EXHIBIT 10.3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
March 3, 1999
_________ shares Warrant No. W____
SIGNAL APPAREL COMPANY, INC.
STOCK PURCHASE WARRANT
Registered Owner: _______________________________________
This certifies that, for value received, Signal Apparel Company, Inc., an
Indiana corporation, the ("Company") grants the following rights to the
Registered Owner, or assigns, of this Warrant:
1. Issue. Upon tender (as defined in Section 5 hereof) to the Company, the
Company, within three (3) Business Days of the date thereof, shall issue to the
Registered Owner, or assigns, up to the number of shares specified in Section 2
hereof of fully paid and nonassessable shares of Common Stock that the
Registered Owner, or assigns, is otherwise entitled to purchase.
2. Number of Shares. The total number of shares of Common Stock that the
Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant (the "Warrant Shares") is _________ shares, subject to
adjustment from time to time as set forth in Section 6 hereof. The Company shall
at all times reserve and hold available sufficient shares of Common Stock to
satisfy all conversion and purchase rights represented by outstanding
convertible securities, options and warrants, including this Warrant. The
Company covenants and agrees that all shares of Common Stock that may be issued
upon the exercise of this Warrant shall, upon issuance, be duly and validly
issued, fully paid and nonassessable, free from all taxes, liens and charges
with respect to the purchase and the issuance of the shares, and shall not have
any legend or restrictions on resale, expect as required by Section 3.2(b) of
the Purchase Agreement.
3. Exercise Price. The initial per share exercise price of this Warrant,
representing the price per share at which the shares of stock issuable upon
exercise of this Warrant may be purchased, is one dollar ($1.00), subject to
adjustment from time to time pursuant to the provisions of Section 6 hereof (the
"Exercise Price").
4. Exercise Period. This Warrant may be exercised from the Closing Date (as
defined in the Purchase Agreement) up to and including March 2, 2004 (the
"Exercise Period"). If not exercised during this period, this Warrant and all
rights granted under this Warrant shall expire and lapse.
5. Tender; Issuance of Certificates.
a. This Warrant may be exercised, in whole or in part, by (i) actual
delivery of (a) the Exercise Price in cash, (b) a duly executed Warrant Exercise
Form, a copy of which is attached to this Warrant as Exhibit A, properly
executed by the Registered Owner, or assigns, of this Warrant, and (c) by
surrender of this Warrant, or (ii) if the resale of the Warrant Shares by the
Registered Owner is not then registered pursuant to an effective registration
statement under the Securities Act, delivery to the Company of a written notice
of an election to effect a "Cashless Exercise" (as defined below) for the
Warrant Shares specified in the Warrant Exercise Form. The Warrant Shares so
purchased shall be deemed to be issued to the Registered Owner as of the close
of business on the date on which this Warrant shall have been surrendered, the
completed Warrant Exercise Form shall have been delivered and payment shall have
been made for such shares as set forth above. The payment and Warrant Exercise
Form must be delivered to the registered office of the Company either in person
or as set forth in Section 12 hereof.
b. Commencing ninety (90) days from the Filing Date (as defined in the
Registration Rights Agreement), if, and only if, at the time of exercise of this
Warrant, the Warrant Shares are not saleable pursuant to an effective
registration statement, then in addition to the exercise of all or a part of
this Warrant by payment of the Exercise Price in cash as provided above, and in
lieu of such payment, the Registered Owner shall have the right to effect a
cashless exercise (a "Cashless Exercise"). In the event of a Cashless Exercise
the Registered Owner may exercise this Warrant in whole or in part by
surrendering this Warrant in exchange for the number of shares of Common Stock
equal to the product of (x) the number of shares as to which this Warrant is
being exercised multiplied by (y) a fraction, the numerator of which is the Per
Share Market Value of the Common Stock less the Exercise Price then in effect
and the denominator of which is the Per Share Market Value (in each case
adjusted for fractional shares as herein provided).
