Exhibit 4
[FORM OF ONE-YEAR WARRANT]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT") OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
AND QUALIFICATION IN EFFECT WITH RESPECT THERETO UNDER THE 1933 ACT AND UNDER
ANY APPLICABLE STATE SECURITIES LAW, (ii TO THE EXTENT APPLICABLE, RULE 144
UNDER THE 1933 ACT, OR (iii) AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO
C-PHONE CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED
UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
No. WA-_______ _________ Warrants
COMMON STOCK PURCHASE WARRANT
C-Phone Corporation, a New York corporation (the "COMPANY"), hereby
certifies that for $10.00 and other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, ___________________ (the
"BUYER") is entitled, on the terms and conditions set forth below, to purchase
from the Company up to ________ fully paid and nonassessable shares of Common
Stock, par value $.01 per share, of the Company (the "COMMON STOCK") at the
price per share set forth in Section 6, subject to adjustment.
1. DEFINITIONS. All capitalized terms used herein but not otherwise
defined herein shall have the meanings assigned to them in the Securities
Purchase Agreement, dated as of December 17, 1997, among the Company and certain
purchasers, including the Buyer (collectively, the "BUYERS"), of the Company's
Series A Convertible Preferred Stock.
2. EXPIRATION DATE. The Buyer and its registered assigned (the
"HOLDER") is hereby granted the right to purchase, at any time from and after
the date hereof until 5:00 P.M., New York time, on the earlier of (a) December
19, 1998 and (b) and the business day preceding the Redemption Date (as defined
in Section 9(d)) (the "EXPIRATION DATE").
3. EXERCISE OF WARRANT. This Warrant initially is exercisable at an
exercise price (subject to adjustment as provided in Section 8 hereof) per share
of Common Stock set forth in Section 6 hereof payable by certified or official
bank check in New York Clearing House funds. Upon surrender of this Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock purchased at the Company's principal offices presently
located at 6714
1
Netherlands Drive, Wilmington, North Carolina 28405 the Holder shall be entitled
to receive a certificate or certificates for the shares of Common Stock so
purchased. This Warrant is exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional shares of the Common Stock underlying
this Warrant). In the case of the purchase of less than all the shares of Common
Stock purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender thereof and shall execute and deliver a new Warrant of like tenor
for the balance of the shares of Common Stock purchasable hereunder.
Notwithstanding anything in this Warrant to the contrary, in no event
shall the Holder of this Warrant be entitled to exercise a number of Warrants
(or portions thereof) in excess of the number of Warrants (or portions thereof)
upon exercise of which the sum of (i) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants and unconverted shares of Series A Preferred Stock and (ii)
the number of shares of Common Stock issuable upon exercise of the Warrants (or
portions thereof) with respect to which the determination described herein is
being made, would result in beneficial ownership by the Holder and its
affiliates of more than 4.9% of the outstanding shares of Common Stock. For
purposes of the immediately preceding sentence, (a) beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13D through 13G thereunder, except as otherwise
provided in clause (i) hereof and (b) the holder of this Warrant may waive the
limitations set forth therein by written notice to the Company upon not less
than sixty-one (61) days prior notice (with such waiver taking effect only upon
the expiration of such 61-day notice period).
4. ISSUANCE OF CERTIFICATES. Upon the exercise of this Warrant, the
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying this Warrant shall be made forthwith (and in any
event within three (3) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder hereof (consistent with the terms and conditions of this
Warrant); provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
2
This Warrant Certificates and the certificates representing the Common
Stock (and/or other securities, property or rights issuable upon the exercise of
this Warrant) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors or President or Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of the
then present Secretary or Assistant Secretary of the Company. This Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.
5. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of this Warrant, by
its acceptance thereof, covenants and agrees that this Warrant is being acquired
as an investment and not with a view to the distribution thereof.
6. EXERCISE PRICE.
a. INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise
provided in Section 8 hereof, the initial exercise price of this Warrant shall
be $8.05 per share of Common Stock. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 8 hereof.
b. EXERCISE PRICE. The term "EXERCISE PRICE" herein
shall mean the initial exercise price or the adjusted exercise
price, depending upon the context.
7. REGISTRATION RIGHTS.
The shares of Common Stock issuable upon exercise of this
Warrant (the "WARRANT SHARES") shall be included in the registration statement
(the "REGISTRATION STATEMENT") to be prepared and filed by the Company with the
Securities and Exchange Commission ("SEC") pursuant to the terms of the
Registration Rights Agreement.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
a. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES UPON
ISSUANCE OF COMMON STOCK. Except as otherwise provided in Section 8(c), 8(d) and
8(f) hereof, if and whenever on or after the date of issuance of this Warrant,
the Company issues or sells, or in accordance with Section 8(b) hereof is deemed
to have issued or sold, any shares of Common Stock for no consideration or for a
consideration per share (before deduction of reasonable expenses or commissions
or underwriting discounts or allowances in connection therewith) less than 80%
of the Market Price (as hereinafter defined) (or in the case of Section
(8(b)(i), 100% of the Market Price) on the date of issuance (a "DILUTIVE
ISSUANCE"), then immediately upon the Dilutive Issuance, the Exercise Price will
be reduced to a price
3
determined by multiplying the Exercise Price in effect immediately prior to the
Dilutive Issuance by a fraction, (i) the numerator of which is an amount equal
to the sum of (x) the number of shares of Common Stock actually outstanding
immediately prior to the Dilutive Issuance, plus (y) the quotient of the
aggregate consideration, calculated as set forth in Section 8(b) hereof,
received by the Company upon such Dilutive Issuance divided by the Market Price
in effect immediately prior to the Dilutive Issuance, and (ii) the denominator
of which is the total number of shares of Common Stock Deemed Outstanding (as
defined below) immediately after the Dilutive Issuance.
b. EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Section 8(a) hereof, the following
will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities convertible into or exchangeable for Common Stock ("CONVERTIBLE
SECURITIES") (such warrants, rights and options to purchase Common Stock or
Convertible Securities are hereinafter referred to as "OPTIONS") and the price
per share for which Common Stock is issuable upon the exercise of such Options
is less than the Market Price on the date of issuance or grant of such Options,
then the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options will, as of the date of the issuance or grant of
such Options, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For purposes of the preceding sentence,
the "price per share for which Common Stock is issuable upon the exercise of
such Options" is determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the issuance or granting of
all such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus, in
the case of Convertible Securities issuable upon the exercise of such Options,
the minimum aggregate amount of additional consideration payable upon the
conversion or exchange thereof at the time such Convertible Securities first
become convertible or exchangeable, by (ii) the maximum total number of shares
of Common Stock issuable upon the exercise of all such Options (assuming full
conversion of Convertible Securities, if applicable). No further adjustment to
the Exercise Price will be made upon the actual issuance of such Common Stock
upon the exercise of such Options or upon the conversion or exchange of
Convertible Securities issuable upon exercise of such Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any manner issues or sells any Convertible Securities, whether or not
immediately convertible (other than where the same are issuable upon the
exercise of Options) and the price per share for which Common Stock is issuable
upon such conversion or exchange is less than 80% of the Market Price on the
date of
4
issuance, then the maximum total number of shares of Common Stock issuable upon
the conversion or exchange of all such Convertible Securities will, as of the
date of the issuance of such Convertible Securities, be deemed to be outstanding
and to have been issued and sold by the Company for such price per share. For
the purposes of the preceding sentence, the "price per share for which Common
Stock is issuable upon such conversion or exchange" is determined by dividing
(i) the total amount, if any, received or receivable by the Company as
consideration for the issuance or sale of all such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof at the time such Convertible
Securities first become convertible or exchangeable, by (ii) the maximum total
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price will be
made upon the actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION
RATE. If there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any Options; (ii) the
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange of any Convertible Securities; or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Common Stock
(other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of shares of Common
Stock issuable upon exercise of any Option or upon conversion or exchange of any
Convertible Securities is not, in fact, issued and the rights to exercise such
Option or to convert or exchange such Convertible Securities shall have expired
or terminated, the Exercise Price then in effect will be readjusted to the
Exercise Price which would have been in effect at the time of such expiration or
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination (other than in respect of
the actual number of shares of Common Stock issued upon exercise or conversion
thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If
any Common Stock, Options or Convertible Securities are issued, granted or sold
for cash, the consideration received therefor for purposes of this Warrant will
be the amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
5
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Common Stock, Options or Convertible Securities are issued or sold
for a consideration part or all of which shall be other than cash, the amount of
the consideration other than cash received by the Company will be the fair value
of such consideration, except where such consideration consists of securities,
in which case the amount of consideration received by the Company will be the
Market Price thereof as of the date of receipt. In case any Common Stock,
Options or Convertible Securities are issued in connection with any acquisition,
merger or consolidation in which the Company is the surviving corporation, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other than cash or securities
will be determined in good faith by the Board of Directors of the Company.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE.
No adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities granted, issued and outstanding on
the date of issuance of this Warrant; (ii) upon the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
benefit plan of the Company now existing or to be implemented in the future, so
long as the issuance of such stock or options is approved by a majority of the
independent members of the Board of Directors of the Company or a majority of
the members of a committee of independent directors established for such
purpose; or (iii) upon the exercise of the Warrants.
c. SUBDIVISION AND COMBINATION. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
d. STOCK DIVIDENDS AND DISTRIBUTIONS. In case the Company
shall pay a dividend in, or make a distribution of, shares of Common Stock or of
the Company's capital stock convertible into Common Stock, in respect of the
Common Stock. the Exercise Price shall forthwith be proportionately decreased.
An adjustment made pursuant to this Section 8(b) shall be made as of the record
date for the subject stock dividend or distribution.
e. ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 8, the number of
Securities issuable upon the exercise at the adjusted exercise price of this
Warrant shall be adjusted to the nearest non-fractional amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such adjustment and
6
dividing the product so obtained by the adjusted Exercise Price.
f. MERGER OR CONSOLIDATION. In case of any consolidation of
the Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder an amended warrant providing that the holder of this Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of this Warrant, the kind
and amount of shares of stock and other securities and property receivable upon
such consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such amended
Warrant shall provide for adjustments which shall be identical to the
adjustments provided in Section 8. The above provision of this subsection shall
similarly apply to successive consolidations or mergers. The Company will not
effect any consolidation, merger or sale or conveyance unless prior to the
consummation thereof, the successor corporation (if other than the Company)
assumes by written instrument the obligations under this Section 8 and the
obligations to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the holder
may be entitled to acquire.
g. DISTRIBUTION OF ASSETS. In case the Company shall declare
or make any distribution of its assets (including cash but excluding any Common
Stock held in treasury) to holders of Common Stock as a partial liquidating
dividend, by way of return of capital or otherwise, then, after the date of
record for determining stockholders entitled to such distribution, but prior to
the date of distribution, the holder of this Warrant shall be entitled upon
exercise of this Warrant for the purchase of any or all of the shares of Common
Stock subject hereto, to receive the amount of such assets which would have been
payable to the holder had such holder been the holder of such shares of Common
Stock on the record date for the determination of stockholders entitled to such
distribution.
h. CERTAIN DEFINITIONS.
i. The term "COMMON STOCK" shall mean (x) the
class of stock designated as Common Stock in the Certificate of Incorporation of
the Company as may be amended as of the date hereof, or (y) any other class of
stock resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value.
ii. The term "COMMON STOCK DEEMED OUTSTANDING"
shall mean the number of shares of Common Stock actually outstanding (not
including shares of Common Stock held in the
7
treasury of the Company), plus (x) pursuant to Section 8(b)(i) hereof, the
maximum total number of shares of Common Stock issuable upon the exercise of
Options, as of the date of such issuance or grant of such Options, if any, and
(y) pursuant to Section 8(b)(ii) hereof, the maximum total number of shares of
Common Stock issuable upon conversion or exchange of Convertible Securities, as
of the date of issuance of such Convertible Securities, if any.
