EXHIBIT 10.18
SERIES B WARRANT
To Purchase Common Stock
of
FAMILY BOOKSTORES COMPANY, INC.
Warrant No. B-1
TABLE OF CONTENTS
Page
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1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. EXERCISE OF WARRANT. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. Manner of Exercise. . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . 5
2.3. Fractional Shares.. . . . . . . . . . . . . . . . . . . . . . . 5
3. TRANSFER, DIVISION AND COMBINATION . . . . . . . . . . . . . . . . . 6
3.1. Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Division and Combination. . . . . . . . . . . . . . . . . . . . 6
3.3. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4. Maintenance of Books. . . . . . . . . . . . . . . . . . . . . . 6
4. ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1. Stock Dividends, Subdivisions and Combinations. . . . . . . . . 7
4.2. Certain Other Distributions . . . . . . . . . . . . . . . . . . 7
4.3. Issuance of Additional Shares of Common Stock . . . . . . . . . 8
4.4. Issuance of Warrants, Options or Other Rights . . . . . . . . .10
4.5. Issuance of Convertible Securities. . . . . . . . . . . . . . .10
4.6. Superseding Adjustment. . . . . . . . . . . . . . . . . . . . .11
4.7. Other Provisions Applicable to Adjustments Under This
Section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
4.8. Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets . . . . . . . . . . . . . . . . . . . . .14
4.9 Other Action Affecting Common Stock . . . . . . . . . . . . . .15
4.10. Taking of Record; Stock and Warrant Transfer Books.. . . .16
5. NOTICES TO WARRANT HOLDERS . . . . . . . . . . . . . . . . . . . . .16
5.1. Notice of Adjustments . . . . . . . . . . . . . . . . . . . . .16
5.2. Notice of Certain Corporate Action. . . . . . . . . . . . . . .16
6. NO IMPAIRMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH
OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY. . . . . . . . . . . . . .17
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8. PUT RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
9. RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . . . .17
9.1. Restrictive Legend. . . . . . . . . . . . . . . . . . . . . . .18
9.2. Buy and Sell Agreement. . . . . . . . . . . . . . . . . . . . .18
9.3. Consent to Transfer . . . . . . . . . . . . . . . . . . . . . .18
9.4. Notice of Proposed Transfers; Requests for Registration . . . .19
10. LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . .19
11. FINANCIAL AND BUSINESS INFORMATION . . . . . . . . . . . . . . . . .19
12. APPRAISAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
13. LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . .20
14. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
14.1. Nonwaiver and Expenses . . . . . . . . . . . . . . . . . .20
14.2. Notice Generally . . . . . . . . . . . . . . . . . . . . .20
14.3. Voting . . . . . . . . . . . . . . . . . . . . . . . . . .21
14.4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . .21
14.5. Successors and Assigns . . . . . . . . . . . . . . . . . .21
14.6. Office of the Company. . . . . . . . . . . . . . . . . . .22
14.7. Information. . . . . . . . . . . . . . . . . . . . . . . .22
14.8. Amendment. . . . . . . . . . . . . . . . . . . . . . . . .22
14.9. Severability . . . . . . . . . . . . . . . . . . . . . . .22
14.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . .22
14.11. Governing Law. . . . . . . . . . . . . . . . . . . . . . .22
EXHIBITS:
Exhibit A - Subscription Form
Exhibit B - Assignment Form
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NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE UNDERLYING SHARES
OF COMMON STOCK HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND NEITHER MAY BE OFFERED FOR SALE OR SOLD IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM
UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. THIS WARRANT AND THE WARRANT STOCK ISSUED HEREUNDER ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AS PROVIDED IN SECTION 9 HEREOF.
SERIES B WARRANT
To Purchase Common Stock
of
FAMILY BOOKSTORES COMPANY, INC.
THIS IS TO CERTIFY THAT ELECTRA INVESTMENT TRUST P.L.C., a
corporation organized under the laws of the United Kingdom ("ELECTRA") , or
permitted and registered assigns (collectively referred to herein as the
"HOLDER") , is entitled, beginning on the Effective Date and at any time
prior to the Expiration Date, to purchase from FAMILY BOOKSTORES COMPANY,
INC., a Michigan corporation (the "COMPANY") , that number of shares of Class
A Stock (as defined herein and subject to adjustment as provided herein)
equal to 1.7% of the number of shares of Common Stock, par value $1.00 per
share, of the Company, outstanding on a Fully Diluted basis, excluding shares
issued pursuant to the Performance Plan, on the date of issuance of this
Warrant, at a purchase price equal to the Current Warrant Price, which shall
be initially equal to $.01 per share and which is subject to adjustment as
provided herein. This Warrant is issued in connection with, and as
consideration, in part, for the Holder's purchase on November 17, 1994 of
certain of the Company's Senior Subordinated Notes due May 17, 2003, together
with the Series A Warrants, this Series B Warrant and the other warrants
referred to in the Securities Purchase Agreement. Capitalized terms used but
not otherwise defined in this Warrant shall have the meanings ascribed to
such terms in the Securities Purchase Agreement.
