Exhibit 99.4
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WARRANT AGREEMENT
Dated as of March 16, 2000
BY AND BETWEEN
XXXXXXXXXXXXX.XXX, INC.
(AS ISSUER OF WARRANTS)
AND
MCG FINANCE CORPORATION
(AS PURCHASER OF WARRANTS)
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Warrants to Purchase 838,779 Shares of
Voting Common Stock of Company
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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.................................2
ARTICLE 2: PURCHASER'S REPRESENTATIONS AND AGREEMENTS....................2
ARTICLE 3: COMPANY'S REPRESENTATIONS AND WARRANTIES......................2
0.0.XXXXX EXISTENCE AND POWER...........................................2
3.2.AUTHORIZATION; NON-CONTRAVENTION....................................3
3.3.EXECUTION, DELIVERY AND BINDING EFFECT..............................3
0.0.XXXXXX 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...............................5
4.1.WARRANT CERTIFICATES................................................5
4.2.EXERCISE OF WARRANTS................................................6
4.3.TRANSFERS OF WARRANTS AND WARRANT SHARES............................7
4.4.REGISTRATION AND RELATED RIGHTS.....................................7
4.5.RIGHTS UPON EQUITY DISPOSITIONS, EQUITY REDEMPTIONS AND
NON-SURVIVING TRANSACTIONS.........................................12
4.6.REPURCHASE OFFERS..................................................13
4.7.CUMULATIVE RIGHTS..................................................14
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...................15
4.11. CORRECTIVE ADJUSTMENTS.......................................15
4.12. LISTING OF SHARES............................................16
4.13. LISTS OF HOLDERS.............................................16
4.14. STATEMENT OF WARRANT INTEREST................................16
4.15. RIGHT OF INSPECTION..........................................16
4.16. ATTENDANCE AND PARTICIPATION RIGHTS..........................16
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...............................................19
5.3.PRESERVATION OF PURCHASE RIGHTS UPON CERTAIN TRANSACTIONS..........19
ARTICLE 6: COMPANY'S COVENANTS..........................................20
6.1.INFORMATION........................................................20
6.2.BOOKS AND RECORDS..................................................21
0.0.XX AMENDMENTS TO ORGANIC DOCUMENTS.................................21
6.4.EXISTENCE AND GOOD STANDING........................................22
6.5.TRANSACTIONS WITH RELATED PARTIES..................................22
6.6.CONDUCT OF BUSINESS................................................22
ARTICLE 7: DEFINITIONS..................................................22
7.1.DEFINITIONS........................................................22
7.2.GENERAL CONSTRUCTION AND INTERPRETATION............................28
ARTICLE 8: MISCELLANEOUS................................................29
8.1.COMPLIANCE WITH FCC AND STATE PUC REQUIREMENTS.....................29
8.2.COMPLIANCE WITH PURCHASER'S REGULATORY REQUIREMENTS................29
8.3.BINDING EFFECT AND GOVERNING LAW...................................29
8.4.SURVIVAL...........................................................30
0.0.XX WAIVER; DELAY...................................................30
8.6.MODIFICATION.......................................................30
8.7.NOTICES............................................................30
8.8.PRIOR AGREEMENTS SUPERSEDED........................................31
8.9.SEVERABILITY.......................................................31
8.10. COUNTERPARTS.................................................31
8.11. LIMITATION OF LIABILITY......................................31
8.12. FORUM SELECTION; CONSENT TO JURISDICTION.....................31
8.13. WAIVER OF JURY TRIAL.........................................32
EXHIBIT A -- Articles of Incorporation...................................34
EXHIBIT B -- Authorizing Resolutions.....................................35
EXHIBIT C -- Form of Warrant Certificate.................................36
EXHIBIT D -- Restrictive Legends.........................................37
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 March
16, 2000 by and between XXXXXXXXXXXXX.XXX, INC. (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) has
requested Lender (and Xxxxxx has agreed) to enter into the Credit Agreement
and various related Loan Documents (as defined in the Credit Agreement)
pursuant to which Lender will provide Borrowers (as defined therein) with
credit facilities initially aggregating up to $15.0 million; and
WHEREAS, to induce Xxxxxx to enter into the Credit Agreement and other
Loan Documents and as additional consideration for the credit to be
provided thereunder, Company has agreed to issue and deliver to Purchaser
the Warrants (evidenced by Warrant Certificates) to purchase up to an
aggregate of 838,779 shares (subject to adjustment as provided in Section
4.11 and Section 5.1) of Common Stock of Company;
NOW, THEREFORE, for 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
(including all Block A Warrants and all Block B Warrants, each a "Warrant";
collectively, the "Warrants") to purchase up to an aggregate of 838,779
shares of Common Stock (as such number may be adjusted from time to time as
provided herein). 559,186 Warrants shall be designated as Block A Warrants
and shall have a Block A Exercise Price, which Block A Exercise Price is
set forth in Section 1.2. 279,593 Warrants shall be designated as Block B
Warrants and shall have a Block B Exercise Price, which Block B Exercise
Price is set forth in Section 1.2. Each Warrant is exercisable immediately.