iii. The term "MARKET PRICE," as of any date, (x)
means the average of the last reported sale prices for the shares of Common
Stock on the Nasdaq National Market ("Nasdaq") for the five (5) trading days
immediately preceding such date as reported by Bloomberg, L.P. ("BLOOMBERG"), or
(y) if Nasdaq is not the principal trading market for the shares of Common
Stock, the average of the last reported sale prices on the Principal Market for
the Common Stock during the same period as reported by Bloomberg, or (iii) if
market value cannot be calculated as of such date on any of the foregoing bases,
the Market Price shall be the fair market value as reasonably determined in good
faith by (a) the Board of Directors of the Corporation or, at the option of a
majority-in-interest of the holders of the outstanding Warrants by (b) an
independent investment bank of nationally recognized standing in the valuation
of businesses similar to the business of the corporation (as set forth in the
Certificate of Amendment). The manner of determining the Market Price of the
Common Stock set forth in the foregoing definition shall apply with respect to
any other security in respect of which a determination as to market value must
be made hereunder.
i. NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No
adjustment of the Exercise Price shall be made:
i. Upon the issuance or sale of this Warrant or
the shares of Common Stock issuable upon the exercise of this
Warrant; or
ii. If the amount of said adjustment shall be
less than two cents (2(cent)) per Warrant Share, provided, however, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents (2(cent)) per Warrant Share.
9. REDEMPTION OF WARRANTS.
a. REDEMPTION PRICE AND REDEMPTION ACCELERATION PRICE. The
Company may, at its option, redeem all or any portion of the this Warrant at a
redemption price of $.01 a Warrant (such price is hereinafter referred to as the
"REDEMPTION PRICE") if (a) the Closing Price per share of Common Stock, as
determined pursuant to Section 9(c), shall have been greater than 130% of the
then exercise price (such price, as the same may from time to time be adjusted,
is hereinafter referred to as the "REDEMPTION
8
ACCELERATION PRICE") for any 10 consecutive trading days ending not more than 20
trading days prior to the date that notice of such redemption shall have been
given to the Holder by the Company pursuant to Section 9(d), and (b) the
Registration Statement covering the Warrant Shares is then effective.
b. PAYMENT OF REDEMPTION PRICE. On or prior to the opening of
business on the Redemption Date (as defined in Section 9(d)), the Company will
set aside the funds sufficient to purchase such portion of this Warrant which
are to be redeemed. Payment of the Redemption Price will be made by the Company
upon presentation and surrender of this Warrant Certificates to the Company at
its principal office.
c. DETERMINATION OF CLOSING PRICE. For the purposes of Section
9(a), the Closing Price for each day shall be the last reported sale price of
the Common Stock on the Nasdaq National Market or such other national securities
exchange on which the Common Stock is listed.
d. NOTICE OF REDEMPTION. Notice of redemption shall be given
to the Holder by the Company not less than 15 days and not more than 45 days
prior to the date established for such redemption (the "REDEMPTION DATE"). Each
such notice of redemption will specify the Redemption Date and the Redemption
Price. The notice will state that payment of the Redemption Price will be made
by the Company upon presentation and surrender of this Warrant Certificates
representing such Warrants to the Company at its principal office, and will also
state that the right to exercise this Warrant will terminate at 5:00 P.M., New
York City time, on the business day immediately preceding the Redemption Date.
10. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. This Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be reasonably designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
11. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of
9
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or other securities, properties or rights.
12. CERTAIN AGREEMENTS OF THE COMPANY
a. RESERVATION AND LISTING OF SECURITIES. The Company shall at
all times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of this Warrant,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of this Warrant and payment of the Exercise Price therefor,
all shares of Common Stock and other securities issuable upon such exercise
shall be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any stockholder. As long as this Warrant shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of this Warrant to be listed (subject to
official notice of issuance) on all securities exchanges on which the Common
Stock issued to the public in connection herewith may then be listed and/or
quoted on The Nasdaq Stock Market, Inc.
b. CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its charter or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder, but will at all times in
good faith assist in the carrying out of all the provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this Warrant in order to protect the exercise privilege of the holder of this
Warrant against dilution or other impairment, consistent with the tenor and
purpose of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, and (ii) will take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.
c. SUCCESSORS AND ASSIGNS. This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.
