Exhibit 10.2
WARRANT
TO PURCHASE COMMON STOCK OF
NAVISITE, INC.
Warrant No. B-1
Original Issue Date: February 13, 2007
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT OR (II) THE
TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE ACT.
Warrant No. B-1
WARRANT
TO PURCHASE 311,402 SHARES (SUBJECT TO ADJUSTMENT) OF COMMON STOCK OF
NAVISITE, INC.
THIS IS TO CERTIFY THAT SPCP Group, LLC, a Delaware limited liability
corporation ("Silver Point"), or its registered assigns, is entitled, at any
time prior to the Expiration Date to purchase from NaviSite, Inc., a Delaware
corporation (the "Company"), 311,402 shares (subject to adjustment as provided
herein) of the common stock, par value $0.01 per share, of the Company at a
purchase price of $0.01 per share (the initial "Exercise Price", subject to
adjustment as provided herein).
This Warrant was issued in connection with that certain Amendment No.
4 and Waiver (the "Amendment"), dated as of February 13, 2007, to the Credit and
Guaranty Agreement, dated April 11, 2006, by and among the Company, the
Guarantors party thereto, the Lenders from time to time party thereto, and
Silver Point, as Administrative Agent for the Lenders (as amended, modified,
supplemented or restated from time to time, the "Credit Agreement"), and is
subject to the terms thereof.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective meanings
set forth below:
"Affiliate" of, or a Person "Affiliated" with, a specified Person means any
other Person directly or indirectly controlling, controlled by, or under common
control with, that Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power (i) to vote 5% or more of the
Securities having ordinary voting power for the election of directors of such
Person, or (ii) to direct or cause the direction of the management and policies
of that Person, whether through the ownership of voting securities or by
contract or otherwise. Notwithstanding anything to the
contrary herein, in no event shall any Agent or Lender be considered an
"Affiliate" of any Credit Party.
"Affiliate Transaction" shall have the meaning assigned to it in Section
5.4 hereof.
"Agreed Rate" means the rate of interest announced publicly by Citibank,
N.A. in New York, New York, from time to time, as Citibank, N.A.'s base rate.
"Appraisal Procedure" means the following procedure to determine the fair
market value, as to any security, for purposes of the definition of "Fair Market
Value" or the fair market value, as to any other property (in either case, the
"Valuation Amount"). The Valuation Amount shall be determined in good faith
jointly by the Company and the Holder; provided, however, that if such parties
are not able to agree on the Valuation Amount within a reasonable period of time
(not to exceed twenty (20) Business Days), the Valuation Amount shall be
determined by an investment banking firm of national reputation, which firm
shall be reasonably acceptable to the Company and the Holder. If the Company and
the Holder are unable to agree upon an acceptable investment banking firm within
ten (10) days after the date either party proposed that one be selected, the
investment banking firm will be selected by an arbitrator located in New York
City, New York, selected by the American Arbitration Association (or if such
organization ceases to exist, the arbitrator shall be chosen by a court of
competent jurisdiction). The arbitrator shall select the investment banking firm
(within ten (10) days of his appointment) from a list, jointly prepared by the
Company and the Holder, of not more than six investment banking firms of
national reputation in the United States, of which no more than three may be
named by the Company and no more than three may be named by the Holder. The
arbitrator may consider, within the ten-day period allotted, arguments from the
parties regarding which investment banking firm to choose, but the selection by
the arbitrator shall be made in its sole discretion from the list of six. The
Company and the Holder shall submit their respective valuations and other
relevant data to the investment banking firm, and the investment banking firm
shall, within thirty days of its appointment, make its own determination of the
Valuation Amount. The determination of the final Valuation Amount by such
investment banking firm shall be final and binding upon the parties. The Company
shall pay all of the fees and expenses of the investment banking firm and
arbitrator (if any) used to determine the Valuation Amount. If required by any
such investment banking firm or arbitrator, the Company shall execute a retainer
and engagement letter containing reasonable terms and conditions, including,
without limitation, customary provisions concerning the rights of
indemnification and contribution by the Company in favor of such investment
banking firm or arbitrator and its officers, directors, partners, employees,
agents and Affiliates.
"Board Observer" shall have the meaning assigned to it in Section 9.3
hereof.
"Business Day" means any day that is not a Saturday or Sunday or a day on
which banks are required or permitted to be closed in the State of New York.
"Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act and other federal
securities laws.
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"Common Stock" means the common stock, par value $0.01 per share, of the
Company as constituted on the Original Issue Date, and any capital stock into
which such Common Stock may thereafter be changed, and shall also include (i)
capital stock of the Company of any other class (regardless of how denominated)
issued to the holders of shares of any Common Stock upon any reclassification
thereof which is also not preferred as to dividends or liquidation over any
other class of stock of the Company and which is not subject to redemption and
(ii) shares of common stock of any successor or acquiring corporation received
by or distributed to the holders of Common Stock of the Company in the
circumstances contemplated by Section 4.6 hereof.
"Company" means NaviSite, Inc., a Delaware corporation, and any successor
corporation.
"Conversion Cap" shall have the meaning assigned to it in Section 4.13
hereof.
"Designated Office" shall have the meaning assigned to it in Section 8
hereof.
"Dilution Price" shall mean, with respect to each share of Common Stock,
$3.50, subject to appropriate adjustment for events described in Sections 4.4,
4.5 and 4.6.
"Exercise Date" shall have the meaning assigned to it in Section 2.1(a)
hereof.
"Exercise Notice" shall have the meaning assigned to it in Section 2.1(a)
hereof.
"Exercise Price" means, in respect of a share of Warrant Stock at any date
herein specified, the initial Exercise Price set forth in the preamble of this
Warrant, as adjusted from time to time pursuant to Section 4 hereof.
"Expiration Date" means the 10th anniversary of the Original Issue Date.
