EXHIBIT 10.52
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WARRANT AGREEMENT
Dated as of November 30, 1999
BY AND BETWEEN
ACCESS ONE COMMUNICATIONS CORP.
(AS ISSUER OF WARRANTS)
AND
MCG FINANCE CORPORATION
(AS PURCHASER OF WARRANTS)
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Warrants to Purchase 400,000 Shares of
Common Stock of Company (subject to adjustment)
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TABLE OF CONTENTS
Page
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ARTICLE 1: GRANT OF WARRANTS.....................................................................................1
1.1. GRANT OF WARRANTS...................................................................................1
1.2. WARRANT ENTITLEMENT.................................................................................1
1.3. WARRANTS AS ADDITIONAL COMPENSATION.................................................................1
ARTICLE 2: PURCHASER'S REPRESENTATIONS AND AGREEMENTS............................................................2
ARTICLE 3: COMPANY'S REPRESENTATIONS AND WARRANTIES..............................................................2
3.1. LEGAL EXISTENCE AND POWER...........................................................................2
3.2. AUTHORIZATION; NON-CONTRAVENTION....................................................................2
3.3. EXECUTION, DELIVERY AND BINDING EFFECT..............................................................3
3.4. BROKER AND FINDER FEES..............................................................................3
3.5. OFFER AND SALE OF SECURITIES........................................................................3
3.6. CAPITALIZATION; WARRANT SHARES AS A PERCENT OF CAPITAL STOCK........................................3
3.7. RESERVATION AND ISSUANCE OF WARRANT SHARES..........................................................4
3.8. DISCLOSURES.........................................................................................4
3.9. ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE WARRANTS.......................................4
ARTICLE 4: THE WARRANTS AND WARRANT SHARES.......................................................................4
4.1. WARRANT CERTIFICATES................................................................................4
4.2. EXERCISE OF WARRANTS................................................................................5
4.3. TRANSFERS OF WARRANTS AND WARRANT SHARES............................................................6
4.4. REGISTRATION AND RELATED RIGHTS.....................................................................7
4.5. RIGHTS UPON EQUITY DISPOSITIONS AND NON-SURVIVING TRANSACTIONS.....................................12
4.6. REPURCHASE OFFERS..................................................................................14
4.7. CUMULATIVE RIGHTS..................................................................................15
4.8. EXERCISE OF RIGHTS CONDITIONED UPON CLOSING OF TRANSACTION INVOLVED................................15
4.9. PAYMENT OF TAXES AND EXPENSES......................................................................15
4.10. RESERVATION AND ISSUANCE OF WARRANT SHARES........................................................16
4.11. CORRECTIVE ADJUSTMENTS............................................................................16
4.12. LISTING OF SHARES.................................................................................16
4.13. LISTS OF HOLDERS..................................................................................16
4.14. STATEMENT OF WARRANT INTEREST.....................................................................16
4.15. RIGHT OF INSPECTION...............................................................................17
4.16. ATTENDANCE AND PARTICIPATION RIGHTS...............................................................17
4.17. COMPLIANCE WITH APPROVAL REQUIREMENTS.............................................................17
ARTICLE 5: ANTI-DILUTION PROVISIONS.............................................................................17
5.1. ADJUSTMENTS TO WARRANT SHARES PURCHASABLE AND EXERCISE PRICE.......................................17
5.2. NOTICE OF ADJUSTMENT...............................................................................21
5.3. PRESERVATION OF PURCHASE RIGHTS UPON CERTAIN TRANSACTIONS..........................................22
ARTICLE 6: COMPANY'S COVENANTS..................................................................................22
6.1. INFORMATION........................................................................................22
6.2. BOOKS AND RECORDS..................................................................................24
6.3. NO AMENDMENTS TO ORGANIC DOCUMENTS.................................................................24
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6.4. REINCORPORATION AND REORGANIZATION.................................................................24
6.5. EXISTENCE, GOOD STANDING AND AUTHORIZATIONS........................................................24
6.6. CONDUCT OF BUSINESS................................................................................24
ARTICLE 7: DEFINITIONS..........................................................................................24
7.1. DEFINITIONS........................................................................................24
7.2. GENERAL CONSTRUCTION AND INTERPRETATION............................................................29
ARTICLE 8: MISCELLANEOUS........................................................................................30
8.1. COMPLIANCE WITH FCC AND STATE PUC REQUIREMENTS.....................................................30
8.2. COMPLIANCE WITH PURCHASER'S REGULATORY REQUIREMENTS................................................31
8.3. BINDING EFFECT AND GOVERNING LAW...................................................................31
8.4. SURVIVAL...........................................................................................31
8.5. NO WAIVER; DELAY...................................................................................31
8.6. MODIFICATION.......................................................................................32
8.7. NOTICES............................................................................................32
8.8. PRIOR AGREEMENTS SUPERSEDED........................................................................33
8.9. SEVERABILITY.......................................................................................33
8.10. COUNTERPARTS......................................................................................33
8.11. LIMITATION OF LIABILITY...........................................................................33
8.12. FORUM SELECTION; CONSENT TO JURISDICTION..........................................................34
8.13. WAIVER OF JURY TRIAL..............................................................................34
EXHIBIT A -- ARTICLES OF INCORPORATION..................................................ERROR! BOOKMARK NOT DEFINED
EXHIBIT B -- AUTHORIZING RESOLUTIONS....................................................ERROR! BOOKMARK NOT DEFINED
EXHIBIT C -- FORM OF WARRANT CERTIFICATE................................................ERROR! BOOKMARK NOT DEFINED
EXHIBIT D -- RESTRICTIVE LEGENDS........................................................ERROR! BOOKMARK NOT DEFINED
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT (as defined in Article 7 along with all the other
defined terms, this "Agreement") is made and effective as of November 30, 1999
by and between ACCESS ONE COMMUNICATIONS CORP. (as more fully defined in Article
7, "Company"), and MCG FINANCE CORPORATION (as more fully defined in Article 7,
"Purchaser", "Lender" and/or a "Holder").
R E C I T A L S
WHEREAS, Company (together with certain of its Affiliates) and Lender have
entered into a Credit Agreement and various related Loan Documents (as defined
in the Credit Agreement) pursuant to which Lender has provided Company (together
with certain of its Affiliates) with credit facilities aggregating up to $15.0
million; and
WHEREAS, to induce Lender (a) to increase the credit facilities established
under the Credit Agreement to $15 million and (b) to consent to the incurrence
of additional subordinated indebtedness by certain Borrowers under the Credit
Agreement, Company has agreed to issue and deliver to Purchaser Warrants
(evidenced by Warrant Certificates) to purchase up to an aggregate of 400,000
shares of the Common Stock of Company (subject to adjustment as provided for
herein);
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration (receipt and sufficiency of which are hereby
acknowledged), and intending to be legally bound hereby, Company and Purchaser
hereby agree as follows:
ARTICLE 1. GRANT OF WARRANTS
1.1. GRANT OF WARRANTS. Company hereby grants to Purchaser warrants (the
"Warrants") to purchase up to an aggregate of 400,000 shares of Common Stock (as
such number may be adjusted from time to time as provided herein) Each Warrant
is exercisable immediately.
1.2. WARRANT ENTITLEMENT. Each Warrant entitles the registered Holder of
such Warrant to purchase (during the Exercise Period) one fully paid,
nonassessable Warrant Share at a price of $1.55 per share (as such amount may be
adjusted from time to time as provided herein, the "Exercise Price").
1.3. WARRANTS AS ADDITIONAL COMPENSATION. The Warrants (and the grant
thereof hereunder) are additional compensation for the cost, expense and risk
incurred by Lender (and/or its Affiliates) associated with the underwriting and
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establishment of the loan credit facilities to be provided for in the Credit
Agreement, but neither the grant nor the exercise of any Warrants in any way
affects or relieves Company (or any Affiliate thereof) of any of its obligations
to fully and timely perform and to fully and timely repay the entire
indebtedness due under the Credit Agreement and related Loan Documents.
ARTICLE 2. PURCHASER'S REPRESENTATIONS AND AGREEMENTS
Purchaser represents and warrants that it is acquiring the Warrants (a)
solely for the purpose of investment and not with a view to any distribution of
the Warrants or any Warrant Shares within the meaning of the Securities Act, and
(b) with no present intention of selling or otherwise transferring the Warrants,
the Warrant Certificates or the Warrant Shares except as provided herein.
Purchaser further represents and warrants as follows: (1) it has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Warrants, and (2) it
has the ability to bear the economic risks of its prospective investment, and
(3) it is able (without materially impairing its financial condition) to hold
the Warrants and Warrant Shares for an indefinite period of time and to suffer a
complete loss on its investment in such Warrants and Warrant Shares. Purchaser
agrees that it will not offer, sell or otherwise transfer any Warrants, Warrant
Certificates or Warrant Shares except in compliance with this Agreement and the
Securities Act (and the regulations of the Commission thereunder) , as well as
in compliance with any applicable laws, regulations and orders of and/or
administered by any State PUC (to the extent failure to so comply could
reasonably be expected to have or cause a material adverse effect on the
operations of Company) or the FCC.
ARTICLE 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
3.1. LEGAL EXISTENCE AND POWER. Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey, and (b) has all requisite power to execute, deliver and perform this
Agreement, and (c) has all requisite power to issue and deliver the Warrants, to
execute, deliver and perform the Warrant Certificates (evidencing the Warrants),
and to issue and deliver the Warrant Shares (if and when any Warrants are
exercised). The Articles of Incorporation of Company (as amended from time to
time prior to the effective date hereof) are attached as Exhibit A.
3.2. AUTHORIZATION; NON-CONTRAVENTION. Company has duly authorized each of
the following by all requisite actions thereof: (a) the execution, delivery and
performance of this Agreement, and (b) the issuance and delivery of the
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Warrants, and (c) the execution, delivery and performance of the Warrant
Certificates, and (d) the issuance and delivery of the Warrant Shares upon any
exercise of the Warrants. None of the actions or activities by Company the
authorization of which is described in the first sentence of this Section (when
performed by Company) will violate, breach or cause a default under (or will
require any consent that has not been obtained under) any applicable law or
regulation (including the laws, regulations and orders of and/or administered by
the FCC or any State PUC), the Organic Documents of Company, any voting or other
equity-related agreements, any other material agreements or instruments, any
order, injunction or decree of any court or governmental authority, or any
permit, authorization or license that (with respect to each of the foregoing
items, as applicable) Company is a party to, Company is bound by or Company
operates pursuant to. The resolutions of Company's Board of Directors
authorizing the actions described in the first sentence of this Section are
attached as Exhibit B and are in full force and effect as of the effective date
hereof.
3.3. EXECUTION, DELIVERY AND BINDING EFFECT. This Agreement has been duly
executed and delivered by Company. This Agreement, the Warrant Certificates and
the Warrants constitute valid and binding obligations of Company enforceable
against Company in accordance with their terms except as (a) the enforceability
hereof or thereof may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
3.4. BROKER AND FINDER FEES. Company has not dealt with any broker, finder,
investment bank or other advisor in connection with the issuance and sale of the
Warrants or Warrant Shares, and no broker, finder, investment banking or
advisory fee or commission has been or will be payable (or asserted to be
payable) by Company with respect to the issuance and sale of the Warrants or the
Warrant Shares.