1.2. WARRANT ENTITLEMENT. Each Block A Warrant entitles the registered
Holder of such Warrant to purchase (during the Exercise Period) one fully
paid, nonassessable Warrant Share at a price of $7.00 per share (as such
amount may be adjusted from time to time as provided herein, the "Block A
Exercise Price"). Each Block B Warrant entitles the registered Holder of
such Warrant to purchase (during the Exercise Period) one fully paid,
nonassessable Warrant Share at a price per share equal to $12.00 (as such
amount may be adjusted from time to time as provided herein, the "Block B
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 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, Borrowers (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. Purchaser
further represents and warrants that it is an "accredited investor" within
the meaning of Rule 501 under Regulation D of the Securities Act, has
received a copy of Company's Information Statement dated within 10 calendar
days of the date of this Agreement disclosing certain risks regarding
investment in the Company's securities as well as other information
pertaining to the Company's business.
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 Delaware, and (b) has all requisite corporate power to execute,
deliver and perform this Agreement, and (c) has all requisite corporate
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 and upon
payment of the purchase price therefor). 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 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 and payment of the
purchase price therefor. 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 and the
Warrant Certificates have 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 by Company with respect to the issuance and sale of the Warrants or
the Warrant Shares.
3.5. OFFER AND SALE OF SECURITIES. Assuming the truth of the
representations and warranties of the Purchaser set forth in Article 2 as
of the date hereof and as of the date of exercise of the Warrants and
acquisition of the Warrant Shares, then 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.
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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. There are no outstanding warrants, options, convertible
securities or other rights, agreements or arrangements under which Company
is or may be obligated (contingently or otherwise) to issue any Capital
Stock or to purchase, redeem, retire or otherwise acquire any Capital
Stock, except (1) pursuant to this Agreement, and (2) warrants issued to
the Company's underwriters for its initial public offering exercisable for
290,000 shares of Common Stock at an exercise price of $16.50 per share
(the "Underwriters' Warrants"), and warrants issued to certain financial
advisors exercisable for 45,000 shares of Common Stock at exercise prices
of $7.00 and $9.00 per share (the "Advisors' Warrants"), and options issued
to directors, officers, employees and agents of Company exercisable for
400,375 shares of Common Stock at exercise prices ranging from $8.50 to
$15.00 per share. No Person has any right of first refusal, preemptive
right, anti-dilution protection, put right, registration right, or similar
right with respect to any Capital Stock of Company, except (i) Holders
pursuant to this Agreement, and (ii) the holders of the Underwriters'
Warrants which warrants contain customary demand and piggyback registration
rights, and (iii) the holders of a portion of the Advisors' Warrants
exercisable for 15,000 shares which warrants are entitled to registration
rights and anti-dilution protection. To the knowledge of Company (after
diligent inquiry), no holder of any Capital Stock is a party to any
equityholder or voting agreement with respect to any such Capital Stock.
c. The Warrant Shares (if issued as of the effective date hereof)
would constitute 7.5% of the issued and outstanding shares of Capital Stock
and voting rights on a fully diluted basis assuming 8,609,574 shares are
outstanding as of the date hereof, warrants and options exercisable for up
to an aggregate of 735,375 are outstanding as of the date hereof and
1,000,000 shares of Common Stock are issued in connection with the Telecon
Acquisition and the Additional Acquisitions.
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.