13. CASHLESS EXERCISE. Notwithstanding the provisions of Section 3, if
the resale of the Warrant Shares by the holder is not then registered pursuant
to an effective registration statement under the 1933 Act as a result of a
breach by the Company of its obligations under the Registration Rights
10
Agreement and as a result of which a Mandatory Redemption Event has occurred as
set forth in Article V.A(ii) of the Certificate of Amendment, this Warrant may
be exercised by presentation and surrender of this Warrant to the Company at its
principal executive offices with a written notice of the holder's intention to
effect a cashless exercise, including a calculation of the number of shares of
Common Stock to be issued upon such exercise in accordance with the terms hereof
(a "CASHLESS EXERCISE"). In the event of a Cashless Exercise, in lieu of paying
the Exercise Price in cash, the holder shall surrender this Warrant for that
number of shares of Common Stock determined by multiplying the number of Warrant
Shares to which it would otherwise be entitled by a fraction, the numerator of
which (which shall not be less than zero) shall be the then current Market Price
per share of the Common Stock less the Exercise Price, and the denominator of
which shall be the then current Market Price per share of Common Stock.
14. NOTICES TO WARRANT HOLDER. 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 any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of this Warrant and its exercise, any of the following events
shall occur:
a. the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
b. the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
c. there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all its assets to, another
corporation or entity; or
d. a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days (or as many days as is practicable, if
such record date is not fixed at
11
least fifteen (15) days in advance) prior to the date fixed as a record date or
the date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
15. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or three (3) business days after mailing, if mailed by
registered or certified mail, return receipt requested:
(a) If to the registered Holder of this Warrant, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice to the
Holder.
16. AMENDMENTS. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company
and the holder hereof.
17. SUCCESSORS. All the covenants and provisions of this Warrant shall
be binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.
18. GOVERNING LAW: SUBMISSION TO JURISDICTION. This Warrant Certificate
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the laws of said
State without giving effect to its rules governing the conflicts of laws.
The Company and the Holder hereby agree that any action, proceeding or
claim against it arising out of or relating in any way to, this Warrant shall be
brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably submit
to such jurisdiction, which jurisdiction shall be exclusive. The Company and the
Holder hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any such process or summons to be served upon the Company or
the Holder (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
referred to in Section 14 hereof.
12
Such mailing shall be deemed personal service and shall be legal and binding
upon the party so served in any action, proceeding or claim. The Company and the
Holder agree that the prevailing party or parties in any such action or
proceeding shall be entitled to recover from the other party or parties all of
its/their reasonable legal costs and expenses relating to such action or
proceeding and/or incurred in connection with the preparation therefor.
19. ENTIRE AGREEMENT: MODIFICATION. This Warrant contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
20. SEVERABILITY. If any provision of this Warrant shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Warrant.
21. CAPTIONS. The caption headings of the Sections of this Warrant are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Warrant and shall be given no substantive effect.
22. BENEFITS OF THIS AGREEMENT. Nothing in this Warrant shall be
construed to give to any person or corporation other than the Company and the
Holder of the Warrant Certificates or Warrant Shares any legal or equitable
right, remedy or claim under this Warrant; and this Warrant shall be for the
sole and exclusive benefit of the Company and the Holder of this Warrant
Certificates or Warrant Shares.
23. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
13
IN WITNESS WHEREOF the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of December 19, 1997
C-PHONE CORPORATION
[SEAL] By:_____________________
Daniel P. Flohr
President and Chief
Executive Officer
Attest:
- ---------------------------
Tina L. Jacobs
Secretary
14
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____________ shares of
Common Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
C-Phone Corporation in the amount of $________ , all in accordance with the
terms of Section 3 of this Warrant. The undersigned requests that a certificate
for such securities be registered in the name of ____________ whose address is
_____________________ and that such Certificate be delivered to _______________
whose address is ________________
Dated: ____________________
Signature____________________________________________________
(Signature must conform in all respects to name of
holder as specified on the face of the Warrant
Certificate.)
____________________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
15
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED) __________________________ hereby sells, assigns and
transfers unto ____________________________________.
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: ____________________
Signature: ____________________________________________________
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
____________________________________________________
(Insert Social Security or Other Identifying Number of
Assignee)
16