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Exhibit 4.10
THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR QUALIFIED
UNDER ANY STATE SECURITIES LAW. THE SHARES ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO
UNLESS SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN A
TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
WARRANT
FOR THE PURCHASE OF SHARES
OF COMMON STOCK
OF
Z-TEL TECHNOLOGIES, INC.
THIS CERTIFIES THAT, for value received, The 1818 Fund III, L.P., a Delaware
limited partnership, or its successor or assignee (the "Holder"), is entitled to
subscribe for and purchase from Z-TEL TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), 2,083,333 fully paid and nonassessable shares of Common Stock,
$0.01 par value per share, of the Company at the purchase price of $13.80 per
share (the "Exercise Price"), subject to adjustment as provided in Sections 4
and 6 of this Warrant on or before the Expiration Date (as hereinafter defined).
This Warrant is issued pursuant to that certain Stock Purchase Agreement, dated
October 19, 2000, by and among the Company, the Holder and the other investors
named on Schedule 1 thereto (the "Stock Purchase Agreement").
I. DEFINITIONS. When used in this Warrant, the following terms shall
have the meanings specified:
A. "AFFILIATE" shall mean any affiliate, as that term is defined under
Rule 144 promulgated under the Securities Act.
B. "COMMON STOCK" shall mean the common stock, $0.01 par value per
share, of the Company.
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C. "CONVERTIBLE SECURITIES" means evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for, with
or without payment of additional consideration in cash or property, additional
shares of Common Stock, either immediately or upon the arrival of a specified
date or the happening of a specified event.
D. "CURRENT MARKET PRICE" as of a particular day means the closing
price on such day of the Common Stock on The Nasdaq Stock Market (or on the
exchange or quotation system on which the Corporation's Common Stock is then
traded) as reported in THE WALL STREET JOURNAL.
E. "DERIVATIVE EQUIVALENT SHARES" shall mean that number of shares
derived by dividing the aggregate consideration received by the Corporation for
the issuance of Derivative Securities, as determined in accordance with Section
1.6, by the Current Market Price immediately prior to such issuance.
F. "DERIVATIVE SECURITIES" shall mean securities, other than Options
and Convertible Securities, issued for cash by the Corporation or an Affiliate
of the Corporation, the value of which is directly based upon or derived by
reference to the market value of the Common Stock. The consideration received by
the Corporation for additional shares of Common Stock deemed to be issued in
connection with the issuance of Derivative Securities shall be determined by a
recognized financial institution agreeable to the Corporation and holders of
warrants exercisable for at least two-thirds of the total number of shares of
the Common Stock issuable upon exercise of all warrants issued pursuant to the
Stock Purchase Agreement.
G. "EXERCISE NOTICE" shall mean a notice of exercise of all or any
portion of this Warrant, in the form attached hereto as Exhibit A.
H. "FAIR MARKET VALUE" of one share of Common Stock shall be equal to
the average for the five trading days prior to the date of such exercise of (i)
the last reported sale price of the Common Stock quoted on the Nasdaq National
Market System or the principal exchange on which the Common Stock is then
listed, whichever is applicable, or (ii) the average of the closing bid and
asked prices of the Common Stock quoted in the Over-The-Counter Market Summary,
in each case as published in THE WALL STREET JOURNAL. If no public market exists
for the Common Stock at the time of such exercise, the "fair market value" shall
be determined by the Company's Board of Directors in good faith, which shall be
deemed to be fair market value unless holders of at least 15% of the Common
Stock issuable upon exercise of the Warrants issued pursuant to the Stock
Purchase Ageement request that the Company obtain an opinion of a nationally
recognized investment banking firm chosen by such holders and the Company (at
the Company's expense), in which event fair market value shall be determined by
such investment banking firm.
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I. "OPTIONS" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or Convertible Securities.
J. "EXPIRATION DATE" shall mean the earlier to occur of the following:
(i) the exercise of all of the rights represented by this Warrant; or (ii) five
years from the Initial Closing (as defined in the Stock Purchase Agreement).
K. "PERSON" shall mean and include an individual, partnership,
corporation, trust, joint venture, limited liability company, incorporated
organization and a government or any department or agency thereof.
L. "REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement of even date herewith by and between the Company, the Holder and each
of the other signatories thereto.
