EXHIBIT 10.8
WARRANT ISSUANCE AGREEMENT
THIS WARRANT ISSUANCE AGREEMENT (this "AGREEMENT") is made and entered into
as of September 13, 2002 among Choice One Communications Inc. (the "ISSUER"),
Wachovia Investors, Inc. ("WACHOVIA"), Xxxxxx Xxxxxxx Emerging Markets Inc.
("MSEM"), CIBC Inc. ("CIBC") (Wachovia, MSEM and CIBC collectively, the "BRIDGE
LENDERS"), Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Partners IV, L.P., MSDW IV 892
Investors, L.P., Xxxxxx Xxxxxxx Xxxx Xxxxxx Capital Investors IV, L.P.,
(collectively, the "MSDWCP IV FUNDS") (the Bridge Lenders, the MSDWCP IV Funds,
and together with their successors and assigns, collectively, the "HOLDERS") and
Xxxxxx Xxxxxxx & Co. Incorporated ("MS&CO"). Capitalized terms used and not
otherwise defined in this Agreement are used as defined in the Credit Agreement
(as defined below).
WHEREAS, concurrently with the execution and delivery of this Agreement,
parties hereto have also entered into the Third Amended and Restated Credit
Agreement (the "CREDIT AGREEMENT") dated as of the date hereof among the Issuer,
as guarantor, the Subsidiaries party thereto, the lenders party thereto,
Wachovia Investors, Inc., as administrative agent and collateral agent, General
Electric Capital Corporation, as syndication agent, and Xxxxxx Xxxxxxx Senior
Funding, Inc., as documentation agent, and the Third Amendment to the Bridge
Financing Agreement ("BRIDGE FINANCING AGREEMENT") dated as of the date hereof
among the Issuer, Xxxxxx Xxxxxxx Senior Funding, Inc., as administrative agent,
and the lenders party thereto;
WHEREAS, in connection with the Credit Agreement and the Bridge Financing
Agreement, the Issuer has agreed to the issuance of Company New Warrants to the
Holders; and
WHEREAS, certain stockholders of the Issuer have executed irrevocable
written consents (the "STOCKHOLDERS' CONSENT") approving this Agreement, the
Company New Warrants and the transactions contemplated hereby and thereby,
including the issuances of common stock of the Issuer, par value $0.01 per share
(the "COMMON STOCK") upon the exercise of the Company New Warrants.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. REPRESENTATIONS AND WARRANTIES OF THE ISSUER:
The Issuer represents and warrants to each Holder that:
a. ORGANIZATION. The Issuer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
b. AUTHORIZATION; NO BREACH. The execution, delivery and performance
of this Agreement and the Company New Warrants have been duly
authorized by the Issuer. This Agreement and each of the Company New
Warrants constitutes a legal, valid and binding obligation of the
Issuer, enforceable against the Issuer in accordance with its
terms. The execution and delivery by the Issuer of this Agreement
and of the Company New Warrants and the consummation of the
transactions contemplated hereby and thereby, do not and will not
conflict with or result in a default under or breach of, any
agreement, instrument, order, judgment or decree to which the
Issuer or any Subsidiary of the Issuer is subject.
2. COVENANTS OF THE ISSUER.
a) LISTING. The Issuer shall use its reasonable best efforts to
secure the listing (following issuance) of all of the shares
of Common Stock issued upon exercise of the Company New
Warrants upon each national securities exchange and automated
quotation system, if any, upon which shares of Common Stock
are then listed (subject to official notice of issuance) and
shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all of the shares of
Common Stock issued upon exercise of the Company New Warrants.
2
b) SHAREHOLDER APPROVAL. As soon as reasonably practicable
after the date hereof, but in no event later than thirty (30)
days after the Closing Date, the Issuer shall cause a
preliminary information statement relating to the shareholder
approval of this Agreement and the Company New
Warrants and the transactions contemplated hereby and
thereby, including without limitation the issuances of Common
Stock upon the exercise of the Company New Warrants, to be
filed with the Securities and Exchange Commission (the
"SEC"). Thereafter, the Issuer shall use its reasonable
best efforts to cause the Stockholders' Consent to become
effective in accordance with the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT"). In connection therewith,
the Issuer will (1) promptly prepare and file with the SEC,
use its reasonable best efforts to have cleared by the SEC
and thereafter mail to its shareholders as promptly as
practicable a definitive information statement, and (2)
otherwise comply with all legal requirements applicable to
such information statement, including without
limitation, requirements under the Exchange Act. The
Issuer shall bear all expenses in connection with the
obtaining of the Stockholders' Consent, including the
costs and expenses of the preparation, filing and
distribution of the preliminary and any definitive
information statement, and shall provide the Holders and
their counsel a reasonable opportunity to review and comment
upon such information statements prior to the filing thereof
with the SEC.
3. WAIVERS OF NOTICE. In connection with the issuance of the warrants as
contemplated by the Credit Agreement, each of (a) the Bridge Warrantholders (as
defined below) hereby waives the notice required by Section 8(k) of each
Original Warrant (provided that the Corporation agrees to provide each Bridge
Warrantholder a notice, the contents and form of which would have been required
as provided in Section 8(k) of each Original Warrant promptly after the date
hereof) and (b) the MSDWCP IV Funds hereby waives the notice required by Section
8(m) of each of the (i) warrants dated March 31, 2002 issued by the Corporation
to each of the MSDWCP IV Funds (the "MARCH 2002 WARRANTS") and (ii) warrants
dated August 1, 2000 issued by the Corporation to each of the MSDWCP IV Funds
(the "AUGUST 2000 WARRANTS"), (provided that in the case of (b)(i) and (ii), the
Corporation agrees to provide each of the MSDWCP IV Funds a notice, the contents
and form of which would have been required as provided in Section 8(m) of each
of the March 2002 Warrants and each of the August 2000 Warrants respectively,
promptly after the date hereof).
