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Exhibit 10.12
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ("WARRANTS") AND THE UNDERLYING
WARRANT SHARES ("WARRANT SHARES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE WARRANTS MAY NOT BE
EXERCISED OFFERED OR SOLD UNLESS, IN EACH CASE, THE WARRANTS AND WARRANT SHARES
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE, AS EVIDENCED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY.
THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED, SOLD, PLEDGED,
HYPOTHECATED AND ENCUMBERED SUBJECT TO THE PROVISIONS CONTAINED HEREIN.
WARRANTS TO PURCHASE COMMON STOCK
MICROTEL INTERNATIONAL, INC., a Delaware corporation (the "Company")
hereby grants to the entrenet Group, L.L.C. (the "Holder") __________________
(_______) transferable warrants (the "Warrants") for the purchase of common
stock of the Company (the "Common Stock"), with each whole Warrant entitling
the Holder to purchase one share of Common Stock (each a "Warrant Share" and
collectively the "Warrant Shares") on the terms and subject to the conditions
set forth herein. The Warrants have been issued as part of a larger private
offering by the Company described in a certain Confidential Offering Memorandum
of the Company dated March 21, 1997.
1. TERM. The Warrants may be exercised, in whole or in part, at any
time and from time to time from the date hereof until 5:00 Pacific Time on
April __, 2000 (the "Exercise Period").
2. EXERCISE PRICE. The initial exercise price of each whole Warrant
shall be $2.66 (the "Exercise Price"). The Exercise Price shall be subject to
adjustment as provided in Section 10.
3. EXERCISE OF WARRANTS. The Warrants are exercisable on the terms
provided herein at any time during the Exercise Period by the surrender of this
certificate to the Company at its principal office together with the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder,
accompanied by payment in full, in immediately available funds, of the amount
of the aggregate Exercise Price of the Warrant Shares being purchased upon such
exercise. The Holder shall be deemed the record owner of such Warrant Shares as
of and from the close of business on the date on which this certificate is
surrendered together with the completed Notice of Exercise and payment in full
as required above (the "Exercise Date"). The Company agrees that the Warrant
Shares so purchased shall be issued as soon as practicable thereafter. It shall
be a condition to the exercise of the Warrants that the
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Holder or any transferee hereof provide an opinion of counsel reasonably
satisfactory to the Company that the Warrants and the Warrant Shares to be
delivered upon exercise thereof have been registered under the Securities Act
or that an exemption from the registration requirements of the Securities Act
is available.
4. FRACTIONAL INTEREST. In lieu of issuing fractional shares of Common
Stock upon exercise of the Warrants, the Company may pay the Holder a cash
amount determined by multiplying the fraction of a share otherwise issuable by
the Fair Market Value of one share of Common Stock. For this purpose, "Fair
Market Value" means the average closing sale price for the ten trading days
immediately preceding the Exercise Date or, if there is no last-sale reporting
for the Common Stock at such time, then the value as determined in good faith
by the Board of Directors of the Company.
5. WARRANTS CONFER NO RIGHTS OF STOCKHOLDER. The Holder shall not have
any rights as a stockholder of the Company with regard to the Warrant Shares
prior to the Exercise Date for any actual purchase of Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither the Warrants nor the Warrant
Shares issuable upon the exercise of the Warrants have been registered under the
Securities Act or any state securities laws. The Holder acknowledges by
acceptance of this certificate that, as of the date of this Warrant and at the
time of exercise, (a) the Holder has acquired the Warrants or the Warrant
Shares, as the case may be, for investment and not with a view to distribution;
and either (b) the Holder has a pre-existing personal or business relationship
with the Company or its executive officers, or by reason of the Holder's
business or financial experience the Holder has the capacity to protect the
Holder's own interests in connection with the transaction; and (c) the Holder
and its members are each accredited investors as that term is defined in Rule
501(a) of Regulation D under the Securities Act. The Holder agrees, by
acceptance of this certificate, that any Warrant Shares purchased upon exercise
of the Warrants may have to be held indefinitely, until registered and
qualified for resale pursuant to Section 7, or until an exemption from
registration is available, as evidenced by an opinion of counsel reasonably
satisfactory to the Company. The Holder, by acceptance of this certificate,
consents to the placement of a restrictive legend (the "Legend") on the
certificates representing any Warrant Shares that are purchased upon exercise
of the Warrants during the applicable restricted period under Rule 144 or any
other applicable restricted period under the Securities Act. The Legend shall
be in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
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SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND 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,
AS AMENDED, UNLESS IN THE WRITTEN LEGAL OPINION (APPROVED BY THE
COMPANY) OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH REGISTRATION IS
NOT REQUIRED.
