FRONTLINE COMMUNICATIONS CORPORATION
a Delaware corporation
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Warrant Agent
and
ROCKEFELLER SECURITIES GROUP, INC.
Underwriter
WARRANT AGREEMENT
Table of Contents
Section Page
1 Appointment of Warrant Agent................................................................ 1
2 Form of Warrant............................................................................. 2
3 Countersignature and Registration........................................................... 3
4 Transfers and Exchanges..................................................................... 3
5 Exercise of Warrants; Payment of Warrant Solicitation
Fee......................................................................................... 4
6 Payment of Taxes............................................................................ 8
7 Mutilated or Missing Warrants............................................................... 9
8 Reservation of Common Stock................................................................. 9
9 Warrant Price; Adjustments.................................................................. 11
10 Fractional Interest......................................................................... 18
11 Notices to Warrantholders................................................................... 18
12 Disposition of Proceeds on Exercise of Warrants............................................. 20
13 Redemption of Warrants...................................................................... 21
14 Merger or Consolidation or Change of Name of Warrant
Agent....................................................................................... 21
15 Duties of Warrant Agent..................................................................... 22
16 Change of Warrant Agent..................................................................... 26
17 Identity of Transfer Agent.................................................................. 27
18 Notices..................................................................................... 27
19 Supplements and Amendments.................................................................. 29
20 New York Contract........................................................................... 29
21 Benefits of this Agreement.................................................................. 29
22. Successors.................................................................................. 30
Exhibit A - Form of Warrant
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WARRANT AGENT AGREEMENT dated as of , 1997, by and among
Frontline Communications Corporation, a Delaware corporation (the "Company"),
Rockefeller Securities Group, Inc. (the "Underwriter") and Continental Stock
Transfer & Trust Company, as warrant agent (hereinafter called the "Warrant
Agent").
WHEREAS, the Company proposes to issue and sell to the public
up to 1,150,000 shares of the Common Stock of the Company, par value $.01 per
share (hereinafter, together with the stock of any other class to which such
shares may hereafter have been changed, called "Common Stock"), and up to
575,000 Common Stock purchase warrants (the "Warrants");
WHEREAS, each Warrant will entitle the holder thereof to
purchase one (1) share of Common Stock;
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer, exchange and exercise of the
Warrants;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as Warrant Agent for the Company in accordance
with the instructions hereinafter set forth in this Agreement, and the Warrant
Agent hereby accepts such appointment.
Section 2. Form of Warrant. The text of the Warrants and of
the form of election to purchase Common Stock to be printed on the reverse
thereof shall be substantially as set forth in Exhibit A attached hereto. Each
Warrant shall entitle the registered holder thereof to purchase one share of
Common Stock at a purchase price of $5.50, at any time from , 1998 or such
earlier date upon which the Underwriter consents to the exercise of the Warrants
until 5:00 p.m. Eastern time, on
, 2002 (the "Warrant Exercise Period"). The warrant price and the number
of shares of Common Stock issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events, all as hereinafter provided.
The Warrants shall be executed on behalf of the Company by the manual or
facsimile signature of the present or any future President or Vice President of
the Company, attested to by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company.
Warrants shall be dated as of the issuance by the Warrant
Agent either upon initial issuance or upon transfer or exchange.
In the event the aforesaid expiration date of the Warrants
falls on a Saturday or Sunday, or on a legal holiday on which the New York Stock
Exchange is closed, then the Warrants shall expire at 5:00 p.m. Eastern time on
the next succeeding business day.
Section 3. Countersignature and Registration. The
Warrant Agent shall maintain books for the transfer and
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registration of the Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue and register the Warrants in the names of the
respective holders thereof. The Warrants shall be countersigned manually or by
facsimile by the Warrant Agent (or by any successor to the Warrant Agent then
acting as warrant agent under this Agreement) and shall not be valid for any
purpose unless so countersigned. Warrants may, however, be so countersigned by
the Warrant Agent (or by its successor as Warrant Agent) and be delivered by the
Warrant Agent, notwithstanding that the persons whose manual or facsimile
signatures appear thereon as proper officers of the Company shall have ceased to
be such officers at the time of such countersignature or delivery.