4. EXISTING WARRANTS HELD BY MSDWCP IV FUNDS. The Issuer and each of the MSDWCP
IV Funds acknowledges and agrees that as a result of the triggering of the
anti-dilution provisions in the existing warrants held by the MSDWCP IV Funds
(the "EXISTING MSDWCP IV WARRANTS"), the Existing MSDWCP IV Warrants will become
exercisable for an additional number of shares as follows: (1) with respect to
Warrants No.1, 2 and 3, each dated as of August 1, 2000, issued by the
Corporation to each of the MSDWCP IV Funds, an additional 259,735 shares in the
aggregate (2) with respect to Closing Warrants No. 1, 2 and 3, each dated as of
March 31, 2002, issued by the Corporation to each of the MSDWCP IV Funds, an
additional 69,979 shares in the aggregate, and (3) with respect to the
Contingent Amount Warrants No. 1, 2 and 3, each dated as of March 31, 2002,
issued by the Corporation to each of the MSDWCP IV Funds, an additional 104,967
shares in the aggregate; PROVIDED that the Issuer and each of the MSDWCP IV
Funds acknowledges and agrees that the foregoing numbers do not take into
account additional increases in the number of shares as a result of the
triggering of the anti-dilution provisions in the Existing MSDWCP IV Warrants by
(a) warrants no. 4, 5 and 6 dated as of the date hereof issued by the
Corporation to each of the Bridge Lenders becoming exercisable for in excess of
2,377,611 shares of Common Stock in the aggregate, and (b) warrants no. 7, 8 and
9 issued by the Corporation dated as of the date hereof to each of the Bridge
Lenders becoming exercisable for shares of Common Stock.
3
5. EXISTING WARRANTS HELD BY BRIDGE LENDERS. The Issuer and each of Wachovia,
MS&Co and CIBC ("BRIDGE WARRANTHOLDERS") acknowledges and agrees that as a
result of the triggering of the anti-dilution provisions in the existing
warrants held by the Bridge Warrantholders dated as of November 9, 2001 issued
by the Corporation (the "EXISTING BRIDGE LENDERS WARRANTS"), the Existing Bridge
Lenders Warrants shall become exercisable for an additional 265,716 shares in
the aggregate; PROVIDED that the Issuer and each of the Bridge Warrantholders
acknowledges and agrees that the foregoing number does not take into account
additional increases in the number of shares as a result of the triggering of
the anti-dilution provisions in the Existing Bridge Lenders Warrants by (a)
warrants no. 4, 5 and 6 dated as of the date hereof issued by the Corporation to
each of the Bridge Lenders becoming exercisable for in excess of 2,377,611
shares of Common Stock in the aggregate, and (b) warrants no. 7, 8 and 9 issued
by the Corporation dated as of the date hereof to each of the Bridge Lenders
becoming exercisable for shares of Common Stock.
6. SUCCESSORS AND ASSIGNS. The Issuer may not assign any of its rights and
obligations hereunder without the prior written consent of the Holders. The
Holders may assign their rights and obligations hereunder without the consent of
the Issuer only in connection with an assignment or other transfer of Company
New Warrants. This Agreement shall be binding upon the Issuer and the Holders
and their respective successors and assigns.
7. GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the laws of the State of New York.
8. COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received a counterpart
hereof signed by the other parties hereto. No provision of this Agreement is
intended to confer upon any Person, other than the parties hereto any rights or
remedies hereunder.
[Remainder of page intentionally left blank; next page is signature page]
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
CHOICE ONE COMMUNICATIONS INC.
By:/s/Xxxx Xxxxxxxxx
---------------------------------------
Name:Xxxx Xxxxxxxxx
Title:Executive Vice President
& Chief Financial Officer
5
WACHOVIA INVESTORS, INC.
By:/s/Xxxx Xxxxx
--------------------------------------
Name:Xxxx Xxxxx
Title:Managing Director
XXXXXX XXXXXXX EMERGING MARKETS INC.
By:/s/Xxxx X. Xxxxxxxxx
--------------------------------------
Name:Xxxx X. Xxxxxxxxx
Title:Managing Director
CIBC INC.
By:/s/Xxxxxxx Xxxxxxx
--------------------------------------
Name:Xxxxxxx Xxxxxxx
Title:Managing Director
6
XXXXXX XXXXXXX XXXX XXXXXX CAPITAL
PARTNERS IV, L.P.
By: MSDW Capital Partners IV, LLC,
its general partner
By: MSDW Capital Partners IV, Inc.,
its Member
By: /s/Xxxx X. Xxxxxxxxxx
-------------------------------------
Name:Xxxx X. Xxxxxxxxxx
Title:Managing Director
MSDW IV 892 INVESTORS, L.P.
By: MSDW Capital Partners IV, LLC,
its general partner
By: MSDW Capital Partners IV, Inc.,
its Member
By: /s/Xxxx X. Xxxxxxxxxx
-------------------------------------
Name:Xxxx X. Xxxxxxxxxx
Title:Managing Director
XXXXXX XXXXXXX XXXX XXXXXX CAPITAL
INVESTORS IV, L.P.
By: MSDW Capital Partners IV, LLC,
its general partner
By: MSDW Capital Partners IV, Inc.,
its Member
By: /s/Xxxx X. Xxxxxxxxxx
-------------------------------------
Name:Xxxx X. Xxxxxxxxxx
Title:Managing Director
XXXXXX XXXXXXX & CO. INCORPORATED
By: /s/Xxxx X. Xxxxxxxxx
-------------------------------------
Name:Xxxx X. Xxxxxxxxx
Title:Managing Director
