Exhibit 4.7
NET-tel COMMUNICATIONS, INC.
Washington, DC
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COMMON STOCK WARRANT
PURCHASE AGREEMENT
August 2, 1999
In connection with financing provided by
ALLIED CAPITAL CORPORATION
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TABLE OF CONTENTS
PREAMBLE
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Parties
Recitals
ARTICLE...................................................................1
Equity ................................................................1
Section 1.1 Warrants ............................................1
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Section 1.2 Valuation of Warrants ...............................2
ARTICLE 2 ................................................................2
Registration and Investor Rights ......................................2
ARTICLE 3.................................................................2
Representations and Warranties ........................................2
ARTICLE 4.................................................................3
Covenants .............................................................3
Section 4.1 [Intentionally Omitted] .............................3
Section 4.2 Further Assurance ...................................3
ARTICLE 5 ................................................................3
Section 5.1 Survival of Representations .........................3
Section 5.2 Agreement of the Company to Indemnify ...............3
Section 5.3 Conditions of Indemnification .......................4
Section 5.4 Specific Performance ................................5
Section 5.5 Exclusive Remedies ..................................5
ARTICLE 5
Section 6.1 No Implied Waiver....................................6
ARTICLE 7.................................................................6
Parties................................................................6
ARTICLE 8.................................................................6
Notice.................................................................7
ARTICLE 9.................................................................7
Controlling Law; Venue and jurisdiction; Service of Process ...........8
ARTICLE 10................................................................8
Captions; Severance....................................................8
ARTICLE 11................................................................8
Counterparts; Entire Agreement
ARTICLE 12 ...............................................................8
Definitions and Rules of Construction .................................8
Section 12.1 Definitions ........................................8
Section 12.2 Rules of Construction .............................10
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THIS COMMON STOCK WARRANT PURCHASE AGREEMENT is made as of August 2,
1999, by and among (i) NET-tel Communications, Inc., a Delaware corporation
(collectively with successors and assigns, the "Parent"); and NET-tel
Corporation. a Florida corporation (collectively with successors and assigns,
the "Borrower"; the Parent and the Borrower being hereinafter sometimes together
referred to as the "Company"); and (ii) Allied Capital Corporation, a Maryland
corporation (collectively with successors and assigns, "Holders").
RECITALS
A. Under terms of a credit agreement dated July 28, 1999,
Nortel Networks Inc., as administrative agent for itself and for other Lenders,
("Senior Lender") is providing to Borrower certain term loans and a revolving
credit facility in the aggregate principal amount of One Hundred Forty Million
Dollars ($140,000,000) pursuant to a Credit Agreement dated July 28, 1999 (the
"Credit Agreement") in the form of Exhibit A.
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B. Parent proposes to issue to Holders certain warrants to
purchase shares of the common stock of Parent, in consideration for Holders'
entry into in the Credit Agreement as a lender of the principal amount of Ten
Million Dollars ($10,000,000).
C. Under terms of a certain Securities Purchase Agreement,
Parent has issued and/or proposes to issue to Holders and other investors Series
B Convertible Preferred Stock ("Series B Stock") for an aggregate purchase price
of approximately Fifty Million Dollars ($50,000,000) ("Securities Purchase
Agreement") in the form of Exhibit B.
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PROVISIONS
In consideration of the premises and the covenants herein, Holders and
the Company agree as set forth below.
ARTICLE 1
Equity
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Section 1.1 Warrants. At Closing, Parent will issue and sell, and each Holder
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will purchase, a Warrant (collectively with all modifications, extensions,
renewals and replacements thereof and therefor, the "Warrants"), to acquire
shares of Parent's common stock, par value $.0001 ("Shares"), which will entitle
Holders to receive that number of Parent's authorized but unissued shares that
will provide Holder with One and Eight Tenths Percent (1.8%) of Parent's capital
stock on a Fully Diluted Basis immediately after Closing, with such percentage
being subject to certain anti-dilution provisions set forth in the Warrants. The
aggregate purchase price for the Warrants shall be One Hundred Dollars ($100),
which Holders shall pay to Parent at Closing.
