EXHIBIT 4.21
EXECUTION COPY
WARRANT AGREEMENT
BETWEEN
CORECOMM LIMITED
AND
USN COMMUNICATIONS, INC.
Dated as of May 26, 1999
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of May 26, 1999 (this "Agreement"),
between CORECOMM LIMITED, a Bermuda corporation (the "Company"), and USN
COMMUNICATIONS, INC., a Delaware corporation ("USN" and USN or any assignee
to whom this Warrant may be transferred hereunder, the "Holder").
WITNESSETH:
WHEREAS, pursuant to an Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of February 19, 1999, by and between the
Company, USN and the subsidiaries of USN that are signatories thereto
(collectively, the "Sellers"), the Sellers sold, conveyed, assigned and
transferred to the Company, and the Company purchased and obtained the
assignment from Sellers of, substantially all of the assets and properties
of the Sellers relating to the Business (as defined in the Asset Purchase
Agreement); and
WHEREAS, pursuant to the Asset Purchase Agreement, the Company is
issuing to USN certain Warrants, on the terms hereinafter described (the
"Warrants"), to purchase from the Company 100,000 shares of common stock,
$.01 par value, of the Company (the "Shares"), at an exercise price equal
to $50.00 per Share (the "Exercise Price").
NOW, THEREFORE, in consideration of the mutual agreements set
forth in the Asset Purchase Agreement and herein, the parties hereto agree
as follows:
SECTION 1. Definitions. All capitalized terms, if not defined herein,
shall have the respective meanings ascribed to such terms in the Asset
Purchase Agreement. In addition, the following terms shall have the
following respective meanings:
"Asset Purchase Agreement" has the meaning specified in the
Recitals.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in New York, NY are authorized or
required by law to close.
"Company" has the meaning specified in the Preamble.
"Election Date" has the meaning specified in Section 4.4 herein.
"Election Form" means the Form of Election to Purchase attached as
Exhibit B hereto.
"Exercise Price" has the meaning specified in the Recitals.
"Holder" has the meaning specified in the Preamble.
"Shares" has the meaning specified in the Recitals.
"Warrants" has the meaning specified in the Recitals.
"Warrant Certificates" has the meaning specified in Section 2
herein.
SECTION 2. Warrant Certificates. The Company will issue and deliver a
certificate or certificates evidencing the Warrants (the "Warrant
Certificates") substantially in the form set forth as Exhibit A attached
hereto. Warrant Certificates shall be dated the date of issuance by the
Company.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its chairman of the board,
president, or a vice president. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of such chairman
of the board, president, or vice president, and may be imprinted or
otherwise reproduced on the Warrant Certificates. Each Warrant Certificate
shall also be manually signed on behalf of the Company by its secretary or
its assistant secretary.
SECTION 4. Warrants; Exercise of Warrants.
4.1 How Exercised. Subject to the terms and conditions set forth
herein, the Warrants may be exercised, in whole or in part, by the Holder
by:
(a) the surrender of the Warrant Certificate to the Company, with a
duly executed Election Form (substantially in the form attached as Exhibit
B hereto) specifying the number of Shares to be purchased, during normal
business hours on any Business Day prior to May 26, 2004; and
(b) the delivery of payment to the Company, for the account of the
Company, by cash or by certified or bank cashier's check, of the
appropriate Exercise Price, for the number of Shares specified in the
Election Form in lawful money of the United States of America.
4.2 Delivery of Shares. Within ten Business Days after surrender
of the Warrants and receipt by the Company of payment, the Company shall
promptly issue and deliver to the Holder a certificate or certificates for
the number of Shares set forth in the Election Form, in such name or names
as may be designated by the Holder, along with a check for the amount of
cash to be paid in lieu of issuance of fractional shares, if any.
4.3 Partial Exercise. If a Warrant is exercised for less than all
of the Shares purchasable thereunder, the Company shall cancel the Warrant
upon surrender thereof and shall execute and deliver to the Holder a new
Warrant of like tenor for the remaining balance of purchasable Shares
within ten Business Days.
4.4 When Effective. The exercise of the Warrants shall be deemed
to become effective immediately prior to the close of business on the
Business Day on which the Warrants are surrendered to and payment is
received by the Company (the "Election Date"), and the party in whose name
any certificate for Shares shall be issuable upon such exercise, as
provided in Section 4.2, shall be deemed to be the record holder of such
Shares for all purposes on the Election Date. If the last day for the
exercise of the Warrants is not a Business Day, then such exercise may be
made on the next succeeding Business Day.