3.5. OFFER AND SALE OF SECURITIES. The offer, sale and issuance of the
Warrants complied with or are exempt from, and the issuance of the Warrant
Shares pursuant to the terms hereof and thereof will comply with or will be
exempt from, the requirements of federal and applicable state securities or
"Blue Sky" laws.
3.6. CAPITALIZATION; WARRANT SHARES AS A PERCENT OF CAPITAL STOCK.
a. Schedule 3.6 accurately and completely describes all of the authorized,
issued and outstanding shares of Capital Stock of Company. All of such
outstanding shares of Capital Stock have been validly issued and are fully paid
and nonassessable.
b. Except as disclosed on Schedule 3.6 or as is required under this
Agreement, Company is not subject to any obligation (contingent or otherwise) to
purchase or otherwise acquire or retire any of its Capital Stock, and no Person
has any right of first refusal, preemptive right, put right or similar right
with respect to any Capital Stock of Company. Except as disclosed on Schedule
3.6 or as is required under this Agreement, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements
under which Company is or may be
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obligated to issue any Capital Stock. Except as disclosed on Schedule 3.6 or as
is required under this Agreement, Company has not granted to any Person the
right to require Company to register any securities of Company under the
Securities Act (whether on a demand basis or in connection with the registration
of securities of Company for its own account or for the account of any other
Person).
3.7. RESERVATION AND ISSUANCE OF WARRANT SHARES. Company has reserved among
its currently authorized but unissued shares of Common Stock the full number of
Warrant Shares deliverable upon exercise of all of the Warrants. The Warrant
Shares (when and if issued upon exercise of the Warrants in accordance with the
terms hereof) (a) will be duly authorized, validly issued, fully paid and
nonassessable, and (b) will be free from all taxes (other than income taxes that
may be imposed upon the Holder thereof), liens (other than liens that may be
created by the Holder thereof as and to the extent permitted under this
Agreement), preemptive rights, rights of first refusal or similar rights of
other equityholders of Company.
3.8. DISCLOSURES. All information relating to or concerning Company (and
its direct and indirect Subsidiaries, if any) set forth in this Agreement or
otherwise provided to Purchaser in connection with the transactions contemplated
by this Agreement is true, correct and complete in all material respects, and
Company --- has not omitted to state any material fact necessary in order to
make the statements made herein or therein (in light of the circumstances under
which there were made) not misleading.
3.9. ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE WARRANTS. Company
acknowledges and agrees that (a) Purchaser is acting solely in the capacity of
an arm's length purchaser with respect to this Agreement and the transactions
contemplated hereby, and (b) Company has been advised by legal counsel in
connection herewith, and (c) Purchaser is not acting as a financial advisor or
fiduciary of Company (or in any similar capacity) with respect to this Agreement
or the transactions contemplated hereby, and (d) any advice given by Purchaser
or any of its representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to Purchaser's
purchase of the Warrants.
ARTICLE 4. THE WARRANTS AND WARRANT SHARES
4.1. WARRANT CERTIFICATES.
a. Form of Certificate; Registration Among Company's Records. The Warrants
shall be evidenced by one or more Warrant Certificates, each of which will be
substantially in the form of Exhibit C with the applicable legend specified on
Exhibit D (but shall incorporate such changes therein as may be required from
time to time to reflect any adjustments made pursuant to Article 5). Each
Warrant Certificate shall be uniquely numbered, shall identify the record Holder
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thereof, and shall be registered on the books and records of Company in
substantially the same manner as other equity interests of Company.
b. Exchange and Transfer of Certificates. A Warrant Certificate (and the
Warrants evidenced thereby) may be exchanged or (subject to compliance with the
applicable requirements hereof) may be transferred from time to time at the
option of the Holder thereof. Upon surrender of any such Warrant Certificate to
Company, then Company shall issue and deliver to (or in accordance with the
written instructions of) such Holder one or more new Warrant Certificates
evidencing in the aggregate the same number of Warrants.
c. Missing and Mutilated Certificates. If any Warrant Certificate is lost,
stolen, mutilated or destroyed, then Company (upon request of the registered
Holder thereof) shall issue and deliver to (or in accordance with the written
instructions of) such Holder one or more replacement Warrant Certificates
evidencing in the aggregate the same number of Warrants. Company's obligation
under this Clause is conditioned upon its receipt of reasonably satisfactory
evidence of such loss, theft, mutilation or destruction.
d. Authorization of Certificate Signer. Any Warrant Certificate may be
signed on behalf of Company (and delivered to the Holder entitled thereto) by
any person who, on the actual date of execution of such Warrant Certificate, is
a proper officer of Company to sign such Warrant Certificate even though (1) on
the date of execution of this Agreement such person was not such an officer,
and/or (2) on the date of delivery of such Warrant Certificate such person has
ceased to serve as such officer of Company.
4.2. EXERCISE OF WARRANTS.
a. Exercise Period. The Warrants are exercisable at any time and from time
to time after the date hereof and prior to 11:59 p.m. (Eastern Time) on November
30, 2009 (as such period may be extended from time to time by mutual agreement
of the Holders and Company, "Exercise Period"), at which time any unexercised
Warrants shall expire.
b. Method of Exercise. A Holder of any Warrant Certificate may exercise any
such Warrants from time to time during the Exercise Period to purchase Warrant
Shares upon (1) the surrender of such Warrant Certificate evidencing such
Warrants, and (2) the payment of the Exercise Price in cash, by certified or
cashier's check payable to the order of Company or by wire transfer to Company.
Such surrender and payment must occur at an office of Company or at such other
address as Company may specify in writing to the then registered Holder of such
Warrant Certificate.
c. Issuance of Warrant Shares Upon Exercise. Upon surrender of any Warrant
Certificate and payment of the applicable Exercise Price (as described above in
this Section), then Company shall issue, sell and deliver to or upon the
instructions of the Holder of such Warrant Certificate and/or its designee one
or more certificates evidencing in the aggregate the number of Warrant Shares
represented by such Warrant Certificate that are then being purchased (each of
which Warrant Shares shall be validly issued, fully paid and nonassessable). Any
persons so designated to be named therein shall be deemed to have become a
Holder of record of such Warrant Shares as of
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the date of exercise of such Warrants. If less than all of the Warrants
evidenced by a Warrant Certificate are exercised at any time prior to the last
day of the Exercise Period, then Company shall issue to such Holder (or its
designee) one or more new Warrant Certificates evidencing the remaining number
of Warrants evidenced by such Warrant Certificate that are not then exercised by
Holder.
d. Rights of a Holder of Warrant Shares Upon Exercise. Upon any exercise of
Warrants by a Holder entitled thereto in accordance with and as provided under
this Agreement, the Holder of such issued Warrant Shares shall be entitled to
all of the rights and benefits of a holder of voting Capital Stock under the
Organic Documents of Company as well as the rights and benefits of a Holder of
Warrant Shares under this Agreement (notwithstanding any provision of such
Organic Documents to the contrary). To the extent that the rights and benefits
of a holder of voting Capital Stock under the Organic Documents are inconsistent
with or less favorable than the rights and benefits of a Holder of Warrant
Shares under this Agreement, then the terms and provisions of this Agreement
shall control and govern with respect to the rights and benefits of such Holder.
4.3. TRANSFERS OF WARRANTS AND WARRANT SHARES.
a. General Transferability. Except as otherwise expressly provided herein,
upon compliance with any applicable requirements under the Securities Act and
the laws, regulations and orders of and/or administered by each State PUC (to
the extent failure to so comply could reasonably be expected to have or cause a
material adverse effect on the operations of Company) or the FCC, then the
Warrants, the corresponding Warrant Certificates and the Warrant Shares may be
transferred by Purchaser (or any other subsequent Holder) from time to time in
whole or in part upon complying with the right of first refusal under Clause "b"
of this Section or as otherwise provided under Clause "c" of this Section (but
without the necessity of obtaining any consent of Company).
b. Restrictions on Transferability (Right of First Refusal). So long as (i)
all other holders of equity (or rights to acquire equity) of Company are subject
to at least as restrictive a condition on their ability to transfer such equity
interests and (ii) no Public Offering has occurred, and (iii) no Event of
Default then exists under the Credit Agreement, then Prior to selling any of the
Warrants to any Person (other than as provided in Clause "c" below), Purchaser
(or a subsequent Holder-Affiliated Transferee who is then the Holder of such
Warrants) will afford Company the right (for a period of 5 Business Days after
such Holder provides notice thereof to Company) to purchase such Warrants on the
same terms and conditions (including price, consideration and method of payment)
as such Holder is proposing to sell such Warrants to any such other Person. If
Company does not irrevocably commit to so acquire all such Warrants under such
terms and conditions during such 5-Business-Day period (and thereafter
consummate such acquisition within 30 calendar days after such commitment), then
such Holder at any time thereafter may sell such Warrants to any such other
Person on terms and conditions that are substantially the same or less favorable
to such acquiror than as was offered to Company. For purposes of the immediately
preceding sentence, the term "less favorable" terms and conditions will include
a higher price per Warrant Share and/or a higher percentage of consideration in
immediately available funds.
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c. Unrestricted Transferability to Certain Persons. Notwithstanding the
foregoing or any other provision of this Agreement, upon compliance with any
applicable requirements under the Securities Act and the laws, regulations and
orders of and/or administered by each State PUC (to the extent failure to so
comply could reasonably be expected to have or cause a material adverse effect
on the operations of Company) or the FCC, then the Warrants, the Warrant
Certificates and/or the Warrant Shares may be transferred by Purchaser (or any
other subsequent Holder) from time to time in whole or in part without any
restriction or condition (including without the necessity of complying with any
right of first refusal) to any Holder-Affiliated Transferee, to any Affiliate of
such Holder and/or to any Person who is also acquiring some or all of the
indebtedness of Company under the Credit Agreement.
d. Treatment of Holder Prior to Notice of Transfer. Prior to receiving
notice of any such transfer (either from such Holder or from such transferee),
Company shall be otherwise entitled to treat such known Holder as the Holder of
record hereunder for purposes of giving and receiving notices and for purposes
of exercising rights hereunder.
e. Rights of a Subsequent Holder. Unless otherwise limited or restricted
pursuant to the document of transfer, then a subsequent Holder of Warrants,
Warrant Certificates or Warrant Shares hereunder shall be entitled to all of the
rights and benefits of the transferring Holder under this Agreement and under
the Organic Documents.
4.4.REGISTRATION AND RELATED RIGHTS.
a. Incidental Registration in a Public Offering. Each Holder of Warrant
Shares and each Holder of Warrants shall have the right to require Company to
include all or (at such Holder's election) any portion of such Warrant Shares
and the Warrant Shares purchasable upon exercise of any such Warrants in any
Public Offering of Company's securities.
Company shall give written notice to each Holder of Warrants and each
Holder of Warrant Shares (at each such Holder's last known address as it appears
on Company's books and records) promptly after the occurrence of any of the
following events: (i) Company deciding to proceed with any registration of
securities that would constitute a Public Offering if declared effective, or
(ii) the initial filing of a registration statement with the Commission
pertaining to any Public Offering, or (iii) any amendment, supplement or
modification to any registration statement for a Public Offering by Company
(other than amendments, supplements and modifications that occur automatically
through incorporation by reference as a result of subsequently prepared publicly
available materials), or (iv) any withdrawal of any registration statement for a
Public Offering by Company. Once any such registration statement is declared
effective by the Commission, then Company may not amend or modify it without
providing each Holder of Warrants and each Holder of Warrant Shares with written
notice thereof at least 5 Business Days prior to filing any such amendment or
modification with the Commission.