"Fair Market Value" means, as to any security, the Twenty Day Average of
the average closing prices of such security's sales on all domestic securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted on The Nasdaq Capital Market as of 4:00 P.M., New York
City time, on such day, or, if on any day such security is not quoted on The
Nasdaq Capital Market, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar or successor organization (and in
each such case excluding any trades that are not bona fide, arm's length
transactions). If at any time such security is not listed on any domestic
securities exchange or quoted on The Nasdaq Capital Market or the domestic
over-the-counter market, the "Fair Market Value" of such security shall be the
fair market value thereof as determined in accordance with the Appraisal
Procedure, using any appropriate valuation method, assuming an arms-length sale
to an independent party. "Fair Market Value" means, with respect to property
other than securities, the "fair market value" determined in accordance with the
Appraisal Procedure. No amount shall be ascribed to "Fair Market Value" with
respect to any non-cash consideration other than a security or other property,
as contemplated above.
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"Financial Officer Certification" means, with respect to the financial
statements for which such certification is required, the certification of the
chief financial officer of Company that such financial statements fairly
present, in all material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, in each case in conformity with GAAP
applied on a consistent basis, subject, in the case of interim financial
statements, to changes resulting from normal audit and year end adjustments.
"Fiscal Quarter" means a fiscal quarter of any Fiscal Year.
"Fiscal Year" means the fiscal year of Company and its Subsidiaries ending
on July 31 of each calendar year.
"GAAP" means United States generally accepted accounting principles
consistently applied.
"Governmental Entity" means any federal, state, municipal, national or
other government, governmental department, commission, board, bureau, court,
agency or instrumentality or political subdivision thereof or any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.
"Holder" means (a) with respect to this Warrant, the Person in whose name
the Warrant set forth herein is registered on the books of the Company
maintained for such purpose and (b) with respect to any other Warrant or shares
of Warrant Stock, the Person in whose name such Warrant or Warrant Stock is
registered on the books of the Company maintained for such purpose.
"Lien" means (i) any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, and any
lease in the nature thereof) and any option, trust or other preferential
arrangement having the practical effect of any of the foregoing, and (ii) in the
case of Securities, any purchase option, call or similar right of a third party
with respect to such Securities.
"Original Issue Date" means February 13, 2007, the date on which the
Original Warrants were issued by the Company pursuant to the Purchase Agreement.
"Original Warrants" means the Warrants originally issued by the Company
pursuant to the Purchase Agreement.
"Outstanding" means, when used with reference to Common Stock, at any date
as of which the number of shares thereof is to be determined, all issued shares
of Common Stock, except shares then owned or held by or for the account of the
Company or any Subsidiary, and shall include all shares issuable in respect of
outstanding scrip or any certificates representing fractional interests in
shares of Common Stock.
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"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and Governmental Entity.
"Purchase Agreement" means the Warrant Purchase Agreement by and between
the Company, SPCP Group, LLC and SPCP Group III LLC, dated as of February 13,
2007.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Stock Incentive Plan" shall have the meaning assigned to it in Section
4.16 hereof.
"Subsidiary" means any corporation, association, trust, limited liability
company, partnership, joint venture or other business association or entity (i)
at least 50% of the Outstanding voting securities of which are at the time owned
or controlled, directly or indirectly, by the Company; or (ii) with respect to
which the Company possesses, directly or indirectly, the power to direct or
cause the direction of the affairs or management of such Person.
"Transfer" means any disposition of any Warrant or Warrant Stock or of any
interest therein, which would constitute a "sale" thereof or a transfer of a
beneficial interest therein within the meaning of the Securities Act.
"Twenty Day Average" means, with respect to any prices and in connection
with the calculation of Fair Market Value, the average of such prices over the
twenty Business Days ending on the Business Day immediately prior to the day as
of which "Fair Market Value" is being determined.
"Warrant Price" means an amount equal to (i) the number of shares of
Warrant Stock being purchased upon exercise of this Warrant pursuant to Section
2.1 hereof, multiplied by (ii) the Exercise Price.
"Warrant" means the Original Warrants and all Warrants issued upon
transfer, division or combination of, or in substitution for, the Original
Warrants, or any other Warrant subsequently issued to the Holder. All Warrants
shall at all times be identical as to terms and conditions, except as to the
number of shares of Warrant Stock for which they may be exercised and their date
of issuance.
"Warrant Stock" means the shares of Common Stock issued, issuable or both
(as the context may require) upon the exercise of Warrants.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise.
(a) From and after the Original Issue Date and at any time before 5:00
P.M., New York time, on the Expiration Date, the Holder of this Warrant may from
time to time exercise this Warrant, on any Business Day, for all or any part of
the number of shares of
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Warrant Stock (subject to adjustment as provided herein) purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the Holder shall (i)
deliver to the Company at its Designated Office a written notice of the Holder's
election to exercise this Warrant (an "Exercise Notice") substantially in the
form attached to this Warrant as Annex A, which Exercise Notice shall be
irrevocable and specify the number of shares of Warrant Stock to be purchased,
together with this Warrant and (ii) pay to the Company the Warrant Price. The
date on which such delivery and payment shall have taken place being hereinafter
sometimes referred to as the "Exercise Date".
(b) Upon receipt by the Company of such Exercise Notice, surrender of
this Warrant and payment of the Warrant Price (in accordance with Section 2.1(c)
hereof), the Company shall, as promptly as practicable, and in any event within
five (5) Business Days thereafter, execute (or cause to be executed) and deliver
(or cause to be delivered) to the Holder a certificate or certificates
representing the shares of Warrant Stock issuable upon such exercise, together
with cash in lieu of any fraction of a share, as hereafter provided. The stock
certificate or certificates so delivered shall be, to the extent possible, in
such denomination or denominations as the exercising Holder shall reasonably
request in the Exercise Notice and shall be registered in the name of the Holder
or, subject to compliance with Section 3.3 below, such other name as shall be
designated in the Exercise Notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates of Warrant Stock shall be deemed
to have been issued, and the Holder or any other Person so designated to be
named therein shall be deemed to have become a holder of record of such shares
of Warrant Stock for all purposes, as of the Exercise Date.
