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EXHIBIT 4.3
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE ASSIGNED
EXCEPT (1) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES WHICH IS EFFECTIVE UNDER THE ACT OR (2) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES AND (3) IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES AND BLUE SKY LAWS.
WARRANT
WARRANT TO PURCHASE ONE MILLION (1,000,000) SHARES OF COMMON STOCK
OF
SONUS COMMUNICATION HOLDINGS, INC.
Date of Issuance: January 3, 2001
No.__________
THIS CERTIFIES that, for value received, QUADRANT MANAGEMENT, INC., or
its assigns (in either case, the "Holder") is entitled to purchase, subject to
the provisions of this Warrant, from SONUS COMMUNICATION HOLDINGS, INC., a
Delaware corporation (the "Company"), at the price per share set forth in
Section 8 hereof, the number of shares of the Company's common stock, $.0001 par
value per share (the "Common Stock"), set forth in Section 7 hereof. This
Warrant is referred to herein as the "Warrant" and the shares of Common Stock
issuable pursuant to the terms hereof are sometimes referred to herein as
"Warrant Shares".
Section 1. Exercise of Warrant. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company at its principal office, (a) a
written notice, in substantially the form of the exercise notice attached hereto
(the "Exercise Notice"), of the Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be purchased,
(b) a check in the amount of the aggregate exercise price for the Warrant Shares
being purchased, and (c) this Warrant. The Company shall as promptly as
practicable, and in any event within twenty (20) days after delivery to the
Company of (i) the Exercise Notice, (ii) the check mentioned above, and (iii)
this Warrant, execute and deliver or cause to be executed and delivered, in
accordance with such notice, a certificate or certificates representing the
aggregate number of shares of Common Stock specified in such notice, provided
the Warrants specified in such notice have vested on or prior to the date such
notice is delivered. If the Holder elects to purchase, at any time, less than
the number of shares of Common Stock then purchasable under the terms of this
Warrant, the Company shall issue to the Holder a new Warrant exercisable into
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the number of remaining shares of Common Stock purchasable under this Warrant.
Each certificate representing Warrant Shares shall bear the legend or legends
required by applicable securities laws as well as such other legend(s) the
Company requires to be included on certificates for its Common Stock. The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, issuance and delivery of such stock certificates except
that, in case such stock certificates shall be registered in a name or names
other than the name of the Holder, funds sufficient to pay all stock transfer
taxes that are payable upon the issuance of such stock certificate or
certificates shall be paid by the Holder at the time of delivering the Exercise
Notice. All shares of Common Stock issued upon the exercise of this Warrant
shall be validly issued, fully paid, and nonassessable. This Warrant may be
exercised on multiple occasions in amounts not less than 15% of the original
amount issued before the expiration of its term as described in this Section 1.
This Warrant will expire on the third anniversary of the date of issuance (the
"Expiration Date").
Section 2. Reservation of Shares. The Company hereby covenants that at
all times during the term of this Warrant there shall be reserved for issuance
such number of shares of its Common Stock as shall be required to be issued upon
exercise of this Warrant.
Section 3. Fractional Shares. This Warrant may be exercised only for a
whole number of shares of Common Stock, and no fractional shares or scrip
representing fractional shares shall be issuable upon the exercise of this
Warrant.
Section 4. Transfer of Warrant and Warrant Shares. The Holder may sell,
pledge, hypothecate, or otherwise transfer this Warrant, in whole or in part,
only in accordance with and subject to the terms and conditions set forth in the
Subscription Agreement and then only if such sale, pledge, hypothecation, or
transfer is made in compliance with the Act or pursuant to an available
exemption from registration under the Act relating to the disposition of
securities, and is made in accordance with applicable State securities laws.
Section 5. Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, or destruction of this Warrant, and of
indemnification satisfactory to it, or upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor.
Section 6. Rights of the Holder. No provision of this Warrant shall be
construed as conferring upon the Holder the right to vote, consent, receive
dividends or receive notice other than as expressly provided herein. Prior to
exercise, no provision hereof, in the absence of affirmative action by the
Holder to exercise this Warrant, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
Section 7. Number of Warrant Shares. This Warrant shall be exercisable
for up to ONE MILLION (1,000,000) shares of the Company's Common Stock, as
adjusted in accordance with this Agreement.
Section 8. Exercise Price; Redemption; Adjustment of Warrants.
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(a) Determination of Exercise Price. The per share purchase price (the
"Exercise Price") for each of the Warrant Shares purchasable under this Warrant
shall be equal to two cents ($0.02).