In connection with any such Public Offering, Company shall enter into an
underwriting agreement with one or more underwriters that shall provide, among
other things, that the underwriters shall offer to purchase at the closing of
such Public Offering all of the Warrant Shares
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and all of the Warrants (or such lesser portion thereof as any Holder may
request) at the price paid by the underwriters for the Capital Stock (or if a
security convertible into or exchangeable for, or rights to purchase, Capital
Stock, then the conversion, exchange or purchase price for the Capital Stock
provided for by such security less the conversion, exchange or exercise premium
on the date of such offering) sold by Company and/or any selling shareholders
(less, with respect to Warrants, the Exercise Price then in effect).
Notwithstanding the foregoing, if the underwriters shall advise Company in
writing that, in their experience and professional opinion arrived at in good
faith based upon existing market conditions, inclusion of such number of Warrant
Shares (together with the shares of Capital Stock requested for registration by
any other selling equityholders) will adversely affect the price or distribution
of the securities to be offered in such Public Offering solely for the account
of Company, then (1) Company shall promptly furnish each such Holder with a copy
of such written advice by the underwriters, and (2) such Holders shall then have
the right to include only such number of Warrant Shares and Warrants that such
advice by the underwriters indicates may be distributed without adversely
affecting the distribution of the securities solely for Company's account. As
among Holders of Warrant Shares and/or Warrants, such availability for inclusion
in the registration for such Public Offering shall be allocated pro rata based
upon the total number of Warrant Shares owned or purchasable by such Holder. As
between such Holders and any other holders of Capital Stock requesting to be
included in such Public Offering, priority for inclusion in the registration for
such Public Offering shall be allocated pro rata based upon the total number of
shares of Capital Stock owned or purchasable by such holder and the Holders.
In connection with an Initial Public Offering, provided that all other
holders of equity interests of Company are subject to identical (or more
restrictive) restrictions with respect to their equity interests, each Holder of
Warrants and each Holder of Warrant Shares shall agree to refrain from selling
or otherwise transferring (other than to a Holder-Affiliated Transferee) any
Warrant Shares not included in such Initial Public Offering for a period of time
(not to exceed 90 calendar days after the effective date of the registration
statement for such Initial Public Offering) as may be appropriate under the
circumstances and reasonably requested by Company and the underwriters for such
offering.
b. Demand Registration Following an Initial Public Offering or Surviving
Public Combination. In addition to any other registration rights to which any
Holder is entitled, at any time and from time to time after the closing of an
Initial Public Offering or a Surviving Public Combination, Company (upon each
request of Holders of at least 50% of the Warrant Shares and Warrants) shall
prepare, shall file with the Commission and shall use its best efforts to cause
to become effective as promptly as reasonably possible a registration statement
(on Form S-3 or any successor form, if available) covering such number of
Warrant Shares owned or then purchasable as is requested by such Holders.
Notwithstanding the foregoing, Company shall not be required to so prepare and
file upon the demand of such Holders either (a) more than three (3) such
registration statements that are declared effective by the Commission and
maintained in effect by Company for at least 90 consecutive calendar days and
are not on a Form S-3 (or any successor form), or (b) any such registration
statement within the first 90 calendar days after the closing of an Initial
Public Offering, or (c) any such registration statement within the first 90
calendar days after the closing of a
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Public Offering that was effective for at least 90 consecutive calendar days and
in which 50% or more of the Warrant Shares and Warrants were included.
In connection with any such demand registration, Company shall use its best
efforts to engage (or, at Holders' request, shall use its best efforts to assist
Holders in engaging) one or more underwriters to purchase on a best-efforts or a
firm-offer basis the Warrant Shares owned or then purchasable at the price at
which such Warrant Shares are to be resold under such registration statement
less the underwriters' discount (less, with respect to Warrants, the Exercise
Price then in effect). The registration statement shall also provide that sales
of the Warrant Shares may be made by dealers, on an exchange if listed, directly
to purchasers or in any other manner. No such registration statement filed
pursuant to this demand registration provision (without the consent of Holders
of at least 50% of the total Warrant Shares and Warrants) may relate to any
securities other than the Warrant Shares, and no other securities may be sold
incidentally to any such underwritten public offering of Warrant Shares so
registered.
In connection with any such demand registration, Company shall keep
effective and maintain the registration, qualification, approval or listing
covering the Warrant Shares for a period of at least 90 consecutive calendar
days (or in the event such registration is on Form S-3 or any successor form, on
a continuous basis). Company from time to time shall amend or supplement the
prospectus and registration statement used in connection with any such
registration to the extent necessary to comply with applicable law (including to
reflect additional information relating to the plan of distribution), and shall
immediately advise each Holder if any such prospectus or registration statement
does not so comply and/or if any stop order or similar order is issued or
threatened or any request for amendment or supplement is received from any
regulatory agency. Company shall make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment. Company shall comply with all
other applicable laws in connection with any offering of Warrant Shares and will
promptly make available an earnings statement in accordance with Section 11(a)
of the Securities Act and the regulations promulgated thereunder.
c. Holders Entitled to Equivalent Rights. If Company has otherwise granted
or hereafter grants to any Person any other or additional registration rights
with respect to any securities of Company (or similar registration rights with
any more favorable or less restrictive terms), then Company will promptly notify
each Holder of Warrants and each Holder of Warrant Shares, and such registration
rights (or the more favorable or less restrictive terms thereof) will be deemed
automatically to be incorporated into this Agreement (without the necessity of
any other action by the parties hereto) as additional registration rights that
each Holder is entitled to exercise.
d. Sales Through Underwriters and Dealers. Company shall effect the
registration or qualification of the Warrant Shares, and the notification to or
approval of any governmental authority under any federal or state law, and the
listing with any securities exchange on which the Common Stock is listed, in
each instance as may be necessary to permit the sale of Warrant Shares through
underwriters, and, in the case of a demand registration hereunder, also through
dealers, on an exchange, directly to purchasers or in any other manner.
9
e. Certain Additional Agreements in Connection with Registrations. In
connection with any Public Offering, Company (1) shall enter into, execute and
deliver all agreements and other instruments and documents (including opinions
of counsel, comfort letters and underwriting agreements) that are customary and
appropriate with such public offerings, and (2) shall cooperate with any
underwriters to facilitate sales of the Warrant Shares to the same extent as if
such Warrant Shares were being offered directly by Company, and (3) shall
furnish each Holder such numbers of copies of registration statements and
prospectuses (and amendments and supplements thereto) as such Holder may
reasonably request, and (4) shall take all such other actions as are necessary
or advisable to facilitate the registration and sale of such Warrant Shares. In
connection with any Public Offering as to which any Holder is requesting
registration of Warrant Shares, each such Holder (i) shall provide Company with
such information regarding itself, himself or herself as may be reasonably
required by Company, and (ii) shall reasonably cooperate with Company in the
preparation of the registration statement, and (iii) shall enter into, execute
and deliver all agreements and other instruments and documents that are
customary and appropriate for selling equityholders to execute in connection
with a secondary public offering.
f. Indemnification by Company. In connection with any offering of Warrant
Shares pursuant to the provisions of this Section, Company hereby indemnifies
and holds harmless each Holder of Warrants and each Holder of Warrant Shares
(and the directors, officers and controlling Persons of each such Holder), each
other Person (if any) who acts on behalf of or at the request of any such
Holder, each underwriter, and each other Person who participates in the offering
of Warrant Shares (collectively, for purposes of this Clause, the "Indemnified
Parties") against any losses, claims, damages or liabilities, joint or several,
to which such Indemnified Party may become subject under the Securities Act or
any other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
either of the following:
(i) any untrue statement or alleged untrue statement of any material
fact contained (on the effective date thereof) in any registration
statement (or any amendment thereto) under which such Warrant Shares were
registered under the Securities Act, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, or
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or
(iii) any violation by Company of any federal or state law, rule or
regulation applicable to Company in connection with any registration
statement or prospectus (or any amendment or supplement thereto).
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Company shall also reimburse each such Indemnified Party for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or action. Notwithstanding the
foregoing, Company shall not be liable to an Indemnified Party in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus,
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to Company through an instrument duly executed by
such Indemnified Party specifically stating that it is expressly for use
therein. Such indemnity shall remain in full force and effect and shall survive
the transfer of such Warrants or Warrant Shares by any such Holder.
g. Indemnification by Holders. Each Holder whose Warrant Shares are sold
under any registration statement pursuant to this Section (by inclusion of such
Warrant Shares thereunder) shall indemnify and hold harmless Company (the
officers, directors and controlling Persons thereof), each other Holder of
Warrants and each other Holder of Warrant Shares (and the directors, officers
and controlling Persons of each such Holder), each other Person (if any) who
acts on behalf of or at the request of Company or such other Holder, each
underwriter, and each other Person who participates in the offering of Warrant
Shares (collectively, for purposes of this Clause, the "Indemnified Parties")
against any losses, claims, damages or liabilities, joint or several, to which
such Indemnified Party may become subject under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon either of the
following:
(i) any untrue statement or alleged untrue statement of any material
fact contained (on the effective date thereof) in any registration
statement (or any amendment thereto) under which such Warrant Shares were
registered under the Securities Act at the request of such Holder, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus or prospectus (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
but only to the extent (with respect to either of the foregoing Clauses) that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary prospectus,
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to Company through an instrument duly executed by
such Holder specifically stating that it is expressly for use therein. Each such
Holder shall also reimburse each such Indemnified Party for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or action. Notwithstanding the
foregoing, no such Holder shall be liable to any Indemnified Party in any such
instance to the extent
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(a) such loss, claim, damage or liability relates to any untrue statement or
omission, or any alleged untrue statement or omission, made in a preliminary
prospectus but eliminated or remedied in a final prospectus, and (b) a copy of
the final prospectus was not delivered to the Person asserting the claim at or
prior to the time required by the Securities Act in an instance for which
delivery thereof would have constituted a defense to the claim asserted by such
Person.
h. Certain Notices and Other Rights Relating to Indemnification. A party
from whom indemnity may be sought pursuant to the provisions of this Section
shall not be liable for such indemnity with respect to any claim as to which
indemnity is sought unless the party seeking such indemnity shall have notified
such indemnifying party in writing of the nature of such claim promptly after
such indemnified party becomes aware of the assertion thereof. Notwithstanding
the foregoing, the failure to so notify such indemnifying party shall not
relieve such party from any liability which it may have to such indemnified
party otherwise than on account of the provisions of this Section or if the
failure to give such notice promptly shall not have been prejudicial to such
indemnifying party. No indemnifying party shall be liable for any compromise or
settlement of any such action effected without its consent. No indemnifying
party (in the defense of any such claim or suit), without the consent of each
indemnified party, shall consent to any compromise or settlement that does not
include as an unconditional term thereof the giving by the claimant to such
indemnified party of a complete release from all liability in respect of such
claim or suit.
i. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section for any
reason is held to be unenforceable although applicable in accordance with its
terms, Company and the Holders, as amongst themselves, shall contribute to the
losses, claims, damages, liabilities and expenses described herein in such
proportions so that the portion thereof for which any Holder shall be
responsible shall be limited to the portion determined by a court or the parties
to any settlement to be directly attributable to an untrue statement of a
material fact or an omission to state a material fact in a registration
statement, preliminary prospectus, prospectus or amendment or supplement thereto
in specific reliance upon and in conformity with written information furnished
to Company through an instrument duly executed by such Holder specifically
stating that it is expressly for use therein, and Company shall be responsible
for the balance. Notwithstanding the foregoing, the liability of each Holder
shall be limited to the net proceeds received by such Holder from the sale of
the Warrant Shares sold by it thereunder. Company and the Holders agree that it
would not be just and equitable if their respective obligations to contribute
were to be determined by pro rata allocation, by reference to the proceeds
realized by them or in any manner which does not take into account the equitable
considerations set forth in this Clause.