(c) Payment of the Warrant Price shall be made at the option of the
Holder by one or more of the following methods: (i) by delivery of a certified
or official bank check or by wire transfer of immediately available funds in the
amount of such Warrant Price payable to the order of the Company, (ii) by
instructing the Company to withhold a number of shares of Warrant Stock then
issuable upon exercise of this Warrant with an aggregate Fair Market Value equal
to such Warrant Price, (iii) by surrendering to the Company shares of Common
Stock previously acquired by the Holder with an aggregate Fair Market Value
equal to such Warrant Price, or (iv) any combination of the foregoing. In the
event of any withholding of Warrant Stock or surrender of Common Stock pursuant
to clause (ii), (iii) or (iv) above where the number of shares whose Fair Market
Value is equal to the Warrant Price is not a whole number, the number of shares
withheld by or surrendered to the Company shall be rounded up to the nearest
whole share and the Company shall make a cash payment to the Holder based on the
incremental fraction of a share being so withheld by or surrendered to the
Company in an amount determined in accordance with Section 2.3 hereof.
Notwithstanding the foregoing, the Holder will pay an amount per Warrant Share
equal to the par value, or such other amount as is necessary to have fully paid
and nonassessable shares of the Company, provided that any such election by a
Holder shall not relieve the Company of any liability or obligation it may have
under this Warrant.
(d) If this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or certificates representing
the shares of Warrant Stock being issued, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the
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unpurchased shares of Warrant Stock called for by this Warrant. Such new Warrant
shall in all other respects be identical to this Warrant.
(e) All Warrants delivered for exercise shall be canceled by the
Company.
2.2 Payment of Taxes. All shares of Warrant Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable, issued without violation of any preemptive or
similar rights of any stockholder of the Company and free and clear of all
Liens. The Company shall pay all expenses in connection with, and all taxes and
other governmental charges that may be imposed with respect to, the issue or
delivery thereof.
2.3 Fractional Shares. The Company shall not be required to issue a
fractional share of Warrant Stock upon exercise of any Warrant. As to any
fraction of a share that the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay to such Holder an amount in
cash equal to such fraction multiplied by the Fair Market Value of one share of
Common Stock on the Exercise Date.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Compliance with Securities Act. The Holder, by acceptance hereof,
agrees to comply in all respects with the provisions of this Section 3.1 and
further agrees that this Warrant and the Warrant Stock to be issued upon
exercise hereof are being acquired for investment for its own account and that
such Holder will not offer, sell or otherwise dispose of this Warrant or any
Warrant Stock to be issued upon exercise hereof except under circumstances that
will not result in a violation of the Securities Act. This Warrant and all
shares of Warrant Stock issued upon exercise of this Warrant (unless registered
under the Securities Act) shall be stamped or imprinted with a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (I) A
REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT OR
(II) THE TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE ACT.
In addition, in connection with the issuance of this Warrant, the Holder
specifically represents to the Company by acceptance of this Warrant as follows:
(a) The Holder believes it has received all the information it
considers necessary or appropriate for deciding whether to acquire the Warrant.
The Holder further represents that it has had an opportunity to ask questions
and receive answers from the Company regarding the terms and conditions of the
offering of the Warrant and the business, properties, prospects and financial
condition of the Company. The foregoing, however, does not limit or
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modify the representations and warranties of the Company in this Warrant or in
the Credit Agreement or the right of the Holder to rely thereon.
(b) The Holder understands that the securities it is purchasing are
characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act,
only in certain limited circumstances. In addition, the Holder represents that
it is familiar with SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.
(c) The Holder is an investor that can bear the economic risk of its
investment, and has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Warrant and the Warrant Stock. The Holder also represents it has not been
organized solely for the purpose of acquiring the Warrant and the Warrant Stock.
3.2 Transfer. Each new certificate evidencing the Warrant and/or
Warrant Stock so transferred shall bear the appropriate restrictive legend set
forth in Section 3.1 hereof, except that such certificate shall not bear such
restrictive legend, if, in the opinion of counsel for the Company, such legend
is not required in order to establish or assist in compliance with any
provisions of the Securities Act or any applicable state securities laws. Upon
compliance with the provisions of this Section 3.2, each transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the Designated Office and compliance with the terms hereof,
together with a written assignment of this Warrant in the form of Annex B hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes described in Section 2.2 in connection with the making of
such transfer. Upon such compliance, surrender and delivery and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned and this Warrant shall
promptly be cancelled.
3.3 Mutilation or Loss. Upon receipt by the Company from any Holder of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and an indemnity reasonably satisfactory to it (it
being understood that the written indemnification agreement of or affidavit of
loss of the Holder shall be a sufficient indemnity) and, in case of mutilation,
upon surrender and cancellation hereof, the Company will execute and deliver in
lieu hereof a new Warrant of like tenor to such Holder; provided, however, that,
in the case of mutilation, no indemnity shall be required if this Warrant in
identifiable form is surrendered to the Company for cancellation.
3.4 Division and Combination. Subject to compliance with the
applicable provisions of this Warrant, this Warrant may be divided or combined
with other Warrants upon presentation hereof at the Designated Office, together
with a written notice specifying the names and denominations in which new
Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with the applicable provisions of this Warrant as to any
transfer
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which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice.
3.5 Expenses. The Company shall prepare, issue and deliver at its own
expense any new Warrant or Warrants required to be issued hereunder.
3.6 Maintenance of Books. The Company agrees to maintain, at the
Designated Office, books for the registration and transfer of the Warrants.
4. ANTIDILUTION PROVISIONS
The number of shares of Warrant Stock for which this Warrant is
exercisable and the Exercise Price shall be subject to adjustment from time to
time as set forth in this Section 4.
4.1 Upon Issuance of Common Stock. If the Company shall, at any time
or from time to time after the Original Issue Date, issue any shares of Common
Stock, options to purchase or rights to subscribe for Common Stock, securities
by their terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable securities
without consideration or for consideration per share less than either (x) the
Dilution Price in effect immediately prior to the issuance of such Common Stock
or securities or (y) the Fair Market Value per share of the Common Stock
immediately prior to such issuance, if such Fair Market Value is greater than
the Dilution Price, then such Exercise Price shall forthwith be lowered to a
price equal to the price obtained by multiplying:
(i) the Exercise Price in effect immediately prior to the
issuance of such Common Stock, options, rights or securities by
(ii) a fraction of which (x) the numerator shall be the sum of
(i) the number of shares of Common Stock Outstanding on a
fully-diluted basis immediately prior to such issuance and (ii) the
number of additional shares of Common Stock which the aggregate
consideration for the number of shares of Common Stock so offered
would purchase at the greater of the Dilution Price in effect
immediately prior to such issuance or the Fair Market Value per share
of Common Stock and (y) the denominator shall be the number of shares
of Common Stock Outstanding on a fully-diluted basis immediately after
such issuance.
