1
Exhibit 10.8
--------------------------------------------------------
NETWORK PLUS CORP.
Common Stock Purchase Warrant
Dated as of _________, 2000
---------------------------------------------------------
[THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE
A REGISTRATION UNDER SUCH ACT IS IN EFFECT OR PURSUANT TO AN EXEMPTION
THEREFROM UNDER SUCH ACT. THIS WARRANT AND SUCH SHARES MAY BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS
WARRANT.]
2
Table of Contents
1. Exercise of Warrant................................................................. 1
1.1. Manner of Exercise............................................................ 1
1.2. When Exercise Effective....................................................... 2
1.3. Delivery of Stock Certificates, etc........................................... 2
1.4. Payment by Application of Shares Otherwise Issuable........................... 2
1.5. Exercise of Warrants.......................................................... 3
2. Adjustment of Common Stock Issuable Upon Exercise................................... 3
2.1. General; Warrant Price........................................................ 3
2.2. Adjustment of Warrant Price................................................... 3
2.2.1 Issuance of Additional Shares of Common Stock............................ 3
2.2.2 Extraordinary Dividends and Distributions................................ 4
2.3. Treatment of Options and Convertible Securities............................... 4
2.4. Treatment of Stock Dividends, Stock Splits, etc............................... 7
2.5. Computation of Consideration.................................................. 7
2.6. Adjustments for Combinations, etc............................................. 9
2.7. Minimum Adjustment of Warrant Price........................................... 9
3. Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc.......... 10
4. Other Dilutive Events............................................................... 10
5. No Dilution or Impairment........................................................... 10
6. Report as to Adjustments............................................................ 11
7. Notices of Corporate Action......................................................... 11
8. Registration of Common Stock........................................................ 12
9. Restrictions on Transfer............................................................ 13
9.1. Restrictive Legends........................................................... 13
9.2. Notice of Proposed Transfer; Opinions of Counsel.............................. 13
9.3. Termination of Restrictions................................................... 15
10. Reservation of Stock, etc........................................................... 15
11. Registration and Transfer of Warrants, etc.......................................... 15
11.1. Warrant Register; Ownership of Warrants....................................... 15
11.2. Transfer and Exchange of Warrants............................................ 16
11.3. Replacement of Warrants...................................................... 16
12. Registration under Securities Act, etc............................................. 16
12.1. Registration on Request...................................................... 16
12.2. Incidental Registration...................................................... 19
3
12.3. Registration Procedures...................................................... 21
12.4. Underwritten Offerings....................................................... 27
12.5. Preparation; Reasonable Investigation........................................ 30
12.6. Indemnification.............................................................. 30
13. Definitions........................................................................ 34
14. Remedies........................................................................... 41
15. No Rights or Liabilities as Stockholder............................................ 41
16. Notices............................................................................ 41
17. Amendments......................................................................... 41
18. Expiration......................................................................... 42
19. Descriptive Headings............................................................... 42
20. GOVERNING LAW...................................................................... 42
21. Judicial Proceedings; Waiver of Jury............................................... 42
FORM OF SUBSCRIPTION.................................................................... 53
FORM OF ASSIGNMENT...................................................................... 54
4
NETWORK PLUS CORP.
Form Of Common Stock Purchase Warrant
New York, New York
No. FW-1 _____________, 2000
NETWORK PLUS CORP. (the "COMPANY"), a Delaware corporation,
for value received, hereby certifies that [____________________], or registered
assigns, is entitled to purchase from the Company [________] duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock, par value
$0.01 per share (the "COMMON STOCK") of the Company at the purchase price per
share of $7.01, at any time or from time to time prior to 5:00 [P.M.], New York
City time, on September 27, 2003 (or such earlier date as may be determined
pursuant to section 3), all subject to the terms, conditions and adjustments set
forth below in this Warrant.
This Warrant evidences rights to purchase an aggregate of
______ shares of Common Stock subject to adjustment as provided herein. Certain
capitalized terms used in this Warrant are defined in section 13; references to
an "Exhibit" are, unless otherwise specified, to one of the Exhibits attached to
this Warrant and references to a "section" are, unless otherwise specified, to
one of the sections of this Warrant.
1. Exercise of Warrant.
1.1. Manner of Exercise. This Warrant may be exercised by the
holder hereof, in whole or in part, during normal business hours on any Business
Day, by surrender of this Warrant to the Company at its principal office,
accompanied by a subscription in substantially the form attached to this Warrant
(or a reasonable facsimile thereof) duly executed by such holder and accompanied
by payment, in cash, by certified or official bank check payable to the order of
the Company, or in the manner provided in section 1.4 or section 1.5 (or by any
combination of such methods), in the amount obtained by multiplying (a) the
whole number of shares of Common Stock (without giving effect to any adjustment
thereof) designated in such subscription by (b) $7.01 (as adjusted pursuant to
the terms hereof), and such holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully paid and nonassessable shares
of Common Stock (or Other Securities) determined as provided in sections 2
through 4.
5
1.2. When Exercise Effective. Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Warrant shall have been surrendered to the
Company as provided in section 1.1, and at such time the Person or Persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such exercise as provided in
section 1.3 shall be deemed to have become the holder or holders of record
thereof.
1.3. Delivery of Stock Certificates, etc. As soon as
practicable after each exercise of this Warrant, in whole or in part, and in any
event within ten Business Days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the
name of and delivered to the holder hereof or, subject to section 9, as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct,
(a) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal
to the same fraction of the Market Price per share on the Business Day
next preceding the date of such exercise, and
(b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock equal (without giving
effect to any adjustment thereof) to the number of such shares called
for on the face of this Warrant minus the number of such shares
designated by the holder upon such exercise as provided in section 1.1.
The holder hereof shall comply will all applicable provisions
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Law of 1976, as amended, and any
successor statute, in connection with the exercise of this Warrant, and shall
provide to the Company upon its reasonable request a certificate of such
compliance.
1.4. Payment by Application of Shares Otherwise Issuable. Upon
any exercise of this Warrant, the holder hereof may, at its option, instruct the
Company, by written notice accompanying the surrender of this Warrant at the
time of such exercise, to apply to the payment required by section 1.1 such
number of the shares of Common Stock otherwise issuable to such holder upon such
exercise as shall be specified in such notice, in which case an amount equal to
the excess of the aggregate Current Market Price of such specified number of
shares on the date of exercise over the portion of the payment required by
section 1.1 attributable to such shares shall be deemed to have been paid to the
Company
6
and the number of shares issuable upon such exercise shall be reduced by such
specified number.
1.5. Exercise of Warrants. Notwithstanding anything to the
contrary set forth herein, no Warrant shall be exercisable other than in
accordance with this section 1.5. The Warrants shall be exercisable as follows:
(i) 72.73% of holder's Warrants shall be exercisable at any time on or after the
Closing Date (as defined in the Credit Agreement), (ii) 13.64% shall be
exercisable on a pro rata basis with each amount drawn by the Company on the
first $100 million of loans under the Credit Agreement divided by $100 million,
and (iii) 13.63% shall be exercisable at any time on or after the date the
amount drawn by the Company under the Credit Agreement exceeds $100 million
2. Adjustment of Common Stock Issuable Upon Exercise.
2.1. General; Warrant Price. The number of shares of Common
Stock which the holder of this Warrant shall be entitled to receive upon each
exercise hereof shall be determined by multiplying the number of shares of
Common Stock which would otherwise (but for the provisions of this section 2) be
issuable upon such exercise, as designated by the holder hereof pursuant to
section 1.1, by the fraction of which (a) the numerator is $7.01 and (b) the
denominator is the Warrant Price in effect on the date of such exercise. The
"Warrant Price" shall initially be $7.01 per share, shall be adjusted and
readjusted from time to time as provided in this section 2 and, as so adjusted
or readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by this section 2.
