1
EXHIBIT 10.78
WARRANT AGREEMENT
DATED JUNE 20, 1997
FROM
RDM SPORTS GROUP, INC.
TO
METROMEDIA COMPANY
2
RDM SPORTS GROUP, INC.
AND
METROMEDIA COMPANY
------------------
WARRANT AGREEMENT
Dated as of June 20, 1997
--------------------------------------------------------------------------------
3
WARRANT AGREEMENT, dated as of June 20, 1997 between RDM SPORTS GROUP,
INC., a Delaware corporation (the "Company"), and METROMEDIA COMPANY, a Delaware
general partnership ("Metromedia").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue warrants to Metromedia
("Warrants") to purchase up to 3,000,000 shares (the "Shares") of Common Stock,
par value $.01 per share, of the Company (the "Common Stock") at the exercise
price of $.50 per share of Common Stock; and
WHEREAS, RDM Holdings, Inc., Sports Group, Inc., International Sports
and Fitness, Inc., Diversified Products Corporation, Willow Hosiery Company,
Inc., Hutch Sports, USA, Inc. and Diversified Trucking Corp., as borrowers
propose to enter into a $100,000,000 borrowing facility, dated as of the same
date of this Agreement, with Foothill Capital Corporation as Agent and with the
financial institutions named therein, as lenders, such agreement hereinafter
referred to as the "Loan Agreement"); and
WHEREAS, Metromedia has furnished or agreed to furnish a $15,000,000
"Credit Enhancement" as defined in such Loan Agreement; and
WHEREAS, such Credit Enhancement of the Loan Agreement by Metromedia
is, and will be, of direct interest, benefit and advantage to the Company; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Loan Agreement) by
the Company to Metromedia in partial consideration for Metromedia providing the
Credit Enhancement under the Loan Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by
Metromedia to the Company of an aggregate of three dollars ($3.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Grant. Metromedia is hereby granted the right to
purchase, at any time from ninety (90) days after June 20, 1997 (the "Closing
Date") until 5:30 p.m., Atlanta, Georgia time, on June 20, 2007 (the "Exercise
Period"), up to 3,000,000 shares (subject to adjustment as provided in Section 8
hereof, such shares, as adjusted, the "Shares") of Common Stock at an exercise
price equal to $.50 per share (subject to adjustment as provided in Section 8
hereof), all subject to the terms and conditions of this Agreement.
Section 2. Warrant Certificates. The warrant certificates (the
"Warrant Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A attached hereto and made a part
hereof, with such appropriate insertions, omissions, substitutions and other
variations as required or permitted by this Agreement. The Warrant Certificates
shall further evidence the purchase rights granted hereby.
4
Section 3. Exercise of Warrant; Method of Exercise.
The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder (as defined herein) thereof, in whole
or in part, at any time or from time to time during the Exercise Period. Upon
surrender of a Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Common Stock Exercise
Price (as hereinafter defined), payable by certified or official bank check in
New York Clearing House funds for the Shares purchased at the Company's
principal offices in Atlanta, Georgia (currently located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇. ▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ 30269), the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the Shares so purchased. In the case of the
purchase of less than all the Shares purchasable under any Warrant Certificate,
the Company shall cancel said Warrant Certificate upon the surrender thereof
and shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Shares purchasable thereunder. The Holder shall identify the
aggregate principal amount of Shares for which the Warrant is exercised on the
Form of Election to Purchase.
Section 4. Issuance of Certificates. Upon the exercise of
Warrants, the issuance of certificates for the Shares and/or other securities,
properties or rights underlying such Warrants shall be made forthwith (and in
any event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof (other than state or federal income taxes), and such
certificates shall (subject to the provisions of Sections 5 and 7 hereof) be
issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder
thereof 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.
The Warrant Certificates and the certificates representing the Shares
and/or other securities, property or rights issuable upon the exercise of
Warrants shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or any Vice President of the Company under its corporate
seal reproduced thereon and by the manual or facsimile signature of the then
present Treasurer or any Assistant Treasurer or Secretary or any Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer. Certificates representing the Shares and/or other securities,
property or rights issuable upon exercise of Warrants shall be dated the date on
which the exercise is perfected as provided in Section 3 hereof (the "Exercise
Date") and any interest bearing securities so issued shall accrue interest from
the Exercise Date.
Section 5. Restriction On Transfer of Warrants. The Holder of a
Warrant Certificate, by its acceptance thereof, covenants and agrees that the
Warrants are being acquired as an investment and not with a view to the
distribution thereof. Subject to compliance with all applicable federal and
state securities laws, Metromedia may transfer the Warrants and this Agreement
at any time.
5
Section 6. Exercise Price.
Section 6.1 Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 8 hereof, the initial exercise price of each
Warrant for Common Stock, shall be $.50. The adjusted exercise price for Common
Stock, shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 8 hereof.
Section 6.2 Exercise Price. The term "Common Stock Exercise Price"
herein shall mean the initial exercise price for Common Stock hereunder or the
adjusted exercise price for Common Stock hereunder, depending upon the context.
Section 7. Transfer Restrictions and Registration Rights.
Section 7.1 Registration Under the Securities Act of 1933. The
Warrants, the Shares and any of the other securities issuable upon exercise of
Warrants have not been registered under the Securities Act of 1933, as amended
(the "Act"). Upon exercise, in part or in whole, of Warrants, certificates
representing the Shares and any other securities issuable upon exercise of
Warrants shall bear the following legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not
be offered or sold except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144 under
the Act (or any similar rule under the Act relating to the disposition
of securities) or (iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to the issuer and counsel to the issuer, that
an exemption from registration under such Act is available.
Section 7.2 Registration Rights Agreement. The Company hereby
expressly acknowledges and agrees that, upon any transfer of the Warrants to
Metromedia International Group, Inc. ("MIG") that (i) the Shares will constitute
"registrable stock" under that certain Registration Rights Agreement dated as of
December 6, 1994 by and between Roadmaster Industries, Inc. (n/k/a RDM Sports
Group, Inc.), a Delaware corporation and The Actava Group, Inc., a Delaware
corporation to which agreement Metromedia is a party as the successor by merger
to The Actava Group, Inc. (the "MIG Registration Rights Agreement"), and (ii)
the Shares will be entitled to all the benefits thereunder and subject to all of
the obligations of Metromedia thereunder. Until a transfer of the Warrants to
MIG, the Company hereby grants Metromedia the same registration rights under
this Warrant Agreement as have been granted to MIG under the MIG Registration
Rights Agreement; provided, however that, to the extent any rights granted to
Metromedia would conflict with or be inconsistent with any rights of MIG under
the MIG Registration Rights Agreement, the rights of Metromedia under the
registration rights granted pursuant to this Section 7.2 shall be limited to the
fullest extent necessary to ▇▇▇▇▇ or avoid such conflict; and further provided
that, notwithstanding anything in the registration rights provisions
incorporated by reference herein to the contrary, Registrable Shares for the
purpose of such registration rights shall only include Shares issuable upon the
exercise of the Warrants granted hereunder. Upon any transfer of the Warrants to
MIG, the registration rights with respect to such Warrants and the Shares
issuable upon the exercise thereof shall be governed by the MIG Registration
Rights Agreement and
6
the registration rights granted under this Section 7.2 shall cease to be of any
force and effect. A copy of such MIG Registration Rights Agreement is attached
hereto as Exhibit A.
Section 8. Adjustments to Exercise Price and Number of Securities.
Section 8.1 Computation of Adjusted Exercise Price. Except as
hereinafter provided, in case the Company shall at any time after the date
hereof issue or sell any shares of Common Stock (other than the issuances or
sales referred to in Section 8.7 hereof), including shares held in the Company's
treasury (but excluding shares issued upon the exercise of any options, rights
or warrants and shares issued upon the direct or indirect conversion or exchange
of securities or pursuant to employee benefit plans approved by a majority of
the Company's entire Board of Directors), for a consideration per share less
than the Market Price per share of Common Stock on the date immediately prior to
the issuance or sale of such shares, or without consideration, then forthwith
upon such issuance or sale, the Common Stock Exercise Price shall (until another
such issuance or sale or other event giving rise to an adjustment to the Common
Stock Exercise Price pursuant to this Section 8) be reduced to the price
(calculated to the nearest full cent) equal to the quotient derived by dividing
(i) an amount equal to the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus (b) the number of
shares of Common Stock which the aggregate consideration received by the Company
in connection with such issuance or sale would purchase at such Market Price, by
(ii) the total number of shares of Common Stock outstanding immediately after
such issuance or sale; provided, however, that in no event shall the Common
Stock Exercise Price be adjusted pursuant to this computation to an amount in
excess of the Common Stock Exercise Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock as provided by Section 8.3 hereof.
For the purposes of this Section 8, the term Common Stock Exercise
Price shall mean the Common Stock Exercise Price per share of Common Stock set
forth in Section 6 hereof, as adjusted from time to time pursuant to the
provisions of this Section 8.
As used herein, the "Market Price" of Common Stock at any date shall be
deemed to be the last reported sale price (expressed as a dollar value per
share) or, in case no such reported sale takes place on such day, the average of
the last reported sale prices for the last three (3) trading days, in either
case as officially reported by the principal securities exchange on which the
Common Stock is listed or admitted to trading or, if not so listed or admitted,
by the National Association of Securities Dealers Automated Quotation System
("NASDAQ") National Market System ("NASDAQ/NMS") or, if not approved for
quotation on the NASDAQ/NMS, the average closing bid price as furnished by the
National Association of Securities Dealers, Inc. (the "NASD") through NASDAQ or
similar organization if NASDAQ is no longer reporting such information, or if
such security is not quoted on NASDAQ, as determined in good faith by resolution
of the Board of Directors of the Company, based on the best information
available to it.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
7
(i) In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if shares of Common Stock
shall be sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be the
value of such consideration as determined in good faith by the Board of
Directors of the Company and shall include any amounts payable to security
holders or any affiliates thereof, including without limitation, pursuant to any
employment agreement, royalty, consulting agreement, covenant not to compete,
earned or contingent payment right or similar arrangement, agreement or
understanding, whether oral or written, all such amounts being valued for the
purposes hereof at the aggregate amount payable thereunder, whether such
payments are absolute or contingent, and irrespective of the period or
uncertainty of payment, the rate of interest, if any, or the contingent nature
thereof; provided, however, that if any Holders does not agree with such
valuation, a mutually acceptable independent appraiser shall make such
valuation, the cost of which shall be borne by the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company (other
than shares of Common Stock) into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (ii) of this Section 8.1.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof, upon the exercise of
options, rights and warrants and upon the conversion or exchange of convertible
or exchangeable securities.
Section 8.2 Options, Rights, Warrants and Convertible and
Exchangeable Securities. In case the Company shall at any time after the date
hereof issue options, rights or warrants to purchase or subscribe for, or
exercisable for, shares of Common Stock, or issue any securities convertible
into or exchangeable for shares of Common Stock, for a consideration per share
less than the Market Price for Common Stock immediately prior to the issuance of
such
8
options, rights, warrants or convertible or exchangeable securities, or without
consideration, the Common Stock Exercise Price in effect immediately prior to
the issuance of such options, rights, warrants or convertible or exchangeable
securities, as the case may be, shall be reduced to a price determined by making
a computation in accordance with the provisions of Section 8.1 hereof, provided
that:
(a) The aggregate maximum number of shares of Common Stock,
as the case may be, issuable under such options, rights or warrants
shall be deemed to be issued and outstanding at the time such options,
rights or warrants were issued, and for a consideration equal to the
minimum purchase or subscription price per share provided for in such
options, rights or warrants at the time of issuance, plus the
consideration (determined in the same manner as consideration received
on the issue or sale of shares in accordance with the terms of the
Warrants), if any, received by the Company for such options, rights or
warrants.
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of such convertible or
exchangeable securities shall be deemed to be issued and outstanding at
the time of issuance of such securities, and for a consideration equal
to the consideration (determined in the same manner as consideration
received on the issue or sale of shares of Common Stock in accordance
with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the
Company upon the conversion or exchange thereof.
(c) If any change shall occur in the purchase or
subscription price per share provided for in any of such options,
rights or warrants or in the conversion or exchange price per share of
such securities, such options, rights, warrants or conversion or
exchange rights, as the case may be, shall be deemed to have expired or
terminated on the date when such price change became effective in
respect of shares not theretofore issued pursuant to the exercise or
conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights, warrants or convertible or
exchangeable securities at the new purchase, subscription, conversion
or exchange price in respect of the number of shares issuable upon the
exercise of such options, rights or warrants or the conversion or
exchange of such convertible or exchangeable securities.
Section 8.3 Subdivision and Combination. In case the Company shall
at any time (i) declare a dividend on the Common Stock payable in shares of its
capital stock (including Common Stock), (ii) subdivide or combine the
outstanding shares of Common Stock, or (iii) issue any class of its capital
stock in a reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation then, subject to the adjustment procedures
provided for in Section 8.1, the Common Stock Exercise Price shall forthwith be
proportionately adjusted so that the Holder of any Warrant exercised after such
date shall be entitled to receive the aggregate number and kind of capital stock
which, if such Warrant had been exercised immediately prior to such date, such
holder
9
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, division, subdivision, combination or reclassification.
Section 8.4 Adjustment in Number of Securities. Upon each
adjustment of the Common Stock Exercise Price pursuant to the provisions of this
Section 8, the number of shares of Common Stock issuable upon exercise at the
adjusted Common Stock Exercise Price of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Common Stock Exercise
Price in effect immediately prior to such adjustment by the number of shares of
Common Stock issuable upon exercise of Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Common Stock
Exercise Price.
Section 8.5 Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean the class of stock designated as
Common Stock in the Certificate of Incorporation of the Company as of the date
hereof, or the class, classes and/or series of capital stock issued in exchange
therefor, upon conversion thereof or in lieu thereof in connection with any
change in par or stated value, recapitalization, reorganization or other
transaction (the "New Common Stock").
Section 8.6 Merger or Consolidation. In case of any consolidation
or merger of the Company with or into another corporation or other entity (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of the
outstanding Common Stock or other securities issuable upon exercise of Warrants)
or in case of any sale or conveyance to another person, corporation or other
entity of all or substantially of the assets and the property of the Company,
then, as a condition of such consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case may be, shall
execute and deliver to the Holder of each Warrant then outstanding a
supplemental warrant agreement providing that such Holder shall have the right
thereafter to receive, upon exercise of such Warrant (until the expiration of
such Warrant) the kind and amount of securities, rights and property receivable
upon such consolidation, merger, sale or conveyance by a holder of the number of
Warrant Securities issuable upon exercise of such Warrant immediately prior to
such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in this Section 8. The above provision of this subsection
shall similarly apply to successive consolidations, mergers, conveyances and
sales.
Section 8.7 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Common Stock Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants, upon
exercise of the Warrants or the issuance of the shares of Common Stock
issuable upon the exercise of the Warrants; or
(b) If the amount of said adjustment shall be less than one
cent (1(cent)) per share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the tine of and
10
together with the next subsequent adjustment which, together with any
adjustment so carried forward, shall amount to at least one cent
(1(cent)) per share.
Section 8.8 Certificate of Adjustment. After each adjustment of the
Common Stock Exercise Price or the amount of Warrant Securities purchasable upon
exercise of Warrants pursuant to this Section 8, the Company will promptly
prepare a certificate signed by the Chairman or President, and by the Treasurer
or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the
Company setting forth: (i) the Common Stock Exercise Price, as so adjusted; (ii)
the amount of Warrant Securities purchasable upon exercise of each Warrant after
such adjustment; and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with its records and
cause a brief summary thereof to be sent by ordinary first class mail to each
Holder at his last address as it shall appear on the registry books of the
Company. No failure to mail such notice nor any defect therein or in the mailing
thereof shall affect the validity thereof, except as to any Holder to whom the
Company failed to mail such notice or except as to any Holder whose notice was
defective.
Section 8.9 Validity of Warrant Certificate. Irrespective of any
adjustments or changes in the Common Stock Exercise Price or the amount of
Warrant Securities purchasable upon exercise of Warrants, Warrant Certificates
theretofore and thereafter issued shall continue to express the Common Stock
Exercise Price per share and the amount of Warrant Securities purchasable
thereunder as of the date such Warrant Certificates were originally issued;
provided, the Holders shall be entitled to exercise Warrants represented by such
Warrant Certificates after giving effect to each such adjustment and change, and
such Warrant Certificate shall be deemed to incorporate each such adjustment and
change as if new Warrant Certificates reflecting each such adjustment and change
had been issued to the Holders.