4.2 Upon Acquisition of Common Stock. If the Company or any Subsidiary
shall, at any time or from time to time after the Original Issue Date, directly
or indirectly, redeem, purchase or otherwise acquire any shares of Common Stock,
options to purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to purchase
or rights to subscribe for such convertible or exchangeable securities, for a
consideration per share (plus, in the case of such options, rights, or
securities, the additional consideration required to be paid to the Company upon
exercise, conversion or exchange) greater than the Fair Market Value per share
of Common Stock
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immediately prior to such event, then the Exercise Price shall forthwith be
lowered to a price equal to the price obtained by multiplying:
(i) the Exercise Price in effect immediately prior to such event
by
(ii) a fraction of which (x) the denominator shall be the Fair
Market Value per share of Common Stock immediately prior to such event
and (y) the numerator shall be the result of dividing:
(A) (1) the product of (a) the number of shares of Common
Stock Outstanding on a fully-diluted basis and (b) the
Fair Market Value per share of Common Stock, in each
case immediately prior to such event, minus (2) the
aggregate consideration paid by the Company in such
event (plus, in the case of such options, rights, or
convertible or exchangeable securities, the aggregate
additional consideration required to be paid to the
Company upon exercise, conversion or exchange), by
(B) the number of shares of Common Stock Outstanding on a
fully-diluted basis immediately after such event.
4.3 Provisions Applicable to Adjustments. For the purposes of any
adjustment of the Exercise Price pursuant to Section 4.1 or 4.2, the following
provisions shall be applicable:
(i) In the case of the issuance of Common Stock, options to
purchase or rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the Fair
Market Value of the non-cash consideration.
(ii) In the case of the issuance of options to purchase or rights
to subscribe for Common Stock, securities by their terms convertible
into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum number of shares of Common Stock
that potentially may be deliverable upon exercise of
such options to purchase or rights to subscribe for
Common Stock at any time during the term thereof shall
be deemed to have been issued at the time such options
or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in
subparagraph (i) above), if any, received by the
Company upon the issuance of such options or rights
plus the minimum purchase price
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provided in such options or rights for the Common Stock
covered thereby;
(B) the aggregate maximum number of shares of Common Stock
that potentially may be deliverable upon conversion of
or in exchange for any such convertible or exchangeable
securities or upon the exercise of options to purchase
or rights to subscribe for such convertible or
exchangeable securities and subsequent conversion or
exchange thereof at any time during the term thereof
shall be deemed to have been issued at the time such
securities, options, or rights were issued and for a
consideration equal to the consideration received by
the Company for any such securities and related options
or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
Company upon the conversion or exchange of such
securities or the exercise of any related options or
rights (the consideration in each case to be determined
in the manner provided in paragraph (i) above);
(C) on any increase in the number of shares or decrease in
the effective exercise or conversion price of Common
Stock deliverable upon exercise of any such options,
rights or securities or conversions of or exchanges of
such securities, including any change resulting from
the anti-dilution provisions thereof, the Exercise
Price shall forthwith be readjusted to such Exercise
Price as would have been obtained had the adjustment
made upon the issuance of such options, rights or
securities not converted prior to such change or
options or rights related to such securities not
converted prior to such change been made upon the basis
of such change; and
(D) no further adjustment of the Exercise Price adjusted
upon the issuance of any such options, rights,
convertible securities or exchangeable securities shall
be made as a result of the actual issuance of Common
Stock on the exercise of any such rights or options or
any conversion or exchange of any such securities.
4.4 Upon Stock Dividends, Subdivisions or Splits. If, at any time
after the Original Issue Date, the number of shares of Common Stock Outstanding
is increased by a stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then, following the record
date for the determination of holders of Common Stock entitled to receive such
stock dividend, or to be affected by such subdivision or split-up, the Exercise
Price shall be appropriately decreased by multiplying the Exercise Price by a
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fraction, the numerator of which is the number of shares of Common Stock
Outstanding immediately prior to such increase and the denominator of which is
the number of shares of Common Stock Outstanding immediately after such increase
in Outstanding shares.
4.5 Upon Combinations or Reverse Stock Splits. If, at any time after
the Original Issue Date, the number of shares of Common Stock Outstanding is
decreased by a combination or reverse stock split of the Outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, following
the record date to determine shares affected by such combination or reverse
stock split, the Exercise Price shall be appropriately increased by multiplying
the Exercise Price by a fraction, the numerator of which is the number of shares
of Common Stock Outstanding immediately prior to such decrease and the
denominator of which is the number of shares of Common Stock Outstanding
immediately after such decrease in Outstanding shares.
4.6 Upon Reclassifications, Reorganizations, Consolidations or
Mergers. In the event of any capital reorganization of the Company, any
reclassification of the stock of the Company (other than a change in par value
or from par value to no par value or from no par value to par value or as a
result of a stock dividend or subdivision, split-up or combination of shares),
or any consolidation or merger of the Company with or into another Person (where
the Company is not the surviving Person or where there is a change in or
distribution with respect to the Common Stock), each Warrant shall after such
reorganization, reclassification, consolidation, or merger be exercisable for
the kind and number of shares of stock or other securities or property of the
Company or of the successor Person resulting from such consolidation or
surviving such merger, if any, to which the holder of the number of shares of
Common Stock deliverable (immediately prior to the time of such reorganization,
reclassification, consolidation or merger) upon exercise of such Warrant would
have been entitled upon such reorganization, reclassification, consolidation or
merger. The provisions of this clause shall similarly apply to successive
reorganizations, reclassifications, consolidations, or mergers. The Company
shall not effect any such reorganization, reclassification, consolidation or
merger unless, prior to the consummation thereof, the successor Person (if other
than the Company) resulting from such reorganization, reclassification,
consolidation or merger, shall assume, by written instrument, the obligation to
deliver to the Holders of the Warrant such shares of stock, securities or
assets, which, in accordance with the foregoing provisions, such Holders shall
be entitled to receive upon such conversion.
4.7 Deferral in Certain Circumstances. In any case in which the
provisions of this Section 4 shall require that an adjustment shall become
effective immediately after a record date of an event, the Company may defer
until the occurrence of such event (a) issuing to the Holder of any Warrant
exercised after such record date and before the occurrence of such event the
shares of capital stock issuable upon such exercise by reason of the adjustment
required by such event and issuing to such Holder only the shares of capital
stock issuable upon such exercise before giving effect to such adjustments, and
(b) paying to such Holder any amount in cash in lieu of a fractional share of
capital stock pursuant to Section 2.3 above; provided, however, that the Company
shall deliver to such Holder an appropriate instrument or due bills evidencing
such Holder's right to receive such additional shares or such cash.
12
4.8 Other Anti-Dilution Provisions. If the Company has issued or
issues any securities of the Company to a financial institution, lender, other
credit provider, leasing company or other lessor in connection with the
provisions of any financing or lending agreements, containing provisions
(including, without limitation, any of the terms of pricing, exercise price,
anti-dilution and registration rights) which are more favorable than those set
forth herein, the Company will make such provisions (or any more favorable
portion thereof) available to the Holder and will enter into amendments
necessary to confer such rights on the Holder.
4.9 Voluntary Reduction. The Company from time to time may reduce the
Exercise Price by any amount for any period of time if the period is at least 20
days and if the reduction is irrevocable during the period; provided, however,
that in no event may the Exercise Price be less than the par value of a share of
Common Stock. Whenever the Exercise Price is reduced, the Company shall mail to
all Holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
4.10 Appraisal Procedure. In any case in which the provisions of this
Section 4 shall necessitate that the Appraisal Procedure be utilized for
purposes of determining an adjustment to the Exercise Price, the Company may
defer until the completion of the Appraisal Procedure and the determination of
the adjustment (1) issuing to the Holder of any Warrant exercised after the date
of the event that requires the adjustment and before completion of the Appraisal
Procedure and the determination of the adjustment, the shares of capital stock
issuable upon such exercise by reason of the adjustment required by such event
and issuing to such Holder only the shares of capital stock issuable upon such
exercise before giving effect to such adjustment and (2) paying to such Holder
any amount in cash in lieu of a fractional share of capital stock pursuant to
Section 2.3 above; provided, however, that the Company shall deliver to such
Holder an appropriate instrument or due bills evidencing such Holder's right to
receive such additional shares or such cash.
4.11 Adjustment of Number of Shares Purchasable. Upon any adjustment
of the Exercise Price as provided in Section 4.1, 4.2, 4.4, 4.5 and 4.6, the
Holders of the Warrants shall thereafter be entitled to purchase upon the
exercise thereof, at the Exercise Price resulting from such adjustment, the
number of shares of Warrant Stock (calculated to the nearest 1/100th of a share)
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Warrant Stock issuable on the exercise
hereof immediately prior to such adjustment and dividing the product thereof by
the Exercise Price resulting from such adjustment.
4.12 Increase of Number of Shares Purchasable. After giving effect to
all other provisions in this Article 4, the number of shares purchasable upon
exercise of this Warrant shall be increased when the Exercise Price is adjusted
to an amount below the then existing par value of the Warrant Shares, including
successive adjustments to the Exercise Price to an amount further below the then
existing par value. The number of additional shares purchasable upon exercise of
this Warrant shall be equal to number obtained by dividing the result of
subsection (i) by the result of subsection (ii):
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(i) The number of shares purchasable upon exercise of the
Warrants before application of this Section 4.12 times the difference
between the then existing par value per Warrant Share minus the
adjusted Exercise Price.
(ii) The difference between the Fair Market Value of the
Company's Common Stock on the Exercise Date minus the then existing
par value per Warrant Share.
4.13 Limitation on Shares Purchasable. In no event shall the number of
shares purchasable under the Original Warrants, in the aggregate, exceed
6,208,662 shares of Common Stock (subject to adjustment for any stock split,
stock dividend, recapitalization, reverse stock split or other similar event
with respect to the Common Stock as provided herein) (the resulting number, the
"Conversion Cap"), which is equal to less than 20% of shares of the Common Stock
outstanding as of the date of issuance of the Original Warrants. The Conversion
Cap limitation shall be applied on a pro rata basis to this Warrant.
4.14 Form of Warrants. Irrespective of any adjustments of the number
of shares purchasable or of the Exercise Price, Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
4.15 Changes in Securities. Notwithstanding any provision in this
Section 4 to the contrary and without limitation to any other provision
contained in this Section 4, in the event any securities of the Company are
amended, modified or otherwise altered by operation of its terms or otherwise in
any manner whatsoever (including through the anti-dilution provisions thereof)
that results in (i) the reduction of the effective exercise, conversion or
exchange price of such securities payable upon the exercise for, or conversion
or exchange into, Common Stock or other securities exercisable for, or
convertible or exchangeable into, Common Stock and/or (ii) such securities
becoming exercisable for, or convertible or exchange into (A) more shares or
dollar amount of such securities which are, in turn exercisable for, or
convertible or exchangeable into, Common Stock, or (B) more shares of Common
Stock, then such amendment, modification or other alteration shall be treated
for purposes of Section 4 as if the securities which have been amended, modified
or altered have been terminated and new securities have been issued with the
amended or modified terms. The Company shall make all necessary adjustments
(including successive adjustments if required) to the Exercise Price in
accordance with Section 4, but in no event shall the Exercise Price be greater
than it was immediately prior to the application of this Section 4.15 to the
amendment, modification or alteration in question.
