
Common Stock shall be executed by the Company and delivered to Lender on the
Initial Draw Date. The Warrant Certificates shall be executed on behalf of the
Company by one or more duly authorized officers of the Company.
Section 2.03. TRANSFER OF WARRANTS.
(a) Subject to clause (b) of this Section 2.03 and provided that all other
conditions regarding the transfer of the Warrants set forth in this Agreement
have been satisfied, each Warrant and the rights thereunder may be transferred
by the Holder thereof by delivering to the Company the Warrant Certificate
evidencing such Warrant accompanied by a properly completed assignment form (a
form of which is attached to the form of Warrant Certificate attached as Exhibit
A to this Agreement). Within ten (10) Business Days of receipt of such
assignment form, the Company shall issue and deliver to the transferee, subject
to clause (b) below, a Warrant Certificate of like kind and tenor representing
the transferred Warrants and to the transferor a Warrant Certificate of like
kind and tenor representing any Warrants evidenced by such original certificate
that are not being transferred. Each Warrant Certificate issued pursuant to this
Section 2.03 shall be substantially in the form of Exhibit A to this Agreement
and shall bear the restrictive legends set forth thereon (unless, with respect
to the legend regarding transfer under applicable securities laws, the Holder or
transferee thereof supplies to the Company an opinion of counsel, reasonably
satisfactory to the Company, that the restrictions described in such legend are
no longer applicable to such Warrants).
(b) The transfer of Warrants shall be permitted only pursuant to a
transaction that complies with, or is exempt from, the provisions of the
Securities Act and any applicable provisions of state securities laws. The
Company may require an opinion of counsel, reasonably satisfactory to the
Company, to such effect prior to the transfer of any Warrant.
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ARTICLE III
EXERCISE PRICE; EXERCISE OF WARRANTS GENERALLY
Section 3.01. EXERCISE PRICE. Each Warrant Certificate shall entitle the
Holder thereof, subject to the provisions of this Agreement, to purchase one
share of Common Stock for each Warrant represented thereby at an exercise price
(the "Exercise Price") of $0.01 per share.
Section 3.02. EXERCISE OF WARRANTS. Subject to the terms and conditions set
forth herein, the Warrants shall be exercisable at any time from the date of
issuance through the Expiration Date.
Section 3.03. EXPIRATION OF WARRANTS. The Warrants shall terminate and
become void as of the close of business on the Expiration Date.
Section 3.04. METHOD OF EXERCISE.
(a) To exercise a Warrant, the Holder thereof must surrender the Warrant
Certificate evidencing such Warrant to the Company, with a duly executed Form of
Election to Purchase, a form of which is attached hereto, and pay the Exercise
Price for each share of Underlying Common Stock as to which Warrants are then
being exercised in full to the Company (i) by wire transfer of immediately
available funds, or (ii) by certified or official bank check, or (iii) by any
combination of the foregoing. A Holder may exercise such Holder's Warrant for
the full number of shares of Underlying Common Stock issuable upon exercise
thereof (subject to the limitations set forth in Section 3.02) or any lesser
number of whole shares of Underlying Common Stock.
(b) Not later than the fifth Business Day following the later of (i)
surrender of a Warrant Certificate in conformity with the foregoing provisions
or (ii) payment by the Holder of the full Exercise Price for the shares of
Underlying Common Stock as to which such Warrants are then being exercised, the
Company shall transfer to the Holder of such Warrant Certificate appropriate
evidence of ownership of any shares of Underlying Common Stock or other
securities or property (including any money) to which the Holder is entitled,
registered or otherwise placed in, or payable to the order of, such name or
names as may be directed in writing by the Holder, and shall deliver such
evidence of ownership and any other securities or property (including any money)
to the person or persons entitled to receive the same, together with an amount
in cash in lieu of any fraction of a share as provided in Section 4.04. If such
Warrant Certificate is not exercised in full, the Company will issue to the
Holder a new Warrant Certificate exercisable for the number of shares of
Underlying Common Stock as to which such Warrant has not been exercised.