2.2. Adjustment of Warrant Price.
2.2.1 Issuance of Additional Shares of Common Stock. In case
the Company at any time or from time to time after the date hereof shall issue
or sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to section 2.3 or 2.4) without consideration
or for a consideration per share less than the Current Market Price in effect
immediately prior to such issue or sale, then, subject to section 2.8, the
Warrant Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Warrant Price by a fraction
(a) the numerator of which shall be (i) the number of shares
of Common Stock outstanding immediately prior to such issue or sale
plus (ii) the number of shares of Common Stock which the aggregate
consideration
3
7
received by the Company for the total number of such Additional Shares
of Common Stock so issued or sold would purchase at such Current Market
Price, and
(b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale,
provided that, for the purposes of this section 2.2.1, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
section 2.3 or 2.4, such Additional Shares shall be deemed to be outstanding,
and (y) treasury shares shall not be deemed to be outstanding.
2.2.2 Extraordinary Dividends and Distributions. In case the
Company at any time or from time to time after the date hereof shall declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other securities or
property or Options by way of dividend or spin-off, reclassification,
recapitalization or similar corporate rearrangement) on the Common Stock, other
than a dividend payable in Additional Shares of Common Stock, then, and in each
such case, subject to section 2.8, the Warrant Price in effect immediately prior
to the close of business on the record date fixed for the determination of
holders of any class of securities entitled to receive such dividend or
distribution shall be reduced, effective as of the close of business on such
record date, to a price (calculated to the nearest .001 of a cent) determined by
multiplying such Warrant Price by a fraction
(x) the numerator of which shall be the Current Market Price
in effect on such record date or, if the Common Stock trades on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading, less the amount of such dividend or distribution (as
determined in good faith by the Board of Directors of the Company)
applicable to one share of Common Stock, and
(y) the denominator of which shall be such Current Market
Price.
2.3. Treatment of Options and Convertible Securities. In case
the Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard
4
8
to any provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if
the Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading), provided that such Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to section 2.5) of such shares would be less than
the Current Market Price in effect on the date of and immediately prior to such
issue, sale, grant or assumption or immediately prior to the close of business
on such record date (or, if the Common Stock trades on an ex-dividend basis, on
the date prior to the commencement of ex-dividend trading), and provided,
further, that in any such case in which Additional Shares of Common Stock are
deemed to be issued
(a) no further adjustment of the Warrant Price shall be made
upon the subsequent issue or sale of Convertible Securities or shares
of Common Stock upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, except in the case of any such
Options or Convertible Securities which contain provisions requiring an
adjustment, subsequent to the date of the issue or sale thereof, of the
number of Additional Shares of Common Stock issuable upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities by reason of (x) a change of control of the Company, (y) the
acquisition by any Person or group of Persons of any specified number
or percentage of the Voting Securities of the Company or (z) any
similar event or occurrence, each such case to be deemed hereunder to
involve a separate issuance of Additional Shares of Common Stock,
Options or Convertible Securities, as the case may be;
(b) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Company, or decrease in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Warrant Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date, or date
prior to the commencement of ex-dividend trading, as the case may be,
with respect thereto), and any subsequent adjustments based thereon,
shall, upon any
5
9
such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options, or the
rights of conversion or exchange under such Convertible Securities,
which are outstanding at such time;
(c) upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have
been exercised or the expiration of any rights of conversion or
exchange under any such Convertible Securities which (or purchase by
the Company and cancellation or retirement of any such Convertible
Securities the rights of conversion or exchange under which) shall not
have been exercised, the Warrant Price computed upon the original
issue, sale, grant or assumption thereof (or upon the occurrence of the
record date, or date prior to the commencement of ex-dividend trading,
as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Company (pursuant to section 2.5)
upon the issue or sale of such Convertible Securities with
respect to which
6
10
such Options were actually exercised;
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Warrant Price by an amount in
excess of the amount of the adjustment thereof originally made in
respect of the issue, sale, grant or assumption of such Options or
Convertible Securities; and
(e) in the case of any such Options which expire by their
terms not more than 30 days after the date of issue, sale, grant or
assumption thereof, no adjustment of the Warrant Price shall be made
until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the manner provided in subdivision (c)
above.
2.4. Treatment of Stock Dividends, Stock Splits, etc. In case
the Company at any time or from time to time after the date hereof shall declare
or pay any dividend on the Common Stock payable in Common Stock, or shall effect
a subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
2.5. Computation of Consideration. For the purposes of this
section 2,
(a) the consideration for the issue or sale of any Additional
Shares of Common Stock shall, irrespective of the accounting treatment
of such consideration,
(i) insofar as it consists of cash, be computed at
the net amount of cash received by the Company,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair value
thereof at the time of such issue or sale, as determined in
good faith by the Board of Directors of the Company, and
7
11
(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the portion of such consideration so received,
computed as provided in clauses (i) and (ii) above, allocable
to such Additional Shares of Common Stock, all as determined
in good faith by the Board of Directors of the Company;
(b) Additional Shares of Common Stock deemed to have been
issued pursuant to section 2.3, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and receivable
by the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration to protect
against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such
Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, in each case computing such
consideration as provided in the foregoing subdivision (a),
by
(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities; and
(c) Additional Shares of Common Stock deemed to have been
issued pursuant to section 2.4, relating to stock dividends, stock
splits, etc., shall be deemed to have been issued for no consideration.
2.6. Adjustments for Combinations, etc. In case the
outstanding
8
12
shares of Common Stock shall be combined or consolidated, by reclassification,
reverse stock-split or otherwise, into a lesser number of shares of Common
Stock, the Warrant Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
2.7. Minimum Adjustment of Warrant Price. If the amount of any
adjustment of the Warrant Price required pursuant to this section 2 would be
less than one tenth (1/10) of one percent (1%) of the Warrant Price in effect at
the time such adjustment is otherwise so required to be made, such amount shall
be carried forward and adjustment with respect thereto made at the time of and
together with any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate at least one tenth
(1/10) of one percent (1%) of such Warrant Price.
3. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company after the date hereof (a) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification of the Common Stock or Other Securities
(other than a capital reorganization or reclassification resulting in the issue
of Additional Shares of Common Stock for which adjustment in the Warrant Price
is provided in section 2.2.1 or 2.2.2), then, this Warrant shall automatically
terminate in its entirety immediately upon the consummation of such transaction,
provided that, upon the basis and the terms and in the manner provided in this
Warrant, the holder of this Warrant shall be permitted to exercise this Warrant
immediately preceding the consummation of such transaction and immediately after
such exercise shall be entitled to receive (at the aggregate Warrant Price in
effect at the time of such consummation for all Common Stock or Other Securities
issuable upon such exercise immediately prior to such consummation), in lieu of
the Common Stock or Other Securities issuable upon such exercise prior to such
consummation, the stock and other securities, cash and property to which such
holder would have been entitled upon such consummation if such holder had
exercised the rights represented by this Warrant immediately prior thereto.
9
13
4. Other Dilutive Events. In case any event shall occur as to
which the provisions of section 2 or section 3 are not strictly applicable but
the failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company shall appoint
a firm of independent certified public accountants of recognized national
standing (which may be the regular auditors of the Company), which shall give
their opinion upon the adjustment, if any, on a basis consistent with the
essential intent and principles established in sections 2 and 3, necessary to
preserve, without dilution, the purchase rights represented by this Warrant.
Upon receipt of such opinion, the Company will promptly mail a copy thereof to
the holder of this Warrant and shall make the adjustments described therein.
5. No Dilution or Impairment. 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 Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against dilution or other impairment. Without
limiting the generality of the foregoing, the Company (a) will not permit the
par value of any shares of stock receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on the exercise
of the Warrants from time to time outstanding and (c) will not take any action
which results in any adjustment of the Warrant Price if the total number of
shares of Common Stock (or Other Securities) issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock (or Other Securities) then authorized by the Company's certificate
of incorporation and available for the purpose of issue upon such exercise.
