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EXHIBIT 10.17
THIS WARRANT AND THE SHARES OF COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS AND CANNOT BE OFFERED, SOLD OR TRANSFERRED IN THE
ABSENCE OF REGISTRATION, OR THE AVAILABILITY OF AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT, APPLICABLE STATE SECURITIES LAWS AND REGULATIONS
PROMULGATED THEREUNDER. THE TRANSFERABILITY OF THIS WARRANT ALSO IS RESTRICTED
AS PROVIDED IN SECTION 4 HEREOF.
STOCK PURCHASE WARRANT
This Warrant is issued as of July 16, 1998, by XxxxXxxxxx.XXX, Inc.
(the "COMPANY"), a Georgia corporation, to ITC Service Company ("ITC"), a
Georgia corporation (ITC and any subsequent assignees or transferees hereof are
hereinafter referred to collectively as "HOLDER" or "HOLDERS").
1. ISSUANCE OF WARRANT; TERM.
For and in consideration of ITC's agreement to enter into that certain
Amended and Restated Loan and Security Agreement (the "LOAN AGREEMENT"), dated
as of July 16, 1998, by and between the Company, ITC and ITC Holding Company,
Inc., and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company hereby grants to Holder the right to
purchase that number of shares of Company's Common Stock, par value $.01 per
share (the "COMMON STOCK") as determined under the provisions of SECTION 2. The
shares of Common Stock issuable upon exercise of this Warrant are hereinafter
referred to as the "SHARES". This Warrant shall be exercisable commencing on
the earlier of the closing of an Initial Public Offering (as defined below) by
the Company or December 31, 1998 and ending on July 16, 2008 (the "WARRANT
TERM").
2. EXERCISE PRICE; NUMBER OF SHARES.
(a) The exercise price ("EXERCISE PRICE") per share for which all or
any of the Shares may be purchased pursuant to the terms of this Warrant shall
be that per share value as determined under SUBSECTION (B) of SECTION 2(B)(I),
2(B)(II) or 2(B)(III), as applicable.
(b) Subject to the terms set forth in this Warrant (including,
without limitation, the adjustment provisions of SECTION 2(C) and SECTION 7),
on any date during the Warrant Term, the Holder hereof shall be entitled to
purchase such number of Shares as is calculated below:
(i) if the Company closes an Initial Public Offering before
December 31, 1998, Holder shall be entitled to purchase such number of Shares
as
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is equal to the quotient of (A) 375,000, divided by (B) the per share selling
price to the public of the Common Stock in the Initial Public Offering;
(ii) if the Company closes a Private Equity Funding (as
defined below) before December 31, 1998, Holder shall be entitled to purchase
such number of Shares as is equal to the quotient of (A) 375,000, divided by
(B) the per share selling price to investors of the Common Stock in the Private
Equity Funding; or
(iii) if the Company does not close an Initial Public Offering
or a Private Equity Funding before December 31, 1998, Holder shall be entitled
to purchase such number of Shares as is equal to the quotient of (A) 375,000,
divided by (B) the fair market value of a share of Common Stock as of December
31, 1998, as jointly determined in good faith by the Company and ITC.
The quotient of the applicable calculation set forth in SECTION 2(B)(I),
2(B)(II) or 2(B)(III), as the case may be, as determined as of December 31,
1998, is hereinafter referred to as the "ORIGINAL SHARE AMOUNT."
(c) If any amounts, whether principal, interest or otherwise, remain
outstanding after December 31, 1998 under that certain Revolving Credit Loan
(the "LOAN") made available pursuant to the Loan Agreement, the number of
Shares purchasable pursuant to this Warrant shall, without adjustment to the
per share Exercise Price, increase from the Original Share Amount to equal the
sum of (1) the Original Share Amount, plus (2) the product of (A) the Original
Share Amount, multiplied by (B) the Loan Factor (as defined below). The
adjustment set forth in this section shall apply whether or not the Holder has
exercised its right to purchase any shares purchasable hereunder prior to the
date of any such adjustment.
"LOAN FACTOR" shall be equal to the product of (A) 0.1, multiplied by
(B) the number of calendar months (with any fraction of a calendar month to be
considered to be a whole calendar month) that any amounts under the Loan,
whether principal, interest or otherwise, remain outstanding after December 31,
1998.
