EXHIBIT 4.5
Execution Copy
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (as may be amended from time to time, this
"Agreement"), is dated and effective this 20th day of October, 2000, by and
between XXXX.XXX INC., a Delaware corporation (the "Company"), and MCG FINANCE
CORPORATION, a Delaware corporation (the "Warrant Holder" or "MCG Finance"), as
agent for itself and the other lenders (collectively, the "Lenders") under that
certain Credit Facility Agreement, dated as of the date hereof (the "Credit
Agreement"), among Xxxx.xxx Holding Corp. ("Talk Holding"), Access One
Communications Corp. ("Access One") and certain affiliates and direct and
indirect subsidiaries of Talk Holding and Access One, on the one hand, and MCG
Finance and the Lenders, on the other.
WITNESSETH:
WHEREAS, pursuant to Section 1.7.6 of the Credit Agreement, the Warrant
Holder is entitled to the issuance by the Company of warrants in accordance with
the terms hereof (the "Warrants") to purchase shares of Common Stock (as defined
below) of the Company and to receive such other securities, rights and interests
as and to the extent provided in this Agreement; and
WHEREAS, the Company desires to set forth the terms and conditions
relating to the issuance and transfer of the Warrants, the issuance of
certificates representing the Warrants, the exercise of the Warrants, and the
rights of the holders thereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company and the Warrant
Holder, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require (all other
capitalized terms used herein and not otherwise defined herein shall have the
respective meanings ascribed to them in the Credit Agreement):
(a) "Common Stock" shall mean the common stock of the Company, $ 0.01
par value per share; provided, however, that the shares issuable upon exercise
of the Warrants shall include (i) only shares of such class designated in the
Company's Certificate of Incorporation as Common Stock, or (ii) in the case of
any reclassification, change, consolidation, merger, sale or conveyance of the
character referred to in Section 8(c) hereof, the stock, securities or property
provided for in such section; or (iii) in the case of any reclassification or
change in the outstanding shares of Common Stock issuable upon exercise of the
Warrants as a result of a subdivision or combination or a change in par value,
or from par value to no par value, or from no par value to par value, such
shares of Common Stock as so reclassified or changed.
(b) "Corporate Office" shall mean the office of the Company at which at
any particular time its principal business shall be administered, which office
is located at the date hereof at 0000 Xxxxx 000, Xxx Xxxx, XX 00000, but which
may be changed by the Company at any time and from time to time for purposes of
this Agreement. The Company shall provide written notice of any such change
within thirty (30) days thereafter to the Warrant Holder (provided that failure
to furnish such notice shall not constitute a default or breach by the Company
hereunder).
(c) "EBITDA" shall have the meaning ascribed to such term in Section
9.1.32 of the Credit Agreement; provided, however, that the calculation therefor
shall relate only to the Borrowers' fiscal quarter ending on December 31, 2000
or March 31, 2001, as the case may be, and not on a rolling four-quarter basis
as set forth in such Section.
(d) "Exercise Date" (if applicable) shall mean as to any Warrant, the
date on which the Company shall have received both (i) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder (as defined below) thereof or by its attorney duly authorized
in writing, and (ii) either (1) payment in cash, by wire transfer or by official
bank or certified check made payable to the Company, of an amount in lawful
money of the United States of America equal to the applicable Purchase Price (as
defined below) or (2) a written election executed by the Registered Holder to
effect a "cashless exercise" in accordance with the terms hereof; provided,
however, that the Exercise Date shall be on or after the Initial Warrant
Exercise Date, if applicable.
(e) "Initial Warrant Exercise Date" (if applicable) shall mean, as to
any Warrant, the date on which such Warrant shall have vested in accordance with
Section 4(b) hereof.
(f) "Purchase Price" (if applicable) shall mean the purchase price per
share to be paid upon exercise of each Warrant in accordance with the terms
hereof, which price shall be $4.36 per share of Common Stock, subject to
adjustment from time to time pursuant to the terms and provisions of Section 8
hereof and subject to the right of a Registered Holder to elect to effect a
"cashless exercise" with respect thereto.
(g) "Registered Holder" shall mean as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the Company
pursuant to Section 6 hereof. As of the date hereof, and until modified in
accordance with the terms hereof, the Registered Holder is the Warrant Holder.
