EXHIBIT 10.45
CHOICE ONE COMMUNICATIONS INC.
[FORM OF]
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK OF CHOICE ONE COMMUNICATIONS INC.
WARRANT TO PURCHASE A NUMBER OF
SHARES IN ACCORDANCE WITH THE DEFINITION
OF WARRANT SHARE AMOUNT
NO. __
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH.
FOR VALUE RECEIVED, CHOICE ONE COMMUNICATIONS INC., a Delaware
corporation (the "COMPANY"), hereby certifies that _____, its successors or
permitted assigns (the "HOLDER"), is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at the times specified herein, a number
of the fully paid and non-assessable shares of common stock of the Company, par
value $0.01 per share (the "COMMON STOCK"), equal to the Warrant Share Amount
(as hereinafter defined) at a purchase price per share equal to the Exercise
Price (as hereinafter defined). The Warrant Share Amount to be received upon the
exercise of this Warrant is subject to adjustment from time to time as
hereinafter set forth.
This Warrant has been issued pursuant to the Agreement (as defined
below). The Holder is entitled to certain benefits as set forth therein. The
Company shall keep a copy of the Agreement and any amendments thereto at its
principal executive office and shall furnish, without charge, copies thereof to
the Holder upon request.
1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"AFFILIATE" shall have the meaning given to such term in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
"AGREEMENT" means the Agreement dated as of March 31, 2002 between the
Company and the holders of the Company's Series A Senior Cumulative Preferred
Stock set forth on the signature pages thereto.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"CERTIFICATE OF INCORPORATION" means the Certificate of Incorporation
of the Company.
"CLOSING PRICE" on any day means (i) if shares of Common Stock then are
listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the Closing
Price on such day as reported on the NYSE Composite Transactions Tape; (ii) if
shares of Common Stock then are not listed and traded on the NYSE, the Closing
Price on such day as reported by the principal national securities exchange on
which shares of Common Stock are listed and traded; (iii) if shares of Common
Stock then are not listed and traded on any such securities exchange, the last
reported sale price on such day on the National Market or SmallCap Market of the
NASD Automated Quotation System ("NASDAQ"); or (iv) if shares of Common Stock
then are not traded on the NASDAQ National Market or NASDAQ SmallCap Market, the
average of the highest reported bid and the lowest reported asked price on such
day as reported by NASDAQ.
"COMMON SHARE EQUIVALENT" means, with respect to any security of the
Company and as of a given date, a number which is, (i) in the case of a share of
Common Stock, one, (ii) in the case of all or a portion of any right, warrant or
other security which may be exercised for a share or shares of Common Stock, the
number of shares of Common Stock receivable upon exercise of such security (or
such portion of such security) and (iii) in the case of any security convertible
or exchangeable into a share or shares of Common Stock, the number of shares of
Common Stock that would be received if such security were converted or exchanged
on such date.
"COMMON STOCK" shall have the meaning set forth in the first paragraph
hereof.
2
"DULY ENDORSED" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange or of the National Association of Securities
Dealers, Inc.
"EXERCISE PRICE" means $1.64 per share of Common Stock.
"EXPIRATION DATE" means the fifth anniversary of the date on which the
Company has elected to terminate the waiver set forth in Section 3.01 of the
Agreement in accordance with Section 3.03 of the Agreement (whether or not such
termination is consented to).
"FAIR MARKET VALUE" as at any date of determination means the fair
market value of the business, securities (and with respect to a share of Common
Stock if shares of Common Stock are not publicly traded, shall mean a
proportionate amount of the Fair Market Value of the Company), property or
services in question as of such date, as determined in good faith by a
nationally recognized firm of investment bankers (whose fees and expenses shall
be payable by the Company) reasonably acceptable to the Company and to the
Principal Holder; provided that if, at any date of determination of the Fair
Market Value of the Common Stock, shares of Common Stock are then publicly
traded, the Fair Market Value of a share of Common Stock outstanding on such
date shall be the Market Price.