c. In lieu of physical delivery of the Warrant, provided the Company's
transfer agent is participating in the Depositary Trust Company ("DTC") Fast
Automated
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Securities Transfer ("FAST") program, upon request of the Registered Owner and
in compliance with the provisions hereof, the Company shall use its best efforts
to cause its transfer agent to electronically transmit the Warrant Shares to the
Registered Owner by crediting the account of the Registered Owner's Prime Broker
with DTC through its Deposit Withdrawal Agent Commission system. The time period
for delivery described herein shall apply to the electronic transmittals
described herein.
d. Certificates for the Warrant Shares so purchased, representing the
aggregate number of shares specified in the Warrant Exercise Form, shall be
delivered to the Registered Owner within a reasonable time, not exceeding three
(3) Business Days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the Registered Owner and shall be registered in the name of the Registered Owner
or such other name as shall be designated by such Registered Owner. If this
Warrant shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Registered Owner a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised.
6. Adjustment of Exercise Price.
a. Common Stock Dividends; Common Stock Splits; Reverse Common Stock
Splits. If the Company, at any time while this Warrant is outstanding, (a) shall
pay a stock dividend on its Common Stock, (b) subdivide outstanding shares of
Common Stock into a larger number of shares, (c) combine outstanding shares of
Common Stock into a smaller number of shares or (d) issue by reclassification of
shares of Common Stock any shares of capital stock of the Company, then (i) the
Exercise Price shall be multiplied by a fraction the numerator of which shall be
the number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and the denominator of which shall be the number
of shares of Common Stock outstanding after such event and (ii) the number of
Warrant Shares shall be multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event and the denominator of which shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding before
such event. Any adjustment made pursuant to this paragraph (6)(a) shall become
effective immediately after the record date for the determination of
shareholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification. Notwithstanding the foregoing, if the Company
shall combine outstanding shares of Common Stock into a smaller number of shares
(a "reverse stock split") at any time prior to December 31, 1999, then the
Exercise Price in effect immediately prior to such reverse stock split shall not
be adjusted and shall remain in effect after giving effect to such reverse stock
split.
b. Rights; Warrants. If the Company, at any time while this Warrant is
outstanding, shall issue rights or warrants to all of the holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the Per Share Market Value of Common Stock at the
record date mentioned below, the
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Exercise Price shall be multiplied by a fraction, the denominator of which shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock offered for subscription or purchase, and
the numerator of which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding on the date of issuance of such rights or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered would purchase at such Per Share Market Value.
Such adjustment shall be made whenever such rights or warrants are issued, and
shall become effective immediately after the record date for the determination
of shareholders entitled to receive such rights or warrants. However, upon the
expiration of any right or warrant to purchase Common Stock the issuance of
which resulted in an adjustment in the Exercise Price pursuant to this paragraph
(6)(b), if any such right or warrant shall expire and all or any portion thereof
shall not have been exercised, the Exercise Price shall immediately upon such
expiration be re-computed and effective immediately upon such expiration be
increased to the price which it would have been (but reflecting any other
adjustments in the Exercise Price made pursuant to the provisions of section (f)
after the issuance of such rights or warrants) had the adjustment of the
Exercise Price made upon the issuance of such rights or warrants been made on
the basis of offering for subscription or purchase only that number of shares of
Common Stock (if any) actually purchased upon the exercise of such rights or
warrants actually exercised.
c. Subscription Rights. If the Company, at any time while this Warrant is
outstanding, shall distribute to all of the holders of Common Stock evidence of
its indebtedness or assets or rights or warrants to subscribe for or purchase
any security (excluding those referred to in paragraphs 6(a) and (b) above),
then in each such case the Exercise Price at which the Warrant shall thereafter
be exercisable shall be determined by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of shareholders
entitled to receive such distribution by a fraction, the denominator of which
shall be the Per Share Market Value of Common Stock determined as of the record
date mentioned above, and the numerator of which shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the Company, such
fair market value shall be determined by an Appraiser selected in good faith by
the Registered Owner of the Warrant; and provided, further, that the Company,
after receipt of the determination by such Appraiser shall have the right to
select in good faith an additional Appraiser meeting the same qualifications, in
which case the fair market value shall be equal to the average of the
determinations by each such Appraiser. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above
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d. Rounding. All calculations under this Section 6 shall be made to the
nearest cent or the nearest l/l00th of a share, as the case may be.