(h) "Transfer Agent" shall mean the Company or, if applicable, a third
party stock transfer agent and registrar retained by the Company.
(i) "Warrants" has the meaning as set forth in the First Recital
hereof.
(j) "Warrant Certificate" has the meaning as set forth in Section 2(b)
hereof.
(k) "Warrant Expiration Date" shall mean, as to any Warrant, 5:00 P. M.
(New York time) on (i) the five-year anniversary date of the date on which the
applicable Warrant vests in accordance with Section 4(b) hereof or (ii) the date
on which the Company has met the EBITDA requirements set forth in Section 4(b)
hereof; provided that if such date shall in the State of New York be a holiday
or a day on which banks are authorized or required to close, then 5:00 P. M.
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(New York time) on the next following day that in the State of New York is not a
holiday or a day on which banks are authorized or required to close. Upon thirty
(30) calendar days' written notice to the Warrant Holder, the Company shall have
the right to extend the Warrant Expiration Date.
(k) "Warrant Share" has the meaning as set forth in Section 2(a)
hereof.
2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant initially shall entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of Common
Stock upon the exercise thereof (sometimes referred to collectively as the
"Warrant Shares") in accordance with the terms hereof, subject to modification
and adjustment as provided in Section 8.
(b) Upon execution of this Agreement, warrant certificates ("Warrant
Certificates") substantially in the form of Exhibit A annexed hereto
representing, in the aggregate, One-Hundred Fifty Thousand (150,000) Warrants
shall be executed by the Company and delivered to the Warrant Holder. Additional
and/or replacement Warrant Certificates shall be issued, executed and delivered
from time to time in accordance with the terms hereof.
(c) From time to time, up to the Warrant Expiration Date, the Transfer
Agent shall countersign and deliver stock certificates in required whole number
denominations representing the shares of Common Stock (and any other applicable
securities, rights and/or interests) issuable, subject to adjustment as
described herein, upon the exercise of Warrants in accordance with this
Agreement.
(d) From time to time, up to the Warrant Expiration Date, the Company
shall countersign and deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no Warrant Certificates
shall be issued except (i) those initially issued hereunder, (ii) those issued
on or after the Initial Warrant Exercise Date, upon the exercise of fewer than
all Warrants represented by any Warrant Certificate, to evidence any unexercised
Warrants held by the exercising Registered Holder, (iii) those issued on any
transfer or exchange pursuant to Section 6 hereof, (iv) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7 hereof, and (v) those issued to reflect any adjustment or
change made pursuant to Section 8 hereof in the Purchase Price or the number of
shares of stock purchasable and/or other rights and interests receivable on
exercise of the Warrants.
3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
attached hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage or to the requirements of Section 2(b) hereof. The Warrant
Certificates shall be dated the date of
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issuance thereof (whether upon initial issuance, transfer, exchange or in lieu
of mutilated, lost, stolen or destroyed Warrant Certificates) and issued in
registered form.
(b) Warrant Certificates shall be executed on behalf of the Company by
its President, or any Vice President and by its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal. In case any
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be an officer of the Company or to hold the particular office
referenced in the Warrant Certificate before the date of issuance of the Warrant
Certificates, such Warrant Certificates may nevertheless be issued and delivered
with the same force and effect as though the person who signed such Warrant
Certificates had not ceased to be an officer of the Company or to hold such
office.
4. Exercise; Vesting.
(a) Each Warrant may be exercised by the Registered Holder thereof at
any time on or after the Initial Warrant Exercise Date, but not after the
Warrant Expiration Date, on the terms and subject to the conditions set forth
herein and (to the extent not inconsistent herewith) in the applicable Warrant
Certificate. A Warrant shall be deemed to have been exercised immediately prior
to the close of business on the Exercise Date and the person entitled to receive
the securities deliverable on such exercise shall be treated for all purposes as
the holder of those securities on the exercise of the Warrant as of the close of
business on the Exercise Date. Promptly following, and in any event within five
(5) business days after the date of such exercise, the Company shall cause to be
issued and delivered by the Transfer Agent, to the person or persons entitled to
receive the same, a certificate or certificates for the securities deliverable
on such exercise (plus a certificate for any remaining unexercised Warrants of
the Registered Holder). In connection with any exercise of Warrants by a
Registered Holder, in lieu of paying all or any portion of the associated
Purchase Price required hereunder, such Registered Holder shall be entitled (at
its election) to effect a partial or complete "cashless exercise."