4.16 Exceptions. Notwithstanding anything to the contrary, Section 4
shall not apply to (i) options to purchase shares of Common Stock granted to
employees or directors of the Company or a Subsidiary pursuant to the NaviSite
Amended and Restated 2003 Stock Incentive Plan, as amended (attached as Exhibit
B to the Purchase Agreement) (the "Stock Incentive Plan") in the ordinary course
of business; provided that if such options are granted after the date hereof
with an exercise price less than the Fair Market Value at the time of the grant,
then Section 4 shall apply with respect to such options; and provided that the
provisions contained in this Section 4 shall apply with respect to options
granted pursuant to the Stock Incentive Plan in
14
excess of 2,500,000 shares per fiscal year of the Company, which number shall
include options granted to Mr. Arthur Becker or his Affiliates, (ii) the shares
of Common Stock issuable upon the exercise of such options, (iii) the exercise
of the warrant issued to Silicon Valley Bank (or an Affiliate) prior to the date
hereof, or (iv) the exercise of warrants issued to Silver Point (or an
Affiliate) prior to the date hereof. Notwithstanding the foregoing, the
applicable adjustment provisions contained in this Section 4 shall apply with
respect to options to purchase shares of Common Stock that are granted to Mr.
Arthur Becker or his Affiliates after the date of hereof in excess of 250,000
shares per fiscal year of the Company.
4.17 Notice of Adjustment of Exercise Price. Whenever the Exercise
Price is adjusted as herein provided:
(i) the Company shall compute the adjusted Exercise Price in
accordance with this Section 4 and shall prepare a certificate signed
by the treasurer or chief financial officer of the Company setting
forth the adjusted Exercise Price and showing in reasonable detail the
facts upon which such adjustment is based, and such certificate shall
forthwith be filed at the Designated Office; and
(ii) a notice stating that the Exercise Price has been adjusted
and setting forth the adjusted Exercise Price shall forthwith be
prepared by the Company, and as soon as practicable after it is
prepared, such notice shall be mailed by the Company at its expense to
all Holders at their last addresses as they shall appear in the
warrant register.
4.18 Limitation on Ownership. Notwithstanding anything to the
contrary, in no event shall the Original Warrants be exercisable for a number of
shares that will cause the Holder, together with its affiliates and together
with any other group member (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934), to beneficially own in excess of 9.99% of the
number of shares of Common Stock outstanding immediately after giving effect to
such exercise. For the purposes of the foregoing sentence, the number of shares
of Common Stock beneficially owned by the Holder, its affiliates and other group
members, shall include their beneficial ownership of the number of shares of
Common Stock issuable upon exercise or conversion of any security of the
Company, but shall exclude their ownership of the number of shares of Common
Stock in excess of the foregoing limitations which would be issuable upon
exercise or conversion of the unexercised or nonconverted portion of any other
security of the Company subject to a limitation on exercise or conversion
analogous to the limitation contained in this Section 4.18.
5. NO IMPAIRMENT; REGULATORY COMPLIANCE AND COOPERATION; AFFILIATE
TRANSACTIONS; NOTICE OF EXPIRATION
5.1 No Impairment. The Company shall not by any action, including,
without limitation, amending its charter documents or through any
reorganization, reclassification, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other similar voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights
15
of the Holder against impairment. Without limiting the generality of the
foregoing, the Company shall take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Warrant Stock upon the exercise of this Warrant,
free and clear of all Liens, and shall use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant. The Company shall not take any action, enter
into any transaction or suffer to exist any event, action or state of facts that
would cause the Exercise Price to be adjusted below the then existing par value
of Common Stock (unless the Common Stock is changed to capital stock with no par
value); provided, however, that nothing herein will prevent the operation of any
other provision of this Warrant, including the anti-dilution provisions of
Section 4.
5.2 No Dilution. If any event shall occur as to which the provisions
of Section 4 are not strictly applicable but the failure to make any adjustment
would adversely affect the purchase rights represented by the Warrant in
accordance with the essential intent and principles of such Section, then, in
each such case, the Company shall appoint an investment banking firm of
recognized national standing, or any other financial expert that does not (or
whose directors, officers, employees, affiliates or stockholders do not) have a
direct or material indirect financial interest in the Company or any of its
Subsidiaries, who has not been, and, at the time it is called upon to give
independent financial advice to the Company, is not (and none of its directors,
officers, employees, affiliates or stockholders are) a promoter, director or
officer of the Company or any of its Subsidiaries, which shall give their
opinion upon the adjustment, if any, on a basis consistent with the essential
intent and principles established in Section 4, necessary to preserve, without
dilution, the purchase rights, represented by this Warrant. Upon receipt of such
opinion, the Company will promptly mail a copy thereof to the holders of the
Warrants and shall make the adjustments described therein.
5.3 Other Agreements. The Company is not a party to or bound in any
manner under, and covenants that it will not enter into at any time after the
date hereof, any agreement or contract (whether written or oral) with respect to
any of its securities which prevents the Company from complying in any respect
with the rights granted by the Company hereunder.
5.4 Affiliate Transactions. So long as the Holder is entitled to
purchase any shares of Common Stock, without the prior written consent or vote
of the Holder, the Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its securities, properties or assets to, or purchase any
securities, property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Company (each, an "Affiliate
Transaction"), unless: (i) the Affiliate Transaction is on terms that are no
less favorable in the aggregate to the Company or the relevant Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Subsidiary with a person that is not an Affiliate, and (ii) the Company
delivers to the Holder, with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$100,000, an officers' certificate certifying that such Affiliate Transaction
complies with clause (i) above.
16
6. RESERVATION AND AUTHORIZATION OF COMMON STOCK
6.1 Reservation. The Company shall at all times reserve and keep
available for issuance upon the exercise of the Warrants such number of its
authorized but unissued shares of Common Stock as will be required for issuance
of the Warrant Stock. All shares of Warrant Stock issuable pursuant to the terms
hereof, when issued upon exercise of this Warrant with payment therefor in
accordance with the terms hereof, shall be duly and validly issued and fully
paid and nonassessable, not subject to preemptive rights and shall be free and
clear of all Liens. Before taking any action that would result in an adjustment
in the number of shares of Warrant Stock for which this Warrant is exercisable
or in the Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction over such action. If any shares of
Warrant Stock required to be reserved for issuance upon exercise of Warrants
require registration or qualification with any Governmental Entity under any
federal or state law (other than under the Securities Act or any state
securities law) before such shares may be so issued, the Company will in good
faith and as expeditiously as possible and at its expense endeavor to cause such
shares to be duly registered.