Section 4. Transfers and Exchanges. The Warrant Agent shall
transfer, from time to time, any outstanding Warrants upon the books to be
maintained by the Warrant Agent for that purpose, upon surrender thereof for
transfer properly endorsed or accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant shall be issued to the
transferee and the surrendered Warrant shall be cancelled by the Warrant Agent.
Warrants so cancelled shall be delivered by the Warrant Agent to the Company
from time to time upon request. Warrants may be exchanged at the option of the
holder thereof, when surrendered at the office of the Warrant Agent, for another
Warrant, or other Warrants of different denominations of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock.
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Section 5. Exercise of Warrants; Payment of Warrant
Solicitation Fee.
(a) Subject to the provisions of this Agreement, each
registered holder of Warrants shall have the right, which may be exercised
commencing at the opening of business on the first day of the Warrant Exercise
Period, to purchase from the Company (and the Company shall issue and sell to
such registered holder of Warrants) the number of fully paid and non-assessable
shares of Common Stock specified in such Warrants upon surrender of such
Warrants to the Company at the office of the Warrant Agent, with the form of
election to purchase on the reverse thereof duly filled in and signed, and upon
payment to the Company of the warrant price, determined in accordance with the
provisions of Sections 9 and 10 of this Agreement, for the number of shares of
Common Stock in respect of which such Warrants are then exercised. Payment of
such warrant price shall be made in cash or by certified check or bank draft to
the order of the Company. Subject to Section 6, upon such surrender of Warrants
and payment of the warrant price, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants and in such name or names as such registered
holder may designate, a certificate or certificates for the number of full
shares of Common Stock so purchased upon the exercise of such Warrants. 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
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become a holder of record of such shares of Common Stock as of the date of the
surrender of such Warrants and payment of the warrant price as aforesaid. The
rights of purchase represented by the Warrants shall be exercisable, at the
election of the registered holders thereof, either as an entirety or from time
to time for a portion of the shares specified therein and, in the event that any
Warrant is exercised in respect of less than all of the shares of Common Stock
specified therein at any time prior to the date of expiration of the Warrants, a
new Warrant or Warrants will be issued to the registered holder for the
remaining number of shares of Common Stock specified in the Warrant so
surrendered, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrants pursuant to the provisions
of this Section and of Section 3 of this Agreement and the Company, whenever
requested by the Warrant Agent, will supply the Warrant Agent with Warrants duly
executed on behalf of the Company for such purpose. Anything in the foregoing to
the contrary notwithstanding, no Warrant will be exercisable unless at the time
of exercise the Company has filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering the shares of Common Stock issuable upon exercise of such Warrant and
such shares have been so registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of such Warrant. The
Company shall use its best
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efforts to have all shares so registered or qualified on or before the date on
which the Warrants become exercisable.
(b) If at the time of exercise of any Warrant after
, 1998 (i) the per share market price of the Company's Common Stock is
equal to or greater than the then exercise price of the Warrant, (ii) the
exercise of the Warrant is solicited by the Underwriter at such time while the
Underwriter is a member of the National Association of Securities Dealers, Inc.
("NASD"), (iii) the Warrant is not held in a discretionary account, (iv)
disclosure of the compensation arrangement is made in documents provided to the
holders of the Warrants; and (v) the solicitation of the exercise of the Warrant
is not in violation of Regulation M (as such regulation or any successor
regulation may be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934, then the Underwriter shall be entitled to
receive from the Company upon exercise of each of the Warrant(s) so exercised a
fee of five percent (5%) of the aggregate price of the Warrants so exercised
(the "Exercise Fee"). The procedures for payment of the warrant solicitation fee
are set forth in Section 5(c) below.
(c) (1) Within five (5) days of the last day of each month
commencing with , 1998, the Warrant Agent will promptly notify the
Underwriter of each Warrant Certificate which has been properly completed for
exercise by holders of Warrants during the last month. The Company and Warrant
Agent shall determine, in their sole and absolute
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discretion, whether a Warrant Certificate has been properly completed. The
Warrant Agent will provide the Underwriter with such information, in connection
with the exercise of each Warrant, as the Underwriter shall reasonably request.