(b) Notwithstanding anything herein to the contrary, the Warrants shall
not vest (and shall not become exercisable) unless (i) EBITDA as of December 31,
2000 is less than negative $10,500,000, in which event, 50% of the Warrants
shall vest and become immediately exercisable; or (ii) EBITDA as of March 31,
2001 is less than negative $500,000, in which event, 50% of the Warrants shall
vest and become immediately exercisable.
5. Reservation of Shares, Listing Payment of Taxes, etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized capital stock, solely for the purpose of issue
on exercise of Warrants, such number, series and classes of shares of Common
Stock and, as applicable, other securities, rights and interests as shall then
be issuable on the exercise of all outstanding Warrants. The Company covenants
that all shares of capital stock of the Company that shall be issuable on
exercise of the Warrants shall, at the time of delivery, be duly and validly
issued, fully paid, non-assessable and free from all taxes, liens and charges
with respect to the issue thereof (other than those that the Company shall
promptly pay or discharge) and that, on issuance, any such shares issued in the
form of Common Stock shall be listed on each national securities exchange or
eligible for inclusion in each automated quotation system, if any, on which the
other shares of outstanding Common Stock of the Company are then listed or
eligible for inclusion.
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(b) The Company shall pay all documentary, stamp or similar taxes and
all other governmental charges that may be imposed or incurred with respect to
the issuance of Warrants, or the issuance, listing and/or delivery of any shares
on exercise of the Warrants; provided, however, that if the shares of Common
Stock are to be delivered in a name other than the name of the Registered Holder
of the Warrant Certificate representing any Warrant being exercised, then no
such delivery shall be made unless the person requesting the same has paid to
the Company the amount of transfer taxes or charges payable to third parties
that are incurred by the Company incident thereto, if any.
6. Exchange and Registration of Transfer.
(a) Warrant Certificates and the Warrants evidenced thereby (from time
to time on request of the Registered Holder thereof) may be exchanged for other
Warrant Certificates representing an equal aggregate number of Warrants of the
same class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Company at its Corporate Office, and on
satisfaction of the terms and provisions hereof, the Company shall execute,
issue and deliver in exchange therefor the Warrant Certificate or Warrant
Certificates (in such amounts and identifying as the Registered Holder thereof
such persons) that the Registered Holder making the exchange shall request and
be entitled to receive. The Registered Holder shall pay all transfer taxes, if
any, for any transfer of Warrant Certificates (although the Registered Holder
may require reimbursement thereof from any transferee of any such Warrant
Certificates and/or Warrants).
(b) The Company shall keep at its Corporate Office books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with its regular
practice. Upon request of the Registered Holder from time to time and due
presentment for transfer of any Warrant Certificate at the Corporate Office, the
Company shall execute, issue and deliver to the transferee(s) and/or the
Registered Holder (in such amounts and in such manner as may be reasonably
requested by the Registered Holder) a new Warrant Certificate or Warrant
Certificates representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented for transfer, or
for exchange or exercise, the assignment or subscription form on the reverse
thereof (or a substantially similar form) shall be duly endorsed, or be
accompanied by a written instrument or instruments of transfer and subscription,
in form reasonably satisfactory to the Company, duly executed by the Registered
Holder or its attorney-in-fact duly authorized in writing.
(d) All Warrant Certificates surrendered for exercise or for exchange
in case of mutilated Warrant Certificates shall be promptly canceled by the
Company and thereafter retained by the Company until termination of this
Agreement.
(e) Prior to due presentment for transfer thereof, the Company may deem
and treat the Registered Holder of any Warrant Certificate as the absolute owner
thereof and of each Warrant represented thereby (notwithstanding any notations
of ownership or writing thereon made by anyone other than a duly authorized
officer of the Company) for all purposes and shall not be affected by any notice
to the contrary.