"INITIAL PUBLIC OFFERING" shall mean a public sale of the Company's
Common Stock pursuant to the registration provisions of the Securities Act of
1933, as amended (the "SECURITIES ACT"), at a minimum aggregate offering price
to the public of $20 million, as a result of which a public trading market for
the Common Stock is created.
"PRIVATE EQUITY FUNDING" shall mean any Private Placement (as defined
below) in excess of $20 million the proceeds of which are allocated, in whole
or in part, to the repayment of outstanding amounts under the
Loan.
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"PRIVATE PLACEMENT" any sale, transfer, exchange, pledge or other
disposition of the Company's Common Stock not requiring registration under the
Securities Act.
3. EXERCISE.
This Warrant may be exercised by the Holder hereof (but only on the
conditions hereinafter set forth) as to all or any increment or increments of
One Hundred (100) Shares (or the balance of the Shares if less than such
number), upon delivery of written notice of intent to exercise to the Company
at the following address: XxxxXxxxxx.XXX, Inc., 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx
000, Xxxxxxxx, XX 00000; Attention: Xxxxxx Xxxx, or such other address as the
Company shall designate in a written notice to the Holder hereof, together with
this Warrant and a check payable to the Company (or wire transfer of funds to
the Company) for the aggregate purchase price of the Shares so purchased. Upon
exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute and
deliver to the Holder of this Warrant a certificate or certificates for the
total number of whole Shares for which this Warrant is being exercised in such
names and denominations as are requested by such Holder. If this Warrant shall
be exercised with respect to less than all of the Shares, the Holder shall be
entitled to receive a new Warrant covering the number of Shares in respect of
which this Warrant shall not have been exercised, which new Warrant shall in
all other respects be identical to this Warrant. The Company covenants and
agrees that it will pay when due any and all state and federal issue taxes
which may be payable in respect of the issuance of this Warrant or the issuance
of any Shares upon exercise of this Warrant.
4. COVENANTS AND CONDITIONS.
The above provisions are subject to the following:
(a) Neither this Warrant nor the Shares have been
registered under the Securities Act or any state securities laws
("BLUE SKY LAWS"). This Warrant has been acquired for investment
purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or
otherwise transferred without an effective registration statement for
such Warrant under the Securities Act and such applicable Blue Sky
Laws, or the availability of an exemption from registration under the
Securities Act and applicable Blue Sky Laws. Transfer of the shares
issued upon the exercise of this Warrant shall be restricted in the
same manner and to the same extent as the Warrant, and the
certificates representing such Shares shall bear substantially the
following legend:
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THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAW AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF REGISTRATION, OR THE AVAILABILITY
OF AN EXEMPTION FROM REGISTRATION, UNDER THE
SECURITIES ACT AND REGULATIONS PROMULGATED THEREUNDER
AND APPLICABLE STATE SECURITIES LAWS.
The Holder hereof and the Company agree to execute such other
documents and instruments as the Company reasonably deems necessary to
effect the compliance of the issuance of this Warrant and any shares
of Common Stock issued upon exercise hereof with applicable federal
and state securities laws.
(b) The Company covenants and agrees that (i) all
Shares which may be issued upon exercise of the Warrant, upon
issuance, shall be fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof; (ii)
the Company will not close its books against the exercise of the
Warrant or the transfer of the Common Stock issued or issuable upon
exercise of the Warrant in any manner which would interfere with the
timely exercise of the Warrant; and (iii) the Company will at all
times reserve and keep available out of its authorized Common Stock,
solely for the purpose of effecting the exercise of the Warrant, the
full number of shares of Common Stock which would be deliverable upon
the exercise of the Warrant.
5. TRANSFER OF WARRANT.
(a) Prior to July 16, 1999, ITC may not transfer,
in whole or in part, without the written consent of the Company, this Warrant
or the Shares to any person or business entity other than Affiliates (as
defined in Rule 144(a) of the Securities Act) of ITC.
