Exhibit 10.31
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WARRANT AGREEMENT
Dated as of March 16, 2000
By and Between
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
(As Issuer of Warrants)
and
MCG FINANCE CORPORATION
(As Purchaser of Warrants)
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Warrants to Purchase 838,779 Shares of
Voting Common Stock of Company
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TABLE OF CONTENTS
Page
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ARTICLE 1: GRANT OF WARRANTS..................................................1
1.1. GRANT OF WARRANTS......................................................1
1.2. WARRANT ENTITLEMENT....................................................1
1.3. WARRANTS AS ADDITIONAL COMPENSATION....................................2
ARTICLE 2: PURCHASER'S REPRESENTATIONS AND AGREEMENTS..........................2
ARTICLE 3: COMPANY'S REPRESENTATIONS AND WARRANTIES............................2
3.1. LEGAL EXISTENCE AND POWER..............................................2
3.2. AUTHORIZATION; NON-CONTRAVENTION.......................................3
3.3. EXECUTION, DELIVERY AND BINDING EFFECT.................................3
3.4. BROKER AND FINDER FEES.................................................3
3.5. OFFER AND SALE OF SECURITIES...........................................3
3.6. CAPITALIZATION; WARRANT SHARES AS A PERCENT OF CAPITAL STOCK...........3
3.7. RESERVATION AND ISSUANCE OF WARRANT SHARES.............................4
3.8. DISCLOSURES............................................................4
3.9. ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE WARRANTS..........4
ARTICLE 4: THE WARRANTS AND WARRANT SHARES.....................................5
4.1. WARRANT CERTIFICATES...................................................5
4.2. EXERCISE OF WARRANTS...................................................6
4.3. TRANSFERS OF WARRANTS AND WARRANT SHARES...............................7
4.4. REGISTRATION AND RELATED RIGHTS........................................7
4.5. RIGHTS UPON EQUITY DISPOSITIONS, EQUITY REDEMPTIONS AND
NON-SURVIVING TRANSACTIONS ...........................................12
4.6. REPURCHASE OFFERS.....................................................13
4.7. CUMULATIVE RIGHTS.....................................................14
4.8. EXERCISE OF RIGHTS CONDITIONED UPON CLOSING OF TRANSACTION INVOLVED...15
4.9. PAYMENT OF TAXES AND EXPENSES.........................................15
4.10. RESERVATION AND ISSUANCE OF WARRANT SHARES............................15
4.11. CORRECTIVE ADJUSTMENTS................................................15
4.12. LISTING OF SHARES.....................................................16
4.13. LISTS OF HOLDERS......................................................16
4.14. STATEMENT OF WARRANT INTEREST.........................................16
4.15. RIGHT OF INSPECTION...................................................16
4.16. ATTENDANCE AND PARTICIPATION RIGHTS...................................16
4.17. COMPLIANCE WITH APPROVAL REQUIREMENTS.................................17
ARTICLE 5: ANTI-DILUTION PROVISIONS...........................................17
5.1. ADJUSTMENTS TO WARRANT SHARES PURCHASABLE AND EXERCISE PRICE..........17
5.2. NOTICE OF ADJUSTMENT..................................................19
5.3. PRESERVATION OF PURCHASE RIGHTS UPON CERTAIN TRANSACTIONS.............19
ARTICLE 6: COMPANY'S COVENANTS................................................20
6.1. INFORMATION...........................................................20
6.2. BOOKS AND RECORDS.....................................................21
6.3. NO AMENDMENTS TO ORGANIC DOCUMENTS....................................21
6.4. EXISTENCE AND GOOD STANDING...........................................22
6.5. TRANSACTIONS WITH RELATED PARTIES.....................................22
6.6. CONDUCT OF BUSINESS...................................................22
ARTICLE 7: DEFINITIONS........................................................22
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7.1. DEFINITIONS...........................................................22
7.2. GENERAL CONSTRUCTION AND INTERPRETATION...............................28
ARTICLE 8: MISCELLANEOUS......................................................29
8.1. COMPLIANCE WITH FCC AND STATE PUC REQUIREMENTS........................29
8.2. COMPLIANCE WITH PURCHASER'S REGULATORY REQUIREMENTS...................29
8.3. BINDING EFFECT AND GOVERNING LAW......................................29
8.4. SURVIVAL..............................................................30
8.5. NO WAIVER; DELAY......................................................30
8.6. MODIFICATION..........................................................30
8.7. NOTICES...............................................................30
8.8. PRIOR AGREEMENTS SUPERSEDED...........................................31
8.9. SEVERABILITY..........................................................31
8.10. COUNTERPARTS..........................................................31
8.11. LIMITATION OF LIABILITY...............................................31
8.12. FORUM SELECTION; CONSENT TO JURISDICTION..............................31
8.13. WAIVER OF JURY TRIAL..................................................32
EXHIBIT A -- Articles of Incorporation........................................34
EXHIBIT B -- Authorizing Resolutions..........................................35
EXHIBIT C -- Form of Warrant Certificate......................................36
EXHIBIT D -- Restrictive Legends..............................................37
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT (as defined in Article 7 along with all the other
defined terms, this "Agreement") is made and effective as of March 16, 2000 by
and between ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC. (as more fully defined in Article 7,
"Company"), and MCG FINANCE CORPORATION (as more fully defined in Article 7,
"Purchaser", "Lender" and/or a "Holder").
R E C I T A L S
WHEREAS, Company (together with certain of its Affiliates) has requested
Lender (and Lender has agreed) to enter into the Credit Agreement and various
related Loan Documents (as defined in the Credit Agreement) pursuant to which
Lender will provide Borrowers (as defined therein) with credit facilities
initially aggregating up to $15.0 million; and
WHEREAS, to induce Lender to enter into the Credit Agreement and other
Loan Documents and as additional consideration for the credit to be provided
thereunder, Company has agreed to issue and deliver to Purchaser the Warrants
(evidenced by Warrant Certificates) to purchase up to an aggregate of 838,779
shares (subject to adjustment as provided in Section 4.11 and Section 5.1) of
Common Stock of Company;
NOW, THEREFORE, for good and valuable consideration (receipt and
sufficiency of which are hereby acknowledged), and intending to be legally bound
hereby, Company and Purchaser hereby agree as follows:
ARTICLE 1. GRANT OF WARRANTS
1.1. Grant of Warrants. Company hereby grants to Purchaser warrants
(including all Block A Warrants and all Block B Warrants, each a "Warrant";
collectively, the "Warrants") to purchase up to an aggregate of 838,779 shares
of Common Stock (as such number may be adjusted from time to time as provided
herein). 559,186 Warrants shall be designated as Block A Warrants and shall have
a Block A Exercise Price, which Block A Exercise Price is set forth in Section
1.2. 279,593 Warrants shall be designated as Block B Warrants and shall have a
Block B Exercise Price, which Block B Exercise Price is set forth in Section
1.2. Each Warrant is exercisable immediately.
1.2. Warrant Entitlement. Each Block A Warrant entitles the registered
Holder of such Warrant to purchase (during the Exercise Period) one fully paid,
nonassessable Warrant Share at a price of $7.00 per share (as such amount may be
adjusted from time to time as provided herein, the "Block A Exercise Price").
Each Block B Warrant entitles the registered Holder of such Warrant to purchase
(during the Exercise Period) one fully paid, nonassessable Warrant Share at a
price per share equal to $12.00 (as such amount may be adjusted from time to
time as provided herein, the "Block B Exercise Price").
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1.3. Warrants as Additional Compensation. The Warrants (and the grant
thereof hereunder) are additional compensation for the cost, expense and risk
incurred by Lender (and/or its Affiliates) associated with the underwriting and
establishment of the loan credit facilities to be provided for in the Credit
Agreement, but neither the grant nor the exercise of any Warrants in any way
affects or relieves Company, Borrowers (or any Affiliate thereof) of any of its
obligations to fully and timely perform and to fully and timely repay the entire
indebtedness due under the Credit Agreement and related Loan Documents.
ARTICLE 2. PURCHASER'S REPRESENTATIONS AND AGREEMENTS
Purchaser represents and warrants that it is acquiring the Warrants (a)
solely for the purpose of investment and not with a view to any distribution of
the Warrants or any Warrant Shares within the meaning of the Securities Act, and
(b) with no present intention of selling or otherwise transferring the Warrants,
the Warrant Certificates or the Warrant Shares except as provided herein.
Purchaser further represents and warrants as follows: (1) it has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Warrants, and (2) it
has the ability to bear the economic risks of its prospective investment, and
(3) it is able (without materially impairing its financial condition) to hold
the Warrants and Warrant Shares for an indefinite period of time and to suffer a
complete loss on its investment in such Warrants and Warrant Shares. Purchaser
agrees that it will not offer, sell or otherwise transfer any Warrants, Warrant
Certificates or Warrant Shares except in compliance with this Agreement and the
Securities Act (and the regulations of the Commission thereunder), as well as in
compliance with any applicable laws, regulations and orders of and/or
administered by any State PUC (to the extent failure to so comply could
reasonably be expected to have or cause a material adverse effect on the
operations of Company) or the FCC. Purchaser further represents and warrants
that it is an "accredited investor" within the meaning of Rule 501 under
Regulation D of the Securities Act, has received a copy of Company's Information
Statement dated within 10 calendar days of the date of this Agreement disclosing
certain risks regarding investment in the Company's securities as well as other
information pertaining to the Company's business.
ARTICLE 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
Company represents and warrants that:
3.1. Legal Existence and Power. Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and (b) has all requisite corporate power to execute, deliver and
perform this Agreement, and (c) has all requisite corporate power to issue and
deliver the Warrants, to execute, deliver and perform the Warrant Certificates
(evidencing the Warrants), and to issue and deliver the Warrant Shares (if and
when any Warrants are exercised and upon payment of the purchase price
therefor). The Articles of Incorporation of Company (as amended from time to
time prior to the effective date hereof) are attached as Exhibit A.
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3.2. Authorization; Non-Contravention. Company has duly authorized each of
the following by all requisite actions thereof: (a) the execution, delivery and
performance of this Agreement, and (b) the issuance and delivery of the
Warrants, and (c) the execution, delivery and performance of the Warrant
Certificates, and (d) the issuance and delivery of the Warrant Shares upon any
exercise of the Warrants and payment of the purchase price therefor. None of the
actions or activities by Company the authorization of which is described in the
first sentence of this Section (when performed by Company) will violate, breach
or cause a default under (or will require any consent that has not been obtained
under) any applicable law or regulation (including the laws, regulations and
orders of and/or administered by the FCC or any State PUC), the Organic
Documents of Company, any voting or other equity-related agreements, any other
material agreements or instruments, any order, injunction or decree of any court
or governmental authority, or any permit, authorization or license that (with
respect to each of the foregoing items, as applicable) Company is a party to,
Company is bound by or Company operates pursuant to. The resolutions of
Company's Board of Directors authorizing the actions described in the first
sentence of this Section are attached as Exhibit B and are in full force and
effect as of the effective date hereof.
3.3. Execution, Delivery and Binding Effect. This Agreement and the
Warrant Certificates have been duly executed and delivered by Company. This
Agreement, the Warrant Certificates and the Warrants constitute valid and
binding obligations of Company enforceable against Company in accordance with
their terms except as (a) the enforceability hereof or thereof may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (b) the availability of equitable remedies may be limited by
equitable principles of general applicability.
