Exhibit 10.4
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED ("SECURITIES
ACT"), AND MAY NOT BE SOLD TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS M THE
SHARES ARE REGISTERED UNDER THE SECURITIES ACT OF 1933 AND THE SECURITIES ACT OF
ANY STATE APPLICABLE TO SUCH SALE, OR (ii) THE PROPOSED SELLER PROVIDES THE
COMPANY WITH AN OPINION OF COUNSEL THAT THE SECURITIES ARE BEING SOLD IN A
TRANSACTION WHICH IS EXCEPT FROM THE REGISTRATION REQUIREMENT OF THE SECURITIES
ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES ACTS AND THE COMPANY IS
SATISFIED THAT NO REGISTRATION STATEMENT IS THEN REQUIRED AND THAT THIS WARRANT
AND THE UNDERLYING SECURITIES MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
IN THE MANNER CONTEMPLATED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933
OR ANY STATE SECURITIES ACT.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK OF
NO. 3
Warrant to Purchase
VOID AFTER 5:00 P.M.
April 9, 2003
FOR VALUE RECEIVED, World CallNet, Inc., a corporation organized under
the laws of Delaware (the "Company"), promises to issue in the name of, and sell
and deliver to Eagle Equity I, L.P., Two Lincoln Centre, Suite 1280, LB 56,
Xxxxxx, Xxxxx 00000, (the "Holder"), a certificate or certificates for an
aggregate of 150,000 shares ("Shares") of common stock of the Company ("Common
Stock") par value $.001 per share, at any time on or after May 9, 1999, and
prior to 5:00 P.M., London, England Time on April 9, 2003 (the "Expiration
Date"), upon payment therefor of $10.00 per Share in lawful funds of the United
States of America, such amount (the "Basic Exercise Price") being subject to
adjustment in the circumstances set forth hereinbelow. This applicable Basic
Exercise Price, until such adjustment is made and thereafter as adjusted from
time to time, is called the "Exercise Price."
THIS WARRANT MAY NOT BE ASSIGNED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE ENCUMBERED OR OTHERWISE DISPOSED OF (EXCEPT FOR
ASSIGNMENT TO AFFILIATES OF HOLDER), IT MAY NOT BE ASSIGNED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED OR DISPOSED OF BY THE HOLDER,
EXCEPT BY THE HOLDER'S EXERCISE HEREOF AS SET FORTH HEREIN FOLLOWING DUE
REGISTRATION UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS, OR IN
TRANSACTIONS EXEMPT FROM SUCH REGISTRATION.
1. Exercise of Warrant. In case the Holder of this Warrant shall desire
to exercise this Warrant in whole or in part, the Holder shall surrender this
Warrant, with the form of exercise notice
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on the last page hereof duly executed by the Holder, to the Company accompanied
by payment of the Exercise Price of $10.00 per Share, subject to adjustment as
noted herein.
At the option of the Holder, the Holder may exercise this Warrant,
without a cash payment of the Exercise Price by designating that the number of
shares of Common Stock issuable to Holder upon such exercise shall be reduced by
the number of shares having a fair market value equal to the amount of the total
exercise price for such exercise. In such instance, no cash or other
consideration will be paid by Holder in connection with such exercise other than
the surrender of the Warrant itself, and no commission or other remuneration
will be paid or given by Holder or the Company in connection with such exercise.
If such exercise results in only a partial exercise of this Warrant, then the
Company shall deliver to Holder a new Warrant evidencing the remaining rights
under this Warrant, as provided below. This election is available to the Holder
only if immediately prior to the exercise date Shares of Common Stock trade on
any stock exchange, the NASDAQ Stock Market or the OTC Bulletin Board. For this
purpose, the fair market value of shares of Common Stock shall be determined as
of the last business day preceding the exercise date and shall be deemed to be
the average of the closing bid and ask prices of the Common Stock; provided,
however, if shares of the Common Stock are then listed on a national securities
exchange or the NASDAQ Stock Market, the fair market value of shares of Common
Stock shall be deemed to be the closing price on the relevant date.
This Warrant may be exercised in whole or in part but not for
fractional Shares. In case of the exercise in part only, the Company will
deliver to the Holder a new Warrant of like tenor in the name of the Holder
evidencing the right to purchase the number of Shares as to which this Warrant
has not been exercised. This Warrant, at any time prior to the exercise hereof,
upon presentation and surrender to the Company may be exchanged, along or with
other Warrants of like tenor registered in the name of the same Holder, for
another Warrant or other Warrants of like tenor in the name of such Holder
exercisable for the same aggregate number of Shares as the Warrant or Warrants
surrendered.