1. DEFINITIONS. As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Series B Warrant Closing Date, other
than (i) Warrant Stock, (ii) the shares of Common Stock issued by the Company
pursuant to the Performance Plan, (iii)
shares of Common Stock issuable to the holders of the Series C and Series D
warrants issued in connection with the transactions contemplated by the
Securities Purchase Agreement and (iv) shares of Common Stock issuable to the
holders of any Penalty Warrants issued in connection with the transactions
contemplated by the Securities Purchase Agreement.
"Appraised Value" shall mean, in respect of any share of Common
Stock as of any date herein specified, the fair saleable value of such share
of Common Stock (determined without giving effect to a discount for (i) a
minority interest, (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the
Exchange Act or (iii) any restrictions on transfer) as of the last day of the
most recent fiscal month end prior to such date specified, based upon the
value of the Company as determined by the Company and the Holder in
reasonable good faith, and, if the Company and the Holder fail to so agree
within 20 Business Days, as determined by an investment banking firm selected
in accordance with the terms of Section 12.
"Business Day" shall mean any day that is not a Saturday or a
Sunday or a day on which commercial banks are required or authorized to be
closed in the City of New York.
"Class A Stock" shall mean the shares of common stock of the
Company, par value $1.00 per share, designated as "Class A Common Stock" in
the Charter Amendment.
"Class B Stock" shall mean the non-voting (except as to the extent
otherwise required by the Michigan Business Corporation Act) shares of common
stock of the Company, par value $1.00 per share, designated as "Class B
Common Stock" in the Charter Amendment.
"Common Stock" shall mean (except where the context otherwise
indicates) collectively, the Class A Stock and the Class B Stock, and any
capital stock into which Class A Stock or Class B Stock may thereafter be
changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of
Common Stock upon any reclassification thereof which is also not preferred as
to dividends or assets over any other class of stock of the Company and which
is not subject to redemption and (ii) shares of common stock of any successor
or acquiring corporation received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.8.
"Company" shall have the meaning set forth in the first paragraph
hereof.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon
the occurrence of a specified date or a specified event.
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"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the greater of (i) book value per
share of Class A Stock or Class B Stock as determined by the Company's
financial statements for the most recently ended fiscal quarter, and (ii) the
Appraised Value per share of Class A Stock or Class B Stock, as appropriate.
"Current Warrant Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date.
"Effective Date" shall mean December 31, 1996.
"Electra" shall have the meaning set forth in the first paragraph
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Expiration Date'' shall mean November 17, 2004.
"Fully-Diluted" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant increased by all
common equivalent shares issuable at any time pursuant to any stock options,
warrants, convertible securities, and any other security or instrument having
the right to require additional common shares to be issued at any time in the
future, outstanding on such date.
"GAAP" shall mean generally accepted accounting principles as set
forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or statements by
such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Holder" shall have the meaning set forth in the first paragraph
hereof.
"Other Property" shall have the meaning set forth in Section 4.8.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, corporation, limited liability
organization, association, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
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"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Securities Purchase Agreement" shall mean that certain Securities
Purchase Agreement, dated as of November 14, 1994, by and among the Company,
Electra and Electra Investment Trust P.L.C., as amended.
"Series B Warrant Closing Date" shall mean December 31, 1996.
"Transfer" shall mean any disposition of any warrant or Warrant
Stock or of any interest in either thereof.
"Transfer Notice" shall have the meaning set forth in Section 9.4.
"Triggering Event" shall have the meaning ascribed to such term in
the Securities Purchase Agreement.
"Warrant" or "Warrants" shall mean this Warrant and all warrants
issued upon transfer, division or combination, or in exchange or substitution
therefor.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date
of such exercise.
"Warrant Stock" shall mean the shares of Common Stock received by
the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT.
2.1. MANNER OF EXERCISE. From and after the Effective Date, and until
5:00 P.M. New York City time on the Expiration Date, the Holder may
exercise this Warrant, on any Business Day, for all or any part of the
number of shares of Common Stock purchasable hereunder; PROVIDED, HOWEVER,
that if a Triggering Event shall have occurred prior to the Expiration Date
this Warrant shall terminate as of the date of occurrence of such
Triggering Event, unless exercised as provided herein.