"MARKET PRICE" as at any date of determination means the average of the
daily Closing Prices of a share of Common Stock for the twenty (20) consecutive
trading days ending on the most recent trading day prior to the date of
determination.
"PERSON" means an individual, partnership, limited liability company,
corporation, trust, joint stock company, association, joint venture, or any
other entity or organization, including a government or political subdivision or
an agency or instrumentality thereof.
"PRINCIPAL HOLDER" means the original Holder of this Warrant on the
date of issue, or if such original Holder so elects, any transferee of all or
any portion of this Warrant whom such original Holder shall have designated by
written notice to the Company as the successor Principal ▇▇▇▇▇▇. Any successor
Principal ▇▇▇▇▇▇ designated pursuant to the immediately preceding sentence shall
also have the right upon any subsequent transfer to designate a successor
Principal ▇▇▇▇▇▇ in the manner described above.
3
"WARRANT SHARES" means the shares of Common Stock deliverable upon
exercise of this Warrant, as adjusted from time to time.
"WARRANT SHARE AMOUNT" means _____ shares of Common Stock, as such
number may be adjusted pursuant to Section 8 and 10 hereof.
"WARRANT TERMINATION EVENT" means that (i) no Waiver Shares are
outstanding or (ii) the Company has elected to terminate the waiver set forth in
Section 3.01 of the Agreement in accordance with Section 3.03 of the Agreement
(whether or not such termination is consented to).
(b) Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement.
2. Exercise or Conversion of Warrant.
(a) The Holder is entitled to exercise this Warrant in
whole or in part at any time, or from time to time, until the
Expiration Date or, if such day is not a Business Day, then on the next
succeeding day that shall be a Business Day; provided that the Holder
is not entitled to exercise this Warrant in whole or in part as long as
the Warrant Share Amount is subject to reduction under Section 10
hereof. To exercise this Warrant, the Holder shall execute and deliver
to the Company a Warrant Exercise Notice substantially in the form
annexed hereto. Subject to paragraph 2(e) below, no earlier than ten
days after delivery of the Warrant Exercise Notice, the Holder shall
deliver to the Company this Warrant, including the Warrant Exercise
Subscription Form forming a part hereof duly executed by the Holder,
together with payment of the applicable Exercise Price. Upon such
delivery and payment, the Holder shall be deemed to be the holder of
record of the Warrant Shares subject to such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or
that certificates representing such Warrant Shares shall not then be
actually delivered to the Holder.
(b) The Exercise Price may be paid in cash or by
certified or official bank check or bank cashier's check payable to the
order of the Company or by any combination of such cash or check. The
Company shall pay any and all documentary, stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of the
Warrant Shares.
4
(c) If the Holder exercises this Warrant in part, this
Warrant shall be surrendered by the Holder to the Company and a new
Warrant of the same tenor and for the unexercised number of Warrant
Shares shall be executed by the Company. The Company shall register the
new Warrant in the name of the Holder or in such name or names of its
transferee pursuant to paragraph 6 hereof as may be directed in writing
by the Holder and deliver the new Warrant to the Person or Persons
entitled to receive the same.
(d) Upon surrender of this Warrant in conformity with the
foregoing provisions, the Company shall transfer to the Holder of this
Warrant appropriate evidence of ownership of the shares of Common Stock
or other securities or property (including any money) to which the
Holder is entitled, registered or otherwise placed in, or payable to
the order of, the name or names of the Holder or such transferee as may
be directed in writing by the Holder, and shall deliver such evidence
of ownership and any other securities or property (including any money)
to the Person or Persons entitled to receive the same, together with an
amount in cash in lieu of any fraction of a share as provided in
paragraph 5 below.
