EXHIBIT 10.03
THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, THESE SECURITIES MAY NOT BE
RESOLD OR OTHERWISE DISPOSED OF UNLESS, IN THE OPINION OF COUNSEL FOR OR
SATISFACTORY TO THE ISSUER, REGISTRATION UNDER THE APPLICABLE FEDERAL OR STATE
SECURITIES LAWS IS NOT REQUIRED OR COMPLIANCE IS MADE WITH SUCH REGISTRATION
REQUIREMENTS. COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR SALE OR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF CALIBER
AT THE PRINCIPAL EXECUTIVE OFFICES OF XXXXXXX. THIS LEGEND SHALL BE ENDORSED
UPON ANY WARRANT ISSUED IN EXCHANGE FOR THIS WARRANT.
Void after 5:00 p.m. Baltimore Time, on November 22, 2006
or earlier pursuant to the terms hereof.
WARRANT TO PURCHASE
752,689 SHARES OF
CLASS A COMMON STOCK
OF
CALIBER LEARNING NETWORK, INC.
This is to certify that, FOR VALUE RECEIVED, MCI TELECOMMUNICATIONS
CORPORATION or its permitted transferees and assigns pursuant to Section (d)
hereof ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from Caliber Learning Network, Inc., a corporation organized under the
laws of the State of Maryland ("Caliber"), 752,689 shares of Class A Common
Stock, par value $.01 per share of Caliber ("Warrant Shares") at a price of
$5.025 per share (the "Exercise Price") until the Expiration Date. The number of
Warrant Shares to be received upon the exercise of this Warrant and the Exercise
Price to be paid for each such Warrant Share shall be adjusted from time to time
as hereinafter set forth.
(a) EXERCISE OF WARRANT; EXPIRATION DATE OF WARRANT. This Warrant may be
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exercised as to all but not less than all of the Warrant Shares at any time,
until 5:00 p.m., Baltimore, Maryland time on November 22, 2006 (the "Expiration
Date"), provided, however, that if such day is a day on which banking
institutions in the State of Maryland are authorized by law to close, then the
Expiration Date shall be the next succeeding day which shall not be such a day.
This Warrant shall be exercised by presentation and surrender hereof to Caliber
at its principal office, or at the office of its transfer agent, if any, with
the Exercise Form annexed hereto duly executed (with signature guaranteed if
required by Xxxxxxx or its transfer
agent) and accompanied by payment of the aggregate Exercise Price for all
Warrant Shares being purchase and any applicable taxes. As soon as practicable
after exercise of this Warrant but not later than seven (7) business days from
the date of such exercise, Caliber shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares, registered in the name of
the Holder or the Holder's permitted designee. Upon receipt by Caliber of this
Warrant at its office, or by the transfer agent of Caliber at its office, in
proper form for exercise, together with the aggregate Exercise Price thereof and
taxes as aforesaid in cash or certified or bank check and the investment letter
described below, the Holder shall be deemed to be the holder of record of the
shares of Class A Common Stock issuable upon such exercise, notwithstanding that
the transfer books of Caliber shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically delivered
to the Holder. It shall be a condition of the exercise of this Warrant that the
Holder shall deliver to Caliber an investment letter in the form as customarily
used by Caliber from time to time in connection with the exercise of non-
registered options and warrants which are issued by Caliber. It is further
understood that certificates for this Warrant Shares to be issued upon exercise
of this Warrant shall contain a restrictive legend in accordance with Section
(i) hereof.
(b) ISSUANCE OF SHARES; ADJUSTMENT IN NUMBER OF WARRANT SHARES. All
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Warrant Shares issuable upon exercise of this Warrant shall, upon issuance
thereof in accordance with the terms of this Warrant, be duly authorized,
validly issued, fully-paid and non-assessable and, without limiting the
generality of the foregoing, Caliber covenants and agrees that it will from time
to time take all such actions as may be required to assure that the par value
per share of the Class A Common Stock is at all times equal to or less than the
effective Exercise Price.
(c) FRACTIONAL SHARES. No fractional shares or scrip representing
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fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, Caliber
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Fair Market Value a share of Class A Common Stock, which value shall be an
amount, calculated as follows: If the Class A Common Stock is then trading on
the Nasdaq Stock Market or other national securities exchange or listed on an
over-the-counter market, the Fair Market Value per share shall be the average of
the reported per share last sale price or last bid price, as the case may be,
for the ten business days preceding exercise of this Warrant; or, if not so
traded or listed, then as negotiated in good faith between Caliber and the
Holder; provided, that, if agreement between the Holder and Caliber cannot be
reached, then the Fair Market Value shall be determined by independent appraisal
using the process set forth in Section 3.2 of the Stockholders' Agreement, as in
effect from time to time.
