EXHIBIT 4.2
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WARRANT AGREEMENT
among
FIBERNET TELECOM GROUP, INC.
and
FIRST CHICAGO INVESTMENT CORPORATION
DATED AS OF FEBRUARY 9, 2001
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TABLE OF CONTENTS
ARTICLE I WARRANT CERTIFICATES............................................. 1
Section 1.1 Warrant Certificates................................... 1
Section 1.2 Execution of Warrant Certificates...................... 1
ARTICLE II REGISTRATION.................................................... 2
Section 2.1 Registration to Beneficiary............................ 2
Section 2.2 Release of Warrants.................................... 2
Section 2.3 Registration of Transfers and Exchanges................ 2
ARTICLE III EXERCISE OF WARRANTS........................................... 3
ARTICLE IV PAYMENT OF TAXES................................................ 5
ARTICLE V MUTILATED OR MISSING WARRANT CERTIFICATES........................ 5
ARTICLE VI RESERVATION OF WARRANT SHARES................................... 5
Section 6.1 Warrant Shares......................................... 5
Section 6.2 Obtaining Stock Exchange Listings...................... 6
Section 6.3 Adjustment of Exercise Price and Number of Warrant
Shares Issuable........................................ 6
Section 6.4 Adjustment for Change in Capital Stock................. 6
Section 6.5 Adjustment for Rights Issue............................ 7
Section 6.6 Adjustment for Other Distributions..................... 8
Section 6.7 Adjustment for Common Stock Issue...................... 9
Section 6.8 Adjustment for Convertible Securities Issue............ 11
Section 6.9 Current Market Price................................... 12
Section 6.10 Consideration Received................................. 12
Section 6.11 When De Minimis Adjustment May Be Deferred............. 13
Section 6.12 When No Adjustment Required............................ 13
Section 6.13 Notice of Adjustment................................... 13
Section 6.14 Notice with respect to Certain Transactions............ 13
Section 6.15 Reorganization of the Company.......................... 14
Section 6.16 Company Determination Not Final........................ 14
Section 6.17 When Issuance or Payment May Be Deferred............... 15
Section 6.18 Adjustment in Number of Shares......................... 15
Section 6.19 Form of Warrants....................................... 15
ARTICLE VII FRACTIONAL INTERESTS........................................... 15
ARTICLE VIII NO DILUTION OR IMPAIRMENT; CAPITAL AND OWNERSHIP STRUCTURE.... 16
ARTICLE IX MISCELLANEOUS................................................... 17
Section 9.1 Notices to Warrant Holders............................. 17
Section 9.2 Notices to Company and Warrant Holder.................. 18
Section 9.3 Supplements and Amendments............................. 19
Section 9.4 Successors............................................. 19
Section 9.5 Termination............................................ 19
Section 9.6 Governing Law.......................................... 19
Section 9.5 Consent to Jurisdiction................................ 19
Section 9.6 Waiver of Jury Trial................................... 20
Section 9.7 Entire Agreement; Waivers.............................. 20
Section 9.8 Benefits of this Agreement............................. 21
Section 9.9 Counterparts........................................... 21
Section 9.10 Lock-up Agreements..................................... 21
Exhibit A - Form of Warrant Certificates
ii
WARRANT AGREEMENT
This WARRANT AGREEMENT (as amended, supplemented, amended and restated or
otherwise modified from time to time, this "Agreement") is entered into as of
February 9, 2001, among FIBERNET TELECOM GROUP, INC., a Delaware corporation
(the "Company"), and FIRST CHICAGO INVESTMENT CORPORATION (the "Beneficiary").
RECITALS
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A. The Company desires and agrees to grant the Beneficiary common stock
warrants ("Warrants") to purchase up to 233,129 shares of the fully-diluted
common stock, $0.001 par value per share (the "Common Stock"), of the Company,
after giving effect to the exercise thereof (the Common Stock or any security
substituted for the Common Stock issuable on exercise of the Warrants being
referred to herein as the "Warrant Shares"), at an initial exercise price equal
to $8.00 per share (the "Exercise Price"); and
B. The Company agrees to execute the Warrants referred to in Recital A
above and to deliver such Warrants to the Beneficiary on the date hereof.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
WARRANT CERTIFICATES
Section 1.1 Warrant Certificates
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The certificates evidencing the Warrants (the "Warrant Certificates") to be
delivered pursuant to this Agreement shall be substantially in the form set
forth in Exhibit A attached hereto.
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Section 1.2 Execution of Warrant Certificates
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(a) The Warrant Certificates shall be signed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer or its President or a Vice
President and by its Secretary or an Assistant Secretary. Each such signature
upon the Warrant Certificates may be in the form of a facsimile signature of the
present or any future Chairman of the Board, Chief Executive Officer President,
Vice President, Secretary or Assistant Secretary and may be imprinted or
otherwise reproduced on the Warrant Certificates.
(b) In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or
disposed of as though such person had not ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
any person who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant Certificate,
although at the date of the execution of this Agreement any such person was not
such officer.