(b) Redemption of Warrants. In the event (i) a registration statement
has been filed under the Securities Act covering the Warrant Shares and other
securities which the Company is contractually obligated to register, and such
registration statement is declared effective by the Securities and Exchange
Commission, and (ii) the bid price of the Common Stock on the OTC Bulletin Board
or other exchange is $1.00 or higher for twenty consecutive trading days, the
Company shall have the option to deliver a redemption notice (the "Redemption
Notice") to the holder of this Warrant. Upon delivery of the Redemption Notice,
all Warrants which remain outstanding on the 30th day following delivery of the
Redemption Notice shall be automatically redeemed by the Company for $.0001 per
Warrant (the "Redemption Price"). All such unexercised Warrants shall be deemed
cancelled upon the Company's delivery of the Redemption Price to the Holder.
Upon receipt of the Redemption Price, Holder agrees to return any documentation
of the unexercised Warrants to the Company.
(c) Adjustments for Stock Dividends, Distributions and Subdivisions. If
the Company at any time or from time to time after the original issue date shall
declare or pay any dividend or distribution on the Common Stock payable in
Common Stock, or effect a subdivision of the outstanding shares of Common Stock
into a greater number of shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock), then the number of
shares of Common Stock into which this Warrant is exercisable shall be increased
to an amount which is equal to the product of (i) the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the stock
dividend, distribution or subdivision, as the case may be, and (ii) a fraction,
the numerator of which is equal to the number of shares of Common Stock issued
and outstanding after giving effect to such stock dividend, distribution or
subdivision, and the denominator of which is the number of shares of Common
Stock issued and outstanding prior to such stock dividend, distribution or
subdivision. If the outstanding shares of Common Stock shall be divided or
increased because of a stock dividend or distribution, by stock split or
otherwise, into a greater number of shares of Common Stock, the Exercise Price
in effect immediately prior to such dividend, distribution or division shall,
concurrently with the effectiveness of such division, dividend or distribution,
be proportionately decreased.
(d) Adjustments for Combinations or Consolidation of Common Stock. If
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification, reverse stock split or otherwise, into a lesser number of
shares of Common Stock, then the number of shares of Common Stock into which
this Warrant is exercisable shall be decreased to an amount which is equal to
the product of (i) the number of shares of Common Stock for which this Warrant
is exercisable immediately prior to combination or consolidation, as the case
may be, and (ii) a fraction, the numerator of which is equal to the number of
shares of Common Stock issued and outstanding after giving effect to such
combination or consolidation, and the denominator of which is the number of
shares of Common Stock issued and outstanding prior to such combination or
consolidation. If the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification, reverse stock split or otherwise, into a
lesser number of shares of Common Stock, the Exercise Price in effect
immediately prior to such
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combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(e) Adjustment for Mergers or Reorganization, etc. In case of any
consolidation or merger of the Company with or into another corporation or the
conveyance of all or substantially all of the assets of the Company to another
corporation, this Warrant shall be exercisable into the number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock of the Company deliverable upon exercise of this Warrant would
have been entitled upon such consolidation, merger or conveyance; and, in any
such case, appropriate adjustment (as determined by the Board of Directors of
the Company) shall be made in the application of the provisions herein set forth
with respect to the rights and interest thereafter of the holder of this
Warrant, to the end that the provisions set forth herein shall thereafter be
applicable, as nearly as reasonable may be, in relation to any shares of stock
or other property thereafter deliverable upon the exercise of this Warrant.
(f) No Impairment. The Company will not, through any reorganization,
transfer of assets, consolidation, merger, 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 to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Section 8 and in the taking of all such action as may be
necessary or appropriate in order to protect the exercise rights of the holder
of this Warrant against impairment.
(g) Issue Taxes. The Company shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on exercise of this Warrant, in whole or in part; provided, however, that
the Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such exercise.
(h) Reservation of Stock Issuable Upon Conversion. The Company shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the exercise of this
Warrant, such number of its shares of Common Stock as shall from time to time be
sufficient to effect the exercise of this Warrant; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the exercise of this Warrant, the Company will take all appropriate
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
Section 9. Piggy-Back Registration Rights.