(d) TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant may not be
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transferred or assigned in part at any time by the Holder. This Warrant may not
be transferred or assigned in whole except to an Affiliate only together with
all shares of Series A Convertible Preferred Stock and Class A Common Stock then
owned by the Holder and, then only as expressly permitted by Section (i) hereof.
Notwithstanding the preceding sentence, no transfer of this Warrant shall be
made to any Affiliate of the Holder that is then engaged in any business
competitive with Xxxxxxx's then business. If the terms of this Section (d) and
Section (i) hereof permit, upon surrender of this Warrant to Caliber at its
principal office or at the office of its transfer agent, if any, with the
Assignment Form annexed hereto duly executed (with signature guaranteed, if
required by Xxxxxxx or its transfer agent) and funds sufficient to pay any
transfer tax, Caliber shall, without charge, execute and deliver a new Warrant
in the name of the assignee Affiliate of Holder named in such instrument of
assignment and this Warrant shall promptly be canceled. The term "Warrant" as
used herein includes any Warrant for which this Warrant has been so transferred.
Upon receipt by Xxxxxxx of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of reasonable satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, Xxxxxxx will execute and deliver a
new Warrant of like tenor, date and amount. Any such new Warrant executed and
delivered shall constitute an additional contractual obligation on the part of
Caliber, whether or not the original Warrant shall be at any time enforceable by
anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
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entitled to any rights of a holder of shares of Capital Stock of Caliber, either
at law or equity, and the rights of the Holder are limited to those expressed in
this Warrant and are not enforceable against Caliber except to the extent set
forth herein.
(f) ANTI-DILUTION PROVISIONS. So long as this Warrant shall be
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outstanding, the following shall apply:
(1) The number of Warrant Shares for which this Warrant is
exercisable shall be adjusted from time to time as necessary so that the
Warrant Shares shall thereafter continue to equal seven percent (7%) of the
total number of shares of Capital Stock of Caliber that would be
outstanding after giving effect to exercise of this Warrant; provided,
however, that no such adjustment shall be made on account of (a) any shares
of Capital Stock issued by Caliber in any transaction as to which the
Holder was given the preemptive right to subscribe for and purchase its pro
rata share thereof on a Fully Diluted Basis and declined or failed to so
subscribe and purchase other than shares in connection with an Initial
Public Offering; or (b) that number of shares of Capital Stock issued by
Caliber in its Initial Public Offering in excess of twenty percent (20%) of
the total number of shares of Capital Stock outstanding immediately
following consummation of the Initial Public Offering. For purposes of any
adjustment pursuant to Section (b) above, shares issued by Caliber as a
result of exercise of the underwriters' over-allotment option in the
Initial Public Offering shall be deemed to be outstanding only to the
extent that the shares as to which the underwriters had a firm commitment
to purchase from Caliber represented 20% or less of the total number of
shares of Capital Stock outstanding following consummation of the Initial
Public Offering but before exercise of such underwriters' over-allotment
option. Any adjustment pursuant to this subsection (1) shall be made
successively whenever any event listed above shall occur.
(2) if Caliber shall (a) pay a dividend in, or make a distribution
on, its outstanding shares of Common Stock in shares of Common Stock, (b)
subdivide or reclassify its outstanding shares of Common Stock into a
greater number of shares, or (c) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price
in effect at the time of the record date for such dividend or distribution,
or the effective date of such subdivision, combination or reclassification
shall be proportionately adjusted as of the effective date of such event by
multiplying such Exercise Price by a fraction, the denominator of which
shall be the number of shares of Common Stock outstanding immediately
following such event and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior thereto. For example,
if Xxxxxxx declares a 2-for-1 share split and the Exercise Price
immediately prior to such event was $5.025 per share, the adjusted Exercise
Price immediately after such event shall be adjusted to $2.513 per share.
Any such adjustment shall be made successively whenever any event listed
above shall occur.
(3) in case of (a) any capital reorganization of Caliber, or (b) the
consolidation or merger of Caliber with or into another corporation or
other entity, (c) a statutory share exchange whereby Caliber's Common Stock
is converted into property other than cash, or (d) the sale, transfer or
other disposition of all or substantially all of the property, assets or
business of Caliber as a result of which property other than cash or
securities shall be payable or distributable to the holders of the Common
Stock, then, in each such case, this Warrant shall thereafter be
exercisable for the number and class of shares or other securities or
property of the corporation or other entity resulting from such
consolidation or merger or with or to which such statutory share exchange,
sale, transfer or other disposition shall have been made, to which the
shares of Class A Common Stock otherwise issuable upon exercise of this
Warrant would have been entitled upon such reorganization, consolidation,
merger, statutory share exchange, or sale, transfer or other disposition
had they been outstanding at the time thereof. In any such case,
appropriate adjustment, as determined by the Board of Directors, shall be
made in the application of the provisions set forth in this subsection (3)
with respect to the exercise of this Warrant thereafter, to the end that
such provisions shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares or securities or other property thereafter
issuable or deliverable upon exercise of this Warrant. Proper provision
shall be made as a part of the terms of any such reorganization,
consolidation, merger, statutory share exchange or sale, transfer or other
disposition whereby the exercisability of this Warrant shall be protected
and preserved in accordance with the provisions of this subsection (3). The
provisions of this subsection (3) shall similarly apply to successive
capital reorganizations, consolidations, mergers, statutory share
exchanges, sales, transfers or other dispositions of property as aforesaid.
(4) Subject to any adjustment provided for in Section (f)(1), if,
after issuing to the Stockholders the Initial Equity Capital, Caliber shall
issue to any person or entity (other than the Holder) any shares of Common
Stock, or rights, options (other than
Management Options) or warrants entitling them to subscribe for or purchase
a share of Common Stock at a price per share which is less than the
Exercise Price per Warrant Share, the number of Warrant Shares thereafter
issuable upon exercise of this Warrant shall be adjusted by multiplying the
number of Warrant Shares heretofore issuable upon exercise of this Warrant
by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such right or warrants
plus the number of additional shares of Common Stock offered for
subscription or purchase, and of which the denominator shall be the number
of shares of Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so
offered would purchase at such current aggregate Exercise Price for the
Warrant Shares. Such adjustment shall be made whenever such rights, options
(other than Management Options) or warrants are issued, and shall become
effective immediately after the record date for the determination of the
holders of the Corporation's shares entitled to receive such rights or
warrants.
(5) Whenever the Exercise Price payable upon exercise of this Warrant
is adjusted pursuant to any of the above subsections, the number of Warrant
Shares purchasable upon exercise of this Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares issuable upon exercise
of this Warrant by the Exercise Price in effect on the date hereof (the
"Aggregate Exercise Price") and dividing the product so obtained by the
Exercise Price, as adjusted. Whenever the number of Warrant Shares
issuable upon exercise of this Warrant is adjusted pursuant to any of the
subsections above, the Exercise Price payable upon exercise of this Warrant
shall simultaneously be adjusted by dividing the Aggregate Exercise Price
by the number of Warrant Shares, as adjusted.
(6) All calculations under this Section (f) shall be made to the
nearest cent or to the nearest whole Warrant Share, as the case may be.
(7) In the event that at any time, as a result of an adjustment made
pursuant to this Section (f), the Holder of this Warrant thereafter shall
become entitled to exercise this Warrant for any shares of Capital Stock of
Caliber, other than shares of Class A Common Stock, thereafter the number
of such other shares receivable upon exercise of this 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 shares of
Class A Common Stock contained in this Section (f).
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price or the number of
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Warrant Shares shall be adjusted as required by Section (f) hereof, Caliber
shall promptly file in the custody of its Secretary or an Assistant Secretary at
its principal office and with its transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price and/or adjusted number of
Warrant Shares, determined as herein provided, setting forth in reasonable
detail the facts requiring such adjustment, including a statement of the number
of additional Warrant Shares, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Caliber shall, promptly after each such
adjustment, mail, by certified mail, a copy of such certificate to the Holder at
its address as shown on Caliber's records.
(h) NOTICES TO HOLDER. So long as this Warrant shall be outstanding, (i)
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if Caliber shall pay any dividend or make any distribution upon the Common
Stock, or (ii) if Caliber shall offer to the holders of Common Stock for
subscription or purchase by them any shares of any class or any other rights, to
subscribe for or purchase shares, or (iii) if any capital reorganization of
Caliber, reclassification of the shares, consolidation or merger of Caliber with
or into another corporation or other entity, statutory share exchange or sale,
lease or transfer of all or substantially all of the property and assets of
Caliber to another corporation or other entity, or voluntary or involuntary
dissolution, liquidation or winding up of Caliber shall be effected, then in any
such case, Caliber shall cause to be mailed by certified mail to the Holder, at
least 15 days prior to the date specified in (x) or (y) below, as the case may
be, a notice containing a brief description of the proposed action and stating
the date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification, reorganization,
consolidation, merger, conveyance, lease, dissolution, liquidation or winding up
is to take place and the date, if any is to be fixed, as of which the holders of
shares of Common Stock or other securities shall receive cash or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
statutory share exchange, conveyance, dissolution, liquidation or winding up.