Underlying Common Stock issued upon exercise of a Warrant in the name of any
person other than the registered holder of the Warrant shall be subject to
Sections 5.03 and 5.04 of this Agreement.
(c) Each person in whose name any certificate representing shares of
Underlying Common Stock is issued shall for all purposes be deemed to have
become the holder of record of such shares of Underlying Common Stock on the
date on which the Warrant
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Certificate was surrendered to the Company and payment
of the Exercise Price therefor was received by the Company, irrespective of the
date of delivery of such certificate representing shares of Underlying Common
Stock.
Section 3.05. CANCELLATION OF WARRANTS. The Company shall cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, exchange or substitution, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall destroy canceled
Warrant Certificates. If the Company shall acquire any of the Warrants, such
acquisition shall not operate as a redemption or termination of the right
represented by such Warrants unless and until the Warrant Certificates
evidencing such Warrants are surrendered to the Company for cancellation.
ARTICLE IV
ADJUSTMENTS
Section 4.01. ADJUSTMENTS. The number of shares of Common Stock issuable
upon exercise of each Warrant shall be subject to adjustment from time to time
as follows:
(a) Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications.
In the event that the Company shall (i) pay a dividend or make any other
distribution with respect to its Common Stock in shares of its capital stock,
(ii) subdivide its outstanding Common Stock, (iii) combine its outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of its
capital stock in a reclassification of the Common Stock (including any such
reclassification in connection with a merger, consolidation or other business
combination in which the Company is the continuing corporation), then
immediately prior to the record date for such dividend or distribution, or the
effective date of such subdivision or combination, the number of shares of
Common Stock issuable upon exercise of each Warrant shall be adjusted so that
the Holder of each Warrant shall thereafter be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company that such
Holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this Section 4.01(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) Issuance of Common Stock, Rights, Options or Warrants at Lower Values.
(i) In the event that the Company shall issue or sell shares of Common
Stock, or rights, options, warrants or other securities convertible or
exchangeable into shares of Common Stock, or containing the right to subscribe
for or purchase shares of Common Stock, at a price per share of Common Stock
(determined in the case of such rights, options, warrants or convertible or
exchangeable securities, by dividing (x) the total amount of Consideration
receivable by the Company in respect of the issuance and sale of such rights,
options, warrants or convertible or exchangeable securities, plus the total
Consideration, if any, payable to the Company upon exercise, conversion or
exchange thereof, by (y) the total number of shares of
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Common Stock covered by such rights, options, warrants or convertible or
exchangeable securities) that is lower than the then Fair Market Value per share
of the Common Stock immediately prior to such sale or issuance, then the number
of shares of Common Stock thereafter issuable upon the exercise of each Warrant
then outstanding shall equal the Pre-Issuance Value per Warrant divided by the
Unadjusted Post-Issuance Value per Warrant. Such adjustment shall be made
successively whenever any such sale or issuance is made.
(ii) For purposes of this Section 4.01(b), (A) "Pre-Issuance Value per
Warrant" shall mean (1) the total number of shares of Common Stock then issuable
upon exercise of each Warrant, multiplied by (2) the Fair Market Value per share
of Common Stock immediately prior to any issuance or sale described in Section
4.01(b)(i); and (B) "Unadjusted Post-Issuance Value per Warrant" shall mean (1)
the sum of (x) the total number of shares of Common Stock (including shares of
Common Stock issuable upon exercise of outstanding Warrants) outstanding
immediately prior to any issuance or sale described in Section 4.01(b)(i),
multiplied by the Fair Market Value per share of Common Stock immediately prior
to such issuance or sale, plus (y) the total number of additional shares of
Common Stock issued or sold by the Company (including, in the case of rights,
options, warrants or convertible or exchangeable securities, the total number of
shares of Common Stock covered by such rights, options, warrants or convertible
or exchangeable securities), multiplied by the price per share of Common Stock
for which such additional shares of Common Stock were issued or sold (including,
in the case of rights, options, warrants or convertible or exchangeable
securities, the total amount of Consideration per share receivable by the
Company in respect of the issuance and sale of such rights, options, warrants or
convertible or exchangeable securities, plus the total Consideration per share,
if any, payable to the Company upon exercise, conversion or exchange thereof),
divided by (2) the total number of shares of Common Stock outstanding
immediately after such issuance or sale (including, in the case of rights,
options, warrants or convertible or exchangeable securities, the total number of
shares of Common Stock covered by such rights, options, warrants or convertible
or exchangeable securities and including shares of Common Stock issuable upon
exercise of outstanding Warrants).