e. Notice of Adjustment. Whenever the Exercise Price is adjusted pursuant
to paragraphs 6(a), (b) or (c), the Company shall promptly deliver to the
Registered Owner a notice setting forth the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.
f. Redemption Event. In case of (A) any reclassification of the Common
Stock, (B) any Change of Control (as such term is defined in the Purchase
Agreement), (C) any compulsory share exchange pursuant to which the Common Stock
is converted into other securities, cash or property or (D) (i) the Company's
notice to any Registered Owner of the Warrant Shares, including by way of public
announcement, at any time, of its intention, for any reason, not to comply with
proper requests for the exercise of any such Warrant Shares or (ii) the
Company's refusal to honor a duly executed Warrant Exercise Form delivered
pursuant to Section 5(a) hereof (clauses (A) through (D) above are referred to
as a "Redemption Event"), in the case of (A), (B) or (C), the Registered Owner
shall have the right thereafter to convert the Warrant for shares of stock and
other securities, cash and property receivable upon or deemed to be held by
holders of Common Stock following such Redemption Event, and the Registered
Owner shall be entitled upon such event to receive such amount of securities,
cash or property as the shares of the Common Stock of the Company into which the
Warrant could have been converted immediately prior to such Redemption Event
(without taking into account any limitations or restrictions on the
convertibility of the Securities) would have been entitled; provided, however,
that in the case of a transaction specified in (B) in which holders of the
Company's Common Stock receive cash, if the Registered Owners are unable to sell
the Company's Common Stock pursuant to an effective registration statement, the
Registered Owners shall have the right to convert the Warrant Shares for such
number of shares of the surviving company equal to the amount of cash into which
the Warrant is convertible divided by the fair market value of the shares of the
surviving company on the effective date of the merger; provided, further, that
in the case of an event specified in (D), the Registered Owner shall have the
option to require the Company to redeem, from funds legally available therefor
at the time of such redemption, its shares of Common Stock immediately
theretofore acquirable and receivable upon the conversion of such Registered
Owner's Warrants at a price per share equal to the product of (i) the average
Per Share Market Value for the five Trading Days immediately preceding (1) the
effective date, the date of the closing, date of occurrence or the date of the
announcement, as the case may be, of the Redemption Event triggering such
redemption right or (2) the date of payment in full by the Company of the
redemption price hereunder, whichever is greater, and (ii) the number of shares
of Common Stock of the Company into which the Warrant could have been converted
immediately prior to such Redemption Event. The entire redemption price shall be
paid in cash. In the case of (A), (B) and (C), the terms of any such Redemption
Event shall include such terms so as to continue to give to the Registered Owner
the right to receive the securities, cash or property set forth in this Section
6(f) upon any conversion or redemption following such Redemption Event. This
provision shall similarly apply to successive Redemption Events.
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g. Reclassification, Etc. If:
(i) the Company shall authorize the issuance to all holders of any
class or series of its Capital Stock, of rights or warrants to subscribe
for or purchase shares of its capital stock or of any other right;
(ii) the Company shall authorize the distribution to all holders of
any class or series of its Capital Stock, of evidences of its indebtedness
or assets;
(iii) the Company shall declare a dividend (or other distribution) on
its Common Stock or the Company shall declare a special nonrecurring
dividend on or a redemption of its Common Stock;
(iv) the approval of any shareholders of the Company shall be required
in connection with any reclassification, subdivision or combination of the
Common Stock of the Company, any consolidation or merger to which the
company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property; or
(v) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be delivered to the
Registered Owner, at least 30 Business Days prior to the applicable record or
effective date hereinafter specified, a notice (provided such notice shall not
include any material non-public information) stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend,
distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the validity of the
corporate action required to be specified in such notice.
h. Adjustment to Exercise Price. If the Company, at any time while this
Warrant is outstanding, takes any of the actions described in this Section 6(h),
then, in order to prevent dilution of the rights granted under this Warrant, the
Exercise Price will be subject to adjustment from time to time as provided in
this Section 6(h).