3.4. Broker and Finder Fees. Company has not dealt with any broker,
finder, investment bank or other advisor in connection with the issuance and
sale of the Warrants or Warrant Shares, and no broker, finder, investment
banking or advisory fee or commission has been or will be payable by Company
with respect to the issuance and sale of the Warrants or the Warrant Shares.
3.5. Offer and Sale of Securities. Assuming the truth of the
representations and warranties of the Purchaser set forth in Article 2 as of the
date hereof and as of the date of exercise of the Warrants and acquisition of
the Warrant Shares, then the offer, sale and issuance of the Warrants complied
with or are exempt from, and the issuance of the Warrant Shares pursuant to the
terms hereof and thereof will comply with or will be exempt from, the
requirements of federal and applicable state securities or "Blue Sky" laws.
3.6. Capitalization; Warrant Shares as a Percent of Capital Stock.
a. Schedule 3.6 accurately and completely describes all of the
authorized, issued and outstanding shares of Capital Stock of Company. All of
such outstanding shares of Capital Stock have been validly issued and are fully
paid and nonassessable.
b. There are no outstanding warrants, options, convertible
securities or other rights, agreements or arrangements under which Company is or
may be obligated (contingently or otherwise) to issue any Capital Stock or to
purchase, redeem, retire or otherwise acquire any Capital Stock, except (1)
pursuant to this Agreement, and (2) warrants issued to the Company's
underwriters
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for its initial public offering exercisable for 290,000 shares of Common Stock
at an exercise price of $16.50 per share (the "Underwriters' Warrants"), and
warrants issued to certain financial advisors exercisable for 45,000 shares of
Common Stock at exercise prices of $7.00 and $9.00 per share (the "Advisors'
Warrants"), and options issued to directors, officers, employees and agents of
Company exercisable for 400,375 shares of Common Stock at exercise prices
ranging from $8.50 to $15.00 per share. No Person has any right of first
refusal, preemptive right, anti-dilution protection, put right, registration
right, or similar right with respect to any Capital Stock of Company, except (i)
Holders pursuant to this Agreement, and (ii) the holders of the Underwriters'
Warrants which warrants contain customary demand and piggyback registration
rights, and (iii) the holders of a portion of the Advisors' Warrants exercisable
for 15,000 shares which warrants are entitled to registration rights and
anti-dilution protection. To the knowledge of Company (after diligent inquiry),
no holder of any Capital Stock is a party to any equityholder or voting
agreement with respect to any such Capital Stock.
c. The Warrant Shares (if issued as of the effective date hereof)
would constitute 7.5% of the issued and outstanding shares of Capital Stock and
voting rights on a fully diluted basis assuming 8,609,574 shares are outstanding
as of the date hereof, warrants and options exercisable for up to an aggregate
of 735,375 are outstanding as of the date hereof and 1,000,000 shares of Common
Stock are issued in connection with the Telecon Acquisition and the Additional
Acquisitions.
3.7. Reservation and Issuance of Warrant Shares. Company has reserved
among its currently authorized but unissued shares of Common Stock the full
number of Warrant Shares deliverable upon exercise of all of the Warrants. The
Warrant Shares (when and if issued upon exercise of the Warrants in accordance
with the terms hereof) (a) will be duly authorized, validly issued, fully paid
and nonassessable, and (b) will be free from all taxes (other than income taxes
that may be imposed upon the Holder thereof), liens (other than liens that may
be created by the Holder thereof as and to the extent permitted under this
Agreement), preemptive rights, rights of first refusal or similar rights of
other equityholders of Company.
3.8. Disclosures. All information relating to or concerning Company (and
its direct and indirect Subsidiaries, if any) set forth in this Agreement or
otherwise provided to Purchaser in connection with the transactions contemplated
by this Agreement is true, correct and complete in all material respects, and
Company has not omitted to state any material fact necessary in order to make
the statements made herein or therein (in light of the circumstances under which
there were made) not misleading.
3.9. Acknowledgment Regarding Purchaser's Purchase of the Warrants.
Company acknowledges and agrees that (a) Purchaser is acting solely in the
capacity of an arm's length purchaser with respect to this Agreement and the
transactions contemplated hereby, and (b) Company has been advised by legal
counsel in connection herewith, and (c) Purchaser is not acting as a financial
advisor or fiduciary of Company (or in any similar capacity) with respect to
this Agreement or the transactions contemplated hereby, and (d) any advice given
by Purchaser or any of its representatives or agents in connection with this
Agreement and the transactions contemplated hereby is merely incidental to
Purchaser's purchase of the Warrants.
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ARTICLE 4. THE WARRANTS AND WARRANT SHARES
4.1. Warrant Certificates.
a. Form of Certificate; Registration Among Company's Records. The
Warrants shall be evidenced by one or more Warrant Certificates, each of which
will be substantially in the form of Exhibit C with the applicable legend
specified on Exhibit D (but such certificates shall incorporate such changes
therein as may be required from time to time to reflect any adjustments made
pursuant to Article 5, and the legend thereon shall be modified or removed from
time to time to reflect the applicable requirements of the Securities Act). Each
Warrant Certificate shall be uniquely numbered, shall identify the record Holder
thereof, and shall be registered on the books and records of Company in
substantially the same manner as other equity interests of Company.
b. Exchange and Transfer of Certificates. A Warrant Certificate (and
the Warrants evidenced thereby) may be exchanged or (subject to compliance with
the applicable requirements hereof) may be transferred from time to time at the
option of the Holder thereof. Upon surrender of any such Warrant Certificate to
Company, then Company shall issue and deliver to (or in accordance with the
written instructions of) such Holder one or more new Warrant Certificates
evidencing in the aggregate the same number of Warrants.
c. Missing and Mutilated Certificates. If any Warrant Certificate is
lost, stolen, mutilated or destroyed, then Company (upon request of the
registered Holder thereof) shall issue and deliver to (or in accordance with the
written instructions of) such Holder one or more replacement Warrant
Certificates evidencing in the aggregate the same number of Warrants. Company's
obligation under this Clause is conditioned upon its receipt of reasonably
satisfactory evidence of such loss, theft, mutilation or destruction.
d. Authorization of Certificate Signer. Any Warrant Certificate may
be signed on behalf of Company (and delivered to the Holder entitled thereto) by
any person who, on the actual date of execution of such Warrant Certificate, is
a proper officer of Company to sign such Warrant Certificate even though (1) on
the date of execution of this Agreement such person was not such an officer,
and/or (2) on the date of delivery of such Warrant Certificate such person has
ceased to serve as such officer of Company.
4.2. Exercise of Warrants.
a. Exercise Period. The Warrants are exercisable at any time and
from time to time after the effective date hereof and prior to 11:59 p.m.
(Eastern Time) on March 16, 2010 (as such period may be extended from time to
time by mutual agreement of the Holders and Company, "Exercise Period"), at
which time any unexercised Warrants shall expire.
b. Method of Exercise; Cashless Exercise. A Holder of any Warrant
Certificate may exercise any such Warrants from time to time during the Exercise
Period to purchase Warrant Shares upon (1) the surrender of such Warrant
Certificate evidencing such Warrants, and (2) the payment of the applicable
Exercise Price in cash, by certified or cashier's check payable to the order
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of Company or by wire transfer to Company. As an alternative to paying such
Exercise Price (or any portion thereof) in cash, a Holder may instead elect to
effect a cashless exercise pursuant to which such Holder will receive in
exchange for such tendered Warrants an amount of Warrant Shares determined by
multiplying (a) the number of Warrant Shares into which such Holder would
otherwise be entitled as a result of such exercise by (b) a fraction (i) the
numerator of which is the difference between the then Current Market Price per
Warrant Share and the Exercise Price then in effect and (ii) the denominator of
which is the then Current Market Price per Warrant Share. Such surrender and
payment must occur at an office of Company or at such other address as Company
may specify in writing to the then registered Holder of such Warrant
Certificate.
c. Issuance of Warrant Shares Upon Exercise. Upon surrender of any
Warrant Certificate and payment of the applicable Exercise Price (as described
above in this Section), then Company shall issue, sell and deliver to or upon
the instructions of the Holder of such Warrant Certificate and/or its designee
one or more certificates evidencing in the aggregate the number of Warrant
Shares represented by such Warrant Certificate that are then being purchased
(each of which Warrant Shares shall be validly issued, fully paid and
nonassessable). Any persons so designated to be named therein shall be deemed to
have become a Holder of record of such Warrant Shares as of the date of exercise
of such Warrants. If less than all of the Warrants evidenced by a Warrant
Certificate are exercised at any time prior to the last day of the Exercise
Period, then Company shall issue to such Holder (or its designee) one or more
new Warrant Certificates evidencing the remaining number of Warrants evidenced
by such Warrant Certificate that are not then exercised by Holder.
d. Rights of a Holder of Warrant Shares Upon Exercise. Upon any
exercise of Warrants by a Holder entitled thereto in accordance with and as
provided under this Agreement, the Holder of such issued Warrant Shares shall be
entitled to all of the rights and benefits of a holder of Common Stock under the
Organic Documents of Company as well as the rights and benefits of a Holder of
Warrant Shares under this Agreement (notwithstanding any provision of such
Organic Documents to the contrary). To the extent that the rights and benefits
of a holder of Capital Stock under the Organic Documents are inconsistent with
or less favorable than the rights and benefits of a Holder of Warrant Shares
under this Agreement, then the terms and provisions of this Agreement shall
control and govern with respect to the rights and benefits of such Holder.
4.3. Transfers of Warrants and Warrant Shares.
a. General Transferability. Except as otherwise expressly provided
herein, upon compliance with any applicable requirements under the Securities
Act and the laws, regulations and orders of and/or administered by each State
PUC (to the extent failure to so comply could reasonably be expected to have or
cause a material adverse effect on the operations of Company) or the FCC, then
the Warrants, the corresponding Warrant Certificates and the Warrant Shares may
be transferred by a Holder from time to time in whole or in part upon complying
with the applicable restrictions under this Section (but without the necessity
of otherwise obtaining any consent of Company).
b. Treatment of Holder Prior to Notice of Transfer. Prior to
receiving notice of any such transfer (either from such Holder or from such
transferee), Company shall be otherwise
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entitled to treat such known Holder as the Holder of record hereunder for
purposes of giving and receiving notices and for purposes of exercising rights
hereunder.
c. Rights of a Subsequent Holder. Unless otherwise limited or
restricted pursuant to the document of transfer, then a subsequent Holder of
Warrants, Warrant Certificates or Warrant Shares hereunder shall be entitled to
all of the rights and benefits of the transferring Holder under this Agreement
and under the Organic Documents.
4.4. Registration and Related Rights.
a. Incidental Registration in a Public Offering. Each Holder of
Warrant Shares and each Holder of Warrants shall have the right to require
Company to include all or (at such Holder's election) any portion of such
Warrants and the Warrant Shares purchasable upon exercise of any such Warrants
in any Public Offering of Company's securities, other than in connection with a
merger or pursuant to a Form ▇-▇, ▇▇▇▇ ▇-▇ or other comparable or successor
registration statement.
Company shall give written notice to each Holder of Warrants and each
Holder of Warrant Shares (at each such Holder's last known address as it appears
on Company's books and records) at least 30 days prior to the initial filing of
a registration statement pertaining to any Public Offering. In addition, Company
shall also notify such Holders promptly after the occurrence of any of the
following events: (i) the initial filing of a registration statement with the
Commission pertaining to any Public Offering, or (ii) any amendment, supplement
or modification to any registration statement for a Public Offering by Company
(other than amendments, supplements and modifications that occur automatically
through incorporation by reference as a result of subsequently prepared publicly
available materials), or (iii) any withdrawal of any registration statement for
a Public Offering by Company. Once any such registration statement is declared
effective by the Commission, then Company may not amend or modify it without
providing each Holder of Warrants and each Holder of Warrant Shares with written
notice thereof at least 2 Business Days prior to filing any such amendment or
modification with the Commission.
In connection with any such Public Offering, Company shall enter into an
underwriting agreement with one or more underwriters that shall provide, among
other things, that the underwriters shall offer to purchase at the closing of
such Public Offering all of the Warrant Shares and all of the Warrants (or such
lesser portion thereof as any Holder may request) at the price paid by the
underwriters for the Capital Stock (or if a security convertible into or
exchangeable for, or rights to purchase, Capital Stock, then the conversion,
exchange or purchase price for the Capital Stock provided for by such security
less the conversion, exchange or exercise premium on the date of such offering)
sold by Company and/or any selling shareholders (less, with respect to Warrants,
the applicable Exercise Price then in effect). Notwithstanding the foregoing, if
the underwriters shall advise Company in writing that, in their experience and
professional opinion arrived at in good faith based upon existing market
conditions, inclusion of such number of Warrant Shares (together with the shares
of Capital Stock requested for registration by any other selling equityholders)
will adversely affect the price or distribution of the securities to be offered
in such Public Offering solely for the account of Company, then (1) Company
shall promptly furnish each such Holder with a copy of such written advice by
the underwriters, and (2) such Holders shall then have the right to include only
such number of Warrant Shares and Warrants that such advice by the underwriters
indicates
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may be distributed without adversely affecting the distribution of the
securities solely for Company's account. As among Holders of Warrant Shares
and/or Warrants, such availability for inclusion in the registration for such
Public Offering shall be allocated pro rata based upon the total number of
Warrant Shares owned or purchasable by such Holder. As between such Holders and
any other holders of Capital Stock requesting to be included in such Public
Offering, priority for inclusion in the registration for such Public Offering
shall be allocated pro rata among the Holders of Warrant Shares and Warrants and
the other holders of securities entitled to incidental or piggyback registration
rights.
In connection with any Public Offering, provided that all other holders of
equity interests of Company are subject to identical (or more restrictive)
restrictions with respect to their equity interests, then each Holder of
Warrants and each Holder of Warrant Shares shall agree to refrain from selling
or otherwise transferring (other than to a Holder-Affiliated Transferee) any
Warrant Shares not included in such Public Offering for a period of time (not to
exceed 180 calendar days after the effective date of the registration statement
for such Public Offering) as may be appropriate under the circumstances and
reasonably requested by Company and the underwriters for such offering.
b. Demand Registration. In addition to any other registration rights
to which any Holder is entitled, at any time and from time to time after the
date hereof, Company (upon each request of Holders of at least 50% of the
Warrant Shares and Warrants) shall prepare, shall file with the Commission and
shall use its best efforts to cause to become effective as promptly as
reasonably possible a registration statement (on Form S-3 or any successor form,
if available) covering such number of Warrant Shares owned or then purchasable
as is requested by such Holders. Notwithstanding the foregoing, Company shall
not be required to so prepare and file upon the demand of such Holders either
(a) more than two (2) such registration statements that are declared effective
by the Commission and maintained in effect by Company for at least 90
consecutive calendar days and are not on a Form S-3 (or any successor form), or
(b) any such registration statement within the first 180 calendar days after the
closing of a Public Offering in which 50% or more of the Warrant Shares and
Warrants were included, or (c) any registration statement if the anticipated
gross proceeds of the Public Offering is less than the lesser of $1,000,000 or
the proceeds realized by registering all Warrants and Warrant Shares then held
by Holders.
In connection with any such demand registration, Company shall use its
best efforts to engage (or, at Holders' request, shall use its best efforts to
assist Holders in engaging) one or more underwriters to purchase on a
best-efforts or a firm-offer basis the Warrant Shares owned or then purchasable
at the price at which such Warrant Shares are to be resold under such
registration statement less the underwriters' discount (less, with respect to
Warrants, the applicable Exercise Price then in effect). The registration
statement shall also provide that sales of the Warrant Shares may be made by
dealers, on an exchange if listed, directly to purchasers or in any other
manner. No such registration statement filed pursuant to this demand
registration provision (without the consent of Holders of at least 50% of the
total Warrant Shares and Warrants) may relate to any securities other than the
Warrant Shares (other than the underwriters' warrants and the advisors' warrants
existing as of the date hereof), and no other securities (other than the
underwriters' warrants and the advisors' warrants existing as of the date
hereof) may be sold incidentally to any such underwritten public offering of
Warrant Shares so registered.
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In connection with any such demand registration, Company shall keep
effective and maintain the registration, qualification, approval or listing
covering the Warrant Shares for a period of at least 90 consecutive calendar
days (or in the event such registration is on Form S-3 or any successor form, on
a continuous basis). Company from time to time shall amend or supplement the
prospectus and registration statement used in connection with any such
registration to the extent necessary to comply with applicable law (including to
reflect additional information relating to the plan of distribution), and shall
immediately advise each Holder if any such prospectus or registration statement
does not so comply and/or if any stop order or similar order is issued or
threatened or any request for amendment or supplement is received from any
regulatory agency. Company shall make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment. Company shall comply with all
other applicable laws in connection with any offering of Warrant Shares and will
promptly make available an earnings statement in accordance with Section 11(a)
of the Securities Act and the regulations promulgated thereunder.
c. Holders Entitled to Equivalent Rights. Except for the
underwriters' warrants and the advisors' warrants existing as of the date
hereof, if Company has otherwise granted or hereafter grants to any Person any
other or additional registration rights with respect to any securities of
Company (or similar registration rights with any more favorable or less
restrictive terms), then Company will promptly notify each Holder of Warrants
and each Holder of Warrant Shares, and such registration rights (or the more
favorable or less restrictive terms thereof) will be deemed automatically to be
incorporated into this Agreement (without the necessity of any other action by
the parties hereto) as additional registration rights that each Holder is
entitled to exercise.
d. Sales Through Underwriters and Dealers. Company shall effect the
registration or qualification of the Warrant Shares, and the notification to or
approval of any governmental authority under any federal or state law, and the
listing with any securities exchange on which the Common Stock is listed, in
each instance as may be reasonably necessary to permit the sale of Warrant
Shares through underwriters, and, in the case of a demand registration
hereunder, also through dealers, on an exchange, directly to purchasers or in
any other manner.
e. Certain Additional Agreements in Connection with Registrations.
In connection with any Public Offering, Company (1) shall enter into, execute
and deliver all agreements and other instruments and documents (including
opinions of counsel, comfort letters and underwriting agreements) that are
customary and appropriate with such public offerings, and (2) shall cooperate
with any underwriters to facilitate sales of the Warrant Shares to the same
extent as if such Warrant Shares were being offered directly by Company, and (3)
shall furnish each Holder such numbers of copies of registration statements and
prospectuses (and amendments and supplements thereto) as such Holder may
reasonably request, and (4) shall take all such other actions as are necessary
or advisable to facilitate the registration and sale of such Warrant Shares. In
connection with any Public Offering as to which any Holder is requesting
registration of Warrant Shares, each such Holder (i) shall provide Company with
such information regarding itself, himself or herself as may be reasonably
required by Company, and (ii) shall reasonably cooperate with Company in the
preparation of the registration statement, and (iii) shall enter into, execute
and deliver all agreements and other instruments and documents that are
customary and appropriate for selling equityholders to execute in connection
with a secondary public offering.
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f. Indemnification by Company. In connection with any offering of
Warrant Shares pursuant to the provisions of this Section, Company hereby
indemnifies and holds harmless each Holder of Warrants and each Holder of
Warrant Shares (and the directors, officers and controlling Persons of each such
Holder), each other Person (if any) who acts on behalf of or at the request of
any such Holder, each underwriter, and each other Person who participates in the
offering of Warrant Shares (collectively, for purposes of this Clause, the
"Indemnified Parties") against any losses, claims, damages or liabilities, joint
or several, to which such Indemnified Party may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon either of the following:
(i) any untrue statement or alleged untrue statement of any
material fact contained (on the effective date thereof) in any
registration statement (or any amendment thereto) under which such
Warrant Shares were registered under the Securities Act, or the
omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading, or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, or
(iii) any violation by Company of any federal or state law,
rule or regulation applicable to Company in connection with any
registration statement or prospectus (or any amendment or supplement
thereto).
Company shall also reimburse each such Indemnified Party for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or action. Notwithstanding the
foregoing, Company shall not be liable to an Indemnified Party in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon any untrue or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus,
prospectus, or amendment or supplement in reliance upon and in conformity with
written information furnished to Company through an instrument duly executed by
such Indemnified Party specifically stating that it is expressly for use
therein. Such indemnity shall remain in full force and effect and shall survive
the transfer of such Warrants or Warrant Shares by any such Holder.
g. Indemnification by Holders. Each Holder whose Warrant Shares are
sold under any registration statement pursuant to this Section (by inclusion of
such Warrant Shares thereunder) shall indemnify and hold harmless Company (the
officers, directors and controlling Persons thereof), each other Holder of
Warrants and each other Holder of Warrant Shares (and the directors, officers
and controlling Persons of each such Holder), each other Person (if any) who
acts on behalf of or at the request of Company or such other Holder, each
underwriter, and each other Person who participates in the offering of Warrant
Shares (collectively, for purposes of this Clause,
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the "Indemnified Parties") against any losses, claims, damages or liabilities,
joint or several, to which such Indemnified Party may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon either of the following:
(i) any untrue statement or alleged untrue statement of any
material fact contained (on the effective date thereof) in any
registration statement (or any amendment thereto) under which such
Warrant Shares were registered under the Securities Act at the
request of such Holder, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading;
but only to the extent (with respect to either of the foregoing Clauses) that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary prospectus,
prospectus, amendment or supplement in reliance upon and in conformity with
written information furnished to Company through an instrument duly executed by
such Holder specifically stating that it is expressly for use therein. Each such
Holder shall also reimburse each such Indemnified Party for any legal or any
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or action. Notwithstanding the
foregoing, no such Holder shall be liable to any Indemnified Party in any such
instance to the extent (a) such loss, claim, damage or liability relates to any
untrue statement or omission, or any alleged untrue statement or omission, made
in a preliminary prospectus but eliminated or remedied in a final prospectus,
and (b) a copy of the final prospectus was not delivered to the Person asserting
the claim at or prior to the time required by the Securities Act in an instance
for which delivery thereof would have constituted a defense to the claim
asserted by such Person and the failure to so deliver such prospectus was not
the result of the negligence of such Holder.
h. Certain Notices and Other Rights Relating to Indemnification. A
party from whom indemnity may be sought pursuant to the provisions of this
Section shall not be liable for such indemnity with respect to any claim as to
which indemnity is sought unless the party seeking such indemnity shall have
notified such indemnifying party in writing of the nature of such claim promptly
after such indemnified party becomes aware of the assertion thereof.