Section 1.2 Valuation of Warrants. The Holders and Parent hereby agree that as
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of the Closing, the fair market value of the Warrants shall be as set out in
Exhibit 1.03 hereto, and that they shall prepare and maintain their books of
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account, financial statements and tax returns in a manner consistent therewith.
ARTICLE 2
Registration and Investor Rights
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Holders are hereby made parties to the Investor Rights Agreement and
the Registration Rights Agreement attached hereto as Exhibits C and D,
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respectively, as Purchasers, as defined therein, and shall, with respect to
Shares issued or issuable under the Warrant, be bound by and entitled to the
benefits of all terms therein applicable to Purchasers. For purposes of the
Registration Rights Agreement the Warrant Shares shall be deemed to be
Registrable Securities. With respect to the Investor Rights Agreement, the
Warrant and Warrant Shares shall be deemed to be that number of shares of Series
B Preferred Stock convertible into the number of shares of Common Stock
corresponding to the number of Warrant Shares; provided, however, that the
Warrant and Warrant Shares shall not be deemed to be Series B Preferred Stock
for purposes of Section 2.7 or the second sentence of Section 6.2 of such
Agreement, except with respect to consents to amendments to Section 1 of such
Agreement.
ARTICLE 3
Representations and Warranties
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To induce Holders to enter into the Credit Agreement and the other
transactions contemplated herein and to purchase the Warrants, Parent hereby
provides the same representations and warranties to Holders as it provided in
Article III of the Securities Purchase Agreement attached hereto as Exhibit C.
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All representations and warranties in this Article shall refer to facts as they
exist at Closing, shall be deemed to have been modified by the Compliance
Certificate set out as Exhibit E hereto, and shall survive the Closing.
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ARTICLE 4
Covenants
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So long as a Holder owns a Warrant or any equity security of the
Company issued directly or indirectly in exchange for, or pursuant to provisions
of a Warrant, the Company shall comply with the following covenants.
Section 4.1 [Intentionally Omitted]
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Section 4.2 Further Assurance. The Company and the Holders shall from time to
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time promptly execute and deliver to each other such additional documents, and
take such other reasonable steps, as they may reasonably require to carry out
the purposes hereof.
ARTICLE 5
Survival of Representations, Indemnification; Remedies
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Section 5.1 Survival of Representations. All representations and warranties (as
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modified by Exhibit E), covenants, agreements and indemnities made by a party to
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this Agreement herein or pursuant hereto shall also be deemed made on and as of
the Closing Date as though such representations, warranties, covenants,
agreements and indemnities were made on and as of such date, and all such
representations, warranties, covenants, agreements and indemnities shall survive
the Closing Date and remain in full force and effect as follows: (a) unless
otherwise specified hereinbelow, representations, warranties, covenants and
agreements shall survive for a period of one (1) year after the Closing Date;
(b) the representations and warranties of the Company set forth in Section 3.13
of the Securities Purchase Agreement shall survive until the expiration of the
applicable statute of limitations; (c) the covenants and agreements in this
Article 5 shall continue in full force and effect until fully discharged; and
(d) any representation, warranty, covenant, indemnity or agreement that is the
subject of a claim which is asserted in writing prior to the expiration of the
applicable survival period set forth above shall survive with respect to such
claim until the final resolution thereof.
Section 5.2 Agreement of the Company to Indemnify. Subject to the conditions and
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provisions of this Article 5, the Company hereby agrees to indemnify, defend and
hold harmless the Holders and their directors, officers, employees, agents, and
controlling persons (the "Indemnified Persons") from and against and in respect
of all demands, claims, actions or causes of action, assessments, losses,
damages (including, without limitation, diminution in value), liabilities, costs
and expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees and disbursements ("Claims") asserted against, resulting to,
imposed upon or incurred by the indemnified Persons (whether such Claims are by,
against or relate to the Company, or any other party, including, without
limitation, a governmental entity), directly or indirectly, by reason of or
resulting from any misrepresentation or breach of any representation or
warranty, or noncompliance with covenants or agreements given or made by the
Company in this Agreement, the Investor Rights Agreement, the Registration
Rights Agreement or in any document furnished by or on behalf of the Company
pursuant to this Agreement.
Section 5.3 Conditions of Indemnification. The obligations and liabilities of
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the Company hereunder with respect to its indemnities pursuant to this Article
5, resulting from any Claim shall be subject to the following terms and
conditions:
(a) The indemnified party shall give prompt written notice to
the indemnifying party of any Claim which is asserted against, resulting to,
imposed upon or incurred by such
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indemnified party and which may give rise to liability of the indemnifying party
pursuant to this Article 5, stating (to the extent known or reasonably
anticipated) the nature and basis of such Claim and the amount thereof.
(b) The indemnifying party shall engage counsel with respect
to any such Claim, such representation (including the compromise or settlement
of any Claim) to be undertaken on behalf of and for the account and risk of the
indemnified party, and the indemnified party shall have the right to approve
such counsel (such approval shall not be unreasonably withheld). No settlement
or compromise of any Claim may be made without the consent of the indemnified
party (such consent shall not be unreasonably withheld). In the event the
indemnifying party elects not to undertake such defense by its own counsel, the
indemnifying party shall give prompt written notice of such election to the
indemnified party, and the indemnified party will undertake the defense thereof
by counsel or other representatives designated by it, at the cost and expense of
the indemnifying party (such costs and expenses of such defense to be advanced
by the indemnifying party as incurred by the indemnified party). Notwithstanding
the foregoing, the indemnified party shall have the right to retain its own
counsel and to participate or assume its own defense in any proceeding where (i)
the indemnifying party and the indemnified party have mutually agreed to the
retention of counsel by, and the participation of, the indemnified party or (ii)
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them.
(c) In the event that any Claim shall arise out of a
transaction or cover any period or periods wherein the Company on the one hand,
and the Investors on the other hand, shall each be liable hereunder for part of
the liability or obligation arising therefrom, then the parties shall, each
choosing its or his own counsel and bearing its or his own expense, defend such
Claim, and no settlement or compromise of such Claim may be made without the
Joint consent or approval of the Company and the Holders (which consent shall
not be unreasonably withheld), except where the respective liabilities and
obligations of the Company and the Investors are clearly allocable or
attributable on the basis of objective facts.
(d) The Company shall not be required to indemnify the
Indemnified Persons with respect to any claim for indemnification pursuant to
Section 5.2 unless and until the aggregate amount of all Claims asserted
against, resulting to, imposed upon or incurred by the Indemnified Persons
exceeds One Hundred Fifty Thousand Dollars ($150,000), and then only to the
extent such aggregate amount exceeds One Hundred Fifty Thousand Dollars
($150,000). Claims thereafter may be asserted regardless of amount. The
Company's maximum liability to the Indemnified Persons for claims for
indemnification pursuant to Section 5.2 shall not exceed, in the aggregate, Two
Million Seven Hundred Thousand Dollars ($2,700,000). The limitations on
indemnification provided for in this Section 5.3(d) shall not apply to any
Claims asserted against, resulting to, imposed upon or incurred by the
Indemnified Persons related to fraud.
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Section 5.4 Specific Performance. In addition to any other remedies which the
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Indemnified Persons may have at law or in equity, the Company hereby
acknowledges that the Shares and the Company are unique, and that the harm to
the Indemnified Persons resulting from breaches by the Company of its
obligations cannot be adequately compensated by damages. Accordingly, the
Company agrees that the Indemnified Persons shall have the right to have all
obligations, undertakings, covenants, agreements and other provisions of this
Agreement specifically performed by the Company, and that the Indemnified
Persons shall have the right to obtain an order or decree of such specific
performance in any of the courts of the United States of America or of any state
or other political subdivision thereof.
Section 5.5 Exclusive Remedies. Except for any remedies that the Indemnified
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Persons might have based on fraud, the remedies provided in this Article 5 shall
be the exclusive remedies available to each party hereto for any breach of the
representations, warranties, covenants and agreements of the other party under
this Agreement; provided, however, that the foregoing shall not limit or
diminish the rights and remedies afforded to the parties under the Investor
Rights Agreement or Registration Rights Agreement.
ARTICLE 6
Waiver
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Section 6.1 No Implied Waiver. No course of dealing between a Holder and any
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other party hereto, or any failure or delay on the part of a Holder in
exercising any rights or remedies hereunder, shall operate as a waiver of any
rights or remedies of any Holder under this or any other applicable agreement.
No single or partial exercise of any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.
ARTICLE 7
Parties
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This Agreement will bind and accrue to the benefit of the Company, the
Holders, any holders of the Warrants, and their successors and permitted
assigns. Any purchaser, assignee, transferee or pledgee of the Warrants, or any
document arising in connection with the transaction subject to this Agreement
(or any of them), sold, assigned, transferred, pledged or repledged by a Holder
shall forthwith become vested with and entitled to exercise all rights and
remedies provided herein to Holders, as if said purchaser, assignee, transferee
or pledgee were originally named in this Agreement in place of the Holders.
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ARTICLE 8
Notice
All notices or communications under this Agreement or the Warrants shall
be in writing and mailed, postage prepaid, or delivered as follows:
To Holders: 1919 Pennsylvania Avenue, N.W., 3rd Floor
Washington, D.C. 20006
Attn: Scott S. Binder, Principal
Thoma H. Aiken
and to
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
Attn: David P. Parker, Esquire
To the Borrower.
NET-tel Corporation
1023 31st Street, N.W.
Washington, D.C. 20007
Attn: Craig R. Bandes
Senior Vice President
To the Parent:
NET-tel Communications Inc.
1023 31st Street, N.W.
Washington, D.C. 20007
Attn: Craig R. Bandes
Senior Vice President
and to
Swidler Berlin Shereff Friedman LLP
3000 K Street, N.W., Suite 300
Washington, D.C. 20007
Attn: Andrew M. Ray, Esquire
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or, to such subsequent addresses as may hereafter be specified by the parties.
Rejection or other refusal to accept, or the inability to deliver because of a
changed address of which no notice was given, shall not affect the date of such
notice sent in accordance with the foregoing provisions. Each such notice,
request or other communication shall be deemed sufficiently given, served, sent
and received for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the affidavit of the messenger
or the answer back being deemed conclusive evidence of such delivery), or at
such time as delivery is refused by addressee upon presentation.
ARTICLE 9
Controlling Law; Venue and Jurisdiction; Service of Process.
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This Agreement shall be interpreted, and the rights and liabilities of
the parties hereto determined, in accordance with the laws of the State of
Delaware, without regard to its principles of conflicts of law. Venue for any
adjudication hereof shall be only in the courts of the District of Columbia or
the Federal courts in such District, to the jurisdiction of which courts all
undersigned parties hereby submit as the agreement of such parties, as not
inconvenient, and as not subject to review by any court other than such courts
in the District of Columbia. All parties intend and agree that the courts of
jurisdictions in which the Company is incorporated and conducts its business
shall afford full faith and credit to any judgment rendered by a court of the
District of Columbia against the Company or other obligees hereunder, and that
such District of Columbia and federal courts shall have in personam jurisdiction
to enter a valid judgment against the Company or other obligees hereunder.
Service of any summons and/or complaint and any other process which may be
served on the Company in any action in respect hereto, may be made by mailing
via registered mail, or delivering a copy of such process to the Company at its
address specified above. The parties hereto agree that this submission to and
consent to service of process are reasonable and made for the express benefit of
Holders.
ARTICLE 10
Captions; Severance.
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The captions in this Agreement and the Warrants are inserted for
convenience of reference only and shall be construed neither to limit nor
amplify the meaning of the other text of such documents. To the extent any
provision herein violates any applicable law, such provision shall be void and
the balance of this Agreement shall remain unchanged.
ARTICLE 11
Counterparts; Entire Agreement
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This Agreement may be executed in as many counterpart copies and with as
many counterpart signature pages as may be convenient. It shall not be necessary
that the signature of, or
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on behalf of, each party appear on each counterpart, but it shall be sufficient
that the signature of, or on behalf of, each party appear on one or more of the
counterparts. An counterparts shall collectively constitute a single agreement;
it shall not be necessary in any proof of this Agreement to produce or account
for more than a number of counterparts containing the respective signatures of,
or on behalf of, all of the parties. This Agreement and the Warrants, and the
documents mentioned herein set forth the entire agreements and understandings of
the parties hereto in respect of this transaction. Any verbal agreements in
respect of this transaction are hereby terminated. The terms herein may not be
changed verbally but only by a writing signed by the party against which
enforcement of the change is sought.
ARTICLE 12
Definitions and Rules of Construction
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Section 12.1 Definitions. As used in this Agreement, and unless the context
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requires a different meaning, the following terms shall have the meanings as
follow:
(a) "Affiliate" shall have the meaning ascribed to it under
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Rule 13e-3 promulgated under the Securities Exchange Act of 1934, as amended;
(b) "Affiliated Person" shall have the definition for such
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term set out in section 2(a)(3) of the Investment Company Act of 1940, as
amended;
(c) "Agreement" is defined as this Common Stock Warrant
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Purchase Agreement and the exhibits and schedules hereto, as the same may be
amended, supplemented, extended, modified or replaced in accordance with the
terms hereof;
(d) "Borrower" shall have the definition set out in the
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Preamble hereof.
(e) "Closing" is defined as the consummation of this
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Agreement;
(f) "Closing Date" shall mean the day on which the Closing
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occurs;
(g) "Company" shall have the definition set out in the
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Preamble hereof;
(h) "Fully Diluted Basis" shall mean as of a particular date,
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in respect to a corporation or other legal entity, the condition wherein all
options, warrants and other securities of such entity outstanding on such date
which are then or later exercisable or exchangeable for capital stock or other
equity interests in the entity, are, for the purpose of calculating relative
ownership rights, presumed to have been exercised or exchanged in full;
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(i) "Gold & Appel" means Gold & Appel Transfer S.A., a
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corporation organized under the laws of The British Virgin Islands, and a
wholly-owned subsidiary of Iceberg Transport, S.A., a corporation organized
under the laws of Panama;
(j) "Holders" shall have the definition set out in the
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Preamble hereof;
(k) "Parent" shall have the definition set forth in the
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Preamble hereof;
(l) "The Securities Act" is defined as the Securities Act of
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1933, as amended;
(m) "Securities Purchase Agreement" shall have the definition
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set forth in Recital C hereof;
(n) "Credit Agreement" shall have the definition set forth in
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Recital A hereof;
(o) "Senior Lender" shall have the definition set forth in
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Recital A hereof;
(p) "Series B Stock" shall have the definition set forth in
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Recital C hereof;
(q) "Shares" shall have the meaning set forth in Section 1.1
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hereof;
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(r) "Warrants" shall have the meaning set forth in Section 1.1
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hereof; and
(s) "Warrant Shares" is defined as the Shares issued or
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issuable pursuant to the warrants.
Section 12.2 Rules of Construction. The rule of ejusdem generis shall not be
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applicable herein to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned. Unless the context otherwise requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Provisions apply to successive events and transactions;
(d) "Herein", "Hereof", "Hereto", "Hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision unless otherwise so provided,
(e) The word "person" shall mean any natural person,
partnership, corporation, nation, state, government, union, association, agency,
tribunal, board, bureau and any other form of business or legal entity;
(f) All words or terms used in this Agreement, regardless of
the number or gender in which they are used, shall be deemed to include any
other number and any other gender; and
(g) All financial terms used herein and not capitalized shall
have the meaning accorded them under GAAP.
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first above written
Parent:
[Seal]
Attest: /s/ Thomas Lera By: /s/ James F. Kenefick
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Thomas Lera, Secretary James F. Kenefick, President
Borrower: NET-tel Corporation
[Seal]
Attest: /s/ Thomas Lera By: /s/ James F. Kenefick
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Thomas Lera, Secretary James P. Kenefick, President
Holders: Allied Capital Corporation
[Seal]
By: /s/ Thomas H. Aiken
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Thomas H. Aiken, Associate
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Agreed to and Accepted for purposes Gold & Appel Transfer, S.A.
of Article II only
By: /s/ Walter Anderson
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Walter Anderson
James Kenefick
By: /s/ James Kenefick
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James Kenefick
Williams Communications, Inc.
By: /s/ James W. Dutton
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James W. Dutton
Vice President
Nortel Networks, Inc.
By: /s/ Jay R. Prestipino
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Jay R. Prestipino
Director, Customer Finance
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