(i) SECURITIES LAW COMPLIANCE
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(1) The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the Warrant Shares to be issued upon exercise hereof
are being acquired solely for the Holder's own account and not as a nominee
for any other party, and for investment, and that the Holder will not
offer, sell, transfer, assign or otherwise dispose of this Warrant or any
shares of Class A Common Stock to be issued upon exercise hereof except
under circumstances that will not result in a violation of the Act or any
state securities laws. Upon exercise of this Warrant, the Holder shall, if
requested by Xxxxxxx, confirm in writing, in a form satisfactory to
Caliber, that the shares of Class A Common Stock so purchased are being
acquired solely for the Holder's own account and not as a nominee for any
other party, for investment, and not with a view toward distribution or
resale.
(2) This Warrant and all shares of Class A Common Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form (in addition to any legend required by
state securities laws):
THESE SECURITIES HAVE BEEN ISSUED PURSUANT TO EXEMPTIONS
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS, AND, ACCORDINGLY, THESE SECURITIES MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS, IN THE
OPINION OF COUNSEL FOR OR SATISFACTORY TO THE ISSUER,
REGISTRATION UNDER THE APPLICABLE FEDERAL OR STATE SECURITIES
LAWS IS NOT REQUIRED OR COMPLIANCE IS MADE WITH SUCH REGISTRATION
REQUIREMENTS. COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF
THESE SECURITIES AND RESTRICTING THEIR SALE OR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD HEREOF TO THE SECRETARY OF CALIBER AT THE PRINCIPAL
EXECUTIVE OFFICES OF XXXXXXX.
(j) AMENDMENTS. Neither this Warrant nor any term hereof may be changed,
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waived, discharged or terminated without the prior written consent of the Holder
and Caliber.
(k) DEFINITIONS. All capitalized terms used herein which are not
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otherwise defined herein shall have the meanings ascribed to them in the
Stockholders' Agreement, dated as of the date of this Warrant, by and among
Caliber, the Holder and certain other Stockholders of Caliber, as the same may
be amended from time to time, a copy of which is available for inspection at the
principal executive offices of Caliber.
(l) NO IMPAIRMENT. Caliber will not avoid or seek to avoid the observance
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or performance of any of the terms to be observed or performed hereunder by
Xxxxxxx, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder.
(m) GOVERNING LAW. This Agreement shall be governed by and construed
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under the laws of the State of Maryland.
(n) NOTICES. All notices and other communications required or permitted
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hereunder shall be in writing and shall be mailed by first class mail, postage
prepaid, addressed (a) if to the Holder, to MCI Telecommunications Corporation,
0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000 Attention: Ms. Xxxxx
Xxxxx, Senior Vice President of Corporate Development, with a copy to MCI's
General Counsel or (b) if to Caliber, to Caliber Learning Network, Inc., c/o
Sylvan Learning Systems, Inc., 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, or at such other address as the Holder or Caliber
shall have furnished to the other party in writing.
IN WITNESS WHEREOF, Caliber Learning Network, Inc. has caused this Warrant
to be executed by its officer thereunto duly authorized, on the 22nd day of
November, 1996.
CALIBER LEARNING NETWORK, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
EXERCISE FORM
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Dated ____________________, ____
The undersigned hereby irrevocably elects to exercise its rights pursuant
to this Warrant by purchasing * shares of Class A Common Stock of
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Caliber Learning Network, Inc., and hereby makes payment of $_________ in
payment of the exercise price thereof.
HOLDER:
Name: ____________________________
By: ____________________________
Title: ____________________________
______________
* Must represent all Warrant Shares for which this Warrant is exercisable.
ASSIGNMENT FORM
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FOR VALUE RECEIVED, ________________________________________ hereby sells,
assigns and transfers unto
Name____________________________________________________________________________
(Please typewrite or print in block letters)
Address_________________________________________________________________________
the right to purchase all shares of Class A Common Stock of Caliber Learning
Network, Inc., represented by this Warrant and does hereby irrevocably
constitute and appoint ____________________________ as Attorney, to transfer
the same on the books of Caliber with full power of substitution in the
premises.
Date ___________________, ______ HOLDER
Name: _________________________
By: _________________________
Title: _________________________