(a) Grant of Piggy-Back Rights. In the event that the Company shall
hereafter initiate a registration of any of its common stock (a "Registered
Offering"), either for its own account or the account of any other holder or
holders of equity securities or securities convertible into equity securities of
the Company, other than (i) a registration relating solely to employee benefit
plans, (ii) a registration relating solely to a Rule 145 transaction, (iii) a
registration in which the only equity security being registered is capital stock
issuable upon conversion of convertible (or exchange of exchangeable) debt
securities which are also being registered, or (iv) an initial
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public offering of the Company, the Company will provide the Holder with written
notice thereof within 30 days of the filing date of the first registration
statement filed in connection with the Registered Offering (the "Company
Notice"), and, subject to the other terms and conditions set forth in this
Section, include in such registration (and any related qualification under blue
sky laws or other compliance) and any underwriting involved therein, if any, the
Warrant Shares which the Holder requests to be included therein within 10 days
after the date of the Company Notice (collectively, the "Registrable
Securities").
(b) Underwritten Registered Offering. If the Registered Offering of
which the Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holder as a part of the Company
Notice. In such event, the Holder's rights to registration pursuant to this
Section 9 shall be conditioned upon the Holder's participation in such
underwriting, and the inclusion of the Holder's Registrable Securities in the
underwriting shall be limited to the extent provided herein. The Holder shall
(together with the Company and the other holders distributing their securities
through such underwriting, if any) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company. Notwithstanding any other provision of this Section 9, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
number of the Holder's Registrable Securities to be included in such
registration to such number of the Holder's Registrable Securities which the
managing underwriter determines can be included in such underwriting without
reducing the number of shares to be sold by the Company pursuant to such
underwriting or by any persons or entities exercising demand registration rights
in connection with such registration. In such event, the Company shall so advise
the Holder and the number of shares (other than shares being registered by the
Company) that may be included in the registration and underwriting shall be
allocated among all the holders of the Company's shares wishing to participate
in the Registered Offering in proportion, as nearly as practicable, to the
respective amounts of shares held by such holders at the time of filing the
Registration Statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company may round the number of shares allocated
to any holder to the nearest 100 shares. If the Holder disapproves of the terms
of any such underwriting, the Holder may elect to withdraw therefrom by written
notice to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration, and
shall not be transferred in a public distribution prior to 180 days after the
effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
(c) Termination and Withdrawal of Registration. The Company shall have
the right to terminate or withdraw any Registered Offering or other registration
prior to the effectiveness of such registration whether or not the Holder has
elected to include its Registrable Securities in such registration.
(d) Expenses. All registration expenses incurred in connection with
registrations pursuant to this Section 9 shall be borne by the Company. Unless
otherwise stated, all selling expenses relating to the Holder's Registrable
Securities shall be borne by the Holder.
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(e) Notification Requirements. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep the Holder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will:
(i) prepare and file with the Commission a registration statement
with respect to such securities and use reasonable best efforts to cause such
registration statement to become and remain effective for at least one hundred
twenty (120) days or until the distribution described in the registration
statement has been completed, whichever first occurs; and
(ii) furnish to the Holder, should the Holder participate in such
registration, and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents the Holder and/or the
underwriters may reasonably request in order to facilitate the public offering
of such securities.
(f) Underwriting Agreement Governs. In the event the terms of this
Section 9 conflicts with the terms of any underwriting agreement in connection
with any registration hereunder, the terms of such underwriting agreement shall
control.
(g) Information. If the Holder's Registrable Securities are to be
included in any Registered Offering, the Holder shall furnish to the Company
such information as the Company may request in writing and as shall be required
in connection with any registration, qualification or compliance referred to in
this Agreement.
(h) Termination. The rights granted pursuant to this Section 9 shall
terminate at such time as the Company has registered the Holder's Registrable
Securities in a Registered Offering or other registration or when the Holder is
permitted to sell all of its Warrant Shares within any ninety day period under
Rule 144 promulgated under the Securities Act of 1933.
Section 10. Certain Distributions. In case the Company shall, at any
time, prior to the Expiration Date set forth in Section 1 hereof, declare any
distribution of its assets to holders of its Common Stock as a partial
liquidation, distribution or by way of return of capital, other than as a
dividend payable out of earnings or any surplus legally available for dividends,
then the Holder shall be entitled, upon the proper exercise of this Warrant in
whole or in part prior to the effecting of such declaration, to receive, in
addition to the shares of Common Stock issuable on such exercise, the amount of
such assets (or at the option of the Company a sum equal to the value thereof at
the time of such distribution to holders of Common Stock as such value is
determined by the Board of Directors of the Company in good faith), which would
have been payable to the Holder had it been a holder of record of such shares of
Common Stock on the record date for the determination of those holders of Common
Stock entitled to such distribution.