4.5 Expiration. The Warrants shall expire at the close of business
on May 26, 2004 and shall thereafter be null and void.
SECTION 5. Adjustment Provisions. Subject to the provisions of this
Section 5, the Exercise Price and the number of Shares issuable upon
exercise of the Warrants in effect from time to time shall be subject to
adjustment, as follows:
5.1 Stock Dividends. If at any time after the date hereof (i) the
Company shall pay a stock dividend payable in Shares or (ii) the number of
Shares shall have been increased by a subdivision or split-up of Shares,
then the number of shares to be delivered upon exercise of the Warrants
shall be increased so that the Holder will be entitled to receive the
number of Shares that such Holder would have owned had the Warrants been
exercised immediately prior to such dividend payment, subdivision or
split-up, and the Exercise Price shall be adjusted as provided in Section
5.5.
5.2 Combination of Stock. If the number of Shares outstanding at
any time after the date of the issuance of the Warrants shall have been
decreased by a combination of the outstanding Shares, then the number of
Shares to be delivered upon exercise of the Warrants will be decreased so
that the Holder thereafter shall be entitled to receive the number of
Shares that such Holder would have owned had the Warrants been exercised
immediately prior to such combination, and the Exercise Price shall be
adjusted as provided in Section 5.5.
5.3 Reorganization. If any capital reorganization of the Company,
or any reclassification of its common stock, or any consolidation of the
Company with or merger of the Company with or into any other person or any
sale, lease or other transfer of all or substantially all of the assets of
the Company to any other person (a "Transaction"), shall be effected, then,
upon exercise of the Warrants the Holder shall have the right to receive
the kind and amount of cash, stock, other securities or assets receivable
upon such reorganization, reclassification, consolidation, merger or sale,
lease or other transfer by a holder of the number of Shares that such
Holder would have been entitled to receive upon exercise of the Warrants
had they been exercised immediately before such reorganization,
reclassification, consolidation, merger or sale, lease or other transfer.
5.4 Fractional Interests. The Company shall not be required to
issue fractional 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 Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Share would, except for the provisions of this Section 5, be
issuable on the exercise of any Warrants (or specified portion thereof),
then the Company shall, at its sole option, pay an amount in cash equal to
the fair market value of the Share so issuable multiplied by such fraction.
5.5 Exercise Price Adjustment. Whenever the number of Shares
purchasable upon the exercise of the Warrants is adjusted as provided
pursuant to this Section 5, the Exercise Price payable upon the exercise of
the Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator
shall be the number of Shares purchasable upon the exercise of the Warrant
immediately prior to such adjustment, and of which the denominator shall be
the number of Shares purchasable immediately thereafter; provided, however,
that the Exercise Price for each Share shall in no event be less than the
par value of such Share.
5.6 Notice of Distribution. If the Board of Directors of the
Company shall declare any dividend or other distribution (other than a
quarterly cash dividend or a dividend or distribution for which an
adjustment will be made hereunder) or if the Company shall enter into any
Transaction, the Company shall notify the Holder not less than 15 days
prior to the record date fixed for determining shareholders entitled to
participation in such dividend or distribution or the consummation of such
Transaction.
SECTION 6. Reservation of Shares. The Company covenants and agrees as
follows:
(a) All Shares issued upon the exercise of the Warrants will, upon
issuance, be validly issued, fully paid and nonassessable, and free from
all taxes, liens, security interests, charges, and other encumbrances with
respect to the issuance thereof, other than taxes in respect of any
transfer occurring contemporaneously with such issue.
(b) During the period that the Warrants may be exercised, the
Company will at all times have authorized and reserved, and keep available
free from preemptive rights, a sufficient number of shares of its common
stock to provide for the exercise of the rights represented by the
Warrants.
(c) The Company covenants that it will keep Shares issuable upon
exercise of the Warrant authorized for quotation on the NASDAQ national
market or the exchange on which Common Stock may be listed upon notice of
issuance.
SECTION 7. Payment of Taxes. The issuance of certificates for Shares
shall be made without charge to the Holder for any stock transfer or other
issuance tax in respect thereto; provided, however, that the Holder shall
be required to pay any and all taxes that may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the then Holder as reflected upon the books of the
Company.
SECTION 8. Restricted Securities.
8.1 The Holder agrees that the Warrants may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed
of without registration under the Securities Act except as permitted by
applicable law; provided, however, that if the Holder is unable to
distribute or transfer the Warrants pursuant to an exemption from
registration under the Securities Act, after using reasonable commercial
efforts to do so, then the Company shall, at the request of the beneficial
holders of a majority interest of the Warrants given not earlier than four
months after the Closing Date, register the Warrants under the Securities
Act pursuant to a customary registration rights agreement.
8.2 Restrictive Legend. Each Warrant shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND
SUCH LAWS."
Each stock certificate for Shares issued upon the exercise of any
Warrant and each stock certificate issued upon the direct or indirect
transfer of any such Shares shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
SOLD, TRANSFERRED, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH LAWS."
Notwithstanding the foregoing, the Holder may require the Company
to issue a Warrant or a stock certificate for Shares, in each case without
a legend, if either (i) such Warrant or such Shares, as the case may be,
have been registered for resale under the Securities Act or (ii) the
Company has received (x) an opinion of legal counsel, in form and
substance, and from counsel, reasonably satisfactory to the Company, that
the distribution or transfer and all subsequent distributions or transfers
may be effected without registration under the Securities Act, or (y) a
Bankruptcy Court order, reasonably satisfactory to the Company, that such
registration is not required with respect to such Warrant or such Shares,
as the case may be.
SECTION 9. Investment Intent. The Holder represents that it is
acquiring the Warrants solely for its own account and not with the view to,
or for resale in connection with, any distribution thereof, other than as
may be permitted under applicable law without registration under the
Securities Act. The Holder understands that the Warrants and the Shares
have not been and are not being registered under the Securities Act by
reason of specified exemptions therefrom which depend upon, among other
things, the bona fide nature of the Holder's investment intent as expressed
herein and as explicitly acknowledged hereby, and that the Warrants and the
Shares are "Restricted Securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the
Securities Act only in certain limited sets of circumstances.
SECTION 10. Investigation and Experience. The Holder represents that
it is an "accredited investor" within the meaning of Rule 501 under the
Securities Act. USN has carefully reviewed the representations and
warranties concerning the Company as contained in the Asset Purchase
Agreement and understands that this investment involves substantial risks.
The Holder has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's management. The
officers of the Company have answered, to the Holder's satisfaction, all
inquiries made thereby. The Holder is experienced in evaluating and
investing in companies such as the Company and has knowledge and experience
in financial and business matters such that the Holder is capable of
evaluating the merits and risks of an investment in the Company and has the
capacity to protect its own interests in connection with this Warrant
Agreement and the transactions contemplated herein.
SECTION 11. Notices. All notices, claims, demands, and other
communications hereunder shall be in writing and shall be deemed given upon
(i) confirmation of receipt of a facsimile transmission, (ii) confirmed
delivery by a standard overnight carrier or when delivered by hand, or
(iii) the expiration of five (5) business days after the day when mailed by
registered or certified mail (postage prepaid, return receipt requested),
addressed to the respective parties at the following addresses (or such
other address for a party as shall be specified by like notice):
(a) If to Company, to:
CoreComm Limited
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
with copies to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
(b) If to Holder, to:
USN Communications, Inc.
00 Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
SECTION 12. Governing Law. This Agreement shall be deemed a contract
made under the laws of the State of Delaware and shall be construed
according to Delaware law without regard to the rules of conflict of laws
of the State of Delaware or any other jurisdiction.
SECTION 13. Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (i) the Company and (ii)
Holders of at least 50% of the outstanding Warrants. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon the
Holder, each future Holder of the Warrants, and the Company.
SECTION 14. Assignments. Subject to Section 8 herein, this Warrant and
the rights and interests granted herein may be assigned or transferred by
the Holder if the Holder completes and delivers to the Company the
applicable document of assignment, duly executed, in the form attached
hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized
as of the day and year first above written.
CORECOMM LIMITED
By: /s/ XXXXXXX X. XXXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
USN COMMUNICATIONS, INC.
By: /s/ XXXXXX X. XXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title:
Exhibit B
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to receive ____ shares of common stock of
CoreComm Limited and herewith tenders payment for such shares to the order
of CoreComm Limited in the amount of $____ in accordance with the terms
hereof.
The undersigned requests that certificates for such shares be
issued and delivered as follows:
ISSUE TO:
____________________________________________________
(Name)
____________________________________________________
(Address)
____________________________________________________
(Social Security or other Tax ID Number)
DELIVER TO:
____________________________________________________
(Name)
____________________________________________________
(Address)
If said number of shares is less than all of the shares of common
stock purchasable hereunder, the undersigned requests that a new Warrant
representing the remaining balance of such shares be issued and delivered
as set forth above.
Signature:
Date:
Signed in the presence of:
