EXHIBIT 4.19
EXECUTION COPY
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WARRANT
to Purchase Common Stock of
CORECOMM LIMITED
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Warrant No. CCL-3B
Original Issue
Date: July 13, 2001
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE SECURITIES
ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER
SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
INCLUDING THE EXEMPTION PROVIDED FOR BY RULE 144 (IF AVAILABLE), SUBJECT TO THE
COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES
(D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO IT. THIS LEGEND WILL BE REMOVED UPON
THE WRITTEN REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE COMPANY SUCH
CERTIFICATES AND OTHER INFORMATION AS THE COMPANY MAY REQUIRE TO CONFIRM THAT
THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
Warrant No. CCL-3B
WARRANT
CORECOMM LIMITED
THIS IS TO CERTIFY THAT AMERICA ONLINE, INC., or registered assigns,
is entitled, at any time prior to 5:00 P.M., New York City time, on the
Expiration Date (such term, and certain other capitalized terms used herein
being hereinafter defined), to purchase from CORECOMM LIMITED, a Delaware
corporation (the "Company"), 385,000 shares of Common Stock (subject to
adjustment as provided in Section 4 hereof), at the Exercise Price (subject to
adjustment as provided in Section 4 hereof), all on the terms and conditions and
pursuant to the provisions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Affiliate" of any specified Person shall mean any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Beneficially Owned" or "Beneficial Owner" shall have the
interpretation set forth in Rule 13d-3 of the Exchange Act.
"Business Day" shall mean any day that is not a Saturday or Sunday or
a day on which banks are required or permitted to be closed in the State of New
York.
"Cashless Exercise" shall have the meaning set forth in Section 2.1(c)
hereof.
"Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Fair Value per share of Common Stock on the Exercise Date over
the Exercise Price as of the Exercise Date and the denominator of which is the
Fair Value per share of the Common Stock on the Exercise Date.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock of the Company, par value $0.01 per share, as
constituted on the Original Issue Date, and any capital stock into which
such Common Stock may thereafter be changed, and shall also include shares
of common stock of any successor or acquiring corporation (as defined in
Section 4.6 hereof) received by or distributed to the holders of Common
Stock of the Company in the circumstances contemplated by Section 4.6
hereof.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities that are convertible into or exchangeable for, with
or without payment of additional consideration in cash or property, shares of
Common Stock, either immediately or upon the occurrence of a specified date or a
specified event.
"Credit Agreement" shall mean the credit agreement, dated as of
September 28, 2000, as amended and restated as of April 11, 2001, by and among
the Company, CoreComm Holdco, Inc., CoreComm Communications, Inc., the Lenders
parties thereto and The Chase Manhattan Bank, as Administrative Agent and
Collateral Agent.
"Current Market Price" shall mean as of any specified date the average
of the daily market prices of the Common Stock for the twenty (20) consecutive
Business Days immediately preceding such date. The "daily market price" for each
such Business Day shall be: (i) if the Common Stock is then listed on a national
securities exchange or is listed on NASDAQ and is designated as a National
Market System security, the last sale price, regular way, on such day on the
principal stock exchange or market system on which such Common Stock is then
listed or admitted to trading, or, if no such sale takes place on such day, the
average of the closing bid and asked prices for the Common Stock on such day as
reported on such stock exchange or market system; or (ii) if the Common Stock is
not then listed or admitted to trading on any national securities exchange or
designated as a National Market System security on NASDAQ but is traded
over-the-counter, the average of the closing bid and asked prices for the
Common Stock as reported on NASDAQ or the Electronic Bulletin Board or in the
NATIONAL DAILY QUOTATION SHEETS, as applicable.
"Designated Office" shall have the meaning set forth in Section 11
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Exercise Date" shall have the meaning set forth in Section 2.1(a)
hereof.
"Exercise Notice" shall have the meaning set forth in Section 2.1(a)
hereof.
"Exercise Period" shall mean the period during which this Warrant is
exercisable pursuant to Section 2.1 hereof.
"Exercise Price" shall mean, in respect of a share of Common Stock at
any date herein specified, $0.01 per share, as adjusted from time to time
pursuant to Section 4 hereof.
"Expiration Date" shall mean July 13, 2011.
"Fair Value" per share of Common Stock as of any specified date
shall mean (i) if the Common Stock is publicly traded on such date, the
Current Market Price per share or (ii) if the Common Stock is not publicly
traded on such date, the fair market value per share of Common Stock as
determined in good faith by the Board of Directors of the Company and set
forth in a written notice delivered to each Holder.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding on such date and all shares
of Common Stock issuable in respect of (x) the Warrants outstanding on such
date, (y) any Convertible Securities outstanding on such date and (z) any other
Stock Purchase Rights outstanding on such date, in each case regardless of
whether or not the conversion, exchange, subscription or purchase rights
associated with such Convertible Securities or Stock Purchase Rights are
presently exercisable.
"Holder" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Uniform Commercial Code or comparable
law of any jurisdiction).
"Loans" shall mean loans made pursuant to the Credit Agreement.
"Majority Warrant Holders" shall mean the holders of Warrants
exercisable for the purchase of more than fifty percent (50%) of the aggregate
number of shares of Warrant Stock then purchasable upon exercise of all then
outstanding Warrants.
"NASDAQ" shall mean the NASDAQ quotation system, or any successor
reporting system.
"Opinion of Counsel" means a written opinion of counsel (who may be an
employee of a Holder) experienced in Securities Act matters chosen by the holder
of this Warrant or Warrant Stock issued upon the exercise hereof and reasonably
acceptable to the Company.
"Original Issue Date" shall mean the date on which the Original
Warrants were issued, as set forth on the cover page of this Warrant.
"Original Warrants" shall mean the Warrants originally issued by the
Company on the Original Issue Date to America Online, Inc.
"Other Property" shall have the meaning set forth in Section 4.6
hereof.
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of the Company or any Subsidiary thereof, and shall include all shares
issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, incorporated organization,
association, corporation, special purpose vehicle, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Registration Agreement" shall mean the Registration Rights Agreement
by and between the Company and America Online, Inc., dated as of September 28,
2001, as it may be amended and restated from time to time in accordance with its
terms.
"Resale Restriction Termination Date" shall have the meaning set forth
in Section 8.1 hereof.
"Restricted Common Stock" shall mean shares of Common Stock which are,
or which upon their issuance on the exercise of this Warrant would be, evidenced
by a certificate bearing the restrictive legend set forth in Section 8.2(a)
hereof.
