EXHIBIT 10.26
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
APPLICABLE STATE SECURITIES LAWS, OR APPLICABLE LAWS OF ANY FOREIGN
JURISDICTION. THIS WARRANT AND SUCH UNDERLYING SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE
OFFERED, SOLD, PLEDGED, HYPOTHECATED, RENOUNCED OR OTHERWISE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
AND APPLICABLE LAWS OF ANY FOREIGN JURISDICTION.
BTI TELECOM CORP.
COMMON STOCK PURCHASE WARRANT
213,210 Shares
This Warrant is issued as of this 28th day of December 1999, by BTI
TELECOM CORP., a North Carolina corporation (the "Company"), to BTI INVESTORS
LLC, a Delaware limited liability company (together with its successors and
permitted assigns, the "Holder").
1. Issuance of Warrant; Term; Price.
1.1 Issuance. Subject to the terms and conditions herein set
forth, the Company hereby grants to Holder the right to purchase Two Hundred
Thirteen Thousand Two Hundred Ten (213,210) fully paid and non-assessable shares
of common stock, no par value per share ("Common Stock") of the Company (the
"Shares"). The number of Shares to be received on exercise or exchange of this
Warrant and the price to be paid for each Share are subject to adjustment from
time to time as hereinafter set forth. This Warrant is being issued pursuant to
the terms of a Series A Preferred Stock Purchase Agreement, dated as of December
10, 1999 among the Company, the Purchaser named therein and FS Multimedia, Inc.
(the "Purchase Agreement").
1.2 Term. This Warrant shall be exercisable or exchangeable at
any time and from time to time in whole or in part during the period commencing
on the date which is the earlier of (i) the last day of the Measurement Period
(as hereinafter defined) or (ii) the date on which a Change in Control
Transaction is consummated, and from such date, and ending on the date which is
ten (10) years after the date hereof.
1.3. Exercise Price. Subject to adjustment as hereinafter
provided, the exercise price (the "Warrant Price") per share for which all or
any of the Shares may be purchased pursuant to the terms of this Warrant shall
be equal to One Cent ($0.01).
2. Adjustment of Warrant Price, Number and Kind of Shares. The Warrant
Price and the number and kind of securities issuable upon the exercise or
exchange of this Warrant shall be subject to adjustment from time to time, and
the Company agrees to provide ten (10) days prior
written notice of the happening of any of the following events, together with a
certificate of adjustment executed by an officer of the Company setting forth
the nature of the adjustment and a brief description of such event triggering
adjustment. The Company further agrees that it will not change the par value of
the Common Stock from no par value per share to any higher par value which
exceeds the Warrant Price then in effect.
2.1 Dividends in Stock Adjustment. In case at any time and
from time to time on or after the date hereof the holders of the Common Stock of
the Company (or any shares of stock or other securities at the time receivable
upon the exercise or exchange of this Warrant) shall have received, or, on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefor, other
additional securities or other property (other than regular cash dividends) by
way of dividend or distribution, then and in each case, the holder of this
Warrant shall, upon the exercise or exchange hereof, be entitled to receive, in
addition to the number of Shares receivable thereupon, and without payment of
any additional consideration therefor, the amount of such other or additional
securities or other property (other than regular cash dividends) which such
holder would hold on the date of such exercise or exchange had it been the
holder of record of such Shares on the date hereof and had thereafter, during
the period from the date hereof to and including the date of such exercise or
exchange, retained such Shares and/or all other additional securities or other
property receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by this Section 2.
2.2 Reclassification Adjustment. In case of any
reclassification or change of the outstanding securities of the Company at any
time and from time to time on or after the date hereof, the holder of this
Warrant, upon the exercise or exchange hereof at any time after the consummation
of such reclassification or change, shall be entitled to receive, in lieu of the
stock or other securities and property receivable upon the exercise or exchange
hereof prior to such consummation, the stock or other securities or property to
which such holder would have been entitled upon such consummation if such holder
had exercised or exchanged this Warrant immediately prior thereto, all subject
to further adjustment as provided in this Section 2.