(2) The Company hereby authorizes and
instructs the Warrant Agent to deliver to the Underwriter the Exercise Fee
promptly after receipt by the Warrant Agent from the Company of a check payable
to the order of the Underwriter in the amount of the Exercise Fee. In the event
that an Exercise Fee is paid to the Underwriter with respect to a Warrant which
the Company or the Warrant Agent determines is not properly completed for
exercise or in respect of which the Underwriter is not entitled to an Exercise
Fee, the Underwriter will promptly return such Exercise Fee to the Warrant Agent
which shall forthwith return such fee to the Company.
The Underwriter and the Company may at any time, after
, 1998, and during business hours, examine the records of the Warrant Agent,
including its ledger of original Warrant certificates returned to the Warrant
Agent upon exercise of Warrants. Notwithstanding any provision to the contrary,
the provisions of paragraphs 5(b) and 5(c) may not be modified, amended or
deleted without the prior written consent of the Underwriter.
Section 6. Payment of Taxes. The Company will pay any
documentary stamp taxes attributable to the initial issuance of Common Stock
issuable upon the exercise of Warrants; provided, however, that the Company
shall not be required to pay
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any tax which may be payable in respect of any transfer involved in the issue or
delivery of any certificates of shares of Common Stock in a name other than that
of the registered holder of Warrants in respect of which such shares are issued,
and in such case neither the Company nor the Warrant Agent shall be required to
issue or deliver any certificate for shares of Common Stock or any Warrant until
the person requesting the same has paid to the Company the amount of such tax or
has established to the Company's satisfaction that such tax has been paid or
that such person has an exemption from the payment of such tax.
Section 7. Mutilated or Missing Warrants. In case any of the
Warrants shall be mutilated, lost, stolen or destroyed, the Company may, in its
discretion, issue and the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and in substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction and, in case of a lost, stolen or destroyed
Warrant, indemnity, if requested, also satisfactory to them. Applicants for such
substitute Warrants shall also comply with such other reasonable regulations and
pay such reasonable charges as the Company or the Warrant Agent may prescribe.
Section 8. Reservation of Common Stock. There have been
reserved, and the Company shall at all times keep reserved, out of the
authorized and unissued shares of Common Stock, a
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number of shares of Common Stock sufficient to provide for the exercise of the
rights of purchase represented by the Warrants, and the transfer agent for the
shares of Common Stock and every subsequent transfer agent for any shares of the
Company's Common Stock issuable upon the exercise of any of the rights of
purchase aforesaid are irrevocably authorized and directed at all times to
reserve such number of authorized and unissued shares of Common Stock as shall
be required for such purpose. The Company agrees that all shares of Common Stock
issued upon exercise of the Warrants shall be, at the time of delivery of the
certificates of such shares, validly issued and outstanding, fully paid and
nonassessable and listed on any national securities exchange upon which the
other shares of Common Stock are then listed. So long as any unexpired Warrants
remain outstanding, the Company will file such post-effective amendments to the
registration statement (Form SB-2, Registration No. 333- ) (the "Registration
Statement") filed pursuant to the Act with respect to the Warrants (or other
appropriate registration statements or post-effective amendment or supplements)
as may be necessary to permit it to deliver to each person exercising a Warrant,
a prospectus meeting the requirements of Section 10(a)(3) of the Act and
otherwise complying therewith, and will deliver such a prospectus to each such
person. To the extent that during any period it is not reasonably likely that
the Warrants will be exercised, due to market price or otherwise, the Company
need not file such a post-effective amendment during such period. The Company
will
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keep a copy of this Agreement on file with the transfer agent for the shares of
Common Stock and with every subsequent transfer agent for any shares of the
Company's Common Stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Warrant Agent is irrevocably authorized to
requisition from time to time from such transfer agent stock certificates
required to honor outstanding Warrants. The Company will supply such transfer
agent with duly executed stock certificates for that purpose. All Warrants
surrendered in the exercise of the rights thereby evidenced shall be cancelled
by the Warrant Agent and shall thereafter be delivered to the Company, and such
cancelled Warrants shall constitute sufficient evidence of the number of shares
of Common Stock which have been issued upon the exercise of such Warrants.