4.5. RIGHTS UPON EQUITY DISPOSITIONS AND NON-SURVIVING TRANSACTIONS.
a. Offer to Purchase. In connection with any Equity Disposition or any
Non-Surviving Transaction, Company or the acquiror in any Equity Disposition or
Non-Surviving Transaction shall also offer to purchase on the terms set forth
below all of the Warrant Shares and all of the Warrants. If an Equity
Disposition is of less than all of the Capital Stock then outstanding, then the
number of Warrants and Warrant Shares subject to purchase under this Section
shall be
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reduced proportionately (to the nearest whole number), and such reduced number
will be allocated pro rata among all Holders desiring to tender Warrant Shares
or Warrants in connection with such transaction.
b. Notice of Proposed Transaction. Company shall give written notice to
each Holder of Warrants and each Holder of Warrant Shares (at each such Holder's
last known address as it appears on Company's books and records) promptly after
an agreement in principle is reached with respect to any Equity Disposition or
any Non-Surviving Transaction (but, in any event, at least 30 calendar days
prior to the closing of any such transaction).
c. Purchase Price. If a Holder accepts the offer under this Section, then
(as a condition to consummation of such Equity Disposition or any Non-Surviving
Transaction) either Company or such acquiror shall purchase (either before or
concurrently with the consummation of such transaction) all Warrants and Warrant
Shares tendered by a Holder thereof at a cash price per Warrant and Warrant
Share equal to the result of the following formula:
(i) the product of (1) the aggregate consideration received by all
sellers and transferors in connection with such transaction or series
of related transactions (including the consideration to be received by
the holders of Warrants and Warrant Shares pursuant to this provision)
and (2) a fraction the numerator of which is the number of Warrants
and Warrant Shares tendered for purchase in connection with such
transaction or series of related transactions and the denominator of
which is the sum of the number of shares of Common Stock outstanding
immediately prior to such transaction or series of related
transactions plus the number of Warrants and Warrant Shares tendered
for purchase (which result is the amount of consideration available
for all Warrants and Warrant Shares tendered in connection with such
transaction), divided by
(ii) the number of Warrants and Warrant Shares tendered for purchase
in connection with such transaction (which result is the amount of
consideration available for each Warrant and Warrant Share tendered in
connection with such transaction), minus
(iii) the Exercise Price then in effect (but only with respect to
Warrants and not Warrant Shares).
Notwithstanding the foregoing, in connection with any such Equity Disposition or
Non-Surviving Transaction, each Holder may elect (at its option) to receive the
purchase price payable under this Section pro rata in kind in the same form of
consideration as is to be received by Company or such selling equityholder.
d. Payment of Purchase Price. Company (either before or concurrently with
the consummation of such transactions) shall distribute to the respective
Holders of Warrants and Warrant Shares (or to such other Person as such Holder
may direct Company in writing) the
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applicable purchase price for each tendered Warrant Share and Warrant in cash,
by certified or cashier's check, by wire transfer or by any other means
acceptable to such Holder. In addition, Company shall also deliver to each such
Holder (as and to the extent applicable) a return or re-issuance of Warrants and
Warrant Shares not purchased in connection with any such transaction.
e. Determination of "Aggregate Consideration". Unless the entire
consideration in such transaction consists of cash or unless otherwise agreed by
Holders of Warrants and Warrant Shares, then the fair value of the "aggregate
consideration" to be received by all sellers and transferors in connection with
an Equity Disposition or Non-Surviving Transaction shall be determined by an
Independent Appraiser selected by Holders of a majority of the Warrants and
Warrant Shares and approved by Company (which approval may not be unreasonably
withheld, delayed or conditioned). Such Independent Appraiser shall use one or
more valuation methods that the Independent Appraiser (in its best professional
judgment) determines to be most appropriate under the circumstances; provided,
that (i) such valuation methods shall take into account any related agreements
that result in personal gain, payments or compensation to any director, officer
or equityholder of Company, and (ii) such valuation methods shall not give
effect to (1) any discount for any lack of liquidity or minority status, or (2)
the fact that such equity securities may not be registered under the Securities
Act. Such Independent Appraiser, as promptly as is reasonably possible, will
prepare and deliver to Company and to each Holder of a Warrant or Warrant Share
a written valuation report indicating (a) the methods of valuation considered or
used, and (b) the value of the "aggregate consideration" paid by the acquiror in
connection with the particular Equity Disposition or Non-Surviving Transaction
or otherwise received by the sellers and transferors in connection therewith,
and (c) the nature and scope of the examination or investigation upon which the
determination of value was made. Unless the valuation report is revised by the
Independent Appraiser within 5 Business Days after delivery thereof or unless
Company and Holders otherwise mutually agree, then the valuation report shall be
deemed final at the end of such 5-Business-Day period. Company shall pay the
fees and expenses associated with the Independent Appraiser.
4.6. REPURCHASE OFFERS.
a. Offer to Repurchase. Within 30 calendar days following the occurrence of
any Repurchase Condition, Company shall make a written offer (each, a
"Repurchase Offer") to repurchase at the Repurchase Price up to all of the
Warrant Shares and Warrants owned by each Holder. Each such Repurchase Offer
(among other things) shall indicate the date of occurrence of the relevant
Repurchase Condition and shall provide a calculation of the Current Market Price
per Warrant Share (together with a copy of documentation supporting such
calculation). Each such Repurchase Offer shall be delivered by Company to each
such Holder entitled thereto by first-class mail to the last known address of
such Holder on the books and records of Company.
b. "Repurchase Condition". A "Repurchase Condition" will be deemed to occur
(1) on February 28, 2002, and (2) on February 28, 2009, and (3) at any time
after June 30, 2002, and prior to November 30, 2009 upon a written request from
Holders of at least 50% of the outstanding Warrants and Warrant Shares, and (4)
upon any full repayment of the indebtedness under the Loan Documents, and (5)
upon the occurrence of any Event of Default under and as defined in the Credit
Agreement.
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c. "Repurchase Price". The "Repurchase Price" for each Warrant and Warrant
Share in connection with any such Repurchase Offer will be the Current Market
Price per Warrant Share, less with respect to Warrants (but not Warrant Shares)
the Exercise Price then in effect.
d. Acceptance of Repurchase Offer. At any time within 60 calendar days
after a Holder receives a Repurchase Offer (together with a final written
valuation report), each such Holder may accept such Repurchase Offer by agreeing
to tender for repurchase by Company all or any portion of such Holder's Warrant
Shares and Warrants.
e. Payment of Purchase Price. Within 30 calendar days of receiving any such
agreement to tender Warrant Shares or Warrants, Company shall distribute to each
such Holder (or to such other Person as such Holder may direct Company in
writing) the applicable Repurchase Price for each such tendered Warrant Share
and Warrant in cash, by certified or cashier's check, by wire transfer or by any
other means acceptable to such Holder (concurrently with which distribution,
such Holder shall deliver to Company the Warrant Certificates and/or Warrant
Shares). In addition, Company shall also deliver to each such Holder (as and to
the extent applicable) a return or re-issuance of Warrants and Warrant Shares
not tendered for repurchase. Notwithstanding the foregoing, with respect to the
Repurchase Condition occurring concurrently with any full repayment of the
indebtedness under the Loan Documents under Clause "b(4)" above, unless the
Holders otherwise consent, Company shall establish a cash escrow of the
Repurchase Price with a "well capitalized" depository institution concurrently
with any such full repayment of the indebtedness under the Loan Documents (but
such cash escrow shall be returned to Company if the Holders elect not to accept
such Repurchase Offer).
4.7. CUMULATIVE RIGHTS. The rights of Holders upon the occurrence of events
set forth in this Article 4 are cumulative. If more than one such event occurs
simultaneously (or the time period for exercising any such rights overlaps),
then each Holder can elect which rights (if any) to exercise and any prior
inclusion or surrender of Warrants or Warrant Shares with respect to a
transaction that has not yet closed may be rescinded by such Holder during such
overlapping period in order to exercise rights arising under any concurrently
occurring event.
4.8. EXERCISE OF RIGHTS CONDITIONED UPON CLOSING OF TRANSACTION INVOLVED.
The rights of Holders to have Warrants or Warrant Shares included and sold in
any Public Offering or purchased in any Equity Disposition or Non-Surviving
Transaction pursuant to this Article 4 are conditioned upon the consummation of
the proposed transaction. Neither Company nor any equityholder involved in any
such proposed transaction shall have any obligation to Holders to consummate any
such proposed transaction once an agreement in principle or decision to proceed
with respect thereto is reached, except as expressly provided in this Article 4.
4.9. PAYMENT OF TAXES AND EXPENSES. Company will pay all expenses
(including reasonable costs and expenses of Holders and legal counsel thereto,
but excluding underwriter's and/or broker's discounts and commissions), taxes
(other than income taxes) and other fees and charges attributable to the
issuance, registration,
15
qualification, notification, approval, listing, transfer pursuant to Section
4.5, and/or repurchase of the Warrants, the Warrant Certificates and the Warrant
Shares.
4.10. RESERVATION AND ISSUANCE OF WARRANT SHARES. Company at all times
shall reserve (and keep free from preemptive rights or similar rights of
equityholders of Company) among its authorized but unissued shares of Capital
Stock the full number of Warrant Shares deliverable upon exercise of all of the
Warrants. Company covenants that all Warrant Shares (when and if issued upon
exercise of the Warrants in accordance with the terms hereof) will be duly
authorized, validly issued, fully paid and nonassessable (and will be free from
all taxes, liens, charges and security interests with respect to the issuance
thereof). Before taking any action that could cause an adjustment pursuant to
Article 5, Company will take any corporate action that (in the opinion of its
counsel) may be necessary or appropriate in order that Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
4.11. CORRECTIVE ADJUSTMENTS. Company hereby acknowledges that Purchaser
has relied upon, among other things, the representation and warranty set forth
in Section 3.6 regarding the outstanding Capital Stock of Company and the rights
to acquire Capital Stock of Company as of the date of this Agreement. If it is
later determined that the representation and warranty set forth in Section 3.6
is untrue or inaccurate such that the outstanding Capital Stock or rights to
acquire Capital Stock are greater that the amount disclosed therein, then
Company shall notify each Holder in writing within 10 Business Days of
discovering such inaccuracy and shall promptly prepare, execute and deliver to
the Holders such additional documents and certificates as are necessary to
equitably adjust the Warrants and Warrant Shares deliverable upon exercise of
all Warrants for the benefit of Holders. Such adjustment shall include the
issuance of additional Warrants or the reduction in Exercise Price of the
Warrants, as approved in writing by Holders of a majority of the Warrants.