ARTICLE II
REGISTRATION AND TRANSFER
Section 2.1 Registration to Beneficiary
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The Company shall number and register the Warrant Certificates in a
register as they are issued. The Company may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and shall not be affected by any notice to the
contrary.
Section 2.2 Release of Warrants
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The Company agrees that it shall release Warrants representing the right to
acquire an aggregate of 233,129 shares of the Common Stock of the Company to the
Beneficiary or its designee on the date hereof. The terms of this Agreement
shall be in full force and effect with respect to such Warrants, including,
without limitation, the anti-dilution provisions of Article VI hereof.
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Section 2.3 Transfers and Exchanges of Warrants and Warrant Shares.
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(a) Notwithstanding anything to the contrary herein, the Beneficiary shall
not be permitted to assign or otherwise transfer any Warrants or Warrant
Certificates.
(b) Notwithstanding anything to the contrary herein, the Beneficiary shall
not be permitted to assign or otherwise transfer any Warrant Share for a period
of 35 days following the exercise pursuant to the terms hereof of the Warrant
entitling the Beneficiary to receive such Warrant Share; provided, however, that
notwithstanding the foregoing, (i) this transfer restriction (i) shall not apply
if the Company has not effected a bona fide public offering and sale of Common
Stock pursuant to a registration statement filed under the Securities Act of
1933, as amended, and declared effective by the U.S. Securities and Exchange
Commission and (ii) shall not prevent the Beneficiary from exercising any of the
rights set forth in the Registration Rights Agreement, dated as of May 7, 1999,
among the Company and certain investors named therein and in the Equity
Registration Rights Joinder Agreement, dated as of the date hereof, among the
Company, the Beneficiary and Signal Equity Partners, L.P., and (iii) may be
waived in writing by the Company.
(b) The Warrant holders agree that, prior to any proposed transfer of a
Warrant Share, if such transfer is not made pursuant to an effective
Registration Statement under the Securities Act of 1933, as amended (the "Act"),
such transferee will, if requested by the Company, deliver to the Company:
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(i) an investment covenant reasonably satisfactory to the Company signed
by the proposed transferee;
(ii) an agreement by such transferee to the impression of the restrictive
investment legend set forth below on such Warrant Share;
(iii) an agreement by such transferee that the Company may place a
notation on the stock books of the Company or a "stop transfer order" with any
transfer agent or registrar with respect to such Warrant Share;
(iv) an agreement by such transferee to be bound by the provisions of
this Section 2.3 relating to the transfer of such Warrant Share; and
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(v) an opinion of counsel, reasonably satisfactory in form and substance
to the Company, to the effect that the proposed transfer of such Warrant Share
may be made without registration under the Act.
(c) The Warrant holders agree that each certificate representing Warrant
Shares will bear the following legend:
"THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS THE REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(d) Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants. Warrant Certificates surrendered for
exchange shall be cancelled and disposed of by the Company.
ARTICLE III
EXERCISE OF WARRANTS
Subject to the terms of this Agreement, each Warrant holder shall have the
right, which may be exercised until 5:00 p.m., New York City time on April 11,
2005 (the "Expiration Date"), to receive from the Company the number of fully
paid and nonassessable Warrant Shares that the holder may at the time be
entitled to receive in accordance herewith upon the exercise of such Warrant and
payment of the Exercise Price. Each Warrant not exercised prior to 5:00 p.m.,
New York City time, on the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
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A Warrant may be exercised upon surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 9.2
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hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed and upon payment to the Company of the Exercise Price as
adjusted as herein provided, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made (i) in cash or by certified or official bank check payable to the
order of the Company, (ii) through the surrender of preferred equity securities
or indebtedness of the Company having a liquidation preference or principal
amount, as the case may be, equal to the aggregate Exercise Price to be paid
(the Company will pay the accrued interest or dividends on such surrendered debt
or preferred equity securities in cash at the time of surrender notwithstanding
the stated terms thereof), (iii) by tendering Warrants having a fair market
value equal to the Exercise Price or (iv) with any combination of (i), (ii) or
(iii). For purpose of clause (iii) above, the fair market value of the Warrants
shall be determined as follows: (A) to the extent the Common Stock is publicly
traded and listed on the Nasdaq National Securities Market or a national
securities exchange, the fair market value shall be equal to the difference
between (1) the Quoted Price of the Common Stock on the date of exercise and (2)
the Exercise Price; or (B) to the extent the Common Stock is not publicly
traded, or otherwise is not listed on a national securities exchange, the fair
market value shall be equal to the value per Warrant as determined in good faith
by the Board of Directors of the Company pursuant to Section 6.16.
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Subject to the provisions of Article IV hereof, upon such surrender of
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Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Article VII;
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provided, however, that if any consolidation, merger or lease or sale of assets
is proposed to be effected by the Company as described in Section 6.15 hereof,
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or a tender offer or an exchange offer for shares of Common Stock of the Company
shall be made, upon such surrender of Warrants and payment of the Exercise Price
as aforesaid, the Company shall, as soon as possible, but in any event not later
than two Business Days thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence together with cash as provided in Article VII.