In order to exercise this Warrant, in whole or in part, the
Holder shall deliver to the Company at its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at the office or agency
designated by the Company pursuant to Section 14.6, (i) a written notice of
the Holder's election to exercise this Warrant, which notice shall specify
the number of shares of Common Stock to be purchased, (ii) the Holder's
check in payment of the Warrant Price and (iii) this Warrant. Such notice
shall
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be substantially in the form of the subscription form appearing at
the end of this Warrant as EXHIBIT A, duly executed by the Holder or its
agent or attorney. Upon receipt thereof, subject to Section 9, the Company
shall, as promptly as practicable, and in any event within five (5)
Business Days thereafter, execute or cause to be executed and delivered or
cause to be delivered to the Holder a certificate or certificates
representing the aggregate number of shares of Common Stock issuable upon
such exercise, or, at the Company's option, the number of shares of Common
Stock issuable on such exercise, together with cash in lieu of any fraction
of a share, as hereinafter provided. The stock certificate or certificates
so delivered shall be, to the extent possible, in such denomination or
denominations as the Holder shall request and shall be registered in the
name of the Holder or, subject to Section 9, such other name as shall be
designated in the notice.
This Warrant shall be deemed to have been exercised and such
certificate or certificates shall be deemed to have been issued, and the
Holder or any other Person so designated to be named therein shall be
deemed to have become a holder of record of such shares for all purposes,
as of the date the notice, together with the cash or check and this
Warrant, is received by the Company as described above and all taxes, if
any, required to be paid prior to the issuance of such shares have been
paid pursuant to Section 2.2. If this Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the certificate or
certificates, deliver to the Holder a new Warrant evidencing the rights of
the Holder to purchase the unpurchased shares of Common Stock called for by
this Warrant, which new Warrant shall in all other respects be identical
with this Warrant, or, at the request of the Holder, appropriate notation
may be made on this Warrant and the same returned to the Holder.
2.2. PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable, and the Company shall pay all
expenses in connection with, and all taxes and other governmental charges
that may be imposed with respect to, the issuance or delivery thereof,
unless such taxes or charges are income taxes or otherwise imposed upon
income or revenues of the Holder.
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company may, as provided in
Section 2.1, pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.
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3. TRANSFER, DIVISION AND COMBINATION.
3.1. TRANSFER. Subject to Section 9, transfer of this Warrant and all
rights hereunder, in whole or in part, shall be registered on the books of
the Company to be maintained for such purpose, upon surrender of this
Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 14.6,
together with a written assignment of this Warrant substantially in the
form of EXHIBIT B hereto duly executed by the Holder or its agent or
attorney. Upon such surrender, the Company shall, subject to Section 9,
execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees and in the denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
canceled. A Warrant, if properly assigned in compliance with Section 9,
may be exercised by a new Holder for the purchase of shares of Common Stock
without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to Section 9, this Warrant may
be divided or combined with other Warrants upon presentation thereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder or its agent or attorney. Subject to
Section 3.1 and Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver the new
Warrant or Warrants and pay all expenses, taxes and other charges payable
in connection with the preparation, issuance and delivery of such Warrants,
unless such taxes or charges are income taxes or otherwise imposed upon
income or revenues of the Holder, or arise because of the domicile of the
Holder.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.
4. ADJUSTMENTS. The number of shares of Common Stock for which this
Warrant is exercisable, and the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time as
set forth in this Section 4. The Company shall give each Holder notice of any
event which requires an adjustment pursuant to this Section 4 at the time of
such event.
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4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in or to
receive any other distribution of Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock which a record
holder of the same number of shares of Common Stock for which this Warrant
is exercisable immediately prior to the occurrence of such event would own
or be entitled to receive after the occurrence of such event, and (ii) the
Current Warrant Price shall be adjusted to equal the product of (A) the
Current Warrant Price prior to the occurrence of such event multiplied by
(B) a fraction, the numerator of which is the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such
adjustment and the denominator of which is the number of shares for which
this Warrant is exercisable immediately after such adjustment.
4.2. CERTAIN OTHER DISTRIBUTIONS. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash (other than a regular cash dividend payable out of
surplus or net profits legally available for the payment of dividends
under the laws of the jurisdiction of incorporation of the Company),
(b) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other
than cash, Convertible Securities or Additional Shares of Common
Stock), or
(c) any warrants, options or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock),
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then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of (A) the number of
shares of Common Stock for which this Warrant is exercisable immediately
prior to such adjustment multiplied by (B) a fraction, the numerator of
which shall be the Current Market Price per share of Common Stock at the
date of taking such record and the denominator of which shall be such
Current Market Price per share of Common Stock minus the amount allocable
to one share of Common Stock of any such cash so distributable and of the
fair value (as determined pursuant to Section 4.7 (a), including as to an
opinion from an investment banking firm) of any and all such evidences of
indebtedness, shares of stock, other than securities or property or
warrants or other subscription or purchase rights so distributable; and
(ii) the Current Warrant Price shall be adjusted to equal (A) the Current
Warrant Price multiplied by (B) a fraction, the numerator of which shall be
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment and the denominator of which shall be
the number of shares for which this Warrant is exercisable immediately
after such adjustment. A reclassification of the Common Stock (other than a
change in par value, or from par value to no par value or from no par value
to par value) into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Company to the holders of its
Common Stock of such shares of such other class of stock within the meaning
of this Section 4.2 and, if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part
of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4.1.