7. Loss or Mutilation. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and loss, theft, destruction
or mutilation of any Warrant
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Certificate and (in case of loss, theft or destruction) upon receipt of a
customary and commercially reasonable indemnity, and (in the case of mutilation)
upon surrender thereof, the Company shall execute (in the absence of notice to
the Company that the Warrant Certificate has been acquired by a bona fide
purchaser) and deliver to the Registered Holder in lieu thereof a new Warrant
Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants. Applicants for a substitute Warrant Certificate
shall comply with such other reasonable regulations and pay such other
reasonable charges that are payable by the Company to third parties in
connection with such substitution.
8. Adjustment of Exercise Price and Number of Shares of Common Stock or
Warrants.
(a) In the event the Company, at any time or from time to time after
the date hereof, shall issue any shares of Common Stock as a stock dividend to
the holders of Common Stock, or split, subdivide or combine the outstanding
shares of Common Stock into a greater or lesser number of shares of Common Stock
(any such issuance, subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of Shares, the Purchase
Price in effect immediately prior to such Change of Shares shall be changed to a
price (including any applicable fraction of a cent) determined by multiplying
(1) the Purchase Price in effect immediately prior thereto by (2) a fraction,
(i) the numerator of which shall be the sum of the number of shares of Common
Stock outstanding immediately prior to the issuance of such additional shares
and the number of shares of Common Stock which the aggregate consideration
received (determined as provided in subsection 8(f) below) for the issuance of
such additional shares of Common Stock would purchase at such current market
price per share of Common Stock, and (ii) the denominator of which shall be the
sum of the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made successively
whenever such an issuance is made.
Upon each adjustment of the Purchase Price pursuant to this
Section 8, the total number of shares of Common Stock purchasable upon the
exercise of each Warrant shall (subject to the provisions contained in Section
8(b) hereof) be (1) such number of shares (calculated to the nearest hundredth)
purchasable in accordance with the terms hereof at the Purchase Price in effect
immediately prior to such adjustment multiplied by (2) a fraction, (i) the
numerator of which shall be the Purchase Price in effect immediately prior to
such adjustment and (ii) the denominator of which shall be the Purchase Price in
effect immediately after such adjustment.
(b) The Company may elect, on any adjustment of the Purchase Price
hereunder, to adjust the number of Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable on the exercise
of each Warrant as hereinabove provided, so that each Warrant outstanding after
such adjustment shall represent the right to purchase one share of Common Stock.
Each Warrant held of record prior to such adjustment of the number of Warrants
shall become that number of Warrants (calculated to the nearest hundredth)
determined by multiplying (1) the number one by (2) a fraction, (i) the
numerator of which shall be the Purchase Price in effect immediately prior to
such adjustment and (ii) the denominator of which shall be the Purchase Price in
effect immediately after such adjustment. Upon each adjustment of the number of
Warrants pursuant to this Section 8, the Company, as promptly as practicable,
shall cause to be distributed to each Registered Holder of Warrant Certificates
on the date of such adjustment Warrant Certificates evidencing the number of
additional Warrants to which such Holder shall be entitled as a result of such
adjustment or, at the option of the Company, cause to be distributed to such
Holder in substitution and replacement for the Warrant Certificates held by such
Registered Holder prior to the date of adjustment (and on surrender thereof, if
required by
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the Company) new Warrant Certificates evidencing the number of Warrants to which
such Registered Holder shall be entitled after such adjustment.
(c) In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as, or
substantially as, an entirety (other than a sale leaseback, mortgage or other
financing transaction), the Company shall cause effective provision and
adjustment to each Warrant to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such Warrant, to
purchase and/or receive the kind and number of shares of stock or other
securities or property (including cash) receivable on such reclassification,
capital reorganization or other change, consolidation, merger, sale or
conveyance that such holder of a Warrant would have been issued and/or received
if such holder of a Warrant had exercised such Warrant immediately prior to such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance. Any such provision shall include provision for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 8. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously with the
consummation thereof the successor (if other than the Company) resulting from
such consolidation or merger or the corporation purchasing assets or other
appropriate corporation or entity shall assume, by written instrument executed
and delivered to the Company, and as to which the Registered Holder is expressly
recognized as a third-party beneficiary, the obligations under this Agreement,
including the obligation to deliver to the holder of each Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holders may be entitled to purchase and/or receive under this Agreement.
The foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the Purchase Price or
the number of shares of Common Stock purchasable on exercise of the Warrants,
the Warrant Certificates theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant Certificates pursuant to
Section 2(d) hereof, continue to express the Purchase Price per share and the
number of shares purchasable thereunder as the Purchase Price per share and the
number of shares purchasable therefor were expressed in the Warrant Certificates
when the same were originally issued.
(e) After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
President or a Vice President, and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable (and any other securities, assets, rights or interests receivable)
on exercise of each Warrant after such adjustment, (iii) if the Company shall
have elected to adjust the number of Warrants, then also the number of Warrants
to which the Registered Holder of each Warrant shall then be entitled after such
adjustment, and (iv) a brief statement of the facts accounting for such
adjustment. The Company will promptly cause such certificate and a brief summary
of the associated transaction to be sent by ordinary first class mail to each
Registered Holder of Warrants at its last address as it shall appear on the
books of the Company. No failure to mail such notice nor any defect therein or
in the mailing thereof shall affect the validity
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thereof except as to the Registered Holder to whom the Company failed to mail
such notice, or except as to the Registered Holder whose notice was defective.
The affidavit of the Secretary or an Assistant Secretary of the Company that
such notice has been mailed, in the absence of fraud, shall be prima facie
evidence of the facts stated therein.
(f) For purposes of Section 8(a) and 8(b) hereof, no adjustment of the
Purchase Price shall be made unless such adjustment would require an increase or
decrease of at least Five Cents ($0.05) in such price; provided that any
adjustments that by reason of this subsection (ii) are not required to be made
shall be carried forward and shall be made at the time of and together with the
next subsequent adjustment that, together with any adjustment(s) so carried
forward, shall require an increase or decrease of at least Five Cents ($0.05) in
the Purchase Price then in effect hereunder.
(g) Any determination as to whether an adjustment in the Purchase Price
in effect hereunder is required pursuant to Section 8, or as to the amount of
any such adjustment, if required, shall be binding on the holders of the
Warrants and the Company if made in good faith by the Board of Directors of the
Company.
(h) If and whenever the Company shall grant to the holders of Common
Stock, as such, rights or warrants to subscribe for or to purchase, or any
options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company shall concurrently therewith grant to each Registered Holder
as of the record date for such transaction of the Warrants then outstanding, the
rights, warrants or options to which each Registered Holder would have been
entitled if, on the record date used to determine the stockholders entitled to
the rights, warrants or options being granted by the Company, the Registered
Holder were the holder of record of the number of whole shares of Common Stock
then issuable on exercise of his Warrants. Such grant by the Company to the
holders of the Warrants shall be in lieu of any adjustment that otherwise might
be called for pursuant to this Section 8.
9. Registration Rights. The Warrants and the Warrant Shares have not
been registered under the Securities Act as of the date of this Agreement.
Within a reasonable period of time following the Initial Warrant Exercise Date,
if applicable, the Company shall prepare and file a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act") relating to the resale of the Warrant Shares
issued in the form of Common Stock and shall use its commercially reasonable
efforts to cause such Registration Statement to become effective for a period of
three (3) years thereafter or such shorter period that shall terminate (a) when
all the Warrant Shares covered by the Registration Statement have been sold or
(b) at any time when the Registered Holders are entitled to sell all the Warrant
Shares covered by the Registration Statement under the Securities Act pursuant
to Rule 144 (or any similar rule or regulation) without any volume limitations.
The Company shall bear all costs and fees associated with the Registration
Statement other than any fees and expenses incurred by any counsel retained by a
Registered Holder and any selling costs or expenses incurred by a Registered
Holder. Until the Registration Statement becomes effective, upon exercise, in
part or in whole, of this Warrant, certificates representing any Warrant Shares
shall bear the following legend:
These securities have not been registered under the Securities
Act of 1933. Such securities may not be sold or offered for
sale, transferred, hypothecated or otherwise assigned in the
absence of
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an effective registration statement with respect thereto under
such Act or an opinion of counsel reasonably satisfactory to
the Company that an exemption from registration for such sale,
offer, transfer, hypothecation or other assignment is
available under such Act.