7. REGISTRATION RIGHTS. The Company agrees, on the following terms and
subject to the following conditions, to register under the Securities Act the
resale of all Warrant Shares which are purchasable upon the exercise of the
Warrants (the "Registrable Securities"), at the Company's own expense, with the
exception of any legal and advisory fees or expenses incurred by the Holder in
connection with the registration.
7.1 FILING OF REGISTRATION STATEMENT. The Company shall prepare and
file with the United States Securities and Exchange Commission ("SEC") not
later than 60 days after the date hereof a registration statement on an
appropriate form (the "Registration Statement") for registration under the
Securities Act of the resale of the Registrable Securities.
7.2 INFORMATION. In connection with the preparation of the Registration
Statement:
(1) The Holder shall furnish to the Company all information reasonably
requested by the Company (including, for example, information regarding the
Holder's intended method of disposition of the Registrable Securities) for
inclusion in the Registration Statement and response to the SEC comments
and questions.
(2) As the Holder may be deemed a statutory underwriter of any
Registrable Securities sold by the Holder under the Registration Statement,
the Company shall give the Holder and its legal counsel and accountants
such access to copies of the Company's records and documents and such
opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial
statements as shall be reasonably necessary, in the opinion of the Holder
or its legal counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Company shall use its
best efforts to cause the Registration Statement to become effective within 150
days after the date hereof (but if not effective within such period, the
Company shall continue to use its best efforts to cause the Registration
Statement to become effective as soon as possible thereafter) and
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to keep the Registration Statement effective thereafter until the earlier of (i)
the date on which all Registrable Securities have been resold pursuant to the
Registration Statement or otherwise resold without restriction under the
Securities Act, or (ii) the date on which is ended the two-year period
referenced in Rule 144(k) under the Securities Act or any successor rule or
subsection relating to the resale of "restricted securities" by
"non-affiliates" of an issuer, as such terms are defined in the Securities Act
and the rules and regulations promulgated thereunder.
7.4 AMENDMENT AND SUPPLEMENTS. The Company shall prepare and file with
the SEC such amendments and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of the Registrable Securities.
7.5 COPIES OF PROSPECTUSES. The Company shall furnish to the Holder of
such numbers of copies of prospectuses or prospectus documents conforming with
the requirements of the Securities Act as the Holder may reasonably request in
order to facilitate the disposition of Registrable Securities owned by the
Holder.
7.6 BLUE SKY REGULATIONS. The Company shall use its best efforts to
register and qualify the Registrable Securities under the state securities or
Blue Sky laws ("State Laws") of such jurisdictions as the Holder reasonably
requests.
7.7 QUIET PERIODS. The Holder agrees that, upon its receipt of any
notice from the Company of the happening of any event which makes any statement
made in the Registration Statement, the prospectus or any documents incorporated
therein by reference, untrue in any material respect or which requires the
making of any changes in the Registration Statement, the prospectus or any
document incorporated therein by reference, in order to make the statements
therein not misleading in any material respect, the Holder will forthwith
discontinue disposition of Registrable Securities under the prospectus related
to the Registration Statement until the Company provides the Holder with copies
of the supplemented or amended prospectus or prospectus documents, or until the
Holder is advised in writing by the Company that the use of the prospectus may
be resumed. The Company agrees to provide the Holder with such copies of the
supplemented or amended prospectus or prospectus documents, or notice that use
of the prospectus may be resumed, as soon as reasonably practicable.
7.8 TRADING MARKET. The Company covenants to use its best efforts to
maintain a continuous trading market for its Common Stock on the Nasdaq
SmallCap Market or National Market System or a
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United States national securities exchange throughout the period that the
registration rights afforded by this Section 7 remain in effect.
7.9 COMPLIANCE WITH ANTI-MANIPULATION RULES. The Holder agrees that,
with respect to the offering for resale of the Registrable Securities, the
Holder will comply with Regulation M promulgated under the Exchange Act and
such other or additional anti-manipulation rules then in effect (the
"Anti-Manipulation Rules") until such offering has been completed. The Company
also agrees to comply with the Anti-Manipulation Rules with respect to the
offering for resale of the Registrable Securities until such offering has been
completed.
7.10 INDEMNIFICATION. To the extent permitted by law, the Company agrees
to indemnify and hold harmless the Holder and its affiliates and agents, and
the Holder agrees to indemnify and hold harmless the Company and its
affiliates and agents:
(1) against any losses, claims, damages and liabilities and any legal
or other costs and expenses reasonably incurred by such indemnified
parties in connection with investigating or defending any such loss,
claim, damage liability, or action to which such parties may become
subject under the Securities Act or other federal or state law, insofar as
such losses, claims, damages, liabilities, costs or expenses (or actions in
respect thereof) did not arise out of and were not based upon written
information furnished by such parties expressly for use in the Registration
Statement; and
(2) for amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected by the indemnifying
party without the prior written consent of the other party to this Warrant,
which consent shall not be unreasonably withheld.