4.3. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.
(a) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, in
exchange for consideration in an amount per Additional Share of Common
Stock which is less than the Current Warrant Price at the time the
Additional Shares of Common Stock are issued, then (i) the Current
Warrant Price as to the number of shares for which this Warrant is
exercisable prior to such adjustment shall be reduced to a price
determined by dividing (A) an amount equal to the sum of (x) the
number of shares of Common Stock outstanding immediately prior to such
issue or sale multiplied by the then existing Current Warrant Price
plus (y) the consideration, if any, received by the Company upon such
issue or sale, by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale; and (ii) the number
of shares of Common Stock for which this Warrant is exercisable shall
be adjusted to equal the product of (A) the Current Warrant Price in
effect immediately prior to such issue or sale multiplied by (B) the
number of
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shares of Common Stock for which this Warrant is exercisable
immediately prior to such issue or sale, and dividing the product
thereof by the Current Warrant Price resulting from the adjustment
made pursuant to clause (i) above.
(b) If at any time the Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, in
exchange for consideration in an amount per Additional Share of Common
Stock which is less than the Current Market Price at the time the
Additional Shares of Common Stock are issued, then (i) the number of
shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product of (A) the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such
issue or sale multiplied by (B) a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately
after such issue or sale and the denominator of which shall be the sum
of (x) number of shares of Common Stock outstanding immediately prior
to such issue or sale plus (y) the number of shares which the
aggregate offering price of the total number of such Additional Shares
of Common Stock would purchase at the then Current Market Price; and
(ii) the Current Warrant Price as to the number of shares for which
this Warrant is exercisable prior to such adjustment shall be adjusted
by multiplying (A) such Current Warrant Price by (B) a fraction, the
numerator of which shall be the number of shares for which this
Warrant is exercisable immediately prior to such issue or sale and the
denominator of which shall be the number of shares of Common Stock for
which this Warrant is exercisable immediately after such issue or
sale.
(c) If at any time the Company (except as hereinafter provided)
shall issue or sell any Additional Shares of Common Stock, in exchange
for consideration in an amount per Additional Share of Common Stock
which is less than the Current Warrant Price and the Current Market
Price at the time the Additional Shares of Common Stock are issued,
the adjustment required under this Section 4.3 shall be made in
accordance with the formula in paragraph (a) or (b) above which
results in the lower Current Warrant Price following such adjustment.
The provisions of paragraphs (a) and (b) of Section 4.3 shall not
apply to any issuance of Additional Shares of Common Stock for which
an adjustment is provided under Section 4.1 or Section 4.2. No
adjustment of the number of shares of Common Stock for which this
Warrant shall be exercisable shall be made under paragraph (a) or
(b) of this Section 4.3 upon the
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issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of
such warrants or other rights or upon the issuance of such
Convertible Securities (or upon the issuance of any warrant or
other rights therefor) pursuant to Section 4.4 or Section 4.5.
4.4. ISSUANCE OF WARRANTS, OPTIONS OR OTHER RIGHTS. If at any time
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a distribution of, or shall in any
manner (whether directly or by assumption in a merger in which the Company
is the surviving corporation) issue or sell, any warrants, options or other
rights to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon the exercise of such warrants, options
or other rights or upon conversion or exchange of such Convertible
Securities shall be less than the Current Warrant Price or the Current
Market Price in effect immediately prior to such issue or sale, then the
number of shares for which this Warrant is exercisable and the Current
Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock issuable
pursuant to all such warrants, options or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and outstanding and the Company shall have
received all of the consideration payable therefor, if any, as of the date
of actual issuance of such warrants, options or other rights. No further
adjustment of the Current Warrant Price shall be made upon the actual issue
of such Common Stock or of such Convertible Securities upon exercise of
such warrants, options or other rights or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
4.5. ISSUANCE OF CONVERTIBLE SECURITIES. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is the
surviving corporation) issue or sell, any Convertible Securities, whether
or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange shall be less than the Current Warrant
Price or Current Market Price in effect immediately prior to the time of
such issue or sale, then the number of Shares for which this Warrant is
exercisable and the Current Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of
Common Stock necessary to effect the conversion or exchange of all such
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Convertible Securities shall be deemed to have been issued and
outstanding and the Company shall have received all of the consideration
payable therefor, if any, as of the date of actual issuance of such
Convertible Securities. No adjustment of the number of shares for which
this Warrant is exercisable and the Current Warrant Price shall be made
under this Section 4.5 upon the issuance of any Convertible Securities
which are issued pursuant to the exercise of any warrants, options or
other subscription or purchase rights therefor, if any such adjustment
shall previously have been made upon the issuance of such warrants,
options or other rights pursuant to Section 4.4. No further adjustments
of the number of Shares for which this Warrant is exercisable and the
Current Warrant Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made upon
exercise of any warrant, option or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments of the
number of Shares for which this Warrant is exercisable and the Current
Warrant Price have been or are to be made pursuant to other provisions
of Section 4, no further adjustments of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price shall be made
by reason of such issue or sale.
4.6. SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the number of shares of Common Stock for which this Warrant is exercisable
and of the Current Warrant Price shall have been made pursuant to Section
4.4 or Section 4.5 as the result of any issuance of warrants, options,
rights or Convertible Securities, such warrants, options or rights, or the
right of conversion or exchange of such Convertible Securities, shall
expire, and all or a portion of such warrants, options or rights, or the
right of conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have been
exercised, then such previous adjustment shall be rescinded and annulled
and the Additional Shares of Common Stock which were deemed to have been
issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of
the effect of such warrants, options or rights or Convertible Securities on
the basis of (a) treating the number of Additional Shares of Common Stock
or other property, if any, theretofore actually issued or issuable pursuant
to the previous exercise of any such warrants, options or rights or any
such right of conversion or exchange, as having been issued on the date or
dates of any such exercise and for the consideration actually received and
receivable therefor, and (b) treating any such warrants, options or rights
or any such Convertible Securities which then remain outstanding as having
been granted or issued immediately after the time of such increase of the
consideration per share for which shares of Common Stock or other property
are issuable under such warrants, options or rights or other Convertible
Securities, whereupon a new adjustment of the number of shares of Common
Stock for which this Warrant is exercisable and the Current Warrant Price
shall be made, which new adjustment shall supersede the previous
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adjustment so rescinded and annulled.
4.7. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) COMPUTATION OF CONSIDERATION. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
warrants, options or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall
be issued for cash consideration, the consideration received by the
Company therefor shall be the amount of the cash received by the
Company, or, if such Additional Shares of Common Stock or Convertible
Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common Stock or
Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the public offering price
(in any such case subtracting any amounts paid or receivable for
accrued interest or accrued dividends and without taking into account
any compensation, discounts or expenses paid or incurred by the
Company for and in the underwriting of, or, otherwise in connection
with, the issuance thereof). To the extent that such issuance shall
be for a consideration other than cash, then, except as herein
otherwise expressly provided, the amount of such consideration shall
be deemed to be the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of
the Company. In case any Additional Shares of Common Stock or any
Convertible Securities or any warrants, options or other rights to
subscribe for or purchase such Additional Shares of Common Stock or
Convertible Securities shall be issued in connection with any merger
in which the Company issues any securities, the amount of
consideration therefor shall be deemed to be the fair value, as
determined in good faith by the Board of Directors of the Company, of
such portion of the assets and business of the nonsurviving
corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible
Securities, warrants, options or other rights, as the case may be.
The consideration for any Additional Shares of Common Stock issuable
pursuant to any warrants, options or other rights to subscribe for or
purchase the same shall be the consideration received by the Company
for issuing such warrants, options or other rights plus the
additional consideration payable to the Company upon exercise of such
warrants, options or
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other rights. The consideration for any Additional Shares of Common
Stock issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Company for issuing
warrants, options or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to the
Company in respect of the subscription for or purchase of such
Convertible Securities, plus the additional consideration, if any,
payable to the Company upon the exercise of the right of conversion or
exchange of such Convertible Securities. In case of the issuance
at any time of any Additional Shares of Common Stock or Convertible
Securities in payment or satisfaction of any dividends upon any
class of stock other than Common Stock, the Company shall be deemed
to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied.
(b) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any adjustment
of the number of shares of Common Stock for which this Warrant is
exercisable that would otherwise be required may be postponed (except
in the case of a subdivision or combination of shares of the Common
Stock, as provided for in Section 4.1) up to, but not beyond the date
of exercise if such adjustment either by itself or with other
adjustments not previously made, will, based on a good faith
determination of the Board of Directors of the Company, add or
subtract less than an amount equal to 1% of the Common Stock
outstanding immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) which is postponed shall be carried forward and
made as soon as such adjustment, together with other adjustments
required by this Section 4 and not previously made, would result in a
minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at
the close of business on the date of its occurrence.
(c) FRACTIONAL INTERESTS. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take
a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or
subscription or purchase rights and shall, thereafter and before
the distribution to stockholders
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thereof, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(e) ESCROW OF WARRANT STOCK. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of
any record of the holders of Common Stock, but prior to the
occurrence of the event for which such record is taken, and the
Holder exercises this Warrant, any Additional Shares of Common
Stock issuable upon exercise by reason of such adjustment shall be
deemed the last shares of Common Stock for which this Warrant is
exercised (notwithstanding any other provision to the contrary
herein) and such shares or other property shall be held in escrow
for the Holder by the Company to be issued to the Holder upon and
to the extent that the event actually takes place, upon payment of
the then Current Warrant Price. Notwithstanding any other
provision to the contrary herein, if the event for which such
record was taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Company and escrowed property
returned.
(f) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board
of Directors of the Company shall be required to make a determination
in good faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Holder, and if,
upon the expiration of 20 Business Days, the Holder and the Company
fail to agree as to such fair value, after reasonable, good faith
negotiation, any dispute shall be resolved by an investment banking
firm selected by the Company and reasonably acceptable to such Holder
(or, if more than one Warrant is outstanding, to holders of a majority
of Warrant Stock issuable upon exercise of the Warrants). The Company
shall bear 80%, and the Holder shall bear 20%, of the cost of such
firm.
4.8. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where there is a change in or distribution with respect to the
Common Stock of the Company other than a subdivision, combination or
exchange otherwise provided for herein), or sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring
-14-
corporation, or any cash, shares of stock or other securities or property
of any nature whatsoever (including warrants or other subscription or
purchase rights) in addition to or in lieu of common stock of the successor
or acquiring corporation (herein referred to as "OTHER PROPERTY"), are to
be received by or distributed to the holders of Common Stock of the
Company, then each Holder shall have the right thereafter to receive, upon
exercise of such Warrant, the number of shares of common stock of the
successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result
of such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to such event.
In case of any such reorganization, reclassification, merger, consolidation
or disposition of assets, the successor or acquiring corporation (if other
than the Company) shall expressly assume the due and punctual observance
and performance of each and every term and condition of this Warrant to be
performed and observed by the Company and all the obligations and
liabilities hereof, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjusustments of shares
of the Common Stock for which this Warrant is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this
Section 4. For purposes of this Section 4.8 "common stock of the successor
or acquiring corporation" shall include stock of such corporation of any
class which is not preferred as to dividends or assets over any other class
of stock of such corporation and which is not subject to redemption and
shall also include any evidences of indebtedness, shares of stock or other
securities which are convertible into or exchangeable for any such stock,
either immediately or upon the arrival of a specified date or the happening
of a specified event, and any warrants, options or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.9 OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from
time to time the Company shall take any action in respect of its Common
Stock, other than action described in this Section 4, then, unless such
action will not have a material adverse effect upon the rights of the
Holder, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted
in such manner as may be equitable in the circumstances.
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4.10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In the
case of all dividends or other distributions by the Company to the holders
of its Common Stock with respect to which any provision of Section 4 refers
to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of
business on a Business Day. The Company will not at any time close its
stock transfer books or warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrant.
5. NOTICES TO WARRANT HOLDERS.
5.1. NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which
a share of such Common Stock may be purchased upon exercise of this
Warrant, shall be adjusted pursuant to Section 4, the Company shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Company setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which
such adjustment was calculated and specifying the Current Warrant Price and
the number of shares of Common Stock for which this Warrant is exercisable
after giving effect to such adjustment or change. The Company shall
promptly cause a signed copy of such certificate to be delivered to the
Holder in accordance with Section 14.2. The Company shall keep at its
office or agency designated pursuant to Section 14.6 copies of all such
certificates and cause the same to be available for inspection at said
office during normal business hours by the Holder or any prospective
purchaser of a Warrant designated by the Holder thereof.
5.2. NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of
Common Stock.
6. NO IMPAIRMENT.
The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such actions as
may be necessary or appropriate to protect the rights of the Holder against
impairment. Without limiting the generality of the foregoing, the Company will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.
-16-
Upon the request of the Holder, the Company will at any time during
the period this Warrant is outstanding acknowledge in writing, in form
satisfactory to the Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH
OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY.The Company shall at all times
reserve and keep available for issuance upon the exercise of this Warrant
such number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding warrants. The
Company covenants that all shares of Common Stock which shall be so issuable,
when issued upon exercise of any Warrant and payment therefor in accordance
with the terms of such Warrant, shall be duly and validly issued and fully
paid and nonassessable.
Before taking any action which would cause an adjustment reducing
the Current Warrant Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take
any and all corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of such
Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in
the Current Warrant Price, the Company shall obtain all authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance
upon exercise of Warrants require registration or qualification with any
governmental authority under any federal or state law (otherwise than as
provided in Section 9) before such shares may be so issued, the Company will
in good faith, as expeditiously as possible and at its own expense, endeavor
to cause such shares to be duly registered or qualified, as the case may be.
8. PUT RIGHTS. The Holder shall have the right to require the Company
to repurchase all or any portion of the Warrants held by the Holder upon the
terms and as provided in paragraph 13B of the Securities Purchase Agreement.
9. RESTRICTIONS ON TRANSFER. The Warrants and the Warrant Stock may
not be transferred or assigned before satisfaction of the conditions
specified in this Section 9, which are intended, among other purposes, to
ensure compliance with the provisions of the Securities Act with respect to
the Transfer of any Warrant or any Warrant Stock. The Holder, by acceptance
of this Warrant, agrees to be bound by the provisions of this Section 9.
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9.1. RESTRICTIVE LEGEND. This Warrant, and all shares of Warrant
Stock issued upon exercise hereof, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
AND THE WARRANT STOCK ISSUED HEREUNDER ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AS PROVIDED IN SECTION 9 HEREOF."
In addition, all shares of Warrant Stock issued upon the initial exercise
of this Warrant shall bear a legend in substantially the following form:
IN ADDITION TO THE FOREGOING RESTRICTIONS ON TRANSFER, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH
THE TERMS OF A CERTAIN BUY AND SELL AGREEMENT DATED AS OF NOVEMBER 14,
1994, AS AMENDED, A COPY OF WHICH IS ON FILE WITH THE COMPANY. ANY
ATTEMPTED SALE, TRANSFER, ASSIGNMENT, PLEDGE OR OTHER DISPOSITION IN
VIOLATION OF THE TERMS OF THE BUY AND SELL AGREEMENT IS VOID.
9.2. BUY AND SELL AGREEMENT. The Warrant Stock is subject to the
terms of a Buy and Sell Agreement dated as of November 14, 1994, as
amended, a copy of which is on file with the Company. No shares of Warrant
Stock may be sold, transferred, assigned, pledged or otherwise disposed of
except in accordance therewith.
9.3. CONSENT TO TRANSFER. The Holder of this Warrant shall not
transfer, assign, or otherwise dispose, or permit the transfer, assignment
or other disposition by it, of this Warrant or any Warrant Stock, or any
interest therein, to any person (including any Electra Transferee,
Permitted Person, or any other transferee), other than the Company or any
Shareholder, unless the transferee agrees in a writing satisfactory to the
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Company: (i) that it will not transfer or permit the transfer of this
Warrant or any shares of Common Stock so acquired or any interest therein
to any Person (other than the Company or any Shareholder) without the prior
written consent of the Company and (ii) that it will be bound by the
transfer restrictions set forth in this Section 9.3. The consent
required in clause (i) of the immediately preceding sentence may be
withheld by the Company only if, in the Company's reasonable opinion,
the transferee (x) competes directly or indirectly with the Company or
(y) may be expected to have a significant adverse effect on the
Company's Christian-based mission or image. Any transfer in violation
of this Section 9.3 shall be void. Any stock certificate for shares
subject to the transfer restrictions set forth in this Section 9.3 shall
include a legend reflecting the restrictions on transfer set forth in
this Section 9.3. For purposes of this Section 9.3, the terms "Electra
Transferee", "Permitted Person" and "Shareholder" shall have the
respective meanings assigned to such terms in the Buy and Sell
Agreement. The Company may deny consent to a transfer of this Warrant
if the proposed transfer would cause the total number of Holders of this
and all other Warrants, including the Series A, Series C, Series D, and
the Penalty Warrants, to exceed 10, except for any proposed
intra-company transfers by and among Electra or any of its Affiliates.
9.4. NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior
to any Transfer of any Warrant, the holder of such Warrant shall give five
days' prior written notice (a "TRANSFER NOTICE") to the Company of such
holder's intention to effect such Transfer, including a description of the
manner and circumstances of the proposed Transfer and, if requested by the
Company, an opinion from counsel to such holder that the proposed Transfer
of such Warrant may be effected without registration under the Securities
Act. After delivery of the Transfer Notice, the holder shall be entitled
to Transfer such Warrant in accordance with the terms of the Transfer
Notice. Each Warrant issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1, unless such legend is not required in
order to ensure compliance with the Securities Act.
10. LOSS OR MUTILATION. Upon receipt by the Company from any Holder of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of this Warrant and, in case of loss, theft
or destruction, of indemnity reasonably satisfactory to it (it being
understood and agreed that the written agreement of Electra and subsequent
institutional transferees, if any, shall be sufficient indemnity) and, in
case of mutilation, upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor in replacement.
11. FINANCIAL AND BUSINESS INFORMATION. The Company will deliver or
cause to be delivered to each Holder, as provided in paragraph 6A of the
Securities Purchase Agreement, certain financial information, financial
analyses, notices, reports, statements and certificates, all to the extent
and in the manner provided therein.
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12. APPRAISAL. If the Company and the Holder fail to agree as to the
Appraised Value per share of Common Stock, after reasonable, good faith
negotiation, upon the expiration of 20 Business Days, the determination of
the Appraised Value per share of Common Stock shall be made by an investment
banking firm satisfactory to both the Company and the Holder (or, if there is
more than one Warrant outstanding, to holders of a majority of the Warrant
Stock issuable upon exercise of the Warrants). The Company shall retain such
investment banking firm as may be necessary for the determination of
Appraised Value required by the terms of this Warrant, and the Company shall
bear 80% and the Holder shall bear 20%, of the cost of such firm.
13. LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder, shall give rise
to any liability of such Holder for the purchase price of any Common Stock or
as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
14. MISCELLANEOUS.
14.1. NONWAIVER AND EXPENSES. No course of dealing or any delay
or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice the Holder's
rights, powers or remedies. If the Company fails to make, when due, any
payments provided for hereunder, or fails to comply with any provision of
this Warrant, the Company shall pay to the Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to
reasonable attorneys' fees, incurred by the Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder.
14.2. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or
made if in writing and either delivered in person with receipt acknowledged
or sent by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of the Company maintained for
such purpose;
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(b) If to the Company at:
Family Bookstores Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇.▇.
Grand Rapids, Michigan 49530
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
900 Old Kent Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
Grand Rapids, Michigan 49503-2489
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt acknowledged, or
three (3) Business Days after the same shall have been postmarked in the
United States mail.
14.3. VOTING. If requested by the Holder hereof, and to the
extent permitted by law, the Company shall take all action to entitle the
Holder to vote with the Common Stock of the Company that number of votes
equal to the number of shares of Common Stock issuable from time to time
upon exercise of this Warrant on any matters upon which the holders of
Common Stock are entitled to vote; PROVIDED, that the rights of the Holder
hereunder shall not duplicate any rights of the Holder to vote with the
Common Stock as may be provided under the Shareholders' Agreement.
14.4. REMEDIES. Each holder of this Warrant and any Warrant Stock
issuable upon exercise of this Warrant, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant. The
Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of Section
9 of this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
14.5. SUCCESSORS AND ASSIGNS. Subject to the provisions of
Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successors of the Company
and the successors and assigns of Electra or any other holder hereof. The
provisions of this Warrant are intended to be for the
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benefit of all holders from time to time of this Warrant, and
shall be enforceable by any such holder.
14.6. OFFICE OF THE COMPANY. As long as any of the Warrants
remain outstanding, the Company shall maintain an office or agency (which
may be the principal executive offices of the Company) where the Warrants
may be presented for exercise, registration of transfer, division or
combination as provided in this warrant.
14.7. INFORMATION. The Company shall cooperate with each Holder
of a Warrant and each holder of Warrant Stock in supplying such information
as may be reasonably requested by such holder to comply with any filings or
information reporting forms presently or hereafter required as a condition
to the availability of an exemption from the Securities Act for the sale of
any Warrant or Warrant Stock.
14.8. AMENDMENT. This Warrant may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Holder (or, if there is more than one warrant outstanding, to holders of a
majority of the Warrant Stock issuable upon exercise of the Warrants).
14.9. SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant.
14.10. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.11. GOVERNING LAW. This Warrant shall be governed by the laws
of the State of New York, without regard to the provisions thereof relating
to conflict of laws, except to the extent matters herein are governed by
the Michigan Business Corporation Act, under which the Company is
incorporated.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and delivered by an officer thereunto duly authorized, as of the 31st
day of December, 1996.
FAMILY BOOKSTORES COMPANY, INC.
By: ________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
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EXHIBIT A
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ________________________ shares of
Common Stock of FAMILY BOOKSTORES COMPANY, INC., and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant and requests that certificates for the shares of Common Stock hereby
purchased (and any securities or other property issuable upon such exercise)
be issued in the name of and delivered to ________________________________
whose address is ________________________________ and, if such shares of
Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
Dated: ____________________________________________
_______________________________________
(Name of Registered Owner)
_______________________________________
(Signature of Registered Owner)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
NOTE: The signature on this subscription must correspond with the
name as written upon the face of the within warrant in every particular,
without alteration or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all
of the rights of the undersigned under this Warrant, with respect to the
number of shares of Common Stock set forth below:
Number of Shares
Name And Address of Assignee Of Common Stock
---------------------------- -----------------
and does hereby irrevocably constitute and appoint__________________________
attorney-in-fact to register such transfer on the books of FAMILY BOOKSTORES
COMPANY, INC. maintained for the purpose, with full power of substitution in
the premises.
Dated: ________________________
______________________________________
(Registered Owner)
NOTE: The signature on this assignment must correspond with the
name as written upon the face of the within Warrant in every particular,
without alteration or any change whatsoever. Transfer is subject to
restrictions as provided in the Warrant.
-24-