6. Report as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable upon
the exercise of this Warrant, the Company at its expense will promptly compute
such adjustment or readjustment in accordance with the terms of this Warrant and
provide to holder an officers certificate verifying such computation (other than
any computation of the fair value of property as determined in good faith by the
Board of Directors of the Company) and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method
10
14
of calculation thereof and the facts upon which such adjustment or readjustment
is based, including a statement of (a) the consideration received or to be
received by the Company for any Additional Shares of Common Stock issued or sold
or deemed to have been issued, (b) the number of shares of Common Stock
outstanding or deemed to be outstanding, and (c) the Warrant Price in effect
immediately prior to such issue or sale and as adjusted and readjusted (if
required by section 2) on account thereof. The Company will forthwith mail a
copy of each such report to each holder of a Warrant and will, upon the written
request at any time of any holder of a Warrant, furnish to such holder a like
report setting forth the Warrant Price at the time in effect and showing in
reasonable detail how it was calculated.
7. Notices of Corporate Action. In the event of
(a) any taking by the Company of a record of the holders of
Common Stock for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a regular periodic
dividend payable in cash out of earned surplus in an amount not
exceeding the amount of the immediately preceding cash dividend for
such period) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger involving the Company and any
other Person or any transfer of all or substantially all the assets of
the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to each holder of a Warrant a notice specifying (i) the
date or expected date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger,
11
15
transfer, dissolution, liquidation or winding-up. Such notice shall be mailed at
least twenty days prior to the date therein specified.
8. Registration of Common Stock. If any shares of Common Stock
required to be reserved for purposes of exercise of this Warrant require
registration with or approval of any governmental authority under any federal or
state law (other than the Securities Act) before such shares may be issued upon
exercise, the Company will, at its expense and as expeditiously as possible, use
its reasonable best efforts to cause such shares to be duly registered or
approved, as the case may be. At any such time as Common Stock is listed on any
national securities exchange, the Company will, at its expense, use its
reasonable best efforts to obtain promptly and maintain the approval for listing
on each such exchange, upon official notice of issuance, the shares of Common
Stock issuable upon exercise of the then outstanding Warrants and maintain the
listing of such shares after their issuance; and the Company will use its
reasonable best efforts to list on such national securities exchange, register
under the Exchange Act and maintain such listing of, any Other Securities that
at any time are issuable upon exercise of the Warrants, if and at the time that
any securities of the same class shall be listed on such national securities
exchange by the Company.
9. Restrictions on Transfer.
9.1. Restrictive Legends. Except as otherwise permitted by
this section 9, each Warrant (including each Warrant issued upon the transfer of
any Warrant) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"This Warrant and any shares acquired upon the exercise of
this Warrant have not been registered under the Securities Act of 1933,
as amended, and may not be transferred, sold or otherwise disposed of
except while a registration under such Act is in effect or pursuant to
an exemption therefrom under such Act. This Warrant and such shares may
be transferred only in compliance with the conditions specified in this
Warrant."
Except as otherwise permitted by this section 9, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
12
16
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such Act. Such shares may be transferred only in compliance with the
conditions specified in certain Common Stock Purchase Warrants issued
by Network Plus Corp. A complete and correct copy of the form of such
Warrant is available from Network Plus Corp. and will be furnished to
the holder of such shares upon written request and without charge."
9.2. Notice of Proposed Transfer; Opinions of Counsel. Prior
to any transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this section 9.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
transfer in sufficient detail to enable counsel to render the opinions referred
to below, and (b) shall designate counsel for the holder giving such notice (who
may be house counsel for such holder). The holder giving such notice will submit
a copy thereof to the counsel designated in such notice and the Company will
promptly submit a copy thereof to its counsel. The following provisions shall
then apply:
(i) If (A) in the opinion of such counsel for the
holder the proposed transfer may be effected without
registration of such Restricted Securities under the
Securities Act, and (B) counsel for the Company shall not have
rendered a reasoned written objection thereto within 15 days
after the receipt by the Company of such written notice that
such registration is required, such holder shall thereupon be
entitled to transfer such securities in accordance with the
terms of the notice delivered by such holder to the Company.
Each warrant or certificate, if any, representing such
securities issued upon or in connection with such transfer
shall bear the appropriate restrictive legend required by
section 9.1, unless in the opinion of each such counsel such
legend is no longer required to insure compliance with the
Securities Act.
(ii) If in the opinion of either of or both such
counsel the proposed transfer may not legally be effected
without registration of such Restricted Securities under the
Securities Act (such opinion or opinions to state the basis of
the legal conclusions reached therein), the Company will
promptly so notify the holder thereof
13
17
and thereafter such holder shall not be entitled to transfer
such Restricted Securities until either (x) receipt by the
Company of a further notice from such holder pursuant to the
foregoing provisions of this section 9.2 and fulfillment of
the provisions of clause (i) above or (y) such shares have
been effectively registered under the Securities Act.
Notwithstanding the foregoing provisions of this section 9.2(ii), [THE PURCHASER
OF THE WARRANTS] shall be permitted to transfer any Restricted Securities to a
limited number of institutional investors, provided that (A) each such investor
represents in writing that it is acquiring such Restricted Securities for
investment and not with a view to the distribution thereof (subject, however, to
any requirement of law that the disposition thereof shall at all times be within
the control of such transferee), (B) each such investor agrees in writing to be
bound by all the restrictions on transfer of such Restricted Securities
contained in this section 9.2 and (C) [THE PURCHASER OF THE WARRANTS] delivers
to the Company an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇, or other
counsel satisfactory to the Company, stating that such transfer may be effected
without registration under the Securities Act. The Company will pay the
reasonable fees and disbursements of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ or
▇▇▇▇ & ▇▇▇▇ for any holder of Restricted Securities and of counsel for the
Company in connection with all opinions rendered by them pursuant to this
section 9.2 and pursuant to section 9.3; provided that such opinions relate to
the transfer of at least 1,284,685 shares of Common Stock in the aggregate
(subject to proportionate adjustment as provided for hereunder) and that such
shares will cease to constitute Restricted Securities following such transfer
for the purposes of this section 9.2 and section 9.3.
9.3. Termination of Restrictions. The restrictions imposed by
this section 9 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when such securities
shall have been effectively registered under the Securities Act, or (b) when, in
the opinions of both counsel for the holder thereof and counsel for the Company,
such restrictions are no longer required in order to insure compliance with the
Securities Act. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense (other than applicable transfer taxes, if any), new
securities of like tenor not bearing the applicable legends required by section
9.1.
10. Reservation of Stock, etc. The Company will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the
14
18
Warrants, the number of shares of Common Stock (or Other Securities) from time
to time issuable upon exercise of all Warrants at the time outstanding. All
shares of Common Stock (or Other Securities) issuable upon exercise of any
Warrants shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof.
11. Registration and Transfer of Warrants, etc.
11.1. Warrant Register; Ownership of Warrants. The Company
will keep at the principal office of the Company or its transfer agent a
register in which the Company will provide for the registration of Warrants and
the registration of transfers of Warrants. The Company may treat the Person in
whose name any Warrant is registered on such register as the owner thereof for
all other purposes, and the Company shall not be affected by any notice to the
contrary, except that, if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes. Subject to section 9, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
11.2. Transfer and Exchange of Warrants. Upon surrender of any
Warrant for registration of transfer or for exchange to the Company at its
principal office, the Company at its expense will (subject to compliance with
section 9, if applicable) execute and deliver in exchange therefor a new Warrant
or Warrants of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants so surrendered.