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Such certificate or certificates shall be deemed to have been issued and any
person 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 the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders thereof,
either in full or, from time to time, in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 1.2 hereof.
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All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices
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given or received hereunder available for inspection by the holders during
normal business hours at its office.
ARTICLE IV
PAYMENT OF TAXES
The Company will pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or any certificates for Warrant Shares in a name other than that of
the registered holder of a Warrant Certificate surrendered upon the exercise of
a Warrant, and the Company shall not be required to issue or deliver such
Warrant Certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
ARTICLE V
MUTILATED OR MISSING WARRANT CERTIFICATES
In case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed, the Company may in its discretion issue, in exchange and substitution
for and upon cancellation of the mutilated Warrant Certificate, or in lieu of
and substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
ARTICLE VI
RESERVATION OF WARRANT SHARES
Section 6.1 Warrant Shares
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(a) The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Common
Stock or its authorized and issued Common Stock held in its treasury, for the
purpose of enabling it to satisfy any obligation to issue Warrant Shares upon
exercise of Warrants, the maximum number of shares of Common Stock which may
then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase represented by the Warrants will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Company will keep a copy of this Agreement on file with
the Transfer Agent and with every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants.
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The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto, transmitted to each holder
pursuant to Section 9.1 hereof.
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(c) Before taking any action which would cause an adjustment pursuant to
Article VI hereof to reduce the Exercise Price below the then par value (if any)
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of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
(d) The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue and payment of the appropriate Exercise
Price, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
Section 6.2 Obtaining Stock Exchange Listings
---------------------------------
The Company will, from time to time, take all action which may be necessary
so that the Warrant Shares, upon their issuance upon the exercise of Warrants,
will be listed on the principal securities exchanges and markets within the
United States of America, if any, on which other shares of Common Stock are then
listed for so long as such other shares of Common Stock are so listed.
Section 6.3 Adjustment of Exercise Price and Number of Warrant Shares
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Issuable
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(a) The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Article VI. For purposes of this
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Article VI, "Common Stock" means shares now or hereafter authorized of any class
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of common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
Section 6.4 Adjustment for Change in Capital Stock
--------------------------------------
(a) If the Company:
(i) pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(iii) combines its outstanding shares of Common Stock into a smaller number
of shares;
(iv) makes a distribution on its Common Stock in shares of its capital
stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares of its
capital stock;
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then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted so that the holder of any Warrant thereafter exercised
may receive the aggregate number and kind of shares of capital stock of the
Company which he would have owned immediately following such action if such
Warrant had been exercised immediately prior to such action.
(b) The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
(c) If, after an adjustment, a holder of a Warrant may receive shares of
two or more classes of capital stock of the Company upon the exercise of such
Warrant, then the Company shall determine the allocation of the adjusted
Exercise Price between the classes of capital stock. After such allocation, the
exercise privilege and the Exercise Price of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Article VI.
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(d) Such adjustment shall be made successively whenever any event listed
above shall occur.
Section 6.5 Adjustment for Rights Issue
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(a) If the Company distributes any rights, options or warrants entitling
any person to subscribe for Common Stock or securities convertible into, or
exchangeable or exercisable for, Common Stock at an offering price which is less
than the Current Market Price per share on that record date for such issuance,
the Exercise Price shall be adjusted in accordance with the formula:
N x P
O + -----
M
E' = E x -----------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the Current Market Price per share of Common Stock on the record
date.
(b) For purposes of this Section 6.5, the "offering price" shall include
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the amount initially paid for such rights, options or warrants plus the amount
to be paid upon exercise or conversion of such rights, options or warrants.
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(c) The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
(d) This Section 6.5 does not apply to:
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(i) rights, options or warrants issued to the Company's employees under
bona fide employment benefit plans adopted by the Board of Directors and
approved by the holders of Common Stock when required by law, if such rights
would otherwise be covered by this Section 6.5 (but only to the extent that the
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aggregate number of rights, options or warrants excluded hereby and issued after
the date of this Agreement shall not exceed the right to subscribe for more than
15% of the Common Stock outstanding on the date of this Agreement, calculated on
a fully diluted basis);
(ii) rights, options or warrants issued to persons in a bona fide public
offering to persons that are not Affiliates of the Company, provided that the
Beneficiary receives evidence that the Board of Directors of the Company has
resolved that such rights, options or warrants were issued for fair value;
(iii) rights, options or warrants issued to persons who are not affiliates
of the Company in a bona fide private placement through a placement agent that
is a member firm of the National Association of Securities Dealers, Inc.
("NASD") (except to the extent that any discount from the Current Market Price
attributable to restrictions on transferability of such rights, options or
warrants, as determined in good faith by the Board of Directors pursuant to
Section 6.16 and described in a Board of Directors' resolution, shall exceed
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15%); provided that Tishman Speyer Properties, L.P. and Metromedia Fiber Network
Services, Inc. and their affiliates shall not be considered affiliates for
purposes of this clause; or
(iv) Common Stock or other equity securities issued as part of any
existing or future strategic arrangement or alliance by the Company or its
Subsidiaries to building licensors, landlords, carriers, joint venture partners,
vendors, lessors or lenders, and securities or instruments issued in connection
with acquisitions, as each such transaction is approved by the Board of
Directors of the Company (but only to the extent that the aggregate shares of
Common Stock and other equity securities excluded hereby pursuant to this clause
(iv) and issued after April 11, 2000 shall not exceed 15% of the Common Stock
outstanding on April 11, 2000 calculated on a fully diluted basis).
Section 6.6 Adjustment for Other Distributions
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(a) If the Company distributes to all holders of its Common Stock any of
its assets (including but not limited to cash), debt securities, preferred
stock, or any rights or warrants to purchase debt securities, preferred stock,
assets or other securities of the Company, the Exercise Price shall be adjusted
in accordance with the formula:
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M-F
E' = E x ---
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Current Market Price per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock. The Board
of Directors shall determine the fair market value pursuant to
Section 6.16 based upon the trading prices of publicly traded
------------
securities where applicable.
(b) The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
(c) This Section does not apply to rights, options or warrants referred to
in Section 6.5.
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Section 6.7 Adjustment for Common Stock Issue
---------------------------------
(a) If the Company issues shares of Common Stock for a consideration per
share less than the Current Market Price per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
P
--
E' = E x O + M
-------
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Current Market Price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
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(b) The adjustment shall be made successively whenever any such
issuance is made, and shall become effective immediately after such issuance.
(c) This Section 6.7 does not apply to:
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(i) any of the transactions described in Section 6.4, Section 6.5 and
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Section 6.6 of this Article VI;
----------- ----------
(ii) the exercise of warrants or options, or the conversion or exchange
of other securities convertible or exchangeable for Common Stock;
(iii) Common Stock issued upon the exercise of rights or warrants issued
to the holders of Common Stock;
(iv) Common Stock issued to the Company's employees under bona fide
employment benefit plans adopted by the Board of Directors and approved by the
holders of Common Stock when required by law, if such rights would otherwise be
covered by this Section 6.7 (but only to the extent that the aggregate shares of
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Common Stock excluded hereby and issued after the date of this Agreement shall
not exceed more than 15% of the Common Stock outstanding on the date of this
Agreement, calculated on a fully diluted basis);
(v) Common Stock issued to shareholders of any person that is not
affiliated with the Company which merges into the Company in proportion to their
stock holdings of such person immediately prior to such merger, upon such
merger;
(vi) Common Stock issued in a bona fide public offering to persons that
are not Affiliates of the Company, provided that the Beneficiary receives
evidence that the Board of Directors of the Company has resolved that Common
Stock was issued for fair value;
(vii) Common Stock issued to persons who are not affiliates of the
Company in a bona fide private placement through a placement agent which is a
member firm of the NASD (except to the extent that any discount from the Current
Market Price attributable to restrictions on transferability of the Common
Stock, as determined in good faith by the Board of Directors pursuant to Section
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6.16 and described in a Board resolution, shall exceed 15%); provided that
----
Tishman Speyer Properties, L.P., Metromedia Fiber Network Services, Inc. and
their affiliates shall not be considered affiliates for purposes of this clause;
or
(viii) Common Stock or other equity securities issued as part of any
existing or future strategic arrangement or alliance by the Company or its
Subsidiaries to building licensors, landlords, carriers, joint venture partners,
vendors, lessors or lenders, and securities or instruments issued in connection
with acquisitions, as each such transaction is approved by the Board of
Directors of the Company (but only to the extent that the aggregate shares of
Common Stock and other equity securities excluded hereby pursuant to this clause
(viii) and issued after April 11, 2000 shall not exceed 15% of the Common Stock
outstanding on April 11, 2000 calculated on a fully diluted basis).
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Section 6.8 Adjustment for Convertible Securities Issue
-------------------------------------------
(a) If the Company issues any securities convertible into or exchangeable
for Common Stock (other than securities issued in transactions described in
Section 6.5 and Section 6.6 of this Article VI) for a consideration per share of
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Common Stock initially deliverable upon conversion or exchange of such
securities less than the Current Market Price per share on the date of issuance
of such securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-
E' = E X O + M
-----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance
of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the Current Market Price per share on the date of issuance of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or exchange
rate.
(b) The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
(c) If all of the Common Stock deliverable upon conversion or exchange of
such securities has not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price that would then be in effect had "D" in the above formula been
equal to the actual number of shares of Common Stock issued upon conversion or
exchange of such securities.
(d) This Section 6.8 does not apply to:
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(i) convertible securities issued to shareholders of any person that is not
affiliated with the Company and that merges into the Company, or with a
subsidiary of the Company, in proportion to their stock holdings of such person
immediately prior to such merger, upon such merger;
(ii) convertible securities issued in a bona fide public offering to
persons that are not Affiliates of the Company, provided that the Beneficiary
receives evidence that the Board of Directors of the Company has resolved that
such convertible securities were issued for fair value;
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(iii) convertible securities issued to persons who are not affiliates of
the Company in a bona fide private placement through a placement agent which is
a member firm of the NASD (except to the extent that any discount from the
Current Market Price attributable to restrictions on transferability of Common
Stock issuable upon conversion, as determined in good faith by the Board of
Directors pursuant to Section 6.16 and described in a Board resolution, shall
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exceed 15% of the then Current Market Price); provided that Tishman Speyer
Properties, L.P., Metromedia Fiber Network Services, Inc. and their respective
affiliates shall not be considered affiliates for purposes of this clause; or
(iv) Common Stock or other equity securities issued as part of any existing
or future strategic arrangement or alliance by the Company or its Subsidiaries
to building licensors, landlords, carriers, joint venture partners, vendors,
lessors or lenders, and securities or instruments issued in connection with
acquisitions, as each such transaction is approved by the Board of Directors of
the Company (but only to the extent that the aggregate shares of Common Stock
and other equity securities excluded hereby pursuant to this clause (iv) and
issued after April 11, 2000 shall not exceed 15% of the Common Stock outstanding
on April 11, 2000, calculated on a fully diluted basis).
Section 6.9 Current Market Price
--------------------
(a) In Section 6.5, Section 6.6, Section 6.7 and Section 6.8 of this
----------- ----------- ----------- -----------
Article VI the "Current Market Price" per share of Common Stock on any date is
----------
the average of the Quoted Prices of the Common Stock for 15 consecutive trading
days commencing 20 trading days before the date in question. The "Quoted Price"
of the Common Stock for any given trading day is the last reported sales price
of the Common Stock for that trading day as reported by Nasdaq National Market
System, or if the Common Stock is listed on a securities exchange, the last
reported sales price of the Common Stock on such exchange, which price shall be
for consolidated trading if applicable to such exchange, or if the sales price
of the Common Stock is not so reported or listed, the last reported bid price of
the Common Stock. In the absence of one or more such quotations, the Board of
Directors of the Company shall determine the Current Market Price pursuant to
Section 6.16 in good faith.
------------
Section 6.10 Consideration Received.
-----------------------
(a) For purposes of any computation respecting consideration received
pursuant to Section 6.7 and Section 6.8 of this Article VI, the following shall
----------- ----------- ----------
apply:
(i) in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case shall
any deduction be made for any commissions, discounts or other expenses incurred
by the Company for any underwriting of the issue or otherwise in connection
therewith;
(ii) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors pursuant to Section 6.16, based upon the trading
------------
prices of publicly traded securities where appropriate (irrespective of the
12
accounting treatment thereof), whose determination shall be described in a Board
of Directors' resolution;
(iii) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall be
deemed to be the consideration received by the Company for the issuance of such
securities plus the additional minimum consideration, if any, to be received by
the Company upon the conversion or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses (i) and (ii) of
this subsection).
Section 6.11 When De Minimis Adjustment May Be Deferred
------------------------------------------
(a) No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account in
any subsequent adjustment.
(b) All calculations under this Section 6.11 shall be made to the nearest
------------
cent or to the nearest 1/1000th of a share, as the case may be.
Section 6.12 When No Adjustment Required
---------------------------
(a) In addition to the other exceptions provided above,
(i) no adjustment need be made for rights to purchase Common Stock pursuant
to a Company plan for reinvestment of dividends or interest;
(ii) no adjustment need be made for a change in the par value or no par
value of the Common Stock;
(iii) to the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash; and
(iv) no adjustment need be made for any additional shares of Common Stock
as may be issued by virtue of antidilution provisions contained in options or
warrants to purchase Common Stock or securities convertible into shares of
Common Stock.
Section 6.13 Notice of Adjustment
--------------------
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Article IX hereof.
----------
Section 6.14 Notice with respect to Certain Transactions
-------------------------------------------
(a) If:
(i) the Company takes any action that would require an adjustment in the
Exercise Price pursuant to Section 6.4, Section 6.5, Section 6.6, Section 6.7 or
----------- ----------- ----------- -----------
Section 6.8 of this Article VI;
----------- ----------
13
(ii) the Company takes any action that would require a supplemental
Warrant Agreement pursuant to this Section 6.14; or
------------
(iii) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least
15 days before such date. Failure to mail the notice or any defect in it shall
not affect the validity of the transaction.
Section 6.15 Reorganization of the Company
-----------------------------
(a) If the Company consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Article
VI. The successor Company shall mail to Warrant holders a notice describing the
supplemental Warrant Agreement.
(b) If the issuer of securities deliverable upon exercise of Warrants under
the supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
(c) If this Section 6.15 applies, Section 6.4, Section 6.5, Section 6.6,
------------ ----------- ----------- -----------
Section 6.7 and Section 6.8 of this Article VI do not apply.
----------- ----------- ----------
Section 6.16 Company Determination Not Final
-------------------------------
Any determination that the Company or its Board of Directors must make
pursuant to this Agreement shall be made in good faith and shall be binding on
the holders of Warrants, except as set forth herein. The Company shall give
each holder of Warrants written notice of any such determination by the Company
or its Board of Directors. If a majority of the holders of the Warrants do not
agree with any such determination by the Company or its Board of Directors, such
holders may request, in a notice delivered to the Company not later than 15 days
after the date on which the holders received notice of such determination from
the Company, that such determination be made, at the cost of the Company, by an
investment banking firm (or, if an investment banking firm is generally not
qualified to render such a determination, an appraisal firm) of recognized
national standing, which determination shall be final and binding on the Company
and the holders of Warrants, absent manifest error.
14
Section 6.17 When Issuance or Payment May Be Deferred
----------------------------------------
In any case in which this Article VI shall require that an adjustment in
----------
the Exercise Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date the Warrant Shares
and other capital stock of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price and (ii) paying
to such holder any amount in cash in lieu of a fractional share pursuant to
Section 7.1; provided, however, that the Company shall deliver to such holder a
-----------
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional Warrant Shares, other capital stock and cash upon the
occurrence of the event requiring such adjustment.
Section 6.18 Adjustment in Number of Shares.
-------------------------------
Upon each adjustment of the Exercise Price pursuant to this Article VI,
----------
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest hundredth) obtained from the following formula:
N' = N X E
-
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
Section 6.19 Form of Warrants.
-----------------
Irrespective of any adjustments in the Exercise Price or the number or kind
of shares purchasable upon the exercise of the Warrants, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
ARTICLE VII
FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be presented for exercise
in full at the same time by the same holder, the number of full Warrant Shares
which shall be issuable upon the exercise thereof
15
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, other than pursuant to the provisions of this Article VII,
-----------
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the fair market value of such
Warrant (as determined in accordance with Article III hereof) on the day
-----------
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction.
ARTICLE VIII
NO DILUTION OR IMPAIRMENT; CAPITAL AND OWNERSHIP STRUCTURE
If any event shall occur as to which the provisions of Article VI are not
----------
strictly applicable, but the failure to make any adjustment would adversely
affect the purchase rights represented by the Warrants in accordance with the
essential intent and principles of such Article, then, in each such case, the
Company shall appoint an investment banking firm of recognized national standing
that does not have a direct or material indirect financial interest in the
Company or any of its Subsidiaries, which has not been, and, at the time it is
called upon to give independent financial advice to the Company, is not (and
none of its directors, officers, employees, affiliates or stockholders are) a
promoter, director or officer of the Company or any of its Subsidiaries, which
shall give their opinion upon the adjustment, if any, on a basis consistent with
the essential intent and principles established in Article VI, necessary to
----------
preserve, without dilution, the purchase rights represented by the Warrants.
Upon receipt of such opinion, the Company will promptly mail a copy thereof to
the holders of the Warrants and shall make the adjustments described therein.
The Company will not, by amendment of its certificate of incorporation or
through any consolidation, merger, reorganization, transfer of assets,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of the Warrants against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (a)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock on the exercise of the Warrants from time to time outstanding and
(b) will not take any action which results in any adjustment of the Exercise
Price if the total number of Warrant Shares issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock then authorized by the Company's certificate of incorporation and
available for the purposes of issue upon such exercise. A consolidation,
merger, reorganization or transfer of assets involving the Company covered by
Section 6.15 shall not be prohibited by or require any adjustment under this
------------
Article VIII.
------------
16
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices to Warrant Holders.
--------------------------
(a) Upon any adjustment of the Exercise Price pursuant to Article VI, the
----------
Company shall promptly thereafter (i) cause to be filed with the Company a
certificate of the Company's Chief Financial Officer setting forth the Exercise
Price after such adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculations are based and setting
forth the number of Warrant Shares (or portion thereof) issuable after such
adjustment in the Exercise Price, upon exercise of a Warrant and payment of the
adjusted Exercise Price, which certificate shall be conclusive evidence of the
correctness of the matters set forth therein, and (ii) cause to be given to each
of the registered holders of the Warrant Certificates at his address appearing
on the Warrant register written notice of such adjustments by first-class mail,
postage prepaid. Where appropriate, such notice may be given in advance and
included as a part of the notice required to be mailed under the other
provisions of this Article IX.
----------
(b) In the event:
(i) that the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(ii) that the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in Section 6.4); or
-----------
(iii) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
(iv) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company; or
(v) that the Company proposes to take any action (other than actions of the
character described in Section 6.4) which would require an adjustment of the
-----------
Exercise Price pursuant to Article VI;
----------
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 20 days (or 10 days in any case specified in clauses (i) or (ii) above)
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first-class mail, postage
17
prepaid, a written notice stating the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or the initial expiration date
set forth in any tender offer or exchange offer for shares of Common Stock, or
the date on which any such consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up is expected to become effective or
consummated, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up. The failure to give the notice required by this Article IX or any defect
----------
therein shall not affect the legality or validity of any distribution, right,
option, warrant, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up, or the vote upon any action. Any notice requirement
under this Section 9.1 shall be in addition to any notice requirement under
-----------
Section 6.15; provided that the Company may deliver one notice that meets all of
------------
the conditions of Section 6.15 and this Section 9.1, which notice shall be
------------ -----------
deemed to have been delivered pursuant to both such Sections.