(b) Subject to the provisions of SECTION 4 and
SECTION 5(A) hereof, this Warrant may be transferred, in whole or in part, on
or after July 16, 1999, to any person or business entity, by presentation of
the Warrant to the Company with written instructions for such transfer. Upon
such presentation for transfer, the Company shall promptly execute and deliver
a new Warrant or Warrants in the form hereof in the name of the assignee or
assignees and in the denominations specified in such instructions. The Company
shall pay all expenses incurred by it
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in connection with the preparation, issuance and delivery of Warrants under
this Section.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS;
PREFERENCE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon
the Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company,
then all shares of Common Stock that are subject to this Warrant shall be
deemed to be outstanding and owned by the Holder and the Holder shall be
entitled to participate in such rights offering.
7. ADJUSTMENT UPON CHANGES IN STOCK.
The Exercise Price and the number of Shares purchasable hereunder are
subject to adjustment from time to time as follows:
(a) Stock Dividend, Stock Split or Subdivision of Shares.
If the number of shares of Common Stock outstanding at any time after
the date hereof 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 fixed for the determination of
holders of Common Stock entitled to receive such stock dividend,
subdivision or split-up, the Exercise Price shall be appropriately
decreased and the number of shares of Common Stock issuable on
exercise of each Warrant shall be increased in proportion to such
increase in outstanding shares.
(b) Combination of Shares. If, at any time after the date
hereof, the number of shares of Common Stock outstanding is decreased
by a combination of the outstanding shares of Common Stock, then,
following the record date for such combination, the Exercise Price
shall be appropriately increased and the number of shares of Common
Stock issuable on exercise of each Warrant shall be decreased in
proportion to such decrease in outstanding shares.
(c) Merger, Consolidation, Share Exchange, Reorganization,
Etc. If all or any portion of this Warrant shall be exercised
subsequent to any merger, consolidation, recapitalization, exchange of
shares, or reorganization of the Company, sale or transfer of
substantially all of the assets of the Company, or other similar
event, occurring after the date hereof, as a result of which shares of
Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes of securities of the
Company or another entity, then lawful provision shall be made by the
Company so that the Holder exercising this Warrant shall
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receive, for the aggregate Exercise Price paid upon such exercise,
the aggregate number and class of shares which such Holder would have
received if this Warrant had been exercised immediately prior to such
merger, consolidation, recapitalization, exchange of shares,
reorganization, sale or other similar event.
8. CERTAIN NOTICES.
(a) Adjustment Certificate. Whenever the Exercise Price or
number of shares purchasable hereunder shall be adjusted pursuant to
SECTION 2(C) or SECTION 7, the Company shall issue a certificate to
each Holder setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price and number of shares
purchasable hereunder after giving effect to such adjustment.
(b) Specific Notices. In case:
(i) the Company shall take a record of the holders
of its Common Stock (or other stock or securities at the time
receivable upon the exercise of this Warrant) for the purpose of
entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other
right, or
(ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any
consolidation or merger of the Company with or into another
Company, or any conveyance of all or substantially all of the
assets of the Company to another Company, or
(iii) of any voluntary dissolution, liquidation or
winding-up of the Company,
then, and in each such case, the Company will notify each Holder of, as the
case may be, (1) the date on which a record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, or (2) the date on which such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock (or such
stock or securities at the time receivable upon the exercise of this Warrant)
shall be entitled to exchange their shares of Common Stock (or such other stock
or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger,
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conveyance, dissolution, liquidation, or winding-up. For any such notification
required under either (1) or (2) above, the Company shall provide to Holder
written notice at least twenty (20) days prior to the date specified therein.
9. NO FRACTIONAL SHARES.
No fractional shares shall be issued upon the exercise of this
Warrant. If any adjustment under either SECTION 2(C) or SECTION 7 would create
a fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward.
10. AMENDMENTS.
The terms and provisions of this Warrant may not be modified or
amended, or any provisions hereof waived, temporarily or permanently, except by
written consent of the Company and a majority in interest of the Holders
hereof.
11. GOVERNING LAW.
This Warrant shall be governed by, and construed in accordance with,
the laws of the State of Georgia (excluding the choice of law rules thereof).
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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Warrant to be duly executed on their behalf as of the date first above written.
XXXXXXXXXX.XXX, INC., a
Georgia corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Title: CFO
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ITC SERVICE COMPANY, a
Georgia corporation
By: /s/ J. Xxxxxxx Xxx
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Title: Senior Vice President
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