(iii) In the event that the Company shall issue or sell shares of
Common Stock or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, for consideration consisting in whole or in part, of property other than
cash or its equivalent, then in determining the "price per share of Common
Stock" and the "Consideration" receivable by or payable to the Company for
purposes of this Section 4.01, the Board shall determine, in good faith, the
fair value of such property. In the event that the Company shall issue and sell
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock, together with one
or more other securities as part of a unit at a price per unit, then to
determine the "price per share of Common Stock" and the "Consideration"
receivable by or payable to the Company for purposes of this Section 4.01, the
Board shall determine, in good faith, the fair value of the rights, options,
warrants or convertible or exchangeable securities then being sold as part of
such unit.
(iv) Notwithstanding anything herein to the contrary, the provisions
of this Section 4.01(b) shall not apply to any of the following:
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(A) the grant or issuance of restricted stock, options or other
similar rights issued pursuant to employee stock option plans, directors stock
option plans or similar plans providing for options or other similar rights to
purchase Common Stock covering in the aggregate not in excess of 20% of the
fully-diluted shares of Common Stock issued and outstanding from time to time,
or the issuance of shares upon exercise of any such options or other similar
rights;
(B) the issuance of shares upon the exercise of options,
warrants, convertible or exchangeable securities, or similar securities that are
convertible into Common Stock in accordance with their terms, that are issued
and outstanding as of the date of this Agreement;
(C) the issuance of any additional Warrants under this Agreement;
(D) the issuance of any Rights;
(E) the issuance of shares of capital stock pursuant to any stock
dividend, stock split or other distribution in respect of outstanding shares;
and
(F) the issuance of Common Stock or securities convertible into
Common Stock pursuant to an underwritten offering (including, without
limitation, any such securities issued pursuant to the underwriters'
overallotment option).
(c) Issuance of Rights. In the event that the Company shall distribute
any Rights prior to the exercise or expiration of the Warrants, the Company
shall make proper provision so that each Holder who exercises a Warrant after
the record date for such distribution and prior to the expiration or redemption
of the Rights shall be entitled to receive upon such exercise, in addition to
the shares of Common Stock issuable upon such exercise, a number of Rights
determined as follows: (A) if such exercise occurs on or prior to the date fixed
for the distribution to the holders of Rights of separate securities evidencing
such Rights, the same number of Rights to which a holder of a number of shares
of Common Stock equal to the number of shares of Underlying Common Stock
issuable upon such exercise would have been entitled at the time of such
exercise in accordance with the terms and provisions applicable to the Rights,
and (B) if such exercise occurs after such distribution date, the same number of
Rights to which a holder of the number of shares of Underlying Common Stock into
which the Warrant so exercised was exercisable immediately prior to such
distribution date would have been entitled on the distribution date in
accordance with the terms and provisions applicable to the Rights.
(d) Expiration Of Rights, Options and Conversion Privileges. Upon the
expiration of any rights, options, warrants or conversion or exchange privileges
that have previously resulted in an adjustment pursuant to Section 4.01(b), if
any thereof shall not have been exercised, the number of shares of Common Stock
issuable upon the exercise of each Warrant shall, upon such expiration, be
readjusted and shall thereafter, upon any future exercise, be such as they would
have been had they been originally adjusted (or had the original
8
adjustment not been required, as the case may be) as if (i) the only shares of
Common Stock so issued were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such rights, options, warrants or conversion or
exchange rights and (ii) such shares of Common Stock, if any, were issued or
sold for the Consideration actually received by the Company upon such exercise
plus the Consideration, if any, actually received by the Company for issuance,
sale or grant of all such rights, options, warrants or conversion or exchange
rights whether or not exercised.