At the request of the Registered Holder thereof, the Company shall remove the
foregoing legend from such certificates on registration of the legended
securities under the Act (if any) or on receipt by the Company of an opinion of
counsel of the Registered Holder (secured at the Registered Holder's sole cost
and expense) reasonably satisfactory in substance to the Company that such
registration is no longer required with respect to such securities.
Each Registered Holder agrees that if requested by the Company, such Registered
Holder shall not effect any sale of Warrant Shares pursuant to the Registration
Statement for any period deemed necessary (i) by the Company or any underwriter
in connection with the offering of shares of the Company's Common Stock or (ii)
by the Company if the Company is in possession of material information that has
not been disclosed to the public and the Company reasonably deems disclosure of
such information in a registration statement to be inadvisable; provided,
however, that the Registered Holders shall not be obligated to refrain from
effecting sales of Warrant Shares pursuant to the Registration Statement for
more than sixty (60) consecutive days (a "blackout period"); provided, however,
that the Company may impose no more than two (2) blackout periods in any
consecutive six (6) month period; and provided, further, that if a blackout
period is in effect at the conclusion of the three (3) year term relating to the
effective period of the Registration Statement (referred to above in this
Section 9), such three (3) year term shall be extended for ten (10) business
days after the end of any such blackout period (or consecutive blackout periods)
that are in effect at the initial expiration of such three (3) year term.
10. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable on the exercise
of each Warrant is adjusted pursuant to Section 8 hereof, the Company
nevertheless shall not be required to issue fractions of shares, on exercise of
the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. In such event, the Company may at its option elect to round
up the number of shares to which the Warrant Holder is entitled to the nearest
whole share or to pay cash in respect of fractional shares in accordance with
the following: With respect to any fraction of a share called for on any
exercise hereof, the Company shall pay to the Warrant Holder an amount in cash
equal to such fraction multiplied by the current market value of such fractional
share, determined as follows:
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the NASDAQ Stock Market, the
current value shall be the last reported sale price of the Common
Stock on such exchange or market on the last business day prior to
the date of exercise of this Warrant, or if no such sale is made on
such day, the average of the closing bid and ask prices for such
day on such exchange or market; or
(ii) If the Common Stock is not listed or admitted to unlisted
trading privileges on a national securities exchange or listed for
trading on the NASDAQ
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Stock Market, the current value shall be the mean of the last
reported bid and asked prices reported by the National Quotation
Bureau, Inc. on the last business day prior to the date of the
exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges on a national securities exchange or
listed for trading on the NASDAQ Stock Market and bid and asked
prices are not so reported, the current value shall be an amount
determined in such reasonable manner as may be prescribed by the
Board of Directors of the Company.
11. Warrant Holders Not Deemed Stockholders. No holder of Warrants (in
such capacity and with respect to such Warrants) shall be entitled to vote or to
receive dividends or be deemed the holder of the shares of Common Stock that may
at any time be issuable on exercise of such Warrants for any purpose whatsoever,
nor shall anything contained herein be construed to confer on the holder of
Warrants (in such capacity and with respect to such Warrants) any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or on any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action (whether on any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Warrant Holder shall have exercised such
Warrants and been issued shares of Common Stock in accordance with the
provisions hereof.
12. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant may in its own behalf and for its own
benefit, enforce against the Company such holder's rights under this Agreement,
including its right to exercise its Warrants for the purchase of shares of
Common Stock in the manner provided in this Agreement and, to the extent not
inconsistent herewith, in the Warrant Certificate.
13. Agreement of Warrant Holders. Every holder of a Warrant, by its
acceptance thereof, consents and agrees with the Company, and every other holder
of a Warrant that:
(a) The Warrants are transferable only on the books of the Company by
the Registered Holder thereof in person or by its attorney-in-fact duly
authorized in writing and only if the Warrant Certificates representing such
Warrants are surrendered at the Corporate Office of the Company, duly endorsed
or accompanied by a proper instrument of transfer reasonably satisfactory to the
Company, together with payment of any applicable transfer taxes; and
(b) The Company may deem and treat the person in whose name the Warrant
Certificate is registered as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes, and the Company
shall not be affected by any notice or knowledge to the contrary, except as
otherwise expressly provided in Sections 6 and 7 hereof.
