EXHIBIT 99.1
WARRANT AGREEMENT
Dated as of November 7, 2006
by and between
INPHONIC, INC.,
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.,
CITICORP NORTH AMERICA, INC.
and
AP INPHONIC HOLDINGS, LLC
WARRANT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS...................................................1
SECTION 2. WARRANT CERTIFICATES..........................................3
SECTION 3. ISSUANCE OF WARRANTS..........................................3
SECTION 4. EXECUTION OF WARRANT CERTIFICATES.............................3
SECTION 5. WARRANTS REGISTER.............................................4
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES.......................4
SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRANTS.......................6
SECTION 8. EXCHANGE OF WARRANTS; TERMS OF EXCHANGE.......................7
SECTION 9. PAYMENT OF TAXES..............................................8
SECTION 10. MUTILATED OR MISSING WARRANT CERTIFICATES.....................8
SECTION 11. RESERVATION OF WARRANT SHARES.................................9
SECTION 12. ADJUSTMENT OF NUMBER OF WARRANT SHARES........................9
(a) Adjustments for Change in Common Stock..................10
(b) Adjustment for Rights Issue.............................10
(c) Superseding Adjustment..................................11
(d) Adjustment for Dividends and Other Distributions........12
(e) Current Market Price....................................13
(f) No Amendments...........................................13
(g) Voluntary Increases.....................................13
(h) When De Minimis Adjustment May Be Deferred..............14
(i) Consolidation, Merger, Reorganization or
Recapitalization of the Company.........................14
(j) Consideration Received..................................14
(k) When Issuance or Payment May Be Deferred................15
(l) Form of Warrants........................................15
(m) Adjustment in Exercise Price............................15
SECTION 13. OBTAINING STOCK EXCHANGE LISTING.............................15
SECTION 14. REGISTRATION RIGHTS..........................................16
(a) S-3 Registration........................................16
(b) Demand Registrations....................................16
(c) Holdback Agreements; Restrictions on Public Sale by
Holders of Warrant Shares...............................19
(d) Piggyback rights........................................19
(e) Other Registration......................................21
(f) Registration Procedures.................................21
(g) Registration Expenses...................................23
(h) Indemnification by the Company..........................24
(i) Postponement or Suspension of Registration..............24
(j) Default Warrant.........................................25
(k) Governmental Filings....................................26
SECTION 15. LIMITATION ON OWNERSHIP OF COMMON STOCK......................26
SECTION 16. FRACTIONAL INTERESTS.........................................26
SECTION 17. NOTICES TO WARRANT HOLDERS; RIGHTS OF
WARRANT HOLDERS..............................................27
SECTION 18. NOTICES......................................................28
SECTION 19. SUPPLEMENTS AND AMENDMENTS...................................29
SECTION 20. SUCCESSORS...................................................29
SECTION 21. EXPIRATION OF WARRANTS; TERMINATION..........................29
SECTION 22. GOVERNING LAW................................................30
SECTION 23. BENEFITS OF THIS AGREEMENT...................................30
SECTION 24. HEADINGS.....................................................30
SECTION 25. SUBMISSION TO JURISDICTION...................................30
SECTION 26. WAIVER OF JURY TRIAL.........................................30
SECTION 27. SERVICE OF PROCESS...........................................31
SECTION 28. COUNTERPARTS.................................................31
EXHIBIT A. FORM OF WARRANT CERTIFICATE.................................A-1
EXHIBIT B. FORM OF TRANSFER............................................B-1
SCHEDULE A ISSUANCE OF WARRANTS .......................................A-1
WARRANT AGREEMENT, dated as of November 7, 2006, by and between
InPhonic, Inc., a Delaware corporation (the "Company"), ▇▇▇▇▇▇▇, Sachs &
Co. , Citicorp North America, Inc. and AP InPhonic Holdings, LLC (each a
"Purchaser", and collectively, the "Purchasers").
RECITALS
--------
WHEREAS, the Company proposes to issue 1,250,000 stock purchase
warrants (the "Warrants"), which in the aggregate entitle the holders
thereof to purchase up to 1,250,000 shares of common stock of the Company
(the "Common Stock") (the Common Stock issuable upon exercise of the
Warrants, the "Warrant Shares"), which constitute approximately 2.72% of
the Common Stock outstanding on the date hereof (on a fully-diluted basis),
after giving effect to the exercise of such Warrants and all options,
warrants, and rights to acquire Common Stock and the conversion of all
restricted stock awards for the maximum number of common shares obtainable
whether or not such convertible securities are then convertible; and
WHEREAS, the parties hereto desire to enter into this Agreement
in order to set forth the terms and conditions 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. DEFINITIONS
As used in this Agreement, the following capitalized terms will
have the respective meanings:
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
"Agreement" and all references thereto means this Warrant
Agreement as it may from time to time be amended, supplemented or modified.
"Applicable Share" shall have the meaning set forth in Section
12(e).
"Board" means the Board of Directors of the Company.
"Business Day" means any day other than Saturday or Sunday and
any day on which the Commission is not open for business.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities
convertible into such equity.
"Closing Date" means November 7, 2006.
"Code" shall have the meaning set forth in Section 8.
"Commission" means the Securities and Exchange Commission.
"Common Stock" shall have the meaning set forth in the Recitals.
"Company" shall have the meaning set forth in the preamble to
this Agreement.
"Company Notice" shall have the meaning set forth in Section
14(b).
"Current Market Price" shall have the meaning set forth in
Section 12(e).
"Default Warrants" shall have the meaning set forth in Section
14(j).
"Demand" shall have the meaning set forth in Section 14(b).
"Demand Registration" shall have the meaning set forth in Section
14(b).
"Exchange Right" shall have the meaning set forth in Section 8.
"Exercise Price" shall have the meaning set forth in Section 7.
"Exercise Rate" shall have the meaning set forth in Section 12.
"Expiration Date" means November 7, 2011 or, if such day is not a
Business Day, the next succeeding Business Day.
"GS" shall have the meaning set forth in Section 15.
"Person" means any individual, corporation, partnership, limited
liability company, association, joint venture, trust, unincorporated
organization, government or any agency or political subdivision thereof or
other entity.
"Piggy-Back Registration" shall have the meaning set forth in
Section 14(d).
"Piggy-Back Registration Rights" shall have the meaning set forth
in Section 14(d).
"Prospectus" means the prospectus or prospectuses included in any
Registration Statement, as amended or supplemented by any prospectus
supplement with respect to the terms of the offering of any portion of the
Warrant Shares covered by such Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus or
prospectuses.
"Purchaser" or "Purchasers" shall have the meaning set forth in
the preamble to this Agreement.
"Register Office" shall have the meaning set forth in Section 6.
"Registration Statement" means any registration statement of the
Company which covers any of the Warrant Shares pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to
such Registration Statement, including post-effective amendments, all
exhibits and all materials incorporated by reference in such Registration
Statement.
"S-3 Registration" shall have the meaning set forth in Section
14(a).
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Company.
"Suspension Notice" shall have the meaning set forth in Section
14(i).
"Transaction" shall have the meaning set forth in Section 12(i).
"Transfer Agent" shall have the meaning set forth in Section 11.
"Warrant holder(s)" or "holders of Warrant certificates" means,
in each case, registered holders of Warrant certificates.
"Warrants" shall have the meaning set forth in the Recitals.
"Warrant Shares" shall have the meaning set forth in the
Recitals.
SECTION 2. WARRANT CERTIFICATES
The Warrant certificates to be issued and delivered pursuant to
this Agreement shall be in registered form only and shall be substantially
in the form set forth in Exhibit A attached hereto.
SECTION 3. ISSUANCE OF WARRANTS
The Company, simultaneously with the Closing Date, shall deliver
to each Purchaser duly executed Warrant certificates registered in the name
of each Purchaser for the purchase of the number of Warrant Shares set
forth opposite the name of such Purchaser on Schedule A to this Agreement.
Warrant certificates shall be dated the date of issuance by the Company.
SECTION 4. EXECUTION OF WARRANT CERTIFICATES
Warrant certificates evidencing Warrants, each Warrant to
purchase initially one share of Common Stock, shall be duly executed, on
the Closing Date, by the Company and delivered to the registered holders of
the Warrants in accordance with the provisions of Section 3. Warrant
certificates shall be signed on behalf of the Company by its Chairman of
the Board, or its President, a Vice President or by its Secretary or an
Assistant Secretary under its corporate seal. 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, President, Vice President,
Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Warrant certificates and, for that purpose, the Company
may adopt and use the facsimile signature of any Person who shall have been
Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant
certificates shall be delivered or disposed of such Person shall have
ceased to hold such office. In case any officer of the Company who shall
have signed any of the Warrant certificates shall cease to be such officer
before such Warrant certificates shall have been delivered or 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. 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 an officer.
SECTION 5. WARRANTS REGISTER
The Company shall number and register the Warrant certificates in
a register as they are issued by the Company. 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 the Company shall not
be affected by any notice to the contrary. The Company shall keep copies of
this Agreement available for inspection by the registered Warrant holders
during normal business hours and upon reasonable notice at the Register
Office.
SECTION 6. REGISTRATION OF TRANSFERS AND EXCHANGES
The Company shall cause to be kept at its principal office (the
"Register Office") a register in which the Company shall provide for the
registration of Warrant certificates and of transfers or exchanges of
Warrant certificates at the Warrant holder's option. The Company shall
promptly register the transfer of any outstanding Warrant certificates, in
the records to be maintained by it for that purpose, upon surrender
thereof. Upon any such registration of transfer, a new Warrant certificate
shall be issued to the transferee(s) and the surrendered Warrant
certificate shall be canceled by the Company. Canceled Warrant certificates
shall thereafter be disposed of in a manner satisfactory to the Company in
accordance with any applicable laws. Whenever any Warrant certificates are
surrendered for exchange, the Company shall execute and deliver the Warrant
certificates that the Warrant holder making the exchange is entitled to
receive. All Warrant certificates issued upon any registration of transfer
or exchange of Warrant certificates in accordance with the provisions of
this Section 6 shall be the valid obligations of the Company, evidencing
the same obligations and entitled to the same benefits under this
Agreement, as the Warrant certificates surrendered for such registration of
transfer or exchange. Every Warrant certificate surrendered for
registration of transfer or exchange shall (if so required by the Company)
be duly endorsed, or be accompanied by a written instrument of transfer in
the form of Exhibit B attached hereto, duly executed by the Warrant holder
or its attorney duly authorized in writing. No service charge will be made
for any registration of transfer or exchange upon surrender of Warrant
certificates or any issuance of Warrant certificates pursuant to Section 3
or this Section 6, but the Company may require payment of a sum sufficient
to cover any stamp or other governmental charge or tax which may be imposed
in connection with any such transfer or exchange before registering any
such transfer or exchange or issuing or delivering any Warrant
certificates. Any Warrant certificate when duly endorsed in blank (with
signature guaranteed) shall be deemed negotiable. The holder of any Warrant
certificate duly endorsed in blank may be treated by the Company and all
other Persons dealing therewith as the absolute owner thereof for any
purpose and as the Person entitled to exercise the rights represented
thereby, or to the transfer thereof on the register of Warrants maintained
by the Company, any notice to the contrary notwithstanding; but until such
transfer on such register, the Company may treat the registered Warrant
holder as the owner for all purposes.
The Warrant holders agree that they shall give five (5) Business
Days prior written notice to the Company of any proposed transfer of the
Warrants or of the Warrant Shares, if such transfer is not made pursuant to
an effective registration statement under the Securities Act prior to (X)
the date which is two years (or such shorter period as may be prescribed by
Rule 144(k) (or any successor provision thereto)) after the later of the
date of original issuance of the Warrants and the last date on which the
Company or any affiliate of the Company was the owner of such Warrants, or
any predecessor thereto, and (Y) such later date, if any, as may be
required by any subsequent change in applicable law, the Warrant holders
shall deliver to the Company:
(1) (a) an opinion of counsel reasonably acceptable to the
Company that the Warrant or Warrant Shares may be transferred without
registration under the Securities Act or (b) in the case of a transfer
(x) to a "qualified institutional buyer" (as defined in Rule 144A
under the Act) in a transaction complying with Rule 144A, (y) to an
institutional "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) under the Act) or (z) outside the United States in
compliance with Rule 904 under the Act, such certificates or letters,
containing such representations and agreements, as are customary for
such transactions and reasonably requested by the Company to
demonstrate compliance with such exemption from the Act;
(2) an agreement by such transferee to the impression of the
restrictive investment legend set forth below on the Warrant or the
Warrant Shares to the extent required; and
(3) an agreement by such transferee to be bound by the
provisions of this Agreement.
In addition to any other legend which may be required by
applicable law, each Warrant certificate representing Warrants and each
certificate representing Warrant Shares issued upon exercise or exchange of
the Warrant shall have endorsed, to the extent appropriate, upon its face
the following words:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO (I) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR
APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION
FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE
SECURITIES LAW, RELATING TO THE DISPOSITION OF
SECURITIES, INCLUDING RULE 144.
SECTION 7. TERMS OF WARRANTS; EXERCISE OF WARRANTS
Subject to the terms of this Agreement, the Warrants may be
exercised at any time after the date hereof and prior to the close of
business on the Expiration Date. Each Warrant, when exercised in accordance
with the terms hereof and upon payment in cash of the exercise price of
$.01 (as adjusted pursuant to Section 12(m)) per share for the Common Stock
(the "Exercise Price") will entitle the holder thereof to acquire from the
Company (and the Company shall issue to such holder of a Warrant) one fully
paid and non-assessable share of the Company's authorized but unissued
Common Stock (subject to adjustment as provided in Section 12).
No cash dividend shall be paid to a holder of Warrant Shares
issuable upon the exercise of Warrants unless such holder was, as of the
record date for the declaration of such dividend, the record holder of such
Warrant Shares.
A Warrant may be exercised upon surrender to the Company at the
Register Office 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, together with payment to the Company of
the Exercise Price for each Warrant Share issuable upon the exercise of
such Warrants.
Subject to the provisions of this Section 7, upon surrender of
the Warrant certificate or certificates, the Company shall issue and
deliver with all reasonable dispatch, to or upon the written order of the
Warrant holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of Warrant Shares
issuable or other securities or property to which such holder is entitled
hereunder upon the exercise of such Warrants, including, at the Company's
option, any cash payable in lieu of fractional interests as provided in
Section 16. 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 Company
may issue fractional shares of Common Stock upon exercise of any Warrants
in accordance with Section 16.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part (provided that
Warrants shall be exercisable in multiples of 5,000 Warrants unless all of
the Warrants evidenced by a particular certificate are being exercised)
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 on or prior to the Expiration Date, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the
Company will duly execute and deliver the required new Warrant certificate
or certificates pursuant to the provisions of Section 4 and this Section 7.
All Warrant certificates surrendered upon exercise of Warrants
shall be canceled by the Company. Such canceled Warrant certificates shall
then be disposed of in a manner satisfactory to the Company and in
accordance with any applicable law. The Company shall account promptly in
writing with respect to Warrants exercised and all monies received for the
purchase of the Warrant Shares through the exercise of such Warrants. In
the event that the Company shall purchase or otherwise acquire Warrants,
the Company may elect to have the Warrants canceled and retired.
SECTION 8. EXCHANGE OF WARRANTS; TERMS OF EXCHANGE
Subject to the terms of this Agreement, the Warrants may be
exchanged in whole or in part (provided that Warrants shall be exchangeable
in multiples of 5,000 Warrants unless all of the Warrants evidenced by a
particular certificate are being exchanged) at any time or from time to
time after the date hereof and prior to the close of business on the
Expiration Date.
The Warrant holder shall have the right to require the Company to
exchange the Warrants, in whole or in part and at any time or times (the
"Exchange Right"), for Warrant Shares by surrendering to the Company the
certificate or certificates evidencing the number of Warrants to be
exchanged, together with the form of notice of exchange on the reverse
thereof duly filled in and signed. Upon exercise of the Exchange Right, the
Company shall deliver to the Warrant holder (without payment of any
Exercise Price by the holder of the Warrants to be exchanged) that number
of Warrant Shares which is equal to the quotient obtained by dividing (x)
the value of the number of Warrants being exchanged at the time the
Warrants are exchanged (determined by subtracting the aggregate Exercise
Price for all such Warrants immediately prior to the exchange of the
Warrants from the aggregate Current Market Price (determined pursuant to
Section 12(e)) of that number of Warrant Shares purchasable upon exercise
of such Warrants immediately prior to the exchange of the Warrants (taking
into account all applicable adjustments pursuant to Section 12) by (y) the
Current Market Price of one share of Common Stock immediately prior to the
exchange of the Warrants.
No cash dividend shall be paid to a holder of Warrant Shares
issuable upon the exchange of Warrants unless such holder was, as of the
record date for the declaration of such dividend, the record holder of such
Warrant Shares.
Subject to the provisions of this Section 8, upon surrender of
the Warrant certificate or certificates, the Company shall issue and
deliver with all reasonable dispatch, to or upon the written order of the
Warrant holder and in such name or names as the Warrant holder may
designate, a certificate or certificates for the number of Warrant Shares
issuable or other securities or property to which such holder is entitled
hereunder upon the exchange of such Warrants, including, at the Company's
option, any cash payable in lieu of fractional interests as provided in
Section 16. 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 pursuant to the Exchange Right. The Company may
issue fractional shares of Common Stock upon exchange of any Warrants in
accordance with Section 16.
The Warrants shall be exchangeable, at the election of the
holders thereof, either in full or from time to time in part (provided that
Warrants shall be exchangeable in multiples of 5,000 Warrants unless all of
the Warrants evidenced by a particular certificate are being exchanged)
and, in the event that a certificate evidencing Warrants is exchanged in
respect of fewer than all of the Warrant Shares issuable on such exchange
at any time on or prior to the Expiration Date, a new certificate
evidencing the remaining Warrant or Warrants will be issued, and the
Company will duly execute and deliver the required new Warrant certificate
or certificates pursuant to the provisions of Section 4 and this Section 8.
All Warrant certificates surrendered upon exchange of Warrants
shall be canceled by the Company. Such canceled Warrant certificates shall
then be disposed of in a manner satisfactory to the Company and in
accordance with any applicable law. The Company shall account promptly in
writing with respect to Warrants exchanged and all monies received for the
acquisition of the Warrant Shares through the exchange of such Warrants.
The Company and the Warrant holder each agree to treat any
exchange made pursuant to the provisions of this Section 8 as a tax-free
recapitalization within the meaning of Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended (the "Code") pursuant to a plan of
reorganization within the meaning of Section 354 of the Code including by
making all required tax filings in a manner that is consistent with such
treatment.