7.11 ENFORCEMENT. In the event of a material breach of the terms of this
Section 7 by the Company, the Holder will be entitled to enforce its rights
under this Section 7 specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision hereof, and to exercise
all other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach by the Company
of the provisions hereof, and that the Subscriber may in its sole discretion
apply to a court of competent jurisdiction for specific performance and/or
injunctive relief in order to enforce or prevent any violation of the provisions
hereof. In addition, upon the occurrence of a material breach by the Company or
by the Holder of this Section 7, the breaching party shall pay all costs and
expenses (including the prevailing party's
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attorney's fees and expenses) reasonably incurred in connection with the
preservation and enforcement of such party's rights hereunder.
7.12 SUBSEQUENT HOLDERS. Any person who acquires the Warrants or
Warrant Shares in a transaction that does not result in such person receiving
securities which are free of restrictions on transfer in the United States and
to U.S. Persons, such person shall be entitled to the benefit of all of the
rights and privileges set forth in this Section 7, provided that such person
agrees in a writing to the Company to undertake all of the obligations of the
Holder under this Section 7.
8. RESERVATION OF SHARES. The Company agrees that, at all times during
the Exercise Period, the Company will have authorized and reserved, for the
exclusive purpose of issuance and delivery upon exercise of the Warrants, a
sufficient number of shares of its Common Stock to provide for the issuance of
the Warrant Shares.
9. ADJUSTMENT FOR CHANGES IN CAPITAL STOCK. If the Company at any time
during the Exercise Period shall, by subdivision, combination or
reclassification of securities, change any of the securities into which the
Warrants are exercisable into the same or a different number of securities of
any class or classes, the Warrants shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares if the Warrant Shares
had been outstanding immediately prior to such subdivision, combination, or
reclassification. If shares of the Company's Common Stock are subdivided into a
greater number of shares of Common Stock, the Exercise Price for the Warrant
Shares upon exercise of the Warrants shall be proportionately reduced and the
number of Warrant Shares shall be proportionately increased; and conversely, if
shares of the Company's Common Stock are combined into a smaller number of
shares of Common Stock, the Exercise Price shall be proportionately increased,
and the number of Warrant Shares shall be proportionately decreased.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF CERTIFICATE. Upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any certificate representing the Warrants or the
Warrant Shares (referred to herein as the "original certificate"), and in case
of loss, theft or destruction, of indemnity or security reasonably satisfactory
to the Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the original
certificate if mutilated, the Company will make and deliver a new certificate
of like tenor in lieu of the original certificate.
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11. ASSIGNMENT. The Warrants may be transferred subject to the
provisions of Section 6.
12. GENERAL. This certificate shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California. The headings herein are for purposes of convenience and
reference only and shall not be used to construe or interpret the terms of this
certificate. The terms of this certificate may be amended, waived, discharged or
terminated only by a written instrument signed by both the Company and the
Holder. All notices and other communications from the Company to the Holder
shall be mailed by first-class registered or certified mail, postage pre-paid,
to the address furnished to the Company in writing by the last Holder who shall
have furnished an address to the Company in writing.
Dated: April , 1997
MICROTEL INTERNATIONAL, INC.
By: /s/ Carmine T. Oliva
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(Authorized Signature)
President and CEO
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(Name and Title)
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NOTICE OF EXERCISE
To: MicroTel International, Inc. (the "Company")
1. The undersigned hereby elects to exercise a total of ______________
Warrants for the purchase of a like number of Warrant Shares, and tenders
herewith payment of the Exercise Price for such shares in full.
2. In exercising the Warrants, the undersigned hereby confirms and
acknowledges that the Warrant Shares are being acquired solely for the account
of the undersigned for investment, and that the undersigned will not offer,
sell or otherwise dispose of any of the Warrant Shares unless the Warrant
Shares have been registered under the Securities Act or an exemption from such
registration is available, as evidenced by an opinion of counsel reasonably
satisfactory to the Company.
3. The undersigned hereby certifies that the undersigned has delivered
to the Company an opinion of counsel to the effect that the Warrants and the
Warrant Shares have been registered under the Securities Act or an exemption
form such registration is available.
4. Please issue a certificate representing the Warrant Shares in the
name of the Holder and deliver the certificate to the address set forth below.
5. Please issue a new certificate representing the unexercised portion
(if any) of the Warrants in the name of the Holder and deliver the certificate
to the address set forth below.
Dated: __________________
______________________________________
(Name of Holder)
______________________________________
(Authorized Signature)
Address for Delivery:
______________________________________
______________________________________
______________________________________
______________________________________
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