M. "SECURITIES ACT" means the Securities Act of 1933, as amended.
N. "TRANSFER" means any act pursuant to which, directly or indirectly,
the ownership or the economic benefits of assets or securities in question is
sold, exchanged, assigned, transferred, conveyed, delivered or otherwise
disposed of, and shall include the issuance of any instrument the value of which
is based upon the value of such assets or securities.
O. "WARRANT SHARES" shall mean the shares of Common Stock issuable to
the Holder of this Warrant upon any exercise of this Warrant.
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II. WARRANT EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR WARRANT
SHARES.
A. This Warrant may be exercised by the Holder, in whole or in part, at
any time prior to the Expiration Date by delivery of an Exercise Notice and,
within five business days thereafter, surrender of this Warrant (properly
endorsed if required) and payment by the Holder of the Exercise Price as
provided in Section 2.2. Upon such surrender and payment, the Holder shall be
entitled to receive a certificate or certificates representing the Warrant
Shares so purchased. The Company agrees that the Warrant Shares so purchased
shall be deemed to be issued to the Holder as the record owner of such Warrant
Shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares as aforesaid. Certificates for
the Warrant Shares so purchased shall be delivered to the Holder within a
reasonable time, not exceeding five (5) business days, after the rights
represented by this Warrant shall have been so exercised. If the rights of the
Holder of this Warrant are exercised in part, the number of Warrant Shares
subject to this Warrant shall be reduced accordingly and the Company shall
reissue a Warrant or Warrants of like tenor representing in the aggregate the
right to purchase the number of Warrant Shares as so reduced.
B. Payment of the Exercise Price shall be made by check payable to the
Company, wire transfer of immediately available funds to an account specified by
the Company upon inquiry by the Holder, or as further provided in this Section
2.2. Notwithstanding any provisions herein to the contrary, in lieu of
exercising this Warrant in exchange for cash, the Holder may elect to exercise
all or a portion of this Warrant by canceling all or a portion of this Warrant
and receiving in exchange therefor shares of Common Stock (as determined below)
equal to the value of this Warrant, or the portion thereof being canceled, by
surrender of this Warrant at the principal office of the Company together with a
duly executed form of subscription. If the Fair Market Value (as defined below)
of one share of Common Stock is greater than the Exercise Price (computed as of
the date of exercise of this Warrant), the Company shall issue to the holder a
number of shares of Common Stock computed using the following formula:
X = Y(A-B)
------
A
Where X = the number of shares of Common Stock to be
issued to the holder
Y = the number of shares of Common Stock
purchasable under the Warrant or, if only
a portion of the Warrant is being exercised,
under the portion of the Warrant being
exercised (on the date of exercise)
A = the Fair Market Value of one share of the
Common Stock (on the date of exercise)
B = the Exercise Price (as adjusted to the
date of exercise)
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III. AFFIRMATIVE COVENANTS. The Company covenants and agrees that the
Warrant Shares will, upon exercise of this Warrant and issuance in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable. The
Company further covenants and agrees that until the Expiration Date, the Company
will at all times have authorized, and reserved for the purpose of issue upon
total or partial exercise of the rights represented by this Warrant, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant. The Company shall pay, or cause to be
paid, all documentary and similar taxes levied under the laws of any applicable
jurisdiction in connection with the issuance of this Warrant, any modification
of this Warrant or the exercise of this Warrant.
IV. ADJUSTMENTS. If the Company shall, while this Warrant remains
outstanding (i) pay a stock dividend or make a distribution to holders of Common
Stock in shares of its Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company, then thereafter the
number of Warrant Shares shall be automatically (and without notice or further
action) increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of such
change, and the per share Exercise Price of this Warrant after such change shall
in case of an increase in the number of shares be proportionately decreased, and
in case of a decrease in the number of shares be proportionately increased, so
that the aggregate Exercise Price of this Warrant shall be unchanged by such
change. An adjustment made pursuant to this Section 4 shall become effective
retroactively (x) in the case of any such dividend or distribution, to a date
immediately following the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of any such subdivision,
combination or reclassification, to the close of business on the date upon which
such corporate action becomes effective.
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V. REORGANIZATION, RECLASSIFICATION, SHARE EXCHANGE OR MERGER.