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(i) Adjustment of Exercise Price upon Issuance of Common Stock. If at
any time while this Warrant is outstanding the Company issues or sells, or
is deemed to have issued or sold, any shares of Common Stock (other than
the Underlying Shares or shares of Common Stock deemed to have been issued
by the Company in connection with an Approved Stock Plan or shares of
Common Stock issuable upon the exercise of any options or warrants
outstanding on the date hereof and listed in Schedule 2.1(c) of the
Purchase Agreement or shares of Common Stock issued or deemed to have been
issued as consideration for an acquisition by the Company of a division,
assets or business (or stock constituting any portion thereof) from another
person) for a consideration per share less than the Exercise Price in
effect immediately prior to such issuance or sale, then immediately after
such issue or sale the Exercise Price then in effect shall be reduced to an
amount equal to the consideration per share of Common Stock of such
issuance or sale. For the purpose of determining the adjusted Exercise
Price under this Section 6(h)(i), the following shall be applicable:
(A) Issuance of Options. Except for the warrants issued to BNY
Financial Corp. pursuant to that certain $98 million Credit Facility
currently being negotiated between the Company and BNY Financial
Corp., if at any time while this Warrant is outstanding the Company in
any manner grants any rights or options to subscribe for or to
purchase Common Stock or any stock or other securities convertible
into or exchangeable for Common Stock (other than the Underlying
Shares or shares of Common Stock deemed to have been issued by the
Company in connection with an Approved Stock Plan or shares of Common
Stock issuable upon the exercise of any options or warrants
outstanding on the date hereof and listed in Schedule 2.1(c) of the
Purchase Agreement or shares of Common Stock issued or deemed to have
been issued as consideration for an acquisition by the Company of a
division, assets or business (or stock constituting any portion
thereof) from another person) (such rights or options being herein
called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities") and the price
per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities
is less than the Exercise Price in effect immediately prior to such
grant, then the Exercise Price shall be adjusted to equal the price
per share for which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible
Securities. No adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock or of such Convertible Securities
upon the exercise of such Options or upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(B) Issuance of Convertible Securities. If at any time while this
Warrant is outstanding the Company in any manner issues or sells any
Convertible Securities and the price per share for which Common Stock
is issuable upon such conversion or exchange (other than the
Underlying Shares or shares of Common
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Stock deemed to have been issued by the Company in connection with an
Approved Stock Plan, shares of Common Stock issuable upon the exercise
of any options or warrants outstanding on the date hereof and listed
in Schedule 2.1(c) of the Purchase Agreement, shares of Common Stock
issued or deemed to have been issued as consideration for an
acquisition by the Company of a division, assets or business (or stock
constituting any portion thereof) from another person) is (i) less
than the Exercise Price in effect immediately prior to issuance or
sale or (ii) with respect to any Convertible Securities issued with a
floating conversion or exchange price, is converted at a price that is
less than the Exercise Price then in effect, then the Exercise Price
shall be adjusted to equal the price per share for which Common Stock
is issuable upon the conversion or exchange of such Convertible
Securities.
(C) Change in Option Price or Rate of Conversion. If there is a
change at any time in (i) the purchase price provided for in any
Options, (ii) the additional consideration, if any, payable upon the
issuance, conversion or exchange of any Convertible Securities or
(iii) the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock, then the Exercise Price in
effect at the time of such change shall be readjusted to the Exercise
Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or changed conversion rate,
as the case may be, at the time initially granted, issued or sold;
provided that no adjustment shall be made if such adjustment would
result in an increase of the Exercise Price then in effect.
(D) Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under this Section 6(h)(i),
the following shall be applicable:
(I) Calculation of Consideration Received. If any Common
Stock, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by
the Company therefor. In case any Common Stock, Options or
Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash
received by the Company will be the fair value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received by
the Company will be the arithmetic average of the Per Share
Market Values of such security for the five (5) consecutive
Trading Days immediately preceding the date of receipt thereof.