14. Cancellation of Warrant Certificates. If the Company shall purchase
or acquire any Warrant, the Warrant Certificate or Warrant Certificates
evidencing the same shall thereupon be delivered to the Company and canceled by
it and retired. The Company shall also cancel any Warrant Certificates following
exercise of any of the Warrants Certificates represented thereby or delivered to
it for transfer, split up, combination or exchange.
10
15. Modification of Agreement. This Agreement shall not be modified,
supplemented or altered in any respect except with the consent in writing of the
Company and the Registered Holders, other than such changes as are specifically
prescribed by this Agreement as originally executed or are made in compliance
with applicable law.
16. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class registered or certified mail, postage prepaid as
follows: (a) if to MCG Finance as the Warrant Holder or a Registered Holder, at
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attn.: Investment
Administration, Chief Operating Officer and General Counsel or such other
address as MCG Finance from time to time may have notified the Company in
writing; (b) if to any Registered Holder of a Warrant Certificate other than MCG
Finance, at the address of such holder as shown on the books maintained by the
Company; and (c) if to the Company, 0000 Xxxxx 000, Xxx Xxxx, XX 00000 or such
other address as the Company from time to time may have notified the Registered
Holders in writing.
Notwithstanding any other provision of this Agreement, in order to provide each
Registered Holder with an adequate opportunity with respect to distribution and
dividends to be made by the Company, the Company from time to time shall provide
written notice to each Registered Holder at least ten (10) business days prior
to the occurrence of the record date for determining shares of Common Stock
entitled to receive any dividend, distribution or issuances of any other rights
(along with a general description of the dividend, distribution or issuance of
any other rights to be made). In addition, the Company shall also concurrently
provide to each Registered Holder a copy of each notification, communication and
other information that the Company provides to the holders of Common Stock in
connection with such dividend, distribution or issuance of any other right.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws.
18. Binding Effect. This Agreement shall be binding on and inure to the
benefit of the Company and the Registered Holders, and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer on any other person any right, remedy or claim, in equity or at law, or
to impose on any other person any duty, liability or obligation.
19. Termination. This Agreement shall terminate at the close of
business on the Warrant Expiration Date of all the Warrants or such earlier date
on which all Warrants have been exercised.
20. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
[SIGNATURE PAGE TO FOLLOW]
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
XXXX.XXX INC. (THE COMPANY)
By:_____________________________________
Name: _______________________________
Title: _______________________________
MCG FINANCE CORPORATION (THE WARRANT HOLDER)
By:_____________________________________
Name: ______________________________
Title: ______________________________
12
EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION FOR
SUCH SALE, OFFER, TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER
SUCH ACT.
No. ____ 150,000
Common Stock Purchase Warrants
VOID AFTER THE EXPIRATION DATE (AS DEFINED BELOW)
STOCK PURCHASE WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
XXXX.XXX INC.
THIS CERTIFIES THAT
FOR VALUE RECEIVED, MCG FINANCE CORPORATION or registered assigns (the
"Registered Holder") is the owner of the number of Common Stock Purchase
Warrants ("Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined) and (to the
extent not inconsistent therewith) in this Warrant Certificate, one fully paid
and non-assessable share of Common Stock, $0.01 par value ("Common Stock"), of
XXXX.XXX INC., a Delaware corporation (the "Company"), at any time between the
Initial Exercise Date (as herein defined) and the Expiration Date (as
hereinafter defined), on the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the Corporate Office of the Company, accompanied by payment of _______ Dollars
and ________ Cents ($____) per share of Common Stock, (subject to adjustment
from time to time pursuant to the terms and provisions of Section 8 of the
Warrant Agreement and subject to the Registered Holder's right to effect a
"cashless exercise" under the Warrant Agreement) in lawful money of the United
States of America in cash, by wire transfer, or by official bank or certified
check made payable to XXXX.XXX INC.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement") dated October 20, 2000,
by and between the Company and MCG Finance Corporation. Capitalized terms not
defined herein shall have the meanings assigned to them in the Warrant
Agreement.