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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 such certificates shall incorporate such
changes therein as may be required from time to time to reflect any
adjustments made pursuant to Article 5, and the legend thereon shall be
modified or removed from time to time to reflect the applicable
requirements of the Securities Act). Each Warrant Certificate shall be
uniquely numbered, shall identify the record Holder 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.
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a. Exercise Period. The Warrants are exercisable at any time and
from time to time after the effective date hereof and prior to 11:59 p.m.
(Eastern Time) on March 16, 2010 (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; Cashless 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
applicable Exercise Price in cash, by certified or cashier's check payable
to the order of Company or by wire transfer to Company. As an alternative
to paying such Exercise Price (or any portion thereof) in cash, a Holder
may instead elect to effect a cashless exercise pursuant to which such
Holder will receive in exchange for such tendered Warrants an amount of
Warrant Shares determined by multiplying (a) the number of Warrant Shares
into which such Holder would otherwise be entitled as a result of such
exercise by (b) a fraction (i) the numerator of which is the difference
between the then Current Market Price per Warrant Share and the Exercise
Price then in effect and (ii) the denominator of which is the then Current
Market Price per Warrant Share. 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 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 Common
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 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.
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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 a Holder from
time to time in whole or in part upon complying with the applicable
restrictions under this Section (but without the necessity of otherwise
obtaining any consent of Company).
b. 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 Xxxxxx
as the Holder of record hereunder for purposes of giving and receiving
notices and for purposes of exercising rights hereunder.
c. 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.
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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
Warrants and the Warrant Shares purchasable upon exercise of any such
Warrants in any Public Offering of Company's securities, other than in
connection with a merger or pursuant to a Form S-8, Form S-4 or other
comparable or successor registration statement.
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) at least 30 days prior to the
initial filing of a registration statement pertaining to any Public
Offering. In addition, Company shall also notify such Holders promptly
after the occurrence of any of the following events: (i) the initial filing
of a registration statement with the Commission pertaining to any Public
Offering, or (ii) 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 (iii) 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 2 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 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 applicable 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 among the Holders of Warrant Shares and Warrants and
the other holders of securities entitled to incidental or piggyback
registration rights.
In connection with any 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, then 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 Public Offering for a
period of time (not to exceed 180 calendar days after the effective date of
the registration statement for such Public Offering) as may be appropriate
under the circumstances and reasonably requested by Company and the
underwriters for such offering.
b. Demand Registration. In addition to any other registration
rights to which any Holder is entitled, at any time and from time to time
after the date hereof, 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 two (2) 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 180 calendar days after the closing of a Public Offering
in which 50% or more of the Warrant Shares and Warrants were included, or
(c) any registration statement if the anticipated gross proceeds of the
Public Offering is less than the lesser of $1,000,000 or the proceeds
realized by registering all Warrants and Warrant Shares then held by
Holders.
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 applicable 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 (other than the
underwriters' warrants and the advisors' warrants existing as of the date
hereof), and no other securities (other than the underwriters' warrants and
the advisors' warrants existing as of the date hereof) 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. Except for the
underwriters' warrants and the advisors' warrants existing as of the date
hereof, 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 reasonably 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.
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).
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 (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 and the failure to so deliver such
prospectus was not the result of the negligence of such Holder.
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, EQUITY REDEMPTIONS AND
NON-SURVIVING TRANSACTIONS.
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a. Offer to Purchase. In connection with any Equity Disposition,
any Equity Redemption or any Non-Surviving Transaction, Company or the
acquiror in any such 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 or an Equity Redemption 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 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, any Equity Redemption 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,
Equity Redemption or 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 an aggregate price equal to 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 then outstanding (which product
shall be net of the applicable Exercise Price then in effect with respect
to Warrants tendered but not with respect to Warrant Shares tendered).
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 applicable
purchase price for each tendered Warrant Share and Warrant. Such payment,
except as otherwise provided in this Clause, shall be in immediately
available funds (i.e., in cash, by certified or cashier's check, or 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. To the extent that any
consideration for such transaction is payable by such acquiror in cash, in
publicly traded and readily marketable securities (with reasonable
liquidity and no restrictions on transfer) or evidence of indebtedness from
an obligor who (in the commercially reasonable opinion of Holders) is
highly creditworthy, then the purchase price payable to Holders may be in
the same form of consideration; otherwise, the purchase price (or the
remaining balance thereof) payable to Holders shall be in immediately
available funds. Notwithstanding the foregoing, in connection with any such
Equity Disposition, Equity Redemption 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.
e. Intentionally Blank.
4.6. REPURCHASE OFFERS.
-----------------
a. Offer to Repurchase. Within 30 calendar days following the
occurrence of any Repurchase Condition, Company and each Borrower (jointly
and severally) 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) at any time after January 1, 2005 upon a written
request from Holders of at least 50% of the outstanding Warrants and
Warrant Shares, and (2) upon any full repayment of the indebtedness under
the Loan Documents, and (3) upon the occurrence of any Event of Default
under and as defined in the Credit Agreement, and (4) upon the execution of
any definitive agreement by Company or holders of Capital Stock to engage
in an Equity Disposition or a Non-Surviving Transaction (or any amendment
thereto), and (5) upon any attempt by any Holder to exercise the Warrants
in accordance with the terms hereof at a time when Company is legally,
regulatorily or otherwise not authorized or permitted to issue the
corresponding Warrant Shares, provided, however, that Company shall be
permitted a reasonable period of time (not to exceed 30 calendar days) to
prepare any state blue sky filings, information statements, Nasdaq listing
applications or other necessary securities documents to procure the
necessary private placement exemptions from registration and Nasdaq
approvals in connection with any such exercise without a "Repurchase
Condition" being deemed to have occurred.
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 applicable Exercise Price then in effect.
d. Acceptance of Repurchase Offer. At any time within 30 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 Xxxxxx'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
and each Borrower (jointly and severally) 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(2)" above, unless the Holders otherwise
consent, Company and each Borrower (jointly and severally) 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 within the time
period set forth in Section 4.6.d).
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 one legal counsel
thereto, but excluding underwriter's and/or broker's discounts and
commissions), taxes (other than income taxes) and other reasonable fees and
charges attributable to the issuance, registration, 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
including receipt of the Exercise Price) 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 applicable 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
Exercise Price and/or Warrants and Warrant Shares deliverable upon exercise
of all Warrants for the benefit of Holders. Such adjustment shall include
the issuance of additional Warrants and/or the reduction in Exercise Price
of the Warrants, as approved in writing by Holders of a majority of the
Warrants. In addition, if the assumption regarding the number of shares of
Common Stock issued in connection with the Telecon Acquisition and the
Additional Acquisitions (as set forth in Section 3.6.c) is incorrect (after
the Telecon Acquisition and all such Additional Acquisitions have been
completed), then Company shall, within 30 calendar days after the
completion of the last such Additional Acquisition, provide Holders with a
current capitalization chart. Holders shall then determine the appropriate
adjustment to the number of issued Warrants and/or the Exercise Price of
the Warrants, and Company shall promptly prepare, execute and deliver to
the Holders such additional documents and certificates as are necessary to
equitably adjust the Exercise Price and/or 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
Xxxxxx, and (b) the number of Warrant Shares purchasable upon the exercise
of each Warrant then owned of record by such Xxxxxx, and (c) the Exercise
Price of each Warrant then owned of record by such Holder, and (d) the
number of Warrant Shares then owned of record by such Xxxxxx, 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 (and upon reasonable prior written notice) Company
will permit an agent or representative of any Holder (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, subject in all cases to the confidentiality
requirements of Section 6.1(d).
4.16. ATTENDANCE AND PARTICIPATION RIGHTS. So long as the Warrants and
Warrant Shares of Holders (together will all other Capital Stock owned by
any Holder) collectively represent 1% or more of the Common Stock (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
use best efforts to secure and maintain such registration or approval or
will take such other action as and when necessary.