Notwithstanding the foregoing, the failure to so notify such indemnifying party
shall not relieve such party from any liability which it may have to such
indemnified party otherwise than on account of the provisions of this Section or
if the failure to give such notice promptly shall not have been prejudicial to
such indemnifying party. No indemnifying party shall be liable for any
compromise or settlement of any such action effected without its consent. No
indemnifying party (in the defense of any such claim or suit), without the
consent of each indemnified party, shall consent to any compromise or settlement
-11-
that does not include as an unconditional term thereof the giving by the
claimant to such indemnified party of a complete release from all liability in
respect of such claim or suit.
i. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section for any reason is held to be unenforceable although applicable in
accordance with its terms, Company and the Holders, as amongst themselves, shall
contribute to the losses, claims, damages, liabilities and expenses described
herein in such proportions so that the portion thereof for which any Holder
shall be responsible shall be limited to the portion determined by a court or
the parties to any settlement to be directly attributable to an untrue statement
of a material fact or an omission to state a material fact in a registration
statement, preliminary prospectus, prospectus or amendment or supplement thereto
in specific reliance upon and in conformity with written information furnished
to Company through an instrument duly executed by such Holder specifically
stating that it is expressly for use therein, and Company shall be responsible
for the balance. Notwithstanding the foregoing, the liability of each Holder
shall be limited to the net proceeds received by such Holder from the sale of
the Warrant Shares sold by it thereunder. Company and the Holders agree that it
would not be just and equitable if their respective obligations to contribute
were to be determined by pro rata allocation, by reference to the proceeds
realized by them or in any manner which does not take into account the equitable
considerations set forth in this Clause.
4.5. Rights Upon Equity Dispositions, Equity Redemptions and Non-Surviving
Transactions.
a. Offer to Purchase. In connection with any Equity Disposition, any
Equity Redemption or any Non-Surviving Transaction, Company or the acquiror in
any such transaction shall also offer to purchase on the terms set forth below
all of the Warrant Shares and all of the Warrants. If an Equity Disposition or
an Equity Redemption is of less than all of the Capital Stock then outstanding,
then the number of Warrants and Warrant Shares subject to purchase under this
Section shall be reduced proportionately (to the nearest whole number), and such
reduced number will be allocated pro rata among all Holders desiring to tender
Warrant Shares or Warrants in connection with such transaction.
b. Notice of Proposed Transaction. Company shall give written notice
to each Holder of Warrants and each Holder of Warrant Shares (at each such
Holder's last known address as it appears on Company's books and records)
promptly after an agreement in principle is reached with respect to any Equity
Disposition, any Equity Redemption or any Non-Surviving Transaction (but, in any
event, at least 30 calendar days prior to the closing of any such transaction).
c. Purchase Price. If a Holder accepts the offer under this Section,
then (as a condition to consummation of such Equity Disposition, Equity
Redemption or Non-Surviving Transaction) either Company or such acquiror shall
purchase (either before or concurrently with the consummation of such
transaction) all Warrants and Warrant Shares tendered by a Holder thereof at an
aggregate price equal to the product of (1) the aggregate consideration received
by all sellers and transferors in connection with such transaction or series of
related transactions (including the consideration to be received by the holders
of Warrants and Warrant Shares pursuant to this provision) and (2) a fraction
the numerator of which is the number of Warrants and Warrant Shares
-12-
tendered for purchase in connection with such transaction or series of related
transactions and the denominator of which is the sum of the number of shares of
Common Stock outstanding immediately prior to such transaction or series of
related transactions plus the number of Warrants then outstanding (which product
shall be net of the applicable Exercise Price then in effect with respect to
Warrants tendered but not with respect to Warrant Shares tendered).
d. Payment of Purchase Price. Company (either before or concurrently
with the consummation of such transactions) shall distribute to the respective
Holders of Warrants and Warrant Shares (or to such other Person as such Holder
may direct Company in writing) the applicable purchase price for each tendered
Warrant Share and Warrant. Such payment, except as otherwise provided in this
Clause, shall be in immediately available funds (i.e., in cash, by certified or
cashier's check, or by wire transfer) or by any other means acceptable to such
Holder. In addition, Company shall also deliver to each such Holder (as and to
the extent applicable) a return or re-issuance of Warrants and Warrant Shares
not purchased in connection with any such transaction. To the extent that any
consideration for such transaction is payable by such acquiror in cash, in
publicly traded and readily marketable securities (with reasonable liquidity and
no restrictions on transfer) or evidence of indebtedness from an obligor who (in
the commercially reasonable opinion of Holders) is highly creditworthy, then the
purchase price payable to Holders may be in the same form of consideration;
otherwise, the purchase price (or the remaining balance thereof) payable to
Holders shall be in immediately available funds. Notwithstanding the foregoing,
in connection with any such Equity Disposition, Equity Redemption or
Non-Surviving Transaction, each Holder may elect (at its option) to receive the
purchase price payable under this Section pro rata in kind in the same form of
consideration as is to be received by Company or such selling equityholder.
e. Intentionally Blank.
4.6. Repurchase Offers.
a. Offer to Repurchase. Within 30 calendar days following the
occurrence of any Repurchase Condition, Company and each Borrower (jointly and
severally) shall make a written offer (each, a "Repurchase Offer") to repurchase
at the Repurchase Price up to all of the Warrant Shares and Warrants owned by
each Holder. Each such Repurchase Offer (among other things) shall indicate the
date of occurrence of the relevant Repurchase Condition and shall provide a
calculation of the Current Market Price per Warrant Share (together with a copy
of documentation supporting such calculation). Each such Repurchase Offer shall
be delivered by Company to each such Holder entitled thereto by first-class mail
to the last known address of such Holder on the books and records of Company.
b. "Repurchase Condition". A "Repurchase Condition" will be deemed
to occur (1) at any time after January 1, 2005 upon a written request from
Holders of at least 50% of the outstanding Warrants and Warrant Shares, and (2)
upon any full repayment of the indebtedness under the Loan Documents, and (3)
upon the occurrence of any Event of Default under and as defined in the Credit
Agreement, and (4) upon the execution of any definitive agreement by Company or
holders of Capital Stock to engage in an Equity Disposition or a Non-Surviving
Transaction (or any amendment thereto), and (5) upon any attempt by any Holder
to exercise the Warrants in accordance with the terms hereof at a time when
Company is legally, regulatorily or
-13-
otherwise not authorized or permitted to issue the corresponding Warrant Shares,
provided, however, that Company shall be permitted a reasonable period of time
(not to exceed 30 calendar days) to prepare any state blue sky filings,
information statements, Nasdaq listing applications or other necessary
securities documents to procure the necessary private placement exemptions from
registration and Nasdaq approvals in connection with any such exercise without a
"Repurchase Condition" being deemed to have occurred.
c. "Repurchase Price". The "Repurchase Price" for each Warrant and
Warrant Share in connection with any such Repurchase Offer will be the Current
Market Price per Warrant Share, less with respect to Warrants (but not Warrant
Shares) the applicable Exercise Price then in effect.
d. Acceptance of Repurchase Offer. At any time within 30 calendar
days after a Holder receives a Repurchase Offer (together with a final written
valuation report), each such Holder may accept such Repurchase Offer by agreeing
to tender for repurchase by Company all or any portion of such Holder's Warrant
Shares and Warrants.
e. Payment of Purchase Price. Within 30 calendar days of receiving
any such agreement to tender Warrant Shares or Warrants, Company and each
Borrower (jointly and severally) shall distribute to each such Holder (or to
such other Person as such Holder may direct Company in writing) the applicable
Repurchase Price for each such tendered Warrant Share and Warrant in cash, by
certified or cashier's check, by wire transfer or by any other means acceptable
to such Holder (concurrently with which distribution, such Holder shall deliver
to Company the Warrant Certificates and/or Warrant Shares). In addition, Company
shall also deliver to each such Holder (as and to the extent applicable) a
return or re-issuance of Warrants and Warrant Shares not tendered for
repurchase. Notwithstanding the foregoing, with respect to the Repurchase
Condition occurring concurrently with any full repayment of the indebtedness
under the Loan Documents under Clause "b(2)" above, unless the Holders otherwise
consent, Company and each Borrower (jointly and severally) shall establish a
cash escrow of the Repurchase Price with a "well capitalized" depository
institution concurrently with any such full repayment of the indebtedness under
the Loan Documents (but such cash escrow shall be returned to Company if the
Holders elect not to accept such Repurchase Offer within the time period set
forth in Section 4.6.d).
4.7. Cumulative Rights. The rights of Holders upon the occurrence of
events set forth in this Article 4 are cumulative. If more than one such event
occurs simultaneously (or the time period for exercising any such rights
overlaps), then each Holder can elect which rights (if any) to exercise and any
prior inclusion or surrender of Warrants or Warrant Shares with respect to a
transaction that has not yet closed may be rescinded by such Holder during such
overlapping period in order to exercise rights arising under any concurrently
occurring event.
4.8. Exercise of Rights Conditioned Upon Closing of Transaction Involved.
The rights of Holders to have Warrants or Warrant Shares included and sold in
any Public Offering or purchased in any Equity Disposition or Non-Surviving
Transaction pursuant to this Article 4 are conditioned upon the consummation of
the proposed transaction. Neither Company nor any equityholder involved in any
such proposed transaction shall have any obligation to Holders to
-14-
consummate any such proposed transaction once an agreement in principle or
decision to proceed with respect thereto is reached, except as expressly
provided in this Article 4.
4.9. Payment of Taxes and Expenses. Company will pay all expenses
(including reasonable costs and expenses of Holders and one legal counsel
thereto, but excluding underwriter's and/or broker's discounts and commissions),
taxes (other than income taxes) and other reasonable fees and charges
attributable to the issuance, registration, qualification, notification,
approval, listing, transfer pursuant to Section 4.5, and/or repurchase of the
Warrants, the Warrant Certificates and the Warrant Shares.
4.10. Reservation and Issuance of Warrant Shares. Company at all times
shall reserve (and keep free from preemptive rights or similar rights of
equityholders of Company) among its authorized but unissued shares of Capital
Stock the full number of Warrant Shares deliverable upon exercise of all of the
Warrants. Company covenants that all Warrant Shares (when and if issued upon
exercise of the Warrants in accordance with the terms hereof including receipt
of the Exercise Price) will be duly authorized, validly issued, fully paid and
nonassessable (and will be free from all taxes, liens, charges and security
interests with respect to the issuance thereof). Before taking any action that
could cause an adjustment pursuant to Article 5, Company will take any corporate
action that (in the opinion of its counsel) may be necessary or appropriate in
order that Company may validly and legally issue fully paid and nonassessable
Warrant Shares at the applicable Exercise Price as so adjusted.
4.11. Corrective Adjustments. Company hereby acknowledges that Purchaser
has relied upon, among other things, the representation and warranty set forth
in Section 3.6 regarding the outstanding Capital Stock of Company and the rights
to acquire Capital Stock of Company as of the date of this Agreement. If it is
later determined that the representation and warranty set forth in Section 3.6
is untrue or inaccurate such that the outstanding Capital Stock or rights to
acquire Capital Stock are greater that the amount disclosed therein, then
Company shall notify each Holder in writing within 10 Business Days of
discovering such inaccuracy and shall promptly prepare, execute and deliver to
the Holders such additional documents and certificates as are necessary to
equitably adjust the Exercise Price and/or Warrants and Warrant Shares
deliverable upon exercise of all Warrants for the benefit of Holders. Such
adjustment shall include the issuance of additional Warrants and/or the
reduction in Exercise Price of the Warrants, as approved in writing by Holders
of a majority of the Warrants. In addition, if the assumption regarding the
number of shares of Common Stock issued in connection with the Telecon
Acquisition and the Additional Acquisitions (as set forth in Section 3.6.c) is
incorrect (after the Telecon Acquisition and all such Additional Acquisitions
have been completed), then Company shall, within 30 calendar days after the
completion of the last such Additional Acquisition, provide Holders with a
current capitalization chart. Holders shall then determine the appropriate
adjustment to the number of issued Warrants and/or the Exercise Price of the
Warrants, and Company shall promptly prepare, execute and deliver to the Holders
such additional documents and certificates as are necessary to equitably adjust
the Exercise Price and/or the Warrants.
4.12. Listing of Shares. If Company lists any shares of Common Stock on
any national securities exchange, inter-dealer quotation system or other market,
then Company (at its expense) will use its best efforts to cause the Warrant
Shares to be approved for listing, subject to notice of
-15-
issuance, and will provide prompt notice to each such exchange, system or other
market of the issuance thereof from time to time.
4.13. Lists of Holders. Company (from time to time upon the request of any
Holder) will provide such Holder with a list of the registered Holders and their
respective addresses.
4.14. Statement of Warrant Interest. Company (from time to time upon the
request of any Holder) will provide such Holder with a statement of such
Holder's interest in Company containing the following information (as
applicable): (a) the number of Warrants then owned of record by such Holder, and
(b) the number of Warrant Shares purchasable upon the exercise of each Warrant
then owned of record by such Holder, and (c) the Exercise Price of each Warrant
then owned of record by such Holder, and (d) the number of Warrant Shares then
owned of record by such Holder, and (e) a chart describing (in reasonable
detail) the then current capitalization of Company.
4.15. Right of Inspection. At any time and from time to time during normal
business hours (and upon reasonable prior written notice) Company will permit an
agent or representative of any Holder (at such Holder's cost and expense) (i) to
visit, and (ii) to examine and make copies of and abstracts from the books and
records of Company and its Subsidiaries, and (iii) to discuss the affairs,
finances, and accounts of Company and its Subsidiaries with any of their
respective officers, directors and independent accountants, subject in all cases
to the confidentiality requirements of Section 6.1(d).
4.16. Attendance and Participation Rights. So long as the Warrants and
Warrant Shares of Holders (together will all other Capital Stock owned by any
Holder) collectively represent 1% or more of the Common Stock (on a fully
diluted basis), then a representative of Holders shall be entitled (if at any
time hereafter Holders so elect) to attend each of the meetings of Company's
Board of Directors (including, each committee thereof). Notwithstanding the
foregoing, at the request of Company, representatives of Holders may be required
temporarily to leave any such meeting of the Board of Directors if such action
is necessary to preserve Company's attorney-client privilege with respect to
such meetings or the information disseminated therein. In addition, at all times
while any Holder owns Warrant Shares (together with all other shares of Capital
Stock owned by such Holder) representing 5% or more of the issued and
outstanding Common Stock, such Holder (at its option) shall be entitled to
designate a pro rata percent of the positions on the Board of Directors (and
each committee thereof) of Company (rounded upwards to the next whole number).
The Company will cause any directors designated by a Holder to be included among
the nominees who are recommended for election as directors by management of the
Company, at each meeting of the Company's stockholders at which directors of the
Company are proposed to be elected.
4.17. Compliance with Approval Requirements. If any Warrants or Warrant
Shares require registration or approval of the FCC, any State PUC or any other
governmental authority (or the taking of any other action under the laws of the
United States of America or any political subdivision thereof) before such
securities may be validly issued, then Company will use best efforts to secure
and maintain such registration or approval or will take such other action as and
when necessary.
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ARTICLE 5. ANTI-DILUTION PROVISIONS
5.1. Adjustments to Warrant Shares Purchasable and Exercise Price.
a. Equity Dividends, Restructurings and Reclassifications. If
Company at any time (1) declares or pays a dividend on its outstanding Capital
Stock in shares of Common Stock or other securities of Company, or (2)
subdivides its outstanding shares of Common Stock, or (3) combines its
outstanding shares of Common Stock into a smaller number of shares, or (4)
issues by reclassification of the Common Stock other securities of Company
(including any such reclassification in connection with a merger, consolidation
or other business combination in which Company is the surviving entity), then
the number and kind of Warrant Shares purchasable upon exercise of each Warrant
and the applicable Exercise Price therefor shall be adjusted so that each Holder
of a Warrant upon exercise of such Warrant shall be entitled to receive (for the
same aggregate Exercise Price) the aggregate number and kind of Warrant Shares
or other securities of Company that such Holder would have owned or would have
been entitled to receive after the occurrence of any such event had such Warrant
been exercised immediately prior to the occurrence of such event (or, if
earlier, any record date with respect thereto). Any adjustment required by this
Clause (a) shall become effective on the date of such event retroactive to the
record date with respect thereto (if any), and (b) shall be made successively
whenever any such event occurs.
b. Issuances Below Target Market Price. If Company issues or sells
any shares of Capital Stock (or rights, options, warrants or convertible or
exchangeable securities containing a right to subscribe for or purchase shares
of Common Stock) other than the Excludible Shares for no consideration or at a
price per share less than the Target Market Price per share of Common Stock in
effect immediately prior to such sale or issuance, then the number of Warrant
Shares owned and Warrant Shares thereafter purchasable upon the exercise of each
Warrant shall be automatically increased to account for the economic effects of
such transaction (and the applicable Exercise Price for such Warrants shall be
proportionately decreased) using a standard weighted average formula approach to
compute such adjustment. If Company (i) issues or sells shares for consideration
that includes any property other than cash or (ii) issues or sells shares
together with other securities as a part of a unit at a price per unit, then the
"price per share" and the amount of consideration received by Company for
purposes of this Clause (unless Company and Holders otherwise mutually agree)
will be determined by an Independent Appraiser. In addition, if Company and
Holders are unable to agree on the amount or form of any such adjustment, then
Company will retain an Independent Appraiser acceptable to Holders (which
acceptance may not be unreasonably withheld) that will determine the amount and
form of such adjustment. Any adjustment required by this Clause (1) shall become
effective on the date of issuance retroactive to the record date for determining
equityholders entitled to receive such issuance, and (2) shall be made
successively whenever any such event occurs.
c. Dividend and Distribution Dilution. If any dividend, distribution
or payment (whether as cash or other assets of Company) is made after the date
hereof with respect to any Capital Stock or other equity securities of Company,
other than dividends appropriately covered under Clause "a" above, then Company
(concurrently with the payment thereof) shall make a corresponding proportionate
distribution or payment to each Holder of Warrants and/or Warrant
-17-
Shares equal to such Holder's percentage ownership of Company's outstanding
Capital Stock (but, for such purposes, treating all Warrants as though they had
then been exercised). Notwithstanding the foregoing, Company shall not be
obligated to make any such distribution or payment to a Holder (and no Holder
shall be entitled to receive such distribution or payment) to the extent that
such Holder otherwise receives actual payment of the corresponding dividend or
distribution as a holder of Warrant Shares in such class of equity security.
d. Catchall Anti-Dilution Protection. If Company otherwise issues
any securities or instruments or engages in any transaction an effect of which
is to dilute the economic value or voting rights of any Holder's Warrants or
Warrant Shares (including the issuance of any securities or instruments with
enhanced voting rights, preemptive rights, dividend preferences or liquidation
preferences) in a manner contrary to the intent of this Section 5.1, then
Company will implement an equitable adjustment to such Holder's interest in
Company (in a manner reasonably acceptable to such Holder) in order to account
for the effects of such transaction. Any adjustment required by this Clause
shall be made successively whenever any such event occurs. If Company and
Holders are unable to agree on the amount or form of any such equitable
adjustment, then Company will retain an Independent Appraiser acceptable to
Holders (which acceptance may not be unreasonably withheld) that will determine
the amount and form of such equitable adjustment.
e. Preemptive Rights. If Company issues or sells any shares of
Capital Stock (or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Capital
Stock), other than (i) in a Public Offering, or (ii) in connection with
acquisitions of Internet service providers or other telecommunications
companies, or (iii) in connection with the Excludible Shares, then each Holder
of Warrants and/or Warrant Shares shall be entitled at any time during the term
of this Warrant Agreement to acquire (at the price paid by such acquiror of
Capital Stock and on terms and conditions otherwise at least as favorable as was
offered to such acquiror) an amount of additional shares of Capital Stock that
would entitle such Holder to have the same aggregate percentage of Capital Stock
(on a fully diluted basis) as such Holder had or was entitled to have
immediately prior to such transaction.
f. Rights Applicable to Shares Other than Common Stock. If at any
time (as a result of an adjustment made pursuant to this Section 5.1) a Holder
becomes entitled to receive any shares of Company other than shares of Common
Stock, then thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Warrant Shares contained in this Section 5.1, and the provisions
of Article 4 with respect to the Warrant Shares shall apply on like terms to
such other shares.
g. Holders Entitled to Equivalent Rights. Except for the
underwriters' warrants and the advisors' warrants existing as of the date
hereof, if Company has otherwise granted or hereafter grants to any Person any
other or additional anti-dilution protection or preemptive rights with respect
to any securities of Company (or similar protections or rights with any more
favorable or less restrictive terms), then Company will promptly notify each
Holder of Warrants and each Holder of Warrant Shares, and such protections and
rights (or the more favorable or less restrictive terms thereof) will be deemed
automatically to be incorporated into this Agreement (without the
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necessity of any other action by the parties hereto) as additional protections
and rights that each Holder is entitled to exercise.
h. Expiration of Rights Previously Subject to Adjustment. Upon the
expiration of any rights, options or warrants that resulted in adjustments
pursuant to this Section 5.1 that were not exercised, then the Exercise Price
and the number of Warrant Shares purchasable shall be readjusted and thereafter
shall be such as it would have been had it been originally adjusted (or had the
original adjustment not been required, as applicable) as if (A) the only shares
of Common Stock purchasable upon exercise of such rights, options or warrants
were the shares of Common Stock (if any) actually issued or sold upon the
exercise of such rights, options or warrants and (B) such shares of Common Stock
so issued or sold (if any) were issuable for the consideration actually received
by Company for the issuance, sale or grant of all such rights, options or
warrants whether or not exercised; provided that no such readjustment may have
the effect of increasing the Exercise Price or decreasing the number of Warrant
Shares purchasable upon the exercise of a Warrant by an amount in excess of the
amount of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options or warrants.
5.2. Notice of Adjustment. Upon any adjustment required under this Article
5, Company (at its expense) shall mail (within 10 Business Days after such
adjustment) by first-class mail, postage prepaid, to each Holder of Warrants and
each Holder of Warrant Shares a notice of such adjustment. Such notice shall
include the following (each in reasonable detail): (i) the number of Warrant
Shares purchasable upon the exercise of each Warrant and the Exercise Price of
such Warrant after such adjustment, and (ii) a brief statement of the facts
requiring such adjustment, and (iii) the computation by which such adjustment
was made.
5.3. Preservation of Purchase Rights upon Certain Transactions. In
connection with any merger, consolidation, reorganization or combination of
Company with or into another Person (whether or not Company is the surviving
entity), or any sale, transfer or lease to another Person of all or
substantially all the property of Company, then Company (or such successor or
purchasing Person) shall execute an agreement in favor of each Holder of
Warrants giving such Holder the right thereafter upon payment of the applicable
Exercise Price in effect immediately prior to such action to purchase upon
exercise of each Warrant the kind and amount of securities, cash and property
that such Holder would have owned or would have been entitled to receive after
the happening of such merger, consolidation, combination, sale, transfer or
lease had such Warrant been exercised immediately prior to such action. Such
agreement shall provide for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 5. The
provisions of this Section shall similarly apply to successive mergers,
consolidations, combinations, sales, transfers or leases.
ARTICLE 6. COMPANY'S COVENANTS
6.1. Information.
a. Information Provided by Company to Other Persons. Whether or not
Company is subject to the reporting requirements of Sections 13 or 15(d) of the
Exchange Act, Company will provide each Holder with a copy of all information
(including financial information)
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and other communications that are sent by or on behalf of Company (i) to any
class of Company's equityholders, or (ii) to the members of Company's Board of
Directors (if and to the extent subsequently requested by Holders), or (iii) to
the Commission, subject to the confidentiality requirements set forth in Section
6.1.d. Company shall provide such information and communications to Holders
concurrently with providing it to such third parties.
b. Specific Additional Information. Company will also provide each
Holder written notice of (and describing in reasonable detail) the occurrence of
any of the following events:
1. Company offers or issues to any Person any shares of
Capital Stock or securities convertible into or exchangeable for Capital
Stock or any right to subscribe for or purchase any thereof (other than in
connection with the issuance of Excludible Shares or the issuance of
options exercisable for Excludible Shares); or
2. A dissolution, liquidation or winding up of Company; or
3. An agreement in principle is reached and/or a letter of
intent is executed with respect to any Equity Disposition or Non-Surviving
Transaction; or
4. Company declares or makes (directly or indirectly) any
payment, dividend or distribution (in cash or otherwise) with respect to,
or incurs any liability for the purchase, acquisition, redemption or
retirement of, any Capital Stock or as a dividend, return of capital or
other payment or distribution of any kind to any equityholder.
Each such notice shall be mailed by Company to each Holder (at such Holder's
last known address on the books and records of Company) at least 20 Business
Days prior to the applicable record date of such transaction.
c. Additional Requested Information. In addition to the information
and disclosures otherwise required under this Agreement, Company will also
provide to each Holder any information reasonably requested from time to time by
such Holder relating to the operations, business plans and/or ownership of
Company, subject to the confidentiality requirements set forth in Section 6.1.d.
d. Disclosure of Information by Holders. Each Holder will employ
reasonable procedures to treat as confidential all written, non-public
information delivered to such Holder pursuant to this Agreement concerning the
performance, operations, assets, structure and business plans of Company that is
conspicuously designated by Company as confidential information. While other or
different confidentiality procedures may be employed by each Holder, the actual
procedures employed by such Holder for this purpose will be conclusively deemed
to be reasonable if they are at least as protective of such information as the
procedures generally employed by such Holder to safeguard the confidentiality of
such Holder's own information that such Holder generally considers to be
confidential. Notwithstanding the foregoing, each Holder may disclose any
information concerning Company in such Holder's possession from time to time (a)
to permitted participants, transferees, assignees, pledgees and investors
(including prospective participants, transferees, assignees, pledgees and
investors), but subject to a reasonable confidentiality agreement regarding any
non-public confidential information thereby disclosed, and (b) in response to
credit inquiries
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consistent with general banking practices, and (c) to any federal or state
regulator of such Holder, and (d) to such Holder's Affiliates, employees, legal
counsel, appraisers, accountants, and agents, and (e) to any Person pursuant to
compulsory judicial process, and (f) to any judicial or arbitration forum in
connection with enforcing this Agreement or defending any action based upon this
Agreement or the relationship between such Holder and Company, and (g) to any
other Person with respect to the public or non-confidential portions of any such
information. Moreover, each Holder (without any compensation, remuneration or
notice to Company) may also include operational, performance and structural
information and data relating to Company in compilations, reports and data bases
assembled by such Holder (or its Affiliates) and used to conduct, support,
assist in and validate portfolio, industry and credit research and analysis for
itself and/or other Persons; provided, however, that such Holder may not thereby
disclose to other Persons any information relating to Company in a manner that
is attributable to Company unless (1) such disclosure is permitted under the
standards outlined above in this Section or (2) Company otherwise separately
consents thereto (which consent may not be unreasonably withheld).
Notwithstanding the foregoing, each Holder agrees to comply with applicable
federal securities laws and regulations regarding dissemination, use and/or
disclosure of non-public information
6.2. Books and Records. Company and each of its Subsidiaries shall keep
and maintain satisfactory and adequate books and records of account in
accordance with generally accepted accounting principles.
6.3. No Amendments to Organic Documents. Without the prior written consent
of Holders representing a majority of Warrant Shares and Warrants (which consent
may not be unreasonably withheld), Company shall not permit any amendments to or
reincorporation of its Organic Documents that could reasonably be expected to
have or cause an adverse effect on the rights and interest of Holders. Without
limiting the generality of the foregoing, without the prior written consent of
Holders representing a majority of Warrant Shares and Warrants (which consent
may not be unreasonably withheld), Company shall not establish any class of
Capital Stock or issue any shares of Capital Stock that have rights, dividends
or preferences senior to or more advantageous than the rights, dividends and
preferences of the Warrant Shares.
6.4. Existence and Good Standing. Company and each of its Subsidiaries
shall preserve and maintain its existence in good standing as a organization
under the laws of its jurisdiction of organization.
6.5. Transactions with Related Parties. Without the prior written consent
of Holders representing a majority of Warrant Shares and Warrants (which consent
may not be unreasonably withheld), Company will not (and will not permit any
Subsidiary to) engage in any transaction (including employment and compensation
arrangements) with any Affiliate or other related party other than for value
received and under reasonable and customary terms and conditions that are
consistent with Company's historical practices and at least as favorable to
Company as would be achieved in an arm's length transaction.
6.6. Conduct of Business. Without the prior written consent of Holders
representing a majority of Warrant Shares and Warrants (which consent may not be
unreasonably withheld), Company (a) will continue to engage in (and only in)
businesses of the same general type as now
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conducted by it, and (b) will comply, and will cause each Subsidiary to comply,
in all material respects with all applicable material laws, regulations, and
orders.
ARTICLE 7. DEFINITIONS
7.1. Definitions. As used herein, the following terms have the following
respective meanings:
7.1.1. "Additional Acquisitions" has the meaning set forth in the
Credit Agreement.
7.1.2. "Affiliate" of any Person means any other Person that
directly or indirectly controls, is controlled by or is under direct or indirect
common control with such Person. A Person shall be deemed to "control" another
Person if such first Person directly or indirectly possesses the power to direct
(or to cause the direction of or to materially influence) the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise. Without limiting the generality of the
foregoing, each of the following Persons will be deemed to be an Affiliate of a
Person: (a) each Person who owns or controls 5% or more of any class or series
of any equity interest of such Person, and (b) each member, manager, partner,
director and/or senior executive officer of such Person or any Affiliate
thereof, and (c) any family member or other relative of such Person or any
Affiliate thereof, and (d) any trust of which any Person or Affiliate thereof is
either a trustee or beneficiary. Notwithstanding the foregoing, No Holder shall
be deemed to be an Affiliate of Company or any Affiliate thereof.
7.1.3. "Agreement" means this Warrant Agreement, as amended,
modified and supplemented from time to time.
7.1.4. "Appraised Valuation" means, as of any relevant date, the
fair market value of a Warrant Share, a share of Common Stock or other security
or equity interest (as applicable) as determined by an Independent Appraiser.
Such Independent Appraiser will be selected by Holders of a majority of the
Warrants and Warrant Shares and approved by Company (which approval may not be
unreasonably withheld, delayed or conditioned). Such Independent Appraiser shall
use one or more valuation methods that the Independent Appraiser (in its best
professional judgment) determines to be most appropriate under the
circumstances; provided, that such valuation methods shall not give effect to
(1) any discount for any lack of liquidity of the Warrants, Warrant Shares
and/or such other security, or (2) the minority status of any holder of
Warrants, Warrant Shares or other security, or (3) the fact that Company may
have no class of equity securities registered under the Securities Act. Such
Independent Appraiser, as promptly as is reasonably possible, will prepare and
deliver to Company and to each Holder of a Warrant or Warrant Share a written
valuation report indicating (a) the methods of valuation considered or used, and
(b) the value of a Warrant Share or other security, and (c) the nature and scope
of the examination or investigation upon which the determination of value was
made. Unless the valuation report is revised by the Independent Appraiser within
5 Business Days after delivery thereof or unless Company and Holders otherwise
mutually agree, then the valuation report shall be deemed final at the end of
such 5-Business-Day period. Company shall pay the fees and expenses associated
with the Independent Appraiser.
7.1.5. "Block A Exercise Price" has the meaning set forth in Section
1.2.
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7.1.6. "Block A Warrant" means the irrevocable and unconditional
right (subject to the terms hereof) to acquire a fully paid and nonassessable
Warrant Share at a purchase price per share equal to the Block A Exercise Price
(and any other right or warrant issued upon any exchange or transfer of any such
Warrant or any adjustment relating thereto).
7.1.7. "Block B Exercise Price" has the meaning set forth in Section
1.2.
7.1.8. "Block B Warrant" means the irrevocable and unconditional
right (subject to the terms hereof) to acquire a fully paid and nonassessable
Warrant Share at a purchase price per share equal to the Block B Exercise Price
(and any other right or warrant issued upon any exchange or transfer of any such
Warrant or any adjustment relating thereto).
7.1.9. "Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Arlington, Virginia are authorized by law
to close.
7.1.10. "Capital Stock" means the Common Stock, and all other
classes of common stock (whether voting or non-voting), and all other forms of
capital stock or securities of Company (preferred or otherwise).
7.1.11. "Commission" means the Securities and Exchange Commission or
any entity or agency that succeeds to any or all of its functions under the
Securities Act or the Exchange Act.
7.1.12. "Common Stock" means the voting common stock of Company
(which has a par value of $0.01 per share).
7.1.13. "Company" means ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation, and its successors and permitted assigns.
7.1.14. "Credit Agreement" means the Credit Facility Agreement dated
as of March ___15, 2000 by and among Company (and certain of its Affiliates) and
Lender (and certain other lenders), as the same may be amended, modified or
otherwise supplemented from time to time (including any renewals, refinancings
or extensions thereof or increases in the credit extended thereunder).
