THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER THE SECURITIES LAWS OF ANY STATE. THIS COMMON STOCK PURCHASE WARRANT
AND THE SHARES THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND REGISTRATION OR QUALIFICATION UNDER APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL THAT THE PROPOSED TRANSACTION
DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AND APPLICABLE STATE SECURITIES
LAWS.
HEADWAY CORPORATE RESOURCES, INC.
COMMON STOCK PURCHASE WARRANT
-----------------------------
Date of Issuance: September 7, 2001 Certificate No. W-9
THIS IS TO CERTIFY that GARMARK PARTNERS, L.P., a Delaware limited
partnership, and its transferees, successors and assigns (the "Holder"), for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, is entitled to purchase from HEADWAY CORPORATE RESOURCES, INC., a
Delaware corporation (the "Company"), at the price of $3.05 per share (the
"Exercise Price"), at any time after January 2, 2002 (the "Commencement Date")
and expiring on the later of (a) January 2, 2007 and (b) the date on which all
principal, premiums (if any) and interest on the Subordinated Notes has been
indefeasibly paid in full and all of the Preferred Stock has been redeemed or
converted (the "Expiration Date"), FIVE HUNDRED AND SIXTY-SIX THOUSAND, SIX
HUNDRED AND SIXTY-SEVEN (566,667) shares of the fully paid and nonassessable
Common Stock, par value $0.0001 per share ("Common Stock"), of the Company (the
"Aggregate Number"), as such number may be adjusted as provided herein.
Notwithstanding the foregoing, this Warrant shall be canceled, and of
no further force and effect: (a) as of the Commencement Date, if all Payments
(as defined in the Limited Waiver and Amendment) accrued on and prior to the
Commencement Date have been paid in full in cash by the Commencement Date; and
(b) immediately, upon the Company obtaining the Common Stockholder Approval (as
defined in the Limited Waiver and Amendment).
Capitalized terms used herein shall have the meanings ascribed to such
terms in Section 12 hereof unless otherwise defined herein.
SECTION 1. THE WARRANT; TRANSFER AND EXCHANGE.
----------------------------------
(a) The Warrant. This Common Stock Purchase Warrant (the "Warrant")
is issued under and pursuant to the Limited Waiver and Amendment. This Warrant
and the rights and privileges of the Holder and the Company hereunder may be
exercised by the Holder in whole or in part as provided herein; shall survive
any termination of the Limited Waiver and Amendment; and, as more fully set
forth in Sections 1(b) and 8 hereof, may be transferred by the
Holder to any other Person or Persons at any time or from time to time, in whole
or in part, regardless of whether the Holder retains any or all rights under the
Limited Waiver and Amendment.
(b) Transfer and Exchanges. The Company shall initially record this
Warrant on a register to be maintained by the Company with its other stock books
and, subject to Section 9 hereof, from time to time thereafter shall reflect the
transfer of this Warrant on such register when surrendered for transfer in
accordance with the terms hereof and properly endorsed, accompanied by
appropriate instructions, and further accompanied by payment in cash or by
check, bank draft or money order payable to the order of the Company, in United
States currency, of an amount equal to any stamp or other tax or governmental
charge or fee required to be paid in connection with the transfer thereof. Upon
any such transfer, a new warrant or warrants shall be issued to the transferee
and the Holder (in the event the Warrant is only partially transferred) and the
surrendered warrant shall be canceled. This Warrant may be exchanged at the
option of the Holder, when surrendered at the Principal Office of the Company,
for another warrant or other warrants of like tenor and representing in the
aggregate the right to purchase a like number of shares of Common Stock.
SECTION 2. EXERCISE.
--------
(a) Right to Exercise. At any time after the Commencement Date and on
or before the Expiration Date, the Holder, in accordance with the terms hereof,
may exercise this Warrant, in whole at any time or in part from time to time, by
delivering this Warrant to the Company during normal business hours on any
Business Day at the Company's Principal Office, together with the Election to
Purchase, in the form attached hereto as Exhibit A and made a part hereof (the
"Election to Purchase"), duly executed, and payment of the Exercise Price per
share for the number of shares to be purchased (the "Exercise Amount"), as
specified in the Election to Purchase. If the Expiration Date is not a Business
Day, then this Warrant may be exercised on the next succeeding Business Day.
(b) Payment of Exercise Price. Payment of the Exercise Price shall be
made to the Company by any of the following means (or any combination of such
means): (i) in cash or other immediately available funds, (ii) by surrender to
the Company of Subordinated Notes in an aggregate amount (including principal
and interest accrued thereon) equal to the Exercise Price, (iii) by surrender to
the Company of Preferred Stock with an aggregate liquidation preference and
accrued but unpaid dividends equal to the Exercise Price (it being understood
and agreed that any Preferred Stock so surrendered will be retired by the
Company pursuant to Section 12 of the Certificate of Designations) or (iv) as
provided in Section 2(c). In the case of payment of all or a portion of the
Exercise Price pursuant to Section 2(c), the direction by the Holder to make a
"Cashless Exercise" shall serve as accompanying payment for that portion of the
Exercise Price. The amount of the Exercise Price to be paid shall equal the
product of (i) the Exercise Amount multiplied by (ii) the Exercise Price per
share.
(c) Cashless Exercise. The Holder shall have the right to pay all or a
portion of the Exercise Price by making a "Cashless Exercise" pursuant to this
Section 2(c), in which case the portion of the Exercise Price to be so paid
shall be paid by reducing the number of shares of Common Stock otherwise
issuable pursuant to the Election to Purchase (the "Exercised Shares")
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by an amount (the "Cashless Exercise Shares") equal to (i) the Exercise Price
multiplied by the Exercise Shares and divided by (ii) the Fair Market Value Per
Share. The number of shares of Common Stock to be issued to the Holder as a
result of a Cashless Exercise will therefore be equal to the Exercised Shares
minus the Cashless Exercise Shares.
(d) Issuance of Shares of Common Stock. Upon receipt by the Company of
this Warrant at its Principal Office in proper form for exercise, and
accompanied by payment of the Exercise Price as aforesaid, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that certificates representing such shares of
Common Stock may not then be actually delivered. Upon such surrender of this
Warrant and payment of the Exercise Price as aforesaid, the Company shall issue
and cause to be delivered with all reasonable dispatch to, or upon the written
order of, the Holder (and in such name or names as the Holder may designate) a
certificate or certificates for the Exercise Amount, subject to any reduction as
provided in Section 2(c) for a Cashless Exercise.
(e) Fractional Shares. The Company shall not be required to deliver
fractions of shares of Common Stock upon exercise of this Warrant. If any
fraction of a share of Common Stock would be deliverable upon an exercise of
this Warrant, the Company may, in lieu of delivering such fraction of a share of
Common Stock, make a cash payment to the Holder in an amount equal to the same
fraction of the Fair Market Value Per Share determined as of the Business Day
immediately preceding the date of exercise of this Warrant.
(f) Partial Exercise. In the event of a partial exercise of this
Warrant, the Company shall issue to the Holder a Warrant in like form for the
unexercised portion thereof.
SECTION 3. PAYMENT OF TAXES. The Company shall pay all stamp taxes attributable
to the initial issuance of shares or other securities issuable upon the exercise
of this Warrant or issuable pursuant to Section 6 hereof, excluding any tax or
taxes which may be payable because of the transfer involved in the issuance or
delivery of any certificates for shares or other securities in a name other than
that of the Holder in respect of which such shares or securities are issued.
SECTION 4. REPLACEMENT WARRANT. In case this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue and deliver in exchange and substitution
for and upon cancellation of the mutilated Warrant, or in lieu of and in
substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and representing an equivalent right or interest, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction of such Warrant and upon receipt of indemnity reasonably
satisfactory to the Company (provided, that if the Holder is a financial
institution or other institutional investor its personal undertaking to provide
an indemnity is hereby deemed to be reasonably satisfactory to the Company;
provided, further, the form of such undertaking shall be reasonably satisfactory
to the Company).
SECTION 5. RESERVATION OF COMMON STOCK AND OTHER COVENANTS.
-----------------------------------------------
(a) Reservation of Authorized Common Stock. The Company shall at all
times reserve and keep available out of the aggregate of its authorized but
unissued shares, free of preemptive rights, such number of its duly authorized
shares of Common Stock, or other stock or
3
securities deliverable pursuant to Section 6 hereof, as shall be sufficient to
enable the Company at any time to fulfill all of its obligations under this
Warrant.
(b) Affirmative Actions to Permit Exercise and Realization of Benefits.
If any shares of Common Stock reserved or to be reserved for the purpose of the
exercise of this Warrant, or any shares or other securities reserved or to be
reserved for the purpose of issuance pursuant to Section 6 hereof, require
registration with or approval of any governmental authority under any federal or
state law (other than securities laws) before such shares or other securities
may be validly delivered upon exercise of this Warrant, then the Company
covenants that it will, at its sole expense, secure such registration or
approval, as the case may be (including but not limited to approvals or
expirations of waiting periods required under the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust
Improvements Act).
(c) Regulatory Requirements and Restrictions. In the event of any
reasonable determination by the Holder that, by reason of any existing or future
federal or state law, statute, rule, regulation, guideline, order, court or
administrative ruling, request or directive (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful)
(collectively, a "Regulatory Requirement"), the Holder is effectively restricted
or prohibited from holding this Warrant or the Warrant Shares (including any
shares of capital stock or other securities distributable to the Holder in any
merger, reorganization, readjustment or other reclassification), or otherwise
realizing upon or receiving the benefits intended under this Warrant, the
Company shall, and shall use its reasonable best efforts to have its
shareholders, take such action as the Holder and the Company shall jointly agree
in good faith to be reasonably necessary to permit the Holder to comply with
such Regulatory Requirement. The reasonable costs of taking such action, whether
by the Company, the Holder or otherwise, shall be borne by the Holder.
(d) Validly Issued Shares. The Company covenants that all shares of
Common Stock that may be delivered upon exercise of this Warrant, assuming full
payment of the Exercise Price, (including those issued pursuant to Section 6
hereof) shall upon delivery by the Company be duly authorized and validly
issued, fully paid and nonassessable, free from all stamp taxes, liens and
charges with respect to the issue or delivery thereof and otherwise free of all
other security interests, encumbrances and claims of any nature whatsoever other
than such security interests, encumbrances and claims granted by the Holder.
SECTION 6. ADJUSTMENTS TO AGGREGATE NUMBER.
-------------------------------
Under certain conditions, the Aggregate Number is subject to adjustment
as set forth in this Section 6. No adjustments shall be made under this Section
6 as a result of (a) the issuance by the Company of (1) the Warrant Shares upon
exercise of this Warrant or (2) shares of Common Stock upon exercise of the
other warrants granted to Holder and the other holders of the Subordinated Notes
and the Preferred Stock pursuant to the Limited Waiver and Amendment, (b) the
issuance of shares of Common Stock (or options related thereto) upon the
exercise of options granted or to be granted under the Company's current and
future stock option and incentive plans representing in the aggregate the right
to receive or purchase shares aggregating up to 1,892,731 shares of Common Stock
(subject to adjustment for any of the circumstances described in Sections
6(a)(i)(A), (B) and (C)) and (c) the issuance of any shares of Common
4
Stock with respect to the liquidation preference (but not with respect to
accrued but unpaid dividends) upon the conversion of the Preferred Stock
(collectively, the "Exempt Issuances").
(a) Adjustments. The Aggregate Number, after taking into
consideration any prior adjustments pursuant to this Section 6, shall be subject
to adjustment from time to time as follows and, thereafter, as adjusted, shall
be deemed to be the Aggregate Number hereunder.
(i) Stock Dividends; Subdivisions and Combinations. In case at
any time or from time to time the Company shall:
(A) issue to the holders of its Common Stock a dividend
payable in, or other distribution of, Common Stock (a "Stock Dividend"),
(B) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, including without limitation by means
of a stock split (a "Stock Subdivision"), or
(C) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock (a "Stock Combination"),
then the Aggregate Number in effect immediately prior thereto shall be (1)
proportionately increased in the case of a Stock Dividend or a Stock Subdivision
and (2) proportionately decreased in the case of a Stock Combination. In the
event the Company shall declare or pay, without consideration, any dividend on
the Common Stock payable in any right to acquire Common Stock for no
consideration, then the Company shall be deemed to have made a Stock Dividend in
an amount of shares equal to the maximum number of shares issuable upon exercise
of such rights to acquire Common Stock.