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) 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 and the applicable Exercise Price therefor
shall be adjusted so that each Holder of a Warrant upon exercise of such
Warrant shall be entitled to receive (for the same aggregate Exercise
Price) 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. Issuances Below Target Market Price. If Company issues or
sells any shares of Capital Stock (or rights, options, warrants or
convertible or exchangeable securities containing a right to subscribe for
or purchase shares of Common Stock) other than the Excludible Shares for no
consideration or 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 owned and Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be automatically
increased to account for the economic effects of such transaction (and the
applicable Exercise Price for such Warrants shall be proportionately
decreased) using a standard weighted average formula approach to compute
such adjustment. 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 amount of consideration received by
Company for purposes of this Clause (unless Company and Holders otherwise
mutually agree) will be determined by an Independent Appraiser. In
addition, if Company and Holders are unable to agree on the amount or form
of any such 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 adjustment. Any adjustment
required by this Clause (1) shall become effective on the date of issuance
retroactive to the record date for determining equityholders entitled to
receive such issuance, and (2) shall be made successively whenever any such
event occurs.
c. Dividend and Distribution Dilution. If any dividend,
distribution or payment (whether as cash or other assets of Company) is
made after the date hereof with respect to any Capital Stock or other
equity securities of Company, other than dividends appropriately covered
under Clause "a" above, then Company (concurrently with the payment
thereof) shall make a corresponding proportionate distribution or payment
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).
Notwithstanding the foregoing, Company shall not be obligated to make any
such distribution or payment to a Holder (and no Holder shall be entitled
to receive such distribution or payment) to the extent that such Holder
otherwise receives actual payment of the corresponding dividend or
distribution as a holder of Warrant Shares in such class of equity
security.
d. 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 (including the issuance of any securities or
instruments with enhanced voting rights, preemptive rights, dividend
preferences or liquidation preferences) in a manner contrary to the intent
of this Section 5.1, 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.
e. Preemptive Rights. If Company 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
Capital Stock), other than (i) in a Public Offering, or (ii) in connection
with acquisitions of Internet service providers or other telecommunications
companies, or (iii) in connection with the Excludible Shares, 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 price paid by
such acquiror of Capital Stock 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.
f. 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 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.
g. Holders Entitled to Equivalent Rights. Except for the
underwriters' warrants and the advisors' warrants existing as of the date
hereof, 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.
h. 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.
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 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 applicable 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. 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.
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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, or (ii) to the members of Company's Board of Directors (if
and to the extent subsequently requested by Holders), or (iii) to the
Commission, subject to the confidentiality requirements set forth in
Section 6.1.d. 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
(other than in connection with the issuance of Excludible Shares or
the issuance of options exercisable for Excludible Shares); or
2. A dissolution, liquidation or winding up of Company; or
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
Xxxxxx'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, subject to the confidentiality
requirements set forth in Section 6.1.d.
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 Xxxxxx'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, and
agents, 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). Notwithstanding the foregoing,
each Holder agrees to comply with applicable federal securities laws and
regulations regarding dissemination, use and/or disclosure of non-public
information
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 or reincorporation of its Organic Documents that could
reasonably be expected to have or cause an adverse effect on the rights and
interest of Holders. 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. EXISTENCE AND GOOD STANDING. 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 organization.
6.5. TRANSACTIONS WITH RELATED PARTIES. Without the prior written
consent of Holders representing a majority of Warrant Shares and Warrants
(which consent may not be unreasonably withheld), Company will not (and
will not permit any Subsidiary to) engage in any transaction (including
employment and compensation arrangements) with any Affiliate or other
related party other than for value received and under reasonable and
customary terms and conditions that are consistent with Company's
historical practices and at least as favorable to Company as would be
achieved in an arm's length transaction.
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.
ARTICLE 7. DEFINITIONS
7.1. DEFINITIONS. As used herein, the following terms have the
following respective meanings:
7.1.1. "Additional Acquisitions" has the meaning set forth in the
Credit Agreement.
7.1.2. "Affiliate" of any Person means any other Person that
directly or indirectly controls, is controlled by or is under direct or
indirect common control with such Person. A Person shall be deemed to
"control" another Person if such first Person directly or indirectly
possesses the 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 a Person: (a) each
Person who owns or controls 5% or more of any class or series of any equity
interest of such Person, and (b) each member, manager, partner, director
and/or senior executive officer of such Person or any Affiliate thereof,
and (c) any family member or other relative of such Person or any Affiliate
thereof, and (d) any trust of which any Person or Affiliate thereof is
either a trustee or beneficiary. Notwithstanding the foregoing, No Holder
shall be deemed to be an Affiliate of Company or any Affiliate thereof.
7.1.3. "Agreement" means this Warrant Agreement, as amended,
modified and supplemented from time to time.
7.1.4. "Appraised Valuation" means, as of any relevant date, the
fair market 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.