7.1.15. "Current Market Price" means, with respect to any share of
Common Stock or any other security of Company at the date herein specified, the
following:
(i) if Company does not then have such securities registered
under the Exchange Act, then the Current Market Price per share of such security
will be the greater of the applicable Exercise Price per Warrant Share then in
effect or the Appraised Valuation per share of such security, or alternatively
(ii) if Company does then have such securities registered
under the Exchange Act, then the Current Market Price per share of such security
will be the greater of the Appraised Valuation per share of such security or the
average of the daily market prices of such security for 20 consecutive Business
Days during the period commencing 30 Business Days before such date (or, if
Company has had a class of such securities registered under the Exchange Act for
less than 30
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consecutive Business Days before such date, then the average of the daily market
prices for all of the Business Days before such date for which daily market
prices are available). The market price for each such Business Day shall be as
follows: (A) for a security listed or admitted to trading on any securities
exchange, then the closing price (regular way) on such day (or if no sale takes
place on such day, then the average of the closing bid and asked prices on such
day), and (B) for a security not then listed or admitted to trading on any
securities exchange, then the last reported sale price on such day (or if no
sale takes place on such day, then the average of the closing bid and asked
prices on such day, as reported by a reputable quotation source designated by
Company), and (C) for a security not then listed or admitted to trading on any
securities exchange and as to which no such reported sale price or bid and asked
prices are available, then the average of the reported high bid and low asked
prices on such day, as reported by a reputable quotation service, or a newspaper
of general circulation in Manhattan Borough (New York, NY) customarily published
on each business day, designated by Company (or if there is no bid and asked
prices on such day, then the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than 30 calendar days prior to the
date in question) for which prices have been so reported), and (D) if there are
no bid and asked prices reported during the 30 calendar days prior to the date
in question, then the Current Market Price per share of the security shall be
determined as if Company did not have a class of such securities registered
under the Exchange Act.
7.1.16. "Equity Disposition" means the sale, issuance, transfer or
other Equity Disposition of Capital Stock (or securities convertible into, or
exchangeable for, Capital Stock or rights to acquire Capital Stock or such
securities) to one or more Persons through any transaction or series of related
transactions (other than as a result of a Public Offering or other than as a
result of a series of acquisitions of unrelated internet service providers or
telecommunications companies) if, after such sale, issuance, transfer or Equity
Disposition, (a) more than 50% of the Capital Stock or voting power of Company
is sold, issued or transferred or (b) the Initial Shareholders sell, issue or
transfer more than 50% of the Capital Stock and voting rights owned by such
Initial Shareholders as of the date hereof. For purposes of this definition, any
transfer of Capital Stock (or securities convertible into, or exchangeable for,
Capital Stock or rights to acquire Capital Stock or such securities) by a
shareholder to any member of his or her immediately family or to any trust
created by such shareholder for estate planning purposes shall not constitute an
"Equity Disposition".
7.1.17. "Equity Redemption" means any purchase, repurchase,
acquisition, redemption or retirement of any issued and outstanding shares of
Capital Stock (or any rights, options or convertible securities therefor) from
any holder by Company or any Affiliate thereof, except for repurchases to fund
employee stock purchase/401(k) or similar plans which plans in the aggregate do
not exceed 5% of the outstanding Capital Stock.
7.1.18. "Event of Dilution" means any of the events described in
Section 5.1 as to which anti-dilution rights are granted pursuant to Article 5.
7.1.19. "Exchange Act" means the Securities and Exchange Act of
1934, as amended, or any similar Federal statute, as implemented by the
Commission or any court of competent jurisdiction.
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7.1.20. "Excludible Shares" means (1) the shares issued upon
exercise of the advisors' warrants and (2) the pool of options convertible into
shares of Common Stock that Company may issue from time to time as incentive
compensation for its employees and directors, provided that (a) such options are
granted at a price that is equal to or greater than the Current Market Price on
the date of such grant, and (b) such issuances are reasonable in amount and
otherwise in accordance with normal and customary business practices within
Company's industry and (c) the aggregate amount of such shares issued at not
times exceeds 15.0% of the issued and outstanding equity of Company from time to
time (on a fully diluted basis). Such issuances may be pursuant to option plans
either (i) that have been established as of the effective date hereof or (ii)
that are established after the effective date hereof with notice to Holders.
7.1.21. "Exercise Period" has the meaning set forth in Section 4.2.
7.1.22. "Exercise Price" means either the Block A Exercise Price or
the Block B Exercise Price, as applicable.
7.1.23. "FCC" means the Federal Communications Commission or any
other entity or agency that succeeds to its responsibilities and powers.
7.1.24. "Holder" means any owner or holder of any Warrant (and
corresponding Warrant Certificate) or any Warrant Share, and (with respect to
each) any successor, assignee, transferee, trustee, estate, heir, executor,
administrator, or personal representative thereof.
7.1.25. "Holder-Affiliated Transferee" means any Affiliate of a
Holder, and/or any current or former director, officer, employee, business unit
or division, or successor-in-interest of such Holder, and/or (with respect to
Purchaser) any pledgee of Purchaser's interest under the Credit Agreement.
7.1.26. "Independent Appraiser" means a Person who (a) is with a
nationally recognized investment banking or appraisal firm, and (b) is qualified
in the valuation of businesses, transactions and securities of the general type
being analyzed, and (c) does not have a material direct or material indirect
financial interest in Company or any Holder.
7.1.27. "Initial Shareholders" means, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇ ▇▇▇▇▇▇, who collectively beneficially own 3,084,242 shares of Common Stock
of Company as of the effective date of this Agreement.
7.1.28. "Lender" means MCG Finance Corporation, a Delaware
corporation, and its successors, assigns, pledgees and transferees.
7.1.29. "Non-Surviving Transaction" means either (a) any merger,
consolidation or other business combination by Company with one or more Persons
in which the other Person effectively is the survivor or (b) any sale, transfer,
lease or license of all or any material portion of the assets (or the economic
benefits thereof) of Company to one or more other Persons through any
transaction or series of related transactions.
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7.1.30. "Organic Document" means, relative to any entity, its
certificate and articles of incorporation, organization or formation, its
by-laws or operating agreements, and all equityholder agreements, voting
agreements and similar arrangements applicable to any of its authorized shares
of capital stock, its partnership interests or its equity interests, and any
other arrangements relating to the control or management of any such entity
(whether existing as a corporation, a partnership, an LLC or otherwise).
7.1.31. "Person" means an individual, an association, a partnership,
a corporation, a trust or an unincorporated organization or any other entity or
organization.
7.1.32. "Public Offering" means any issuance or other sale of any
Capital Stock (or securities convertible into, or exchangeable for, Capital
Stock or rights to acquire Capital Stock or such securities) of Company pursuant
to a registration statement filed with the Commission under the Securities Act.
7.1.33. "Purchaser" means Lender, and its successors, assigns,
pledgees and transferees with respect to the Warrants, corresponding Warrant
Certificates and/or Warrant Shares.
7.1.34. "Registration Rights" means the rights of the Holders of the
Warrant Certificates to have the Warrant Shares registered for sale under an
effective registration statement under the Securities Act.
7.1.35. "Repurchase Condition" has the meaning set forth in Section
4.6.
7.1.36. "Repurchase Offer" has the meaning set forth in Section 4.6.
7.1.37. "Repurchase Price" has the meaning set forth in Section 4.6.
7.1.38. "Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute, as implemented by the Commission or any
court of competent jurisdiction.
7.1.39. "State Communications Acts" means the laws of any state in
which Company does business that govern the provision of communications services
offered or performed by Company within such state and are applicable to Company,
as amended from time to time, and as implemented by the rules, regulations, and
orders of the applicable State PUC or any court of competent jurisdiction.
7.1.40. "State PUC" means the public utility commission or other
regulatory agency of any state in which Company does business that is vested
with jurisdiction over Company and over State Communications Acts or the
provision of communication services within such state.
7.1.41. "Subsidiary" of any Person means (a) any other Person as to
which the first Person directly or indirectly owns or controls 50% or more of
the equity, voting rights or enterprise value thereof or (b) any other Person
the accounts of which would be consolidated with those of the first Person in
its consolidated or combined financial statements according to generally
accepted accounting principles.
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7.1.42. "Surviving Public Combination" means any merger,
consolidation or other business combination by Company with one or more Persons
in which Company is the survivor (or a purchase of assets by Company from one or
more other Persons) if Company is thereafter required to file reports with
respect to any of its Capital Stock with the Commission pursuant to the Exchange
Act.
7.1.43. "Target Market Price" means, at the time of any
determination, (a) with respect to the Block A Warrants, (i) a price per share
of Capital Stock (or with respect to options, warrants or convertible
securities, such price inclusive of any exercise or conversion payments) of
$7.00 per share for the first $15.0 million in equity issued by Company after
the Closing Date and (ii) a price per share of Capital Stock (or with respect to
options, warrants or convertible securities, such price inclusive of any
exercise or conversion payments) of $10.00 per share for all additional equity
issuances and (b) with respect to the Block B Warrants, a price per share of
Capital Stock (or with respect to options, warrants or convertible securities,
such price inclusive of any exercise or conversion payments) equal to the lesser
of the Current Market Price or $12.00 per share, as each such price may be
adjusted from time to time in connection with any subdivisions, combinations or
reclassifications of any Capital Stock.
7.1.44. "Telecon Acquisition" has the meaning set forth in the
Credit Agreement.
7.1.45. "Warrant Certificate" means a certificate (substantially in
the form of Exhibit C) evidencing one or more Warrants.
7.1.46. "Warrant" means the irrevocable and unconditional right
(subject to the terms hereof) to acquire a fully paid and nonassessable Warrant
Share at a purchase price per share equal to an applicable Exercise Price (and
any other right or warrant issued upon any exchange or transfer of any such
Warrant or any adjustment relating thereto).
7.1.47. "Warrant Share" means a share of Common Stock issuable upon
exercise of a Warrant (until such share is registered by Company and sold by the
Holder thereof to a third party in a public transaction). For purposes of
Section 4.4 and Section 4.5 only, the term "Warrant Share" shall include all
shares of Common Stock issued or issuable to any Holder in connection with any
Loan Document.
7.2. General Construction and Interpretation.
7.2.1. Plural; Gender. Unless otherwise expressly stated or the
context clearly indicates a different intention, then (as may be appropriate in
the particular context) (a) a singular number or noun used herein includes the
plural, and a plural number or noun includes the singular, and (b) the use of
the masculine, feminine or neuter gender pronouns herein includes each and all
genders.
7.2.2. Section, Schedule and Exhibit References. Unless otherwise
expressly stated or the context clearly indicates a different intention, then
all references to sections, paragraphs, clauses, schedules and exhibits herein
are to be interpreted as references to sections, paragraphs, clauses, schedules
and exhibits of and to this Agreement. In addition, the words "herein",
"hereof",
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"▇▇▇▇▇▇▇▇▇", "▇▇▇▇▇▇" and other words of similar import herein refer to this
Agreement as a whole, and not to any particular section, paragraph or clause in
this Agreement.
7.2.3. Titles and Headings. Unless otherwise expressly stated or the
context clearly indicates a different intention, then the various titles and
headings herein are inserted for convenience only and do not affect the meaning
or interpretation of any provision hereof.