Promptly after the date of expiration of the Warrants, the Warrant Agent shall
certify to the Company the total aggregate amount of Warrants then outstanding,
and thereafter no shares of Common Stock shall be subject to reservation in
respect of such Warrants which shall have expired.
Section 9. Warrant Price; Adjustments.
(a) The warrant price at which Common Stock
shall be purchasable upon the exercise of the Warrants shall be $5.00 per share
or after adjustment, as provided in this Section, shall be such price as so
adjusted (the "Warrant Price").
(b) The Warrant Price shall be subject to
adjustment from time to time as follows:
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(i) In case the Company shall at any time
after the date hereof pay a dividend in shares of Common Stock or make a
distribution in shares of Common Stock, then upon such dividend or distribution
the Warrant Price in effect immediately prior to such dividend or distribution
shall forthwith be reduced to a price determined by dividing:
(A) an amount equal to the total
number of shares of Common Stock outstanding immediately prior to such dividend
or distribution multiplied by the Warrant Price in effect immediately prior to
such dividend or distribution, by
(B) the total number of shares of
Common Stock outstanding immediately after such dividend or distribution.
For the purposes of any computation to be
made in accordance with the provisions of this Section 9(b)(i), the following
provisions shall be applicable: Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the date following the date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution.
(ii) In case the Company shall at any time
subdivide or combine the outstanding Common Stock, the Warrant Price shall
forthwith be proportionately decreased in the case of subdivision or increased
in the case of combination to the nearest one cent. Any such adjustment shall
become effective at the time such subdivision or combination shall become
effective.
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(iii) Within a reasonable time after the
close of each quarterly fiscal period of the Company during which the Warrant
Price has been adjusted as herein provided, the Company shall
(A) file with the Warrant Agent a
certificate signed by the President or Vice President of the Company and by the
Treasurer or Assistant Treasurer or the Secretary or an Assistant Secretary of
the Company, showing in detail the facts requiring all such adjustments
occurring during such period and the Warrant Price after each such adjustment;
and
(B) the Warrant Agent shall have no
duty with respect to any such certificate filed with it except to keep the same
on file and available for inspection by holders of Warrants during reasonable
business hours, and the Warrant Agent may conclusively rely upon the latest
certificate furnished to it hereunder. The Warrant Agent shall not at any time
be under any duty or responsibility to any holder of a Warrant to determine
whether any facts exist which may require any adjustment of the Warrant Price,
or with respect to the nature or extent of any adjustment of the Warrant Price
when made, or with respect to the method employed in making any such adjustment,
or with respect to the nature or extent of the property or securities
deliverable hereunder. In the absence of a certificate having been furnished,
the Warrant Agent may conclusively rely upon the provisions of the Warrants with
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respect to the Common Stock deliverable upon the exercise of the Warrants and
the applicable Warrant Price thereof.
(iv) Notwithstanding anything contained
herein to the contrary, no adjustment of the Warrant Price shall be made if the
amount of such adjustment shall be less than $.05, but in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to not less than $.05.
(v) In the event that the number of outstanding
shares of Common Stock is increased by a stock dividend payable in Common Stock
or by a subdivision of the outstanding Common Stock, then, from and after the
time at which the adjusted Warrant Price becomes effective pursuant to
Subsection (b) of this Section by reason of such dividend or subdivision, the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall be increased in proportion to such increase in outstanding shares. In the
event that the number of shares of Common Stock outstanding is decreased by a
combination of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to this Section 9(b)
of this Section by reason of such combination, the number of shares of Common
Stock issuable upon the exercise of each Warrant shall be decreased in
proportion to such decrease in the outstanding shares of Common Stock.
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(vi) In case of any reorganization or
reclassification of the outstanding Common Stock (other than a change in par
value, or from par value to no par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company with, or merger of
the Company into, another corporation (other than a consolidation or merger in
which the Company is the continuing corporation and which does not result in any
reclassification of the outstanding Common Stock), or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, the holder of each Warrant then outstanding
shall thereafter have the right to purchase the kind and amount of shares of
Common Stock and other securities and property receivable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which the holder of such Warrant
shall then be entitled to purchase; such adjustments shall apply with respect to
all such changes occurring between the date of this Warrant Agreement and the
date of exercise of such Warrant.
(vii) Subject to the provisions of this Section
9, in case the Company shall, at any time prior to the exercise of the Warrants,
make any distribution of its assets to holders of its Common Stock as a
liquidating or a partial liquidating dividend, then the holder of Warrants who
exercises its Warrants after the record date for the determination of those
holders of Common Stock entitled to such distribution of assets as a
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liquidating or partial liquidating dividend shall be entitled to receive for the
Warrant Price per Warrant, in addition to each share of Common Stock, the amount
of such distribution (or, at the option of the Company, a sum equal to the value
of any such assets at the time of such distribution as determined by the Board
of Directors of the Company in good faith), which would have been payable to
such holder had he been the holder of record of the Common Stock receivable upon
exercise of its Warrant on the record date for the determination of those
entitled to such distribution.
(viii) In case of the dissolution, liquidation
or winding up of the Company, all rights under the Warrants shall terminate on a
date fixed by the Company, such date to be no earlier than ten (10) days prior
to the effectiveness of such dissolution, liquidation or winding up and not
later than five (5) days prior to such effectiveness. Notice of such termination
of purchase rights shall be given to the last registered holder of the Warrants,
as the same shall appear on the books of the Company maintained by the Warrant
Agent, by registered mail at least thirty (30) days prior to such termination
date.
(ix) In case the Company shall, at any time
prior to the expiration of the Warrants and prior to the exercise thereof, offer
to the holders of its Common Stock any rights to subscribe for additional shares
of any class of the Company, then the Company shall give written notice thereof
to the last registered holder thereof not less than thirty (30)
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days prior to the date on which the books of the Company are closed or a record
date is fixed for the determination of the stockholders entitled to such
subscription rights. Such notice shall specify the date as to which the books
shall be closed or record date fixed with respect to such offer of subscription
and the right of the holder thereof to participate in such offer of subscription
shall terminate if the Warrant shall not be exercised on or before the date of
such closing of the books or such record date.
(x) Any adjustment pursuant to the aforesaid
provisions of this Section 9(b) shall be made on the basis of the number of
shares of Common Stock which the holder thereof would have been entitled to
acquire by the exercise of the Warrant immediately prior to the event giving
rise to such adjustment.
(xi) Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable upon exercise of the
Warrants, Warrants previously or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the similar Warrants
initially issuable pursuant to this Warrant Agreement.
(xii) The Company may retain a firm of
independent public accountants (who may be any such firm regularly employed by
the Company) to make any computation required under this Section 9, and any
certificate setting forth such computation signed by such firm shall be
conclusive
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evidence of the correctness of any computation made under this
Section 9.
(xiii) If at any time, as a result of an
adjustment made pursuant to Section 9(b)(vi) above, the holders of a Warrant or
Warrants shall become entitled to purchase any securities other than shares of
Common Stock, thereafter the number of such securities so purchasable upon
exercise of each Warrant and the Warrant Price for such shares 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 Common Stock contained in
Section 9(b)(ii) through (v).
Section 10. Fractional Interest. The Warrants may only be
exercised to purchase full shares of Common Stock and the Company shall not be
required to issue fractions of shares of Common Stock on the exercise of
Warrants. However, if a Warrant holder exercises all Warrants then owned of
record by it and such exercise would result in the issuance of a fractional
share, the Company will pay to such Warrant holder, in lieu of the issuance of
any fractional share otherwise issuable, an amount of cash based on the market
value of the Common Stock of the Company on the last trading day prior to the
exercise date.
Section 11. Notices to Warrantholders.
(a) Upon any adjustment of the Warrant Price and
the number of shares of Common Stock issuable upon exercise of a Warrant, then
and in each such case the Company shall give written notice thereof to the
Warrant Agent, which notice shall state the Warrant Price resulting from such
adjustment and the
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increase or decrease, if any, in the number of shares purchasable at such price
upon the exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Company
shall also mail such notice to the holders of the Warrants at their addresses
appearing in the Warrant register. Failure to give or mail such notice, or any
defect therein, shall not affect the validity of the adjustments.
(b) In case at any time:
(i) the Company shall pay dividends payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends) to the
holders of its Common Stock; or
(ii) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights; or
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale or substantially all of its assets to, another
corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then in any one or more of such cases,
the Company shall give written notice in the manner set forth in Section 11(a)
of the date on which (A) a record shall be taken for such dividend, distribution
or subscription rights, or (B) such reorganization, reclassification,
consolidation, merger, sale, dissolution,
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liquidation or winding up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up as the case may be. Such
notice shall be given at least thirty (30) days prior to the action in question
and not less than thirty (30) days prior to the record date in respect thereof.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any of the matters set forth in this Section 11(b).
(C) The Company shall cause copies of all
financial statements and reports, proxy statements and other documents that are
sent to its stockholders to be sent by first-class mail, postage prepaid, on the
date of mailing to such stockholders, to each registered holder of Warrants at
his address appearing in the warrant register as of the record date for the
determination of the stockholders entitled to such documents.
Section 12. Disposition of Proceeds on Exercise of
Warrants.
(i) The Warrant Agent shall promptly forward to
the Company all monies received by the Warrant Agent for the purchase of shares
of Common Stock through the exercise of such Warrants; provided, however, that
the Warrant Agent may retain
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an amount equal to the Exercise Fee, if any, until the Company has satisfied its
obligations under Section 5(c)(ii).
(ii) The Warrant Agent shall keep copies of this
Agreement available for inspection by holders of Warrants during normal business
hours.
Section 13. Redemption of Warrants. The Warrants are
redeemable by the Company, in whole or in part, on not less than thirty (30)
days' prior written notice at a redemption price of $.10 per Warrant at any time
commencing , 1998; provided that (i) the closing bid quotation price of
the Common Stock on all twenty (20) trading days ending on the third trading day
prior to the day on which the Company gives notice (the "Call Date") of
redemption has been at least 150% of the then effective exercise price of the
Warrants (the "Target Redemption Price") and the Company obtains the written
consent of the Underwriter to such redemption prior to the Call Date and (ii)
the Warrants are currently exercisable. The redemption notice shall be mailed to
the holders of the Warrants at their addresses appearing in the Warrant
register. Holders of the Warrants will have exercise rights until the close of
business on the date fixed for redemption.
Section 14. Merger or Consolidation or Change of Name of
Warrant Agent. Any corporation or company which may succeed to the corporate
trust business of the Warrant Agent by any merger or consolidation or otherwise
shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties
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hereto, provided that such corporation would be eligible to serve as a successor
Warrant Agent under the provisions of Section 16 of this Agreement. In case at
the time such successor to the Warrant Agent shall succeed to the agency created
by this Agreement, any of the Warrants shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrants so
countersigned.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrants shall have been countersigned but
not delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrants so countersigned. In all such cases such Warrants
shall have the full force provided in the Warrants and in the Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Warrants, by their acceptance thereof, shall be bound:
(a) The statements of fact and recitals
contained herein and in the Warrants shall be taken as statements of the
Company, and the Warrant Agent assumes no responsibility for the correctness of
any of the same except such as describe the Warrant Agent or action taken or to
be taken by it. The Warrant Agent assumes no responsibility with
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respect to the distribution of the Warrants except as herein
expressly provided.
(b) The Warrant Agent shall not be responsible
for any failure of the Company to comply with any of the covenants in this
Agreement or in the Warrants to be complied with by the Company.
(c) The Warrant Agent may consult at any time
with counsel satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any holder of any Warrant in respect of any action taken, suffered or omitted by
it hereunder in good faith and in accordance with the opinion or the advice of
such counsel.
(d) The Warrant Agent shall incur no liability
or responsibility to the Company or to any holder of any Warrant for any action
taken in reliance on any notice, resolution, waiver, consent, order, certificate
or other instrument believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant
Agent reasonable compensation for all services rendered by the Warrant Agent in
the execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done
-22-
or omitted by the Warrant Agent in the execution of this Agreement except as a
result of the Warrant Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expenses unless the Company or one or more
registered holders of Warrants shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses which may be incurred, but
this provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without any
such security or indemnity. All rights of action under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the possession
of any of the Warrants or the production thereof at any trial or other
proceeding, and any such action, suit or proceeding instituted by the Warrant
Agent shall be brought in its name as Warrant Agent, and any recovery of
judgment shall be for the ratable benefit of the registered holders of the
Warrants, as their respective rights and interests may appear.
(g) The Warrant Agent and any stockholder,
director, officer, partner or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to or otherwise act as fully and
freely as though it were not the Warrant Agent under this Agreement. Nothing
herein
-23-
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely
as agent and its duties shall be determined solely by the provisions hereof.
(i) The Warrant Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys, agents or employees, and the
Warrant Agent shall not be answerable or accountable for any such attorneys,
agents or employees or for any loss to the Company resulting from such neglect
or misconduct, provided reasonable care had been exercised in the selection and
continued employment thereof.
(j) Any request, direction, election, order or
demand of the Company shall be sufficiently evidenced by an instrument signed in
the name of the Company by its President or a Vice President or its Secretary or
an Assistant Secretary or its Treasurer or an Assistant Treasurer (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
Section 16. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to the
Company notice in writing, and to the holders of the Warrants notice by mailing
such notice to the holders at their addresses appearing on the Warrant register,
of
-24-
such resignation, specifying a date when such resignation shall take effect. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and the like mailing of notice to the holders of the Warrants. If the
Warrant Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Warrant Agent or after the
Company has received such notice from a registered holder of a Warrant (who
shall, with such notice, submit his Warrant for inspection by the Company), then
the registered holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a bank or trust company, in good standing, incorporated under New York
or federal law. After appointment, the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed and the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent all
cancelled Warrants, records and property at the time held by it hereunder, and
execute and deliver any further assurance or conveyance necessary for the
purpose. Failure to file or mail any notice provided for in this Section,
however, or any defect therein,
-25-
shall not affect the validity of the resignation or removal of the Warrant Agent
or the appointment of the successor Warrant Agent, as the case may be.
Section 17. Identity of Transfer Agent. Forthwith upon the
appointment of any transfer agent for the shares of Common Stock or of any
subsequent transfer agent for the shares of Common Stock or other shares of the
Company's Common Stock issuable upon the exercise of the rights of purchase
represented by the Warrants, the Company will file with the Warrant Agent a
statement setting forth the name and address of such transfer agent.
Section 18. Notices. Any notice pursuant to this Agreement to
be given by the Warrant Agent, or by the registered holder of any Warrant to the
Company, shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another is filed in writing by the Company with the
Warrant Agent) as follows:
Frontline Communications Corporation
Xxx Xxxx Xxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxx-Xxxxxxxx,
Chairman
and a copy thereof to:
Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Any notice pursuant to this Agreement to be given by
the Company or by the registered holder of any Warrant to the
-26-
Warrant Agent shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) as follows:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Any notice pursuant to this Agreement to be given by the
Warrant Agent or by the Company to the Underwriter shall be sufficiently given
if sent by first-class mail, postage prepaid, addressed (until another address
if filed in writing with the Warrant agent) as follows:
Rockefeller Securities Group, Inc.
000 Xxxxxxx Xxxxxxxxx Xxxx.
Xxxxxx Xxxx, Xxx Xxxx 00000
Attention: Xxx Xxxxxxx, Chairman
and a copy thereof to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxx X. Xxxxx, Esq.
Section 19. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement 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 and the Warrant Agent may deem necessary or desirable and
which shall not be inconsistent with
-27-
the provisions of the Warrants and which shall not adversely
affect the interest of the holders of Warrants.
Section 20. New York Contract. This Agreement and each Warrant
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and shall be construed in accordance with the laws of New York
applicable to agreements to be performed wholly within New York.
Section 21. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrants any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Warrant Agent
and the registered holders of the Warrants.
Section 22. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company, the Warrant Agent or the
Underwriter shall bind and inure to the benefit of their respective successors
and assigns hereunder.
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IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
FRONTLINE COMMUNICATIONS
CORPORATION
By: ____________________________________
Name:
Title:
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By: ____________________________________
Name:
Title:
ROCKEFELLER SECURITIES GROUP, INC.
By: ____________________________________
Name:
Title:
