Exhibit 4.1
NEITHER THIS WARRANT NOR THE
SECURITIES THAT MAY BE ACQUIRED UPON THE EXERCISE OF THIS
WARRANT: (A) HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY
STATE SECURITIES LAWS; AND (B) MAY BE SOLD, PLEDGED,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES
ACT (INCLUDING ANY RULES OR REGULATIONS THEREUNDER) AND ANY
APPLICABLE STATE SECURITIES LAWS.
COMPUCREDIT
CORPORATION
WARRANT AGREEMENT
THIS CERTIFIES that, for value
received, MERRILL LYNCH MORTGAGE CAPITAL INC. , a Delaware
corporation (the “Holder”), shall be entitled to
acquire from COMPUCREDIT CORPORATION , a Georgia corporation
(the “Company”), subject to the terms and conditions
contained herein, at any time during the period from 9:00 A.M.
(Eastern Time) on January 30, 2004, through 5:00 P.M.
(Eastern Time) on January 30, 2007 (the “Expiration
Date”), one million two hundred thousand (1,200,000) shares
of “Common Stock” (as hereinafter defined)
(individually, a “Warrant Share” and collectively, the
“Warrant Shares”), at the Exercise Price (as
hereinafter defined) (the “Warrant”). For
purposes of this Warrant, the term “Common Stock” shall
mean the no par value common stock of the Company.
1.
Exercise of
Warrants .
1.1
Method of Exercise
.
(a)
Cash Exercise
. The Warrant evidenced hereby
may be exercised by the Holder, in whole or in part, by the
delivery at the principal office of the Company (or at such other
office or agency of the Company as it may designate by notice in
writing to the Holder), during normal business hours, of this
Warrant and the Form of Exercise attached hereto as
Schedule A , duly completed and executed by the Holder,
and payment (by wire transfer of immediately available United
States federal funds or by bank certified, treasurer’s or
cashier’s check payable to the order of the Company) of the
aggregate Exercise Price for the Warrant Shares covered by such
exercise.
(b)
Net Issue Exercise
. At any time after ninety
(90) days after the Closing Date, provided that a registration
statement has not been filed and is effective for such shares under
the Securities Act and under which the Holder would then be
entitled to immediately sell free and clear of any resale
restrictions all of the Warrant Shares issuable upon holder’s
exercise in full of this Warrant, in lieu of exercising this
Warrant pursuant to Section 1.1(a) hereof, the Holder may
elect to receive, without the payment of any additional
consideration, a number of Warrant Shares equal to the value (as
determined below) of this Warrant (or the portion
thereof
being exercised) by surrender of
this Warrant at the principal office of the Company together with a
duly executed Form of Exercise. In such event, the
Company shall issue to the Holder the number of Warrant Shares
computed using the following formula:
X = Y (A-B)
A
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Where X
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=
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the number of Warrant Shares to be
issued to the Holder.
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Y
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=
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the number of Warrant Shares subject
to this Warrant or, if only a portion of this Warrant is being
exercised, the portion of this Warrant being exercised (at the time
of such calculation).
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A
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=
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the Fair Market Value of one Warrant
Share (at the date of such calculation).
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B
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=
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the Exercise Price (as adjusted to the date of
such calculation).
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1.2
Partial or Conditional
Exercise . In the
event this Warrant is not exercised in full, the total number of
Warrant Shares shall be reduced by the number of Warrant Shares
subject to such partial exercise, and the Company shall promptly
issue and deliver to the Holder a new Warrant of like tenor in the
name of the Holder, reflecting such adjusted number of Warrant
Shares. In the event this Warrant is to be exercised in
connection with a registered public offering or the sale of the
Company, the exercise of any portion of this Warrant may, at the
election of the Holder, be conditioned upon the consummation of the
public offering or sale of the Company in which case such exercise
shall not be deemed to be effective until the consummation of such
transaction and may be rescinded if such transaction shall not
occur within a reasonable time.
1.3
Delivery of
Certificates .
(a) The certificate for the
Warrant Shares issued upon exercise of this Warrant by the Holder
pursuant to Sections 1.1 or 1.2 shall be delivered to the Holder as
soon as practicable after the exercise of this Warrant. The
certificate evidencing the Warrant Shares shall bear a restrictive
legend substantially in the form set forth below:
“THE SECURITIES REPRESENTED BY
THIS CERTIFICATE: (A) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR UNDER ANY STATE SECURITIES LAWS; AND
(B) MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER THE SECURITIES ACT (INCLUDING ANY RULES
OR REGULATIONS THEREUNDER) AND ANY APPLICABLE STATE SECURITIES
LAWS.”
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(b)
Removal of Legend
. Upon request of a Holder of
a certificate with the legend required by
Section 1.3(a) hereof, the Company shall issue to such
holder a new certificate therefor free of any transfer legend, if,
with such request, the Company shall have received an opinion of
counsel (either external counsel or counsel employed by Holder or
its affiliate) reasonably satisfactory to the Company in form and
substance to the effect that any transfer by such holder of the
shares evidenced by such certificate will not violate the
Securities Act or any applicable state securities laws.
1.4
No Fractional Shares
. No fractional shares of
Common Stock will be issued in connection with any exercise
hereunder. Any fraction of a share resulting from any
calculation will be rounded up to the next whole share.
1.5
Stock Fully Paid; Reservation of
Shares . All of the
shares of Common Stock issuable upon the exercise of the rights
represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefor, be fully paid and nonassessable, and free
from all preemptive rights, rights of first refusal or first offer,
taxes, liens and charges of whatever nature. During the
period within which the rights represented by this Warrant may be
exercised, the Company shall at all times have authorized and
reserved for issuance a sufficient number of shares of its Common
Stock to provide for the full exercise of the rights represented by
this Warrant. The Company shall take all steps necessary to
amend its certificate of incorporation and other organizational
documents to provide sufficient reserves of shares of Common Stock
issuable upon full exercise of this Warrant. The Company
hereby agrees that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the proper
certificates for Shares upon the full or each partial exercise of
this Warrant.
2.
Adjustments to Exercise Price
and Warrant Shares .
The Exercise Price and the number of Warrant Shares
issuable upon the exercise of the Warrant are subject to adjustment
from time to time upon the occurrence of the events enumerated in
this Section 2.
2.1
In case the Company shall at any
time after the date hereof (i) declare a dividend or make a
distribution on Common Stock payable in Common Stock,
(ii) subdivide or split the outstanding Common Stock,
(iii) combine or reclassify the outstanding Common Stock into
a smaller number of shares, or (iv) consolidate with, or merge
with or into, any other Person, or engage in any reorganization,
reclassification or recapitalization which, in the case of any such
transaction is effected in such a manner that the holders of Common
Stock are entitled to receive stock, securities, cash or other
assets with respect to or in exchange for Common Stock, then the
Exercise Price and the kind and amount of stock, securities, cash
or other assets issuable upon exercise at the time of the record
date for such dividend or distribution or the time of the effective
date of such subdivision, split, combination, consolidation,
merger, reorganization, reclassification or recapitalization shall
be adjusted as indicated in Sections 2.1 (a) through 2.1
(d) below. The foregoing adjustments shall be made
successively whenever any event listed above shall
occur.
(a)
Adjustments
for Dividends in Common Stock or Other Securities or
Property . If while this
Warrant, or any portion hereof, remains outstanding and
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unexpired, the
holders of any class of securities as to which purchase rights
under this Warrant exist at the time shall have received, or, on or
after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive, without
payment therefor, other or additional Common Stock or other
securities or property (other than cash) of the Company by way of
dividend, then and in each case, this Warrant shall represent the
right to acquire, in addition to the number of shares of such class
of securities receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the amount of
such other or additional stock or other securities or property
(other than cash) of the Company that such Holder would hold on the
date of such exercise had it been the holder of record of the class
of security receivable upon exercise of this Warrant on the date
hereof and had thereafter, during the period from the date hereof
to and including the date of such exercise, retained such Warrant
Shares and/or all other additional Common Stock available to it as
aforesaid during said period, giving effect to all adjustments
called for during such period by the provisions of this
Section 2.
(b)
Adjustments
for Cash Dividends . If while this
Warrant, or any portion hereof, remains outstanding and unexpired,
the holders of any class of securities as to which purchase rights
under this Warrant exist at the time shall have received, or, on or
after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive cash
distributions from the Company by way of cash dividend, then and in
each case, the Exercise Price to be in effect after such dividend
distribution shall represent the Exercise Price immediately prior
to the dividend distribution date reduced by the amount of cash
dividend attributable to each Common Share.