(e) De Minimis Adjustments. No adjustment in the number of shares of
Common Stock issuable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of shares
of Common Stock purchasable upon an exercise of each Warrant; provided, however,
that any adjustments which by reason of this Section 4.01(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations shall be made to the nearest one-tenth of a share.
Section 4.02. DETERMINATION OF ADJUSTMENT. Whenever the number of shares of
Common Stock issuable upon the exercise of each Warrant is adjusted as herein
provided, a certificate of an officer of the Company setting forth the number of
shares of Common Stock issuable upon the exercise of each Warrant after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made
(in reasonable detail), shall, absent demonstrable error, be conclusive evidence
of such adjustment. The Company shall be entitled to rely on such certificate
and shall exhibit the same from time to time to any Holder desiring an
inspection thereof during normal business hours.
Section 4.03. STATEMENT ON WARRANTS. Irrespective of any adjustment in the
number or kind of shares issuable upon the exercise of the Warrants,
certificates evidencing Warrants theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 4.04. FRACTIONAL INTEREST. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares of Common Stock issuable on exercise of the Warrants so
presented. If any fraction of a share of Common Stock would, except for the
provisions of this Section 4.04, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash calculated
by it to be equal to the then Fair Market Value per share of Common Stock
multiplied by such fraction computed to the nearest whole cent.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. WARRANT TRANSFER BOOKS.
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(a) The Warrant Certificates shall be issued in registered form only. The
Company shall keep at its executive office a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Warrant Certificates and of transfers or exchanges of Warrant
Certificates as herein provided.
(b) Every Warrant Certificate surrendered for registration of transfer or
exchange shall (if so required by the Company) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company, duly executed by the Holder thereof or his attorney duly authorized in
writing.
Section 5.02. NO STOCKHOLDER RIGHTS. Prior to the exercise of the Warrants,
no holder of a Warrant Certificate, as such, shall be entitled to vote or be
deemed the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything contained
herein be construed to confer upon any holder of a Warrant Certificate, as such,
the rights of a stockholder of the Company or the right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, to exercise any
preemptive right, to receive notice of meetings or other actions affecting
stockholders (except as specifically provided herein), or to receive dividends
or subscription rights or otherwise.
Section 5.03. RESTRICTIONS ON TRANSFER. The Holder of any Warrant
Certificate, by acceptance thereof, acknowledges and agrees that without
limitation of the obligations set forth in Section 5.07, it shall be a condition
precedent to any transfer of the Warrant that each proposed transferee execute
and deliver to the Company the documentation required by such Section 5.07.
Section 5.04. NO REGISTRATION OF WARRANTS OR UNDERLYING COMMON STOCK UNDER
SECURITIES LAWS; OTHER REGULATORY FILINGS.
(a) Neither the Warrants nor the Underlying Common Stock have been
registered under the Securities Act or any state securities laws.
(b) The Holder of any Warrant Certificate, by acceptance thereof,
represents that it is acquiring the Warrants to be issued to it for its own
account and not with a view to the distribution thereof, and agrees not to sell,
transfer, pledge or hypothecate any Warrants or any Underlying Common Stock
unless (i) such transfer is made in connection with an effective registration
statement under the Securities Act and any applicable state securities laws or
(ii) such transaction is exempt from the registration requirements of the
Securities Act, the rules and regulations in effect thereunder and any
applicable state securities laws and, if requested by the Company, the Holder
thereof has furnished the Company a satisfactory opinion of counsel for such
Holder to such effect.
(c) Each Holder of Warrants also hereby acknowledges that any exercise of
the Warrants may be subject to the filing requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended, and agrees to make any such
required filings prior to any such exercise.