11.3. Replacement of Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction of any Warrant, upon delivery of an indemnity bond in such
reasonable amount as the Company may determine (or, in the case of any Warrant
held by any Institutional Holder or its nominee, of an indemnity agreement from
such Institutional Holder reasonably satisfactory to the Company), or, in the
case of any such mutilation, upon the surrender of such Warrant for cancellation
to the Company at its principal office, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
15
19
12. Registration under Securities Act, etc.
12.1. Registration on Request.
(a) Request. On no more than three occasions upon the written
request of one or more Initiating Holders, requesting that the Company
effect the registration under the Securities Act of all or part of such
Initiating Holders' Registerable Securities and specifying the intended
method of disposition thereof, the Company will, subject to the terms
of this Warrant, promptly give written notice of such requested
registration to all registered holders of Registerable Securities, and
thereupon the Company will effect the registration under the Securities
Act of
(i) the Registerable Securities which the Company has
been so requested to register by such Initiating Holders for
disposition in accordance with the intended method of
disposition stated in such request, and
(ii) all other Registerable Securities the holders of
which shall have made a written request to the Company for
registration thereof within 30 days after the giving of such
written notice by the Company (which request shall specify the
intended method of disposition of such Registerable
Securities),
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registerable Securities so to be
registered.
(b) Registration Statement Form. Registrations under this
section 12.1 shall be on such appropriate registration form of the
Commission (i) as shall be selected by the Company and (ii) as shall
permit the disposition of such Registerable Securities in accordance
with the intended method or methods of disposition specified in their
request for such registration. The Company agrees to include in any
such registration statement all information which holders of
Registerable Securities being registered shall reasonably request. If,
in connection with any registration under this section 12.1 which is
proposed by the Company to be on Form S-3 or any similar short form
registration statement which is a successor to Form S-3, the managing
underwriters, if any, shall advise the Company in writing that in their
opinion the use of another permitted form is of material
16
20
importance to the success of the offering, then such registration shall
be on such other permitted form.
(c) Expenses. The Company will pay all Registration Expenses
in connection with any registration requested pursuant to this section
12.1 by any Initiating Holders of Registerable Securities prior to the
time at which three such registrations shall have been effected in
which all of the Registerable Securities requested to be included in
such registration by any holders of Registerable Securities shall have
been registered pursuant to this section 12.1. The Registration
Expenses (and underwriting discounts and commissions and transfer
taxes, if any) in connection with each other registration requested
under this section 12.1 shall be allocated pro rata among all Persons
on whose behalf securities of the Company are included in such
registration, on the basis of the respective amounts of the securities
then being registered on their behalf.
(d) Effective Registration Statement. A registration requested
pursuant to this section 12.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become
effective, provided that a registration which does not become effective
after the Company has filed a registration statement with respect
thereto solely by reason of the refusal to proceed of the Initiating
Holders (other than a refusal to proceed based upon the advice of
counsel relating to a matter with respect to the Company or material
adverse information concerning the business or financial condition of
the Company which is made known to the Initiating Holders after the
date on which such registration was requested) shall be deemed to have
been effected by the Company at the request of such Initiating Holders
unless the Initiating Holders shall have elected to pay all
Registration Expenses in connection with such registration, (ii) if,
after it has become effective, such registration becomes subject to any
stop order, injunction or other order or requirement of the Commission
or other governmental agency or court for any reason, (provided that,
in lieu of such registration not being deemed to have been effected,
the Company may extend the registration period may be extended by the
period of such stop order, injunction or other order, up to a maximum
of ninety days) or (iii) the conditions to closing specified in the
purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied, other than by reason of some
act or omission by such Initiating Holders.
(e) Selection of Underwriters. If a requested registration
pursuant to this section 12.1 involves an underwritten offering, the
17
21
underwriter or underwriters thereof shall be selected by the holders of
at least a majority (by number of shares) of the Registerable
Securities as to which registration has been requested and shall be
acceptable to the Company, which shall not unreasonably withhold its
acceptance of any such underwriters.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this section 12.1 involves an underwritten
offering, and the managing underwriter shall advise the Company in
writing (with a copy to each holder of Registerable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which
can be sold in such offering within a price range acceptable to the
holders of a majority of the Registerable Securities requested to be
included in such registration, the Company will include in such
registration, to the extent of the number which the Company is so
advised can be sold in such offering, Registerable Securities requested
to be included in such registration by the holder or holders of
Registerable Securities, pro rata among the holders thereof requesting
such registration on the basis of the number of such securities
requested to be included by such holders. In connection with any such
registration, no securities other than Registerable Securities shall be
covered by such registration.
(g) If at the time of any request to register Registerable
Securities by any holder, pursuant to this Section 12.1, the Company is
engaged or has plans to engage in a registered public offering or is
engaged in any other activity which, in the good faith determination of
the Company's Board of Directors, would be adversely affected by the
requested registration, then the Company may at its option direct, upon
no less than five days prior written notice, that such request be
delayed for a period not in excess of 90 days from the date of the
expiration of such notice, such right to delay a request to be
exercised by the Company not more than once in any 12-month period.
12.2. Incidental Registration.
(a) Right to Include Registerable Securities. If the Company
at any time proposes to register any of its securities under the
Securities Act (other than by a registration on Form S-4 or S-8 or any
successor or similar forms and other than pursuant to section 12.1),
whether or not for sale for its own account, it will each such time
give prompt written notice to
18
22
all holders of Registerable Securities of its intention to do so and of
such holders' rights under this section 12.2. Upon the written request
of any such holder made within fifteen days after the receipt of any
such notice (which request shall specify the Registerable Securities
intended to be disposed of by such holder and the intended method of
disposition thereof), the Company will, subject to the terms of this
Warrant, effect the registration under the Securities Act of all
Registerable Securities which the Company has been so requested to
register by the holders thereof, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as
aforesaid) of the Registerable Securities so to be registered, by
inclusion of such Registerable Securities in the registration statement
which covers the securities which the Company proposes to register,
provided that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration,
the Company shall determine for any reason either not to register or to
delay registration of such securities, the Company may, at its
election, give written notice of such determination to each holder of
Registerable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registerable Securities in connection with such
registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any holder or holders of Registerable Securities entitled to
do so to request that such registration be effected as a registration
under section 12.1, and (ii) in the case of a determination to delay
registering, shall be permitted to delay registering any Registerable
Securities, for the same period as the delay in registering such other
securities. No registration effected under this section 12.2 shall
relieve the Company of its obligation to effect any registration upon
request under section 12.1 nor shall any such registration hereunder be
deemed to have been effected pursuant to section 12.1. The Company will
pay all Registration Expenses in connection with each registration of
Registerable Securities requested pursuant to this section 12.2.
(b) Priority in Incidental Registrations. If (i) a
registration pursuant to this section 12.2 involves an underwritten
offering of the securities so being registered, whether or not for sale
for the account of the Company, to be distributed (on a firm commitment
basis) by or through one or more underwriters of recognized standing
under underwriting terms appropriate for such a transaction, (ii) the
Registerable Securities so requested to be registered for sale for the
account of holders of
19
23
Registerable Securities are not also to be included in such
underwritten offering (either because the Company has not been
requested so to include such Registerable Securities pursuant to
section 12.4(b) or, if requested to do so, is not obligated to do so
under section 12.4(b)), and (iii) the managing underwriter of such
underwritten offering shall inform the Company and holders of the
Registerable Securities requesting such registration by letter of its
belief that the distribution of all or a specified number of such
Registerable Securities concurrently with the securities being
distributed by such underwriters would interfere with the successful
marketing of the securities being distributed by such underwriters
(such writing to state the basis of such belief and the approximate
number of such Registerable Securities which may be distributed without
such effect), then the Company may, upon written notice to all holders
of such Registerable Securities, reduce pro rata (if and to the extent
stated by such managing underwriter to be necessary to eliminate such
effect) the number of such Registerable Securities the registration of
which shall have been requested by each holder of Registerable
Securities so that the resultant aggregate number of such Registerable
Securities so included in such registration shall be equal to the
number of shares stated in such managing underwriter's letter.