4.12. LISTING OF SHARES. If Company lists any shares of Common Stock on any
national securities exchange, inter-dealer quotation system or other market,
then Company (at its expense) will use its best efforts to cause the Warrant
Shares to be approved for listing, subject to notice of issuance, and will
provide prompt notice to each such exchange, system or other market of the
issuance thereof from time to time.
4.13. LISTS OF HOLDERS. Company (from time to time upon the request of any
Holder) will provide such Holder with a list of the registered Holders and their
respective addresses.
4.14. STATEMENT OF WARRANT INTEREST. Company (from time to time upon the
request of any Holder) will provide such Holder with a statement of such
Holder's interest in Company containing the following information (as
applicable): (a) the number of Warrants then owned of record by such Holder, and
(b) the number of Warrant Shares purchasable upon the exercise of each Warrant
then owned of record by such Holder, and (c) the Exercise Price of each Warrant
then owned of record by such Holder, and (d) the number of
16
Warrant Shares then owned of record by such Holder, and (e) a chart describing
(in reasonable detail) the then current capitalization of Company.
4.15. RIGHT OF INSPECTION. At any time and from time to time during normal
business hours (upon reasonable prior written notice) Company will permit any
Holder (or any agent or representative thereof, but at such Holder's cost and
expense) (i) to visit, and (ii) to examine and make copies of and abstracts ---
from the books and records of Company and its Subsidiaries, and (iii) to discuss
the affairs, finances, and --- accounts of Company and its Subsidiaries with any
of their respective officers, directors and independent accountants.
4.16. ATTENDANCE AND PARTICIPATION RIGHTS. So long as the Warrants and
Warrant Shares of Holders (together will all other warrants and shares of
Capital Stock owned by Holders) collectively represent 5% or more of the Common
Stock of Company (on a fully diluted basis), then a representative of Holders
shall be entitled (if at any time hereafter Holders so elect) to attend each of
the meetings of Company's Board of Directors (including, each committee
thereof). Notwithstanding the foregoing, at the request of Company,
representatives of Holders may be required temporarily to leave any such meeting
of the Board of Directors if such action is necessary to preserve Company's
attorney-client privilege with respect to such meetings or the information
disseminated therein. In addition, at all times while any Holder owns Warrant
Shares (together with all other shares of Capital Stock owned by such Holder)
representing 5% or more of the issued and outstanding Common Stock, such Holder
(at its option) shall be entitled to designate a pro rata percent of the
positions on the Board of Directors (and each committee thereof) of Company
(rounded upwards to the next whole number). The Company will cause any directors
designated by a Holder to be included among the nominees who are recommended for
election as directors by management of the Company, at each meeting of the
Company's stockholders at which directors of the Company are proposed to be
elected.
4.17. COMPLIANCE WITH APPROVAL REQUIREMENTS. If any Warrants or Warrant
Shares require registration or approval of the FCC, any State PUC or any other
governmental authority (or the taking of any other action under the laws of the
United States of America or any political subdivision thereof) before such
securities may be validly issued, then Company will secure and maintain such
registration or approval or will take such other action as and when necessary.
4.1.
ARTICLE 5. ANTI-DILUTION PROVISIONS
5.1. ADJUSTMENTS TO WARRANT SHARES PURCHASABLE AND EXERCISE PRICE.
a. Equity Dividends, Restructurings and Reclassifications. If Company at
any time (1) declares or pays a dividend on its outstanding Capital Stock in
shares of Common Stock or other securities of Company, or (2) subdivides its
outstanding shares of Common Stock, or (3)
17
combines its outstanding shares of Common Stock into a smaller number of shares,
or (4) issues by reclassification of the Common Stock other securities of
Company (including any such reclassification in connection with a merger,
consolidation or other business combination in which Company is the surviving
entity), then the number and kind of Warrant Shares purchasable upon exercise of
each Warrant shall be adjusted so that each Holder of a Warrant upon exercise of
such Warrant shall be entitled to receive the aggregate number and kind of
Warrant Shares or other securities of Company that such Holder would have owned
or would have been entitled to receive after the occurrence of any such event
had such Warrant been exercised immediately prior to the occurrence of such
event (or, if earlier, any record date with respect thereto). Any adjustment
required by this Clause (a) shall become effective on the date of such event
retroactive to the record date with respect thereto (if any), and (b) shall be
made successively whenever any such event occurs.
b. Rights to Purchase Below Target Current Market Price. If Company issues
any rights, options or warrants to subscribe for or purchase Common Stock (or
securities convertible or exchangeable into Common Stock) at a price per share
(or having a conversion or exchange price per share) less than the Target Market
Price per share of Common Stock or without consideration, then the current
Exercise Price to be in effect after such issuance shall be reduced to a price
determined as follows:
multiply (1) the Exercise Price in effect immediately prior to such
issuance by (2) a fraction (i) the numerator of which is the number of
shares of Common Stock outstanding on the date of such issuance plus
the number of shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or
exchangeable securities so to be offered) would purchase at the Target
Market Price and (ii) the denominator of which is the number of shares
of Common Stock outstanding on the date of such issuance plus the
number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible or exchangeable
securities so to be offered are initially convertible).
The provisions of this Clause, however, will not apply to any issuance of
Warrants or to any issuance of Warrant Shares upon exercise of any Warrants. If
such subscription price may be paid in a consideration any of which is in a form
other than cash, then the value of such consideration (unless Company and
Holders otherwise mutually agree) shall be as determined by an Independent
Appraiser, and the Board of Directors of Company shall cause the related shares
to be fully paid. Any adjustment required by this Clause (a) shall become
effective on the date of issuance retroactive to the record date for determining
equityholders entitled to receive such issuance, and (b) shall be made
successively whenever any such event occurs.
c. Distributions of Indebtedness, Assets or Securities. If Company
distributes to any holders of Capital Stock (including any such distribution in
connection with a merger or consolidation in which Company is the continuing
entity) evidences of indebtedness of Company,
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assets or securities (excluding dividends or distributions otherwise
appropriately covered under other Clauses of this Section 5.1), then the current
Exercise Price to be in effect after such distribution shall be reduced to a
price determined as follows:
multiply (1) the Exercise Price in effect immediately prior to such record
date by (2) a fraction (i) the numerator of which is the Current Market
Price per share of Common Stock on such record date minus the fair value
(as determined by an Independent Appraiser, unless otherwise mutually
agreed by Company and Holders) of the portion of the assets, evidences of
indebtedness or other securities so to be distributed applicable to one
share of Capital Stock and (ii) the denominator of which is the Current
Market Price per share of Common Stock.
Any adjustment required by this Clause (a) shall become effective on the date of
issuance retroactive to the record date for determining equityholders entitled
to receive such distribution, and (b) shall be made successively whenever any
such event occurs.
d. Other Issuances Below Target Market Price. If Company issues or sells
any shares of Common Stock (or rights, options, warrants or convertible or
exchangeable securities containing a right to subscribe for or purchase shares
of Common Stock) (excluding (i) issuances or sales with respect to transactions
otherwise appropriately covered under other Clauses of this Section 5.1 and (ii)
any Warrant Shares), at a price per share less than the Target Market Price per
share of Common Stock in effect immediately prior to such sale or issuance, then
the number of Warrant Shares thereafter purchasable upon the exercise of each
Warrant shall be determined as follows:
multiply (1) the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by (2) a fraction (i) the numerator of which shall
be the total number of shares of Common Stock outstanding immediately after
such issuance or sale and (ii) the denominator of which shall be an amount
equal to the sum of (A) the total number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus (B) the number
of shares of Common Stock that the aggregate consideration received (as
determined below) for such issuance or sale would purchase at the Target
Market Price per share of Common Stock in effect immediately prior to such
sale and issuance.
For purposes of such adjustments, the shares of Common Stock that the holder of
any such rights, options, warrants or convertible or exchangeable securities is
entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such issuance or sale, and the "consideration
received" by Company shall be deemed to be (a) the consideration received by
Company for such rights, options, warrants or convertible or exchangeable
securities plus (b) the consideration or premiums stated in such rights,
options, warrants or convertible or exchangeable securities to be paid for the
shares of Common Stock purchasable thereby. If Company (i) issues or sells
shares for consideration that includes any property other than cash or
(ii) issues or sells shares together with other securities as a part of a unit
at a price per unit, then the "price per share" and the
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"consideration received" by Company for purposes of this Clause (unless Company
and Holders otherwise mutually agree) will be determined by an Independent
Appraiser. Any adjustment required by this Clause (a) shall become effective
retroactive to the date of issuance or sale of any such rights, options,
warrants or convertible or exchangeable securities, and (b) shall be made
successively whenever any such event occurs.
e. Dividend Dilution Fee. If any dividend, distribution or other payment is
made or accrued after the date hereof with respect to any Capital Stock or other
equity securities of Company, then Company (concurrently with any actual payment
thereof) shall make a payment in immediately available funds to each Holder of
Warrants and/or Warrant Shares equal to such Holder's percentage ownership of
Company's outstanding Capital Stock (but, for such purposes, treating all
Warrants as though they had then been exercised) of such dividend, distribution
or other payment. Notwithstanding the foregoing, Company shall not be obligated
to make any such payment to a Holder (and no Holder shall be entitled to receive
such payment) to the extent that such Holder otherwise receives actual payment
of the corresponding dividend or distribution relating to such Warrant Share as
a holder of Warrant Shares in such class of equity security.
f. Catchall Anti-Dilution Protection. If Company otherwise issues any
securities or instruments or engages in any transaction an effect of which is to
dilute the economic value or voting rights of any Holder's Warrants or Warrant
Shares in a manner contrary to the general intent expressed under Clause "a" of
this Section (including the issuance of any securities or instruments with
enhanced voting rights, preemptive rights, dividend preferences or liquidation
preferences), then Company will implement an equitable adjustment to such
Holder's interest in Company (in a manner reasonably acceptable to such Holder)
in order to account for the effects of such transaction. Any adjustment required
by this Clause shall be made successively whenever any such event occurs. If
Company and Holders are unable to agree on the amount or form of any such
equitable adjustment, then Company will retain an Independent Appraiser
acceptable to Holders (which acceptance may not be unreasonably withheld) that
will determine the amount and form of such equitable adjustment.
g. Preemptive Rights for Any Non-Protected Issuances. If Company otherwise
issues or sells any shares of Capital Stock (or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock) (excluding issuances or sales with respect to
transactions for which Holders otherwise appropriately received anti-dilution
protection under other Clauses of this Section 5.1), then each Holder of
Warrants and/or Warrant Shares shall be entitled at any time during the term of
this Warrant Agreement to acquire (at the lesser of the price paid by such
acquiror of Capital Stock or the Current Market Price therefor, and on terms and
conditions otherwise at least as favorable as was offered to such acquiror) an
amount of additional shares of Capital Stock that would entitle such Holder to
have the same aggregate percentage of Capital Stock (on a fully diluted basis)
as such Holder had or was entitled to have immediately prior to such
transaction.
h. Rights Applicable to Shares Other than Common Stock. If at any time (as
a result of an adjustment made pursuant to this Section 5.1) a Holder becomes
entitled to receive any shares of Company other than shares of Common Stock,
then thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in
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a manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Warrant Shares contained in this Section 5.1, and the provisions
of Article 4 with respect to the Warrant Shares shall apply on like terms to
such other shares.
i. Holders Entitled to Equivalent Rights. If Company has otherwise granted
or hereafter grants to any Person any other or additional anti-dilution
protection or preemptive rights with respect to any securities of Company (or
similar protections or rights with any more favorable or less restrictive
terms), then Company will promptly notify each Holder of Warrants and each
Holder of Warrant Shares, and such protections and rights (or the more favorable
or less restrictive terms thereof) will be deemed automatically to be
incorporated into this Agreement (without the necessity of any other action by
the parties hereto) as additional protections and rights that each Holder is
entitled to exercise.
j. Expiration of Rights Previously Subject to Adjustment. Upon the
expiration of any rights, options or warrants that resulted in adjustments
pursuant to this Section 5.1 that were not exercised, then the Exercise Price
and the number of Warrant Shares purchasable shall be readjusted and thereafter
shall be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as applicable) as if (A) the only shares
of Common Stock purchasable upon exercise of such rights, options or warrants
were the shares of Common Stock (if any) actually issued or sold upon the
exercise of such rights, options or warrants and (B) such shares of Common Stock
so issued or sold (if any) were issuable for the consideration actually received
by Company for the issuance, sale or grant of all such rights, options or
warrants whether or not exercised; provided that no such readjustment may have
the effect of increasing the Exercise Price or decreasing the number of Warrant
Shares purchasable upon the exercise of a Warrant by an amount in excess of the
amount of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options or warrants.
k. Election to Adjust Warrants Rather than Exercise Price. Any Holder may
elect on or after the date of any adjustment to the Exercise Price to adjust the
number of Warrants (and Warrant Shares purchasable) instead of the Exercise
Price. Upon any such election, the number of Warrants (and Warrant Shares
purchasable) will be determined by multiplying the number of Warrants and
Warrant Shares purchasable by a fraction the numerator of which is the Exercise
Price in effect immediately prior to such adjustment and the denominator of
which is the Exercise Price in effect as a result of such adjustment.
l. Adjustments for Subsidiaries Not Wholly-Owned by Company. If Company at
any time does not own 100% of the Capital Stock of any Subsidiary, then the
number of Warrant Shares purchasable upon exercise of each Warrant shall be
adjusted in accordance with the following formula: multiply (1) the percentage
of the Capital Stock of Company to which Holders would otherwise be entitled
under this Warrant Agreement by (2) a fraction (i) the numerator of which is 1
and (ii) the denominator of which is the percentage of the Capital Stock of such
Subsidiary then owned by Company.
5.2. NOTICE OF ADJUSTMENT. Upon any adjustment required under this Article
5, Company (at its expense) shall mail (within 10 Business Days after such
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adjustment) by first-class mail, postage prepaid, to each Holder of Warrants and
each Holder of Warrant Shares a notice of such adjustment. Such notice shall
include the following (each in reasonable detail): (i) the number of Warrant
Shares purchasable upon the exercise of each Warrant and the Exercise Price of
such Warrant after such adjustment, and (ii) a brief statement of the facts
requiring such adjustment, and (iii) the computation by which such adjustment
was made.
5.3. PRESERVATION OF PURCHASE RIGHTS UPON CERTAIN TRANSACTIONS. In
connection with any merger, consolidation, reorganization or combination of
Company with or into another Person (whether or not Company is the surviving
entity), or any sale, transfer or lease to another Person of all or
substantially all the property of Company, then Company (or such successor or
purchasing Person) shall execute an agreement in favor of each Holder of
Warrants giving such Holder the right thereafter upon payment of the Exercise
Price in effect immediately prior to such action to purchase upon exercise of
each Warrant the kind and amount of securities, cash and property that such
Holder would have owned or would have been entitled to receive after the
happening of such merger, consolidation, combination, sale, transfer or lease
had such Warrant been exercised immediately prior to such action. If any such
successor, reorganized or purchasing Person is not a corporation taxed as a "C"
corporation, then such Person shall also provide appropriate tax indemnification
with respect to such shares and other securities and property so that, upon
exercise of the Warrants, each Holder thereof will have the same benefits such
Holder otherwise would have had if such successor or purchasing Person were a
corporation. Such agreement shall provide for adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 5. The provisions of this Section shall similarly apply to successive
mergers, consolidations, combinations, sales, transfers or leases.
ARTICLE 6. COMPANY'S COVENANTS
6.1. INFORMATION.
a. Information Provided by Company to Other Persons. Whether or not Company
is subject to the reporting requirements of Sections 13 or 15(d) of the Exchange
Act, Company will provide each Holder with a copy of all information (including
financial information) and other communications that are sent by or on behalf of
Company (i) to any class of Company's equityholders (if such communication is
material), or (ii) to the members of Company's Board of Directors, or (iii) to
the Commission. Company shall provide such information and communications to
Holders concurrently with providing it to such third parties.
b. Specific Additional Information. Company will also provide each Holder
written notice of (and describing in reasonable detail) the occurrence of any of
the following events:
1. Company offers or issues to any Person any shares of Capital Stock
or securities convertible into or exchangeable for Capital Stock or any
right to subscribe for or purchase any thereof; or
2. A dissolution, liquidation or winding up of Company; or
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3. An agreement in principle is reached and/or a letter of intent is
executed with respect to any Equity Disposition or Non-Surviving
Transaction; or
4. Company declares or makes (directly or indirectly) any payment,
dividend or distribution (in cash or otherwise) with respect to, or incurs
any liability for the purchase, acquisition, redemption or retirement of,
any Capital Stock or as a dividend, return of capital or other payment or
distribution of any kind to any equityholder.
Each such notice shall be mailed by Company to each Holder (at such Holder's
last known address on the books and records of Company) at least 20 Business
Days prior to the applicable record date of such transaction.
c. Additional Requested Information. In addition to the information and
disclosures otherwise required under this Agreement, Company will also provide
to each Holder any information reasonably requested from time to time by such
Holder relating to the operations, business plans and/or ownership of Company.
d. Disclosure of Information by Holders. Each Holder will employ reasonable
procedures to treat as confidential all written, non-public information
delivered to such Holder pursuant to this Agreement concerning the performance,
operations, assets, structure and business plans of Company that is
conspicuously designated by Company as confidential information. While other or
different confidentiality procedures may be employed by each Holder, the actual
procedures employed by such Holder for this purpose will be conclusively deemed
to be reasonable if they are at least as protective of such information as the
procedures generally employed by such Holder to safeguard the confidentiality of
such Holder's own information that such Holder generally considers to be
confidential. Notwithstanding the foregoing, each Holder may disclose any
information concerning Company in such Holder's possession from time to time (a)
to permitted participants, transferees, assignees, pledgees and investors
(including prospective participants, transferees, assignees, pledgees and
investors), but subject to a reasonable confidentiality agreement regarding any
non-public confidential information thereby disclosed, and (b) in response to
credit inquiries consistent with general banking practices, and (c) to any
federal or state regulator of such Holder, and (d) to such Holder's Affiliates,
employees, legal counsel, appraisers, accountants, agents and investors, and (e)
to any Person pursuant to compulsory judicial process, and (f) to any judicial
or arbitration forum in connection with enforcing this Agreement or defending
any action based upon this Agreement or the relationship between such Holder and
Company, and (g) to any other Person with respect to the public or
non-confidential portions of any such information. Moreover, each Holder
(without any compensation, remuneration or notice to Company) may also include
operational, performance and structural information and data relating to Company
in compilations, reports and data bases assembled by such Holder (or its
Affiliates) and used to conduct, support, assist in and validate portfolio,
industry and credit research and analysis for itself and/or other Persons;
provided, however, that such Holder may not thereby disclose to other Persons
any information relating to Company in a manner that is attributable to Company
unless (1) such disclosure is permitted under the standards outlined above in
this Section or (2) Company otherwise separately consents thereto (which consent
may not be unreasonably withheld).
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6.2. BOOKS AND RECORDS. Company and each of its Subsidiaries shall keep and
maintain satisfactory and adequate books and records of account in accordance
with generally accepted accounting principles.
6.3. NO AMENDMENTS TO ORGANIC DOCUMENTS. Without the prior written consent
of Holders representing a majority of Warrant Shares and Warrants (which consent
may not be unreasonably withheld), Company shall not permit any amendments to
its Organic Documents. Without limiting the generality of the foregoing, without
the prior written consent of Holders representing a majority of Warrant Shares
and Warrants (which consent may not be unreasonably withheld), Company shall not
establish any class of Capital Stock or issue any shares of Capital Stock that
have rights, dividends or preferences senior to or more advantageous than the
rights, dividends and preferences of the Warrant Shares.
6.4. REINCORPORATION AND REORGANIZATION. Company shall not at any time
reincorporate in any jurisdiction or reorganize into a different form of legal
entity unless (in each such instance) Company shall have received a favorable
opinion of counsel to the effect that such reincorporation or reorganization
shall impose no direct or contingent liability on Holders under the laws of such
jurisdiction. A copy of each such opinion shall be provided to each Holder.
6.5. EXISTENCE, GOOD STANDING AND AUTHORIZATIONS. Company and each of its
Subsidiaries shall preserve and maintain its existence in good standing as a
organization under the laws of its jurisdiction of incorporation and the
validity of all its authorizations and licenses required in the conduct of its
businesses.
6.6. CONDUCT OF BUSINESS. Without the prior written consent of Holders
representing a majority of Warrant Shares and Warrants (which consent may not be
unreasonably withheld), Company (a) will continue to engage in (and only in)
businesses of the same general type as now conducted by it, and (b) will comply,
and will cause each Subsidiary to comply, in all material respects with all
applicable material laws, regulations, and orders, and (c) will not (and will
not permit any Subsidiary to) engage in any transaction (including employment
arrangements) with any Affiliate or other related party other than for value
received and under reasonable and customary terms and conditions that are at
least as favorable to Company as would be achieved in an arm's length
transaction.
ARTICLE 7. DEFINITIONS
7.1. DEFINITIONS. As used herein, the following terms have the following
respective meanings:
7.1.1. "Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such Person. A Person shall be deemed to "control" another Person if such
first Person possesses directly or indirectly the
24
power to direct (or to cause the direction of or to materially influence) the
management and policies of the second Person, whether through the ownership of
voting securities, by contract or otherwise. Without limiting the generality of
the foregoing, each of the following Persons will be deemed to be an Affiliate
of Company: (a) each Person (other than a Holder) who owns 5% or more of any
class or series of Capital Stock of Company, and (b) each Person (other than a
Holder) who serves on the board of directors of the Company or any Subsidiary
thereof, and (c) each senior executive officer of Company.
7.1.2. "Agreement" means this Warrant Agreement, as amended, modified and
supplemented from time to time.