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Section 5.05. RESERVATION OF COMMON STOCK FOR ISSUANCE ON EXERCISE OF
WARRANTS. The Company shall at all times reserve and keep available, out of its
authorized but unissued Common Stock, solely for the purpose of issue upon
exercise of Warrants as herein provided, such number of shares of Common Stock
as shall then be issuable upon the exercise of all outstanding Warrants. All
shares of Common Stock which shall be so issuable shall, upon such issue and
upon payment of the exercise price therefor as provided herein and in the
applicable Warrant Certificate, be duly and validly issued and fully paid and
non-assessable.
Section 5.06. PAYMENT OF TAXES. The Company shall pay all Taxes that may be
imposed on the Company or on the Warrants or on any securities deliverable upon
exercise of Warrants with respect thereto. The Company shall not be required,
however, to pay any Taxes or other charges imposed in connection with any
transfer of any certificate for shares of Common Stock or other securities
underlying the Warrants or payment of cash, to any person other than the Holder
of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant.
Section 5.07. CERTAIN PERSONS TO EXECUTE AGREEMENT. Without in any way
limiting any transfer restrictions contained elsewhere herein, no Holder shall
sell or otherwise transfer any Warrants held by such Holder, unless, prior to
the consummation of any such sale or other disposition, the person to whom such
sale or other disposition is proposed to be made executes and delivers to the
Company an agreement, in form and substance satisfactory to the Company, whereby
such prospective transferee confirms that, with respect to the Warrants that are
the subject of such sale or other disposition, it shall be deemed to be a
"Holder" for the purposes of this Agreement and agrees to be bound by all the
terms of this Agreement. Upon the execution and delivery by such prospective
transferee of such agreement, and subject to all applicable transfer
restrictions, such prospective transferee shall be deemed a "Holder" for the
purposes of this Agreement, and shall have the rights and be subject to the
obligations of a Holder hereunder with respect to the Warrants held by such
prospective transferee.
ARTICLE VI
MISCELLANEOUS
Section 6.01. EXPENSES. Except as otherwise specified in this Agreement or
in the Credit Agreement, all costs and expenses, including, without limitation,
fees and disbursements of counsel, financial advisors and accountants, incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
Section 6.02. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, or by courier service, cable, telecopy, telegram, or registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties hereto at their addresses set forth on the signature pages to this
Agreement
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(or at such other address for a party hereto as shall be specified in a notice
given in accordance with this Section 6.02).
Section 6.03. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning, construction or interpretation of this Agreement.
Section 6.04. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
Section 6.05. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate is lost, stolen, mutilated or destroyed, the Company in its
discretion may issue, in exchange and substitution for and upon cancellation of
the mutilated Warrant Certificate, or in lieu of and substitution for the
Warrant Certificate lost, stolen or destroyed, and upon receipt of a proper
affidavit or other evidence satisfactory to the Company (and surrender of any
mutilated Warrant Certificate) and bond of indemnity in form and amount and with
corporate surety satisfactory to the Company in each instance protecting the
Company, a new Warrant Certificate of like tenor and exercisable for an
equivalent number of shares of Common Stock as the Warrant Certificate so lost,
stolen, mutilated or destroyed. Any such new Warrant Certificate shall
constitute an original contractual obligation of the Company, whether or not the
allegedly lost, stolen, mutilated or destroyed Warrant Certificate at any time
shall be enforceable by anyone. An applicant for such a substitute Warrant
Certificate also shall comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe. All Warrant
Certificates shall be held and owned upon the express condition that the
foregoing provisions are exclusive with respect to the replacement of lost,
stolen, mutilated or destroyed Warrant Certificates, and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement of negotiable
instruments or other securities without their surrender.
Section 6.06. ENTIRE AGREEMENT. This Agreement and the documents referred
to herein constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, between or among the parties with respect to the subject
matter hereof.
Section 6.07. NO THIRD PARTY BENEFICIARIES. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, whether express or
implied, is intended to or shall confer upon any person other than the parties
hereto and their respective successors and
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permitted assigns, any legal or equitable right, benefit or remedy of any nature
whatsoever, under or by reason of this Agreement.
Section 6.08. AMENDMENT; WAIVER. This Agreement may not be amended,
modified, supplemented or waived except by an instrument in writing signed by,
or on behalf of, the Company and holders of more than 50% of the outstanding
Warrants or, in the case of a waiver, the party to be bound thereby (which, in
the case of the Holders of the Warrants, shall require Holders of more than 50%
of the outstanding Warrants).
Section 6.09. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS OF
EACH PARTY ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.
Section 6.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
Section 6.11. SPECIFIC PERFORMANCE. Each Holder shall have the right to
specific performance by the Company of the provisions of this Agreement, in
addition to any other remedies that it may have at law or in equity. The Company
hereby irrevocably waives, to the extent that it may do so under applicable law,
any defense based on the adequacy of a remedy at law which may be asserted as a
bar to the remedy of specific performance in any action brought against the
Company for specific performance of this Agreement by the Holders of the
Warrants or the Underlying Common Stock.
Section 6.12. FILINGS. The Company shall, at its own expense and to the
extent it is reasonably able to do so, promptly execute and deliver, or cause to
be executed and delivered, to any Holder of Warrants all applications,
certificates, instruments and other documents that such Holder may reasonably
request in connection with the obtaining of any consent, approval, qualification
or authorization of any Federal, state or local government (or any agency or
commission thereof) necessary or appropriate in connection with, or for the
effective exercise of, any Warrants then held by such Holder, in each case
subject to such confidentiality obligations as the Company may reasonably impose
on such Holder; provided, however, that the Company shall not be required to
qualify to do business in, or provide a general consent to service of process
in, any jurisdiction in which it is not already qualified to do business and
shall not be required to register the Warrants or the Underlying Common Stock
under any Federal or state securities laws except as otherwise required under
any registration rights agreement (or similar agreement) to which the Company
may be a party from time to time.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MCM CAPITAL GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
Title: President
CTW FUNDING, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF, AND
NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE
ISSUER, UNLESS (i) SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR (ii) SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, THE RULES AND REGULATIONS IN EFFECT THEREUNDER AND ANY
APPLICABLE STATE SECURITIES LAWS AND, IF REQUESTED BY THE COMPANY, THE HOLDER
THEREOF HAS FURNISHED THE COMPANY A SATISFACTORY OPINION OF COUNSEL FOR SUCH
HOLDER TO SUCH EFFECT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON
THE EXERCISE OF THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND OTHER PROVISIONS SET FORTH IN A WARRANT AGREEMENT, DATED AS OF OCTOBER __,
2000, AS THEREAFTER AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS
OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH.
MCM CAPITAL GROUP, INC.
WARRANT CERTIFICATE
Dated as of _________, _____
WARRANTS TO PURCHASE ____ SHARES OF COMMON STOCK
Certificate No. ___
Number of Warrants: __________
MCM CAPITAL GROUP, INC., a corporation organized and existing under the
laws of the State of Delaware (the "Company"), hereby certifies that, for value
received, --------------------------, or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant shall entitle the registered holder thereof (the "Holder"), during
the time periods specified below and subject to the provisions contained herein
and in the Warrant Agreement (as defined below), to receive from the Company one
share of Common Stock, par value $0.01 per share, of the Company ("Common
Stock"),
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subject to adjustment upon the occurrence of certain events as more
fully described in the Warrant Agreement, at an exercise price of $0.01 per
share. The Warrants shall be exercisable beginning on the date of issuance
through October 31, 2005 (the "Expiration Date"). This Warrant Certificate shall
terminate and become void as of the close of business on the Expiration Date.
This Warrant Certificate is issued under and in accordance with the Warrant
Agreement, dated as of October 31, 2000 (as thereafter amended, modified or
supplemented, the "Warrant Agreement"), among the Company and the Lender (as
defined therein), and is subject to the terms and provisions contained in the
Warrant Agreement, to all of which terms and provisions the Holder of this
Warrant Certificate consents by acceptance hereof, which applicable terms and
provisions are hereby incorporated herein by reference and made a part hereof.
Reference is hereby made to the Warrant Agreement for a full statement of the
respective rights, limitations of rights, duties and obligations thereunder of
the Company and the Holders of the Warrants.
The number of shares of Common Stock issuable upon the exercise of each
Warrant is subject to adjustment as provided in the Warrant Agreement.
All shares of Common Stock issuable by the Company upon the exercise of
Warrants shall, upon such issuance and upon payment of the Exercise Price in
accordance with the terms set forth in the Warrant Agreement, be duly and
validly issued and fully paid and non-assessable.
In order to exercise a Warrant, the Holder hereof must surrender this
Warrant Certificate at the office of the Company, with the Form of Election to
Purchase attached hereto appropriately completed and duly executed by the Holder
hereof, all subject to the terms and conditions hereof and of the Warrant
Agreement.
All capitalized terms used in this Warrant Certificate that are not defined
herein shall have the meanings assigned to them in the Warrant Agreement.
Copies of the Warrant Agreement are on file at the office of the Company
and may be obtained by writing to the Company at MCM Capital Group, Inc., ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
executed by its officers thereunto duly authorized as of the date first written
above.
MCM CAPITAL GROUP, INC.
By:
--------------------------------
Name:
Title:
3
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder to Exercise Warrants Evidenced by the Foregoing
Warrant Certificate)
To: MCM Capital Group, Inc.
The undersigned hereby irrevocably elects to exercise the Warrants evidenced by
the foregoing Warrant Certificate for, and to acquire thereunder, one full share
(subject to adjustment) of Common Stock issuable upon exercise of each such
Warrant, all on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to. The undersigned
hereby surrenders this Warrant Certificate and all right, title and interest
therein to the Company and directs that the shares of Common Stock deliverable
upon the exercise of such Warrants be registered or placed in the name of the
undersigned at the address specified below and delivered thereto.
Address:
------------------------------------------
------------------------------------------
------------------------------------------
(Include Zip Code)
Name of Holder:
-----------------------------------------------------------------
(Please Print)
By:
------------------------------------------------
(Signature)*
(Name:)
--------------------------------------------
(Title:)
-------------------------------------------
Dated:
---------------------------------------------
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned Holder of the foregoing Warrant
Certificate hereby sells, assigns and transfers(1) unto each assignee set forth
below (including the undersigned with respect to any Warrants constituting a
part of the Warrants evidenced by the foregoing Warrant Certificate not being
assigned hereby) all of the rights of the undersigned in and to the number of
Warrants (as defined in and evidenced by the foregoing Warrant Certificate) set
forth opposite the name of such assignee below and in and to the foregoing
Warrant Certificate with respect to said Warrants and the shares of Common Stock
issuable upon exercise of said Warrants:
Name of Assignee:
---------------------------------------
(Please Print)
Address:
---------------------------------------
---------------------------------------
---------------------------------------
(Include Zip Code)
Number of Warrants:
---------------------
and does hereby irrevocably constitute and appoint the Company the undersigned's
attorney-in-fact to make such transfer on the books of the Company maintained
for that purpose, with full power of substitution in the premises.
-----------------------
(1) THE SECURITIES EVIDENCED BY THE FOREGOING WARRANT CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN THE WARRANT
AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
ISSUER. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS
OF THE ISSUER UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH.
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If the total number of Warrants transferred shall not be all the Warrants
evidenced by the foregoing Warrant Certificate, the undersigned requests that a
new Warrant Certificate evidencing the Warrants not so assigned be issued in the
name of and delivered to the undersigned.
Dated:
--------------------
Name of Holder:
--------------------------------------------
(Please Print)
--------------------------------------------
(Signature)*
(Name:)
----------------------------------------------------
(Title:)---------------------------------------------------
2