7.1.5. "Block A Exercise Price" has the meaning set forth in
Section 1.2.
7.1.6. "Block A 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
Block A Exercise Price (and any other right or warrant issued upon any
exchange or transfer of any such Warrant or any adjustment relating
thereto).
7.1.7. "Block B Exercise Price" has the meaning set forth in
Section 1.2.
7.1.8. "Block B 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
Block B Exercise Price (and any other right or warrant issued upon any
exchange or transfer of any such Warrant or any adjustment relating
thereto).
7.1.9. "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.
7.1.10. "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).
7.1.11. "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.
7.1.12. "Common Stock" means the voting common stock of Company
(which has a par value of $0.01 per share).
7.1.13. "Company" means XXXXXXXXXXXXX.XXX, INC., a Delaware
corporation, and its successors and permitted assigns.
7.1.14. "Credit Agreement" means the Credit Facility Agreement
dated as of March 15, 2000 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).
7.1.15. "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 applicable 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 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.
7.1.16. "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
or other than as a result of a series of acquisitions of unrelated internet
service providers or telecommunications companies) if, after such sale,
issuance, transfer or Equity Disposition, (a) more than 50% of the Capital
Stock or voting power of Company is sold, issued or transferred or (b) the
Initial Shareholders sell, issue or transfer more than 50% of the Capital
Stock and voting rights owned by such Initial Shareholders as of the date
hereof. For purposes of this definition, 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 created by such
shareholder for estate planning purposes shall not constitute an "Equity
Disposition".
7.1.17. "Equity Redemption" means any purchase, repurchase,
acquisition, redemption or retirement of any issued and outstanding shares
of Capital Stock (or any rights, options or convertible securities
therefor) from any holder by Company or any Affiliate thereof, except for
repurchases to fund employee stock purchase/401(k) or similar plans which
plans in the aggregate do not exceed 5% of the outstanding Capital Stock.
7.1.18. "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.
7.1.19. "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.
7.1.20. "Excludible Shares" means (1) the shares issued upon
exercise of the advisors' warrants and (2) the pool of options convertible
into shares of Common Stock that Company may issue from time to time as
incentive compensation for its employees and directors, provided that (a)
such options are granted at a price that is equal to or greater than the
Current Market Price on the date of such grant, and (b) such issuances are
reasonable in amount and otherwise in accordance with normal and customary
business practices within Company's industry and (c) the aggregate amount
of such shares issued at not times exceeds 15.0% of the issued and
outstanding equity of Company from time to time (on a fully diluted basis).
Such issuances may be pursuant to option plans either (i) that have been
established as of the effective date hereof or (ii) that are established
after the effective date hereof with notice to Holders.
7.1.21. "Exercise Period" has the meaning set forth in Section
4.2.
7.1.22. "Exercise Price" means either the Block A Exercise Price
or the Block B Exercise Price, as applicable.
7.1.23. "FCC" means the Federal Communications Commission or any
other entity or agency that succeeds to its responsibilities and powers.
7.1.24. "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.
7.1.25. "Holder-Affiliated Transferee" means any Affiliate of a
Holder, and/or any current or former 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.
7.1.26. "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.
7.1.27. "Initial Shareholders" means, Xxxx Xxxxx, Xxxxx Xxxxx and
Xxxxx Xxxxxx, who collectively beneficially own 3,084,242 shares of Common
Stock of Company as of the effective date of this Agreement.
7.1.28. "Lender" means MCG FINANCE CORPORATION, a Delaware
corporation, and its successors, assigns, pledgees and transferees.
7.1.29. "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.
7.1.30. "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).
7.1.31. "Person" means an individual, an association, a
partnership, a corporation, a trust or an unincorporated organization or
any other entity or organization.
7.1.32. "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.
7.1.33. "Purchaser" means Lender, and its successors, assigns,
pledgees and transferees with respect to the Warrants, corresponding
Warrant Certificates and/or Warrant Shares.
7.1.34. "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.
7.1.35. "Repurchase Condition" has the meaning set forth in
Section 4.6.
7.1.36. "Repurchase Offer" has the meaning set forth in Section
4.6.
7.1.37. "Repurchase Price" has the meaning set forth in Section
4.6.
7.1.38. "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.
7.1.39. "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.