6.2 Corporate Action. Before taking any action that would cause an
adjustment reducing the Exercise Price below the then par value (if any) of the
shares of Warrant Stock deliverable upon exercise of the Warrant or that would
cause the number of shares of Warrant Stock issuable upon exercise of the
Warrant to exceed (when taken together with all other Outstanding shares of
Common Stock) the number of shares of Common Stock that the Company is
authorized to issue, the Company will take any corporate action that, in the
opinion of its counsel, is necessary in order that the Company may validly and
legally issue the full number of fully paid and nonassessable shares of Warrant
Stock issuable upon exercise of the Warrant at such adjusted exercise price.
7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS
7.1 Notices of Corporate Actions.
In case:
(a) the Company shall grant to the holders of its Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class; or
(b) the Company shall declare to the holders of its Common Stock any
dividend or distribution; or
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the Outstanding shares of Common Stock), or of any
consolidation, merger or share exchange to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
17
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary shall commence a tender offer for
all or a portion of the Outstanding shares of Common Stock (or shall amend any
such tender offer to change the maximum number of shares being sought or the
amount or type of consideration being offered therefor);
then the Company shall cause to be filed at the Designated Office, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the warrant register, at least 30 days prior to the applicable record,
effective or expiration date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution or granting of rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record who will be
entitled to such dividend, distribution, rights or warrants are to be
determined, (y) the date on which such reclassification, consolidation, merger,
share exchange, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up, or (z) the date on which such tender
offer commenced, the date on which such tender offer is scheduled to expire
unless extended, the consideration offered and the other material terms thereof
(or the material terms of the amendment thereto). Such notice shall also set
forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Exercise Price and the number and kind
or class of shares or other securities or property which shall be deliverable or
purchasable upon the occurrence of such action or deliverable upon exercise of
the Warrants. Neither the failure to give any such notice nor any defect therein
shall affect the legality or validity of any action described in clauses (a)
through (e) of this Section 7.1.
7.2 Taking of Record. In the case of all dividends or other
distributions by the Company to the holders of its Common Stock with respect to
which any provision hereof refers to the taking of a record of such holders, the
Company will in each such case take such a record and will take such record as
of the close of business on a Business Day.
7.3 Closing of Transfer Books. The Company shall not at any time close
its stock transfer books or warrant transfer books so as to result in preventing
or delaying the exercise or transfer of any Warrant.
8. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency, which may be the principal executive offices of
the Company (the "Designated Office"), where the Warrants may be presented for
exercise, registration of transfer, division or combination as provided in this
Warrant. Such Designated Office shall initially be the office of the Company at
400 Minuteman Road, Andover, Massachusetts, 01810. The Company may from time to
time change the Designated Office to another office of the Company
18
or its agent within the United States by notice given to all registered Holders
at least ten (10) Business Days prior to the effective date of such change.
9. FINANCIAL AND BUSINESS INFORMATION
9.1 Financial Statements. At the request of the Holder, which shall
remain effective until revoked, the Company shall deliver to the Holder:
(i) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, an income
statement and a statement of cash flows for such fiscal year and a
balance sheet of the Company as of the end of such year, such year-end
financial reports to be prepared in accordance with GAAP and audited
and certified by independent public accountants of nationally
recognized standing selected by the Company;
(ii) within forty-five (45) days of the end of each quarter, an
unaudited income statement and a statement of cash flows and balance
sheet for and as of the end of such month or quarter, as applicable,
in reasonable detail;
(iii) simultaneously with any distribution of any document to the
shareholders of the Company generally, any such document so
distributed; and
(iv) so long as the Company or its successor makes periodic
filings with the SEC, copies of all reports, statements or other
notices immediately upon making such filings.
9.2 Access. The Company shall permit the Holder reasonable access,
upon reasonable advance notice, to the Holder, the Affiliates of the Holder and
each of their respective officers, employees, advisors, counsel and other
authorized representatives, during normal business hours, to all of the books,
records and properties of the Company and its Subsidiaries and all officers and
employees of the Company and such Subsidiaries. It shall be a condition to the
Company's obligations under this Section 9.2 that the Holder execute and deliver
to the Company a confidentiality agreement that is reasonably acceptable to the
Company.
9.3 Board Observation. If requested by any Holder that, together with
its Affiliates, owns or has the right to acquire more than 4.5% of the
outstanding Common Stock, the Company shall give the Holder all notices of (in
the same manner as notice is given to directors), and permit one Person
designated by the Holder to attend as observer (the "Board Observer"), all
meetings of the Company's Board of Directors and all executive and other
committee meetings of the Board of Directors. If requested by the Holder, the
Company shall provide to the Board Observer the same information concerning the
Company, and access thereto, provided to the members of the Company's Board of
Directors and such committees. The reasonable travel expenses incurred by the
Board Observer in attending any board or committee meetings shall be reimbursed
by the Company to the extent consistent with the Company's then existing policy
of reimbursing directors generally for such expenses. It shall be a condition to
the Company's obligations under this Section 9.3 that the Board Observer execute
19
and deliver to the Company a confidentiality agreement that is reasonably
acceptable to the Company.
10. DILUTION FEE
(a) In the event that any dividends are declared or paid or any other
distribution is made on or with respect to the Common Stock, the Holder of this
Warrant as of the record date established by the Board of Directors for such
dividend or distribution on the Common Stock shall be entitled to receive a fee
(the "Dilution Fee") in an amount (whether in the form of cash, securities or
other property) equal to the amount (and in the form) of the dividends or
distribution that such Holder would have received had the Warrant been exercised
as of the date immediately prior to the record date for such dividend or
distribution, such Dilution Fee to be payable on the same payment date
established by the Board of Directors for the payment of such dividend or
distribution; provided, however, that if the Company declares and pays a
dividend or distribution on the Common Stock consisting in whole or in part of
Common Stock, then no such Dilution Fee shall be payable in respect of the
Warrant on account of the portion of such dividend or distribution on the Common
Stock payable in Common Stock and in lieu thereof the adjustment in Section 4
hereof shall apply. The record date for any such Dilution Fee shall be the
record date for the applicable dividend or distribution on the Common Stock, and
any such Dilution Fee shall be payable to the Persons in whose name the Warrant
is registered at the close of business on the applicable record date.