12.3. Registration Procedures. If and whenever the Company is
required to effect the registration of any Registerable Securities under the
Securities Act as provided in sections 12.1 and 12.2 the Company shall promptly:
(i) prepare and (within sixty days after the end of
the period within which requests for registration may be given
to the Company or in any event as soon thereafter as possible)
(in the case of a registration pursuant to section 12.1, such
filing to be made within sixty days after the initial request
of one or more Initiating Holders of Registerable Securities
or in any event as soon thereafter as possible) file with the
Commission the requisite registration statement to effect such
registration (including such audited financial statements as
may be required by the Securities Act or the rules and
regulations promulgated thereunder) and thereafter use its
reasonable best efforts to cause such registration statement
to become and remain effective, provided, however, that the
Company may discontinue any registration of its securities
which are not Registerable Securities (and, under the
circumstances specified in section 12.2(a), its securities
which are Registerable Securities) at any time prior to the
effective date of the registration statement
20
24
relating thereto;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such
registration statement until such time as all of such
securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or (i) in the
case of a registration pursuant to section 12.1, the
expiration of 180 days after such registration statement
becomes effective, or (ii) in the case of a registration
pursuant to section 12.2, the expiration of 90 days after such
registration statement becomes effective;
(iii) furnish to each seller of Registerable
Securities covered by such registration statement and each
underwriter, if any, of the securities being sold by such
seller such number of conformed copies of such registration
statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424
under the Securities Act, in conformity with the requirements
of the Securities Act, and such other documents, as such
seller and underwriter, if any, may reasonably request;
(iv) use its reasonable best efforts to register or
qualify all Registerable Securities and other securities
covered by such registration statement under such other
securities laws or blue sky laws of such jurisdictions as any
seller thereof and any underwriter of the securities being
sold by such seller shall reasonably request, to keep such
registrations or qualifications in effect for so long as such
registration statement remains in effect, and take any other
action which may be reasonably necessary or advisable to
enable such seller and underwriter to consummate the
disposition in such jurisdictions of the securities owned by
such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subdivision (iv)
21
25
be obligated to be so qualified, to subject itself to taxation
in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(v) use its reasonable best efforts to cause all
Registerable Securities covered by such registration statement
to be registered with or approved by such other governmental
agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of
such Registerable Securities;
(vi) use its reasonable best efforts to furnish to
each seller of Registerable Securities a signed counterpart,
addressed to such seller and the underwriters, if any of
(x) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), reasonably satisfactory in
form and substance to such seller, and
(y) a "comfort" letter (or, in the case of such Person which
does not satisfy the conditions for receipt of a "comfort" letter
specified in Statement on Auditing Standards No. 72, an "agreed upon
procedures" letter), dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, a letter dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten public
offerings of securities (with, in the case of an "agreed upon procedures"
letter, such modifications or deletions as may be required under Statement on
Auditing Standards No. 35) and, in the case of the accountants' letter, such
other financial matters, and, in the case of the legal opinion, such other legal
matters, as such seller (or the underwriters, if any) may reasonably request;
22
26
(vii) notify the holders of Registerable Securities
and the managing underwriter or underwriters, if any, promptly
and confirm such advice in writing promptly thereafter:
(v) when the registration statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has become
effective;
(w) of any request by the Commission for amendments or
supplements to the registration statement or the prospectus or for additional
information;
(x) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the initiation of
any proceedings by any Person for that purpose;
(y) if at any time the representations and warranties of the
Company made as contemplated by section 12.4 below cease to be true and correct;
(z) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registerable Securities
for sale under the securities or blue sky laws of any jurisdiction or the
initiation or threat of any proceeding for such purpose;
(viii) notify each seller of Registerable Securities
covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, upon the Company's discovery that, or upon
the happening of any event as a result of which, the
prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the
request of any such seller promptly prepare and furnish to
such seller and each underwriter, if any, a reasonable number
of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such
prospectus shall not 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 the light of the circumstances then existing;
23
27
(ix) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder, and will furnish to
each such seller prior to the filing thereof a copy of any
amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such
seller shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or of the
rules or regulations thereunder;
(x) make available for inspection by a representative
or representatives of the holders of Registerable Securities
any underwriter participating in any disposition pursuant to
the registration statement and any attorney or accountant
retained by such selling holders or underwriter (each, an
"INSPECTOR"), all financial and other records, pertinent
corporate documents and properties of the Company (the
"RECORDS"), and cause the Company's officers, directors and
employees to supply all information reasonably requested by
any such Inspector in connection with such registration in
order to permit a reasonable investigation within the meaning
of Section 11 of the Securities Act, provided that the Company
shall not be required to comply with this subdivision (xi) if
there is a reasonable likelihood, in the judgment of the
Company, that such delivery could result in the loss of any
attorney-client privilege related thereto; and provided
further that Records which the Company determines, in good
faith, to be confidential and which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors
(other than to any holder of Registerable Securities) unless
(x) such Records have become generally available to the public
or (y) the disclosure of such Records may be necessary or
appropriate (A) in compliance with any law, rule, regulation
or order applicable to any such Inspectors or holder of
Registerable Securities, (B) in response to any subpoena or
other legal process or (C) in connection with any litigation
to which such Inspectors or any holder of Registerable
Securities is a party;
24
28
(xi) provide and cause to be maintained a transfer
agent and registrar for all Registerable Securities covered by
such registration statement from and after a date not later
than the effective date of such registration statement;
(xii) take such other actions as sellers of such
Registerable Securities holding 51% of the shares so to be
sold shall reasonably request in order to expedite or
facilitate the disposition of such Registerable Securities;
(xiii) use its best efforts to list all Registerable
Securities covered by such registration statement on any
securities exchange on which any of the securities of the same
class as the Registerable Securities are then listed; and
(xiv) use its best efforts to provide a CUSIP number
for the Registerable Securities, not later than the effective
date of the registration statement.
The Company may require each seller of Registerable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registerable Securities shall be deemed to have
agreed by acquisition of such Registerable Securities that, upon receipt of any
notice from the Company of the occurrence of any event of the kind described in
subdivision (vii) or (viii) of this section 12.3, such holder will forthwith
discontinue such holder's disposition of Registerable Securities pursuant to the
registration statement relating to such Registerable Securities until such
holder's receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (vii) of this section 12.3 and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies, then in such holder's possession of the
prospectus relating to such Registerable Securities current at the time of
receipt of such notice.
In the event that, in the reasonable judgment of the Company,
it is necessary or advisable to suspend use of a prospectus included in a
Registration Statement due to pending material developments or other material
events that
25
29
have not yet been publicly disclosed and as to which the Company believes public
disclosure would be detrimental to the Company, the Company shall notify all
sellers of Registerable Securities to such effect, and upon receipt of such
notice, each such seller of Registerable Securities shall promptly discontinue
any sales of Registerable Securities pursuant to Registration Statement until
such seller of Registerable Securities has received copies of a supplemented or
amended prospectus or until such seller of Registerable Securities is advised in
writing by the Company that the current prospectus may be used and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus. Notwithstanding anything to the
contrary herein, the Company shall not exercise its rights under this paragraph
to suspend sales of Registerable Securities for a period in excess of ninety
days in any 365 day-period.
If any such registration or comparable statement refers to any
holder of Registerable Securities by name or otherwise as the holder of any
securities of the Company then such holder shall have the right to require (i)
the insertion therein of language, in form and substance satisfactory to such
holder, to the effect that the holding by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding does not imply
that such holder will assist in meeting any future financial requirements of the
Company, or (ii) in the event that such reference to such holder by name or
otherwise is not required by the Securities Act or any similar federal statute
then in force, the deletion of the reference to such holder.
12.4. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the
underwriters for any underwritten offering by holders of Registerable
Securities pursuant to a registration requested under section 12.1, the
Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to be satisfactory in
substance and form to the Company, each such holder and the
underwriters, and to contain such representations and warranties by the
Company and such other terms as are generally prevailing in agreements
of this type, including, without limitation, indemnities to the effect
and to the extent provided in section 12.7. The holders of the
Registerable Securities will cooperate with the Company in the
negotiation of the underwriting agreement and will give consideration
to the reasonable suggestions of the Company regarding the form
thereof, provided that
26
30
nothing herein contained shall diminish the foregoing obligations of
the Company. The holders of Registerable Securities to be distributed
by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registerable
Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registerable
Securities. Any such holder of Registerable Securities shall not be
required to make any representations or warranties to or agreements
with the Company or the underwriters other than representations and
warranties contained in a writing furnished by such holder expressly
for use in such registration statement, customary representations and
warranties contained in the relevant underwriting agreement, or
agreements regarding such holder, such holder's Registerable Securities
and such holder's intended method of distribution and any other
representation required by law.
(b) Incidental Underwritten Offerings. If the Company at any
time proposes to register any of its securities under the Securities
Act as contemplated by section 12.2 and such securities are to be
distributed by or through one or more underwriters, the Company will,
if requested by any holder of Registerable Securities as provided in
section 12.2 and subject to the provisions of section 12.2(b), use its
best efforts to arrange for such underwriters to include all the
Registerable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters, provided that if the
managing underwriter of such underwritten offering shall inform the
holders of the Registerable Securities requesting such registration and
the holders of any other securities which shall have exercised, in
respect of such underwritten offering, registration rights comparable
to the rights under section 12.2 by letter of its belief that inclusion
in such underwritten distribution of all or a specified number of such
Registerable Securities or of such other shares of securities so
requested to be included would interfere with the successful marketing
of the securities (other than such Registerable Securities and other
shares of securities so requested to be included) by the underwriters
(such writing to state the basis of such belief and the approximate
number of such Registerable Securities and shares of other securities
so requested to be included which may be included in such underwritten
offering without such effect), then the Company may, upon
27
31
written notice to all holders of such Registerable Securities and of
such other shares of securities so requested to be included, exclude
pro rata from such underwritten offering (if and to the extent stated
by such managing underwriter to be necessary to eliminate such effect)
the number of such Registerable Securities and shares of such other
securities so requested to be included the registration of which shall
have been requested by each holder of Registerable Securities and by
the holders of such other so that the resultant aggregate number of
such Registerable Securities and of such other shares of securities so
requested to be included which are included in such underwritten
offering shall be equal to the approximate number of shares stated in
such managing underwriter's letter. The holders of Registerable
Securities to be distributed by such underwriters shall be parties to
the underwriting agreement between the Company and such underwriters
and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such holders of Registerable
Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registerable
Securities. Any such holder of Registerable Securities shall not 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, such holder's
Registerable Securities and such holder's intended method of
distribution and any other representation required by law.
Notwithstanding anything to the contrary contained herein, in the event
that any terms of this Section 12 are inconsistent with or conflict
with the terms of the proviso to Section 5.01(b) of the Warrant
Agreement dated as of September 3, 1998 between the Company and
American Stock Transfer & Trust Company (the "UNIT AGREEMENT"), the
terms of the Unit Agreement shall govern and the terms hereof shall be
deemed to be amended insofar as is necessary to resolve such
inconsistency or conflict.
(c) Confidentiality. Any holder receiving any written notice
from the Company regarding the Company's plans to file a Registration Statement
shall treat such notice confidentially and shall not disclose such information
to any person other than as necessary to exercise its rights under this Warrant.
(d) Participation in Underwritten Offerings. No Person may
participate in any underwritten offering hereunder unless such Person (i) agrees
28
32
to sell such Person's securities on the basis provided in any underwriting
arrangements approved, subject to the terms and conditions hereof, by the
holders of a majority of Registerable Securities to be included in such
underwritten offering and (ii) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents (other than powers of
attorney) required under the terms of such underwriting arrangements.
Notwithstanding the foregoing, no underwriting agreement (or other agreement in
connection with such offering) shall require any holder of Registerable
Securities to make any representations or warranties to or agreements with the
Company or the underwriters other than representations and warranties contained
in a writing furnished by such holder expressly for use in the related
registration statement, customary representations or warranties contained in the
relevant underwriting agreement, or agreements regarding such holder, such
holder's Registerable Securities and such holder's intended method of
distribution and any other representation required by law.
12.5. Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Warrant, the Company will give the holders of
Registerable Securities registered under such registration statement, their
underwriters, if any, and their respective counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act, provided that the
Company shall not be required to comply with this section 12.5 if there is a
reasonable likelihood, in the judgment of the Company, that such delivery could
result in the loss of any attorney-client privilege related thereto; and
provided further that Records which the Company determines, in good faith, to be
confidential and which it notifies the holders of Registerable Securities are
confidential shall not be disclosed by the holders of Registerable Securities
unless (x) such Records have become generally available to the public or (y) the
disclosure of such Records may be necessary or appropriate (A) in compliance
with any law, rule, regulation or order applicable to any such holder of
Registerable Securities, (B) in response to any subpoena or other legal process
or (C) in connection with any litigation to which any such holder of
Registerable Securities is a party.
29
33
12.6. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act,
the Company will, and hereby does, indemnify and hold harmless in the
case of any registration statement filed pursuant to section 12.1 or
12.2, the holder of any Registerable Securities covered by such
registration statement, its directors and officers, each other Person
who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such holder or
any such underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which
such holder or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto,
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and the Company will reimburse such holder and
each such director, officer, underwriter and controlling person for any
legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action
or proceeding, provided that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability
(or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any
such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company through an instrument duly
executed by such holder specifically stating that it is for use in the
preparation thereof and, provided, further that the Company shall not
be liable to any Person who participates as an underwriter, in the
offering or sale of Registerable Securities or to any other Person, if
any, who controls such underwriter within the meaning of the Securities
Act, in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense
arises out of such Person's failure to send or give a copy
30
34
of the final prospectus, as the same may be then supplemented or
amended, within the time required by the Securities Act to the Person
asserting an untrue statement or alleged untrue statement or omission
or alleged omission at or prior to the written confirmation of the sale
of Registerable Securities to such Person if such statement or omission
was corrected in such final prospectus. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of such holder or any such director, officer, underwriter or
controlling person and shall survive the transfer of such securities by
such holder.
(b) Indemnification by the Sellers. The Company may require,
as a condition to including any Registerable Securities in any
registration statement filed pursuant to section 12.3, that the Company
shall have received an undertaking satisfactory to it from the
prospective seller of such Registerable Securities, to indemnify and
hold harmless (in the same manner and to the same extent as set forth
in subdivision (a) of this section 12.6) the Company, each director of
the Company, each officer of the Company and each other person, if any,
who controls the Company within the meaning of the Securities Act, with
respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such seller specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement. Any such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling person and shall survive the
transfer of such securities by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subdivisions
of this section 12.6 and subdivision (f) below, such indemnified party
will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any
indemnified party to give notice as provided herein shall not relieve
the indemnifying party of its obligations under the preceding
subdivisions of this section 12.6, except to the extent that the
indemnifying party is
31
35
actually prejudiced by such failure to give notice. In case any such
action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying
party similarly notified, to the extent that the indemnifying party may
wish, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement of any
such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a
release from all liability, or a covenant not to ▇▇▇, in respect to
such claim or litigation. No indemnified party shall consent to entry
of any judgment or enter into any settlement of any action for which
indemnity is required to be provided by an indemnifying party hereunder
without the consent of such indemnifying party; in no event shall the
indemnifying party be required to pay the expenses of more than one law
firm per jurisdiction as counsel for the indemnified party. The
provisions of this subsection (c) shall also apply to a contribution
pursuant to subsection (f) below.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this section 12.6 (with
appropriate modifications) shall be given by the Company and each
seller of Registerable Securities with respect to any required
registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority, other than the
Securities Act.
(e) Indemnification Payments. The indemnification required by
this section 12.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
(f) Contribution. If the indemnification provided for in the
preceding subdivisions of this section 12.6 is unavailable to an
indemnified party in respect of any expense, loss, claim, damage or
liability referred to therein, then each indemnifying party, in lieu of
indemnifying such
32
36
indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of such expense, loss, claim, damage
or liability (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
holder or underwriter, as the case may be, on the other from the
distribution of the Registerable Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the holder or underwriter, as the
case may be, on the other in connection with the statements or
omissions which resulted in such expense, loss, damage or liability, as
well as any other relevant equitable considerations. The relative fault
of the Company on the one hand and of the holder or underwriter, as the
case may be, on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or omission to state a material fact relates to
information supplied by the Company, by the holder or by the
underwriter and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission, provided that the foregoing contribution agreement shall not
inure to the benefit of any indemnified party if indemnification would
be unavailable to such indemnified party by reason of the provisions
contained in the first sentence of subdivision (a) of this section
12.6, and in no event shall the obligation of any indemnifying party to
contribute under this subdivision (f) exceed the amount that such
indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under subdivisions
(a) or (b) of this section 12.6 had been available under the
circumstances.
The Company and the holders of Registerable Securities agree
that it would not be just and equitable if contribution pursuant to
this subdivision (f) were determined by pro rata allocation (even if
the holders and any underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to
in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth in the preceding sentence and
subdivision (c) of this section 12.6, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
33
37
Notwithstanding the provisions of this subdivision (f), no
holder of Registerable Securities or underwriter shall be required to
contribute any amount in excess of the amount by which (i) in the case
of any such holder, the net proceeds received by such holder from the
sale of Registerable Securities or (ii) in the case of an underwriter,
the total price at which the Registerable Securities purchased by it
and distributed to the public were offered to the public exceeds, in
any such case, the amount of any damages that such holder or
underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
13. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
Acquiring Person: With reference to the transactions referred
to in clauses (a) through (d) of section 3.1, the continuing or surviving
corporation of a consolidation or merger with the Company (if other than the
Company), the transferee of substantially all of the properties of the Company,
the corporation consolidating with or merging into the Company in a
consolidation or merger in connection with which the Common Stock is changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or, in the case of a capital reorganization or
reclassification, the Company.
Acquisition Price: As applied to the Common Stock, (a) the
Market Price on the date immediately preceding the date on which any transaction
to which section 3 applies is consummated, or (b) if a purchase, tender or
exchange offer is made by the Acquiring Person (or by any of its affiliates) to
the holders of the Common Stock and such offer is accepted by the holders of
more than 50% of the outstanding shares of Common Stock, the greater of (i) the
price determined in accordance with the provisions of the foregoing clause (a)
of this sentence and (ii) the Market Price on the date immediately preceding the
acceptance of such offer by the holders of more than 50% of the outstanding
shares of Common Stock.
Additional Shares of Common Stock: All shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to section 2.3 or
2.4, deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than
34
38
(a) shares issued upon the exercise of the Warrants,
(b) shares issued (including upon the exercise of options) to
directors, advisors, employees or consultants of the Company pursuant
to a stock option plan, employee stock purchase plan, restricted stock
plan or other agreement approved by the board of directors of the
Company,
(c) such additional number of shares as may become issuable
upon the exercise of any of the securities referred to in the foregoing
clauses (a) and (b) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as in effect on
the date hereof, but only if and to the extent that such adjustments
are required as the result of the original issuance of the Warrants,
(d) such additional number of shares as may become issuable
upon the exercise of any of the securities referred to in the foregoing
clauses (a) and (b) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as in effect on
the date hereof, in order to reflect any subdivision or combination of
Common Stock, by reclassification or otherwise, or any dividend on
Common Stock payable in Common Stock,
(e) shares issued upon exercise of any warrants outstanding on
the date hereof, and
(f) shares issued pursuant to the terms of the Company's
7 1/2% Series A Cumulative Convertible Preferred Stock, including as
dividends thereon or pursuant to the conversion thereof.
Business Day: Any day other than a Saturday or a Sunday or a
day on which commercial banking institutions in the City of New York are
authorized by law to be closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
Commission: The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant,
such term to include any stock into which such Common Stock shall have been
changed or any stock resulting from any reclassification of such Common Stock,
and all
35
39
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference.
Company: As defined in the introduction to this Warrant, such
term to include any corporation which shall succeed to or assume the obligations
of the Company hereunder in compliance with section 3.
Convertible Securities: Any evidences of indebtedness, shares
of stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
Credit Agreement: That certain Credit Agreement, by and among
Network Plus, Inc., Network Plus Corp., the lenders party thereto from time to
time, ▇▇▇▇▇▇▇ Sachs Credit Partners L.P., as a joint lead arranger, book runner
and as syndication agent, FleetBoston ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., as a joint lead
arranger, DLJ Bridge Finance, Inc., as documentation agent and Fleet National
Bank, as administrative agent and as collateral agent, dated as of September 27,
2000.
Current Market Price: On any date specified herein, the
average daily Market Price during the period of the most recent 20 days, ending
on such date, on which the national securities exchanges were open for trading,
except that if no Common Stock is then listed or admitted to trading on any
national securities exchange or quoted in the over-the-counter market, the
Current Market Price shall be the Market Price on such date.
Exchange Act: The Securities Exchange Act of 1934, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Initiating Holders: Any holder or holders of Registerable
Securities holding at least 50% of the Registerable Securities (by number of
shares at the time issued and outstanding), and initiating a request pursuant to
section 12.1 for the registration of all or part of such holder's or holders'
Registerable Securities.
Institutional Holder: Any original purchaser of any Warrant,
any insurance company, pension fund, mutual fund, investment company, bank,
savings bank, savings and loan association, broker-dealer, investment adviser,
investment
36
40
banking company, trust company or any finance or credit company, any portfolio
or any investment fund managed by any of the foregoing, any other institutional
investor and any nominee of any of the foregoing.
Market Price: On any date specified herein, the amount per
share of the Common Stock, equal to (a) the last sale price of such Common
Stock, regular way, on such date or, if no such sale takes place on such date,
the average of the closing bid and asked prices thereof on such date, in each
case as officially reported on the principal national securities exchange on
which such Common Stock is then listed or admitted to trading, or (b) if such
Common Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system security by
the NASD, the last trading price of the Common Stock on such date, or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the closing bid and asked prices of the Common Stock
on such date as shown by the NASD automated quotation system, or (d) if such
Common Stock is not then listed or admitted to trading on any national exchange
or quoted in the over-the-counter market, the higher of (x) the book value
thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company as of the
last day of any month ending within 60 days preceding the date as of which the
determination is to be made or (y) the fair value thereof determined in good
faith by the Board of Directors of the Company as of a date which is within 18
days of the date as of which the determination is to be made.
Market Value: Per share of common stock (or equivalent equity
interests) of the Acquiring Person or its Parent on any date specified herein,
(a) the average of the last sale prices, regular way, on the 20 consecutive
business days immediately preceding such date or, if there shall have been no
sale on any such day, the average of the closing bid and asked prices on such
date, in each case as officially reported on the principal national securities
exchange on which such common stock is at the time listed or admitted to
trading, or (b) if such common stock is not then listed or admitted to trading
on any national securities exchange, but is designated as a national market
system security by the NASD, the last trading price of the common stock on such
date, or if there shall have been no trading on such date or if the common stock
is not so designated, the average of the reported closing bid and asked prices
on such 20 days as shown by the NASD automated quotation system.
NASD: The National Association of Securities Dealers, Inc.
37
41
Options: Rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
Other Securities: Any stock (other than Common Stock) and
other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to section 3 or otherwise.
Parent: As to any Acquiring Person any corporation which (a)
controls the Acquiring Person directly or indirectly through one or more
intermediaries, (b) is required to include the Acquiring Person in the
consolidated financial statements contained in such Parent's Annual Report on
Form 10-K and (c) is not itself included in the consolidated financial
statements of any other person (other than its consolidated subsidiaries).
Person: A corporation, an association, a partnership, an
organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.
Purchaser: As defined in the introduction to this Warrant.
Registerable Securities: (a) Any shares of Common Stock or
Other Securities issued or issuable upon exercise of this Warrant and (b) any
securities issued or issuable with respect to any securities referred to in the
foregoing subdivision by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Registerable Securities, once
issued such securities shall cease to be Registerable Securities when (a) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, (b) they shall have
been distributed to the public pursuant to Rule 144 (or any successor provision)
under the Securities Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further transfer shall
have been delivered by the Company and subsequent disposition of them shall not
require registration or qualification of them under the Securities Act or any
similar state law then in force, (d) they shall have ceased to be outstanding
or,
38
42
(e) such securities are eligible for sale pursuant to Rule 144(k) (or any
successor provision) under the Securities Act.
Registration Expenses: All expenses incident to the Company's
performance of or compliance with section 12, including, without limitation, all
registration, filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the reasonable fees and disbursements of one
counsel retained by holder or holders and accountants retained by the holder or
holders of more than 50% of the Registerable Securities being registered,
premiums and other costs of policies of insurance against liabilities arising
out of the public offering of the Registerable Securities being registered and
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts and commissions and
transfer taxes and fees and expenses of counsel for any holder except as set
forth above, if any, provided that, in any case where Registration Expenses are
not to be borne by the Company, such expenses shall not include salaries of
Company personnel or general overhead expenses of the Company, auditing fees,
premiums or other expenses relating to liability insurance required by
underwriters of the Company or other expenses for the preparation of financial
statements or other data normally prepared by the Company in the ordinary course
of its business or which the Company would have incurred in any event.
Restricted Securities: (a) any Warrants bearing the applicable
legend set forth in section 9.2, (b) any shares of Common Stock (or Other
Securities) issued upon the exercise of Warrants which are evidenced by a
certificate or certificates bearing the applicable legend set forth in such
section, (c) any shares of Common Stock (or Other Securities) issued subsequent
to the exercise of any of the Warrants as a dividend or other distribution with
respect to, or resulting from a subdivision of the outstanding shares of Common
Stock (or Other Securities) into a greater number of shares by reclassification,
stock splits or otherwise, or in exchange for or in replacement of the Common
Stock (or Other Securities) issued upon such exercise, which are evidenced by a
certificate or certificates bearing the applicable legend set forth in such
section, and (d) unless the context otherwise requires, any shares of Common
Stock (or Other Securities) issuable upon the exercise of Warrants, which, when
so issued, will be evidenced by a certificate or certificates bearing the
applicable legend set forth in such section.
39
43
Securities Act: The Securities Act of 1933, or any similar
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Transfer: Any sale, assignment, pledge or other disposition of
any security, or of any interest therein, which could constitute a "sale" as
that term is defined in section 2(3) of the Securities Act.
Voting Securities: Stock of any class or classes (or
equivalent interests), if the holders of the stock of such class or classes (or
equivalent interests) are ordinarily, in the absence of contingencies, entitled
to vote for the election of the directors (or persons performing similar
functions) of such business entity, even though the right so to vote has been
suspended by the happening of such a contingency.
Warrant Price: As defined in section 2.1.
Warrants: The common stock purchase warrants issued in
connection with this warrant agreement.
Weighted Average Warrant Price: As to any holder of Restricted
Securities, the price determined by dividing (a) the sum of the aggregate
consideration previously paid by such holder upon the exercise of Warrants plus
the consideration payable upon the exercise of all Warrants held by such holder
by (b) the sum of (i) the aggregate number of shares previously received by such
holder upon the exercise of Warrants plus (ii) the number of shares which would
be received by such holder upon the exercise of all Warrants held by such
holder, based upon the Warrant Price in effect on the effective date of the
registration statement in respect of which the Weighted Average Warrant Price is
being determined.
14. Remedies. Each party hereto stipulates that the remedies
at law of the holder of this Warrant in the event of any default or threatened
default by the Company in the performance of or compliance with any of the terms
of this Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
15. No Rights or Liabilities as Stockholder. Nothing contained
in this Warrant shall be construed as conferring upon the holder hereof any
rights
40
44
as a stockholder of the Company or as imposing any obligation on such holder to
purchase any securities or as imposing any liabilities on such holder as a
stockholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
16. Notices. All notices and other communications under this
Warrant shall be in writing and shall be delivered, or mailed by registered or
certified mail, return receipt requested, by a nationally recognized overnight
courier, postage prepaid, addressed (a) if to any holder of any Warrant, at the
registered address of such holder as set forth in the register kept at the
principal office of the Company, or (b) if to the Company, to the attention of
its President at its principal office, provided that the exercise of any Warrant
shall be effective in the manner provided in section 1.
17. Amendments. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. Notwithstanding the foregoing, any term of Section 12
of this Warrant may be amended or waived upon the written consent of the Company
and the holders of Company Warrants (as defined below) representing at least a
majority of the number of shares of Common Stock then subject to the outstanding
Company Warrants; provided that any such amendment or waiver must apply to all
Company Warrants then outstanding. "COMPANY WARRANTS" shall mean this Warrant
and all other warrants in the series of warrants issued by the Company in
connection with the Credit Agreement, all dated the date hereof and of like
tenor (other than the number of shares of Common Stock issuable upon exercise
thereof), including any warrants issued upon partial exercise or transfer
thereof.
18. Expiration. The right to exercise this Warrant shall
expire at 5.00 p.m., New York City time, on September 27, 2003. Notwithstanding
anything to the contrary set forth herein all rights to registration hereunder
shall expire at 5:00 p.m. on September 27, 2005.
19. Descriptive Headings. The headings in this Warrant are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.
20. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAW OF THE STATE OF DELAWARE, WITHOUT
41
45
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
21. Judicial Proceedings; Waiver of Jury. Any judicial
proceeding brought against the Company with respect to this Warrant may be
brought in any court of competent jurisdiction in the State of New York or of
the United States of America for the Southern District of New York and, by
execution and delivery of this Warrant, each of the Company and holder (a)
accepts, generally and unconditionally, the nonexclusive jurisdiction of such
courts and any related appellate court, and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Warrant, subject to any
rights of appeal, and (b) irrevocably waives any objection the Company may now
or hereafter have as to the venue of any such suit, action or proceeding brought
in such a court or that such court is an inconvenient forum. The Company hereby
waives personal service of process and consents, that service of process upon it
may be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of section 16,
and service so made shall be deemed completed on the third Business Day after
such service is deposited in the mail or, if earlier, when delivered. Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of any holder of any Warrant to bring proceedings
against the Company in the courts of any other jurisdiction. THE COMPANY HEREBY
WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS WARRANT OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
NETWORK PLUS CORP.
By:_____________________________
Title:
42
46
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To: [NAME OF ISSUER]
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, ______* shares of Common
Stock of [NAME OF ISSUER] and herewith makes payment of $ therefor, and
requests that the certificates for such shares be issued in the name of, and
----------
* Insert here the number of shares called for on the face of
this Warrant (or, in the case of a partial exercise, the
portion thereof as to which this Warrant is being exercised),
in either case without making any adjustment for Additional
Shares of Common Stock or any other stock or other securities
or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In
the case of partial exercise, a new Warrant or Warrants will
be issued and delivered, representing the unexercised portion
of the Warrant, to the holder surrendering the Warrant.
43
47
delivered to , whose address is .
Dated: _______________________________________________
(Signature must conform in all respects to name
of holder as specified on the face of Warrant)
_______________________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
_______________________________________________
(City)(State)(Zip Code)
44
48
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto the right represented by such
Warrant to purchase shares of [Common Stock] of [NAME OF ISSUER] to which
such Warrant relates, and appoints Attorney to make such transfer
on the books of [NAME OF ISSUER] maintained for such purpose, with full power of
substitution in the premises.
Dated: _______________________________________________
(Signature must conform in all respects to name
of holder as specified on the face of Warrant)
_______________________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
_______________________________________________
(City)(State)(Zip Code)
Signed in the presence of:
45