"Rule 144A" shall have the meaning set forth in Section 8.1 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
"Stock Purchase Rights" shall mean any options, warrants or other
securities or rights to subscribe to or exercisable for the purchase of shares
of Common Stock or Convertible Securities, whether or not immediately
exercisable.
"Subsequent Issuance" shall mean any sale or issuance by the Company
of Common Stock, Convertible Securities or Stock Purchase Rights after the
Original Issue Date other than:
(i) any issuance of Warrant Stock upon exercise of the Warrants;
(ii) any issuance of Common Stock, Convertible Securities or Stock
Purchase Rights (and any issuance of Common Stock pursuant to the
conversion, exchange or exercise of any such Convertible Securities or
Stock Purchase Rights) deemed to have been issued as of the Original Issue
Date pursuant to the definition of Fully Diluted Outstanding;
(iii) any issuance of Common Stock or Convertible Securities (and any
issuance of Common Stock pursuant to the conversion or exchange of any
Convertible Securities) paid as a dividend with respect to Convertible
Securities;
(iv) any issuance of Common Stock paid as interest with respect to
Convertible Securities;
(v) any issuance of Common Stock upon exchange or redemption of
Convertible Securities;
(vi) any issuance of Common Stock, Convertible Securities or
Stock Purchase Rights (and any issuance of Common Stock pursuant to
the conversion, exchange or exercise of any such Convertible
Securities or Stock Purchase Rights) to a non-Affiliate (as determined
prior to the consummation of such transaction) in an arm's length
transaction that was approved by a majority of the Board of Directors
(or a committee thereof) of the Company;
(vii) any issuance of Stock Purchase Rights (or any issuance of shares
of Common Stock upon exercise of such Stock Purchase Rights) or Common
Stock to employees of, or consultants to, the Company or any of its
Subsidiaries pursuant to an employee stock option, stock incentive plan,
employment agreement or consulting agreement approved by the Board of
Directors of the Company in good faith;
(viii) any issuance of Common Stock, Convertible Securities or Stock
Purchase Rights (and any issuance of Common Stock pursuant to the
conversion, exchange or exercise of any such Convertible Securities or
Stock Purchase Rights) to a non-Affiliate (as determined prior to the
consummation of such transaction) (a) in connection with the acquisition of
another company, business or assets thereof, (b) to a lender in connection
with a financing transaction or the renegotiation of an existing
transaction or (c) in connection with strategic transactions involving the
Company or any of its Subsidiaries and other entities, including joint
ventures, manufacturing, marketing or distribution agreements or technology
transfers or development agreements;
(ix) any issuance of Convertible Securities or Stock Purchase Rights
(and any issuance of Common Stock or Stock Purchase Rights pursuant to the
exchange or exercise of any such Convertible Securities or Stock Purchase
Rights) in connection with the shareholders rights plan of the Company; or
(x) any other issuance of Common Stock, Convertible Securities or
Stock Purchase Rights with respect to which the Majority Warrant Holders
shall have waived application of the provisions of Section 4 hereof.
"Subsidiary" means any corporation or association more than 50% (by
number of votes) of the voting stock of which is at the time owned by the
Company or by one or more of its Subsidiaries or by the Company and one or more
of its Subsidiaries, or any other business entity in which the Company or one or
more of its Subsidiaries or the Company and one or more of its Subsidiaries own
more than a 50% interest either in the profits or capital of such business
entity.
"Transfer" shall mean any disposition of any Warrant or Warrant Stock
or of any interest in either thereof, which would constitute a "sale" thereof
within the meaning of Section 2(3) of the Securities Act.
"Warrant Price" shall mean an amount equal to (i) the number of shares
of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1 hereof, multiplied by (ii) the Exercise Price as of the date of such
exercise.
"Warrants" shall mean the Original Warrants and all warrants issued
upon transfer, division or combination of, or in substitution for, such Original
Warrants or any other such Warrant. All Warrants shall at all times be identical
as to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.
"Warrant Stock" generally shall mean the shares of Common Stock
issued, issuable or both (as the context may require) upon the exercise of
Warrants until such time as such shares of Common Stock have either been
(i) Transferred in a public offering pursuant to a registration statement
filed under the Securities Act or (ii) Transferred in a transaction exempt
from the registration and prospectus delivery requirements of the
Securities Act under Rule 144 thereunder with all transfer restrictions and
restrictive legends with respect to such Common Stock being removed in
connection with such transaction.
2. EXERCISE OF WARRANT
2.1. MANNER OF EXERCISE.
(a) From and after the Original Issue Date and until 5:00 P.M., New
York City time, on the Expiration Date, the Holder may from time to time
exercise this Warrant, on any Business Day, for all or any part of the number of
shares of Common Stock purchasable hereunder (subject to adjustment pursuant to
Section 4 hereof). In order to exercise this Warrant, in whole or in part, the
Holder shall (i) deliver to the Company at the Designated Office a written
notice of the Holder's election to exercise this Warrant (an "Exercise Notice"),
which Exercise Notice shall be irrevocable and specify the number of shares of
Common Stock to be purchased, together with this Warrant and (ii) pay to the
Company the Warrant Price (the date on which both such delivery and payment
shall have first taken place being hereinafter sometimes referred to as the
"Exercise Date"). Such Exercise Notice shall be in the form of the subscription
form attached as ANNEX A to this Warrant, duly executed by the Holder or its
duly authorized agent or attorney.
(b) Upon receipt by the Company of such Exercise Notice, Warrant and
payment of the Warrant Price, the Company shall, as promptly as practicable, and
in any event within five (5) Business Days thereafter, execute (or cause to be
executed) and deliver (or cause to be delivered) to the Holder a certificate or
certificates representing the aggregate number of full shares of Common Stock
issuable upon such exercise, together with cash in lieu of any fraction of a
share, as hereafter provided. The stock certificate or certificates so delivered
shall be, to the extent possible, in such denomination or denominations as the
exercising Holder shall reasonably request in the Exercise Notice and shall be
registered in the name of the Holder or such other name as shall be designated
in the Exercise Notice. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been issued, and the
Holder or any other Person so designated to be named therein shall be deemed to
have become a holder of record of such shares of Common Stock for all purposes,
as of the Exercise Date, PROVIDED, HOWEVER, that a Holder shall not be entitled
to revoke, rescind or modify its Exercise Notice after such notice is delivered
to the Company.
(c) Payment of the Warrant Price shall be made (i) by delivery to
the Company of a certified or official bank check in the amount of such
Warrant Price or (ii) without the payment of cash, by (1) canceling (or
entering into any other arrangement having substantially the same economic
effect with respect to the) outstanding Loans (including accrued interest
thereon through the Exercise Date) held and designated by such Holder in an
amount equal to the Warrant Price, subject to the satisfaction of any
requirements in respect of the cancellation of, or other arrangement with
respect to, the Loans under the Credit Agreement; PROVIDED THAT the Company
shall not be required to (I) seek or effect any amendment or modification
of, or interpretation with respect to, the Credit Agreement to effect the
provisions of this subsection (ii)(1) and (II) pay, setoff or cancel (or
caused to be paid, setoff or canceled) any sum (except with respect to
outstanding Loans as permitted under the Credit Agreement) or expend any
resources in order to effect the provisions of this subsection (ii)(1), (2)
reducing the number of shares of Common Stock which would be obtainable
upon the exercise of this Warrant by the payment of the Warrant Price
solely in cash so as to yield a number of shares of Common Stock upon the
exercise of this Warrant equal to the product of (x) the number of shares
of Common Stock issuable as of the Exercise Date upon the exercise of this
Warrant (if payment of the Warrant Price were being made in cash) and (y)
the Cashless Exercise Ratio or (3) any combination of permitted exercises
pursuant to clauses (1) and (2) above. An exercise of this Warrant in
accordance with the immediately preceding clause (ii) is herein called a
"Cashless Exercise". Subject to Section 2.1 hereof, the rights represented
by this Warrant shall be exercisable at the election of the Holder thereof
either in full at any time or from time to time in part and in the event
that a certificate is surrendered for exercise of less than all the
Warrants represented by such certificate at any time prior to the
Expiration Date, a new certificate representing the remaining Warrants
shall be issued.
(d) If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
the shares of Common Stock being issued, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased shares of
Warrant Stock called for by this Warrant. Such new Warrant shall in all other
respects be identical with this Warrant.
2.2. NO LIENS. All shares of Common Stock issuable upon the exercise
of this Warrant pursuant to the terms hereof shall be validly issued, fully paid
and nonassessable, issued without violation of any preemptive rights and free
and clear of all Liens (other than any created by actions of the Holder).
2.3. FRACTIONAL SHARES. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share that the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the Fair Value
of one share of Common Stock on the Exercise Date.
2.4. CONTINUED VALIDITY AND APPLICATION. A holder of shares of Warrant
Stock issued upon the exercise of this Warrant, in whole or in part, including
any permitted transferee of such shares (other than a permitted transferee in
whose hands such shares no longer constitute Warrant Stock as defined herein),
shall continue, with respect to such shares, to be entitled to all rights and to
be subject to all obligations that are applicable to such holder by the terms of
this Warrant. The Company shall, at the time of any exercise of this Warrant or
any transfer of Warrant Stock, upon the written request of the holder of the
shares of Warrant Stock issued in connection with such exercise or transfer,
acknowledge in writing, in a form reasonably satisfactory to such holder, its
continuing obligation to afford to such holder such rights referred to in this
Section 2.4; PROVIDED, HOWEVER, that if such holder of Warrant Stock shall fail
to make any such written request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1. TRANSFER. Subject to compliance with Section 8 hereof, each
transfer of this Warrant and all rights hereunder, in whole or in part,
shall be registered on the books of the Company to be maintained for such
purpose, upon surrender of this Warrant at the Designated Office, together
with a written assignment of this Warrant in the form attached as ANNEX B
to this Warrant, duly executed by the Holder or its duly authorized agent
or attorney. Upon such surrender and delivery, the Company shall, subject
to Section 8 hereof, execute and deliver a new Warrant or Warrants in the
name of the assignee or assignees and in the denominations specified in
such instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 8 hereof, may be exercised by the new Holder for
the purchase of shares of Common Stock without having a new Warrant issued.
3.2. DIVISION AND COMBINATION. Subject to compliance with the
applicable provisions of this Warrant, this Warrant may be divided or combined
with other Warrants upon presentation hereof at the Designated Office, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued, signed by the Holder or its duly authorized agent or
attorney. Subject to compliance with the applicable provisions of this Warrant
as to any transfer which may be involved in such division or combination, the
Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice.
3.3. EXPENSES. The Company shall prepare, issue and deliver at its own
expense any new Warrant or Warrants required to be issued under this Section 3.
3.4. MAINTENANCE OF BOOKS. The Company agrees to maintain, at the
Designated Office, books for the registration and transfer of the Warrants.
4. ANTIDILUTION PROVISIONS
The number of shares of Common Stock for which this Warrant is
exercisable and the Exercise Price shall be subject to adjustment from time to
time as set forth in this Section 4.
4.1. STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend payable in, or other distribution
of, additional shares of Common Stock,
(b) subdivide, split or reclassify its outstanding shares of Common
Stock into a larger number of shares of such Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of such Common Stock,
then the Exercise Price shall be adjusted to equal the product of the Exercise
Price in effect immediately prior to such event multiplied by a fraction the
numerator of which is equal to the number of shares of Common Stock Outstanding
immediately prior to the adjustment and the denominator of which is equal to the
number of shares of Common Stock Outstanding immediately after such adjustment.
4.2. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If at any time
the Company shall issue or sell any shares of Common Stock in a Subsequent
Issuance for a consideration per share that is less than the Fair Value thereof,
then, forthwith upon such issuance or sale, the Exercise Price shall be reduced
to the price calculated by dividing (i) an amount equal to the sum of (x) the
number of shares of Common Stock Fully Diluted Outstanding immediately prior to
such Subsequent Issuance multiplied by the then existing Fair Value per share,
plus (y) the aggregate consideration (determined in accordance with the
provisions of Section 4.7 hereof), if any, received by the Company in connection
with such Subsequent Issuance, by (ii) the total number of shares of Common
Stock Fully Diluted Outstanding immediately after such Subsequent Issuance.
(b) The provisions of this Section 4.2 shall not apply to (i) any
issuance of Common Stock for which an adjustment is provided for under Section
4.1 hereof or (ii) any issuance or sale of Common Stock pursuant to the exercise
of any Stock Purchase Rights or Convertible Securities to the extent that an
adjustment shall have been previously made hereunder in connection with the
issuance of such Stock Purchase Rights or Convertible Securities pursuant to the
provisions of Section 4.3 hereof.
4.3. ISSUANCES OF STOCK PURCHASE RIGHTS AND CONVERTIBLE SECURITIES
(a) In the event that the Company shall at any time issue, sell or
grant any Stock Purchase Rights to any Person in a Subsequent Issuance, then,
for the purpose of Section 4.2 hereof, the Company shall be deemed to have
issued at that time a number of shares of Common Stock equal to the maximum
number of shares of Common Stock that are or may become issuable upon exercise
of such Stock Purchase Rights (or upon exercise of any Convertible Securities
issuable upon exercise of such Stock Purchase Rights) for a consideration per
share equal to (i) the aggregate consideration per share (determined in
accordance with the provisions of Section 4.7 hereof) received by the Company in
connection with the issuance, sale or grant of such Stock Purchase Rights plus
(ii) the minimum amount of such consideration per share receivable by the
Company in connection with the exercise of such Stock Purchase Rights (and the
exercise of any Convertible Securities issuable upon exercise of such Stock
Purchase Rights).
(b) In the event that the Company shall at any time issue or sell any
Convertible Securities to any Person in a Subsequent Issuance, then, for the
purposes of Section 4.2 hereof, the Company shall be deemed to have issued at
that time a number of shares of Common Stock equal to the maximum number of
shares of Common Stock that are or may become issuable upon the exercise of the
conversion or exchange rights associated with such Convertible Securities for a
consideration per share equal to (i) the aggregate consideration per share
(determined in accordance with the provisions of Section 4.7 hereof) received by
the Company in connection with the issuance or sale of such Convertible
Securities plus (ii) the minimum amount of such consideration per share
receivable by the Company in connection with the exercise of such conversion or
exchange rights.
(c) If, at any time after any adjustment of the Exercise Price
shall have been made hereunder as the result of any issuance, sale or grant
of any Stock Purchase Rights or Convertible Securities, the maximum number
of shares issuable upon exercise of such Stock Purchase Rights or of the
rights of conversion or exchange associated with such Convertible
Securities shall increase, or the minimum amount of consideration per share
receivable in connection with such exercise shall decrease, whether by
operation of any antidilution rights pertaining to such Stock Purchase
Rights or Convertible Securities, by agreement of the parties or otherwise,
the Exercise Price then in effect shall first be readjusted to eliminate
the effects of the original issuance, sale or grant of such Stock Purchase
Rights or Convertible Securities on such Exercise Price and then readjusted
as if such Stock Purchase Rights or Convertible Securities had been issued
on the effective date of such increase in number of shares or decrease in
consideration.
(d) If, at any time after any adjustment of the Exercise Price shall
have been made hereunder as the result of any issuance, sale or grant of any
Stock Purchase Rights or Convertible Securities, any of such Stock Purchase
Rights or the rights of conversion or exchange associated with such Convertible
Securities shall expire by their terms or any of such Stock Purchase Rights or
Convertible Securities shall be repurchased by the Company or a Subsidiary
thereof for a consideration per underlying share of Common Stock not exceeding
the amount of such consideration received by the Company in connection with the
issuance, sale or grant of such Stock Purchase Rights or Convertible Securities,
the Exercise Price then in effect shall forthwith be increased to the Exercise
Price that would have been in effect if such expiring Stock Purchase Rights or
rights of conversion or exchange or such repurchased Stock Purchase Rights or
Convertible Securities had never been issued. Similarly, if at any time after
any such adjustment of the Exercise Price shall have been made pursuant to
Section 4.2 hereof, (i) any additional consideration is received or becomes
receivable by the Company in connection with the issuance or exercise of such
Stock Purchase Rights or Convertible Securities or (ii) there is a reduction in
the conversion ratio applicable to such Convertible Securities so that fewer
shares of Common Stock will be issuable upon the conversion or exchange thereof
or there is a decrease in the number of shares of Common Stock issuable upon
exercise of such Stock Purchase Rights, the Exercise Price then in effect shall
be forthwith readjusted to the Exercise Price that would have been in effect had
such changes taken place at the time that such Stock Purchase Rights or
Convertible Securities were initially issued, granted or sold. In no event shall
any readjustment under this Section 4.3(d) affect the validity of any shares of
Warrant Stock issued upon any exercise of this Warrant prior to such
readjustment, nor shall any such readjustment have the effect of increasing the
Exercise Price above the Exercise Price that would have been in effect if the
related Stock Purchase Rights or Convertible Securities had never been issued.
4.4. OTHER ADJUSTMENTS. Notwithstanding any other provision of this
Warrant, in the event the Company consummates any transaction or series of
transactions which results in an antidilution or similar adjustment pursuant to
the terms of any Convertible Securities or Stock Purchase Rights, in each case
primarily for the benefit of any member of management or any director of the
Company, and such antidilution or similar adjustment is implemented pursuant to
and in compliance with the terms of such instrument, the Company shall make a
proportionate adjustment to this Warrant; PROVIDED THAT the foregoing and
Section 4.8 hereof shall not be interpreted to result in, or have the effect of
requiring, an adjustment to this Warrant upon a repricing of options or similar
equity instruments of the Company Beneficially Owned by any employee or director
of the Company or any Subsidiary of the Company which is approved in good faith
by the Board of Directors (or a committee thereof) of the Company.
4.5. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon any
adjustment of the Exercise Price as provided in Sections 4.1, 4.2, 4.3,
4.4, 4.6 and 4.8 hereof, as applicable, the Holder hereof shall thereafter
be entitled to purchase upon the exercise of this Warrant, at the Exercise
Price resulting from such adjustment, the number of shares of Common Stock
(calculated to the nearest 1/100th of a share) obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number
of shares of Common Stock issuable on the exercise hereof immediately prior
to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
4.6. REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is any change whatsoever in, or distribution with respect to, the Outstanding
Common Stock), or sell, transfer or otherwise dispose of all or substantially
all of its property, assets or business to another corporation and, pursuant to
the terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, (a) shares of common stock of the successor or acquiring
corporation or of the Company (if it is the surviving corporation) or (b) any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property") are to be received by or distributed to the holders of Common Stock
who are holders immediately prior to such transaction, then the Holder of this
Warrant shall have the right thereafter to receive, upon exercise of this
Warrant, the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In such event, the aggregate Exercise Price
otherwise payable for the shares of Common Stock issuable upon exercise of this
Warrant shall be allocated among the shares of common stock and Other Property
receivable as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets in proportion to the respective fair
market values of such shares of common stock and Other Property as determined in
good faith by the Board of Directors of the Company. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be reasonably deemed appropriate (as determined by
resolution of the Board of Directors of the Company) in order to provide for
adjustments of any shares of the common stock of such successor or acquiring
corporation for which this Warrant thus becomes exercisable, which modifications
shall be as equivalent as practicable to the adjustments provided for in this
Section 4. For purposes of this Section 4.6, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any class that
is not preferred as to dividends or assets over any other class of stock of such
corporation and that is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities that are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.6 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or dispositions of
assets.
4.7. DETERMINATION OF CONSIDERATION. For purposes of Sections
4.2, 4.3, 4.4, 4.6 and 4.8 hereof, as applicable, the consideration
received and/or receivable by the Company in connection with the issuance,
sale, grant or exercise of additional shares of Common Stock, Stock
Purchase Rights or Convertible Securities, irrespective of the accounting
treatment of such consideration, shall be valued as follows:
(a) CASH PAYMENT. In the case of cash, the net amount received by the
Company after deduction of any underwriting commissions or concessions paid
or allowed by the Company.
(b) SECURITIES OR OTHER PROPERTY. In the case of securities or other
property, the fair market value thereof as of the date immediately
preceding such issuance, sale, grant or exercise as determined in good
faith by the Board of Directors of the Company.
(c) ALLOCATION RELATED TO COMMON STOCK. In the event shares of Common
Stock are issued or sold together with other securities or other assets of
the Company for a consideration which covers both, the consideration
received (computed as provided in (a) and (b) above) shall be allocable to
such shares of Common Stock as determined in good faith by the Board of
Directors of the Company.
(d) ALLOCATION RELATED TO STOCK PURCHASE RIGHTS AND CONVERTIBLE
SECURITIES. In case any Stock Purchase Rights or Convertible Securities
shall be issued or sold together with other securities or other assets of
the Company, together comprising one integral transaction in which no
specific consideration is allocated to the Stock Purchase Rights or
Convertible Securities, the consideration allocable to such Stock Purchase
Rights or Convertible Securities shall be determined in good faith by the
Board of Directors of the Company.
(e) DIVIDENDS IN SECURITIES. In case the Company shall declare a
dividend or make any other distribution upon any stock of the Company
payable in either case in Common Stock or Convertible Securities, such
Common Stock or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been
issued or sold without consideration.
(f) MERGER, CONSOLIDATION OR SALE OF ASSETS. In case any shares of
Common Stock, Stock Purchase Rights or Convertible Securities shall be
issued in connection with any merger or consolidation in which the Company
is the surviving corporation, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the assets and business of
the non-surviving corporation attributable to such Common Stock, Stock
Purchase Rights or Convertible Securities, as is determined in good faith
by the Company's Board of Directors.
4.8. OTHER DILUTIVE EVENTS. In case any event shall occur as to
which the other provisions of this Section 4 are not strictly applicable
but as to which the failure to make any adjustment would not fairly protect
the purchase rights represented by this Warrant in accordance with the
essential intent and principles hereof as determined in good faith by the
Company's Board of Directors (including, without limitation, the issuance
of equity securities (other than as specifically provided in Sections 4.1,
4.2, 4.3, 4.4 and 4.6), the distribution to all holders of Common Stock of
evidences of indebtedness, cash or other property (other than cash
dividends paid in the ordinary course of business), the granting of
"phantom stock" rights or "stock appreciation rights" or the repurchase of
outstanding shares of Common Stock, Convertible Securities or Stock
Purchase Rights for a purchase price exceeding Fair Value; PROVIDED,
HOWEVER, that the Company shall be permitted to effect (i) a self tender
offer of Common Stock up to 10% of the Fully Diluted Outstanding Common
Stock at a price not to exceed Fair Value on the date the self tender offer
is first publicly announced by the Company and (ii) a redemption of
Convertible Securities in accordance with the terms of such instrument as
in effect on the date hereof), then, in each such case, the Majority
Warrant Holders may select an independent investment banking firm of
nationally recognized standing and reasonably acceptable to the Company to
make a determination as to the adjustment, if any, required to be made on a
basis consistent with the essential intent and principles established
herein as a result of such event in order to preserve the purchase rights
represented by the Warrants. If the investment bank selected by the
Majority Warrant Holders is not reasonably acceptable to the Company, and
the Company and the Majority Warrant Holders cannot agree on a mutually
acceptable investment bank, then the Company and the Majority Warrant
Holders shall each choose one such investment bank and the respective
chosen firms shall jointly select a third investment bank, which shall make
the determination. The Company, on the one hand, and all affected holders
of Warrants or Warrant Stock, on the other hand, shall each pay 50% of the
costs and fees of each such investment bank (the holders of Warrants and
Warrant Stock shall agree among themselves the pro rata allocation of such
costs and expenses), and the decision of the investment bank making such
determination shall be final and binding on the Company and all affected
holders of Warrants or Warrant Stock. Promptly after receipt by the Company
of the opinion of such investment bank as to any such required adjustments,
the Company shall take any actions necessary to implement same.
4.9. OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION 4.
The following provisions shall be applicable to the adjustments provided for
pursuant to this Section 4:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring such an adjustment shall occur. For the purpose of any such
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(b) RECORD DATE. In case the Company shall take a record of the
holders of the Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock,
Convertible Securities or Stock Purchase Rights or (ii) to subscribe for or
purchase Common Stock, Convertible Securities or Stock Purchase Rights,
then all references in this Section 4 to the date of the issuance or sale
of such shares of Common Stock, Convertible Securities or Stock Purchase
Rights shall be deemed to be references to such record date.
(c) FRACTIONAL INTERESTS. In computing adjustments under this Section
4, fractional interests in Common Stock shall be taken into account to the
nearest 1/100th of a share.
(d) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution to which the provisions of
Section 4.1 hereof would apply, but shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay
or deliver such dividend or distribution, then thereafter no
adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(e) MAXIMUM EXERCISE PRICE. Except as provided in Section 4.1 hereof,
at no time shall the Exercise Price per share of Common Stock exceed the
amount set forth in the first paragraph of the preamble of this Warrant.
(f) CERTAIN LIMITATIONS. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction that, by
reason of any adjustment under Sections 4.1, 4.2, 4.3, 4.4, 4.6 and 4.8
hereof, as applicable, would cause the Exercise Price to be less than the
par value of the Common Stock, if any, unless the Company first reduces the
par value of the Common Stock to be less than the Exercise Price that would
result from such transaction.