Section 11. Dissolution or Liquidation. In case the Company shall, at
any time prior to the Expiration Date set forth in Section 1 hereof, dissolve,
liquidate or wind up its affairs, the Holder shall be entitled, upon the proper
exercise of this Warrant in whole or in part and prior to any distribution
associated with such dissolution, liquidation, or winding up, to receive on such
exercise, in lieu of the shares of Common Stock to which the Holder would have
been entitled,
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the same kind and amount of assets as would have been distributed or paid to the
Holder upon any such dissolution, liquidation or winding up, with respect to
such shares of Common Stock had the Holder been a holder of record of such share
of Common Stock on the record date for the determination of those holders of
Common Stock entitled to receive any such dissolution, liquidation, or winding
up distribution.
Section 12. Reclassification or Reorganization. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (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 an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), the Company shall cause effective provision to be
made so that the Holder shall have the right thereafter by exercising this
Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, capital reorganization or
other change, by a holder of the number of shares of Common Stock which might
have been purchased upon exercise of this Warrant immediately prior to such
reclassification or change. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 12 shall similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock. In the event that in any
such capital reorganization, reclassification, or other change, additional
shares of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for or of a security of the Company other than
Common Stock, any amount of the consideration received upon the issue thereof
being determined by the Board of Directors of the Company shall be final and
binding on the Holder.
Section 13. Indemnification.
(a) Indemnification. The Holders agree, if any of Holders' Registrable
Securities are included in the securities as to which such registration,
qualification or compliance is being effected, to indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each Person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such holder, each of its officers and directors
and each Person controlling such holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such holders, such directors, officers, Persons, underwriters or
control Persons for any legal or any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating or defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by the Holder.
Notwithstanding the foregoing, the Holder's liability under this subsection
shall be limited in an amount equal to
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the initial price of the Registrable Securities sold by the Holder, unless such
liability arises out of or is based on willful misconduct by the Holder.
(b) Indemnification Procedure. Each party entitled to indemnification
under this Section (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action, and provided further that the Indemnifying Party shall
not assume the defense for matters as to which there is a conflict of interest
or separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
Section 14. Miscellaneous.
(a) Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of, and be binding upon, the respective successors
and assigns of the parties, except to the extent otherwise provided herein.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
(b) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
principles of conflict of laws thereof.
(c) Counterparts; Delivery by Facsimile. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. Delivery of this
Agreement may be effected by facsimile.
(d) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(e) Notices. Unless otherwise provided, any notice required or permitted
hereunder shall be given by personal service upon the party to be notified, by
nationwide overnight delivery service or upon deposit with the United States
Post Office, by certified mail, return receipt requested and:
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i. if to the Company, addressed to SONUS COMMUNICATION
HOLDINGS, INC., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X.
Xxxxxxxx, with a copy to Xxxxx X. Xxxxxx, III, Esquire, McGuireWoods LLP, Seven
Xxxxx Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxx 00000-0000, or at such other
address as the Company may designate by notice to the Holder in accordance with
the provisions of this Section; and
ii. if to the Warrant holder, at the address indicated on the
signature pages hereof, or at such other addresses as such Holder may designate
by notice to the Company in accordance with the provisions of this Section.
(f) Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either prospectively or retroactively), only
with the written consent of the Company and a majority in interest of the
Holders receiving Warrants in the Offering.
(g) Entire Agreement. This Agreement and the Security Agreement
(including the exhibits and schedules hereto) constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof
and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties hereto.
IN WITNESS WHEREOF, the undersigned hereby sets is hand and seal this
3rd day of January, 2001.
SONUS COMMUNICATION HOLDINGS, INC.
By:
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Name: Xxxx X. Xxxxxxxx
Title: President
QUADRANT MANAGEMENT, INC.
By:
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Title:
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EXERCISE NOTICE
Dated:
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The undersigned hereby irrevocably elects to exercise his, her or its
right to purchase _________ shares of the common stock, $.0001 par value per
share (the "Common Stock"), of SONUS COMMUNICATION HOLDINGS, INC., a Delaware
corporation (the "Company"), such right being pursuant to a Warrant dated
December ____, 2000, and as issued to the undersigned by the Company, and remits
herewith the sum of $______ in payment for same in accordance with the Exercise
Price specified in Section 8 of said Warrant.
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ASSIGNMENT FORM
Dated: _____________________
For value received QUADRANT MANAGEMENT, INC. hereby sells, assigns and
transfers unto
Name:
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(Please typewrite or print block letters)
Address:
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and appoints:
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Attorney to transfer the said Warrant on the books of SONUS COMMUNICATION
HOLDINGS, INC. with full power of substitution in the premises.
Signature:
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