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Exhibit 4.2
WARRANT AGREEMENT
among
FIBERNET TELECOM GROUP, INC.,
as the Borrower,
DEUTSCHE BANK SECURITIES INC.,
and
TORONTO DOMINION (TEXAS) INC.,
as the Beneficiaries.
DATED AS OF APRIL 11, 2000
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TABLE OF CONTENTS
ARTICLE I WARRANT CERTIFICATES............................................................. 2
Section 1.1 Warrant Certificates.................................................... 2
Section 1.2 Execution of Warrant Certificates....................................... 2
ARTICLE II REGISTRATION.................................................................... 2
Section 2.1 Registration to Beneficiaries........................................... 2
Section 2.4 Registration of Transfers and Exchanges................................. 3
ARTICLE III EXERCISE OF WARRANTS........................................................... 4
Section 3.1 Exercise................................................................ 4
ARTICLE IV PAYMENT OF TAXES................................................................ 6
Section 4.1 Payment................................................................. 6
ARTICLE V MUTILATED OR MISSING WARRANT CERTIFICATES........................................ 6
Section 5.1 Loss, Theft and Destruction of Warrant Certificates..................... 6
ARTICLE VI RESERVATION OF WARRANT SHARES................................................... 6
Section 6.1 Warrant Shares.......................................................... 6
Section 6.2 Obtaining Stock Exchange Listings....................................... 7
Section 6.3 Adjustment of Exercise Price and Number of Warrant Shares Issuable...... 7
Section 6.4 Adjustment for Change in Capital Stock.................................. 7
Section 6.5 Adjustment for Rights Issue............................................. 8
Section 6.6 Adjustment for Other Distributions...................................... 10
Section 6.7 Adjustment for Common Stock Issue....................................... 10
Section 6.8 Adjustment for Convertible Securities Issue............................. 12
Section 6.9 Current Market Price.................................................... 13
Section 6.10 Consideration Received.................................................. 13
Section 6.11 When De Minimis Adjustment May Be Deferred.............................. 14
Section 6.12 When No Adjustment Required............................................. 14
Section 6.13 Notice of Adjustment.................................................... 14
Section 6.14 Notice with respect to Certain Transactions............................. 14
Section 6.15 Reorganization of the Borrower.......................................... 14
Section 6.16 Borrower Determination Not Final........................................ 15
Section 6.17 When Issuance or Payment May Be Deferred................................ 15
Section 6.18 Adjustment in Number of Shares.......................................... 16
Section 6.19 Form of Warrants........................................................ 16
ARTICLE VII FRACTIONAL INTERESTS........................................................... 16
Section 7.1 Fractional Interests.................................................... 16
ARTICLE VIII NO DILUTION OR IMPAIRMENT; CAPITAL AND
OWNERSHIP STRUCTURE....................................................................... 17
Section 8.1 No Dilution............................................................. 17
ARTICLE IX MISCELLANEOUS................................................................... 17
Section 9.1 Notices to Warrant Holders.............................................. 17
Section 9.2 Notices to Borrower and Warrant Holder.................................. 19
Section 9.3 Supplements and Amendments.............................................. 20
Section 9.4 Successors.............................................................. 20
Section 9.5 Termination............................................................. 20
Section 9.6 Governing Law........................................................... 20
Section 9.5 Consent to Jurisdiction................................................. 21
Section 9.6 Waiver of Jury Trial.................................................... 21
Section 9.7 Reliance................................................................ 22
Section 9.8 Entire Agreement; Waivers............................................... 22
Section 9.9 Benefits of This Agreement.............................................. 22
Section 9.10 Counterparts............................................................ 22
Exhibit A - Form of Warrant Certificates
This WARRANT AGREEMENT (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Agreement") is entered into as of
April 11, 2000, among FIBERNET TELECOM GROUP, INC., a Delaware corporation (the
"Borrower"), DEUTSCHE BANK SECURITIES INC., and TORONTO DOMINION (TEXAS) INC.
(individually, a "Beneficiary" and, collectively, the "Beneficiaries").
Capitalized terms used herein and not defined herein shall have the meanings
specified in the Credit Agreement described below.
RECITALS
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A. The Borrower, the Lenders, the Administrative Agent, the Documentation
Agent and the Co-Syndications Agents have entered into a Credit Agreement, dated
as of April 11, 2000 (as amended, restated or otherwise modified from time to
time, the "Credit Agreement"), providing for, among other things, certain Loans
to be made by the Lenders thereunder to the Borrower;
B. The Borrower agrees that on the Closing Date, the Beneficiaries shall
collectively be entitled to receive common stock warrants ("Warrants"), to
purchase up to 3% of the fully-diluted common stock, $0.001 par value per share
(the "Common Stock"), of the Borrower, after giving effect to the exercise
thereof (the Common Stock or any security substituted for the Common Stock
issuable on exercise of the Warrants being referred to herein as the "Warrant
Shares"), at an initial exercise price equal to $[___] [To be calculated as
follows: (i) the average closing price for the Common Stock of the Borrower over
the 20 consecutive trading days ending on the day prior to the Closing Date,
multiplied by (ii) the number of Warrants to be converted to Common Stock of the
Borrower] (the "Exercise Price");
C. The Borrower agrees that (a) if the Loans remain outstanding on October
12, 2000, the Beneficiaries shall collectively be entitled to receive Warrants
to purchase up to an additional 1% of the Warrant Shares, (b) if the Loans
remain outstanding on April 12, 2001, the Beneficiaries shall collectively be
entitled to receive Warrants to purchase up to an additional 1% of the Warrant
Shares, (c) if the Loans remain outstanding on July 12, 2001, the Beneficiaries
shall collectively be entitled to receive Warrants to purchase up to an
additional 1% of the Warrant Shares, (d) if the Loans remain outstanding on
October 11, 2001, the Beneficiaries shall collectively be entitled to receive
Warrants to purchase up to an additional 1% of the Warrant Shares and (e) after
April 11, 2001 and before October 11, 2001, if the Borrower issues High Yield
Securities (as defined in and as contemplated by the Fee Letter), the
Beneficiaries shall collectively be entitled to receive the Warrants described
in clauses (c) and (d) in this Recital C, if the receipt of such Warrants is
required in connection with the issuance or placement of the High Yield
Securities, in each case, at the Exercise Price;
D. The Borrower agrees to execute the Warrants referred to in Recital B
above and deliver such Warrants to the Beneficiaries on the Closing Date in
accordance with the Credit Agreement.
E. The Borrower agrees to execute the Warrants referred to in Recital C
above and deliver such Warrants to an escrow agent on the date hereof, and such
escrow agent has agreed to deliver the Warrants to the Beneficiaries in
accordance with an escrow agreement, dated as of April 11, 2000 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Escrow Agreement"), among the Borrower, the Beneficiaries and BANKERS TRUST
COMPANY, as escrow agent.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
WARRANT CERTIFICATES
Section 1.1 Warrant Certificates
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The certificates evidencing the Warrants (the "Warrant Certificates") to be
delivered pursuant to this Agreement shall be substantially in the form set
forth in Exhibit A attached hereto.
Section 1.2 Execution of Warrant Certificates
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(a) The Warrant Certificates shall be signed on behalf of the Borrower by
its Chairman of the Board, Chief Executive Officer or its President or a Vice
President and by its Secretary or an Assistant Secretary. Each such signature
upon the Warrant Certificates may be in the form of a facsimile signature of the
present or any future Chairman of the Board, Chief Executive Officer President,
Vice President, Secretary or Assistant Secretary and may be imprinted or
otherwise reproduced on the Warrant Certificates.
(b) In case any officer of the Borrower who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Borrower, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Borrower; and any Warrant Certificate
may be signed on behalf of the Borrower by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Borrower to sign such Warrant Certificate, although at the date of the execution
of this Agreement any such person was not such officer.
ARTICLE II
REGISTRATION
Section 2.1 Registration to Beneficiaries
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The Borrower shall number and register the Warrant Certificates in a
register as they are issued. The Borrower may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and shall not be affected by any notice to the
contrary.
Section 2.2 Release of Warrants
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The Borrower agrees that it shall release Warrants representing the right
to acquire an aggregate of 3% of the fully-diluted Common Stock, of the Borrower
(calculated after giving effect to the exercise of such Warrants and all other
outstanding warrants, options and other convertible securities in accordance
herewith) at the time of such issuance to the Beneficiaries or their designees
on the Closing Date. The Borrower agrees that it shall deposit an aggregate of
4.0% of the fully-diluted Common Stock, of the Borrower (calculated after giving
effect to the exercise of such Warrants and all other outstanding warrants,
options and other convertible securities in accordance herewith) at the time of
issuance into escrow pursuant to the Escrow Agreement by the Borrower on the
date of this Agreement. The terms of this Agreement shall be in full force and
effect with respect to such Warrants, including, without limitation, the anti-
dilution provision of Article VI hereof.
Section 2.3 Allocation among Beneficiaries
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The Borrower shall release the Warrants to the Beneficiaries on the Closing
Date and the Escrow Agent shall release the Warrants on each date that the
Warrants are released to the Beneficiaries in accordance with the terms of the
Escrow Agreement. Each of the Beneficiaries shall be entitled to one-half of the
Warrants.
Section 2.4 Registration of Transfers and Exchanges.
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(a) The Borrower shall from time to time register the transfer of any
outstanding Warrant Certificates in a Warrant register to be maintained by the
Borrower upon surrender thereof accompanied by a written instrument or
instruments of transfer in form satisfactory to the Borrower, duly executed by
the registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Borrower.
(b) The Warrant holders agree that, prior to any proposed transfer of a
Warrant or a Warrant Share, if such transfer is not made pursuant to an
effective Registration Statement under the Securities Act of 1933, as amended
(the "Act"), such transferee will, if requested by the Borrower, deliver to the
Borrower:
(i) an investment covenant reasonably satisfactory to the Borrower signed
by the proposed transferee;
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(ii) an agreement by such transferee to the impression of the restrictive
investment legend set forth below on such Warrant or Warrant Shares;
(iii) an agreement by such transferee that the Borrower may place a
notation on the stock books of the Borrower or a "stop transfer order" with any
transfer agent or registrar with respect to such Warrant Shares;
(iv) an agreement by such transferee to be bound by the provisions of this
Section 4 relating to the transfer of such Warrant or Warrant Shares; and
(v) an opinion of counsel, reasonably satisfactory in form and substance
to the Borrower, to the effect that the proposed transfer of such Warrants or
Warrant Shares (as the case may be) may be made without registration under the
Act.
(c) The Warrant holders agree that each certificate representing Warrant
Shares will bear the following legend:
"THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(d) Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Borrower at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be cancelled and disposed of by the Borrower.
ARTICLE III
EXERCISE OF WARRANTS
Section 3.1 Exercise
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(a) Subject to the terms of this Agreement, each Warrant holder shall
have the right, which may be exercised until 5:00 p.m., New York City time on
April 11, 2005 (the "Expiration Date"), to receive from the Borrower the number
of fully paid and nonassessable Warrant Shares that the holder may at the time
be entitled to receive in accordance herewith and with the Escrow Agreement upon
the exercise of such Warrant and payment of the Exercise Price. Each Warrant not
exercised prior to 5:00 p.m., New York City time, on the Expiration Date shall
become void and all rights thereunder and all rights in respect thereof under
this Agreement shall cease as of such time. No adjustments as to dividends will
be made upon exercise of the Warrants.
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(b) A Warrant may be exercised upon surrender to the Borrower at its office
designated for such purpose (the address of which is set forth in Section 9.2
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hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States of America or a
broker or dealer which is a member of a registered securities exchange or the
National Association of Securities Dealers, Inc., ("NASD") and upon payment to
the Borrower of the Exercise Price as adjusted as herein provided, for the
number of Warrant Shares in respect of which such Warrants are then exercised.
Payment of the aggregate Exercise Price shall be made (i) in cash or by
certified or official bank check payable to the order of the Borrower, (ii)
through the surrender of preferred equity securities or indebtedness of the
Borrower having a liquidation preference or principal amount, as the case may
be, equal to the aggregate Exercise Price to be paid (the Borrower will pay the
accrued interest or dividends on such surrendered debt or preferred equity
securities in cash at the time of surrender notwithstanding the stated terms
thereof), (iii) by tendering Warrants having a fair market value equal to the
Exercise Price or (iv) with any combination of (i), (ii) or (iii). For purpose
of clause (iii) above, the fair market value of the Warrants shall be determined
as follows: (A) to the extent the Common Stock is publicly traded and listed on
the Nasdaq National Securities Market or a national securities exchange, the
fair market value shall be equal to the difference between (1) the Quoted Price
of the Common Stock on the date of exercise and (2) the Exercise Price; or (B)
to the extent the Common Stock is not publicly traded, or otherwise is not
listed on a national securities exchange, the fair market value shall be equal
to the value per Warrant as determined in good faith by the Board of Directors
of the Borrower pursuant to Section 6.16.
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(c) Subject to the provisions of Section 4.1 hereof, upon such surrender of
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Warrants and payment of the Exercise Price, the Borrower shall issue and cause
to be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 7.1;
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provided, however, that if any consolidation, merger or lease or sale of assets
is proposed to be effected by the Borrower as described in Section 6.15 hereof,
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or a tender offer or an exchange offer for shares of Common Stock of the
Borrower shall be made, upon such surrender of Warrants and payment of the
Exercise Price as aforesaid, the Borrower shall, as soon as possible, but in any
event not later than two Business Days thereafter, issue and cause to be
delivered the full number of Warrant Shares issuable upon the exercise of such
Warrants in the manner described in this sentence together with cash as provided
in Section 7.1. Such certificate or certificates shall be deemed to have been
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issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date of the surrender
of such Warrants and payment of the Exercise Price.
(d) The Warrants shall be exercisable, at the election of the holders
thereof, either in full or, from time to time, in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to
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the date of expiration of the Warrants, a new certificate evidencing the
remaining Warrant or Warrant will be issued and delivered pursuant to the
provisions of this Section and of Section 1.2 hereof.
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(e) All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by the Borrower. The Borrower shall keep copies of
this Agreement and any notices given or received hereunder available for
inspection by the holders during normal business hours at its office.
ARTICLE IV
PAYMENT OF TAXES
Section 4.1 Payment
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The Borrower will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided,
however, that the Borrower shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Borrower shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Borrower the amount of such tax or shall
have established to the satisfaction of the Borrower that such tax has been
paid.
ARTICLE V
MUTILATED OR MISSING WARRANT CERTIFICATES
Section 5.1 Loss, Theft and Destruction of Warrant Certificates
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In case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Borrower may in its discretion issue, in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence reasonably
satisfactory to the Borrower of such loss, theft or destruction of such Warrant
Certificate and indemnity, if requested, also reasonably satisfactory to it.
Applicants for such substitute Warrant Certificates shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Borrower may prescribe.
ARTICLE VI
RESERVATION OF WARRANT SHARES
Section 6.1 Warrant Shares
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(a) The Borrower will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Stock or its authorized and issued
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Common Stock held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the exercise of all
outstanding Warrants.
(b) The Borrower or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Borrower's capital stock issuable upon the exercise of any of the rights of
purchase represented by the Warrants will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Borrower will keep a copy of this Agreement on file with
the Transfer Agent and with every subsequent transfer agent for any shares of
the Borrower's capital stock issuable upon the exercise of the rights of
purchase represented by the Warrants. The Borrower will furnish such Transfer
Agent a copy of all notices of adjustments and certificates related thereto,
transmitted to each holder pursuant to Section 9.1 hereof.
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(c) Before taking any action which would cause an adjustment pursuant to
Article VI hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Borrower will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Borrower may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
(d) The Borrower covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue and payment of the appropriate Exercise
Price, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
Section 6.2 Obtaining Stock Exchange Listings
---------------------------------
The Borrower will, from time to time, take all action which may be
necessary so that the Warrant Shares, upon their issuance upon the exercise of
Warrants, will be listed on the principal securities exchanges and markets
within the United States of America, if any, on which other shares of Common
Stock are then listed for so long as such other shares of Common Stock are so
listed.
Section 6.3 Adjustment of Exercise Price and Number of Warrant Shares
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Issuable
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(a) The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Article VI. For purposes of this
Article VI, "Common Stock" means shares now or hereafter authorized of any class
of common stock of the Borrower and any other stock of the Borrower, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Borrower without limit as to per share amount.
Section 6.4 Adjustment for Change in Capital Stock
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(a) If the Borrower:
(i) pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(iii) combines its outstanding shares of Common Stock into a smaller number
of shares;
(iv) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares of its
capital stock;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Borrower which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
(b) The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
(c) If, after an adjustment, a holder of a Warrant may receive shares of
two or more classes of capital stock of the Borrower upon the exercise of such
Warrant, then the Borrower shall determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After such allocation, the
exercise privilege and the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Article VI.
(d) Such adjustment shall be made successively whenever any event listed
above shall occur.
Section 6.5 Adjustment for Rights Issue.
----------------------------
(a) If the Borrower distributes any rights, options or warrants entitling
any person to subscribe for Common Stock or securities convertible into, or
exchangeable or exercisable for, Common Stock at an offering price which is less
than the Current Market Price per share on that record date for such issuance,
the Exercise Price shall be adjusted in accordance with the formula:
N x P
O + _____
M
E' = Ex _________
O + N
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where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Current Market Price per share of Common Stock on the record
date.
(b) For purposes of this Section 6.5, the "offering price" shall include
-----------
the amount initially paid for such rights, options or warrants plus the amount
to be paid upon exercise or conversion of such rights, options or warrants.
(c) The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(d) This Section 6.5 does not apply to:
-----------
(i) rights, options or warrants issued to the Borrower's employees under
bona fide employment benefit plans adopted by the Board of Directors and
approved by the holders of Common Stock when required by law, if such rights
would otherwise be covered by this Section 6.5 (but only to the extent that the
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aggregate number of rights, options or warrants excluded hereby and issued after
the date of this Agreement shall not exceed the right to subscribe for more than
[10%] of the Common Stock outstanding on the date of this Agreement); [DISCUSS
BREADTH OF ANTI-DILUTION PROTECTION]
(ii) rights, options or warrants issued to persons in a bona fide public
offering pursuant to a firm commitment underwriting; or
(iii) rights, options or warrants issued to persons who are not affiliates
of the Borrower in a bona fide private placement through a placement agent that
is a member firm of NASD (except to the extent that any discount from the
Current Market Price attributable to restrictions on transferability of such
rights, options or warrants, as determined in good faith by the Board of
Directors pursuant to Section 6.16 and described in a Board of Directors'
------------
resolution, shall exceed [15%]). [DISCUSS BREADTH OF ANTI-DILUTION PROTECTION]
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Section 6.6 Adjustment for Other Distributions
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(a) If the Borrower distributes to all holders of its Common Stock any of
its assets (including but not limited to cash), debt securities, preferred
stock, or any rights or warrants to purchase debt securities, preferred stock,
assets or other securities of the Borrower, the Exercise Price shall be adjusted
in accordance with the formula:
M-F
E' = Ex ___
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Current Market Price per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock. The Board
of Directors shall determine the fair market value pursuant to
Section 6.16 based upon the trading prices of publicly traded
------------
securities where applicable.
(b) The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
(c) This Section does not apply to rights, options or warrants referred to
in Section 6.5.
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Section 6.7 Adjustment for Common Stock Issue
---------------------------------
(a) If the Borrower issues shares of Common Stock for a consideration per
share less than the Current Market Price per share on the date the Borrower
fixes the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
P
--
E' = Ex O + M
-------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
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O = the number of shares outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Current Market Price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
(b) The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
(c) This Section 6.7 does not apply to:
-----------
(i) any of the transactions described in Section 6.4, Section 6.5 and
----------- -----------
Section 6.6 of this Article VI;
-----------
(ii) the exercise of warrants or options, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock;
(iii) Common Stock issued upon the exercise of rights or warrants issued to
the holders of Common Stock;
(iv) Common Stock issued to the Borrower's employees under bona fide
employment benefit plans adopted by the Board of Directors and approved by the
holders of Common Stock when required by law, if such rights would otherwise be
covered by this Section 6.7 (but only to the extent that the aggregate shares of
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Common Stock excluded hereby and issued after the date of this Agreement shall
not exceed more than [10%] of the Common Stock outstanding on the date of this
Agreement); [DISCUSS BREADTH OF ANTI-DILUTION PROTECTION]
(v) Common Stock issued to shareholders of any person that is not
affiliated with the Borrower which merges into the Borrower in proportion to
their stock holdings of such person immediately prior to such merger, upon such
merger;
(vi) Common Stock issued in a bona fide public offering pursuant to a firm
commitment underwriting; or
(vii) Common Stock issued to persons who are not affiliates of the Borrower
in a bona fide private placement through a placement agent which is a member
firm of NASD (except to the extent that any discount from the Current Market
Price attributable to restrictions on transferability of the Common Stock, as
determined in good faith by the Board of Directors pursuant to Section 6.16 and
------------
described in a Board resolution, shall exceed [15%]).
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Section 6.8 Adjustment for Convertible Securities Issue
-------------------------------------------
(a) If the Borrower issues any securities convertible into or
exchangeable for Common Stock (other than securities issued in transactions
described in Sections 6.5 and Section 6.6 of this Article VI) for a
------------ -----------
consideration per share of Common Stock initially deliverable upon conversion or
exchange of such securities less than the Current Market Price per share on the
date of issuance of such securities, the Exercise Price shall be adjusted in
accordance with this formula:
P
-
E' = E x O + M
-----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance
of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the Current Market Price per share on the date of issuance of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or exchange
rate.
(b) The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
(c) If all of the Common Stock deliverable upon conversion or exchange of
such securities has not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price that would then be in effect had "D" in the above formula been
equal to the actual number of shares of Common Stock issued upon conversion or
exchange of such securities.
(d) This Section 6.8 does not apply to:
-----------
(i) convertible securities issued to shareholders of any person that is
not affiliated with the Borrower and that merges into the Borrower, or with a
subsidiary of the Borrower, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger,
(ii) convertible securities issued in a bona fide public offering pursuant
to a firm commitment underwriting or
12
(iii) convertible securities issued to persons who are not affiliates of
the Borrower in a bona fide private placement through a placement agent which is
a member firm of the National Association of Securities Dealers, Inc. (except
to the extent that any discount from the Current Market Price attributable to
restrictions on transferability of Common Stock issuable upon conversion, as
determined in good faith by the Board of Directors pursuant to Section 6.16 and
------------
described in a Board resolution, shall exceed [15%] of the then Current Market
Price). [DISCUSS BREADTH OF ANTI-DILUTION PROTECTION]
Section 6.9 Current Market Price
--------------------
(a) In Section 6.5, Section 6.6, Section 6.7 and Section 6.8 of this
----------- ----------- ----------- -----------
Article VI the "Current Market Price" per share of Common Stock on any date is
the average of the Quoted Prices of the Common Stock for 15 consecutive trading
days commencing 20 trading days before the date in question. The "Quoted Price"
of the Common Stock for any given trading day is the last reported sales price
of the Common Stock for that trading day as reported by Nasdaq National Market
System, or if the Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange, which price shall be
for consolidated trading if applicable to such exchange, or if the sales price
of the Common Stock is not so reported or listed, the last reported bid price of
the Common Stock. In the absence of one or more such quotations, the Board of
Directors of the Borrower shall determine the Current Market Price pursuant to
Section 6.16 in good faith.
------------
Section 6.10 Consideration Received.
-----------------------
(a) For purposes of any computation respecting consideration received
pursuant to Section 6.7 and Section 6.8 of this Article VI, the following shall
----------- -----------
apply:
(i) in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Borrower for any underwriting of the issue or otherwise in connection
therewith;
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors pursuant to Section 6.16, based upon the trading
------------
prices of publicly traded securities where appropriate (irrespective of the
accounting treatment thereof), whose determination shall be described in a Board
of Directors' resolution;
(iii) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall be
deemed to be the consideration received by the Borrower for the issuance of such
securities plus the additional minimum consideration, if any, to be received by
the Borrower upon the conversion or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses (i) and (ii) of
this subsection).
13
Section 6.11 When De Minimis Adjustment May Be Deferred
------------------------------------------
(a) No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
(b) All calculations under this Section 6.11 shall be made to the nearest
------------
cent or to the nearest 1/1000th of a share, as the case may be.
Section 6.12 When No Adjustment Required.
----------------------------
(a) In addition to the other exceptions provided above,
(i) no adjustment need be made for rights to purchase Common Stock
pursuant to a Borrower plan for reinvestment of dividends or interest;
(ii) no adjustment need be made for a change in the par value or no par
value of the Common Stock; and
(iii) to the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
Section 6.13 Notice of Adjustment.
---------------------
Whenever the Exercise Price is adjusted, the Borrower shall provide the
notices required by Article IX hereof.
Section 6.14 Notice with respect to Certain Transactions.
--------------------------------------------
(a) If:
(i) the Borrower takes any action that would require an adjustment in the
Exercise Price pursuant to Section 6.4, Section 6.5, Section 6.6, Section 6.7 or
----------- ----------- ----------- -----------
Section 6.8 of this Article VI;
-----------
(ii) the Borrower takes any action that would require a supplemental
Warrant Agreement pursuant to this Section 6.14; or
------------
(iii) there is a liquidation or dissolution of the Borrower,
the Borrower shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Borrower shall mail the notice at least
15 days before such date. Failure to mail the notice or any defect in it shall
not affect the validity of the transaction.
Section 6.15 Reorganization of the Borrower.
-------------------------------
14
(a) If the Borrower consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Borrower, or the person to which such sale or
conveyance shall have been made, shall enter into a supplemental Warrant
Agreement so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Article VI. The successor Borrower shall mail to Warrant holders a notice
describing the supplemental Warrant Agreement.
(b) If the issuer of securities deliverable upon exercise of Warrants under
the supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
(c) If this Section 6.15 applies, Section 6.4, Section 6.5, Section 6.6,
------------ ----------- ----------- -----------
Section 6.7 and Section 6.8 of this Article VI do not apply.
----------- -----------
Section 6.16 Borrower Determination Not Final.
---------------------------------
Any determination that the Borrower or its Board of Directors must make
pursuant to this Agreement shall be made in good faith and shall be binding on
the holders of Warrants, except as set forth herein. The Borrower shall give
each holder of Warrants written notice of any such determination by the Borrower
or its Board of Directors. If a majority of the holders of the Warrants do not
agree with any such determination by the Borrower or its Board of Directors,
such holders may request, in a notice delivered to the Borrower not later than
15 days after the date on which the holders received notice of such
determination from the Borrower, that such determination be made, at the cost of
the Borrower, by an investment banking firm (or, if an investment banking firm
is generally not qualified to render such a determination, an appraisal firm) of
recognized national standing, which determination shall be final and binding on
the Borrower and the holders of Warrants, absent manifest error.
Section 6.17 When Issuance or Payment May Be Deferred.
-----------------------------------------
In any case in which this Article VI shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified event,
the Borrower may elect to defer until the occurrence of such event (i) issuing
to the holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Borrower, if any, issuable upon such exercise
over and above the Warrant Shares and other capital stock of the Borrower, if
any, issuable upon such exercise on the basis of the Exercise Price and (ii)
paying to such holder any amount in cash in lieu of a fractional share pursuant
to Section 7.1; provided, however, that the Borrower shall deliver to such
-----------
holder a due xxxx or other appropriate instrument evidencing such
15
holder's right to receive such additional Warrant Shares, other capital stock
and cash upon the occurrence of the event requiring such adjustment.
Section 6.18 Adjustment in Number of Shares.
-------------------------------
Upon each adjustment of the Exercise Price pursuant to this Article VI,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest hundredth) obtained from the following formula:
N' = N x E
-
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
Section 6.19 Form of Warrants.
-----------------
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
ARTICLE VII
FRACTIONAL INTERESTS
Section 7.1 Fractional Interests
--------------------
The Borrower shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would other than
pursuant to the provisions of this Article VII, be issuable on the exercise of
any Warrants (or specified portion thereof), the Borrower shall pay an amount in
cash equal to the fair market value of such Warrant (as determined in accordance
with Article III hereof) on the day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
16
ARTICLE VIII
NO DILUTION OR IMPAIRMENT; CAPITAL AND OWNERSHIP STRUCTURE
Section 8.1 No Dilution
-----------
(a) If any event shall occur as to which the provisions of Article VI are
not strictly applicable, but the failure to make any adjustment would adversely
affect the purchase rights represented by the Warrants in accordance with the
essential intent and principles of such Section, then, in each such case, the
Borrower shall appoint an investment banking firm of recognized national
standing that does not have a direct or material indirect financial interest in
the Borrower or any of its Subsidiaries, which has not been, and, at the time it
is called upon to give independent financial advice to the Borrower, is not (and
none of its directors, officers, employees, affiliates or stockholders are) a
promoter, director or officer of the Borrower or any of its Subsidiaries, which
shall give their opinion upon the adjustment, if any, on a basis consistent with
the essential intent and principles established in Article VI, necessary to
preserve, without dilution, the purchase rights represented by the Warrants.
Upon receipt of such opinion, the Borrower will promptly mail a copy thereof to
the holders of the Warrants and shall make the adjustments described therein.
(b) The Borrower will not, by amendment of its certificate of incorporation
or through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of the Warrants against dilution or other
impairment. Without limiting the generality of the foregoing, the Borrower (a)
will take all such action as may be necessary or appropriate in order that the
Borrower may validly and legally issue fully paid and nonassessable shares of
Common Stock on the exercise of the Warrants from time to time outstanding and
(b) will not take any action which results in any adjustment of the Exercise
Price if the total number of Warrant Shares issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock then authorized by the Borrower's certificate of incorporation and
available for the purposes of issue upon such exercise. A consolidation,
merger, reorganization or transfer of assets involving the Borrower covered by
Section 6.15 shall not be prohibited by or require any adjustment under this
------------
Article VIII.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices to Warrant Holders.
--------------------------
(a) Upon any adjustment of the Exercise Price pursuant to Article VI, the
Borrower shall promptly thereafter (i) cause to be filed with the Borrower a
certificate of the Borrower's Chief Financial Officer setting forth the Exercise
Price after such adjustment and setting forth in
17
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register
written notice of such adjustments by first-class mail, postage prepaid. Where
appropriate, such notice may be given in advance and included as a part of the
notice required to be mailed under the other provisions of this Article IX.
(b) In the event that:
(i) the Borrower shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or purchase shares
of Common Stock or of any other subscription rights or warrants; or
(ii) the Borrower shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in Section 6.4); or
-----------
(iii) of any consolidation or merger to which the Borrower is a party and
for which approval of any shareholders of the Borrower is required, or of the
conveyance or transfer of the properties and assets of the Borrower
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or a tender offer or exchange offer for
shares of Common Stock; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding
up of the Borrower; or
(v) the Borrower proposes to take any action (other than actions of the
character described in Section 6.4) which would require an adjustment of the
-----------
Exercise Price pursuant to Article VI; then the Borrower shall cause to be given
to each of the registered holders of the Warrant Certificates at his address
appearing on the Warrant register, at least 20 days (or 10 days in any case
specified in clauses (i) or (ii) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating the
date as of which the holders of record of shares of Common Stock to be entitled
to receive any such rights, options, warrants or distribution are to be
determined, or the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding
18
up. The failure to give the notice required by this Article IX or any defect
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action. Any notice requirement
under this Section 13 shall be in addition to any notice requirement under
----------
Section 6.15; provided that the Borrower may deliver one notice that meets all
------------
of the conditions of Section 6.15 and this Article IX, which notice shall be
------------
deemed to have been delivered pursuant to both such Sections.
(c) Subject to Section 6.16, nothing contained in this Agreement or in
------------
any of the Warrant Certificates shall be construed as conferring upon the
holders thereof the right to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
Directors of the Borrower or any other matter, or any rights whatsoever as
shareholders of the Borrower.
Section 9.2 Notices to Borrower and Warrant Holder.
---------------------------------------
(a) Any notice or demand authorized by this Agreement to be given or made
by the registered holder of any Warrant Certificate to or on the Borrower shall
be sufficiently given or made when and if delivered in person or by overnight
courier, addressed to the office of the Borrower expressly designated by the
Borrower at its office for purposes of this Agreement (until the Warrant holders
are otherwise notified in accordance with this Section by the Borrower), as
follows:
To the Borrower:
---------------
FiberNet Telecom Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
To the Beneficiaries:
--------------------
Deutsche Bank Securities Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxx
Telecopy: (000) 000-0000
Toronto Dominion (Texas) Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: (000) 000-0000
19
(b) Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) one Business Day after being delivered, if delivered by telecopier with
confirmation of good transmission, (c) one Business Day after being sent by
overnight courier, if sent by overnight courier, (d) two Business Days after
being sent by Federal Express or United Parcel Service, if sent by Federal
Express or United Parcel Service, or (e) three Business Days after being sent,
if sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of
the other parties hereto.
Section 9.3 Supplements and Amendments.
--------------------------
The Borrower may from time to time supplement or amend this Agreement
without the approval of any holders of Warrant Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Borrower may deem necessary or desirable; provided that any such supplement or
amendment shall not in any way adversely affect the interests of the holders of
Warrant Certificates. All other amendments, modifications or supplements to
this Agreement may only be made in a written agreement executed by each of the
parties hereto.
Section 9.4 Successors.
----------
Each of the Beneficiaries may assign its rights and obligations hereunder
to any person without the consent of any party hereto. The Borrower may not
assign its obligations hereunder. All the covenants and provisions of this
Agreement by or for the benefit of the Borrower shall bind and inure to the
benefit of its respective successors and assigns hereunder.
Section 9.5 Termination
-----------
This Agreement shall terminate at 5:00 p.m., New York City time on April
11, 2005. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised.
Section 9.6 Governing Law
-------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT WHERE THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION IS REQUIRED AS A MATTER OF LAW. EACH PARTY
HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR
20
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.5 Consent to Jurisdiction.
------------------------
Each of the parties agrees that all actions, suits or proceedings arising
out of or based upon this Agreement or the subject matter hereof may be brought
and maintained in the federal district court in the Southern District of New
York. Each of the parties hereby by execution hereof (i) hereby irrevocably
submits to the non-exclusive jurisdiction of such court in New York, New York,
for the purpose of any action, suit or proceeding arising out of or based upon
this Agreement or the subject matter hereof and (ii) hereby waives to the extent
not prohibited by applicable law, and agrees not to assert, by way of motion, as
a defense or otherwise, in any such action, suit or proceeding, any claim that
it is not subject personally to the jurisdiction of the above-named court, that
it is immune from extraterritorial injunctive relief or other injunctive relief,
that its property is exempt or immune from attachment or execution, that any
such action, suit or proceeding may not be brought or maintained in the above-
named court should be dismissed on the grounds of forum non conveniens, should
be transferred to any court other than the above-named court, should be stayed
by virtue of the pendency of any other action, suit or proceeding in any court
other than the above-named court, or that this Agreement or the subject matter
hereof may not be enforced in or by the above-named court. Each of the parties
hereto hereby consents to service of process in any such suit, action or
proceeding in any manner permitted by the laws of the State of New York, agrees
that service of process by registered or certified mail, return receipt
requested, at the address specified in or pursuant to Section 9.2 hereof is
-----------
reasonably calculated to give actual notice and waives and agrees not to assert
by way of motion, as a defense or otherwise, in any such action, suit or
proceeding any claim that service of process made in accordance with Section 9.2
-----------
hereof does not constitute good and sufficient service of process. The
provisions of this Section 9.5 shall not restrict the ability of any party to
-----------
enforce in any court any judgment obtained in the federal district court in the
Southern District of New York.
Section 9.6 Waiver of Jury Trial.
---------------------
To the extent not prohibited by applicable law which cannot be waived, each
of the parties hereto hereby waives, and covenants that it will not assert
(whether as plaintiff, defendant, or otherwise), any right to trial by jury in
any forum in any respect of any issue, claim, demand, cause of action, action,
suit or proceeding arising out of or based upon this
21
Agreement or the subject matter hereof, in each case whether now existing or
hereafter arising and whether in contract or tort or otherwise. Any of the
parties hereto may file an original counterpart or a copy of this Section 4.5
-----------
with any court as written evidence of the consent of each of the parties hereto
to the waiver of his or its right to trial by jury.
Section 9.7 Reliance.
--------
Each of the parties hereto acknowledges that it has been informed by each
other party that the provisions of this Section constitute a material inducement
upon which such party is relying and will rely in entering into this Agreement
and the transactions contemplated hereby.
Section 9.8 Entire Agreement; Waivers.
-------------------------
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties with respect to such subject matter. No
waiver of any provision of this Agreement (a) shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar), (b)
shall constitute a continuing waiver unless otherwise expressly provided therein
or (c) shall be effective unless in writing and executed by each party hereto.
Section 9.9 Benefits of This Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Borrower and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this Agreement;
but this Agreement shall be for the sole and exclusive benefit of the Borrower
and the registered holders of the Warrant Certificates.
Section 9.10 Counterparts.
------------
This Agreement and any amendments, waivers, consents, or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto. Delivery of an
executed counterpart of a signature page to this Agreement or to any amendments,
waivers, consents or supplements hereof by telecopier shall be as effective as
delivery of a manually executed counterpart thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed by their respective authorized representatives as of the day
and year first above written.
FIBERNET TELECOM GROUP, INC.,
as Borrower
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
DEUTSCHE BANK SECURITIES INC.,
as Beneficiary
By: /s/ Xxx X. Xxxxxx
---------------------------------------
Name: Xxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title Assistant Vice President
TORONTO DOMINION (TEXAS) INC.,
as Beneficiary
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
Title Vice President
A-1
EXHIBIT A
Warrant Certificate
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
EXERCISABLE ON OR BEFORE APRIL 11, 2005
No. _____ Warrant to purchase _______ shares
Warrant Certificate
[BENEFICIARY]
This Warrant Certificate certifies that ______________, or its registered
assigns, is the registered holder of Warrants expiring April 11, 2005 (the
"Warrants") to purchase Common Stock, par value $0.001 per share (the "Common
Stock"), of FiberNet Telecom Group, Inc., a Delaware corporation (the
"Borrower"). Each Warrant entitles the holder upon exercise to receive from the
Borrower on or before 5:00 p.m. New York City Time on April 11, 2005, an amount
of fully paid and nonassessable shares of Common Stock as set forth above (the
"Warrant Shares") at the initial exercise price per share (the "Exercise Price")
equal to [_____], payable as provided in the Warrant Agreement referred to on
the reverse hereof upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Borrower designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time on April
11, 2005, and to the extent not exercised by such time such Warrants shall
become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
A-2
This Warrant Certificate shall not be valid unless executed by the
Borrower.
A-3
IN WITNESS WHEREOF, FiberNet Telecom Group, Inc. has caused this Warrant
Certificate to be signed by its Chief Executive Officer or President and by its
Secretary, each by his signature.
Dated:
FIBERNET TELECOM GROUP, INC.
By:_______________________________________
[Chief Executive Officer/President]
By:_______________________________________
Secretary
A-4
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring April 11, 2005 entitling the holder on
exercise to receive shares of Common Stock, par value $0.001 per share, of the
Borrower (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement, dated as of April 11, 2000 (the "Warrant Agreement"), duly
executed and delivered by the Borrower, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Borrower and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Borrower.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price at the office of the Borrower designated for such purpose.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Borrower will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Warrants. Said registration rights are set forth in full in
an Equity Registration Rights Agreement, dated as of April 11, 2000, among the
Borrower and certain investors named therein. A copy of the Equity Registration
Rights Agreement may be obtained by the holder hereof upon written request to
the Borrower.
Warrant Certificates, when surrendered at the office of the Borrower by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
A-5
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Borrower a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Borrower may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Borrower shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Borrower.
A-6
[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of FIBERNET
TELECOM GROUP, INC. in the amount of $______ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is ___________ ______________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:
Date:
Signature Guaranteed:
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