(c) Subject to Section 6.16, nothing contained in this Agreement or in any
------------
of the Warrant Certificates shall be construed as conferring upon the holders
thereof the right to vote or to consent or to receive notice as shareholders in
respect of the meetings of shareholders or the election of Directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company.
Section 9.2 Notices to Company and Warrant Holder.
---------------------------------------
(a) Any notice or demand authorized by this Agreement to be given or made
by the registered holder of any Warrant Certificate to or on the Company, and
any notice to be given by the Company to the Beneficiary, shall be sufficiently
given or made when and if delivered in person or by overnight courier, addressed
to the office of the Company or Beneficiary, as applicable, expressly designated
by the Company or Beneficiary, as applicable, as its office for purposes of this
Agreement (until the Warrant holders are otherwise notified in accordance with
this Section by the Company or the Company is otherwise notified in accordance
with this Section by the Beneficiary), as follows:
To the Company:
--------------
FiberNet Telecom Group, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
To the Beneficiary:
------------------
First Chicago Investment Corporation
[_____________________]
[_____________________]
Attention: [___________]
Telecopy: [___________]
18
(b) Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) one Business Day after being delivered, if delivered by telecopier with
confirmation of good transmission, (c) one Business Day after being sent by
overnight courier, if sent by overnight courier, (d) two Business Days after
being sent by Federal Express or United Parcel Service, if sent by Federal
Express or United Parcel Service, or (e) three Business Days after being sent,
if sent by registered or certified mail. Each of the parties hereto shall be
entitled to specify a different address by giving notice as aforesaid to each of
the other parties hereto.
Section 9.3 Supplements and Amendments
--------------------------
The Company may from time to time supplement or amend this Agreement
without the approval of any holders of Warrant Certificates in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company may deem necessary or desirable; provided that any such supplement or
amendment shall not in any way adversely affect the interests of the holders of
Warrant Certificates. All other amendments, modifications or supplements to
this Agreement may only be made in a written agreement executed by each of the
parties hereto.
Section 9.4 Successors
----------
The Beneficiary may assign its rights and obligations hereunder to any
person without the consent of the Company. The Company may not assign its
obligations hereunder. All the covenants and provisions of this Agreement by or
for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 9.5 Termination
-----------
This Agreement shall terminate at 5:00 p.m., New York City time on April
11, 2005. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date if all Warrants have been exercised.
Section 9.6 Governing Law
-------------
This Agreement shall be governed by, and shall be construed in and enforced
in accordance with, the internal laws of the State of New York, without regard
to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the
General Obligations Law of the State of New York), except where the application
of the law of another jurisdiction is required as a matter of law.
Section 9.5 Consent to Jurisdiction
-----------------------
Each of the parties agrees that all actions, suits or proceedings arising
out of or based upon this Agreement or the subject matter hereof may be brought
and maintained in any state or federal court of competent jurisdiction sitting
in the state, county and city of New York. Each of the parties hereby by
execution hereof (i) hereby irrevocably submits to the non-exclusive
19
jurisdiction of such courts for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter hereof and
(ii) hereby waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such action,
suit or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that it is immune from extraterritorial
injunctive relief or other injunctive relief, that its property is exempt or
immune from attachment or execution, that any such action, suit or proceeding
may not be brought or maintained in the above-named courts or should be
dismissed on the grounds of forum non conveniens, should be transferred to any
court other than the above-named courts, should be stayed by virtue of the
pendency of any other action, suit or proceeding in any courts other than the
above-named courts, or that this Agreement or the subject matter hereof may not
be enforced in or by the above-named courts. Each of the parties hereto hereby
consents to service of process in any such suit, action or proceeding in any
manner permitted by the laws of the State of New York, agrees that service of
process by registered or certified mail, return receipt requested, at the
address specified in or pursuant to Section 9.2 hereof is reasonably calculated
-----------
to give actual notice and waives and agrees not to assert by way of motion, as a
defense or otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 9.2 hereof does not
-----------
constitute good and sufficient service of process. The provisions of this
Section 9.5 shall not restrict the ability of any party to enforce in any court
-----------
any judgment obtained in the above named courts.