SECTION 9. PAYMENT OF TAXES
The Company will pay all taxes and other governmental charges
attributable to the initial issuance of Warrant Shares upon the exercise or
exchange of Warrants; provided, however, that the Company shall not be
required to pay any such taxes or charges 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 or exchange
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
taxes or charges or shall have established to the satisfaction of the
Company that such taxes or charges have been paid.
SECTION 10. 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 and security
therefor, if requested, also satisfactory (provided that if the Warrant
holder is a Purchaser, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory) to the Company. 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.
SECTION 11. RESERVATION OF WARRANT SHARES
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 Common Stock held in its treasury, that
number of shares of Common Stock sufficient for the purpose of enabling it
to satisfy any obligation to issue Warrant Shares upon the exercise or
exchange of all outstanding Warrants.
The Company covenants that the transfer agent for the Common
Stock (which may be the Company if it is acting as transfer agent) (the
"Transfer Agent") and every subsequent transfer agent for any shares of the
Company's equity issuable upon the exercise or exchange of any Warrants
will be irrevocably authorized and directed by the Company 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 for any shares of the Company's equity issuable upon the
exercise or exchange of the Warrants. The Company will supply such Transfer
Agent with duly executed stock certificates for purposes of honoring all
outstanding Warrants upon exercise or exchange thereof in accordance with
the terms of this Agreement and the Company will provide or otherwise make
available any cash which may be payable as provided in Section 12 or 16.
The Company will furnish such Transfer Agent a copy of all notices of
adjustments and certificates related thereto which are transmitted to each
Warrant holder pursuant to Section 17.
The Company represents, warrants and covenants that all Warrant
Shares which may be issued upon exercise or exchange of Warrants have been
duly authorized and will, upon payment of the Exercise Price or upon the
exercise of the Exchange Right and issuance, be duly and validly issued,
fully paid and nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue
thereof, other than restrictions on transfer pursuant to this Agreement and
applicable federal and state securities laws. The Company represents,
warrants and covenants that the Board has duly, validly and irrevocably
approved of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and its affiliates becoming an "interested
stockholder" (within the meaning) and for purposes of Section 203 of the
Delaware General Corporation Law.
SECTION 12. ADJUSTMENT OF NUMBER OF WARRANT SHARES
Each Warrant will initially be exercisable by the holder thereof
into one share of Common Stock. The number of Warrant Shares that may be
purchased upon the exercise of each Warrant (the "Exercise Rate") will be
subject to adjustment from time to time upon the occurrence of the events
enumerated in this Section 12. For purposes of this Section 12, the Common
Stock shall mean shares now or hereafter authorized of any class of common
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.
(a) Adjustments for Change in Common Stock. If at any time after
the date of this Agreement the Company:
(1) pays a dividend or makes a distribution on its Common
Stock exclusively in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) issues by reclassification of its Common Stock any
Capital Stock of the Company; or
(5) pays a dividend or makes a distribution on its Common
Stock in shares of its Capital Stock other than Common
Stock;
then the Exercise Rate in effect immediately prior to such action shall be
proportionately adjusted upon occurrence of such event so that the holder
of any Warrant thereafter exercised may receive the aggregate number and
kind of shares of equity of the Company which such holder would have owned
immediately following such action if such Warrant had been exercised
immediately prior to such action (or, in the case of a dividend or
distribution of Common Stock, immediately prior to the record date
therefor). An adjustment made pursuant to this Section 12(a) shall become
effective immediately after the distribution date, retroactive to the
record date therefor in the case of a dividend or distribution in shares of
Common Stock or other shares of its equity, and shall become effective
immediately after the effective date in the case of a subdivision,
combination or reclassification. If upon exercise of a Warrant after an
adjustment to the Exercise Rate pursuant to clauses (4) or (5) of this
Section 12(a), the holder of such Warrant may receive shares of two or more
classes or series of equity of the Company, the exercise rights and the
Exercise Rate of each class of equity shall thereafter be subject to
further adjustment on terms comparable to those applicable to the Common
Stock in this Section 12. The adjustment pursuant to this Section 12(a)
shall be made successively each time that any event listed in this Section
12(a) above shall occur.
(b) Adjustment for Rights Issue. In case the Company shall issue
to all (or substantially all) holders of Common Stock (other than a
distribution covered by paragraph (a) of this Section 12), or shall make a
dividend or other distribution to all (or substantially all) holders of
Common Stock, consisting exclusively of (i) rights, options or warrants
entitling the holders thereof to subscribe for or purchase Common Stock
(provided, however, that no adjustment shall be made under this Section
12(b) upon the exercise of such rights, options or warrants) or (ii)
securities convertible into or exchangeable for Common Stock (including,
without limitation, any rights issuance concurrent with the issuance of
Warrants) (provided, however, that no adjustment shall be made under this
Section 12(b) upon the conversion or exchange of such securities (other
than issuances specified in (i) or (ii) which are made as the result of
anti-dilution adjustments set forth in such securities)) at a price per
share (determined in the case of such rights, options, warrants or
convertible or exchangeable securities, by dividing (x) the total
consideration payable to the Company upon exercise, conversion or exchange
of such rights, options, warrants or convertible or exchangeable
securities, by (y) the total number of shares of such class or series of
Common Stock covered by such rights, options, warrants or convertible or
exchangeable securities) less than the Current Market Price (as determined
in accordance with paragraph (e) of this Section 12) on the date fixed for
the determination of shareholders entitled to receive such rights, options,
or warrants or convertible or exchangeable securities, the number of
Warrant Shares for which each Warrant may be exercised shall be determined
(and the Exercise Rate shall be appropriately adjusted) by multiplying the
number of Warrant Shares issuable upon exercise of such Warrant immediately
prior to the close of business on the date fixed for the determination of
shareholders entitled to receive such rights, options or warrants, or
convertible or exchangeable securities, by a fraction (not less than one)
the numerator of which shall be the number of fully diluted shares of
Common Stock outstanding immediately after giving effect to such dividend
or other distribution (and assuming that such rights, options, warrants or
convertible or exchangeable securities had been fully exercised or
converted, as the case may be) and the denominator of which shall be the
number of fully diluted shares of Common Stock outstanding at the close of
business on the date fixed for the determination of shareholders entitled
to receive such rights, options, or warrants or convertible or exchangeable
securities plus the number of shares of Common Stock which the aggregate
consideration (as determined in good faith by the Board) that would be
received by the Company for the additional shares of Common Stock to be
issued, purchased or subscribed for upon exercise of such rights, options
or warrants or upon conversion or exchange of such convertible or
exchangeable securities would purchase at the Current Market Price (as
determined in accordance with paragraph (e) of this Section 12) on the date
fixed for the determination of shareholders entitled to receive such
rights, options or warrants, or convertible or exchangeable securities. For
the purposes of this paragraph (b), the number of shares of Common Stock at
any time outstanding shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of Common Stock. This paragraph
(b) does not apply to the issuance of Common Stock upon the exercise of any
such rights, options or warrants or the conversion or exchange of any such
convertible or exchangeable securities for consideration per share of
Common Stock less than the Current Market Price, so long as the Warrant
holders participate in such offering on the same basis as other
stockholders of the Company (as if such Warrant holders had exercised their
Warrants immediately prior to the record date relating to such offering,
but without requiring any such exercise). The adjustment pursuant to this
Section 12(b) shall be made successively each time that any event listed in
this Section 12(b) above shall occur and shall be effective immediately
after the record date for the determination of stockholders entitled to
receive such rights, options, warrants or convertible or exchangeable
securities.
(c) Superseding Adjustment. If, at any time (x) after any
adjustment in the number of shares issuable upon exercise of the Warrants
shall have been made pursuant to Section 12(b) on the basis of the issuance
of rights, options or warrants entitling the holders thereof to subscribe
for or purchase Common Stock or securities convertible into or exchangeable
for Common Stock, or (y) after new adjustments in the number of shares
issuable upon exercise of the Warrants shall have been made pursuant to
this Section 12(c),
(1) the right of conversion, exercise or exchange in such
rights, options or warrants, or convertible or exchangeable
securities shall expire, and the right of conversion,
exercise or exchange in respect of any or all of such
rights, options or warrants, or convertible or exchangeable
securities shall not have been exercised, and/or
(2) the consideration per share for which shares of Common
Stock are issuable pursuant to the terms of such rights,
options or warrants, or convertible or exchangeable
securities shall be increased or decreased by virtue of
provisions therein or by virtue of the conversion rate or
exchange rate of such security being changed upon the
arrival of a specified date or the happening of a specified
event or by agreement between the Company and the holders of
such securities,
such previous adjustment shall be rescinded and annulled. Thereupon, a
recomputation shall be made of the effect of such rights, options or
warrants, or convertible or exchangeable securities on the basis of
(3) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise of such right of conversion, exercise or
exchange as having been issued on the date or dates of such
exercise and for the consideration actually received or
receivable therefor, and treating the rights, options or
warrants, or convertible or exchangeable securities which
have expired and shall not have been exercised as if such
securities had not been issued, and
(4) with respect to securities as to which the consideration
per share of Common Stock has been changed, treating any
such rights, options or warrants or convertible or
exchangeable securities which then remain outstanding as
having been granted or issued immediately after the time of
such increase or decrease for the consideration per share
for which shares of Common Stock are issuable under such
rights, options or warrants or convertible or exchangeable
securities, and
in each such case, a new adjustment in the number of shares issuable upon
exercise of the Warrants shall be made, which new adjustment shall
supersede the previous adjustment so rescinded and annulled. No adjustment
in the number of shares issuable upon exercise of the Warrants pursuant to
this Section 12(c) shall change the number of or otherwise affect any
shares of Common Stock issued prior to such adjustment upon exercise of the
Warrants.
(d) Adjustment for Dividends and Other Distributions. In case the
Company shall make a dividend or other distribution on the Common Stock
(other than a distribution covered by any of paragraphs (a), or (b) of this
Section 12), each Warrant holder shall be entitled to receive (and the
Company shall pay and/or distribute) the cash, stock or other securities or
property to which the Warrant holder would have been entitled by way of
dividends and distributions if the Warrant holder had exercised its
Warrant(s) immediately prior to the declaration of such dividend or the
making of such distribution (or, if earlier, the record date therefor) so
as to be entitled thereto. Except as provided in this Section 12, no
adjustment as to dividends will be made upon the exercise of the Warrants
pursuant to Section 7 or exchange of the Warrants pursuant to Section 8.
(e) Current Market Price. For the purpose of any computation
under Section 8 or this Section 12, the current market price (the "Current
Market Price") per share of Common Stock of the Company or any other
security (the "Applicable Share") on any date shall be deemed to be the
average of the daily closing prices of such Applicable Share on the
principal national securities exchange on which the Applicable Shares are
listed or admitted to trading or, if the Applicable Shares are not so
listed, the average daily closing bid prices of such Applicable Shares on
the Nasdaq National Market System if the Applicable Shares are quoted
thereon or, if not quoted on the Nasdaq National Market System, the average
of the closing bid and asked prices in the over-the-counter market as
furnished by any New York Stock Exchange member firm selected from time to
time by the Company for that purpose, in any such case, for the twenty (20)
consecutive trading days ending on the day before the date in question. If,
on any date on which computation of the Current Market Price is to be made
hereunder, the Applicable Shares are not so listed or quoted on a national
securities exchange or the Nasdaq National Market System or the
over-the-counter market (or if the market price is not determinable for at
least ten (10) Business Days in such period), the Current Market Price
(except as otherwise provided herein) shall be determined by the Board in
good faith.
(f) No Amendments. 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 this Agreement, 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 Warrant holders thereof against dilution
or other impairment. Without limiting the generality of the foregoing, the
Company (i) will take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and non
assessable Common Stock on the exercise of the Warrants from time to time
outstanding and (ii) will not take any action which results in any
adjustment of the number of Warrant Shares if the total number of shares of
Common Stock 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 issuance upon such exercise.
(g) Voluntary Increases. The Company may, but shall not be
obligated to, make such increases in the number of Warrant Shares, in
addition to those required by paragraphs (a) through (c) of this Section
12, as it considers to be advisable in order that any event treated for
United States federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients, or if that is not possible,
to diminish any income taxes that are otherwise payable because of such
event; provided that no such adjustment shall be made without the consent
of the holders of the Warrants if such adjustment would result in the
increase of income tax liabilities of such holders.
(h) When De Minimis Adjustment May Be Deferred. No adjustment in
the number of Warrant Shares shall be required unless such adjustment (plus
any other adjustments not previously made by reason of this paragraph (h))
would require an increase or decrease of at least 1.0% in the number of
Warrant Shares; provided, however, that any adjustments which by reason of
this paragraph (h) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(i) Consolidation, Merger, Reorganization or Recapitalization of
the Company. In case at any time the Company shall be a party to any
transaction (including, without limitation, a merger, consolidation, sale
of all or substantially all of the Company's assets, liquidation or
recapitalization of the Common Stock, not subject to adjustment under any
of the paragraphs (a) through (g) of this Section 12) in which the
previously outstanding Common Stock shall be converted or changed into or
exchanged for different securities of the Company or Common Stock or other
securities of another corporation or interests in a non-corporate entity or
other property (including cash) or any combination of the foregoing (each
such transaction being herein called a "Transaction"), then, as a condition
of the consummation of the Transaction, lawful and adequate provision shall
be made so that each holder of a Warrant, upon the exercise thereof at any
time on or after the consummation of the Transaction, shall be entitled to
receive, and such Warrant shall thereafter represent the right to receive,
in lieu of the Common Stock issuable upon such conversion prior to such
consummation, the securities, cash or other property to which such holder
would have been entitled upon consummation of the Transaction if such
holder had exercised such Warrant immediately prior thereto (subject to
adjustments from and after the consummation date as nearly equivalent as
possible to the adjustments provided for in this Section 12). The Company
will not effect any Transaction unless prior to the consummation thereof
each corporation or entity (other than the Company) which may be required
to deliver any securities or other property upon the exercise of the
Warrants as provided herein shall assume in a written agreement the
obligation to deliver to such holder such securities or other property as
in accordance with the foregoing provisions such holder may be entitled to
receive and agreeing and confirming that all of the outstanding Warrants
and this Agreement shall continue in full force and effect, enforceable
against the Company and such corporation or entity in accordance with the
terms thereof and hereof. The foregoing provisions of this Section 12(i)
shall similarly apply to successive mergers, consolidations, sales of
assets, liquidations and recapitalizations.
(j) Consideration Received. For purposes of any computation
respecting consideration received pursuant to this Section 12, the
following shall apply:
(1) 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;
(2) 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); and
(3) 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 (1) and (2) of
this paragraph (j)).
(k) When Issuance or Payment May Be Deferred. In any case in
which this Section 12 shall require that an adjustment in the Exercise Rate
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 equity of the Company, if any, issuable upon such exercise over
and above the Warrant Shares and other equity of the Company, if any,
issuable upon such exercise on the basis of the Exercise Rate and (ii)
paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 16; provided, however, that the Company shall deliver
to such holder a due ▇▇▇▇ or other appropriate instrument evidencing such
holder's right to receive such additional Warrant Shares, other equity and
cash upon the occurrence of the event requiring such adjustment.
(l) Form of Warrants. Irrespective of any adjustments in the
Exercise Price or the Exercise Rate or kind of shares or other assets
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 or other assets as are stated in the Warrants initially
issuable pursuant to this Agreement. The Company, however, may at any time
in its sole discretion make any change in the form of Warrant certificate
that it may deem appropriate to give effect to such adjustments and that
does not affect the substance of the Warrant certificate, and any Warrant
certificate thereafter issued or countersigned, whether in exchange or
substitution for an outstanding Warrant certificate or otherwise, may be in
the form as so changed.
(m) Adjustment in Exercise Price. Upon each adjustment in the
number of Warrant Shares for which a Warrant is exercisable pursuant to
this Section 12, the Exercise Price for such Warrant shall be adjusted to
equal an amount per share of Common Stock equal to the Exercise Price
before such adjustment multiplied by a fraction, of which the numerator is
the number of Warrant Shares for which a Warrant is exercisable immediately
before giving effect to such adjustment and the denominator of which is the
number of Warrant Shares for which a Warrant is exercisable immediately
after giving effect to such adjustment; provided, however, that in no event
shall the Exercise Price be reduced below the par value of the Common Stock
for which the Warrant is exercisable; provided, further, that if this
paragraph (m) shall have any adverse impact on the intended benefit of the
Warrants, the Company shall cooperate to maintain the value of such
intended benefit of the Warrants, including but not limited to,
establishing no par value Common Stock.
SECTION 13. OBTAINING STOCK EXCHANGE LISTING
The Company will use its commercially reasonable best efforts to
cause the Warrant Shares, immediately upon their issuance upon the exercise
of Warrants, to be listed on any domestic national securities exchange or
quotation system upon which shares of Common Stock or other securities
constituting Warrant Shares are listed or quoted at the time of such
exercise.
SECTION 14. REGISTRATION RIGHTS
(a) S-3 Registration. If at any time that the Company is eligible
to use Form S-3 or any successor thereto, the holders of Warrants or
Warrant Shares holding not less than 25% of the Warrant Shares (including
Warrants exercisable therefor) request that the Company file a Registration
Statement on Form S-3 or any successor thereto for a public offering of all
or any portion of the Warrant Shares held by such holders, then the Company
shall use its commercially reasonable best efforts to register, as soon as
reasonably practicable but in any event within forty-five (45) calendar
days of such request, under the Act on Form S-3 or any successor thereto
(an "S-3 Registration"), for public sale in accordance with the method of
disposition specified in such notice, the number of Warrant Shares
specified in such notice (or otherwise proposed to be offered in such
registration); provided, however, that (i) no more than two such S-3
Registrations shall be required in any 12-month period, (ii) the Company
shall have no obligation to register such Warrant Shares pursuant to this
Section 14(a) if (based on the Current Market Price) the number of Warrant
Shares specified in such notice would not yield gross proceeds to the
selling holders of at least $2,000,000 (based on the Current Market Price),
and (iii) the Company shall not be required to cause an S-3 Registration to
become effective prior to April 30, 2007. Whenever the Company is required
by this Section 14 to use its commercially reasonable best efforts to
effect the registration of Warrant Shares, each of the procedures and
requirements of Sections 14(b), 14(c), 14(f) and 14(i) (including but not
limited to the requirement that the Company notify all holders from whom
notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration. There is no
limitation on the number of registrations pursuant to this Section 14(a)
that the Company is obligated to effect.
(b) Demand Registrations.
(1) At any time the Company is not eligible to use Form S-3
or any successor thereto, the holders of Warrants or Warrant
Shares holding not less than 25% of the Warrant Shares
(including Warrants exercisable therefor) not (i)
theretofore effectively registered under the Act and
disposed of in accordance with the Registration Statement
covering any such Warrants and Warrant Shares or (ii) then
saleable by the holder thereof pursuant to Rule 144(k) under
the Act shall be entitled to make up to four (4) written
requests (each, a "Demand") of the Company to register all
or part of their Warrant Shares (including Warrant Shares
issuable upon exercise of their Warrants), under the Act (a
"Demand Registration") on a Registration Statement on Form
S-1 or any successor thereof for a public offering of all or
any portion of the Warrant Shares held by such holder(s) for
sale in accordance with the method of disposition specified
in such notice, provided, however, that (i) no Demand may be
made until at least one hundred eighty (180) calendar days
after the effective date of a previous S-3 Registration or a
previous registration under which the initiating holders had
Piggy-Back Registration Rights and (ii) the Company shall
have no obligation to register such Warrant Shares pursuant
to this Section 14(b) if (based on the Current Market Price)
the number of Warrant Shares specified in such notice (or
otherwise proposed to be offered in such registration) would
not yield gross proceeds to the selling holders of at least
$2,000,000 (based on the Current Market Price).
Within ten (10) calendar days after receipt of such Demand,
the Company will serve written notice thereof (the "Company
Notice") to all other holders of Warrants and Warrant
Shares. Subject to the provisions of the next succeeding
paragraph, the Company shall include in such Demand
Registration all Warrant Shares with respect to which the
Company receives written requests for inclusion within
fifteen (15) calendar days after the delivery of the Company
Notice.
If any of the Warrant Shares registered pursuant to a Demand
Registration are to be sold in one or more firm commitment
underwritten offerings, the Company will also provide
written notice to holders of securities of the Company other
than the holders of the Warrants and the Warrant Shares, if
any, who have piggyback registration rights with respect
thereto and will permit all such holders who request to be
included in the Demand Registration to include any or all
securities of the Company held by such holders in such
Demand Registration on the same terms and conditions as the
Warrant Shares. Notwithstanding the foregoing, if the
managing underwriter or underwriters of the offering to
which such Demand Registration relates advises the Company
that the total amount of Warrant Shares and securities that
such holders of securities of the Company (other than
holders of the Warrant Shares) intend to include in such
Demand Registration is in the aggregate such as to
materially and adversely affect the success of such offering
and/or exceeds the number of securities which can be sold in
such offering, then (i) first, the amount of securities to
be offered for the account of the holders of such other
securities of the Company will be reduced, to zero if
necessary (pro rata among such holders on the basis of the
amount of such other securities to be included therein by
each such holder), and (ii) second, the number of Warrant
Shares included in such Demand Registration will, if
necessary, be reduced and there will be included in such
firm commitment underwritten offering only the number of
Warrant Shares that, in the opinion of such managing
underwriter or underwriters, can be sold without materially
and adversely affecting the success of such offering and/or
exceeding the number of securities which can be sold in such
offering, allocated pro rata among the holders of the
Warrants and Warrant Shares on the basis of the number of
Warrants or Warrant Shares held by each such holder.
(2) Selection of Underwriter. Any Demand Registration
hereunder shall be on any appropriate form under the Act
permitting registration of such Warrant Shares for resale by
the holders thereof in the manner or manners designated by
them (including, without limitation, pursuant to one or more
underwritten offerings). The determination of whether the
offering will involve an underwritten offering, and the
selection of investment bankers and managers, if any, and
counsel for the holders, shall be made by a majority of the
holders making such Demand; provided, however, that the
selection of investment bankers and managers, if any, and
such counsel so selected shall be reasonably satisfactory to
the Company. If requested by such holders, the Company shall
enter into an underwriting or purchase agreement with an
investment banking firm in connection with a Demand
Registration containing representations, warranties,
indemnities and agreements then customarily included in
underwriting or purchase agreements with respect to
secondary distributions of securities.
(3) The Company shall file a Registration Statement with
respect to each Demand Registration as promptly as
practicable following receipt of each Demand and use its
commercially reasonable best efforts to cause the same to be
declared effective as promptly as practicable following such
Demand, but not later than seventy five (75) calendar days
after such Demand. Unless all of the Warrant Shares covered
by the registration statement have earlier been sold or
withdrawn from sale, the Company shall keep any such
Registration Statement effective for a period of at lease
one hundred and eighty (180) calendar days after such
registration statement is first declared effective plus a
period equal to (y) any period during which the holders are
prohibited from making sales because of any stop order,
injunction or other order or requirement of the Commission
or any other governmental agency or court plus (z) any
period during which the right of holders to make sales
pursuant to a Demand Registration is suspended pursuant to
paragraph (i) of this Section 14 (the "Demand Period").
(4) For purposes of determining whether the holders have
made a Demand pursuant to Section 14(a), a registration will
not count as a Demand Registration unless it is declared
effective by the Commission and remains effective until the
earlier of such time as all of the Warrant Shares included
in such registration have been sold or disposed of or
withdrawn from sale by the holders or the expiration of the
Demand Period. In addition, a request for registration shall
not be deemed to constitute a Demand Registration if: (i)
the conditions to closing specified in the purchase
agreement or underwriting agreement entered into in
connection with such Demand Registration are not satisfied
other than by reason of some act or omission by the holders;
(ii) the Company voluntarily takes any action (other than as
permitted under paragraph (f) of this Section 14) that would
result in the holders not being able to sell such Warrant
Shares covered thereby during the Demand Period; (iii) after
it has become effective, such Demand Registration becomes
subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency
or court and such order, injunction or requirement is not
withdrawn or lifted within thirty (30) days, and such Demand
Registration has not otherwise remained effective for the
Demand Period (including effective periods both before and
after the order, injunction or requirement is made or
imposed); or (iv) such Demand Registration does not involve
an underwritten offering and the holders shall have notified
the Company in writing within ten (10) days following any
delay or suspension of a Demand Registration imposed under
paragraph (f) of this Section 14 by the Company that such
holders have determined not to proceed; provided, however,
that prior to such a delay under this clause (iv), the
holders have not sold all of the Warrant Shares included in
such Demand Registration.
(5) The Company further agrees to supplement or amend the
registration statement with respect to such Demand
Registration, as required by the registration form utilized
by the Company or by the Act or as reasonably requested
(which request shall result in the filing of a supplement or
amendment subject to approval thereof by the Company, which
approval shall not be unreasonably withheld) by the holders
or any managing underwriter of Warrant Shares to which such
Demand Registration relates, and the Company agrees to
furnish to the holders (and any managing underwriter)
copies, in substantially the form proposed to be used and/or
filed, of any such supplement or amendment prior to its
being used and/or filed with the Commission.
(c) Holdback Agreements; Restrictions on Public Sale by Holders
of Warrant Shares. Each holder of Warrant Shares participating in a
registered offering of such Warrant Shares pursuant to this Agreement and
the Company agrees, if timely requested in writing by the managing
underwriter or underwriters in an underwritten offering, not to effect any
public sale or distribution of any Warrant Shares, including a sale
pursuant to Rule 144 (except as part of such underwritten offering), during
the period beginning ten (10) calendar days prior to, and ending one
hundred and eighty (180) calendar days after, the closing date of the
underwritten offering made pursuant to such Registration Statement or such
shorter period as the managing underwriter shall agree to with respect to
any other stockholder of the Company. Such agreement shall be in writing in
form reasonably satisfactory to the Company and the managing underwriter.
(d) Piggyback rights. If at any time the Company proposes to file
a Registration Statement with the Commission respecting an underwritten
offering of any shares of any class of its equity securities for its own
account or for the account of a holder of securities of the Company, the
Company shall give written notice to all the holders of Warrants or Warrant
Shares at least ten (10) calendar days prior to the initial filing of the
Registration Statement relating to such offering (the "Piggy-Back
Registration"). Each holder shall have the right, within five (5) Business
Days after delivery of such notice, to request in writing that the Company
include all or a portion of the Warrant Shares issued or issuable upon
exercise of such holder's Warrants in such Registration Statement
("Piggy-Back Registration Rights"). The Company may postpone or withdraw
the filing or the effectiveness of a Piggyback Registration at any time in
its sole discretion. The Company shall include in such Underwritten
Offering all of the Warrant Shares that a holder has requested be included.
The underwriting agreement for such Underwritten Offering shall provide
that each requesting holder shall have the right to sell its Warrant Shares
to the underwriters and that the underwriters shall purchase the Warrant
Shares at the price paid by the underwriters for the Common Shares sold by
the Company and/or selling stockholders, as the case may be.
Notwithstanding the foregoing, if the managing underwriter or underwriters of
such offering advises the Company to the effect that the total amount of
securities which such holders, the Company and any other Persons having
rights to participate in such registration propose to include in such
offering is such as to materially and adversely affect the success of such
offering and/or exceed the number of securities which can be sold in such
offering, then:
(1) if such registration is a primary registration on
behalf of the Company, the Company will include therein: (x)
first, up to the full amount of securities to be included
therein for the account of the Company that, in the opinion
of such managing underwriter or underwriters, can be sold,
(y) second, up to the full amount of shares held by the
Holders (as such term is defined in the Seventh Amended and
Restated Investor Rights Agreement dated as of June 12, 2003
by and among InPhonic, Inc. and the investors thereto) that,
in the opinion of such managing underwriter or underwriters,
can be sold without adversely affecting the success of the
offering (allocated pro rata in proportion to the number of
shares held by such holders to the extent necessary to
reduce the total amount of securities to be included in such
offering to the amount recommended by such managing
underwriter or underwriters) and (z) third, up to the full
amount of the Warrant Shares which such holders propose to
include in such registration that, in the opinion of such
managing underwriter or underwriters, can be sold without
adversely affecting the success of the offering (allocated
pro rata in proportion to the number of Warrant Shares held
by such holders to the extent necessary to reduce the total
amount of securities to be included in such offering to the
amount recommended by such managing underwriter or
underwriters); and
(2) if such registration is an underwritten secondary
registration on behalf of holders of securities of the
Company other than the Warrant Shares, the Company will
include therein: (w) first, up to the full number of
securities of such Persons exercising "demand" registration
rights that, in the opinion of such managing underwriter or
underwriters, can be sold, (x) second, up to the full amount
of shares held by the Holders (as such term is defined in
the Seventh Amended and Restated Investor Rights agreement
dated as of June 12, 2003 by and between InPhonic, Inc. and
the investors thereto) that, in the opinion of such managing
underwriter or underwriters, can be sold without adversely
affecting the success of the offering (allocated pro rata in
proportion to the number of shares held by such holders to
the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such managing underwriter or underwriters),
(y) third, up to the full amount of the Warrant Shares which
such holders propose to include in such registration that,
in the opinion of such managing underwriter or underwriters,
can be sold (allocated pro rata in proportion to the number
of Warrant Shares held by such holders to the extent
necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such
managing underwriter or underwriters) and (z) fourth, all
other securities proposed to be sold by any other Persons
that, in the opinion of such managing underwriter or
underwriters can be sold without adversely affecting the
success of the offering (allocated pro rata among such
persons in proportion to the number of securities held by
such persons, or as the Company may otherwise determine).
(3) If any holder advises the book-runner(s) of any
underwritten offering that the Warrant Shares covered by the
Registration Statement cannot be sold in such offering
within a price range acceptable to such holder, then such
holder shall have the right to exclude its Warrant Shares
from registration.
If any Piggy-Back Registration is an underwritten primary offering, the
Company shall have the right to select the managing underwriter or
underwriters to administer any such offering. The Company hereby represents
and warrants that the Company is not a party to any agreement or arrangement
on the date hereof providing "piggyback" registration rights with respect to
shares of the Company that are required by such agreement to be included in
any registered offering.
(e) Other Registration. If the Company has previously filed a
Registration Statement with respect to the Warrant Shares pursuant to
Section 14(a), Section 14(b) or Section 14(d), and if such registration has
not been withdrawn or abandoned, the Company shall not be obligated to
cause to become effective any other registration of any holder or holders
of such securities, until a period of at least one hundred and eighty (180)
calendar days from the effective date of such previous registration.
(f) Registration Procedures.
(1) No holder of Warrant Shares may participate in any
registration which is underwritten unless such holder (i)
agrees to sell such person's securities on the basis
provided in any customary underwriting arrangements approved
by the Company to the extent the Company is entitled
hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents
required under the terms of such customary underwriting
arrangements; provided, that no such holder shall be
required to make any representations or warranties to or
agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such
holder and its ownership of the securities being registered
on its behalf and its intended method of distribution and
any other representation required by law; provided, further
that, the liability of each such holder shall not be greater
in amount than the dollar amount of the proceeds (net of any
selling expenses) received by such holder from the sale of
the Warrant Shares giving rise to such indemnification.
(2) The Company shall not be obligated to cause any special
audit to be undertaken in connection with any registration
pursuant to this Agreement unless such audit is required by
the Commission or requested by the underwriters in
connection with an underwritten offering with respect to
such registration.
(3) The Company shall (i) furnish without charge to each
selling holder of Warrant Shares named in any Registration
Statement, before filing with the Commission, such numbers
of copies of any Registration Statement or any prospectus
included therein or any amendments or supplements to any
such Registration Statement or prospectus (including all
documents incorporated by reference after the initial filing
of such Registration Statement) as such selling holders of
Warrant Shares may reasonably request in order to facilitate
the public sale or other disposition of the Warrant Shares
covered by such Registration Statement, and (ii) provide
each such selling holder of Warrant Shares the opportunity
to object to any information pertaining to such selling
holder of Warrant Shares and its plan of distribution that
is contained therein and make the corrections reasonably
requested by such selling holder of Warrant Shares with
respect to such information prior to filing such
Registration Statement or any prospectus included therein or
any amendments or supplements thereto.
(4) The Company shall (i) obtain an opinion of counsel to
the Company and updates thereof, addressed to each selling
holder of the Warrant Shares covered by any Registration
Statements and the underwriters, if any, participating in
the underwritten offering of such Warrant Shares, covering
the matters (including, without limitation, 10b-5 matters)
customarily covered in opinions of counsel to the Company
requested in underwritten offerings of equity securities
similar to the Warrant Shares, as may be appropriate in the
circumstances; and (ii) obtain "cold comfort" letters and
updates thereof from the registered independent public
accounting firm of the Company, addressed to such selling
holder of the Warrant Shares covered by any Registration
Statement and the underwriters, if any, participating in the
underwritten offering of such Warrant Shares, such letters
to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection
with underwritten offerings of equity securities similar to
the Warrant Shares, as may be appropriate in the
circumstances.
(5) The Company shall make available for inspection by any
selling holder of the Warrant Shares covered by any
Registration Statement, or any underwriter, if any,
participating in the underwritten offering of the Warrant
Shares, and any attorney, accountant or other agent retained
by any such holder or underwriter (collectively, the
"Inspectors"), upon written request, at the offices where
normally kept, during reasonable business hours, all
pertinent financial and other records and pertinent
corporate documents of the Company and its subsidiaries
(collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the officers,
directors and employees of the Company and its subsidiaries
to supply all information reasonably requested in writing by
any such Inspector in connection with such due diligence
responsibilities. Each Inspector shall agree that it will
keep the Records confidential and not disclose any of the
Records unless (i) the release of such Records is ordered
pursuant to a subpoena or other order from a court of
competent jurisdiction, (ii) the information in such Records
is public or has been made generally available to the public
other than as a result of a disclosure or failure to
safeguard by such Inspector or (iii) disclosure of such
information is, in the reasonable written opinion of counsel
for any Inspector, necessary in connection with any action,
claim, suit or proceeding, directly or indirectly, involving
or potentially involving such Inspector and arising out of,
based upon, related to, or involving this Agreement, or any
transaction contemplated hereby or arising hereunder.
(6) Notwithstanding anything to the contrary elsewhere in
this Agreement or the Warrants, holders of Warrants shall be
entitled to specify that their exercise of Warrants pursuant
to Section 7 or their exchange of Warrants pursuant to
Section 8 may be conditioned upon the closing of the
offering that is the subject of a Registration Statement
pursuant to this Section 14.
(g) Registration Expenses. The costs and expenses (other than
underwriting discount or commission, fees and disbursements of holders'
counsel and such fees for printing, registration and other fees as state
securities officials may require any holder pay) of all registrations and
qualifications under the Act, and of all other actions that the Company is
required to take or effect, shall be paid by the Company (including,
without limitation, all registration and filing fees, printing expenses,
costs of special audits incident to or required by any such registration
(subject to paragraph (g) of this Section 14), and fees and disbursements
of counsel for the Company).
(h) Indemnification by the Company. In the event of any
registration (whether or not declared effective by the Commission) under
the Act of any Warrant Shares, the Company hereby agrees to indemnify and
hold harmless all past or present holders of Warrants or Warrant Shares and
their affiliates and its and their respective directors, officers,
employees, representatives and agents (collectively, the "Indemnitees")
against any losses, claims, damages or liabilities, joint or several, to
which any Indemnitee may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained, on the effective date
thereof, in any Registration Statement under which Warrant Shares were
registered under the Act, or in any preliminary prospectus or final
prospectus contained therein or any amendment or supplement thereto, (ii)
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading or (iii) any failure or alleged failure of the Company to comply
with any applicable statute, rule or regulation in connection with the
Registration Statement or the offering, and will reimburse any Indemnitee
for any legal or other expenses reasonably incurred by any such Indemnitee
in connection with investigating or defending any such loss, claim, damage,
liability or proceeding; provided that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration
Statement, or in said preliminary or final prospectus or said amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Person for use in the preparation thereof.
(i) Postponement or Suspension of Registration. Subject to the
provisions of this paragraph, the Company shall be entitled to postpone,
for a reasonable period of time, the filing or effectiveness of, or suspend
the rights of any holders to make sales pursuant to, any Registration
Statement otherwise required to be prepared, filed and made and kept
effective by it pursuant to Section 14(a), Section 14(b) or Section 14(d)
hereunder, in the event that, and for a period of time not to exceed an
aggregate of ninety (90) days in any twelve-month period, (i) the Board
determines in good faith that the premature disclosure of a material event
at such time would be detrimental to the business, operations or prospects
of the Company or any Subsidiary and the stockholders of the Company, or
(ii) the disclosure otherwise relates to a material business transaction
which has not been publicly disclosed and the Board determines in good
faith that any such disclosure would jeopardize the success of such
transaction, (iii) a holder is holding Warrant Shares covered by a
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Act, upon delivery of a notice to the
holders (a "Suspension Notice") of the occurrence of any event as a result
of which the prospectus included in such Registration Statement, as then in
effect, could reasonably be expected to include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances then existing; provided, that the Company shall
promptly make corrections with respect to such untrue statement or to
include such material fact required to be stated therein or necessary to
make such statements not misleading in light of the circumstances then
existing, or (iv) during the period starting with the date thirty (30) days
prior to the Company's estimated date of filing of a registration statement
pertaining to Common Stock of the Company and ending ninety (90) days
following such estimated date if (A) the Company received such holder's
request for registration after the Company had given written notice, made
in good faith, to the holders entitled to registration pursuant to this
Section 14 that the Company was commencing to prepare a Company-initiated
registration statement, (B) the Company is using its commercially
reasonable best efforts to achieve such effectiveness promptly following
such period and (C) the holders are entitled to participate in such
registration with respect to all of the Warrant Shares held by such holder.
If the Company shall postpone the filing of a Registration Statement as set
forth above, it shall, as promptly as possible, deliver a certificate
signed by an executive officer of the Company to the selling holders as to
such determination, and the selling holders shall have the right, in the
case of a postponement of the filing or effectiveness of a Registration
Statement, upon the affirmative vote of the holders of not less than a
majority of the Warrant Shares (or Warrants exercisable for such Warrant
Shares) to be included in such Registration Statement, to withdraw the
request for registration by giving written notice to the Company within 10
days after receipt of such notice. If the Company shall deliver a
Suspension Notice as set forth above, the selling holders shall have the
right, in the case of a suspension of the right to make sales, to receive
an extension of the registration period equal to the number of days of the
suspension.
(j) Default Warrant. If (i) the Registration Statement covering
the Warrant Shares required to be filed by the Company pursuant to Section
14(a) or Section 14(b) is not filed on or prior to the required date or not
declared effective by the Commission on or prior to the required date, or
(ii) after the Registration Statement has been declared effective by the
Commission, the Registration Statement ceases for any reason to remain
continuously effective as to all securities for which it is required to be
effective, or the holders are not permitted to resell their Warrant Shares
for more than fifteen (15) consecutive calendar days, and for more than an
aggregate of thirty (30) calendar days during any 12-month period (which
need not be consecutive calendar days, provided that such number of days
shall not include the fifteen (15) calendar days following the filing of
any Form 8-K, Form 10-Q, or Form 10-K, or other comparable form, for
purposes of filing a post-effective amendment to the Registration
Statement), in each case, other than (x) in connection with a delay or
suspension pursuant to paragraph (i) of this Section 14 or (y) after such
time as all Warrants or Warrant Shares, as the case may be, have been
disposed of thereunder or all Warrants and Warrant Shares are eligible to
be sold pursuant to Rule 144(k), then, in addition to any rights that a
holder may have as a holder of a Warrant, the Company will issue additional
Warrants to the holders in such amounts and at such time as shall be
determined pursuant to the immediately following paragraph.
Upon and after any failure by the Company described in the
immediately preceding paragraph (a "Default"), the Company shall issue to
the holders of Warrants and Warrant Shares additional Warrants ("Default
Warrants"), at a rate of 11,500 Default Warrants per month (based on twelve
30-day months), for each day during which one or more Defaults continues,
provided, that the Company shall not be required to issue in the aggregate
more than 137,500 Default Warrants. The Default Warrants shall be in the
form of Exhibit A hereto and shall be governed by this Warrant Agreement.
Within five (5) Business Days after the end of each month during which a
Default occurred or was continuing, each holder of Warrants and Warrant
Shares shall be issued Default Warrants equal to the total number of
Default Warrants to be issued for such month, multiplied by a fraction, the
numerator of which is the number of Warrants or Warrant Shares owned by
such holder and the denominator of which is the total number of Warrants
and Warrant Shares then outstanding, which shall be rounded up to the next
whole share.
(k) Governmental Filings. The Company shall assist and cooperate
with any reasonable request by any holder of any Warrant which is required
to make any governmental filings or obtain any governmental approvals prior
to or in connection with any exercise or exchange of any Warrant.
SECTION 15. LIMITATION ON OWNERSHIP OF COMMON STOCK.
The Company shall not repurchase shares of its Common Stock or
engage in other transactions if, after giving effect to such proposed stock
repurchase or other transaction, The ▇▇▇▇▇▇▇ ▇▇▇▇▇ Group, Inc. and/or
▇▇▇▇▇▇▇, Sachs & Co. (together with their affiliates, collectively "GS")
would beneficially own more than nineteen and one-half percent (19.50%) of
the shares of Common Stock then outstanding (i.e., not on a fully diluted
basis) (the "Cap"). In determining compliance with this Section 15, the
Company shall rely on the Schedule 13-D, Schedule 13-G or similar filings
made by GS with the Commission for purposes of determining the number of
shares of Common Stock beneficially owned by GS at any time; provided,
however, that the Company shall be entitled to determine compliance with
this Section 15 assuming that GS beneficially owns no more than the same
number of shares beneficially owned by GS immediately after giving effect
to the issuance of the Warrants on the Closing Date, increased by any
shares owned by GS as a result of actions taken by the Company (including
in each case securities which are convertible into such shares).
Nothwithstanding the foregoing, if the Company notifies GS of its desire to
enter into a transaction that would cause GS's beneficial ownership to
exceed the Cap, GS agrees to negotiate with the Company in good faith to
find a mutually acceptable means for the Company to proceed with such
transaction while maintaining GS's beneficial ownership at an amount that
does not exceed the Cap.
SECTION 16. FRACTIONAL INTERESTS
The Company shall not be required to issue fractional Warrant
Shares on the exercise or exchange of Warrants, although it may do so in
its sole discretion. If more than one Warrant shall be presented for
exercise or exchange in full at the same time by the same holder, the
number of full Warrant Shares which shall be issuable upon the exercise or
exchange thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise or exchange of the Warrants so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 16, be issuable upon the exercise or exchange of
any such Warrants (or specified portion thereof), the Company shall notify
the Warrant holder exercising or exchanging the Warrants in writing of the
amount to be paid in lieu of the fraction of a Warrant Share and
concurrently shall pay to the Warrant holder an amount in cash equal to the
Current Market Value per Warrant Share, as determined on the day
immediately preceding the date the Warrant is presented for exercise or
exchange, multiplied by such fraction, computed to the nearest whole cent.
SECTION 17. NOTICES TO WARRANT HOLDERS; RIGHTS OF WARRANT
HOLDERS.
Upon any adjustment of the number of Warrant Shares pursuant to
Section 12, the Company shall promptly thereafter (i) file with the
Register Office a certificate of the Senior Financial Officer of the
Company (unless the Purchasers request a certificate of a firm of
independent public accountants of recognized standing selected by the Board
(who may be the regular auditors of the Company), in which case, the
Company shall instead file with the Register Office a certificate of such
independent public accountants) setting forth the number of Warrant Shares
(or portion thereof) issuable after such adjustment, upon exercise of a
Warrant, and setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based, and (ii) give to each
of the registered holders of the Warrant certificates at his or her 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 Section 17.
In case:
(a) the Company shall authorize the issuance of any dividend
or other distribution on the Common Stock, whether in cash, equity, or
other securities, evidences of indebtedness or other property;
(b) the Company shall authorize any action which would
require an adjustment of the number of Warrant Shares pursuant to Section
12;
(c) the Company shall authorize any tender offer or exchange
offer by the Company for Common Stock, or Common Stock open market
repurchase program, in either case, involving more than 3% of the
outstanding Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed with the Register Office and shall
give to each of the registered holders of the Warrant certificates at the
address appearing on the Warrant register, a written notice delivered by
any method provided in Section 18, at least fifteen (15) Business Days (or
ten (10) Business Days in any case specified in clause (b) above) prior to
the applicable record date hereinafter specified, or, in the case of events
for which there is no record date, at least fifteen (15) Business Days
before the effective date of such event or the commencement of such tender
offer, exchange offer, or repurchase program. Any written notice provided
pursuant to this Section 17 shall state (i) the date as of which the
holders of record of the Common Stock are entitled to receive any such
rights, options, warrants or distribution is to be determined, or (ii) the
commencement date of any tender offer, exchange offer or repurchase program
for the Common Stock, or (iii) the date on which any such consolidation,
merger, conveyance, transfer, reclassification, 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 Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such consolidation, merger, conveyance, transfer,
reclassification, dissolution, liquidation or winding up. The failure to
give the notice required by this Section 17 or any defect therein shall not
affect the legality or validity of any issuance, right, option, warrant,
distribution, tender offer, exchange offer, repurchase program,
consolidation, merger, conveyance, transfer, reclassification, dissolution,
liquidation or winding up, or the vote upon any action.
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 of meetings of
shareholders or the election of directors of the Company or any other
matter, or any other rights of shareholders of the Company, including any
right to receive dividends. In addition, the holders of Warrant
certificates shall have no preemptive rights and shall not be entitled to
share in the assets of the Company in the event of the liquidation,
dissolution or winding up of the Company's affairs.
SECTION 18. NOTICES
Any notice or demand authorized by this Agreement to be given or
made by the Company or by the registered holder of any Warrant certificate
to the Company shall be sufficiently given or made when deposited in the
mail, first class or registered, postage prepaid, addressed, or when sent
via facsimile, as follows:
InPhonic, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇
Facsimile no.:
Attention: Chief Financial Officer
with copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile no.: 212.735.2000
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇.
Any notice pursuant to this Agreement to be given by the Company
to the Purchasers shall be sufficiently given when deposited in the mail,
first-class or registered, postage prepaid, addressed (until another
address is provided in writing by the Purchasers to the Company) to the
Purchasers, or when sent via facsimile, as follows:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. L.P.
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile no.: 212.256.5474 or 212.256.4104
Attention: ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with copies to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile no.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Citicorp. North America, Inc.
▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AP InPhonic Holdings, LLC
c/o Liberty Associated Partners, LP
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
▇▇▇-▇▇▇-▇▇▇▇ tel
▇▇▇-▇▇▇-▇▇▇▇ fax
with copies to:
Dechert LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. Nassau and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 19. SUPPLEMENTS AND AMENDMENTS
Any amendment or supplement to this Agreement shall require the
written consent of the Company and registered holders of fifty percent in
interest of the then outstanding Warrants (excluding any Warrants that may
be held by the Company, any parent holding company of the Company, or any
subsidiary or controlled affiliate thereof); provided, however, the consent
of each holder of a Warrant affected shall be required for any amendment of
this Section 19 or pursuant to which the Exercise Price would be increased
or the number of Warrant Shares for or into which a Warrant may be
exercised or exchanged would be decreased (other than in connection with a
waiver of any provisions of Section 12).
SECTION 20. SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Company, Warrant holders or holders of Warrant Shares shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 21. EXPIRATION OF WARRANTS; TERMINATION
This Agreement shall terminate on the date on which all Warrants
have been exercised, exchanged or lapsed, except that the provisions of
Sections 13, 14, 15, and 18 through 28 shall survive such termination. Each
Warrant not (x) exercised pursuant to Section 7 or (y) exchanged pursuant
to Section 8, in each case, prior to the close of business 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.
SECTION 22. GOVERNING LAW
THIS AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE NY GENERAL
OBLIGATION LAW).
SECTION 23. BENEFITS OF THIS AGREEMENT
Nothing in this Agreement shall be construed to give to any
Person other than the Company, the registered holders of Warrant
certificates and the holders of Warrant Shares 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 and the registered
holders of the Warrant certificates. Whether or not expressly stated,
references to Warrant holders or holders of Warrants shall mean and include
the holders of Warrant Shares for purposes of Sections 13, 14, 15 and 17
through 28 as appropriate for the context.
SECTION 24. HEADINGS
The descriptive headings of the several Sections and paragraphs
of this Agreement are inserted for convenience only, do not constitute a
part of this Agreement and shall not affect in any way the meanings or
interpretation of this Agreement.
SECTION 25. SUBMISSION TO JURISDICTION
If any action, proceeding or litigation shall be brought by the
Purchasers, any holder of Warrants, any holder of Warrant Shares or the
Company in order to enforce any right or remedy under this Agreement, the
parties hereto hereby consent and will submit, and will cause each of its
subsidiaries to submit, to the jurisdiction of any state or federal court
of competent jurisdiction sitting within the area comprising the Southern
District of New York on the date of this Agreement. The parties hereto
hereby irrevocably waive any objection, including, but not limited to, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which they may now or hereafter have to the bringing of any
such action, proceeding or litigation in such jurisdiction.
SECTION 26. WAIVER OF JURY TRIAL
THE PARTIES HERETO HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT
OR ANY OF THE WARRANTS.
SECTION 27. SERVICE OF PROCESS
Nothing herein shall affect the right of any holder of a Warrant
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Company in any other
jurisdiction.
SECTION 28. COUNTERPARTS
This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
INPHONIC, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: CEO
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
Attorney-in-Fact
CITICORP NORTH AMERICA, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director/Vice
President
AP INPHONIC HOLDINGS, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Partner
EXHIBIT A
Form of Warrant Certificate
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION
STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE
UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR
(II) ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR
APPLICABLE STATE SECURITIES LAW, RELATING TO THE
DISPOSITION OF SECURITIES, INCLUDING RULE 144.
[Date]
No. Warrants
----- -------
Warrant Certificate
INPHONIC, INC.
This Warrant Certificate certifies that _____________, or
registered assigns, is the registered holder of __________ Warrants (the
"Warrants") to purchase an aggregate of __________ shares of Common Stock,
par value $.01 per share (the "Common Stock"), of InPhonic, Inc., a
Delaware corporation (the "Company"). Each Common Stock Warrant entitles
the holder upon exercise to purchase from the Company at any time after the
date hereof and prior to the close of business on November 7, 2011 (or, if
such day is not a Business Day, the next succeeding Business Day) (the
"Expiration Date") one (1) fully paid and non-assessable shares of Common
Stock (a "Warrant Share") upon surrender of this Warrant Certificate and
payment in full for such Warrant Share at the Register Office of the
Company, subject to the conditions set forth herein and in the Warrant
Agreement referred to on the reverse hereof. The number of Warrant Shares
purchasable upon exercise thereof is subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, which provisions shall
for all purposes have the same effect as though fully set forth at this
place.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401
AND SECTION 5-1402 OF THE NY GENERAL OBLIGATION LAW).
IN WITNESS WHEREOF, InPhonic, Inc., has caused this Warrant
Certificate to be signed by its duly authorized officer as of the date
first above written.
INPHONIC, INC., a Delaware corporation
By:
----------------------------------
Name:
Title:
Form of Warrant Certificate
[Reverse]
The Warrants evidenced by this Warrant are part of a duly
authorized issue of Warrants entitling the holder on exercise or exchange
to receive shares of Common Stock of the Company, and are issued or to be
issued pursuant to a Warrant Agreement, dated as of November 7, 2006 (the
"Warrant Agreement"), between the Company and the other parties thereto,
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. All terms not
otherwise defined herein shall have the meanings set forth in the Warrant
Agreement. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
Warrants may be exercised or exchanged at any time after the date
hereof and prior to the close of business on the Expiration Date. The
holder of Warrants evidenced by this Warrant Certificate may exercise such
Warrants by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed,
together with payment to the Company of the Exercise Price for each Warrant
then exercised. In addition, the holder of the Warrants may exchange the
Warrants, in whole or in part and at any time or times, into Common Stock
by surrendering to the Company this Warrant Certificate with the form of
notice of exchange set forth hereon properly completed and executed. In the
event that upon any exercise or exchange of Warrants evidenced hereby the
number of Warrants exercised or exchanged shall be less than the total
number of Warrants evidenced hereby, there shall be issued prior to the
close of business on the Exercise Date to the holder hereof or his assignee
a new Warrant Certificate evidencing the number of Warrants not exercised
or exchanged. No adjustment shall be made for any dividends on any Common
Stock issuable upon exercise or exchange of this Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the number of Warrant Shares may, subject to certain
conditions, be adjusted. The Company will not be required to issue
fractional Warrant Shares on the exchange of Warrants, although it may do
so in its sole discretion. If fractional shares are not issued, the Company
will pay the cash value of such fractional shares as determined in
accordance with the provisions of the Warrant Agreement.
Warrant certificates, when surrendered at the Register 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.
Upon due presentation for registration of transfer of this
Warrant certificate at the office of the Company, a new Warrant certificate
or Warrant certificates of like tenor and evidencing in the aggregate a
like number of Warrants shall be issued to the transferee(s) in exchange
for this Warrant certificate, subject to the limitations provided in the
Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.
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 or exchange 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.
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 pursuant to the terms
hereof and Section 8 of the Warrant Agreement [insert number] shares of
Common Stock and hereby tenders for payment for such shares to the order of
InPhonic, Inc. cash in the amount of $____________,
in accordance with the terms hereof and the Warrant Agreement.
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 Warrant 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:
--------------------
Form of Notice of Exchange
(To Be Executed Upon Exchange of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant certificate, to exchange pursuant to the terms
hereof and Section 8 of the Warrant Agreement_[insert number] of the
Warrants represented hereby into the number of shares of Common Stock
determined in accordance with the terms hereof and the Warrant Agreement.
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 Warrant 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:
--------------------
EXHIBIT B
Form of Transfer
(To Be Executed Upon Transfer of Warrant)
FOR VALUE RECEIVED, the undersigned registered holder of this
Warrant certificate hereby sells, assigns and transfers unto the
Assignee(s) named below (including the undersigned with respect to any
Warrants constituting a part of the Warrants evidenced by this Warrant
certificate not being assigned hereby) all of the rights of the undersigned
under this Warrant certificate, with respect to the number of Warrants set
forth below:
Name of Assignee(s) Address Social Security, EIN Number of Warrants
or other identifying
number of assignee(s)
and does hereby irrevocably constitute and appoint the Company as the
undersigned's attorney to make such transfer on the register maintained by
the Company for that purpose, with full power of substitution in the premises.
Date:
-----------------------------------
(Signature of Registered Holder)
-----------------------------------
(Street Address)
-----------------------------------
(City) (State) (Zip Code)
SCHEDULE A
Issuance of Warrant Shares
--------------------------
NUMBER OF WARRANTS
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▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO. 687,500
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile no.: 212.256.5474 or 212.256.4104
Attention: ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
CITICORP NORTH AMERICA, INC. 250,000
▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AP INPHONIC HOLDINGS, LLC 312,500
c/o Liberty Associated Partners, LP
▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
TOTAL 1,250,000