2. Registration Rights. Holder shall have the registration rights set
forth in the Registration Rights Agreement executed by the Company in connection
with the issuance of this Warrant.
3. Stock Dividends a Reclassification Reorganizations Anti-Dilution
Provisions. This Warrant is subject to the following further provisions:
a. In case, prior to the expiration of this Warrant by
exercise or by its terms, the Company shall issue any shares of its
Common Stock as a stock dividend or subdivide the number of outstanding
shares of Common Stock into a greater number of shares, then in such
case, the number of shares of Common Stock issuable upon exercise of
this Warrant shall be proportionately increased and the Exercise Price
shall be proportionately decreased, and conversely, in the event the
Company shall contract the number of outstanding shares of Common Stock
by combining such shares of Common Stock into a smaller number of
shares of Common Stock then, in such case the number of shares of
Common Stock issuable upon exercise of this Warrant shall be
proportionately decreased and the Exercise Price shall be
proportionately increased. If the Company shall, at any time during the
life of this Warrant,
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declare a dividend payable in cash on its Common Stock and shall at
substantially the same time offer to its stockholders generally a right
to purchase new shares of Common Stock from the proceeds of such
dividend or for an amount substantially equal to the dividend, all
shares of Common Stock so issued shall for the purpose of this Warrant.
be deemed to have been issued as a stock dividend. Any dividend paid or
distributed upon the Common stock in shares of any other class of
securities convertible into shares of Common Stock or any other
securities shall be treated as a dividend paid in Common Stock to the
extent that shares of Common Stock are issuable upon the conversion
thereof.
b. In case prior to the expiration of this Warrant by exercise
or by its terms, the Company shall be recapitalized by reclassifying
its outstanding Common Stock into shares with a different par value or
shall thereafter reclassify any such shares in a like manner, or the
Company or a successor corporation shall consolidate, or merge with or
convey all or substantially all of its, or all or substantially all of
any successor corporation's property and assets to any other
corporation or corporations (any such corporation being included within
the meaning of the term "successor corporation" hereinbefore used in
the event of any consolidation or merger of any such corporation with,
or the sale of all or substantially all of the property of any such
corporation to another corporation or corporations), the Holder shall
thereafter have the right to purchase, pursuant to and under the terms
and conditions and during the time specified in this Warrant, in lieu
of the shares of Common Stock issuable upon exercise of this Warrant,
such shares of Common Stock, securities or assets as may be issued upon
exercise of this Warrant pursuant to such recapitalization,
consolidation, merger or conveyance; and, in any such event, the rights
of the Holder to an adjustment in the number of shares of Common Stock
that are purchasable upon the exercise of this Warrant and the Exercise
Price as herein provided, shall continue and be preserved in respect to
any shares, securities or assets which the Holder of this Warrant
becomes entitled to purchase.
c. Upon the occurrence of each event requiring an adjustment
of the Exercise Price or of the number of shares of Common Stock
issuable upon exercise of this Warrant in accordance with, and as
required by, the terms of Subsection (a) of this Section 3, the Company
shall use its best efforts to forthwith cause either a firm of
independent certified public accountants (who may be the regular
accountants for the Company) or the Chief Financial Officer of the
Company to compute the adjusted Exercise Price or the adjusted number
of shares of Common Stock issuable upon exercise of this Warrant by
reason of such event in accordance with the provisions of Subsection
(a) or (b) of this Section 3. The Company shall forthwith mail to the
Holder of this Warrant a copy of such computation, which shall be
conclusive and shall be binding upon such Holder unless contested by
such Holder by written notice to the Company within 14 days after the
mailing thereof by the Company.
d. In case.
(1) the Company shall make a record of the holders of
its Common Stock for the purpose of entitling them to receive,
a dividend payable (whether payable in cash, securities,
property or in any other form); or
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(2) the Company shall make a record of the holders of
its Common Stock for the purpose of entitling them to
subscribe for or purchase any shares of any class or to
receive any other rights; or
(3) the Company shall set a date for any
reclassification other reorganization of the capital stock of
the Company, consolidation or merger of the Company with or
into another corporation, or conveyance of all or
substantially all of the assets of the Company, or
(4) the Company shall set a date for the voluntary or
involuntary dissolution, liquidation or winding upon of the
Company:
then, in any such case, the Company shall mail to the Holder of this
Warrant at least 30 days prior to such record date or the date set for
any actions described in subparagraphs (d)(1) through (d)(3) above, a
notice advising such Holder of the date or expected date on which a
record is to be taken for the purpose of such dividend, distribution of
rights or the date on which such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding
up is to take place, as the case may be. Such notice shall also specify
the date or expected date, if any is to be fixed, as of which holders
of Common Stock of record shall be entitled to participate in said
dividend, distribution of rights, or shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation,
merger, conveyance dissolution, liquidation or winding up, as the case
may be. Each such written notice shall be given by certified mail,
postage prepaid, return receipt requested, addressed to the holder of
the Warrant at the address of such holder as shown on the books of the
Company.
e. In case the Company, at any time while this Warrant shall
remain valid and unexercised, shall sell more than one-half of its
property, or dissolve, liquidate or wind up its affairs or sell or
dispose of all or any part of the assets, securities or property of any
wholly-owned subsidiary, the Holder of this Warrant shall thereafter be
entitled to receive upon exercise hereof (in lieu of such shares of
Common Stock underlying this Warrant) and the same kind and amount of
any securities or assets a may be issuable, distributable or payable
upon any such sole, dissolution, liquidation or winding up with respect
to such number of shares of Common Stock of the Company as would
otherwise have been issuable upon exercise of this Warrant. The Company
shall mail notice thereof by registered mail to the Holder and shall
make no distribution to the stockholders of the Company until the
expiration of thirty (30) days from the date of such mailing: provided,
however, that in any such event if the Holder shall not exercise this
Warrant within thirty (30) days from the date of mailing such notice,
all rights herein granted not so exercised within such thirty (30) day
period shall thereafter become null and void. The Company shall not,
however, be prevented from consummating any such sale without awaiting
the expiration of such thirty (30) day period, it being the intent and
purposes hereof to enable the Holder upon exercise of this Warrant to
participate in the distribution of the consideration to be received by
the Company upon any such sale or in the distribution of assets upon
any dissolution or liquidation of the Company.
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f. In the event the Company, at any time while this Warrant
shall remain valid and unexercised, shall propose to declare any
partial liquidating dividend, it shall notify the Holder of this
Warrant as set forth in Subsection (d) of this Section 3. The term
"partial liquidating dividend" shall, include a dividend in cash or
other property of an amount that, together with all other dividends in
cash or other property paid or declared and set aside for payment, is
equal to or greater then 40% of the cumulative consolidated net income
of the Company subsequent to one year from the date hereof.
g. The provisions of this Section 3 are for the purpose of,
and shall be to the effect that upon any exercise of this Warrant the
Holder shall be entitled to receive the same amount and, kind of
securities and other property that it would have been entitled to
receive as the owner at all times subsequent to the date hereof the
number of shares of Common Stock issuable upon exercise of the Warrant.
4. Covenants of the Company. The Company hereby covenants and agrees
that prior to the expiration of this Warrant by exercise or by its terms:
a. The Company will not by amendment of its Certificate of
Incorporation, as they may currently exist, or through reorganization,
consolidation, merger, dissolution, or see of assets, or by any other
voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by the Company, but will at all times
in good faith assist, insofar as it is able, in the carrying out of all
provisions of this Warrant and in the taking of all other actions that
may be necessary in order to protect the rights of the Holder against
dilution.
b. If at any time or from time to time, the Company shall, by
subdivision, consolidation or reclassification of shares, or otherwise,
change as a whole the outstanding shares of Common Stock into a
different number or class of shares, the number and class of shares as
so changed shall, for the purpose of each Warrant and the terms and
conditions hereof, replace the shares outstanding immediately prior to
such change, and the Exercise Price in effect, and the number of Shares
purchasable under each Warrant, immediately prior to the date on which
such change becomes effective, shall be proportionately adjusted.
c. Irrespective of any adjustment or change in the Warrant
Exercise Price, the number of shares of Common Stock issuable upon
conversion of the Shares actually purchasable under each Warrant of
like tenor, the Warrants theretofore and thereafter issued may continue
to express the Warrant Exercise Price per Share and the number of
Shares purchasable thereunder as the Warrant Exercise Price per Share
and the number of Shares purchasable were expressed on the Warrants
when initially issued.
d. If at any time while any Warrant is outstanding the Company
consolidates with or merges into another corporation, firm or entity,
or otherwise enters into a form of business combination, the Holder,
upon exercise hereof, shall be entitled to purchase, with respect to
each share of Common Stock issuable upon exercise of the Warrant, that
number of Shares to which a holder of one (1) share of Common Stock
would have been entitled upon the occurrence of such business
combination without any change in, or payment in
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addition to, the Warrant Exercise Price in effect immediately prior to
such merger or consolidation, and the Company shall take such steps in
connection with such consolidation or merger as may be necessary to
assure that all the provisions of each Warrant shall thereafter be
applicable, as nearly as reasonably may be, in relation to any
securities or property thereafter deliverable upon the exercise of each
Warrant. The Company shall not effect any such consolidation, merger or
other form of business combination unless, prior to the consummation
thereof, the successor corporation (if other than the Company)
resulting therefrom shall assume, by written instrument executed and
mailed to the registered holder of each Warrant at the address of such
holder shown on the books of the Company, the obligation to deliver to
such holder such securities, or property such holder shall be entitled
to purchase in accordance with the foregoing provisions.
e. Upon the happening of any event requiring an adjustment of
the Warrant Exercise Price hereunder, the Company shall forthwith give
written notice thereof to the registered Holder of each Warrant,
stating the adjusted Warrant Exercise Price and the adjusted number of
shares of Common Stock issuable upon the exercise thereof resulting
from such event, and setting forth in reasonable detail the method of
calculation. The certificate of either the Company's independent
certified public accountants or Chief Financial Officer shall be
conclusive evidence of the correctness of any computation made
hereunder unless contested by a Holder by written notice to the Company
within 14 days after the mailing thereof by the Company. Notice
pursuant to this paragraph shall be given by certified mail, postage
prepaid, return receipt requested, addressed to the registered holder
of each Warrant at the address of such holder appearing in the records
of the Company.
f. The Company shall at all times reserve and keep available,
out of its authorized and unissued capital stock, solely for the
purpose of providing for the exercise, forthwith upon the request of
the Holder of the Warrant(s) then outstanding and in effect, such
numbers of shares of Common Stock as shall, from time to time, be
sufficient for the Shares upon such exercise of the Warrants. The
Company shall, from time to time, in accordance with the laws of the
State of Delaware, increase the authorized amount of its capital stock,
if at any time the number of shares of Common Stock remaining unissued
and unreserved for other purposes shall not be sufficient to permit the
exercise of all Warrants then outstanding and in effect.
g. The Company covenants and agrees that all Shares that may
be issued upon the exercise of the rights represented by this Warrant
will, upon issuance be validly issued, fully paid and non-assessable,
and free from all taxes, liens and charges with respect to the issue
thereof (other than taxes in respect of any transfer occurring with
such issue). The Company further covenants and agrees that, during the
period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.
5. Loss, Theft, Destruction or Mutilation. In case this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or in lieu
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of and substitution of such Warrant so destroyed, lost or stolen, upon the
Holder of such Warrant filing the Company such evidence satisfactory to it that
such Warrant has been so mutilated, defaced, destroyed, lost or stolen and of
the ownership thereof by the Holder; provided, however, that the Company shall
be entitled, as a condition to the execution and delivery of such new Warrant,
to demand indemnity satisfactory to it and payment of expenses and charges
incurred in connection with the delivery of such new Warrant, except that no
bond shall be required from the Holder. All Warrants so surrendered to the
Company shall be canceled.
6. Record Owner. At the time of the surrender of this Warrant, together
with the form of subscription properly executed and payment of the Exercise
Price, the person exercising this Warrant shall be deemed to be the Holder of
record of the shares of Common Stock deliverable upon such exercise, in whole,
or in part, notwithstanding that the stock transfer of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to such person. The Company will pay all costs with
respect to the issuance of this Warrant or the shares of Common Stock issuable
upon exercise hereof, or thereof
7. Fractional Shares. No fractional Shares, fractional shares or scrip
representing fractional shares of Common Stock shall be issued upon the exercise
of this Warrant. With respect to any fraction of a. Share called for on such
exercise, the Holder may elect to receive, and the Company shall pay to the
Holder, an amount in cash equal to such fraction multiplied by the Exercise
Price. In the alternative, the Holder may elect to remit to the Company an
amount in cash equal to the difference between such fraction and one, multiplied
by the Exercise Price, and the Company will issue the Holder one share of Common
Stock in addition to the number of whole shares required by the exercise of the
Warrant; provided, however, that the Company shall not be obligated by the
operation of this Section 7 to issue Shares in the aggregate exceeding the
number of shares duty registered in accordance with the applicable federal and
state securities laws or as to which an exemption from registration has been
determined to be available.
8. Mandatory Exercise Provision. The Company may require that the
Warrants represented hereby be exercised prior to the Exercise Date, provided
that the average closing price of the underlying Shares of Common Stock as
adjusted herein, on any stock exchange, public bulletin board or other market
place for any twenty market days equals or exceeds U.S. $25.00 per share. Such
prices may be any combination of such markets and must not be from only one
source. Such Mandatory Exercise right must be exercised by the Company giving
ten days prior written notice to the Holder hereof. After receipt of such
notice, the Holder may exercise the Warrant as provided herein up until the
expiration of the notice period; provided, however, if the Holder requests prior
to the expiration of such notice period registration under the Securities Act of
1933 as amended, (the "Securities Act") of the underlying Shares pursuant to the
Registration Rights Agreement entered into by the Company in connection with the
issuance of the Warrant, the exercise of the Warrant may be deferred at the
election of the Holder until such registration is effective under the Securities
Act or until the Company's obligations to register such shares pursuant to the
Registration Rights Agreement has terminated. If the Warrant is not exercised
prior to the expiration of the notice period referred to above, the Warrant
shall cease to exist.
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9. Original Issue Taxes. The Company will pay all United States, state
and local (but not foreign) original issue taxes, if any, upon the issuance of
this Warrant or the Shares deliverable upon exercise hereof.
10. Mailing of notices, etc. All notices, and other communications from
the Company to the Holder of this Warrant shall be mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, to the
Holder, at the address set forth in the records of the Company, or to such other
address furnished to the Company in writing from time to time by the Holder of
this Warrant. All notices from the Holder of this Warrant to the Company shall
be mailed to the Company at World CallNet, Inc., Brecon House Meridian Gate, 000
Xxxxx Xxxx, Xxxxxx, X000XX, Xxxxxx Xxxxxxx, Attention: Xxxx Xxxxxxx-Xxxxxxx,
President.
11. Registration Under the Securities Act of 1933. This Warrant and the
Shares issuable upon exercise of this Warrant have not been registered under the
Securities Act or the securities acts of any state or foreign country by virtue
of the Registration Statement. This Warrant and all replacement Warrants and all
Shares issued upon exercise of the Warrant shall bear the following legend:
This Warrant, and the securities issuable upon the exercise of
this Warrant, have not been registered under the Securities
Act of 1933, as amended ("Securities Act") and may not be
sold, transferred or otherwise disposed of unless (i) the
Shares are registered under the Securities Act of 1933 and the
securities act of any state applicable to such sale, or (ii)
the proposed seller provides the Company with an opinion of
counsel that the securities are being sold in a transaction
which is except from the registration requirements of the
Securities Act of 1933 and any applicable state securities
acts and the Company is satisfied that no registration
statement is then required and that this Warrant and the
underlying securities may be sold, transferred or otherwise
disposed of in the manner contemplated without registration
under the Securities Act of 1933 or any state securities act.
12. Laws of the of Delaware. This Warrant shall be governed by,
interpreted under and construed in all respects in accordance with the laws of
the State of Delaware, irrespective of the place of domicile or residence of any
party. In the event of a controversy arising out of the interpretation,
construction, performance or breach of this Warrant, the parties hereby agree
and consent to the jurisdiction and venue of any State or Federal court of
competent jurisdiction.
13. Entire Agreement and Modification. The Company and the Holder of
this Warrant hereby represent and warrant that this Warrant is intended to and
does, contain and embody all of the understandings and agreements, both written
and oral, of the parties hereto with respect to the subject matter of this
Warrant, and that there exists no oral, agreement or understanding express or
implied, whereby the absolute, final and unconditional character nature of this
Warrant be in any way invalidated, empowered or affected. A modification or
waiver of any of the terms, conditions or
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provisions of this Warrant shall be effective only if made in writing and
executed with the same formality as this Warrant.
This Warrant will become wholly void and of no effect and the rights
evidenced hereby will terminate unless exercised in accordance with the terms
and provision hereof at or before 5:00 P.M., London Time, on the Expiration
Date.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the Company by its duty authorized officer has
executed this Warrant on this 9th day of April, 1999.
Attest: World CallNet, Inc
____________________ By: _______________________________
Xxxx Xxxxxxx-Xxxxxxx, President
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FORM OF EXERCISE
The undersigned hereby irrevocably elects to exercise the purchase
rights represented by this Warrant for, and to purchase thereunder, ___________
Shares of World CallNet, Inc., a Delaware corporation, and herewith makes
payment of $10.00 per share, or at total of $__________ therefor, and requests
that such Shares be issued to:
------------------------------
(Print Name)
------------------------------
(Address)
------------------------------
(Taxpayer Identification Number)
Dated:
----------------------- ------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
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