A. If at any time prior to the Expiration Date the Company is a party
to any agreement providing for (i) any capital reorganization or
reclassification of the capital stock of the Company or (ii) any share exchange
or merger of the Company with another corporation, in such a way that holders of
Common Stock shall be entitled to receive cash, shares of stock or securities or
assets (collectively, and regardless of whether received in connection with a
merger or some other form of corporate reorganization, the "MERGER
CONSIDERATION") with respect to or in exchange for Common Stock, then, as a
condition to such reorganization, reclassification, share exchange or merger,
the Holder shall be given the opportunity to elect to receive such cash, shares
of stock or securities or assets as may be issued or payable with respect to or
in exchange for the number of Warrant Shares then issuable upon the exercise of
the rights represented by this Warrant upon payment of the aggregate Exercise
Price for all of the Warrant Shares.
B. If the Holder elects to receive the Merger Consideration, then upon
Holder's actual receipt of the Merger Consideration the Holder shall pay to the
Company (i) the per share Exercise Price of this Warrant multiplied by (ii) the
number of shares of Common Stock then issuable upon the exercise of the rights
represented by this Warrant, and thereafter the parties shall have no further
rights or obligations hereunder.
C. If the Holder does not elect to receive the Merger Consideration,
the rights and obligations of the Holder and the Company (including any
successor company) under this Warrant shall remain in full force and effect
pursuant to the terms and conditions of this Warrant. In any such case, the
Company shall not effect any such reclassification, reorganization, share
exchange or merger, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such share exchange or
merger shall assume by written instrument the obligation to deliver to the
Holder, upon exercise of this Warrant, such cash, shares of stock or securities
or assets as the Holder would have been entitled to receive had the Holder made
the election in accordance with the provisions of this Section 5.
D. In connection with any capital reorganization or reclassification of
the capital stock of the Company or any share exchange or merger of the Company
with another corporation, if the Company shall fix a record date for the making
of a distribution to holders of Common Stock of (i) assets (other than cash
dividends or cash distributions payable out of consolidated net income or earned
surplus or dividends payable in Common Stock), (ii) evidences of indebtedness or
other securities of the Company, or of any corporation other than the Company
(except for the Common Stock of the Company) or (iii) subscription rights,
options or warrants to purchase any of the foregoing assets or securities,
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whether or not such rights, options or warrants are immediately exercisable, to
the extent such rights, options or warrants have not expired, then the Company
shall make provisions for the Holder to receive, and the Holder shall be
entitled upon exercise of this Warrant, evidences of indebtedness, securities or
such other rights, options or warrants, as if the Holder had exercised this
Warrant on or before such record date.
VI. DILUTING ISSUANCES.
A. UPON ISSUANCE OF COMMON STOCK. Except as hereinafter provided in
this Section 6, if the Company shall issue or sell any shares of Common Stock,
including any treasury shares, or any Derivative Securities, for consideration
per share (determined, with respect to Derivative Securities, as set forth in
Section 1.6 hereof) less than the greater of (i) the Current Market Price for
the most recent trading day that is able to be determined as of the time of such
issuance (before deducting underwriting discounts and commissions) or (ii) the
then current Exercise Price, then a "Diluting Issuance" shall have occurred and
the Exercise Price and number of Warrant Shares shall be adjusted as provided in
Section 6.4.
B. UPON GRANTING OF CERTAIN RIGHTS.
(a) If the Company shall in any manner grant, issue or sell any rights
to subscribe for or to purchase, or any options for the purchase of, Common
Stock, Convertible Securities or Derivative Securities, whether or not such
rights or options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which shares
of Common Stock or Derivative Securities (determined, as to Derivative
Securities, in accordance with Section 1.6 hereof) are issuable upon the
exercise of such rights or options or upon conversion or exchange of such
Convertible Securities, before deducting underwriting discounts and commissions,
shall be less than the greater of (i) the Current Market Price for the most
recent trading day that is able to be determined as of the time of the granting
of such rights or options (before deducting underwriting discounts and
commissions) or (ii) the then current Exercise Price, then a Diluting Issuance
shall have occurred and the Exercise Price and number of Warrant Shares shall be
adjusted as provided in Section 6.4. For the purposes of such adjustment as
provided in Section 6.4 the maximum number of shares of Common Stock issuable
upon the exercise of such rights or options or upon conversion or exchange of
Convertible Securities shall be deemed to be outstanding and to have been issued
for such price per share, before deducting underwriting discounts and
commissions. No further adjustments of the Exercise Price or number of Warrant
Shares shall be made upon the actual issuance of Common Stock, Derivative
Securities or Convertible Securities upon the exercise of any such warrant,
right or option or the actual issuance of Common Stock upon the conversion or
exchange of any such Convertible Securities.