Section 9.6 Waiver of Jury Trial
--------------------
To the extent not prohibited by applicable law which cannot be waived, each
of the parties hereto hereby waives, and covenants that it will not assert
(whether as plaintiff, defendant, or otherwise), any right to trial by jury in
any forum in any respect of any issue, claim, demand, cause of action, action,
suit or proceeding arising out of or based upon this Agreement or the subject
matter hereof, in each case whether now existing or hereafter arising and
whether in contract or tort or otherwise. Any of the parties hereto may file an
original counterpart or a copy of this Section 9.6 with any court as written
-----------
evidence of the consent of each of the parties hereto to the waiver of its right
to trial by jury. Each of the parties hereto acknowledges that it has been
informed by the other party that the provisions of this Section constitute a
material inducement upon which such party is relying and will rely in entering
into this Agreement and the transactions contemplated hereby.
Section 9.7 Entire Agreement; Waivers
-------------------------
This Agreement constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written, of the parties with respect to such subject matter. No
waiver of any provision of this Agreement (a) shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar), (b)
shall constitute a continuing waiver unless otherwise expressly provided therein
or (c) shall be effective unless in writing and executed by each party hereto.
20
Section 9.8 Benefits of this Agreement
--------------------------
Nothing in this Agreement shall be construed to give to any person other
than the Company and the registered holders of the Warrant Certificates any
legal or equitable right, remedy or claim under this Agreement, and this
Agreement shall be for the sole and exclusive benefit of the Company and the
registered holders of the Warrant Certificates.
Section 9.9 Counterparts
------------
This Agreement and any amendments, waivers, consents, or supplements may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto. Delivery of an
executed counterpart of a signature page to this Agreement or to any amendments,
waivers, consents or supplements hereof by telecopier shall be as effective as
delivery of a manually executed counterpart thereof.
Section 9.10 Lock-up Agreements.
------------------
In the event that (i) the Company undertakes an underwritten offering of
securities, (ii) the managing underwriter of such offering requests that the
shareholders of the Company that are party to the Registration Rights Agreement
dated as of May 7, 1999 (the "Principal Stockholders") enter into "lock-up"
agreements with respect to all of their equity securities and (iii) the Company
and Principal Stockholders enter into such a "lock-up" agreement, then the
Beneficiary shall enter into a reasonable and customary "lock-up" agreement with
respect to such underwritten offering having terms no less favorable than the
"lock-up" agreement entered into by the Principal Stockholders and in any event
terminating in no more than 180 days after the consummation of such offering.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be duly executed by their respective authorized representatives as of the day
and year first above written.
FIBERNET TELECOM GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
Title: President and Chief Executive Officer
FIRST CHICAGO INVESTMENT CORPORATION
By: /s/ Xxxx X. Xxxx
--------------------------------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
By:______________________________________
Name:
Title
Warrant Agreement
EXHIBIT A
Warrant Certificate
THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT HAVE BEEN COMPLIED WITH OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
EXERCISABLE ON OR BEFORE APRIL 11, 2005
No. _____ Warrant to purchase _______ shares
Warrant Certificate
[BENEFICIARY]
This Warrant Certificate certifies that ______________, or its registered
assigns, is the registered holder of Warrants expiring April 11, 2005 (the
"Warrants") to purchase Common Stock, par value $0.001 per share (the "Common
Stock"), of FiberNet Telecom Group, Inc., a Delaware corporation (the
"Company"). Each Warrant entitles the holder upon exercise to receive from the
Company on or before 5:00 p.m. New York City Time on April 11, 2005 an amount of
fully paid and nonassessable shares of Common Stock as set forth above (the
"Warrant Shares") at the initial exercise price per share (the "Exercise Price")
equal to $8.00, payable as provided in the Warrant Agreement referred to on the
reverse hereof upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York City Time on April
11, 2005 and to the extent not exercised by such time such Warrants shall become
void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless executed by the Company.
A-2
IN WITNESS WHEREOF, FiberNet Telecom Group, Inc. has caused this Warrant
Certificate to be signed by its Chief Executive Officer or President and by its
Secretary, each by his signature.
Dated:
FIBERNET TELECOM GROUP, INC.
By:_______________________________________
[Chief Executive Officer/President]
By:_______________________________________
Secretary
A-3
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring April 11, 2005 entitling the holder on
exercise to receive shares of Common Stock, par value $0.001 per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement, dated as of February 9, 2001 (the "Warrant Agreement"), duly
executed and delivered by the Company, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price at the office of the Company designated for such purpose.
In the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Warrants. Said registration rights are set forth in full in
a Registration Rights Agreement, dated as of May 7, 1999, among the Company and
certain investors named therein and an Equity Registration Rights Joinder
Agreement, dated as of February 9, 2001, among the Company, First Chicago
Investment Corporation and Signal Equity Partners, L.P. A copy of these
documents may be obtained by the holder hereof upon written request to the
Company.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof, of any
distribution to the holder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of FIBERNET
TELECOM GROUP, INC. in the amount of $______ in accordance with the terms
hereof. The undersigned requests that a certificate for such shares be
registered in the name of ________________, whose address is
_______________________________ and that such shares be delivered to
________________ whose address is ___________ ______________________. If said
number of shares is less than all of the shares of Common Stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of
______________, whose address is _________________________, and that such
Warrant Certificate be delivered to _________________, whose address is
__________________.
Signature:
Date:
i