7.1.3. "Appraised Valuation" means, as of any relevant date, the value of a
Warrant Share, a share of Common Stock or other security or equity interest (as
applicable) as determined by an Independent Appraiser. Such Independent
Appraiser will be selected by Holders of a majority of the Warrants and Warrant
Shares and approved by Company (which approval may not be unreasonably withheld,
delayed or conditioned). Such Independent Appraiser shall use one or more
valuation methods that the Independent Appraiser (in its best professional
judgment) determines to be most appropriate under the circumstances; provided,
that such valuation methods shall not give effect to (1) any discount for any
lack of liquidity of the Warrants, Warrant Shares and/or such other security, or
(2) the minority status of any holder of Warrants, Warrant Shares or other
security, or (3) the fact that Company may have no class of equity securities
registered under the Securities Act. Such Independent Appraiser, as promptly as
is reasonably possible, will prepare and deliver to Company and to each Holder
of a Warrant or Warrant Share a written valuation report indicating (a) the
methods of valuation considered or used, and (b) the value of a Warrant Share or
other security, and (c) the nature and scope of the examination or investigation
upon which the determination of value was made. Unless the valuation report is
revised by the Independent Appraiser within 5 Business Days after delivery
thereof or unless Company and Holders otherwise mutually agree, then the
valuation report shall be deemed final at the end of such 5-Business-Day period.
Company shall pay the fees and expenses associated with the Independent
Appraiser.
7.1.4. "Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in Arlington, Virginia are authorized by law to close.
7.1.5. "Capital Stock" means the Common Stock, and all other classes of
common stock (whether voting or non-voting), and all other forms of capital
stock or securities of Company (preferred or otherwise).
7.1.6. "Commission" means the Securities and Exchange Commission or any
entity or agency that succeeds to any or all of its functions under the
Securities Act or the Exchange Act.
7.1.7. "Common Stock" means the voting common stock of Company (which has a
par value of $0.001 per share).
7.1.8. "Company" means ACCESS ONE COMMUNICATIONS CORP., a New Jersey
corporation, and its successors and permitted assigns.
25
7.1.9. "Credit Agreement" means the Credit Facility Agreement dated as of
June 30, 1999 by and among Company (and certain of its Affiliates) and Lender
(and certain other lenders), as the same may be amended, modified or otherwise
supplemented from time to time (including any renewals, refinancings or
extensions thereof or increases in the credit extended thereunder).
7.1.10. "Current Market Price" means, with respect to any share of Common
Stock or any other security of Company at the date herein specified, the
following:
(i) if Company does not then have such securities registered under the
Exchange Act, then the Current Market Price per share of such security will be
the greater of the Exercise Price per Warrant Share then in effect or the
Appraised Valuation per share of such security, or alternatively
(ii) if Company does then have such securities registered under the
Exchange Act, then the Current Market Price per share of such security will be
the greater of the Exercise Price per Warrant Share then in effect or the
Appraised Valuation per share of such security or the average of the daily
market prices of such security for 20 consecutive Business Days during the
period commencing 30 Business Days before such date (or, if Company has had a
class of such securities registered under the Exchange Act for less than 30
consecutive Business Days before such date, then the average of the daily market
prices for all of the Business Days before such date for which daily market
prices are available). The market price for each such Business Day shall be as
follows: (A) for a security listed or admitted to trading on any securities
exchange, then the closing price (regular way) on such day (or if no sale takes
place on such day, then the average of the closing bid and asked prices on such
day), and (B) for a security not then listed or admitted to trading on any
securities exchange, then the last reported sale price on such day (or if no
sale takes place on such day, then the average of the closing bid and asked
prices on such day, as reported by a reputable quotation source designated by
Company), and (C) for a security not then listed or admitted to trading on any
securities exchange and as to which no such reported sale price or bid and asked
prices are available, then the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service, or a newspaper
of general circulation in Manhattan Borough (New York, NY) customarily published
on each business day, designated by Company (or if there is no bid and asked
prices on such day, then the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 30 calendar days prior to the
date in question) for which prices have been so reported), and (D) if there are
no bid and asked prices reported during the 30 calendar days prior to the date
in question, then the Current Market Price per share of the security shall be
determined as if Company did not have a class of such securities registered
under the Exchange Act.
7.1.11. "Equity Disposition" means the sale, issuance, transfer or other
Equity Disposition of Capital Stock (or securities convertible into, or
exchangeable for, Capital Stock or rights to acquire Capital Stock or such
securities) to one or more Persons through any transaction or series of related
transactions (other than as a result of a Public Offering) if, after such sale,
issuance, transfer or Equity Disposition, the Initial Shareholders no longer
beneficially own in the aggregate more than 50% of the Capital Stock and voting
rights on a fully-diluted basis (without giving effect to any Warrant Shares
purchased or purchasable) then outstanding. For purposes of this definition,
26
(i) any redemption or repurchase of any shares of Capital Stock (or securities
convertible into, or exchangeable for, Capital Stock or rights to acquire
Capital Stock or such securities) by Company shall constitute an "Equity
Disposition" and (ii) any transfer of Capital Stock (or securities convertible
into, or exchangeable for, Capital Stock or rights to acquire Capital Stock or
such securities) by a shareholder to any member of his or her immediately family
or to any trust for which he or she is the trustee shall not constitute an
"Equity Disposition" provided that such shareholder retains control over the
voting rights associated with such Capital Stock.
7.1.12. "Event of Dilution" means any of the events described in Section
5.1 as to which anti-dilution rights are granted pursuant to Article 5.
7.1.13. "Exchange Act" means the Securities and Exchange Act of 1934, as
amended, or any similar Federal statute, as implemented by the Commission or any
court of competent jurisdiction.
7.1.14. "Exercise Period" has the meaning set forth in Section 4.2.
7.1.15. "Exercise Price" has the meaning set forth in Section 1.2.
7.1.16. "FCC" means the Federal Communications Commission or any other
entity or agency that succeeds to its responsibilities and powers.
7.1.17. "Holder" means any owner or holder of any Warrant (and
corresponding Warrant Certificate) or any Warrant Share, and (with respect to
each) any successor, assignee, transferee, trustee, estate, heir, executor,
administrator, or personal representative thereof.
7.1.18. "Holder-Affiliated Transferee" means any Affiliate of a Holder,
and/or any current director, officer, employee, business unit or division, or
successor-in-interest of such Holder, and/or (with respect to Purchaser) any
pledgee of Purchaser's interest under the Credit Agreement.
7.1.19. "Independent Appraiser" means a Person who (a) is with a nationally
recognized investment banking or appraisal firm, and (b) is qualified in the
valuation of businesses, transactions and securities of the general type being
analyzed, and (c) does not have a material direct or material indirect financial
interest in Company or any Holder.
7.1.20. "Initial Public Offering" means the first time (after the effective
date of this Agreement) that Company issues or otherwise offers for sale any
Capital Stock (or securities convertible into, or exchangeable for, Capital
Stock or rights to acquire Capital Stock or such securities) pursuant to a
registration statement filed with the Commission under the Securities Act.
7.1.21. "Initial Shareholders" means, collectively, the holders of Capital
Stock of Company as of the effective date of this Agreement.
7.1.22. "Lender" means MCG FINANCE CORPORATION, a Delaware corporation, and
its successors, assigns, pledgees and transferees.
27
7.1.23. "Non-Surviving Transaction" means either (a) any merger,
consolidation or other business combination by Company with one or more Persons
in which the other Person effectively is the survivor or (b) any sale, transfer,
lease or license of all or any material portion of the assets (or the economic
benefits thereof) of Company to one or more other Persons through any
transaction or series of related transactions.
7.1.24. "Organic Document" means, relative to any entity, its certificate
and articles of incorporation, organization or formation, its by-laws or
operating agreements, and all equityholder agreements, voting agreements and
similar arrangements applicable to any of its authorized shares of capital
stock, its partnership interests or its equity interests, and any other
arrangements relating to the control or management of any such entity (whether
existing as a corporation, a partnership, an LLC or otherwise).
7.1.25. "Person" means an individual, an association, a partnership, a
corporation, a trust or an unincorporated organization or any other entity or
organization.
7.1.26. "Public Offering" means any issuance or other sale of any Capital
Stock (or securities convertible into, or exchangeable for, Capital Stock or
rights to acquire Capital Stock or such securities) of Company pursuant to a
registration statement filed with the Commission under the Securities Act.
7.1.27. "Purchaser" means Lender, and its successors, assigns, pledgees and
transferees with respect to the Warrants, corresponding Warrant Certificates
and/or Warrant Shares.
7.1.28. "Registration Rights" means the rights of the Holders of the
Warrant Certificates to have the Warrant Shares registered for sale under an
effective registration statement under the Securities Act.
7.1.29. "Repurchase Condition" has the meaning set forth in Section 4.6.
7.1.30. "Repurchase Offer" has the meaning set forth in Section 4.6.
7.1.31. "Repurchase Price" has the meaning set forth in Section 4.6.
7.1.32. "Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, as implemented by the Commission or any court of
competent jurisdiction.
7.1.33. "State Communications Acts" means the laws of any state in which
Company does business that govern the provision of communications services
offered or performed by Company within such state and are applicable to Company,
as amended from time to time, and as implemented by the rules, regulations, and
orders of the applicable State PUC or any court of competent jurisdiction.
7.1.34. "State PUC" means the public utility commission or other regulatory
agency of any state in which Company does business that is vested with
jurisdiction over Company and over State Communications Acts or the provision of
communication services within such state.
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7.1.35. "Subsidiary" of any Person means (a) any other Person as to which
the first Person directly or indirectly owns or controls 50% or more of the
equity, voting rights or enterprise value thereof or (b) any other Person the
accounts of which would be consolidated with those of the first Person in its
consolidated or combined financial statements according to generally accepted
accounting principles.
7.1.36. "Surviving Public Combination" means any merger, consolidation or
other business combination by Company with one or more Persons in which Company
is the survivor (or a purchase of assets by Company from one or more other
Persons) if Company is thereafter required to file reports with respect to any
of its Capital Stock with the Commission pursuant to the Exchange Act.
7.1.37. "Target Market Price" shall mean, at the time of any determination,
a price per share of Capital Stock (or options or warrants therefor) based upon
a $20.0 million valuation of the equity of Company.
7.1.38. "Warrant Certificate" means a certificate (substantially in the
form of Exhibit C) evidencing one or more Warrants.
7.1.39. "Warrant" means the irrevocable and unconditional right (subject to
the terms hereof) to acquire a fully paid and nonassessable Warrant Share at a
purchase price per share equal to the Exercise Price (and any other right or
warrant issued upon any exchange or transfer of any such Warrant or any
adjustment relating thereto).
7.1.40. "Warrant Share" means a share of Common Stock issuable upon
exercise of a Warrant (until such share is registered by Company and sold by the
Holder thereof to a third party in a public transaction).
7.2. GENERAL CONSTRUCTION AND INTERPRETATION.
7.2.1. Plural; Gender. Unless otherwise expressly stated or the context
clearly indicates a different intention, then (as may be appropriate in the
particular context) (a) a singular number or noun used herein includes the
plural, and a plural number or noun includes the singular, and (b) the use of
the masculine, feminine or neuter gender pronouns herein includes each and all
genders.
7.2.2. Section, Schedule and Exhibit References. Unless otherwise expressly
stated or the context clearly indicates a different intention, then all
references to sections, paragraphs, clauses, schedules and exhibits herein are
to be interpreted as references to sections, paragraphs, clauses, schedules and
exhibits of and to this Agreement. In addition, the words "herein", "hereof",
"hereunder", "hereto" and other words of similar import herein refer to this
Agreement as a whole, and not to any particular section, paragraph or clause in
this Agreement.
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7.2.3. Titles and Headings. Unless otherwise expressly stated or the
context clearly indicates a different intention, then the various titles and
headings herein are inserted for convenience only and do not affect the meaning
or interpretation of any provision hereof.
7.2.4. "Including" and "Among Other" References. Unless otherwise expressly
stated or the context clearly indicates a different intention, then all
references herein to phrases containing or lists preceded by the words
"include", "includes", "including", "among other", "among other things" or other
words or phrases of similar import are to be interpreted to mean such "without
limitation" (whether or not such additional phrase is actually added). In other
words, such words and phrases connote an illustrative example or list rather
than an exclusive example or list.
7.2.5. Time of Day References. Unless otherwise expressly stated or the
context clearly indicates a different intention, then all time of day references
in and restrictions imposed hereunder are to be calculated using Eastern Time.
7.2.6. Successors and Assigns. Unless otherwise expressly stated or the
context clearly indicates a different intention, then all references to any
Person (including any Official Body) herein are to be interpreted as including
(as applicable) such Person's successors, assigns, estate, heirs, executors,
administrators and personal representatives.
7.2.7. Modifications to Documents. Unless otherwise expressly stated or the
context clearly indicates a different intention, then all references herein to
any other agreement or instrument are to be interpreted as including all
extensions, renewals, amendments, supplements, substitutions, replacements and
waivers thereto and thereof from time to time.
7.2.8. References to Laws and Regulations. Unless otherwise expressly
stated or the context clearly indicates a different intention, then all
references to any law, regulation, rule, order or policy herein are to be
interpreted as references to such law, regulation, rule or policy (a) as
implemented and interpreted from time to time by Official Bodies with
appropriate jurisdiction therefor, and (b) as amended, modified, supplemented,
replaced and repealed from time to time.
7.2.9. Financial and Accounting Terms. Unless otherwise expressly stated or
the context clearly indicates a different intention, then financial and
accounting terms used in the foregoing definitions or elsewhere herein shall be
defined and determined in accordance with Generally Accepted Accounting
Principles (GAAP).
ARTICLE 8. MISCELLANEOUS
8.1. COMPLIANCE WITH FCC AND STATE PUC REQUIREMENTS. Company and Purchaser
each hereby acknowledge its intent that this Agreement, the Warrants, the
Warrant Certificates and the Warrant Shares (as well as the exercise of rights
hereunder) each comply with all of the laws, regulations and orders of and/or
administered by the FCC or any State PUC relating to Purchaser's ownership,
exercise and/or other
30
realization of rights in connection herewith. If at any time the terms and
conditions of any such ownership, exercise or other ability to realize upon
rights violates, is in conflict with or requires any consent under any such
legal requirements, then Company and Purchaser (or any subsequent Holder) will
cooperate and negotiate in good faith to amend the underlying documents (or the
relevant rights therein) and/or to file and prosecute (or to cause others to
file and prosecute) applications for any such consent in order to enable Company
and Purchaser (or such subsequent Holder) to be in compliance with such legal
requirements.
8.2. COMPLIANCE WITH PURCHASER'S REGULATORY REQUIREMENTS. Company and
Purchaser each hereby acknowledge its intent that this Agreement, the Warrants,
the Warrant Certificates and the Warrant Shares (as well as the exercise of
rights hereunder) each comply with all of the statutory and regulatory
requirements applicable to Purchaser (or any subsequent Holder) relating to its
ownership, exercise and/or other realization of rights in connection herewith.
If at any time the terms and conditions of any such ownership, exercise or other
ability to realize upon rights violates or is in conflict with any such
regulatory requirements applicable to Purchaser (or such subsequent Holder),
then Company and Purchaser (or such subsequent Holder) will cooperate and
negotiate in good faith to amend the underlying documents (or the relevant
rights therein) in order to enable Purchaser (or such subsequent Holder) to be
in compliance with such statutory and regulatory requirements.
8.3. BINDING EFFECT AND GOVERNING LAW. This Agreement (and the Warrants,
the Warrant Certificates and other documents in connection herewith) are binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns (to the extent authorized). This Agreement (and the
Warrants, the Warrant Certificates and other documents in connection herewith)
are governed as to their validity, interpretation, construction and effect by
the laws of the Commonwealth of Virginia (without giving effect to the conflicts
of law rules of Virginia) or, to the extent that the particular issue in
controversy involves Company's legal power or authorization in connection
herewith, matters of internal governance, or matters of corporate law, then
resolution of such issue shall be governed by the corporate laws of the State of
New Jersey.
8.4. SURVIVAL. All agreements, representations, warranties and covenants of
Company contained herein or in any documentation required hereunder will survive
the execution and delivery of this Agreement and will continue in full force and
effect so long as this Agreement otherwise remains effective.
8.5. NO WAIVER; DELAY. To be effective, any waiver by Purchaser must be
expressed in a writing executed by Purchaser. If Purchaser waives any power,
right or remedy arising hereunder or under any applicable law, then such waiver
will not be deemed to be a waiver upon the later occurrence or recurrence of any
events giving rise to the earlier waiver. No failure or delay by Purchaser to
insist upon the strict performance of any term, condition, covenant or agreement
hereunder, or to exercise any right, power or remedy hereunder, will constitute
a waiver of compliance with any such term, condition, covenant or agreement, or
preclude Purchaser from exercising any such right, power, or remedy at any later
time or times. The remedies provided herein are cumulative and not exclusive of
each other and the remedies provided by law.
31
8.6. MODIFICATION. Except as otherwise expressly provided in this
Agreement, no modification or amendment hereof will be effective unless made in
a writing signed by appropriate officers of the parties hereto.
8.7. NOTICES. Unless otherwise provided in this Agreement, any notice,
request, consent, waiver or other communication required or permitted under or
in connection with this Agreement will be deemed satisfactorily given if it is
in writing and is delivered either personally to the addressee thereof, or by
prepaid registered or certified U.S. mail (return receipt requested), or by a
nationally recognized commercial courier service with next-day delivery charges
prepaid, or by telegraph, or by facsimile (voice confirmed), or by any other
reasonable means of personal delivery to the party entitled thereto at its
respective address set forth below:
If to Company [Party Entitled to Notice]
or its Affiliates: c/o Access One Communications Corp.
0000 XX 00xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to the following listed counsel or
such other counsel as may be designated by
Company from time to time (and which notice
shall not constitute notice to Company and
failure to give such notice shall not affect
the effectiveness of notice to Company):
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxxxx Xxxx Xx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxx Xxxxxx, Esquire
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Purchaser: MCG Finance Corporation
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Investment Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to the following listed counsel or
such other counsel as may be designated by
Purchaser from time to time (and which
notice shall not constitute notice to
Purchaser and failure to give such notice
shall not affect the effectiveness of notice
to Purchaser):
32
Xxxxxx X. Xxxxxxxxxx, Esquire
Xxxxx Xxxx LLP
000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party to this Agreement may change its address or facsimile number for
notice purposes by giving notice thereof to the other in accordance with this
Section, provided that such change shall not be effective until 2 calendar days
after notice of such change. All such notices and other communications will be
deemed given and effective (a) if by mail, then upon actual receipt or 5
calendar days after mailing as provided above (whichever is earlier), or (b) if
by facsimile, then upon successful transmittal to such party's designated
number, or (c) if by telegraph, then upon actual receipt or 2 Business Days
after delivery to the telegraph company (whichever is earlier), or (d) if by
nationally recognized commercial courier service, then upon actual receipt or 2
Business Days after delivery to the courier service (whichever is earlier), or
(e) if otherwise delivered, then upon actual receipt.
8.1. PRIOR AGREEMENTS SUPERSEDED. This Agreement completely and fully
supersedes all oral agreements and all other and prior written agreements by and
between Company and Purchaser concerning the terms and conditions of this
Agreement.
8.2. SEVERABILITY. If fulfillment of any provision of or any transaction
related to this Agreement or the Credit Agreement, the time performance of such
provision or transaction is due shall involve transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity. If any clause or provision of this
Agreement operates or would prospectively operate to invalidate this Agreement
in whole or in part, then such clause or provision only shall be void, as though
not contained herein, and the remainder of this Agreement shall remain operative
and in full force and effect.
8.3. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document. Each such counterpart will be deemed to be an original
but all counterparts together will constitute one and the same instrument.
8.4. LIMITATION OF LIABILITY. Notwithstanding any other provision of this
Agreement (unless expressly provided otherwise), neither Company nor any Holder
(nor any director, officer, employee, representative, legal counsel or agent of
Company or any Holder) shall have any liability to any other Person that is a
party to or beneficiary of this Agreement (or to any equityholder of Company)
with respect to (and each Person that is a party to this Agreement hereby
waives, releases and agrees not to xxx upon any claim for) any special,
indirect, consequential, punitive or non-foreseeable damages suffered by such
Person in connection with or in any way related to the transactions contemplated
or the relationship established by this Agreement, or any act, omission or event
occurring in connection herewith.
33
8.5. FORUM SELECTION; CONSENT TO JURISDICTION. ANY LITIGATION IN
CONNECTION WITH OR IN ANY WAY RELATED TO THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OR
INACTIONS OF ANY HOLDER OR COMPANY WILL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE COMMONWEALTH OF VIRGINIA OR IN THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF VIRGINIA; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST COMPANY MAY ALSO BE BROUGHT (AT SUCH HOLDER'S
OPTION) IN THE COURTS OF ANY OTHER JURISDICTION WHERE ANY PROPERTY OF COMPANY
MAY BE FOUND OR WHERE ANY HOLDER MAY OTHERWISE OBTAIN PERSONAL JURISDICTION OVER
COMPANY. COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE COMMONWEALTH OF VIRGINIA AND OF THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF VIRGINIA FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL
AND NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR OUTSIDE THE
COMMONWEALTH OF VIRGINIA. COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT COMPANY HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, THEN COMPANY HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.
8.6. WAIVER OF JURY TRIAL. EACH HOLDER AND COMPANY EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION (WHETHER AS CLAIM, COUNTER-CLAIM, AFFIRMATIVE
DEFENSE OR OTHERWISE) IN CONNECTION WITH OR IN ANY WAY RELATED TO THIS
AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), ACTIONS OR INACTIONS OF ANY HOLDER OR COMPANY. COMPANY
ACKNOWLEDGES AND AGREES (A) THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION, AND (B) THAT IT HAS BEEN ADVISED BY LEGAL
COUNSEL IN CONNECTION HEREWITH, AND (C) THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR PURCHASER ENTERING INTO THIS AGREEMENT.
[BALANCE OF PAGE INTENTIONALLY BLANK]
34
IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to be
duly executed, as an instrument under seal (whether or not any such seals are
physically attached hereto) as of the date and year first above written.
ATTEST: ACCESS ONE COMMUNICATIONS
CORP. (Company)
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxx
---------------- ------------------
Name: Xxxxx Xxxxxx Name: Xxxxxxx X. Xxxxxx
Title: President Title: Chairman and Chief Executive
Officer
[CORPORATE SEAL] Address: 0000 XX 00xx Xxxxxx
Xx. Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
WITNESS: MCG FINANCE CORPORATION
(Purchaser)
_______________________________ By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx, Executive Vice
President
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