In case any Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity the
amount of consideration therefor will be deemed to be the fair
value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common
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Stock, Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or securities
will be determined jointly by the Company and the registered
owners of a majority of the Underlying Shares of Warrants then
outstanding. If such parties are unable to reach agreement within
ten (10) days after the occurrence of an event requiring
valuation (the "Valuation Event"), the fair value of such
consideration will be determined within forty-eight (48) hours of
the tenth (10th) day following the Valuation Event by an
Appraiser selected in good faith by the Company and agreed upon
in good faith by the holders of a majority of the Warrants then
outstanding. The determination of such Appraiser shall be binding
upon all parties absent manifest error.
(II) Integrated Transactions. In case any Option is issued
in connection with the issue or sale of other securities of the
Company, together comprising one integrated transaction in which
no specific consideration is allocated to such Options by the
parties thereto, the Options will be deemed to have been issued
for an aggregate consideration of $.01.
(III) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or
held by or for the account of the Company, and the disposition of
any shares so owned or held will be considered an issue or sale
of Common Stock.
(IV) Record Date. If the Company takes a record of the
holders of Common Stock for the purpose of entitling them (1) to
receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (2) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then
such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(V) Certain Events. If any event occurs of the type
contemplated by the provisions of this Section 6(h)(i) (subject
to the exceptions stated therein) but not expressly provided for
by such provisions (including, without limitation, the granting
of stock appreciation rights, phantom stock rights or other
rights with equity features), then the Company's Board of
Directors will make an appropriate adjustment in the Exercise
Price so as to protect the rights of the Registered Owner, or
assigns, of this Warrant; provided, however, that no such
adjustment will increase the Exercise Price as otherwise
determined pursuant to this Section 6(h).
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Notwithstanding the foregoing, in no event shall any provision in this
Section 6 cause the Exercise Price to be greater than the Exercise Price on the
date of issuance of this Warrant.
7. Restriction on Conversion by Either the Registered Owner or the Company.
Notwithstanding anything herein to the contrary, in no event shall any
Registered Owner or the Company have the right or be required to exercise this
Warrant if as a result of such conversion the aggregate number of shares of
Common Stock beneficially owned by such Registered Owner and its Affiliates
would exceed 4.99% of the outstanding shares of the Common Stock following such
exercise. For purposes of this Section 7, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. The provisions of this Section 7 may be waived by a Registered
Owner as to itself (and solely as to itself) upon not less than 65 days prior
written notice to the Company, and the provisions of this Section 7 shall
continue to apply until such 65th day (or later, if stated in the notice of
waiver).
8. Officer's Certificate. Whenever the number of shares purchasable upon
exercise shall be adjusted as required by the provisions of Section 6, the
Company shall forthwith file in the custody of its Secretary or an Assistant
Secretary at its principal office and with its stock transfer agent, if any, an
officer's certificate showing the adjusted number of shares determined as herein
provided, setting forth in reasonable detail the facts requiring such adjustment
and the manner of computing such adjustment. Each such officer's certificate
shall be signed by the chairman, president or chief financial officer of the
Company and by the secretary or any assistant secretary of the Company. Each
such officer's certificate shall be made available at all reasonable times for
inspection by any Registered Owner of the Warrants and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to the
each of the Registered Owners.
9. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Purchase Agreement. As
used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used
with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms of "affiliated," controlling" and
"controlled" have meanings correlative to the foregoing.
"Appraiser" shall mean a nationally recognized or major regional
investment banking firm or firm of independent certified public accountants
of recognized standing.
"Approved Stock Plan" shall mean any contract, plan or agreement which
has been approved by the Board of Directors of the Company, pursuant to
which the Company's securities may be issued to any employee, officer,
director or consultant.
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"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
"Closing" has the meaning set forth in Section 1.2 of the Purchase
Agreement.
"Common Stock" means the shares of the Company's Common Stock, par
value $.01 per share.
"Company" means Signal Apparel Company, Inc., an Indiana corporation.
"Convertible Securities" has the meaning assigned to it in Section
6(h)(i)(A) hereof.
"Exercise Period" has the meaning assigned to it the Section 4 hereof.
"Exercise Price" has the meaning assigned to it in Section 3 hereof
"Options" has the meaning assigned to it in Section 6(h)(i)(A) hereof.
"Per Share Market Value" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on the New York Stock
Exchange or other registered national stock exchange on which the Common
Stock is then listed or if there is no such price on such date, then the
closing bid price on such exchange or quotation system on the date nearest
preceding such date, or (ii) if the Common Stock is not listed then on the
New York Stock Exchange or any registered national stock exchange, the
closing bid price for a share of Common Stock in the over-the-counter
market, as reported by the National Quotation Bureau Incorporated (or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (iii) if the Common Stock
is not then publicly traded the fair market value of a share of Common
Stock as determined by an Appraiser selected in good faith by the holder of
this Warrant; provided, however, that the Company, after receipt of the
determination by such Appraiser, shall have the right to select, in good
faith, an additional Appraiser, in which case the fair market value shall
be equal to the average of the determinations by each such Appraiser; and
provided, further that all determinations of the Per Share Market Value
shall be appropriately adjusted for any stock dividends, stock splits or
other similar transactions during such period.
"Purchase Agreement" means that certain Securities Purchase Agreement,
dated as of March 3, 1999, among the Company and the Purchasers.
"Purchaser" has the meaning set forth in the Purchase Agreement.
"Redemption Event" has the meaning assigned to it in Section 6(f)
hereof.
"Registered Owner" means the person identified on the face of this
Warrant as the registered owner hereof or such other person as shown on the
records of the Company as being the registered owner of this Warrant.
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"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of March 3, 1999, among the Company and the Purchasers.
"Trading Day(s)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.
"Underlying Shares" has the meaning assigned to it in Section 2.1(d)
of the Purchase Agreement.
"Warrant(s)" means the warrants issuable at the Closing.
10. Registration Rights. The Company will undertake the registration of the
Common Stock into which such Warrants are exercisable at such times and upon
such terms pursuant to the provisions of the Registration Rights Agreement.
11. Reservation of Underlying Shares; Listing. The Company covenants that
it will at all times reserve and keep available out of its authorized shares of
Common Stock, free from preemptive rights, solely for the purpose of issue upon
exercise of the Warrants as herein provided, such number of shares of the Common
Stock as shall then be issuable upon the exercise of all outstanding Warrants
into Common Stock. The Company covenants that all shares of the Common Stock
issued upon exercise of the Warrant which shall be so issuable shall, when
issued, be duly and validly issued and fully paid and non-assessable. The
Company shall promptly secure the listing of the shares of Common Stock issuable
upon exercise of the Warrant upon the national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant.
12. Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be deemed to have been received
(a) upon hand delivery (receipt acknowledged) or delivery by telex (with correct
answer back received), telecopy or facsimile (with transmission confirmation
report) at the address or number designated below (if received by 8:00 p.m. EST
where such notice is to be received), or the first Business Day following such
delivery (if received after 8:00 p.m. EST where such notice is to be received)
or (b) on the second Business Day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications are (i) if to the Company to Signal Apparel Company, Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn. President & General
Counsel, fax no. (▇▇▇) ▇▇▇-▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attn: President and General Counsel, fax no. (▇▇▇) ▇▇▇-▇▇▇▇ (TN) and
(▇▇▇) ▇▇▇-▇▇▇▇ (NY), with copies to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇, Esq., fax no.
(▇▇▇) ▇▇▇-▇▇▇▇ (ii) if to the Registered Owner to the address set forth on
Schedule II to the Purchase Agreement, with copies to Akin, ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
& ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
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10022, Attn: ▇▇▇▇▇ ▇▇▇▇, fax no. (▇▇▇) ▇▇▇-▇▇▇▇ or such other address as may be
designated in writing hereafter, in the same manner, by such person.