(ii) Other Distributions. In case at any time or from time to
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
(collectively, a "Distribution") of:
(A) cash,
(B) any evidences of its indebtedness (other than
Convertible Securities), any shares of its capital stock (other than additional
shares of Common Stock or Convertible Securities) or any other securities or
property of any nature whatsoever (other than cash), or
(C) any options, warrants or other rights to subscribe for
or purchase any of the following: any evidences of its indebtedness (other than
Convertible Securities), any shares of its capital stock (other than additional
shares of Common Stock or Convertible Securities) or any other securities or
property of any nature whatsoever,
then the Holder shall be entitled to elect by written notice to the Company to
receive (1) immediately and without further payment the cash, evidences of
indebtedness, stock, securities, other property, options, warrants and/or other
rights (or any portion thereof) to which the Holder would have been entitled by
way of such Distribution as if the Holder had fully exercised this
5
Warrant immediately prior to such Distribution or (2) upon the exercise of this
Warrant at any time on or after the taking of such record, the number of Warrant
Shares to be received upon exercise of this Warrant determined as stated herein
and, in addition and without further payment, the cash, evidences of
indebtedness, stock, securities, other property, options, warrants and/or other
rights (or any portion thereof) to which the Holder would have been entitled by
way of such Distribution and subsequent dividends and distributions through the
date of exercise as if such Holder (x) had fully exercised this Warrant
immediately prior to such Distribution and (y) had retained the Distribution in
respect of the Common Stock and all subsequent dividends and distributions of
any nature whatsoever in respect of any stock or securities paid as dividends
and distributions and originating directly or indirectly from such Common Stock.
A reclassification of the Common Stock 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
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 event shall be deemed a Stock Subdivision or Stock Combination, as the case
may be, of the outstanding shares of Common Stock within the meaning of Section
6(a)(i) hereof.
(iii) Issuance of Common Stock. If at any time or from time to
time the Company shall (except as hereinafter provided in this Section
6(a)(iii)) issue or sell any additional shares of Common Stock for a
consideration per share less than the Fair Market Value Per Share, then,
effective on the date specified below, the Aggregate Number shall be adjusted by
multiplying (A) the Aggregate Number immediately prior thereto by (B) a
fraction, the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such additional
shares of Common Stock (calculated on a Fully Diluted basis), the number of
shares of Common Stock issuable upon the conversion or exercise of options,
warrants, rights or other Convertible Securities (but only to the extent that
such Convertible Securities are "in the money" and then exercisable but in any
event subject to adjustment as provided in Section 6(a)(vii)(F)), and the number
of such additional shares of Common Stock so issued and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares of Common Stock (calculated on a
Fully Diluted basis), the number of shares of Common Stock issuable upon the
conversion or exercise of options, warrants, rights or other Convertible
Securities (but only to the extent that such Convertible Securities are "in the
money" and then exercisable but in any event subject to adjustment as provided
in Section 6(a)(vii)(F)), and the number of shares of Common Stock which the
aggregate consideration for the total number of such additional shares of Common
Stock so issued would purchase at the Fair Market Value Per Share. The date as
of which the Fair Market Value Per Share shall be computed shall be the earlier
of the date on which the Company shall enter into a firm contract or commitment
for the issuance of such additional shares of Common Stock or the date of actual
issuance of such additional shares of Common Stock.
The provisions of this Section 6(a)(iii) shall not apply to any
issuance of additional shares of Common Stock for which an adjustment is
otherwise provided under Section 6(a)(i) hereof. No adjustment of the Aggregate
Number shall be made under this Section 6(a)(iii) upon the issuance of any
additional shares of Common Stock which are issued pursuant
6
to (1) the exercise of this Warrant in whole or in part or pursuant to any other
Exempt Issuances, (2) the exercise of other subscription or purchase rights or
(3) the exercise of any conversion or exchange rights in any Convertible
Securities, provided that for purposes of clauses (2) or (3) an adjustment shall
previously have been made upon the issuance of such other rights or upon the
issuance of such Convertible Securities (or upon the issuance of any warrants or
other rights therefor) pursuant to Section 6(a)(iv) or (v) hereof.
(iv) Warrants and Options. If at any time or from time to 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, by assumption in a merger in which the Company is the
surviving corporation and in which the shareholders of the Company immediately
prior to the merger continue to own more than 50% of the Outstanding Common
Stock immediately after the merger and for a period of 180 days thereafter, or
otherwise) issue or sell any warrants, options or other rights to subscribe for
or purchase (A) any shares of Common Stock or (B) any Convertible Securities,
whether or not the rights to subscribe, purchase, exchange or convert thereunder
are immediately exercisable, and the consideration per share for which
additional shares of Common Stock may at any time thereafter be issuable
pursuant to such warrants, options or other rights or pursuant to the terms of
such Convertible Securities shall be less than the Fair Market Value Per Share,
then the Aggregate Number shall be adjusted as provided in Section 6(a)(iii)
hereof on the basis that (1) 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 as of the date of the
determination of the Fair Market Value Per Share as hereinafter provided and (2)
the aggregate consideration for such maximum number of additional shares of
Common Stock shall be deemed to be the minimum consideration received and
receivable by the Company for the issuance of such additional shares of Common
Stock pursuant to the terms of such warrants, options or other rights or such
Convertible Securities. For purposes of this Section 6(a)(iv), the effective
date of such adjustment and the date as of which the Fair Market Value Per Share
shall be computed shall be the earliest of (A) the date on which the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive any such warrants, options or other rights, (B) the
date on which the Company shall enter into a firm contract or commitment for the
issuance of such warrants, options or other rights and (C) the date of actual
issuance of such warrants, options or other rights.
No adjustment of the Aggregate Number shall be made under this
Section 6(a)(iv) upon the issuance of any warrants, options or other rights
which are issued pursuant to the exercise of any Convertible Securities if an
adjustment shall have been made or is contemporaneously made or if no such
adjustment shall have been required upon the issuance of such Convertible
Securities, pursuant to Section 6(a)(v) hereof.
(v) Convertible Securities. If at any time or from time to 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, by assumption in a merger in which the Company is the
surviving corporation and in which the shareholders of the Company immediately
prior to the merger continue to own more than 50% of the Outstanding Common
Stock immediately after the merger and for a period of 180 days thereafter, or
7
otherwise) issue or sell Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the
consideration per share for the additional shares of Common Stock which may at
any time thereafter be issuable pursuant to the terms of such Convertible
Securities shall be less than the Fair Market Value Per Share, then the
Aggregate Number shall be adjusted as provided in Section 6(a)(iii) hereof on
the basis that (A) the maximum number of additional shares of Common Stock
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date of the
determination of the Fair Market Value Per Share as herein provided and (B) the
aggregate consideration for such maximum number of additional shares of Common
Stock shall be deemed to be the minimum consideration received and receivable by
the Company for the issuance of such additional shares of Common Stock pursuant
to the terms of such Convertible Securities. For purposes of this Section
6(a)(v), the effective date of such adjustment and the date as of which the Fair
Market Value Per Share shall be computed shall be the earliest of (1) the date
on which the Company shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive any such Convertible Securities, (2)
the date on which the Company shall enter into a firm contract or commitment for
the issuance of such Convertible Securities and (3) the date of actual issuance
of such Convertible Securities.
No adjustment of the Aggregate Number shall be made under this
Section 6(a)(v) upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants, options or other subscription or
purchase rights if an adjustment shall previously have been made or is
contemporaneously made or if no such adjustment shall have been required upon
the issuance of such warrants, options or other rights pursuant to Section
6(a)(iv) hereof.
(vi) Subsequent Adjustments. If at any time after any
adjustment of the Aggregate Number shall have been made pursuant to Section 6(a)
(iv) or (v) hereof on the basis of the issuance of warrants, options or other
rights or the issuance of Convertible Securities, or after any new adjustments
of the Aggregate Number shall have been made pursuant to this Section 6(a)(vi),
then:
(A) such warrants, options or rights or the right of
conversion or exchange in such Convertible Securities shall expire, and a
portion of such warrants, options or rights, or the right of conversion or
exchange in respect of a portion of such Convertible Securities, as the case may
be, shall not have been exercised prior to such expiration, and
(B) in the case of adjustments made pursuant to Section
6(a)(iv) or (v), the consideration per share for which shares of Common Stock
are issuable pursuant to such warrants, options or rights per the terms of such
Convertible Securities shall be irrevocably increased (provided, no remuneration
was paid therefor), and 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 such adjustment shall no
longer be deemed to have been issued by virtue of such computation.
Simultaneously therewith, a recomputation shall be made of the effect of such
warrants, options or rights or Convertible Securities on the determination of
the Aggregate Number, which shall be made on the basis of:
8
(1) treating the number of additional shares of Common
Stock, if any, theretofore actually issued pursuant
to the previous exercise of such warrants, options or
rights or such right of conversion or exchange as
having been issued on the date or dates of such
exercise and, in the case of a recomputation of a
calculation originally made pursuant to Section
6(a)(iv) or (v), for the consideration actually
received and receivable therefor, and
(2) in the case of a recomputation of a calculation
originally made pursuant to Section 6(a)(iv) or (v),
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 irrevocable
increase of the consideration per share for which
shares of Common Stock are issuable under such
warrants, options or rights or Convertible
Securities;
and, if and to the extent called for by the foregoing provisions of Section
6(a)(vi) on the basis aforesaid, a new adjustment of the Aggregate Number shall
be made, such new adjustment shall supersede the previous adjustment so
rescinded and annulled.
(vii) Miscellaneous. The following provisions shall be
applicable to the making of adjustments of the Aggregate Number provided above
in this Section 6(a):
(A) The sale or other disposition of any issued shares of
Common Stock owned or held by or for the account of the Company or any of its
Subsidiaries shall be deemed an issuance thereof for the purposes of this
Section 6(a).
(B) 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 (1) are issued solely for cash consideration, the
consideration received by the Company therefor shall be deemed to be the amount
of the cash received by the Company therefor, (2) are offered by the Company for
subscription, the consideration received by the Company shall be deemed to be
the subscription price or (3) are sold to underwriters or dealers for public
offering, the aggregate consideration received by the Company shall be deemed to
be the consideration received by the Company therefor, in any such case
excluding any amounts paid or receivable for accrued interest or accrued
dividends. To the extent that such issuance shall be for a consideration other
than cash, or partially for cash and partially for other consideration, then,
except as otherwise expressly provided herein, the amount of such consideration
shall be deemed to be the fair market value of such other consideration plus, if
applicable, the amount of such cash at the time of such issuance, determined in
the manner set forth in Section 6(d)(ii). 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 is the survivor and issues any securities, the amount of
consideration therefor shall be deemed to be the fair market value of such
additional shares of Common Stock, Convertible Securities, warrants, options or
other rights, as the case may be, determined in the manner set forth in Section
6(d)(ii).
9
The consideration for any shares of Common Stock issuable
pursuant to the terms of any Convertible Securities shall be equal to (x) the
consideration received by the Company for issuing any warrants, options or other
rights to subscribe for or purchase such Convertible Securities, plus (y) the
consideration paid or payable to the Company in respect of the subscription for
or purchase of such Convertible Securities, plus (z) the 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.
(C) The adjustments required by the preceding paragraphs of
this Section 6(a) shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that no adjustment of the Aggregate
Number that would otherwise be required shall be made (except in the case of a
Stock Subdivision or Stock Combination, as provided for in Section 6(a)(i)
hereof) unless and until such adjustment either by itself or with other
adjustments not previously made adds or subtracts at least one one-hundredth of
one share to or from the Aggregate Number immediately prior to the making of
such adjustment. Any adjustment representing a change of less than such minimum
amount (except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 6(a) and
not previously made, would result in a minimum adjustment. 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.
(D) In computing adjustments under this Section 6(a),
fractional interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
(E) 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 shareholders thereof, legally abandon its plan to pay or
deliver such dividend, distribution, subscription or purchase rights, then 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.
(F) In making any adjustment, at the time of actual
exercise of the Warrant, to the extent not already taken into account,
securities convertible into capital stock which were not exercisable or
in-the-money that are so exercisable and in the money or previously have been
exercised shall be taken into account, at the time of the exercise of the
Warrant, in the calculation of Fully Diluted shares of Common Stock.
10
(b) Changes in Common Stock. In case at any time the Company shall
initiate any transaction or be a party to any transaction (including, without
limitation, a merger, consolidation, share exchange, sale, lease or other
disposition of all or substantially all of the Company's assets, liquidation,
recapitalization or reclassification of the Common Stock) in connection with
which the previous Outstanding Common Stock shall be changed into or exchanged
for different securities of the Company or capital stock or other securities of
another corporation or interests in a non-corporate entity or other property
(including cash) or any combination of the foregoing (each such transaction
being herein called a "Transaction"), then, as a condition of the consummation
of the Transaction, lawful, enforceable and adequate provision shall be made so
that the Holder shall be entitled to elect, by written notice to the Company, to
receive (i) a new warrant in form and substance similar to, and in exchange for,
this Warrant to purchase all or a portion of such securities or other property
or (ii) upon exercise of this Warrant at any time on or after the consummation
of the Transaction, in lieu of the Warrant Shares issuable upon such exercise
prior to such consummation, the securities or other property (including cash) to
which such Holder would have been entitled upon consummation of the Transaction
if such Holder had exercised this Warrant immediately prior thereto (subject to
adjustments from and after the consummation date as nearly equivalent as
possible to the adjustments provided for in this Section 6). The Company will
not effect any Transaction unless prior to the consummation thereof each
corporation or other entity (other than the Company) which may be required to
deliver any new warrant, securities or other property as provided herein shall
assume, by written instrument delivered to the Holder, the obligation to deliver
to such Holder such new warrant, securities or other property as in accordance
with the foregoing provisions such Holder may be entitled to receive and such
corporation or entity shall have similarly delivered to the Holder an opinion of
counsel for such corporation or entity, satisfactory to the Holder, which
opinion shall state that all of the terms of the new warrant or this Warrant
shall be enforceable against the Company and such corporation or entity in
accordance with the terms hereof and thereof, together with such other matters
as the Holder may reasonably request. The foregoing provisions of this Section
6(b) shall similarly apply to successive Transactions.
(c) Other Action Affecting Common Stock.
-----------------------------------
(i) Other Action. In case at any time or from time to time the
Company shall take any action of the type contemplated in Section 6(a) or (b)
hereof 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) other than cash bonuses, then, unless in the
opinion of the Company's board of directors such action will not have a material
adverse effect upon the rights of the Holder (taking into consideration, if
necessary, any prior actions which the Board of Directors deemed not to
materially adversely affect the rights of the Holder), the Aggregate Number
shall be adjusted in such manner and at such time as the Board of Directors of
the Company may in good faith determine to be equitable in the circumstances.
(ii) Stock Option and Incentive Plans. Upon the exercise of the
Warrants hereunder, if the actual number of shares of stock or options (the
"Actual Number") granted, and not cancelled (without the payment for any such
cancellation), or outstanding under the Company's stock option and incentive
plans is more than 1,892,731 shares (or options for
11
such shares (subject to adjustment for stock splits, stock dividends and similar
events) the ("Assumed Number"), then the Aggregate Number shall be
proportionally increased so that the Aggregate Number is equal to the number of
shares of Common Stock that would have been issued under the Warrant had the
Actual Number been used to calculate the Aggregate Number instead of the Assumed
Number.
(d) Notices.
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(i) Notice of Proposed Actions. In case the Company shall
propose (A) to pay any dividend payable in stock of any class to the holders of
its Common Stock or to make any other distribution to the holders of its Common
Stock, (B) to offer to the holders of its Common Stock rights to subscribe for
or to purchase any Convertible Securities or additional shares of Common Stock
or shares of stock of any class or any other securities, warrants, rights or
options, (other than the exercise of pre-emptive rights by a Holder) (C) to
effect any reclassification of its Common Stock, (D) to effect any
recapitalization, stock subdivision, stock combination or other capital
reorganization, (E) to effect any consolidation or merger, share exchange, or
sale, lease or other disposition of all or substantially all of its property,
assets or business, (F) to effect the liquidation, dissolution or winding up of
the Company or (G) to effect any other action which would require an adjustment
under this Section 6, then in each such case the Company shall give to the
Holder written notice of such proposed action, which shall specify the date on
which a record is to be taken for the purposes of such stock dividend, stock
subdivision, stock combination, distribution or rights, or the date on which
such reclassification, recapitalization, reorganization, consolidation, merger,
share exchange, sale, lease, transfer, disposition, liquidation, dissolution,
winding up or other transaction is to take place and the date of participation
therein by the holders of Common Stock, if any such date is to be fixed, or the
date on which the transfer of Common Stock is to occur, and shall also set forth
such facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the Common Stock and on the Aggregate Number after
giving effect to any adjustment which will be required as a result of such
action. Such notice shall be so given in the case of any action covered by
clause (A) or (B) above at least 30 days prior to the record date for
determining holders of the Common Stock for purposes of such action and, in the
case of any other such action, at least 30 days prior to the earlier of the date
of the taking of such proposed action or the date of participation therein by
the holders of Common Stock.
(ii) Adjustment Notice. Whenever the Aggregate Number is to be
adjusted pursuant to this Section 6, unless otherwise agreed by the Holder, the
Company shall promptly (and in any event within 10 Business Days after the event
requiring the adjustment) prepare a certificate signed by the chief financial
officer of the Company, setting forth, in reasonable detail, the event requiring
the adjustment and the method by which such adjustment is to be calculated. The
certificate shall set forth, if applicable, a description of the basis on which
the Board of Directors in good faith determined, as applicable, the Fair Market
Value Per Share, the fair market value of any evidences of indebtedness, shares
of stock, other securities, warrants, other subscription or purchase rights, or
other property or the equitable nature of any adjustment under Section 6(b) or
(c) hereof, the new Aggregate Number and, if applicable, any new securities or
property to which the Holder is entitled. The Company shall promptly cause a
copy of such certificate to be delivered to the Holder. The Company shall keep
at its Principal Office copies of all such certificates and cause the same to be
available for inspection at said office
12
during normal business hours by the Holder or any prospective purchaser of the
Warrant (in whole or in part) if so designated by the Holder.
SECTION 7. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, share exchange, dissolution or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, including without limitation the adjustments
required under Section 6 hereof, and will at all times in good faith assist in
the carrying out of all such terms and in taking of all such action as may be
necessary or appropriate to protect the rights of the Holder against dilution or
other impairment. Without limiting the generality of the foregoing and
notwithstanding any other provision of this Warrant to the contrary (including
by way of implication), the Company (a) will not increase the par value of any
shares of Common Stock receivable on the exercise of this Warrant above the
amount payable therefor on such exercise or (b) will take all such action as may
be necessary or appropriate so that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock on the exercise of this
Warrant.
SECTION 8. REGISTRATION RIGHTS. This Warrant and the Warrant Shares shall be
considered "Registrable Securities" under the terms of, and as defined in, the
Registration Rights Agreement, and the Holder shall be considered a "Holder"
under the terms of, and as defined in, the Registration Rights Agreement.
SECTION 9. TRANSFERS OF THE WARRANT.
------------------------
(a) Generally. Subject to the restrictions set forth in this
Section 9, the Holder may at any time and from time to time freely transfer this
Warrant and the Warrant Shares in whole or in part. Every Holder hereof by
accepting the same agrees with the Company to such provisions and conditions,
and represents to the Company that this Warrant has been acquired and the
Warrant Shares will be acquired for the account of the Holder for investment and
not with a view to or for sale in connection with any distribution thereof.
(b) Compliance with Securities Laws. The Holder agrees that the
Warrant and the Warrant Shares may not be sold or otherwise disposed of except
pursuant to an effective registration statement under the Securities Act and
applicable state securities laws or pursuant to an applicable exemption from the
registration requirements of the Securities Act and such state securities laws.
In the event that the Holder transfers this Warrant or the Warrant Shares
pursuant to an applicable exemption from registration, the Company may request,
at its expense, an opinion of counsel that the proposed transfer does not
violate the Securities Act and applicable state securities laws.
(c) Restrictive Securities Legend. For so long as the Warrant
Shares have not been registered under the Securities Act pursuant to the
Registration Rights Agreement, the certificate representing the shares of Common
Stock issued upon the exercise of the Warrant shall bear the restrictive legends
set forth below:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of
any State and may
13
not be sold or otherwise disposed of except pursuant to an effective
registration statement under such Act and applicable State securities
laws or pursuant to an applicable exemption from the registration
requirements of such Act and such laws."
SECTION 10. REPRESENTATIONS, WARRANTIES AND COVENANTS.
-----------------------------------------
The Company hereby represents, warrants and covenants to the Holder
that so long as Holder holds the Warrant or any Warrant Shares:
(a) Financial Statements and Other Information. The Company
shall deliver to the Holder, at any time that the Company is not subject to the
public reporting requirements of the Exchange Act in the case of (i) and (ii):
(i) Quarterly Financials. As soon as available and in any
event within 45 days after the end of each fiscal quarter, the consolidated
balance sheet of the Company and its Subsidiaries as at the end of such fiscal
quarter and the related consolidated statements of income, shareholders' equity
and cash flow for such fiscal quarter and for the period from the beginning of
the then current fiscal year to the end of such fiscal quarter, setting forth in
each case comparisons to the annual budget and to the corresponding period in
the preceding year, prepared in accordance with GAAP (subject to the absence of
notes required by GAAP and subject to normal year-end adjustments), applied on a
basis consistent with that applied in the preceding quarter or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
quarter.
(ii) Year-End Financials. As soon as available and in any
event within 90 days after the end of each fiscal year, (i) the consolidated
balance sheet of the Company and its Subsidiaries as at the end of such year and
the related consolidated statements of income, shareholders' equity and cash
flow for such fiscal year, setting forth in each case comparisons to the annual
budget and to the preceding fiscal year, and (ii) a report with respect to the
financial statements from a "big five" accounting firm or other firm reasonably
acceptable to the Required Warrant Holders selected by the Company, which report
shall state that (A) such consolidated financial statements present fairly the
consolidated financial position of the Company and its Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP applied on a consistent basis with
prior years or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such year and (B) that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards.
(iii) SEC Filings and Press Releases. Promptly upon their
becoming available, copies of: (A) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by the Company or any of
its Subsidiaries with any securities exchange or with the Commission and (B) all
press releases and other statements made available
14
by the Company or any of its Subsidiaries to the public concerning developments
in the business of any such Person.
(b) Reservation of Shares. The Company shall at all times
reserve and keep available out of the aggregate of its authorized but unissued
shares, free of preemptive rights, such number of its duly authorized shares of
Common Stock as shall be sufficient to enable the Company to issue Common Stock
upon exercise of the Warrant.
(c) Certain Amendments. The Company will not, and will not
permit or cause any of its Subsidiaries (to the extent the Company has any
Subsidiaries after the Closing Date) to amend, modify or change any provision of
its articles or certificate of incorporation, bylaws or the terms of any class
or series of its Capital Stock to the extent such amendment, modification or
change would have a disproportionate adverse effect on the Holder as compared to
any other holder of the Common Stock of the Company and directly or indirectly,
create or otherwise cause or suffer to exist or become effective any restriction
or encumbrance on the ability of the Company and any such Subsidiaries to
perform and comply with their respective obligations under the Warrant.
(d) Limitation on Certain Restrictions. The Company will not,
and will not permit or cause any of its Subsidiaries (to the extent the Company
has any Subsidiaries after the Closing Date) to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any restriction or
encumbrance on the ability of the Company and any such Subsidiaries to perform
and comply with their respective obligations under this Warrant.
SECTION 11. EVENTS OF NON-COMPLIANCE AND REMEDIES.
-------------------------------------
(a) Events of Non-Compliance. If the Company fails to keep and
fully and promptly perform and observe in all material respects any of the
terms, covenants or representations contained or referenced herein within 30
days from the earlier to occur of (A) written notice from the Holder specifying
what failure has occurred, or requesting that a specified failure be remedied or
(B) an executive officer of the Company becoming aware of such failure, other
than failure to deliver the financial statements required under Section 10(a)(i)
and (ii) (an "Event of Non-Compliance"), the Holder shall be entitled to the
remedies set forth in subsection (b) hereof.
(b) Remedies. On the occurrence of an Event of Non-Compliance,
in addition to any remedies the Holder may have under applicable law the Holder
may bring any action for injunctive relief or specific performance of any term
or covenant contained herein, the Company hereby acknowledging that an action
for money damages may not be adequate to protect the interests of the Holder
hereunder.
SECTION 12. DEFINITIONS.
-----------
As used herein, in addition to the terms defined elsewhere herein, the
following terms shall have the following meanings. Capitalized terms not
appearing below and not otherwise defined herein shall have the meaning ascribed
to them in the Limited Waiver and Amendment.
15
"Affiliate" means, with respect to any Person, a Person (a) directly or
indirectly controlling, controlled by, or under common control with, such
Person, (b) directly or indirectly owning or holding ten percent (10%) or more
of any Equity Interest in such Person or (c) ten percent (10%) or more of whose
voting stock or other Equity Interest is directly or indirectly owned or held by
such Person. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling," controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Aggregate Number" has the meaning set forth in the Preamble.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law or executive order to close.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation, any
and all partnership, membership, limited liability company or other equity
interests of such Person that confer on a Person the right to receive a share of
the profits and losses of, or the distribution of assets of, the issuing Person;
and in each case, any and all warrants, rights or options to purchase any of the
foregoing.
"Certificate of Designations" means the Certificate of Designations,
Preferences and Rights of the Company's Series F Preferred Stock, $0.0001 par
value, which amended the Company's Certificate of Incorporation as of March 19,
1998, the Certificate of Designations, Preferences and Rights of the Company's
Series G Preferred Stock, $0.0001 par value, which amended the Company's
Certificate of Incorporation as of September 7, 2001, and the Certificate of
Designations, Preferences and Rights of any other Preferred Stock.
Certificate of Incorporation" means, as to a Person, unless the context
in which it is used shall otherwise require, the Certificate of Incorporation
(or equivalent or similar organizational documents) of such Person as in effect
on the Closing Date.
"Commencement Date" has the meaning set forth in the Preamble.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" has the meaning set forth in the Preamble.
"Company" has the meaning set forth in the Preamble.
"Convertible Securities" means evidences of indebtedness, shares of
stock or other securities (including, but not limited to options and warrants)
which are directly or indirectly
16
convertible, exercisable or exchangeable, with or without payment of additional
consideration in cash or property, for shares of Common Stock, either
immediately or upon the onset of a specified date or the happening of a
specified event.
"Distribution" has the meaning set forth in Section 6(a)(ii).
"Election to Purchase" has the meaning set forth in Section 2(a).
"Event of Non-Compliance" has the meaning set forth in Section 11(a).
"Exempt Issuances" has the meaning set forth in Section 6.
"Exercise Amount" has the meaning set forth in Section 2(a).
"Exercise Price" has the meaning set forth in the Preamble.
"Expiration Date" has the meaning set forth in the Preamble.
"Fair Market Value" means, with respect to the shares of Common Stock,
(a) if the shares are listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the last reported sales price as reported on such exchange or Market; (b) if the
shares are not listed or admitted for trading on any national securities
exchange or included in The Nasdaq National Market or Nasdaq SmallCap Market,
the average of the last reported closing bid and asked quotation for the shares
as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such
information; (c) if the shares are not listed or admitted for trading on any
national securities exchange or included in The Nasdaq National Market or Nasdaq
SmallCap Market or quoted by NASDAQ or a similar service, the average of the
last reported bid and asked quotation for the shares as quoted by a market maker
in the shares (or if there is more than one market maker, the bid and asked
quotation shall be obtained from two market makers and the average of the lowest
bid and highest asked quotation). In the absence of any available public
quotations for the Common Stock, the Board of Directors shall determine in good
faith the Fair Market Value of the Common Stock, which determination shall be
set forth in a certificate by the Secretary of the Company.
"Fully Diluted" means, with respect to the Common Stock as of a
particular time (taking into account the transaction in respect of which the
"Fully Diluted" basis is being calculated at such time), the total number of
outstanding shares of Common Stock as of such time as determined by treating all
outstanding in-the-money and then exercisable options, warrants and other rights
for the purchase or other acquisition of Common Stock as having been exercised
and by treating all outstanding in-the-money Convertible Securities which at the
time of such calculation may be converted as having been so converted.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof, any entity or
person exercising executive, legislative,
17
judicial, arbitral, regulatory or administrative functions of or pertaining to
government, regulation or compliance.
"Holder" or "Holders" means any holder of an interest in the Warrant
or the outstanding Warrant Shares.
"Limited Waiver and Amendment" means that certain Limited Waiver and
Amendment dated as of August 24, 2001 by and among the Company, the Trustee and
the holders of the Subordinated Notes and the Preferred Stock, as the same may
be amended, supplemented or otherwise modified from time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
assets, business, properties, operations, condition (financial or otherwise) or
prospects of the Company, individually, or the Company and its Subsidiaries,
taken as a whole, (ii) the ability of the Company to perform its obligations
under this Warrant, the Limited Waiver and Amendment, the Subordinated Notes or
the Preferred Stock, or (iii) the legality, binding effect, validity or
enforceability of any of this Warrant, the Limited Waiver and Amendment, the
Subordinated Notes or the Preferred Stock.
"Outstanding Common Stock" of the Company means, as of the date of
determination, the sum (without duplication) of the following: (a) the number of
shares of Common Stock then outstanding at the date of determination, (b) the
number of shares of Common Stock then issuable upon the exercise of the Warrant
(as such number of shares may be adjusted pursuant to the terms hereof) and (c)
the number of shares of Common Stock then issuable upon the exercise or
conversion of Convertible Securities and any warrants, options or other rights
to subscribe for or purchase Common Stock or Convertible Securities (but
excluding any unvested options and securities not then exercisable for or
convertible into Common Stock).
"Person" means any individual, firm, corporation, partnership, limited
liability company, joint venture, incorporated or unincorporated association,
joint stock company, Governmental Authority, or other entity of any kind, and
shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" means the Company's Series F Preferred Stock, $0.0001
par value per share, the Company's Series G Preferred Stock, $0.0001 par value
per share, or any other class of preferred stock for which such preferred stock
is exchanged.
"Principal Office" means the Company's principal office as set forth in
Section 20 hereof or such other principal office of the Company in the United
States of America the address of which first shall have been set forth in a
notice to the Holder.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of March 19, 1998, by and among the Company and the holders
of the Preferred Stock.
"Regulatory Requirement" has the meaning set forth in Section 5(c).
18
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations thereunder as the same
shall be in effect at the time.
"Subordinated Notes" means the Increasing Rate Senior Subordinated
Notes Due 2006 of the Company issued pursuant to that certain Indenture, dated
March 19, 1998, by and among the Company, State Street Bank and Trust Company,
N.A., a national banking association, as trustee, and the holders of such notes.
"Stock Combination" has the meaning set forth in Section 6(a)(i)(C).
"Stock Dividend" has the meaning set forth in Section 6(a)(i)(A).
"Stock Subdivision" has the meaning set forth in Section 6(a)(i)(B).
"Subsidiary(ies)" means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or
such other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person.
"Warrant" has the meaning set forth in Section 1(a).
"Warrant Shares" means (a) the shares of Common Stock issued or
issuable upon exercise of this Warrant in accordance with its terms and (b) all
other shares of the Company's capital stock issued with respect to such shares
by way of stock dividend, stock split or other reclassification or in connection
with any merger, consolidation, recapitalization or other reorganization
affecting the Company's capital stock.
SECTION 13. SURVIVAL OF PROVISIONS. Notwithstanding the full exercise by the
Holder of its rights to purchase Common Stock hereunder, the provisions of
Sections 5(c), 5(d) and 11 through 24 of this Warrant shall survive such
exercise and the Expiration Date.
SECTION 14. DELAYS, OMISSIONS AND INDULGENCES. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to the Holder upon any
breach or default of the Company under this Warrant shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character on the Holder's part of any breach or default under this
Warrant, or any waiver on the Holder's part of any provisions or conditions of
this Warrant must be in writing and that all remedies, either under this
Warrant, or by law or otherwise afforded to the Holder, shall be cumulative and
not alternative.
18
SECTION 15. RIGHTS OF TRANSFEREES. Subject to Section 8, the rights granted to
the Holder hereunder of this Warrant shall pass to and inure to the benefit of
all subsequent transferees of all or any portion of the Warrant (provided that
the Holder and any transferee shall hold such rights in proportion to their
respective ownership of the Warrant and Warrant Shares) until extinguished
pursuant to the terms hereof.
SECTION 16. CAPTIONS.The titles and captions of the Sections and other
provisions of this Warrant are for convenience of reference only and are not to
be considered in construing this Warrant.
SECTION 17. NOTICES. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, telecopy, overnight
courier service or personal delivery:
(a) if to the Company:
Headway Corporate Resources, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
LeBoeuf, ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Holder:
GarMark Advisors, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ Berlin ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
20
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged, if telecopied.
SECTION 18. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon and inure
to the benefit of the parties hereto and their respective successors or heirs
and personal representatives and permitted assigns; provided, that the Company
shall have no right to assign its rights, or to delegate its obligations,
hereunder without the prior written consent of the Holder.
SECTION 19. GOVERNING LAW. THIS WARRANT IS TO BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.
SECTION 20. JURISDICTION, JURY TRIAL WAIVER, ETC.
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(a) THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY AGREE THAT ANY LEGAL ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK AND EACH HEREBY EXPRESSLY SUBMITS TO THE PERSONAL
JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY
WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT SUCH COURTS ARE AN
INCONVENIENT FORUM. THE COMPANY AND THE HOLDER EACH HEREBY IRREVOCABLY CONSENT
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN THIS AGREEMENT, SUCH SERVICE
TO BECOME EFFECTIVE 10 DAYS AFTER SUCH MAILING.
(b) THE COMPANY AND THE HOLDER EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS. THE COMPANY (I) CERTIFIES THAT NO HOLDER OR ATTORNEY OR
OTHER REPRESENTATIVE OF THE HOLDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
THE HOLDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (II) ACKNOWLEDGES THAT THE HOLDER HAS BEEN INDUCED TO PURCHASE THIS
WARRANT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
(c) FINAL JUDGMENT AGAINST THE COMPANY, IN ANY ACTION, SUIT OR PROCEEDING SHALL
BE CONCLUSIVE, AND MAY BE ENFORCED IN
21
OTHER JURISDICTIONS (I) BY SUIT, ACTION, OR PROCEEDING ON THE CONCLUSIVE
EVIDENCE OF THE FACT AND OF THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF THE
COMPANY THEREIN DESCRIBED OR (II) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO
THE LAWS OF SUCH OTHER JURISDICTION; PROVIDED, HOWEVER, THAT ANY STOCKHOLDER MAY
AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDING, AGAINST THE
COMPANY OR ANY OF ITS PROPERTIES IN THE STATE OR FEDERAL COURT OF THE UNITED
STATES OR OF ANY COUNTRY OR PLACE WHERE THE COMPANY OR ITS PROPERTIES MAY BE
FOUND.
SECTION 21. SEVERABILITY. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof. The parties hereto further agree to replace such
invalid, illegal or unenforceable provision of this Agreement with a valid,
legal and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such invalid, illegal or unenforceable
provision.
SECTION 22. ENTIRE AGREEMENT. This Warrant, together with the Registration
Rights Agreement and the Limited Waiver and Amendment, contains the entire
agreement among the parties with respect to the subject matter hereof and
thereby supercedes all prior and contemporaneous agreements or understandings
with respect thereto.
SECTION 23. HEADINGS. The headings in this Warrant are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 24. NO STRICT CONSTRUCTION. The Company and the Holder each acknowledge
that they have been represented by counsel in connection with this Warrant and
the Limited Waiver and Amendment. The Company and the Holder have participated
jointly in the negotiation and drafting of this Warrant and the Limited Waiver
and Amendment. In the event an ambiguity or question of intent or interpretation
arises under any provision of this Warrant or the Limited Waiver and Amendment,
this Warrant or the Limited Waiver and Amendment (as applicable) shall be
construed as if drafted jointly by the parties thereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Warrant or the Limited Waiver and
Amendment.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
issued and executed in its corporate name by its duly authorized officers and
its corporate seal to be affixed hereto as of the date below written.
DATED: HEADWAY CORPORATE RESOURCES, INC.
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[CORPORATE SEAL] By:
---------------------------
Name:
Title:
ATTEST:
By:
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Name:
-------------------------------
Title:
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23
EXHIBIT A
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NOTICE OF EXERCISE
To:
-------------------------
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1. The undersigned, pursuant to the provisions of the attached Warrant,
hereby elects to exercise this Warrant with respect to ________ shares of Common
Stock (the "Exercise Amount"). Capitalized terms used but not otherwise defined
herein have the meanings ascribed thereto in the attached Warrant.
2. The undersigned herewith tenders payment for such shares in the
following manner (please check type, or types, of payment and indicate the
portion of the Exercise Price to be paid by each type of payment):
______ Exercise for Cash
______ Exercise for Surrender of Subordinated Notes
______ Exercise for Surrender of Preferred Stock
______ Cashless Exercise
3. Please issue a certificate or certificates representing the shares
issuable in respect hereof under the terms of the attached Warrant, as follows:
---------------------------------
(Name of Record Holder/Transferee)
and deliver such certificate or certificates to the following address:
-------------------------------------
(Address of Record Holder/Transferee)
4. The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale in connection with, the distribution thereof and that the
undersigned has no present intention of distributing or reselling such shares.
5. If the Exercise Amount is less than all of the shares of Common
Stock purchasable hereunder, please issue a new warrant representing the
remaining balance of such shares, as follows:
-------------------------------------
(Name of Record Holder/Transferee)
and deliver such warrant to the following address:
-------------------------------------
(Address of Record Holder/Transferee)
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(Signature)
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(Date)