7.2.4. "Including" and "Among Other" References. Unless otherwise
expressly stated or the context clearly indicates a different intention, then
all references herein to phrases containing or lists preceded by the words
"include", "includes", "including", "among other", "among other things" or other
words or phrases of similar import are to be interpreted to mean such "without
limitation" (whether or not such additional phrase is actually added). In other
words, such words and phrases connote an illustrative example or list rather
than an exclusive example or list.
7.2.5. Time of Day References. Unless otherwise expressly stated or
the context clearly indicates a different intention, then all time of day
references in and restrictions imposed hereunder are to be calculated using
Eastern Time.
7.2.6. Successors and Assigns. Unless otherwise expressly stated or
the context clearly indicates a different intention, then all references to any
Person (including any Official Body) herein are to be interpreted as including
(as applicable) such Person's successors, assigns, estate, heirs, executors,
administrators and personal representatives.
7.2.7. Modifications to Documents. Unless otherwise expressly stated
or the context clearly indicates a different intention, then all references
herein to any other agreement or instrument are to be interpreted as including
all extensions, renewals, amendments, supplements, substitutions, replacements
and waivers thereto and thereof from time to time.
7.2.8. References to Laws and Regulations. Unless otherwise
expressly stated or the context clearly indicates a different intention, then
all references to any law, regulation, rule, order or policy herein are to be
interpreted as references to such law, regulation, rule or policy (a) as
implemented and interpreted from time to time by Official Bodies with
appropriate jurisdiction therefor, and (b) as amended, modified, supplemented,
replaced and repealed from time to time.
7.2.9. Financial and Accounting Terms. Unless otherwise expressly
stated or the context clearly indicates a different intention, then financial
and accounting terms used in the foregoing definitions or elsewhere herein shall
be defined and determined in accordance with Generally Accepted Accounting
Principles (GAAP).
ARTICLE 8. MISCELLANEOUS
8.1. Compliance with FCC and State PUC Requirements. Company and Purchaser
each hereby acknowledge its intent that this Agreement, the Warrants, the
Warrant Certificates and the Warrant Shares (as well as the exercise of rights
hereunder) each comply with all of the laws, regulations and orders of and/or
administered by the FCC or any State PUC relating to Purchaser's ownership,
exercise and/or other realization of rights in connection herewith. If at any
time the
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terms and conditions of any such ownership, exercise or other ability to realize
upon rights violates, is in conflict with or requires any consent under any such
legal requirements, then Company and Purchaser (or any subsequent Holder) will
cooperate and negotiate in good faith to amend the underlying documents (or the
relevant rights therein) and/or to file and prosecute (or to cause others to
file and prosecute) applications for any such consent in order to enable Company
and Purchaser (or such subsequent Holder) to be in compliance in all material
respects with such legal requirements.
8.2. Compliance with Purchaser's Regulatory Requirements. Company and
Purchaser each hereby acknowledge its intent that this Agreement, the Warrants,
the Warrant Certificates and the Warrant Shares (as well as the exercise of
rights hereunder) each comply with all of the statutory and regulatory
requirements applicable to Purchaser (or any subsequent Holder) relating to its
ownership, exercise and/or other realization of rights in connection herewith.
If at any time the terms and conditions of any such ownership, exercise or other
ability to realize upon rights violates or is in conflict with any such
regulatory requirements applicable to Purchaser (or such subsequent Holder),
then Company and Purchaser (or such subsequent Holder) will cooperate and
negotiate in good faith to amend the underlying documents (or the relevant
rights therein) in order to enable Purchaser (or such subsequent Holder) to be
in compliance in all material respects with such statutory and regulatory
requirements.
8.3. Binding Effect and Governing Law. This Agreement (and the Warrants,
the Warrant Certificates and other documents in connection herewith) are binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns (to the extent authorized). This Agreement (and the
Warrants, the Warrant Certificates and other documents in connection herewith)
are governed as to their validity, interpretation, construction and effect by
the laws of the Commonwealth of Virginia (without giving effect to the conflicts
of law rules of Virginia) or, to the extent that the particular issue in
controversy involves Company's legal power or authorization in connection
herewith, matters of internal governance, or matters of corporate law, then
resolution of such issue shall be governed by the corporate laws of the State of
Delaware.
8.4. Survival. All agreements, representations, warranties and covenants
of Company contained herein or in any documentation required hereunder will
survive the execution and delivery of this Agreement and will continue in full
force and effect so long as this Agreement otherwise remains effective.
8.5. No Waiver; Delay. To be effective, any waiver by Purchaser must be
expressed in a writing executed by Purchaser. If Purchaser waives any power,
right or remedy arising hereunder or under any applicable law, then such waiver
will not be deemed to be a waiver upon the later occurrence or recurrence of any
events giving rise to the earlier waiver. No failure or delay by Purchaser to
insist upon the strict performance of any term, condition, covenant or agreement
hereunder, or to exercise any right, power or remedy hereunder, will constitute
a waiver of compliance with any such term, condition, covenant or agreement, or
preclude Purchaser from exercising any such right, power, or remedy at any later
time or times. The remedies provided herein are cumulative and not exclusive of
each other and the remedies provided by law.
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8.6. Modification. Except as otherwise expressly provided in this
Agreement, no modification or amendment hereof will be effective unless made in
a writing signed by appropriate officers of the parties hereto.
8.7. Notices. Unless otherwise provided in this Agreement, any notice,
request, consent, waiver or other communication required or permitted under or
in connection with this Agreement will be deemed satisfactorily given if it is
in writing and is delivered either personally to the addressee thereof, or by
prepaid registered or certified U.S. mail (return receipt requested), or by a
nationally recognized commercial courier service with next-day delivery charges
prepaid, or by telegraph, or by facsimile (voice confirmed), or by any other
reasonable means of personal delivery to the party entitled thereto at its
respective address set forth below:
If to Company [Party Entitled to Notice]
or its Affiliates: c/o ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to the following listed counsel or
such other counsel as may be designated by Company
from time to time (and which notice shall not
constitute notice to Company and failure to give
such notice shall not affect the effectiveness of
notice to Company):
▇▇▇▇▇ & ▇▇▇▇▇▇▇, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: MCG Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Investment Administration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party to this Agreement may change its address or facsimile number for
notice purposes by giving notice thereof to the other in accordance with this
Section, provided that such change shall not be effective until 2 calendar days
after notice of such change. All such notices and other communications will be
deemed given and effective (a) if by mail, then upon actual receipt or 5
calendar days after mailing as provided above (whichever is earlier), or (b) if
by facsimile, then upon successful transmittal to such party's designated
number, or (c) if by telegraph, then upon actual receipt or 2 Business Days
after delivery to the telegraph company (whichever is earlier), or (d) if by
nationally recognized commercial courier service, then upon actual receipt or 2
Business Days after
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delivery to the courier service (whichever is earlier), or (e) if otherwise
delivered, then upon actual receipt.
8.8. Prior Agreements Superseded. This Agreement completely and fully
supersedes all oral agreements and all other and prior written agreements by and
between Company and Purchaser concerning the terms and conditions of this
Agreement.
8.9. Severability. If fulfillment of any provision of or any transaction
related to this Agreement or the Credit Agreement, the time performance of such
provision or transaction is due shall involve transcending the limit of validity
prescribed by law, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity. If any clause or provision of this
Agreement operates or would prospectively operate to invalidate this Agreement
in whole or in part, then such clause or provision only shall be void, as though
not contained herein, and the remainder of this Agreement shall remain operative
and in full force and effect.
8.10. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document. Each such counterpart will be deemed to be an original
but all counterparts together will constitute one and the same instrument.
8.11. Limitation of Liability. Notwithstanding any other provision of this
Agreement (unless expressly provided otherwise), neither Company nor any Holder
(nor any director, officer, employee, representative, legal counsel or agent of
Company or any Holder) shall have any liability to any other Person that is a
party to or beneficiary of this Agreement (or to any equityholder of Company)
with respect to (and each Person that is a party to this Agreement hereby
waives, releases and agrees not to ▇▇▇ upon any claim for) any special,
indirect, consequential, punitive or non-foreseeable damages suffered by such
Person in connection with or in any way related to the transactions contemplated
or the relationship established by this Agreement, or any act, omission or event
occurring in connection herewith.
8.12. Forum Selection; Consent to Jurisdiction. Any litigation in
connection with or in any way related to this Agreement, or any course of
conduct, course of dealing, statements (whether verbal or written), actions or
inactions of any Holder or Company will be brought and maintained exclusively in
the courts of the Commonwealth of Virginia or in the United States District
Court for the Eastern District of Virginia; provided, however, that any suit
seeking enforcement against Company may also be brought (at such Holder's
option) in the courts of any other jurisdiction where any property of Company
may be found or where any Holder may otherwise obtain personal jurisdiction over
Company. Company hereby expressly and irrevocably submits to the jurisdiction of
the courts of the Commonwealth of Virginia and of the United States District
Court for the Eastern District of Virginia for the purpose of any such
litigation as set forth above and irrevocably agrees to be bound by any final
and non-appealable judgment rendered thereby in connection with such litigation.
Company further irrevocably consents to the service of process by registered or
certified mail, postage prepaid, or by personal service within or outside the
Commonwealth of Virginia. Company hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
-31-
such court referred to above and any claim that any such litigation has been
brought in an inconvenient forum. To the extent that Company has or hereafter
may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, then Company hereby irrevocably waives such immunity in respect of its
obligations under this Agreement.
8.13. Waiver of Jury Trial. Each Holder and Company each hereby knowingly,
voluntarily and intentionally waives any rights it may have to a trial by jury
in respect of any litigation (whether as claim, counter-claim, affirmative
defense or otherwise) in connection with or in any way related to this
Agreement, or any course of conduct, course of dealing, statements (whether
verbal or written), actions or inactions of any Holder or Company.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to be
duly executed, as an instrument under seal (whether or not any such seals are
physically attached hereto) as of the date and year first above written.
ATTEST: ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC. (Company)
By: By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------- --------------------------------
Name: Name: ▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------- ------------------------------
Title: Secretary Title: President
[CORPORATE SEAL] Address: __________________________
__________________________
__________________________
Facsimile: (_____) ____-______
WITNESS: MCG FINANCE CORPORATION
(Purchaser)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------- ---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, COO and CFO
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A -- Articles of Incorporation
EXHIBIT B -- Authorizing Resolutions
EXHIBIT C -- Form of Warrant Certificate
EXHIBIT D -- Restrictive Legends
FORM OF RESTRICTIVE LEGENDS FOR WARRANT CERTIFICATES
-----------------------------
"The Warrants evidenced by this certificate have not been registered under the
Securities Act of 1933 or the securities laws of any state. Such Warrants may
not be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement for such Warrants under the Securities Act of 1933 and
applicable state securities laws or an opinion of counsel satisfactory to
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC. prior to the proposed transaction that such registration
is not required."
FORM OF RESTRICTIVE LEGEND FOR WARRANT SHARES
-----------------------------
"The shares evidenced by this certificate have been issued upon the exercise of
warrants issued pursuant to a Warrant Agreement dated as of March 16, 2000 (the
"Warrant Agreement") and have not been registered under the Securities Act of
1933 or the securities laws of any state. Such shares may not be sold,
transferred, pledged or hypothecated in the absence of an effective registration
statement for such shares under the Securities Act of 1933 and applicable state
securities laws or an opinion of counsel satisfactory to ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
prior to the proposed transaction that such registration is not required."