5
(e) In lieu of making the cash payment required to
exercise the Warrant pursuant to paragraph 2(a) (but in all other
respects in accordance with the exercise procedure set forth in
paragraph 2(a), as it may be adjusted to reflect the conversion
referred to herein), the Holder may elect to convert this Warrant into
shares of Common Stock, in which event the Company will issue to the
Holder the number of shares of Common Stock equal to the result
obtained by (a) subtracting B from A, (b) multiplying the difference by
C, and (c) dividing the product by A as set forth in the following
equation:
X = (A - B) x C where:
A
X = the number of shares of Common Stock
issuable upon exercise pursuant to this
paragraph 2(e).
A = the Closing Price on the day
immediately preceding the date on which the
Holder delivers written notice to the
Company pursuant to paragraph 2(a).
B = the Exercise Price.
C = the number of shares of Common
Stock as to which this Warrant is being
exercised pursuant to paragraph 2(a).
If the foregoing calculation results in a negative number,
then no shares of Common Stock shall be issued upon conversion
pursuant to this paragraph 2(e).
3. Restrictive Legend. Except with respect to the shares of Common
Stock issued in connection with the sale of such stock pursuant to the
Registration Rights Agreement among the Company and certain of its stockholders
dated as of July 8, 1998, as amended from time to time, any certificates
representing shares of Common Stock issued pursuant to this Warrant shall bear a
legend substantially in the form of the legend set forth on the first page of
this Warrant.
6
4. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance and delivery upon exercise of this Warrant
such number of its authorized but unissued shares of Common Stock or other
securities of the Company from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this Warrant.
All such shares shall be duly authorized and, when issued upon such exercise,
shall be validly issued, fully paid and non-assessable, free and clear of all
liens, security interests, charges and other encumbrances or restrictions on
sale and free and clear of all preemptive rights.
5. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant and in lieu
of delivery of any such fractional share upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied by
the Fair Market Value of a share of Common Stock at the date of such exercise.
6. Exchange, Transfer or Assignment of Warrant.
(a) Each taker and holder of this Warrant by taking or
holding the same, consents and agrees that the registered holder hereof
may be treated by the Company and all other persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the person
entitled to exercise the rights represented hereby.
(b) The Holder of this Warrant shall be entitled, without
obtaining the consent of the Company, to assign and transfer this
Warrant, at any time in whole or from time to time in part, to any
Person or Persons. Subject to the preceding sentence, upon surrender of
this Warrant to the Company, together with the attached Warrant
Assignment Form duly executed, the Company shall, without charge,
execute and deliver a new Warrant in the name of the assignee or
assignees named in such instrument of assignment and, if the Holder's
entire interest is not being assigned, in the name of the Holder and
this Warrant shall promptly be canceled.
7. Loss or Destruction of Warrant. Upon receipt by the Company of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant, and (in the case of
loss, theft or destruction) of reasonably satisfactory indemnification, or upon
surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
7
8. Anti-dilution Provisions. So long as any Warrants are
outstanding, the Warrant Share Amount shall be subject to change or adjustment
as follows:
(a) Common Stock Dividends, Subdivisions, Combinations.
In case the Company shall (i) pay or make a dividend or other
distribution to all holders of its Common Stock in shares of Common
Stock, (ii) subdivide or split the outstanding shares of its Common
Stock into a larger number of shares or (iii) combine the outstanding
shares of its Common Stock into a smaller number of shares, then in
each such case the Warrant Share Amount shall be adjusted to equal the
number of such shares to which the holder of this Warrant would have
been entitled upon the occurrence of such event had this Warrant been
exercised immediately prior to the happening of such event or, in the
case of a stock dividend or other distribution, prior to the record
date for determination of shareholders entitled thereto. An adjustment
made pursuant to this Section 8(a) shall become effective immediately
after the effective date of such event retroactive to the record date,
if any, for such event in the case of a dividend or distribution and
immediately after the effective date in the case of a subdivision,
split or combination.
(b) Reorganization or Reclassification. In case of any
capital reorganization or any reclassification of the capital stock of
the Company (whether pursuant to a merger or consolidation or
otherwise), this Warrant shall thereafter be exercisable for the number
of shares of stock or other securities or property receivable upon such
capital reorganization or reclassification of capital stock, as the
case may be, by a holder of the number of shares of Common Stock into
which this Warrant was exercisable immediately prior to such capital
reorganization or reclassification of capital stock; and, in any case,
appropriate adjustment (as determined in good faith by the Board of
Directors of the Company) shall be made for the application of the
provisions herein set forth with respect to the rights and interests
thereafter of the Holder of this Warrant to the end that the provisions
set forth herein shall thereafter be applicable, as nearly as
reasonably practicable, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this
Warrant.
8
(c) Distributions of Assets or Securities Other than
Common Stock. In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any of its
capital stock (other than Common Stock), rights or warrants to purchase
any of its securities (other than those referred to in Section 8(d)
below), cash, other assets or evidences of its indebtedness, then in
each such case the Warrant Share Amount shall be adjusted by
multiplying the Warrant Share Amount immediately prior to the date of
such dividend or distribution by a fraction, of which the numerator
shall be the Fair Market Value per share of Common Stock at the record
date for determining shareholders entitled to such dividend or
distribution, and of which the denominator shall be such Fair Market
Value per share less the Fair Market Value of the portion of the
securities, cash, assets or evidences of indebtedness so distributed
applicable to one share of Common Stock.
(d) Below Market Distributions or Issuances of Common
Stock. In case the Company shall issue Common Stock (or options, rights
or warrants to purchase shares of Common Stock (collectively,
"OPTIONS") or other securities convertible into or exchangeable or
exercisable for shares of Common Stock (such other securities,
collectively, "CONVERTIBLE SECURITIES")) at a price per share (or
having an effective exercise, exchange or conversion price per share
together with the purchase price thereof) less than the Fair Market
Value per share of Common Stock on the date such Common Stock (or
Options or Convertible Securities), is sold or issued (provided that no
sale of securities pursuant to an underwritten public offering shall be
deemed to be for less than Fair Market Value), then in each such case
the Warrant Share Amount shall thereafter be adjusted by multiplying
the Warrant Share Amount immediately prior to the date of issuance of
such Common Stock (or Options or Convertible Securities) by a fraction,
the numerator of which shall be (i) the sum (A) of the number of Common
Share Equivalents represented by all securities outstanding immediately
prior to such issuance and (B) the number of additional Common Share
Equivalents represented by all securities so issued multiplied by (ii)
the Fair Market Value of a share of Common Stock immediately prior to
the date of such issuance, and the denominator of which shall be (i)
the product of (A) the Fair Market Value of a share of Common Stock
immediately prior to the date of such issuance and (B) the number of
Common Share Equivalents represented by all securities outstanding
immediately prior to such issuance plus (ii) the aggregate
consideration received by the Company for the total number of
securities so issued plus, (iii) in the case of Options or Convertible
Securities, the additional consideration required to be received by the
Company upon the exercise, exchange or conversion of such securities;
provided that no adjustment shall be made in respect of issuances of
Common Stock (or options to purchase Common Stock) pursuant to stock
option or other employee benefit plans in effect on the date hereof or
approved by the Board of Directors of the Company after the date
hereof. An adjustment made pursuant to this Section 8(d) shall become
effective immediately after the date such Common Stock or other
security is sold or issued. Notwithstanding anything herein to the
contrary, (x) no further adjustment to the Warrant Share Amount shall
be made upon the issuance or sale of Common Stock pursuant to the
exercise of any Options or the conversion or exchange of any
Convertible Securities, if in each case the adjustment in the Warrant
Share Amount was made as required hereby upon the issuance or sale of
such Options or Convertible Securities or no adjustment was required
hereby at the time such Option or Convertible Security was issued and
(y) no adjustment to the Warrant Share Amount shall be made upon the
exercise of any Warrants.