(c)
Adjustments
for Split, Subdivision or Combination of Shares
. If the
Company at any time while this Warrant, or any portion hereof,
remains outstanding and unexpired shall split or subdivide any
class of securities as to which purchase rights under this Warrant
exist into a different number of securities of the same class, the
number of securities of such class issuable upon exercise of this
Warrant immediately prior to such split or subdivision shall be
proportionately increased and the Exercise Price for such
securities of such class shall be proportionately decreased.
If the Company at any time while this Warrant, or any portion
hereof, remains outstanding and unexpired shall combine any class
of securities as to which purchase rights under this Warrant exist
into a different number of securities of the same class, the number
of securities of such class issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately
decreased and the Exercise Price for such class of securities shall
be proportionately increased.
(d)
Adjustment for
Reclassification, Consolidation or Merger . If while this
Warrant, or any portion hereof, remains outstanding and unexpired
there shall be (i) a reorganization, including without
limitation any conversion of the Company’s Common Stock into
shares of Common Stock (other than a combination, reclassification,
exchange or subdivision of shares otherwise provided for herein),
(ii) a merger or consolidation of the Company with or into
another person in which the Company is not the surviving entity, or
a reverse merger in which the Company is the surviving entity but
the shares of
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the
Company’s Common Stock outstanding immediately prior to the
merger are converted by virtue of the merger into other property,
whether in the form of securities, cash, or otherwise, or
(iii) a sale or transfer of the Company’s properties and
assets as, or substantially as, an entirety to any other person in
one transaction or a series of related transactions, then, as a
part of such reorganization, merger, consolidation, sale or
transfer, all necessary or appropriate lawful provisions shall be
made so that the Holder shall thereafter be entitled to receive
upon exercise of this Warrant, during the period specified herein
and upon payment of the Exercise Price then in effect, the greatest
number of shares of Common Stock or other securities or property
that a holder of Warrant Shares would have been entitled to receive
in such reorganization, consolidation, merger, sale or transfer if
this Warrant had been exercised immediately prior to such
reorganization, merger, consolidation, sale or transfer, all
subject to further adjustment as provided in this
Section 2. If the per share consideration payable to the
Holder for Shares in connection with any such transaction is in a
form other than cash or marketable securities, then the value of
such consideration shall be determined in good faith by the
Company’s Board of Directors, provided that if the
Holder shall object to any such determination, the Board of
Directors shall retain an independent appraiser reasonably
satisfactory to the Holder to determine such fair market
value. The Holder shall be notified promptly of any
consideration other than cash or marketable securities received by
the Company and furnished with a description of the consideration
and the fair market value thereof, as determined by the Board of
Directors. The foregoing provisions of this paragraph shall
similarly apply to successive reorganizations, consolidations,
mergers, sales and transfers and to the stock or securities of any
other corporation that are at the time receivable upon the exercise
of this Warrant. In all events, appropriate adjustment shall
be made in the application of the provisions of this Warrant
(including adjustment of the Exercise Price and number of Warrant
Shares purchaseable pursuant to the terms and conditions of this
Warrant) with respect to the rights and interests of the Holder
after the transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as reasonably
may be, in relation to any shares of Common Stock or other property
deliverable or issuable after such reorganization, merger,
consolidation, sale or transfer upon exercise of this
Warrant.
2.2
In case the Company shall issue or
sell any Common Stock (other than Common Stock issued
(i) other than to David G. Hanna, Frank J, Hanna III, or their
affiliates, pursuant to any compensation plan or arrangement for
employees, directors and/or consultants of the Company,
provided that the compensation plan (x) is consistent with
industry practice and (y) was approved by the Company’s Board
of Directors, (ii) upon exercise or conversion of any security
the issuance of which caused an adjustment under Sections 2.3 or
2.4 hereof, or (iii) in a transaction which results in an
adjustment pursuant to Section 2.1 above) without
consideration or for a consideration per share less than the
Exercise Price on the date of such issuance, the Exercise Price to
be in effect after such issuance or sale shall be equal to the
value of a fraction, the numerator of which shall be the sum of
(a) the Ag
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