Each Warrant represented hereby is only exercisable in the event of
certain contingencies provided for in Section 4(b) of the Warrant Agreement. The
Purchase Price and/or the number of shares of Common Stock subject to purchase
on the exercise of each Warrant represented hereby are subject to modification
or adjustment, as provided in the Warrant Agreement.
B-1
Subject to the Warrant Agreement, each Warrant represented hereby is
exercisable at the option of the Registered Holder, but no fractional shares of
Common Stock will be issued. In the case of the exercise of less than all the
Warrants represented hereby, the Company shall cancel this Warrant Certificate
on the surrender hereof and shall execute and deliver a new Warrant Certificate
or Warrant Certificates of like tenor, that the Company shall countersign, for
the balance of such Warrants.
The term "Initial Exercise Date" (if applicable) shall mean the date on
which the Warrant shall have vested in accordance with Section 4(b) of the
Warrant Agreement.
The term "Expiration Date" shall mean 5:00 P. M. (New York time) on (i)
the five-year anniversary date of the date on which the applicable Warrant vests
in accordance with Section 4(b) of the Warrant Agreement; or (ii) the date on
which the Company has met the EBITDA requirements set forth in Section 4(b)
thereof; provided that if such date shall in the State of New York be a holiday
or a day on which banks are authorized or required to close, then 5:00 P. M.
(New York time) on the next following day that in the State of New York is not a
holiday or a day on which banks are authorized or required to close.
This Warrant Certificate is exchangeable, on the surrender hereof by
the Registered Holder at the Corporate Office of the Company, for a new Warrant
Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment with any amounts that are payable
to the Company under the Warrant Agreement in addition to any tax or other
governmental charge imposed in connection therewith, for registration of
transfer of this Warrant Certificate at the Corporate Office, a new Warrant
Certificate or Warrant Certificates representing an equal aggregate number of
Warrants will be issued to the transferee (and, if applicable, to the Registered
Holder) in exchange therefor, subject to the limitations provided in the Warrant
Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except in each instance as provided in the Warrant
Agreement.
Prior to due presentment for transfer hereof, the Company may deem and
treat the Registered Holder as the absolute owner hereof and of each Warrant
represented hereby (notwithstanding any notations of ownership or writing hereon
made by anyone other than a duly authorized officer of the Company) for all
purposes and shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of Delaware.
[BALANCE OF PAGE INTENTIONALLY BLANK]
B-2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by its officer thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
XXXX.XXX INC.
By:___________________________________
Name: ____________________________
Title: _________________________
Date:_________________________________
[Seal]
B-3
SUBSCRIPTION FORM
(To Be Executed by the Registered Holder in Order to Exercise Warrants)
--------------------------
THE UNDERSIGNED REGISTERED HOLDER hereby elects to exercise Warrants
of XXXX.XXX INC. represented by this Warrant Certificate, and to
purchase the securities issuable on the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the
name of:
------------------------------------------
whose taxpayer identification number is: ________________________
and be delivered to:
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below:
------------------------------------------
------------------------------------------
------------------------------------------
(Address)
---------------------------
(Date)
---------------------------
(Taxpayer Identification Number)
---------------------------
(Signature)
SIGNATURE GUARANTEED OR NOTARIZED
---------------------------
(Bank or trust company having an office or correspondent in the
United States or a broker or dealer which is a member of a
registered securities exchange or the National Association of
Securities Dealers, Inc.)
B-4
ASSIGNMENT
(To Be Executed by the Registered Holder in Order to Assign Warrants)
---------------------------
FOR VALUE RECEIVED, the undersigned Registered Holder hereby sells, assigns and
transfers unto
------------------------------------------
(insert name)
whose taxpayer identification or other identifying number is: ______________ and
whose address is:
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
(please print or type address)
the following number of the Warrants represented by this Warrant Certificate:
___________________, and hereby irrevocably constitutes and appoints
___________________ as attorney-in-fact to transfer this Warrant Certificate on
the books of the Company, with full power of substitution in the premises.
---------------------------
(Date)
---------------------------
(Signature)
SIGNATURE GUARANTEED OR NOTARIZED
------------------------------------------
(Bank or trust company having an office or correspondent in the
United States or a broker or dealer which is a member of a
registered securities exchange or the National Association of
Securities Dealers, Inc.)