Section 8.10 Dividends and Other Distributions. In the event that
the Company shall at any time prior to the exercise of all Warrants declare a
dividend (other than a dividend consisting solely of shares of Common Stock and
other than a regularly scheduled dividend with respect to any calendar year
declared within the following calendar year which does not exceed twenty percent
(20%) of net earnings (after taxes) for such calendar year) or otherwise
distribute to all its stockholders any assets (including shares of any
subsidiary), property, rights, evidences of indebtedness, securities (other than
shares of Common Stock) then, forthwith upon such declaration, the Common Stock
Exercise Price (until another such declaration or other event causing price
adjustments to the Common Stock Exercise Price pursuant to this Section 8)
whether issued by the Company or by another, or other thing of value, shall be
reduced to the price (calculated to the nearest full cent) equal to the quotient
derived by dividing (i) the difference between (a) the product of the number of
shares of Common Stock outstanding immediately prior to such declaration
multiplied by the Market Price for Common Stock immediately prior to such
declaration and (b) the aggregate fair market value amount of such dividend or
distribution so declared by (ii) the product of the number of shares of Common
Stock outstanding immediately prior to such declaration multiplied by the Market
Price for Common Stock immediately prior to such declaration. Such adjustments
shall be made on the record date for determination of stockholders entitled to
receive such dividend or distribution.
11
Section 9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable, without expense, upon the surrender thereof
by the Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant
Certificates, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor in lieu thereof.
Section 10. Elimination of Fractional Interests. The Company shall
not be required to issue certificates representing fractions of shares of Common
Stock upon the exercise of Warrants to purchase Common Stock, nor shall it be
required to issue scrip or pay cash in lieu of such fractional interests, it
being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of shares of
Common Stock or other securities, properties or rights.
Section 11. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its authorized capital
stock, solely for the purpose of issuance of Common Stock issuable upon exercise
of Warrants, such number of shares of Common Stock or New Common Stock as shall
be issuable upon exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Common Stock Exercise Price, all
Shares of Common Stock and other securities issuable upon such exercise when
issued shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any security holder of the Company. As long
as Warrants shall be outstanding, the Company shall use its reasonable best
efforts to cause the Common Stock issuable upon the exercise of Warrants to be
listed (subject to official notice of issuance) on all securities exchanges on
which the Common Stock may then be listed and/or quoted on NASDAQ/NMS. The
Company represents and warrants that (i) the Warrants have been duly authorized,
validly issued and are fully paid and non-assessable and are not subject to any
pre-emptive rights, and (ii) as of the date hereof, the Company had 53,746,765
shares of Common Stock issued and outstanding, including 4,239,598 held in its
treasury.
Section 12. Notices to Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders of Warrants the
right to vote or to consent or to receive notice as a stockholder in respect of
any meetings of stockholders for the election of directors or any other matter
or as having any rights whatsoever as a stockholder of the Company. If, however,
at any time prior to the expiration of the Warrants and their exercise, any of
the following events shall occur:
(a) the Company shall take a record of the holders of
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out
12
of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company;
or
(b) the Company shall offer to all the holders of shares of
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock
of the Company, or any option, right or warrant to subscribe therefor;
or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
then, in any one or more of said events, the Company shall give written
notice of such event to each Holder of Warrants at least fifteen (15) days prior
to the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution or
offer. Such notice shall specify such record date or the date of closing the
transfer books, as the case may be. Failure to give such notice or any defect
therein shall not affect the validity of any action taken in connection with
such dividend, distribution, offer, dissolution, liquidation, winding up or
sale.
Section 13. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to a Holder, to the address of such Holder as shown
on the books of the Company; or
(b) If to the Company, to the address set forth in Section
3 hereof or to such other address as the Company may designate by
notice to the Holders.
Section 14. Supplements and Amendments. The Company and Metromedia
may from time to time supplement or amend this Agreement without the approval of
any Holders (other than Metromedia) in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and
Metromedia may deem necessary or desirable and which the Company and Metromedia
deem shall not adversely affect the interests of the Holders.
Section 15. Successors. Subject to compliance with all applicable
federal and state securities laws, this Agreement and the Warrants may be
transferred and assigned by Metromedia without the Company's consent. All the
covenants and provisions of this Agreement shall be binding upon and inure to
the benefit of the Company, the Holders and their respective successors and
assigns hereunder.
13
Section 16. Termination. This Agreement shall terminate at the
close of business on June 20, 2007.
Section 17. Governing Law: Submission to Jurisdiction. This
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be construed in accordance with the laws of said State without giving effect to
the rules of said State governing the conflicts of laws.
The Company, Metromedia and the Holders hereby agree that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement shall be brought and enforced in the courts of the State of Delaware
or of the United States of America for the District of Delaware, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The
Company, Metromedia and the Holders hereby irrevocably waive any objection to
such exclusive jurisdiction or inconvenient forum and also hereby irrevocably
waive any right or claim to trial by jury in connection with any such action,
proceeding or claim. Any such process or summons to be served upon any of the
Company, Metromedia and the Holders (at the option of the party bringing such
action, proceeding or claim) may be served by transmitting a copy thereof, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 13 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the party
so served in any action, proceeding or claim. The Company, Metromedia and the
Holders agree that the prevailing party(ies) in any such action or proceeding
shall be entitled to recover from the other party(ies) all of its/their
reasonable legal costs and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
Section 18. Entire Agreement; Modification. This Agreement
(including the Loan Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
Section 19. Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision of this Agreement.
Section 20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only, are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
Section 21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person, corporation or other entity than the
Company and Metromedia and any other Holders of Warrants and/or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company
and Metromedia and any other Holders of Warrants and/or Warrant Securities.
14
Section 22. Counterparts. This Agreement may be executed in any
number of counterparts, each of such counterparts shall for all purposes be
deemed to be an original and such counterparts shall together constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
[SEAL] RDM SPORTS GROUP, INC.
By
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: President
Attest:
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and Secretary
15
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO
THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH
ACT RELATING TO THE DISPOSITION OF SECURITIES) OR (iii) AN OPINION OF COUNSEL,
IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., ATLANTA, GEORGIA TIME, JUNE 20, 2007
No. W-1 3,000,000 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Metromedia Company, a Delaware
general partnership ("Metromedia"), or registered assigns, is the registered
holder of 3,000,000 Warrants to purchase initially, at any time from ninety (90)
days after the date of this Warrant Certificate until 5:30 p.m. Atlanta, Georgia
time on June 20, 2007 (the "Expiration Date"), up to 3,000,000 fully-paid and
non-assessable shares of Common Stock, par value $.01 per share (the "Common
Stock") of RDM Sports Group, Inc., a Delaware corporation (the "Company") at the
initial exercise price, subject to adjustment in certain events (the "Common
Stock Exercise Price"), equal to $.50 per share upon surrender of this Warrant
Certificate and payment of the Common Stock Exercise Price at an office or
agency of the Company, but subject to the conditions set forth herein and in the
Warrant Agreement dated as of June 20, 1997 between the Company and Metromedia
(the "Warrant Agreement"). Each Warrant entitles the holder thereof initially to
purchase one (1) share of Common Stock. Payment of the Common Stock Exercise
Price shall be made by certified or official bank check in New York Clearing
House funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., Atlanta, Georgia time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
16
The Warrants evidenced by this Warrant Certificate are a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the word "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that, upon the occurrence of certain
events, the Common Stock Exercise Price and the type and/or number of the
Company's securities issuable upon exercise of Warrants may, subject to certain
conditions, be adjusted. In such event, the Company will, at the request of the
holder, issue a new Warrant Certificate evidencing the adjustment in the Common
Stock Exercise Price and the number and/or type of securities issuable upon the
exercise of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter or
otherwise impair the rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any change except for any tax or other governmental change
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
17
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of June 20, 1997
RDM SPORTS GROUP, INC.
[SEAL] By:
---------------------------
Name:
▇▇▇▇▇ ▇▇▇▇
Title:
Chief Executive Officer
Attest:
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
18
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably
elects to exercise the right, represented by this Warrant Certificate, to
purchase _ _____ shares of Common Stock and herewith tenders in payment for such
securities a certified or official bank check payable in New York Clearing House
Funds to the order of RDM Sports Group, Inc. in the amount of $_____________,
all in accordance with the terms of Section 3.1 of that certain Warrant
Agreement dated as of June 20, 1997 between RDM Sports Group, Inc., and
Metromedia Company. The undersigned requests that a certificate for such
securities be registered in the name of ______________________________, whose
address is ______________________________ _________________ and that such
certificate be delivered to _____________ whose address is
Dated: Signature
---------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
------------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
19
FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED __________________
hereby sells, assigns and transfers unto
-----------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ____________________
Attorney to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: Signature:
---------------- --------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
------------------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)