(b) No dividend shall be paid or declared on any share of Common Stock
(other than dividends payable in Common Stock for which an adjustment was made
pursuant to Section 4 hereof), unless the Dilution Fee, payable in the same
consideration and manner, is simultaneously paid or provided for, as the case
may be, in respect of this Warrant in an amount determined as set forth above.
For purposes hereof, the term "dividends" shall include any pro rata
distribution by the Company, out of funds of the Company legally available
therefor, of cash, property, securities (including, but not limited to, rights,
warrants or options) or other property or assets to the holders of the Common
Stock, whether or not paid out of capital, surplus or earnings other than
liquidation.
(c) Prior to declaring any dividend or making any distribution on or
with respect to shares of Common Stock, the Company shall take all prior
corporate action necessary to authorize the issuance of any securities payable
as the Dilution Fee in respect of the Warrant.
11. MISCELLANEOUS
11.1 No Implied Waivers. No failure or delay by any 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.
11.2 Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be hand delivered
or mailed postage
20
prepaid by registered or certified mail or transmitted by facsimile transmission
(with immediate telephonic confirmation thereafter), (a) If to the Holder:
Silver Point Capital
Two Greenwich Plaza
Greenwich, CT 06830
Attn.: Jennifer Poccia
Voice: 203-542-4438
Email: jpoccia@silverpointcapital.com
with a copy to (which shall not constitute notice):
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive
Suite 2100
Chicago, IL 60606
Attn.: Seth E. Jacobson
L. Byron Vance III
Voice: 312-407-0700
Fax: 312-407-0411
or (b) If to the Company:
NaviSite, Inc.
400 Minuteman Road
Andover, MA 01810
Attn.: James W. Pluntze
Voice: (978) 946-7915
Fax: (978) 946-7803
with a copy to (which shall not constitute notice):
BRL Law Group LLC
31 St. James Avenue, Suite 850
Boston, MA 02116
Attention: Thomas B. Rosedale
Voice: (617) 399-6935
Fax: (617) 399-6930
or at such other address as the parties each may specify by written
notice to the others, and each such notice, request, consent and other
communication shall for all purposes of the Warrant be treated as
being effective or having been given when delivered if delivered
personally, upon receipt of facsimile confirmation if transmitted by
facsimile, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly
21
maintained receptacle for the deposit of United States mail, addressed
and postage prepaid as aforesaid.
11.3 Indemnification. If the Company fails to make, when due, any
payments provided for in this Warrant, the Company shall pay to the Holder
hereof (a) interest at the Agreed Rate on any amounts due and owing to such
Holder and (b) such further amounts as shall be sufficient to cover any costs
and expenses including, but not limited to, reasonable attorneys' fees and
expenses incurred by such Holder in collecting any amounts due hereunder. The
Company shall indemnify, save and hold harmless the Holder hereof and the
Holders of any Warrant Stock issued upon the exercise hereof from and against
any and all liability, loss, cost, damage, reasonable attorneys' and
accountants' fees and expenses, court costs and all other out-of-pocket expenses
incurred in connection with or arising from any default hereunder by the Company
or the enforcement of its rights hereunder as against the Company. This
indemnification provision shall be in addition to the rights of such Holder or
Holders to bring an action against the Company for breach of contract based on
such default hereunder.
11.4 Limitation of Liability. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Warrant Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder to pay the Exercise Price for any Warrant
Stock other than pursuant to an exercise of this Warrant or any liability as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company. The Holder shall not, by virtue hereof, be entitled
to any rights of a stockholder of the Company and nothing contained in this
Warrant shall be construed as conferring upon the Holder the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
11.5 Remedies. Each Holder of Warrants and/or Warrant Stock, in
addition to being entitled to exercise its rights granted by law, including
recovery of damages, shall be entitled to specific performance of its rights
provided under this Warrant. The Company agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Warrant and hereby agrees, in an action for specific
performance, to waive the defense that a remedy at law would be adequate.
11.6 Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors of the
Company and the permitted successors and assigns of the Holder hereof. The
provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and to the extent applicable, all Holders of
shares of Warrant Stock issued upon the exercise hereof (including transferees),
and shall be enforceable by any such Holder.
11.7 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived only with the written consent of the
Company and the Holder. Notwithstanding the foregoing, without a Holder's
written consent no such modification, amendment or waiver shall affect adversely
such Holder's rights hereunder in a discriminatory manner inconsistent with its
adverse effects on rights of other Holders hereunder (other than as
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reflected by the different number of shares of Warrant Stock held by such
Holders). This Warrant cannot be changed, modified, discharged or terminated by
oral agreement.
11.8 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
11.9 Headings. The headings and other captions in this Warrant are for
the convenience and reference only and shall not be used in interpreting,
construing or enforcing any provision of this Warrant.
11.10 Governing Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
11.11 Waiver of Jury Trial. THE PARTIES HERETO WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN THE COMPANY AND SILVER
POINT ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF
THE OTHER TRANSACTION AGREEMENTS OR THE TRANSACTIONS RELATED THERETO.
11.12 Aggregation of Stock. All Warrant Stock held by or acquired by
Affiliated Persons will be aggregated together for the purpose of determining
the availability of any rights under this Warrant.
11.13 Entire Agreement. This Warrant contains the entire agreement
with respect to the subject matter hereof and supersedes and replaces all other
prior agreements, written or oral, with respect to the subject matter hereof.
[Execution Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed as of the Original Issue Date.
NAVISITE, INC.
By: /s/ James W. Pluntze
------------------------------------
Name: James W. Pluntze
Title: Chief Financial Officer
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ANNEX A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of ______ shares of Common Stock of NaviSite, Inc.
and herewith makes payment therefor in __________, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered to
_________________ whose address is _____________________________________________
and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.
----------------------------------------
(Name of Registered Owner)
----------------------------------------
(Signature of Registered Owner)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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ANNEX B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
No. of Shares of
Name and Address of Assignee Common Stock
- ---------------------------- ----------------
and does hereby irrevocably constitute and appoint ________ _____________
attorney-in-fact to register such transfer onto the books of NaviSite, Inc.
maintained for the purpose, with full power of substitution in the premises.
Dated: Print Name:
------------------------------ ----------------------------
- ------------------------------------- ----------------------------------------
Signature: Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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