7.1.40. "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.
7.1.41. "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.
7.1.42. "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.
7.1.43. "Target Market Price" means, at the time of any
determination, (a) with respect to the Block A Warrants, (i) a price per
share of Capital Stock (or with respect to options, warrants or convertible
securities, such price inclusive of any exercise or conversion payments) of
$7.00 per share for the first $15.0 million in equity issued by Company
after the Closing Date and (ii) a price per share of Capital Stock (or with
respect to options, warrants or convertible securities, such price
inclusive of any exercise or conversion payments) of $10.00 per share for
all additional equity issuances and (b) with respect to the Block B
Warrants, a price per share of Capital Stock (or with respect to options,
warrants or convertible securities, such price inclusive of any exercise or
conversion payments) equal to the lesser of the Current Market Price or
$12.00 per share, as each such price may be adjusted from time to time in
connection with any subdivisions, combinations or reclassifications of any
Capital Stock.
7.1.44. "Telecon Acquisition" has the meaning set forth in the
Credit Agreement.
7.1.45. "Warrant Certificate" means a certificate (substantially
in the form of Exhibit C) evidencing one or more Warrants.
7.1.46. "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 an applicable Exercise
Price (and any other right or warrant issued upon any exchange or transfer
of any such Warrant or any adjustment relating thereto).
7.1.47. "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). For
purposes of Section 4.4 and Section 4.5 only, the term "Warrant Share"
shall include all shares of Common Stock issued or issuable to any Holder
in connection with any Loan Document.
7.2. GENERAL CONSTRUCTION AND INTERPRETATION.
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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.
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 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 in all
material respects 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 in all material respects 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 Delaware.
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 Xxxxxxxxx must
be expressed in a writing executed by Xxxxxxxxx. 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.
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 XxxxxxxXxxxxx.xxx, Inc.
-----------------
1720 Route 34
P.O. Box 1347
Wall, New Jersey 07719
Attention: Xxxx X. Xxxxx, President
Xxxxxxxxx: (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):
Xxxxx & Xxxxxxx, Ltd.
000 Xxxxx Xxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
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
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.
8.8. 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.
8.9. 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.
8.10. 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.
8.11. 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 sue 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.
8.12. 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.
8.13. 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.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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: XXXXXXXXXXXXX.XXX, INC. (Company)
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxx
------------------------- -------------------------------
Name: Xxxxxx X. Xxxxxxxx Name: /s/ Xxxx X. Xxxxx
-------------------- -----------------------------
Title: Secretary Title: President
[CORPORATE SEAL] Address: 0000 Xxxxx 00
X.X. Box 1347
Wall, NJ 07719
Facsimile: (000) 000-0000
WITNESS: MCG FINANCE CORPORATION
(Purchaser)
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxxx X. Xxxxxx, COO and CFO
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
EXHIBIT A -- ARTICLES OF INCORPORATION
EXHIBIT B -- AUTHORIZING RESOLUTIONS
EXHIBIT C -- FORM OF WARRANT CERTIFICATE
EXHIBIT D -- RESTRICTIVE LEGENDS
FORM OF RESTRICTIVE LEGENDS FOR WARRANT CERTIFICATES
----------------------------------------------------
"The Warrants evidenced by this certificate have not been registered under
the Securities Act of 1933 or the securities laws of any state. Such
Warrants may not be sold, transferred, pledged or hypothecated in the
absence of an effective registration statement for such Warrants under the
Securities Act of 1933 and applicable state securities laws or an opinion
of counsel satisfactory to XXXXXXXXXXXXX.XXX, INC. prior to the proposed
transaction that such registration is not required."
FORM OF RESTRICTIVE LEGEND FOR WARRANT SHARES
---------------------------------------------
"The shares evidenced by this certificate have been issued upon the
exercise of warrants issued pursuant to a Warrant Agreement dated as of
March 16, 2000 (the "Warrant Agreement") and have not been registered under
the Securities Act of 1933 or the securities laws of any state. Such shares
may not be sold, transferred, pledged or hypothecated in the absence of an
effective registration statement for such shares under the Securities Act
of 1933 and applicable state securities laws or an opinion of counsel
satisfactory to XXXXXXXXXXXXX.XXX, INC. prior to the proposed transaction
that such registration is not required."