9
(e) Below Market Distributions or Issuances of Preferred
Stock or Other Securities. In case the Company shall issue
nonconvertible and nonexchangeable preferred stock (or other securities
of the Company other than Common Stock or Options or Convertible
Securities) at a price per share (or other similar unit) less than the
Fair Market Value per share (or other similar unit) of such preferred
stock (or other security) on the date such preferred stock (or other
security) is sold (provided that no sale of preferred stock or other
security pursuant to an underwritten public offering shall be deemed to
be for less than its fair market value), then in each such case the
Warrant Share Amount shall thereafter be adjusted by multiplying the
Warrant Share Amount immediately prior to the date of issuance of such
preferred stock (or other security) by a fraction, the numerator of
which shall be the product of (A) the number of Common Share
Equivalents represented by all securities outstanding immediately prior
to such issuance and (B) the Fair Market Value of a share of Common
Stock immediately prior to the date of such issuance, and the
denominator of which shall be (ii) the product of (A) the number of
Common Share Equivalents represented by all securities outstanding
immediately prior to such issuance and (B) the Fair Market Value of a
share of the Common Stock immediately prior to the date of such
issuance minus (iii) the difference between (A) the aggregate Fair
Market Value of such preferred stock (or other security) and (B) the
aggregate consideration received by the Company for such preferred
stock (or other security). An adjustment made pursuant to this Section
8(e) shall become effective immediately after the date such preferred
stock (or other security) is sold.
(f) Above Market Repurchases of Common Stock. If at any
time or from time to time the Company or any Subsidiary thereof shall
repurchase, by self-tender offer or otherwise, any shares of Common
Stock of the Company (or any Options or Convertible Security) at a
weighted average purchase price in excess of the Fair Market Value
thereof, on the Business Day immediately prior to the earliest of (i)
the date of such repurchase, (ii) the commencement of an offer to
repurchase or (iii) the public announcement of either (such date being
referred to as the "DETERMINATION DATE"), the Warrant Share Amount
shall be determined by multiplying the Warrant Share Amount immediately
prior to such Determination Date by a fraction, the numerator of which
shall be the product of (A) the number of Common Share Equivalents
represented by all securities outstanding immediately prior to such
Determination Date minus the number of Common Share Equivalents
represented by the securities repurchased or to be purchased by the
Company or any Subsidiary thereof in such repurchase and (B) the Fair
Market Value of a share of Common Stock immediately prior to such
Determination Date, and the denominator of which shall be (i) the
product of (A) the number of Common Share Equivalents represented by
all securities outstanding immediately prior to the Determination Date
and (B) the Fair Market Value of a share of Common Stock immediately
prior to such Determination Date minus (ii) the sum of (A) the
aggregate consideration paid by the Company in connection with such
repurchase and (B) in the case of Options or Convertible Securities,
the additional consideration required to be received by the Company
upon the exercise, exchange or conversion of such securities. An
adjustment made pursuant to this Section 8(f) shall become effective
immediately after the effective date of such repurchase.
10
(g) Above Market Repurchases of Preferred Stock or Other
Securities. If at any time or from time to time the Company or any
Subsidiary thereof shall repurchase, by self-tender offer or otherwise,
any shares of nonconvertible and nonexchangeable preferred stock (or
other securities of the Company other than Common Stock or Options or
Convertible Securities), at a weighted average purchase price in excess
of the Fair Market Value thereof, on the Business Day immediately prior
to the Determination Date, the Warrant Share Amount shall be determined
by multiplying the Warrant Share Amount immediately prior to the
Determination Date by a fraction, the numerator of which shall be the
product of (i) the number of Common Share Equivalents represented by
all securities outstanding immediately prior to such Determination Date
and (ii) the Fair Market Value of a share of Common Stock immediately
prior to such Determination Date, and the denominator of which shall be
(i) the product of (A) the number of Common Share Equivalents
represented by all securities outstanding immediately prior to such
Determination Date and (B) the Fair Market Value of a share of Common
Stock immediately prior to such Determination Date minus (ii) the
difference between (A) the aggregate consideration paid by the Company
in connection with such repurchase and (B) the aggregate Fair Market
Value of such preferred stock (or other security). An adjustment made
pursuant to this Section 8(g) shall become effective immediately after
the effective date of such repurchase.
(h) Readjustment of Warrant Share Amount. If (i) the
purchase price provided for in any Option or the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities or the rate at which any Convertible Securities,
in each case as referred to in paragraphs (b) and (f) above, are
convertible into or exchangeable for Common Stock shall change at any
time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment
pursuant to this Section 8), or (ii) any of such Options or Convertible
Securities shall have irrevocably terminated, lapsed or expired, the
Warrant Share Amount then in effect shall forthwith be readjusted
(effective only with respect to any exercise of this Warrant after such
readjustment) to the Warrant Share Amount which would then be in effect
had the adjustment made upon the issuance, sale, distribution or grant
of such Options or Convertible Securities been made based upon such
changed purchase price, additional consideration or conversion rate, as
the case may be (in the case of any event referred to in clause (i) of
this paragraph (h)) or had such adjustment not been made (in the case
of any event referred to in clause (ii) of this paragraph (h)).
11
(i) Consideration. If any shares of Common Stock, Options
or Convertible Securities shall be issued, sold or distributed for
cash, the consideration received in respect thereof shall be deemed to
be the amount received by the Company therefor, before deduction
therefrom of any reasonable, customary and adequately documented
expenses incurred in connection therewith. If any shares of Common
Stock, Options or Convertible Securities shall be issued, sold or
distributed for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed
to be the Fair Market Value of such consideration, before deduction of
any reasonable, customary and adequately documented expenses incurred
in connection therewith. If any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger in
which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the Fair Market Value of
such portion of the assets and business of the non-surviving
corporation as shall be attributable to such Common Stock, Options or
Convertible Securities, as the case may be. If any Options shall be
issued in connection with the issuance and sale of other securities of
the Company, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued without
consideration.
(j) No Impairment. The Company will not, by amendment of
its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 8 and
in the taking of all such action as may be necessary or appropriate in
order to protect the conversion rights of the Holder against
impairment. Without limiting the generality of the foregoing, the
Company will not increase the par value of any shares of Common Stock
receivable on the exercise of the Warrants above the amount payable
therefor on such exercise.
12
(k) Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Warrant Share Amount pursuant to
this Section 8, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and
furnish to the Holder a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Company shall, upon the written request
at any time of the Holder, furnish or cause to be furnished to the
Holder a like certificate setting forth (i) such adjustments and
readjustments and (ii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received
upon the exercise of this Warrant.
(l) Proceedings Prior to Any Action Requiring Adjustment.
As a condition precedent to the taking of any action which would
require an adjustment pursuant to this Section 8, the Company shall
take any action which may be necessary, including obtaining regulatory
approvals or exemptions, in order that the Company may thereafter
validly and legally issue as fully paid and nonassessable all shares of
Common Stock which the Holders are entitled to receive upon exercise
thereof.
(m) Notice of Adjustment. Not less than 10 nor more than
30 days prior to the record date or effective date, as the case may be,
of any action which requires or might require an adjustment or
readjustment pursuant to this Section 8, the Company shall forthwith
file in the custody of its Secretary or an Assistant Secretary at its
principal executive office and with its stock transfer agent or its
warrant agent, if any, an officers' certificate showing the adjusted
number of Warrant Shares determined as herein provided, setting forth
in reasonable detail the facts requiring such adjustment and the manner
of computing such adjustment. Each such officers' certificate shall be
signed by the chairman, president or chief financial officer of the
Company and by the secretary or any assistant secretary of the Company.
Each such officers' certificate shall be made available at all
reasonable times for inspection by the Holder and the Company shall,
forthwith after each such adjustment, mail a copy, by first-class mail,
of such certificate to the Holder.