(g) TAX ADJUSTMENTS. The Company may make such reductions in the
Exercise Price or increase in the number of Common Stock to be received by
any Holder upon the exercise or exchange of this Warrant, in addition to
those adjustments required by this Section 4, as it in its sole discretion
shall determine to be advisable in order that any consolidation or
subdivision of the Common Stock, or any issuance wholly for cash of any
shares of Common Stock, or any issuance wholly for cash of shares of Common
Stock or Convertible Securities, or any stock dividend, or any issuance of
Stock Purchase Rights hereinafter made by the Company to the holders of its
Common Stock shall not be taxable to such holders.
(h) CERTAIN BUSINESS COMBINATIONS. The Company will not merge or
consolidate with or into, or sell, transfer or lease all or substantially
all of its property to, any other entity unless the successor or purchasing
entity, as the case may be (if not the Company), shall expressly agree to
provide to each Holder the securities, cash or property required by Section
4.6 hereof upon the exercise or exchange of this Warrant and expressly
assumes, by supplemental agreement, the due and punctual performance and
observance of each and every covenant and condition of this Warrant to be
performed and observed by the Company; PROVIDED, HOWEVER, that the initial
obligation of such successor with respect to the exercise or exchange of
this Warrant shall be only as set forth in Section 4.6 hereof.
(i) NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable or the Exercise Price shall be
adjusted pursuant to this Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company
setting forth, in reasonable detail, the event requiring the adjustment and
the method by which such adjustment was calculated, specifying the number
of shares of Common Stock for which this Warrant is exercisable and (if
such adjustment was made pursuant to Section 4.6 hereof) describing the
number and kind of any other shares of stock or Other Property for which
this Warrant is exercisable, and any related change in the Exercise Price,
after giving effect to such adjustment or change. The Company shall
promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 14.3 hereof. The Company shall keep at
its principal office or at the Designated Office, if different, copies of
all such certificates and cause the same to be available for inspection at
said office during normal business hours by any Holder or any prospective
transferee of a Warrant designated by a Holder thereof.
(j) INDEPENDENT APPLICATION. Except as otherwise provided herein, all
subsections of this Section 4 are intended to operate independently of one
another (but without duplication). If any single transaction would require
adjustment of the Exercise Price pursuant to more than one subsection of
this Section 4, only one adjustment shall be made and such adjustment shall
be the amount of adjustment which has the highest absolute value.
5. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its charter documents or through any reorganization, reclassification,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other similar voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder against impairment. Without limiting the generality of the
foregoing, the Company shall take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant, free
and clear of all Liens, and shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction over it as may be necessary to enable the Company to perform its
obligations under this Warrant.
6. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY
From and after the Original Issue Date, the Company shall at all times
reserve and keep available for issuance upon the exercise of the Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock issuable pursuant to the terms hereof, when issued upon
exercise of this Warrant with payment therefor in accordance with the terms
hereof, shall be duly and validly issued and fully paid and nonassessable, not
subject to preemptive rights and shall be free and clear of all Liens. Before
taking any action that would result in an adjustment in the number of shares of
Common Stock for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction over such action. If any shares of Common Stock required to be
reserved for issuance upon exercise of Warrants require registration or
qualification with any governmental authority under any federal or state law
(other than under the Securities Act or any state securities law) before such
shares may be so issued, the Company will in good faith and as expeditiously as
possible and at its expense endeavor to cause such shares to be duly registered
or qualified, as the case may be.
7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS
7.1. NOTICES OF CORPORATE ACTIONS. In the event of: (a) any
taking by the Company of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to
receive any dividend or distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of capital stock of any class or
any other securities, (b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger involving the Company and any other Person or
any transfer or other disposition of all or substantially all the assets of
the Company to another Person, (c) any voluntary or involuntary
dissolution, liquidation or winding-up of the Company, (d) any amendment of
the Certificate of Incorporation of the Company, (e) any registration or
public offering of Common Stock or (f) any action taken by the Company
which could in any way dilute the Common Stock for which this Warrant is
exercisable, the Company shall mail to each Holder of a Warrant in
accordance with the provisions of Section 14.3 hereof a notice specifying
(i) the date or expected date on which any such record is to be taken for
the purpose of such dividend, distribution or right, and the amount and
character of such dividend, distribution or right and (ii) the date or
expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, transfer, disposition,
dissolution, liquidation, winding-up or other event is to take place, the
time, if any such time is to be fixed, as of which the holders of record of
Common Stock shall be entitled to exchange their shares of Common Stock for
the securities or Other Property deliverable upon such reorganization,
reclassification, recapitalization, consolidation, merger, transfer,
disposition, dissolution, liquidation, winding-up or other event and a
description in reasonable detail of the transaction. Such notice shall be
mailed to the extent practicable under the circumstances as determined in
the reasonable judgment of an officer of the Company at least fifteen (15)
days prior to the date therein specified, and shall describe the material
terms of the matter in question. In the event that the Company at any time
sends any other notice to the holders of its Common Stock, it shall
concurrently send a copy of such notice to each Holder of a Warrant.
7.2. TAKING OF RECORD. In the case of all dividends or other
distributions by the Company to the holders of its Common Stock with respect to
which any provision of any Section hereof refers to the taking of a record of
such holders, the Company will in each such case take such a record and will
take such record as of the close of business on a Business Day.
7.3. CLOSING OF TRANSFER BOOKS. The Company shall not at any time,
except upon dissolution, liquidation or winding up of the Company, close its
stock transfer books or Warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
7.4. NO RIGHTS AS STOCKHOLDERS. Except as provided herein, Holders
shall have no rights as holders of Common Stock solely as a result of being the
Beneficial Owner of a Warrant. Holders shall have no right to vote, consent or
otherwise participate with respect to matters submitted to a vote of the
stockholders of the Company.
8. TRANSFER
The Holder, by acceptance of this Warrant, agrees to be bound by the
provisions of this Section 8.
8.1. RESTRICTIONS ON TRANSFER. Neither this Warrant nor any
shares of Restricted Common Stock issued upon the exercise hereof shall be
Transferred other than pursuant to an effective registration statement
under the Securities Act or an exemption from the registration provisions
thereof. The Holder of this Warrant by its acceptance hereof agrees to
offer, sell or otherwise transfer such Warrant, prior to the date (the
"Resale Restriction Termination Date") which is two years after the later
of the Original Issue Date and the last date on which the Company or any
Affiliate of the Company was the owner of this Warrant (or any predecessor
of this Warrant), only (a) to the Company, (b) pursuant to a registration
statement that has been declared effective under the Securities Act, (c)
for so long as this Warrant is eligible for resale pursuant to Rule 144A
under the Securities Act ("Rule 144A"), to a person it reasonably believes
is a "qualified institutional buyer" as defined in Rule 144A that purchases
for its own account or for the account of a qualified institutional buyer
to whom notice is given that the transfer is being made in reliance on Rule
144A, (d) to an "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act that is an institutional
accredited investor acquiring the security for its own account or for the
account of such an institutional accredited investor for investment
purposes and not with a view to or for offer or sale in connection with any
distribution in violation of the Securities Act or (e) pursuant to any
other available exemption from the registration requirements of the
Securities Act, including the exemption provided for by Rule 144 (if
available), subject to the Company's right prior to any such offer, sale or
transfer pursuant to clauses (d) or (e) to require the delivery of an
Opinion of Counsel, certification and/or other information satisfactory to
it. The legends contained in Section 8.2 hereof will be removed upon the
written request of the Holder after the Resale Restriction Termination
Date. In connection with any Transfer, the Holder will deliver to the
Company such certificates and other information as the Company may require
to confirm that the transfer complies with the foregoing restrictions.
Holders of the Warrants or the Restricted Common Stock, as the case may be,
shall not be entitled to Transfer such Warrants or such Restricted Common
Stock except in accordance with this Section 8.1.
8.2. RESTRICTIVE LEGENDS.
(a) Except as otherwise provided in this Section 8, each certificate
for Warrant Stock initially issued upon the exercise of this Warrant, and each
certificate for Warrant Stock issued to any subsequent transferee of any such
certificate, shall be stamped or otherwise imprinted with two legends in
substantially the following forms:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING
THE EXEMPTION PROVIDED FOR BY RULE 144 (IF AVAILABLE), SUBJECT TO THE
COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT. THIS LEGEND
WILL BE REMOVED UPON THE WRITTEN REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE. IN CONNECTION WITH ANY TRANSFER,
THE HOLDER WILL DELIVER TO THE COMPANY SUCH CERTIFICATES AND OTHER
INFORMATION AS THE COMPANY MAY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO THE
BENEFIT OF AND ARE SUBJECT TO CERTAIN OBLIGATIONS SET FORTH IN
THE WARRANT PURSUANT TO THE EXERCISE OF WHICH SUCH SHARES WERE
ISSUED. A COPY OF SUCH WARRANT IS AVAILABLE AT THE EXECUTIVE
OFFICES OF THE COMPANY."
(b) Except as otherwise provided in this Section 8, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR ANY OF THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAW. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A)
TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) TO AN "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING
THE EXEMPTION PROVIDED FOR BY RULE 144 (IF AVAILABLE), SUBJECT TO THE
COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT. THIS LEGEND
WILL BE REMOVED UPON THE WRITTEN REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE. IN CONNECTION WITH ANY TRANSFER,
THE HOLDER WILL DELIVER TO THE COMPANY SUCH CERTIFICATES AND OTHER
INFORMATION AS THE COMPANY MAY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS."
8.3. TERMINATION OF SECURITIES LAW RESTRICTIONS. Notwithstanding the
foregoing provisions of Section 8, the restrictions imposed by Section 8.1
hereof upon the transferability of the Warrants and the Restricted Common Stock
and the legend requirements of Section 8.2 hereof shall terminate as to any
particular Warrant or shares of Restricted Common Stock when the Company shall
have received from the holder thereof an Opinion of Counsel to the effect that
such legend is not required in order to ensure compliance with the Securities
Act. Whenever the restrictions imposed by Sections 8.1 and 8.2 shall terminate
as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled
to receive from the Company, at the expense of the Company, a new Warrant
bearing the following legend in place of the restrictive legend set forth
hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED IN
SECTIONS 8.1 AND 8.2 HEREOF TERMINATED ON ______________, 20__, AND ARE OF
NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Wherever the restrictions imposed
by this Section 8.3 shall terminate as to any share of Restricted Common Stock,
as hereinabove provided, the holder thereof shall be entitled to receive from
the Company, at the Company's expense, a new certificate representing such
Common Stock not bearing the restrictive legend set forth in Section 8.2(a)
hereof.
8.4. LISTING ON SECURITIES EXCHANGE. If the Company shall
maintain a listing of any shares of Common Stock on any securities exchange
or on NASDAQ, it shall at its expense, to the extent permitted by the rules
and regulations of such securities exchange or NASDAQ, list thereon,
maintain and, when necessary, increase such listing of, all shares of
Warrant Stock issued or, to the extent permissible under the applicable
securities exchange rules or NASDAQ, issuable upon the exercise of this
Warrant.
8.5. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Warrant
Stock is held by a nominee for the Beneficial Owner thereof, the Beneficial
Owner thereof may, at its election, be treated as the holder of such Warrant
Stock for purposes of any request or other action by any holder or holders of
Warrant Stock pursuant to this Warrant or any determination of any number or
percentage of shares of Warrant Stock held by any holder or holders of Warrant
Stock contemplated by this Agreement. If the Beneficial Owner of any Warrant
Stock so elects, the Company may require assurances reasonably satisfactory to
it of such owner's Beneficial Ownership of such Warrant Stock; PROVIDED,
HOWEVER, that in no event shall there be "double-counting" of Warrants or
Warrant Stock.
8.6 PAYMENT OF TAXES. The Company shall not be required to issue or
deliver Warrant Stock or a new Warrant unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of any
applicable transfer or stamp taxes or shall have established to the reasonable
satisfaction of the Company that such taxes have been paid or are not due and
owing.
9. SUPPLYING INFORMATION; RULE 144
The Company shall cooperate with each holder of a Warrant and each
holder of Warrant Stock in supplying such information as may be reasonably
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Warrant
or shares of Warrant Stock. The Company shall use its best efforts to at all
times make public information available (as such phrase is interpreted under
Rule 144 of the Securities Act) so as to afford the holders of the Warrants and
the Warrant Stock the benefits of Rule 144 of the Securities Act in connection
with resales, and upon the reasonable written request of any Holder shall
provide such Holder with such financial statements, reports and other
information as may be reasonably required to permit such Holder to sell Warrants
or shares of Warrant Stock to one or more "Qualified Institutional Buyers" under
Rule 144A of the Securities Act, in each case as such Rule may be amended from
time to time or replaced or supplemented by any similar rule or regulation
hereafter adopted by the Commission.
10. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and an indemnity reasonably satisfactory to it and,
in case of mutilation, upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
PROVIDED, HOWEVER, in the case of mutilation, no indemnity shall be required if
this Warrant in identifiable form is surrendered to the Company for
cancellation.
11. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency, which may be the principal executive
offices of the Company (the "Designated Office"), where the Warrants may be
presented for exercise, registration of transfer, division or combination
as provided in this Warrant. Such Designated Office shall initially be the
office of the Company at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000. The
Company may from time to time change the Designated Office to another
office of the Company or its agent within the United States by notice given
to all registered holders of Warrants at least ten (10) Business Days prior
to the effective date of such change.
12. INVESTMENT REPRESENTATIONS AND OBLIGATIONS OF HOLDER
(a) The Holder hereby represents that this Warrant is being, and any
shares of Warrant Stock issued upon exercise hereof shall be, acquired for its
own account, and that it has no intention of distributing any such securities in
violation of the federal or any applicable state securities laws.
(b) The Holder hereby acknowledges that it is able to bear the
economic risk of its investment in this Warrant (and any investment in shares of
Warrant Stock upon exercise hereof) for an indefinite period of time.
(c) The Holder hereby represents that it has had an opportunity to
ask questions and receive answers concerning this Warrant and to obtain whatever
information concerning the Company as has been requested by the Holder in order
to make its investment decision with respect to this Warrant and shares of
Warrant Stock upon exercise hereof.
(d) The Holder hereby represents that it (i) is an "accredited
investor" for purposes of Regulation D promulgated under the Securities Act and
(ii) has such knowledge and experience in financial and business matters as to
be able to evaluate the merits and risks of an investment in this Warrant (and
any investment in shares of Warrant Stock upon exercise hereof).
13. REGISTRATION RIGHTS
Holders of the Warrants and the Warrant Stock shall be entitled to the
benefit of the Registration Rights Agreement.
14. MISCELLANEOUS
14.1. COMMISSION REPORTS. If at any time within two years from the
date hereof, the Company is not subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, the Company shall use its reasonable best
efforts to file with the Commission (if permitted by Commission practice and
applicable laws and regulations) and provide the Holders within 15 days after it
files them with the Commission (or if not permitted, within 15 days after it
would have otherwise been required to file them with the Commission), copies of
its annual report and the information, documents and other reports that are
specified in Sections 13 and 15(d) of the Exchange Act to the extent applicable
to the Company at such time. In addition, so long as the Common Stock is
publicly traded, the Company shall furnish to the Holders, promptly upon their
becoming available, copies of the annual report to shareholders and any other
information provided by the Company to its public shareholders generally.
14.2. NONWAIVER. No course of dealing or any delay or failure to
exercise any right hereunder on the part of the Company or the Holder shall
operate as a waiver of such right or otherwise prejudice the rights, powers or
remedies of such Person.
14.3. NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration, delivery or communication hereunder to be made pursuant
to the provisions of this Warrant shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged or sent by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) if to any Holder of this Warrant or holder of Warrant Stock
issued upon the exercise hereof, at its last known address appearing on the
books of the Company maintained for such purpose; and
(b) if to the Company, at its Designated Office,
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) Business Days after the same
shall have been deposited in the United States mail, or one (1) Business Day
after the same shall have been delivered to Federal Express or another overnight
courier service.
14.4. LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder to pay the Exercise Price for any Warrant
Stock other than pursuant to an exercise of this Warrant or any liability as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
14.5. REMEDIES. Each holder of Warrants and/or Warrant Stock, in
addition to being entitled to exercise its rights granted by law, including
recovery of damages, shall be entitled to specific performance of its rights
provided under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees, in an action for specific
performance, to waive the defense that a remedy at law would be adequate.
14.6. SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections
3.1, 8.1 and 8.2, this Warrant and the rights evidenced hereby shall inure to
the benefit of and be binding upon the successors of the Company and the
permitted successors and assigns of the Holder hereof. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time of
this Warrant and to the extent applicable, all holders of shares of Warrant
Stock issued upon the exercise hereof (including permitted transferees), and
shall be enforceable by any such holder.
14.7. AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Warrant Holders; PROVIDED THAT no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for which
such Warrant is exercisable or to increase the price at which such shares may be
purchased upon exercise of such Warrant (before giving effect to any adjustment
as provided therein) without the written consent of the holder thereof.
14.8. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
14.9. HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
14.10. GOVERNING LAW; JURISDICTION. IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, EXCEPT WITH RESPECT TO THE VALIDITY OF THIS
WARRANT, THE ISSUANCE OF WARRANT STOCK UPON EXERCISE HEREOF AND THE RIGHTS AND
DUTIES OF THE COMPANY WITH RESPECT TO REGISTRATION OF TRANSFER, WHICH SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE. THE COMPANY HEREBY CONSENTS AND
AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE,
EXCEPT AS SET FORTH BELOW, EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN THE COMPANY AND THE HOLDER OF THIS WARRANT PERTAINING
TO THIS WARRANT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT,
PROVIDED, THAT IT IS ACKNOWLEDGED THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK CITY.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by a duly authorized officer with effect from the date first set forth
above.
CORECOMM LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
IN WITNESS WHEREOF, AMERICA ONLINE, INC. by signing below (a)
acknowledges that it has read this Warrant, (b) agrees to be bound by the
provisions of this Warrant and (3) makes the representations contained in
Section 12 hereof.
AMERICA ONLINE, INC.
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President
Business Affairs and Development
ANNEX A
SUBSCRIPTION FORM
[To be executed only upon an exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of ______ shares of Common Stock and herewith
makes payment therefor, all at the price and on the terms and conditions
specified in this Warrant and requests that certificates for the shares of
Common Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of and delivered to _________________
whose address is ________________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as provided in this
Warrant, that a new Warrant of like tenor and date for the balance of the shares
of Common Stock issuable hereunder be delivered to the undersigned.
-----------------------------------------
(Name of Registered Owner)
-----------------------------------------
(Signature of Registered Owner)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
ANNEX B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NUMBER OF SHARES OF COMMON STOCK
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
and does hereby irrevocably constitute and appoint ________ _____________
attorney-in-fact to register such transfer onto the books of the Company
maintained for the purpose, with full power of substitution in the premises.
Dated: Print Name:
------------- -----------------------
Signature:
------------------------
Witness:
--------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