13. Compliance With Governmental Requirements. The Company covenants that
if any shares of Common Stock required to be reserved for purposes of exercise
of Warrants hereunder require registration with or approval of any governmental
authority under any Federal or state law, or any national securities exchange,
before such shares may be issued upon exercise, the Company will use its best
efforts to cause such shares to be duly registered or approved, as the case may
be.
14. Fractional Shares. Upon any exercise hereunder, the Company shall not
be required to issue stock certificates representing fractions of shares of the
Common Stock, but may if otherwise permitted make a cash payment in respect of
any final fraction of a share based on the Per Share Market Value at such time.
If the Company elects not, or is unable, to make such a cash payment, the
Registered Owner shall be entitled to receive, in lieu of the final fraction of
a share, one whole share of Common Stock.
15. Payment of Tax Upon Issue of Transfer. The issuance of certificates for
shares of the Common Stock upon exercise of the Warrants shall be made without
charge to the Registered Owners thereof for any documentary stamp or similar
taxes that may be payable in respect of the issue or delivery of such
certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery
of any such certificate upon exercise in a name other than that of the
Registered Owner of such Warrant so converted and the Company shall not be
required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
16. Warrants Owned by Company Deemed Not Outstanding. In determining
whether the holders of the outstanding Warrants have concurred in any direction,
consent or waiver under this Warrant, warrants which are owned by the Company or
any other obligor on the warrants or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the warrants shall be disregarded and deemed not
to be outstanding for the purpose of any such determination; provided that any
Warrants owned by the Purchasers (as defined in the Purchase Agreement) shall be
deemed outstanding for purposes of making such a determination. Warrants so
owned which have been pledged in good faith may be regarded as outstanding if
the pledgee establishes to the satisfaction of the Company the pledgee's right
so to act with respect to such warrants and that the pledgee is not the Company
or any other obligor upon the securities or any person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the warrants.
17. Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.
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18. No Rights as Stockholder. This Warrant shall not entitle the Registered
Owner to any rights as a stockholder of the Company, including without
limitation, the right to vote, to receive dividends and other distributions, or
to receive notice of, or to attend, meetings of stockholders or any other
proceedings of the Company, unless and to the extent converted into shares of
Common Stock in accordance with the terms hereof.
19. Certain Actions Prohibited. The Company will not, by amendment of its
charter 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 to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder of this
Warrant in order to protect the exercise privilege of the holder of this Warrant
against dilution or other impairment, consistent with the tenor and purpose of
this Warrant. Without limiting the generality of the foregoing, the Company (i)
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions 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.
20. Successors and Assigns. This Warrant shall be binding upon and inure to
the benefit of the Registered Owners and its assigns, and shall be binding upon
any entity succeeding to the Company by merger or acquisition of all or
substantially all the assets of the Company. The Company may not assign this
Warrant or any rights or obligations hereunder without the prior written consent
of the Registered Owner. The Registered Owner may assign this Warrant without
the prior written consent of the Company.
21. Governing Law. This Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York without
regard to the principles of conflicts of law thereof. Each party hereby
irrevocably submits to the nonexclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Warrant and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
SIGNAL APPAREL COMPANY, INC.
By:
------------------------------
Name:
Title:
15
EXHIBIT A
Warrant Exercise Form
TO: SIGNAL APPAREL COMPANY, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Signal Apparel Company, Inc. pursuant
to Warrant No. ___ heretofore issued to ___________________ on ____________,
199_; (2) encloses a payment of $__________ for these shares at a price of $____
per share (as adjusted pursuant to the provisions of the Warrant); and (3)
requests that a certificate for the shares be issued in the name of the
undersigned and delivered to the undersigned at the address specified below.
Date: ____________________________________
Investor Name: ____________________________________
Taxpayer
Identification
Number: ____________________________________
By: ____________________________________
Printed Name: ____________________________________
Title: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
Note: The above signature should correspond exactly with the name
on the face of this Warrant Certificate or with the name of
assignee appearing in assignment form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
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