13
(n) Payments in Lieu of Adjustment. The Holder shall, at
its election, be entitled to receive, in lieu of the adjustment
pursuant to Section 8(c) otherwise required thereof, promptly upon the
delivery of the written notice of such election, cash, property,
evidences of indebtedness, other securities or other assets which such
Holder would have been entitled to receive if it had exercised its
Warrant for shares of Common Stock immediately prior to the record date
with respect to such distribution. The Holder may exercise its option
under this Section 8(n) by delivering to the Company a written notice
of such election within fourteen (14) days of its receipt of the
certificate of adjustment required pursuant to Section 8(m) to be
delivered by the Company in connection with such distribution.
(o) Company to Prevent Dilution. In case at any time or
from time to time conditions arise by reason of action taken by the
Company or any of its subsidiaries, which are not adequately covered by
the provisions of this Section 8,or which might adversely affect the
exercise rights of the Holder, the Board of Directors of the Company
shall appoint a firm of independent certified public accountants of
recognized national standing, which shall give their opinion upon the
adjustment, if any, necessary with respect to the Exercise Price and
the Warrant Share Amount, on a basis consistent with the standards
established in the other provisions of this Section 8, so as to
preserve, without dilution, the exercise rights of the Holder. Upon
receipt of such opinion, the Board of Directors of the Company shall
forthwith make the adjustments described therein.
14
9. Consolidation, Merger, or Sale of Assets. In case of any
consolidation of the Company with, or merger of the Company into, any other
Person, any merger of another Person into the Company (other than a merger which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock) or any sale or transfer of all or
substantially all of the assets of the Company or of the Person formed by such
consolidation or resulting from such merger or which acquires such assets, as
the case may be, the Holder shall have the right thereafter to exercise or
convert this Warrant for the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of Common Stock for which this Warrant may have
been exercised or converted immediately prior to such consolidation, merger,
sale or transfer, assuming (i) such holder of Common Stock is not a Person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
("CONSTITUENT PERSON"), or an Affiliate of a constituent Person and (ii) in the
case of a consolidation merger, sale or transfer which includes an election as
to the consideration to be received by the holders, such holder of Common Stock
failed to exercise its rights of election, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer is
not the same for each share of Common Stock held immediately prior to such
consolidation, merger, sale or transfer by other than a constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("NON-ELECTING SHARE"), then for the purpose of this paragraph 9
the kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Adjustments for events subsequent to the effective date of
such a consolidation, merger and sale of assets shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. In any such
event, effective provisions shall be made in the certificate or articles of
incorporation of the resulting or surviving corporation, in any contract of
sale, conveyance, lease or transfer, or otherwise so that the provisions set
forth herein for the protection of the rights of the Holder shall thereafter
continue to be applicable; and any such resulting or surviving corporation shall
expressly assume the obligation to deliver, upon exercise, such shares of stock,
other securities, cash and property. The provisions of this paragraph 9 shall
similarly apply to successive consolidations, mergers, sales, leases or
transfers.
15
10. Warrant Share Amount. If a Warrant Termination Event occurs prior
to October 1, 2002, this Warrant shall not be exercisable for any Warrant
Shares. If a Warrant Termination Event occurs prior to January 1, 2003, the
Warrant Share Amount shall be reduced by sixty-six and two-thirds percent
(662/3%) of its initial amount. If a Warrant Termination Event occurs prior to
April 1, 2003, the Warrant Share Amount shall be reduced by thirty-three and
one-third percent (331/3%) of its initial amount. If a Warrant Termination Event
does not occur prior to April 1, 2003, then the Warrant Share Amount shall not
be reduced in accordance with this paragraph.
11. Notices. Any notice, demand or delivery authorized by this Warrant
shall be in writing and shall be given to the Holder or the Company, as the case
may be, at its address (or telecopier number) set forth below, or such other
address (or telecopier number) as shall have been furnished to the party giving
or making such notice, demand or delivery:
If to the Company:
Choice One Communications Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
16
If to the Holder:
c/o MSDW Capital Partners IV, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Each such notice, demand or delivery shall be effective (i) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the intended recipient confirms the receipt of such telecopy or (ii)
if given by any other means, when received at the address specified herein.
