WARRANT AGREEMENT
This Warrant Agreement (this "Agreement") is made as of October 1, 1997
between Xxxxxxx X. Xxxxxx (the "Purchaser") and Rocky Mountain Internet, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Company and the Purchaser have entered into a Stock Purchase
Agreement, of even date herewith, pursuant to which, among other things, RMII
agreed to issue to the Shareholder 1,225,000 shares (the "Shares") of its common
stock, $0.001 par value per share ("Common Stock") and to enter into this
Agreement for the issuance by the Company of warrants to purchase 4,000,000
additional shares of Common Stock, subject to adjustment (the "Warrants"); and
WHEREAS, the Purchaser has delivered to the Company the consideration for
the issuance of the Shares and for the execution of this Agreement;
NOW, THEREFORE, in consideration of the of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the parties agree as follows.
Section 1
Authorization and Delivery of Warrants
Subject to the conditions set forth in section 3 hereof, the Company has
authorized the issuance and delivery to the Purchaser of warrants (the
"Warrants") to purchase 4,000,000 shares (the "Shares") of the Company's common
stock, par value $0.001 per share (the "Common Stock") at an exercise price of
$1.90 per share of Common Stock, pursuant to the terms of the warrant
certificate attached hereto, to the Purchaser.
Section 2
Terms of Warrants; Exercise of Warrants
The terms and conditions of the Warrants shall be governed by a warrant
certificate in substantially the form attached hereto.
Section 3
Conditions to Obligation of Company to Issue and Deliver Warrants
The parties acknowledge and understand that, as of the date hereof, the
Company does not have a sufficient number of shares of its Common Stock
authorized or reserved for issuance upon exercise of the Warrants. Accordingly,
the Company's obligation hereunder to issue and deliver the Warrants to the
Purchaser is subject to the condition that the Company shall have taken all
corporate action necessary to authorize the issuance of the Warrants and the
shares of Common Stock issuable upon the exercise thereof, including, but not
limited to, the approval by the Company's shareholders of an amendment to the
Company's Certificate of Incorporation to
-1-
authorize an increase in the number of shares Common Stock that may be issued by
the Company.
Section 4
Covenants of the Company
The Company hereby covenants and agrees to call a meeting of shareholders
as soon as reasonably practicable following the date hereof for the purpose,
among other things, of amending the Company's Certificate of Incorporation and
authorizing the issuance of the Warrants to the Purchaser as described in
Section 3. Following the completion of all corporate action necessary or
appropriate to authorize the issuance of the Warrants and the shares of Common
Stock issuable upon the exercise thereof, the Company will at all times keep
reserved out of its authorized Common Stock, so long as any of the Warrants
remain outstanding, solely for the purpose of issue upon exercise of the
Warrants, such number of shares as shall then be issuable upon the exercise of
the Warrants.
Section 5
Representations and Warranties of the Purchaser
5.1 ACCREDITED INVESTOR. The Purchaser is an Accredited Investor.
5.2 INVESTMENT. The Purchaser is acquiring the Warrants for investment
for his own account, not as a nominee or agent, and not with the view to, or
for resale in connection with, any unregistered distribution thereof or of
the Shares.
5.3 RESTRICTED SECURITIES. The Purchaser understands and acknowledges
that the Warrants and the Shares have not been registered under the
Securities Act or relevant state securities laws, but are being offered and
sold pursuant to exemptions from such registrations, and that the Purchaser
may not sell, transfer, assign, convey, pledge, hypothecate, or otherwise
dispose of the Warrants or any of the Shares in any manner without first
obtaining (i) an opinion of counsel satisfactory to the Company that such
proposed disposition or transfer lawfully may be made without the
registration of the Warrants or the Shares, as the case may be, for such
purpose pursuant to the Securities Act, as then amended, and applicable state
securities laws; or (ii) such registration. In furtherance thereof, the
Purchaser represents and warrants to and agrees with the Company that the
Purchaser:
(a) has the financial ability to bear the economic risk for the
investment in the Shares, has adequate means for providing for his
current needs and contingencies, and has no need for liquidity with
respect to the investment in the Warrants or the Shares;
(b) has been furnished with a copy of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, Forms 10-Q
for the quarters ended March 31, 1997 and June 30, 1997, and Current
Report on Form 8-K dated August 15, 1997 (collectively, the
"Documents") and has evaluated the risks of a purchase of the Shares
based on the information contained therein and in this Agreement;
-2-
(c) has been given the opportunity to ask questions of, and receive
answers from, the management of the Company concerning the terms,
conditions, and other matters pertaining to the investment in the
Warrants and has been given the opportunity to obtain such
additional information necessary to verify the accuracy of the
information contained in the Documents;
(d) except as described in Section 5 (c), the Purchaser has not been
furnished with any oral or written representation or oral or written
information in connection with the offering of the Shares; and
(e) has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
acquisition of the Warrant and the Shares and of making an informed
investment decision with respect thereto.
Section 6
Successors
This Agreement and the rights provided hereunder shall be binding upon and
shall inure to the benefit of the parties and their respective assigns,
successors, heirs, executors, and legal representatives.
Section 7
Remedies
7.1 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding by either
party seeking to enforce any provision of, or based on any right arising out of,
this Agreement may be brought against the other party in the courts of the State
of Colorado, City and County of Denver, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Colorado,
and each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred
to in the preceding sentence may be served on any party anywhere in the world.
Each party agrees that a final judgment in any action or proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law or at equity.
7.2 SPECIFIC ENFORCEMENT. The Company agrees that the remedies at law of
the holder of the Warrants, in the event of any default or threatened default by
the Company in the performance or compliance with any of the terms of this
Warrant Agreement, may not be adequate and such terms may, in addition to and
not in lieu of any other remedy, be specifically enforced by a decree of
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
-3-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PURCHASER
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxx
COMPANY
Rocky Mountain Internet, Inc., a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx
Title: Executive Vice President
-4-