2.3 Capital Reorganization; Merger or Sale of Assets. If at
any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this Section 2) or a merger,
consolidation or similar business combination of the Company with or into
another entity, or the sale, assignment, lease or transfer of all or
substantially all of the Company's properties and assets to any other person, or
the sale of a majority of the voting securities of the Company in one
transaction or a series of related transactions (any of which events is herein
referred to as a "Reorganization"), then as a part of such Reorganization,
provision shall be made so that the Holder, upon the exercise or exchange hereof
at any time on or after the consummation of such Reorganization, shall be
entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise or exchange hereof, the number of shares of stock
or other securities or property of the Company, or of the successor corporation
resulting from such Reorganization, to which such Holder would have been
entitled if such Holder had exercised or exchanged this Warrant immediately
prior thereto, all such subject to further adjustment as set forth in this
Section 2. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 2 with respect to the rights of
the
2
Holder after the Reorganization, to the end that the provisions of this Section
2 shall be applicable after that event in as nearly equivalent a manner as may
be practicable.
2.4 Stock Splits and Reverse Stock Splits. If at any time and
from time to time on or after the date hereof the Company shall subdivide or
otherwise change its outstanding shares of Common Stock into a greater number of
shares, the number of shares receivable upon exercise or exchange of this
Warrant shall thereby be proportionately increased; and, conversely, if at any
time and from time to time on or after the date hereof the outstanding number of
shares of Common Stock shall be combined or otherwise changed into a smaller
number of shares, the number of shares receivable upon exercise or exchange of
this Warrant shall thereby be proportionately decreased.
2.5 Anti-dilution. Adjustments shall be made on an equitable
basis to the Warrant Price and the number of shares issuable upon exercise or
exchange of this Warrant in the manner set forth in Section 4(d) of the Amended
and Restated Articles of Incorporation of the Company except that instead of the
adjustments to the Series A Conversion Value adjustments shall be made on an
equitable basis to adjust the Warrant Price and/or the number of shares of
Common Stock issuable upon exercise or exchange of this Warrant. The provisions
of this Section 2.5 shall terminate upon any conversion of any Series A
Preferred Stock under the Amended and Restated Articles of Incorporation of the
Corporation or at such time as the Company elects pursuant to Article IV,
Section 4(m) of the Amended and Restated Articles of Incorporation of the
Company to terminate certain rights of the Series A Preferred Stock as set forth
in such Section 4(m).
3. No Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise or exchange hereunder. In lieu of
any fractional shares that would otherwise be issuable, the Company shall pay
cash equal to the product of such fraction multiplied by the Fair Market Value
(defined below) of one share of Common Stock on the date of exercise or
exchange.
4. No Shareholder Rights. This Warrant as such shall not entitle Holder
to any of the rights of a shareholder of the Company until the Holder has
exercised or exchanged this Warrant in accordance with Section 6 or Section 7
hereof.
5. Reservation of Stock. The Company covenants that during the period
this Warrant is exercisable, the Company will reserve a sufficient number of
shares of its authorized and unissued Common Stock or other securities of the
Company from time to time issuable upon the exercise or exchange of this Warrant
to provide for the issuance of Shares or other securities upon the exercise or
exchange of this Warrant. The Company agrees that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
Shares or other securities upon the exercise or exchange of this Warrant.
6. Exercise of Warrant. This Warrant may be exercised, in whole or in
part, by Holder by the surrender of this Warrant at the principal office of the
Company, accompanied by notice of and payment in full of the purchase price of
the Shares the Holder elects to purchase hereunder. This Warrant shall be deemed
to have been exercised immediately prior to the close of business on
3
the date of its surrender for exercise as provided above, and the person
entitled to receive the Shares or other securities and/or property issuable upon
such exercise shall be treated for all purposes as the holder of such Shares or
other securities of record as of the close of business on such date. As promptly
as practicable, the Company shall issue and deliver (or, if so requested at the
time of surrender of this Warrant, hold for pick-up at its principal office by)
to the person or persons entitled to receive the same a certificate or
certificates for the number of full Shares or other securities issuable upon
such exercise, together with cash in lieu of any fraction of a share as provided
above. The Shares or other securities issuable upon exercise hereof shall, upon
their issuance, be fully paid and nonassessable and free and clear of all liens,
security interests or other encumbrances. If this Warrant shall be exercised in
part only, the Company shall, at the time of delivery of the certificate
representing the Shares or other securities in respect of which this Warrant has
been exercised, deliver to the Holder a new Warrant evidencing the right to
purchase the remaining Shares or other securities purchasable under this
Warrant, which new warrant shall, in all other respects, be identical to this
Warrant. The Company shall pay any and all documentary, stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of the Shares to
the Holder.
7. Right to Exchange Warrant for Stock.
7.1 Right to Exchange. In addition to and without limiting the
rights of the Holder under the terms of this Warrant, but subject to the
provisions of Section 1.2, the Holder shall have the right to exchange this
Warrant or any portion hereof (the "Exchange Right") for Shares as provided in
this Section 7. Upon exercise of the Exchange Right with respect to a particular
number of Shares subject to this Warrant (the "Exchange Warrant Shares"), the
Company shall deliver to the Holder (without payment by the Holder of any cash
or other consideration other than shares of Common Stock in the case of clause
(i) of the first sentence of Section 7.2) that number of Shares equal to the
quotient obtained by dividing (x) the value of this Warrant (or the specified
portion hereof) on the Exchange Date (as defined in Section 7.2 hereof), which
value shall be equal to the aggregate Fair Market Value of the Exchange Warrant
Shares issuable upon exchange of this Warrant (or the specified portion hereof)
on the Exchange Date (as herein defined) minus, in the case of clause (ii) of
the first sentence of Section 7.2, the aggregate Warrant Price of the Exchange
Warrant Shares immediately prior to the exercise of the Exchange Right by (y)
the Fair Market Value of one Share on the Exchange Date (as herein defined). No
fractional shares shall be issuable upon exercise of the Exchange Right, and if
the number of shares to be issued determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the Fair Market Value of the resulting fractional share
on the Exchange Date (as herein defined).
7.2 Method of Exchange. The Exchange Right may be exercised by
the Holder by the surrender of this Warrant at the principal office of the
Company (the date of such surrender, the "Exchange Date") together with a
written statement specifying that the Holder thereby intends to exercise the
Exchange Right, indicating the number of shares subject to this Warrant that are
being surrendered (referred to in Section 7.1 hereof as the Exchanged Warrant
Shares) in exercise of the Exchange Right and specifying whether the Holder has
elected to pay the exchange price (i) in shares of Common Stock owned by the
Holder (in which case the Holder shall surrender a number of shares having a
Fair Market Value equal to the aggregate Warrant Price of the Exchanged Warrant
Shares) or (ii) in shares of Common Stock to be issued
4
upon exchange of this Warrant. Certificates for the Shares issuable upon
exercise of the Exchange Right (or any other securities deliverable in lieu
thereof under Section 2) shall be issued as of the Exchange Date and shall be
delivered to the Holder immediately following the Exchange Date.
7.3 Reserved.
7.4 Exchange. This Warrant shall be deemed to have been
exchanged immediately prior to the close of business on the date of its
surrender for exchange as provided above, and the person entitled to receive the
Shares or other securities and/or property issuable upon such exchange shall be
treated for all purposes as the holder of such Shares or other securities of
record as of the close of business on such date. As promptly as practicable, the
Company shall issue and deliver (or, if so requested at the time of surrender of
this Warrant, hold for pick-up at its principal office by) to the person or
persons entitled to receive the same a certificate or certificates for the
number of full Shares or other securities issuable upon such exchange, together
with cash in lieu of any fraction of a share as provided above. The Shares or
other securities issuable upon exchange hereof shall, upon their issuance, be
fully paid and nonassessable and free and clear of all liens, security interests
or other encumbrances. If this Warrant shall be exchanged in part only, the
Company shall, at the time of delivery of the certificate representing the
Shares or other securities in respect of which this Warrant has been exchanged,
deliver to the Holder a new Warrant evidencing the right to purchase the
remaining Shares or other securities purchasable under this Warrant, which new
warrant shall, in all other respects, be identical to this Warrant. The Company
shall pay any and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Shares to the Holder.
8. Reduction in Number of Shares.
8.1 Notwithstanding anything contained herein to the contrary,
if prior to the date which is three (3) years after the date hereof the Company
undertakes a Qualified Public Offering (as defined in the Company's Amended and
Restated Articles of Incorporation), then the number of Shares that may be
purchased upon exercise or exchange of this Warrant shall be reduced as follows:
(a) If the average (weighted by daily trading
volume) Daily Price of the Company's publicly traded shares of Common Stock
during the Measurement Period (as defined below) exceeds the product obtained by
multiplying 2.5 by the Series A Conversion Value (as such term is defined in the
Company's Amended and Restated Articles of Incorporation) on the last day of the
Measurement Period, this Warrant shall terminate immediately and the Holder of
this Warrant shall not be entitled to purchase any shares pursuant to the
exercise or exchange hereof; and
(b) If the average (weighted by daily trading volume)
Daily Price of the Company's publicly traded shares of Common Stock during the
Measurement Period exceeds the product obtained by multiplying 2.0 by the Series
A Conversion Value on the last day of the Measurement Period (the "2.0 Value")
but is less than or equal to the product obtained by multiplying 2.5 by such
Series A Conversion Value (the "2.5 Value"), the total number of Shares
5
issuable upon exercise or exchange hereof, taking into account all adjustments
to the number and kind of Shares provided in this Warrant, shall automatically
be reduced in accordance with the formula set forth at Schedule A attached
hereto.
(c) As used herein, "Measurement Period" means any
single period of ninety (90) consecutive trading days including the date which
is three (3) years after the date hereof, which period shall be selected by the
Company. The Company shall provide written notice to the Holder within three (3)
days after the end of the Measurement Period in which the average (weighted by
daily trading volume) Daily Price exceeds the 2.5 Value, which notice shall
specify the number of Shares provided in this Warrant that have been reduced in
accordance with the formula set forth at Schedule A attached hereto.
(d) For purposes of this Section 8.1 the term
"Company" shall include any successor entity or any surviving entity as a result
of a Reorganization (other than a Change in Control Transaction) that has a
class of securities registered under the Securities Act of 1933, as amended,
with a market capitalization equal or greater than $100,000,000.
8.2 If, at any time prior to December 28, 2001,
a Change in Control Transaction (as hereinafter defined) is consummated in which
the Fair Market Value of the per share consideration received by a holder of
Common Stock (i) exceeds the product obtained by multiplying 2.0 by the Series A
Conversion Value at the time of such Change in Control Transaction and (ii)
represents an Internal Rate of Return (defined below) on the Series A Preferred
Stockholders' investment of at least 30% (assuming for the purposes of this
Section 8.2, that the Holder continues to own its Series A Preferred Stock at
the time of such Change in Control Transaction), this Warrant shall terminate
without exercise or exchange hereof and the Holder shall receive that portion of
the consideration to which it would have been entitled had it exercised or
exchanged this Warrant for the maximum number of shares for which it was
exercisable or exchangeable immediately prior to the closing of the Change in
Control Transaction. For purposes of this Warrant, a "Change in Control
Transaction" shall mean one transaction or a series of transactions involving
(x) the sale, assignment, lease or transfer of all the shares of the Company's
capital stock or of all or substantially all of its assets to, or a merger,
consolidation or similar business combination with or into, or the sale of a
majority of the voting securities of the Company to, an entity, a majority of
the voting power of which is not owned or controlled, directly or indirectly, by
one or more shareholders of the Company immediately prior to the transaction, or
(y) a liquidation or distribution of all or substantially all the assets of the
Company.
8.3 If, at any time after December 28, 2001, and before March
28, 2002, a Change in Control Transaction is consummated in which the Fair
Market Value of the per share consideration received by a holder of Common Stock
(i) exceeds the product obtained by multiplying 2.25 by the Series A Conversion
Value at the time of such Change in Control Transaction and (ii) represents an
Internal Rate of Return on the Series A Preferred Stockholders' investment of at
least 30% (assuming for the purposes of this Section 8.3, that the Holder
continues to own its Series A Preferred Stock at the time of such Change in
Control Transaction), this Warrant shall terminate without exercise or exchange
hereof and the Holder
6
shall receive that portion of the consideration to which it would have been
entitled had it exercised or exchanged this Warrant for the maximum number of
shares for which it was exercisable or exchangeable immediately prior to the
closing of the Change in Control Transaction.
8.4 If, at any time after March 28, 2002, and before December
28, 2002, a Change in Control Transaction is consummated in which the Fair
Market Value of the per share consideration received by a holder of Common Stock
(i) exceeds the product obtained by multiplying 2.5 by the Series A Conversion
Value at the time of such Change in Control transaction and (ii) represents an
Internal Rate of Return on the Series A Preferred Stockholders' investment of at
least 30% (assuming for the purposes of this Section 8.4, that the Holder
continues to own its Series A Preferred Stock at the time of such Change in
Control Transaction), this Warrant shall terminate without exercise or exchange
hereof and the Holder shall receive that portion of the consideration to which
it would have been entitled had it exercised or exchanged this Warrant for the
maximum number of shares for which it was exercisable or exchangeable
immediately prior to the closing of the Change in Control Transaction.
9. Notice of Proposed Transfers. This Warrant and the Shares may be
transferred and assigned by the Holder subject to the restrictions on transfer
set forth in the Shareholders Agreement, dated as of the date hereof by and
among the Company, Xxxxx X. Xxxxxx and the Holder (the "Shareholders
Agreement"). Each certificate evidencing the securities transferred as above
provided shall bear the appropriate restrictive legends set forth in the
Shareholders Agreement for so long as such legend is required pursuant to the
terms of such Agreement.
10. Replacement of Warrants. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant, and in the case of any such loss, theft or
destruction of the Warrant, on delivery of an indemnity agreement or security
satisfactory in form and amount to the Company acting reasonably, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrant if mutilated, the Company will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
11. Certain Definitions. As used in this Warrant, the following terms,
have the following meanings:
11.1 "Daily Price" means (1) if the shares of such Common
Stock then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"),
the closing price on such day as reported on the NYSE Composite Transactions
Tape; (2) if the shares of Common Stock then are not listed and traded on the
NYSE, the closing price on such day as reported by the principal national
securities exchange on which the shares are listed and traded; (3) if the shares
of Common Stock then are not listed and traded on any such securities exchange,
the last reported sale price on such day on the National Market of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ");
or (4) if the shares of Common Stock then are not traded on the NASDAQ National
Market, the average of the highest reported bid and lowest reported asked price
on such day as reported by NASDAQ.
7
11.2 "Fair Market Value", as of a particular date, means (i)
with respect to one share of Common Stock, if the aggregate Daily Prices of all
of the outstanding shares of Common Stock that have been registered pursuant to
a public offering is at least $200 million as of such date, the average
(weighted by daily trading volume) of the Daily Prices, if any, per share of
Common Stock for the 20 consecutive trading days immediately prior to such date
or (ii) in all other events with respect to the Common Stock, or with respect to
any other property or consideration, the fair market value of such Common Stock
or other property or consideration as determined by two appraisers, one selected
by the Board of Directors of the Company and one selected by the Holder. No
Director who is a Holder or who is designated by or affiliated with a Holder
shall vote on the selection of the appraiser chosen by the Company. In the event
the Board of Directors or the Holder fails to appoint an appraiser within a
reasonable period of time, the appraisal shall be undertaken by the remaining
single appraiser. The Fair Market Value shall be the fair market value
(determined in the manner described above) arrived at by the appraisers within
thirty (30) days following the appointment of the last appraiser to be
appointed. In the event that the two appraisers agree in good faith on such fair
market value within such a period of time, such agreed value shall be used for
these purposes. If the appraisers cannot agree, but their valuations are within
10% of each other, the Fair Market Value shall be the mean of the two
valuations. If the appraisers cannot agree and the differences in the valuations
are greater than 10%, the appraisers shall select a third appraiser who will
calculate fair market value independently (provided that such calculations shall
not be more than the value calculated by the appraiser selected by the Holder or
less than the value calculated by the appraiser selected by the Board of
Directors) and, except as provided in the next sentence, the Fair Market Value
of the shares shall be the mean of the two fair market values arrived at by the
appraisers who are closest in amount. If one appraiser's valuations is the mean
of the other two valuations, such mean valuation shall be the Fair Market Value.
In the event that the two original appraisers cannot agree upon a third
appraiser within ten (10) days following the end of the thirty (30) day period
referred to above, then the third appraiser, which appraiser shall be a
nationally recognized investment banking firm, shall be appointed by the
American Arbitration Association in Washington, D.C. The expenses of the
appraisers will be borne by the Company.
11.3 "Internal Rate of Return" means the effective annual rate
of interest which, when applied to all cash flows (as determined below) made to,
or received from, the Company with respect to the Series A Investment, makes the
net present value of all such cash flows equal to zero. The Series A Investment
shall be deemed to be a cash outflow. Payments made by a new Holder for a
purchase of securities from an existing Holder shall not be deemed to be a cash
outflow. Cash dividends or other cash amounts, if any, paid by the Company to
the Holder in respect of the Series A Investment will be deemed to be interim
cash inflows with respect to the Series A Investment. Distributions or proceeds
received by the Holder in respect of the Series A Investment consisting of
property other than cash shall be valued at the Fair Market Value thereof as
determined as of the date such distributions or proceeds were received. The
final cash flow with respect to the Series A Investment will be based on the
total net proceeds that will be actually received by the Holder on the date of
the completion of a Change in Control Transaction. Notwithstanding the
foregoing, the Internal Rate of Return will be calculated on a fully diluted
basis taking into account any and all dilution, if any, to the Holder, including
without limitation (i) the dilution, if any, that will result from this Warrant
and (ii) the assumed
8
exercise of any then outstanding stock options of the Company to the extent that
the per share consideration received, or that would be received upon the deemed
exercise of such option, in connection with such Change in Control Transaction
exceeds the exercise price of any such outstanding options at the date of such
Change in Control Transaction. The Internal Rate of Return will be calculated
with the timing of cash flows assumed to be on a quarterly basis (March 31, June
30, September 30 and December 31) and with all specific cash flows during a
quarter deemed to have occurred on the last day of such quarter.
11.4 "Series A Investment" means, as of any date, the
aggregate dollar amount of all equity capital invested by the Holder in the
Series A Participating Preferred Stock on or prior to such date.
12. Amendment. Any term of this Warrant may be amended with the written
consent of the Company and the Holder. Any amendment effected in accordance with
this Section 12 shall be binding upon the Holder of this Warrant, each future
holder of such Warrant, and the Company.
13. Remedies. In the event of any default or threatened default by the
Company in the performance of or observance with any of the terms of this
Warrant, it is agreed that remedies at law are not and will not be adequate for
the Holder and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, provided that the Company may not assign its obligations under
this Warrant.
15. Entire Agreement. This Warrant, along with the Amended and Restated
Articles of Incorporation, the Series A Purchase Agreement, the Investor Rights
Agreement, the Shareholders Agreement and the Redemption Agreement, constitutes
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and thereof and supersedes all prior agreements and
understanding between them or any of them as to such subject matter.
16. Severability. Any invalidity, illegality or limitation of the
enforceability with respect to any party of any one or more of the provisions of
this Warrant, or any part thereof, whether arising by reason of the law of any
such person's domicile or otherwise, shall in no way affect or impair the
validity, legality or enforceability of the remainder of this Warrant with
respect to such party or the validity, legality or enforceability of this
Agreement with respect to any other party. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall to the extent
practicable, be modified so as to make it valid, legal and enforceable and to
retain as nearly as practicable the intent of the parties, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
9
17. Notices. All notices and other communications between the Company
and the holder of this Warrant shall be delivered in the manner set forth in the
Investor Rights Agreement.
18. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original but all of which shall
constitute but one and the same instrument. One or more counterparts of this
Agreement or any exhibit hereto may be delivered via telecopier, with the
intention that they shall have the same effect as an original counterpart
hereof.
19. Effect of Headings. The article and section headings herein are for
convenience only and shall not affect the construction hereof.
20. Governing Law. This Warrant shall be governed by the laws of the
State of North Carolina, without regard to the conflict of laws provisions
thereof, and together with the rights and obligations of the parties hereunder,
shall be construed under and governed by the laws of such State without regard
to the conflicts of laws provisions thereof.
21. No Third Party Beneficiaries. This Warrant shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective successor and permitted assigns.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
10
IN WITNESS WHEREOF, the undersigned officer of the Company has executed
this Common Stock Purchase Warrant as of the date first above written.
BTI TELECOM CORP.
By: /s/ R. Xxxxxxx Xxxxxxx
_________________________________
Name: R. Xxxxxxx Xxxxxxx
Title: President
Acknowledged and Agreed as of the date first above written:
BTI INVESTORS LLC
By: /s/ Xxxxxxxx X. Rather
____________________________
Name: Xxxxxxxx X. Rather
Title: Authorized Person
11
SCHEDULE A
Formula: j-[[[(a/b)-c] / f] * g]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
EXAMPLE EXAMPLE 1 EXAMPLE 2 EXAMPLE 3
--------- --------- ---------
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Average Daily Price of Common Stock $ 19.24 [a] $ 18.38 [a] $ 20.09 [a]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Series A Conversion Value $ 8.55 [b] $ 8.55 [b] $ 8.55 [b]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Multiple of Series A Conversion Value (Actual Multiple) 2.25x 2.15x 2.35x
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Minimum multiple of Series A Conversion Value (Minimum Multiple) 2.00 [c] 2.00x [c] 2.00x [c]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Difference: Actual Multiple - Minimum Multiple 0.25x 0.15x 0.35x
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Multiple difference between 100% cancellation and no cancellation 0.50x [f] 0.50x [f] 0.50x [f]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
% of Maximum Shares subject to cancellation 50.0% 30.0% 70.0%
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Maximum Shares subject to cancellation 71,070 [g] 71,070 [g] 71,070 [g]
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
NUMBER OF SHARES CANCELLED 35,535 21,321 49,749
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Total Shares issuable upon exercise or exchange of Warrant ("Maximum WCAS 213,210 [j] 213,210 [j] 213,210 [j]
Warrants")
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
Maximum WCAS Warrants less cancelled Shares ("WCAS Warrants") 177,675 191,889 163,461
--------------------------------------------------------------------------- ----------------- ---------------- -----------------
---------------------------------------------------------------------------------
SUMMARY TABLE
---------------------------------------------------------------------------------
MULTIPLE OF SHARES WCAS
SERIES A CANCELLED WARRANTS
---------------------------- ------------------------- --------------------------
---------------------------- ------------------------- --------------------------
2.00x -- 213,210
---------------------------- ------------------------- --------------------------
2.05x 7,107 206,103
---------------------------- ------------------------- --------------------------
2.10x 14,214 198,996
---------------------------- ------------------------- --------------------------
2.15x 21,321 191,889
---------------------------- ------------------------- --------------------------
2.20x 28,428 184,782
---------------------------- ------------------------- --------------------------
2.25x 35,535 177,675
---------------------------- ------------------------- --------------------------
2.30x 42,642 170,568
---------------------------- ------------------------- --------------------------
2.35x 49,749 163,461
---------------------------- ------------------------- --------------------------
2.40x 56,856 156,354
---------------------------- ------------------------- --------------------------
2.45x 63,963 149,247
---------------------------- ------------------------- --------------------------
2.50x 71,070 142,140
---------------------------- ------------------------- --------------------------