12. Rights of the Holder. Prior to the exercise of any Warrant, the
Holder shall not, by virtue hereof, be entitled to any rights of a shareholder
of the Company, including, without limitation, the right to vote, to receive
dividends or other distributions, to exercise any preemptive right or to receive
any notice of meetings of shareholders or any notice of any proceedings of the
Company except as may be specifically provided for herein.
13. GOVERNING LAW. THIS WARRANT AND ALL RIGHTS ARISING HEREUNDER SHALL
BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN
ACCORDANCE WITH SUCH LAWS.
14. Amendments; Waivers. Any provision of this Warrant may be amended
or waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Holder and the Company, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
17
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
signed by its duly authorized officer and to be dated as of March 31, 2002.
CHOICE ONE COMMUNICATIONS INC.
By:
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and CEO
Acknowledged and Agreed:
[HOLDER]
By: [Holder]
By: [Holder]
By:
-------------------------------------------
Name:
Title:
WARRANT EXERCISE NOTICE
(To be delivered prior to exercise of the Warrant
by execution of the Warrant Exercise Subscription Form)
To: Choice One Communications Inc.
The undersigned hereby notifies you of its intention to exercise the
Warrant to purchase shares of Common Stock, par value $0.01 per share, of Choice
One Communications Inc. The undersigned intends to exercise the Warrant to
purchase ___________ shares (the "SHARES") at $______ per Share (the Exercise
Price currently in effect pursuant to the Warrant). The undersigned intends to
pay the aggregate Exercise Price for the Shares in cash, certified or official
bank or bank cashier's check (or a combination of cash and check) as indicated
below.
Date:________________________
__________________________________________
(Signature of Owner)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
Payment:$__________cash
$__________check
WARRANT EXERCISE SUBSCRIPTION FORM
(To be executed only upon exercise of the Warrant
after delivery of Warrant Exercise Notice)
To: Choice One Communications Inc.
The undersigned irrevocably exercises the Warrant for the purchase of
___________ shares (the "SHARES") of Common Stock, par value $.01 per share, of
Choice One Communications Inc. (the "COMPANY") at $_____ per Share (the Exercise
Price currently in effect pursuant to the Warrant) and herewith makes payment of
$___________ (such payment being made in cash or by certified or official bank
or bank cashier's check payable to the order of the Company or by any permitted
combination of such cash or check), all on the terms and conditions specified in
the within Warrant, surrenders this Warrant and all right, title and interest
therein to the Company and directs that the Shares deliverable upon the exercise
of this Warrant be registered or placed in the name and at the address specified
below and delivered thereto.
Date:__________________
________________________________________
(Signature of Owner)
________________________________________
(Street Address)
________________________________________
(City) (State) (Zip Code)
Securities and/or check to be issued
to:________________________________________________________
Please insert social security or identifying
number:_______________________________________________
Name:__________________________________________________________________________
Street Address:________________________________________________________________
City, State and Zip Code:______________________________________________________
Any unexercised portion of the Warrant evidenced by the within Warrant to be
issued to:
Please insert social security or identifying
number:_______________________________________________________________________
Name:__________________________________________________________________________
Street Address:________________________________________________________________
City, State and Zip Code:______________________________________________________
WARRANT ASSIGNMENT FORM
Dated ___________ ___, _____
FOR VALUE RECEIVED, _______________________ hereby sells,
assigns and transfers unto_____________________________(the "ASSIGNEE"),
(please type or print in block letters)
_____________________________________________________________________
(insert address)
its right to purchase up to _____ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint
_______________________ Attorney, to transfer the same on the books of the
Company, with full power of substitution in the premises.
Signature:
---------------------------------