(b) The price per share for which shares of Common Stock are issuable
upon the exercise of such rights or options or upon conversion or exchange of
such Convertible Securities, and the consideration deemed to be received by the
Company, shall be determined by dividing (i) the total amount, if any, received
or receivable by the Company as consideration for the granting, issuance or sale
of such rights or options or Convertible Securities, before deducting
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underwriting discounts and commissions, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise of such rights
or options, plus, in the case of such Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
conversion or exchange thereof, plus the net amount received or receivable upon
the issuance of such Convertible Securities, before deducting underwriting
discounts and commissions (in each case without double counting), by (ii) the
total maximum number of shares of Common Stock issuable upon the exercise of
such rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or options. The
price per share for which Derivative Securities are issuable upon the exercise
of such rights or options or upon conversion or exchange of such Convertible
Securities, and the consideration deemed to be received by the Company, shall be
determined in accordance with Section 1.6.
C. ISSUANCE OF CONVERTIBLE SECURITIES.
(a) Except as provided in the last sentence of this Section 6.3(a), if
the Company shall in any manner grant, issue or sell any Convertible Securities,
whether or not the rights to convert or exchange thereunder are immediately
exercisable, and the price per share for which shares of Common Stock are
issuable upon such conversion or exchange shall be less than the greater of (i)
the Current Market Price for the most recent trading day that is able to be
determined as of the time of such issuance (before deducting underwriting
discounts and commissions) or (ii) the then current Exercise Price, then a
Diluting Issuance shall have occurred and the Exercise Price and number of
Warrant Shares shall be adjusted as provided in Section 6.4. For the purposes of
such adjustment as provided in Section 6.4, the maximum number of shares of
Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall as of the date for adjustment be deemed to be outstanding and
to have been issued for such price per share, before deducting underwriting
discounts and commissions. No further adjustments of the Exercise Price and
number of Warrant Shares shall be made upon the conversion or exchange of the
Convertible Securities. If any such issue or sale of such Convertible Securities
is made upon exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which adjustments of the
Exercise Price and number of Warrant Shares was made pursuant to Section 6.2, no
further adjustment shall be made by reason of such issue or sale.
(b) The price per share for which shares of Common Stock are issuable
upon such conversion or exchange, and the consideration deemed to be received by
the Company, shall be determined by dividing (i) the total amount received or
receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
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consideration, if any, payable to the Company upon the conversion or exchange
thereof, in each case before deducting underwriting discounts and commissions,
by (ii) the total maximum number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities.
D. EFFECT ON WARRANT EXERCISE RIGHTS. Upon the occurrence of a Diluting
Issuance:
(a) the Exercise Price shall be reduced to the Exercise Price equal to
the following fraction:
(A+B)
----
C
where:
A = the number of shares of Common Stock outstanding
immediately prior to such grant, issue or sale multiplied by
the greater of (i) the Exercise Price or (ii) the Current
Market Price, in each case immediately prior to such grant,
issue or sale,
B = the aggregate consideration, if any, received or deemed to
be received by the Company upon such grant, issue or sale
(determined, with respect to issuances of Derivative
Securities, as set forth in Section 1.6 hereof), and
C = the total number of shares of Common Stock outstanding
immediately after such grant, issue or sale;
(b) any Common Stock issuable upon the exercise of any warrants, rights
or options or the conversion or the exchange of any Convertible Securities, and
any Derivative Equivalent Shares shall be deemed to be outstanding for purposes
of this Section 6.4; and
(c) the Holder shall thereafter be entitled to purchase hereunder as a
part of the Warrant Shares, at the Exercise Price in effect immediately after
such issue or sale, the positive number of shares of Common Stock which, when
multiplied by the Exercise Price in effect immediately after such issue or sale
(as determined under Section 6.4), will equal the product of (i) the Exercise
Price in effect immediately prior to such issue or sale and (ii) the number of
shares of Common Stock issuable pursuant to this Warrant immediately prior to
such issue or sale.
E. OTHER DISTRIBUTIONS. If the Company distributes to any holder of
shares of its Common Stock (including any distribution made in connection with a
consolidation or merger in which the Company is the resulting or surviving
corporation and the Common Stock is not changed or exchanged) cash, evidences of
indebtedness of the Company or another issuer, securities of the Company or
another issuer or other assets or rights or warrants to subscribe for or
purchase securities of the Company (excluding those in respect of which
adjustments in the Exercise Price is made pursuant to Section 6.1, 6.2 or 6.3,
then, and in each such case, the Exercise Price then in effect shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the date of
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such distribution by a fraction (x) the numerator of which shall be the Current
Market Price per share of Common Stock on the record date referred to below and
(y) the denominator of which shall be such Current Market Price per share of
Common Stock less the then Fair Market Value of the portion of the cash,
evidences of indebtedness, securities or other assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock (but
such denominator shall in no event be zero). Such adjustment shall be made
whenever any such distribution is made and shall become effective retroactively
to a date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
F. ADJUSTMENT. An adjustment pursuant to Section 6.4 shall be made
whenever such shares, securities, options, warrants or other rights are issued,
and shall become effective retroactively to a date immediately following the
close of business (x) in the case of an issuance to the stockholders of the
Company, as such on the record date for the determination of stockholders
entitled to receive such shares, securities, options, warrants or other rights
and (y) in all other cases, on the date of such issuance.
G. LIMITATIONS ON DILUTING ISSUANCE ADJUSTMENTS. Notwithstanding the
foregoing provisions of this Section 6, no adjustment of the Exercise Price or
the number of Warrant Shares shall be made as a result of or in connection with
the subdivision of outstanding shares of Common Stock or combination of
outstanding shares of Common Stock as to which adjustments to the Exercise Price
or the number of Warrant Shares have been made pursuant to Section 4, it being
the parties' intent that this Section 6 shall not be deemed to require
additional adjustments to those already provided by Section 4.
H. EFFECT OF CANCELLATIONS OF DILUTIVE SECURITIES. Any adjustments of
the Exercise Price or the Warrant Shares made pursuant to Sections 6.2 or 6.3
shall be disregarded if, as, when and to the extent that the rights, options or
Convertible Securities giving rise to such adjustments expire or are canceled
without being exercised, converted or exchanged. In such event, the Exercise
Price and number of Warrant Shares effective immediately upon such cancellation
or expiration shall be equal to the Exercise Price and number of Warrant Shares
in effect at the time of the issuance or sale of the rights, options or
Convertible Securities which expire or are canceled without being exercised,
converted or exchanged, with such additional adjustments as would have otherwise
been made pursuant to Section 4.
I. OUTSTANDING SECURITIES. Notwithstanding anything else to the
contrary contained in this Warrant, no Dilutive Issuance will have occurred and
no adjustment of the per share Exercise Price or the number of Warrant Shares
shall be made as a result of or in connection with the issuance of Common Stock
pursuant to the conversion of Convertible Securities outstanding as of the date
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of this Warrant or pursuant to the exercise of options, warrants or other
similar securities outstanding as of the date of this Warrant.
VII. NOTIFICATION TO HOLDER.
(a) Upon each adjustment pursuant to Section 6, the Company shall give
written notice thereof to the Holder within ten days after the date of such
adjustment, which notice shall set forth the calculation of the number of shares
of Common Stock issuable upon exercise of the rights represented by this Warrant
before and after such adjustment and the facts upon which such calculations are
based.
(b) If at any time:
(i) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;
(ii) the Board of Directors (or any committee thereof) shall
authorize or approve any capital reorganization, or reclassification of the
capital stock of the Company, or share exchange or merger of the Company with,
or sale, disposition or other conveyance of all or substantially all of its
assets to, any Person;
(iii) the Company (or any other party) shall institute any
proceeding seeking an order for relief under the Federal bankruptcy laws or
seeking to adjudicate the Company as bankrupt or insolvent, or seeking
dissolution, liquidation or winding up of the Company or seeking reorganization
under any law relating to bankruptcy or insolvency;
then, within ten days of the date of any such occurrence, the Company shall give
the Holder written notice describing in reasonable detail such occurrence.
VIII. SPECIAL DISTRIBUTIONS. If the holder so elects by sending a
notice to the Company, in the event that the Company shall declare a dividend or
make any other distribution (including, without limitation, in cash, in capital
stock (which shall include, without limitation, any options, warrants or other
rights to acquire capital stock) of the Company, whether or not pursuant to a
shareholder rights plan, "poison pill" or similar arrangement) in other property
or assets, to holders of Common Stock (a "SPECIAL DISTRIBUTION"), then the Board
of Directors shall set aside the amount of such dividend or distribution that
any holder of a Warrant would have been entitled to receive had it exercised
such Warrant prior to the record date for such dividend or distribution. Upon
the exercise of this Warrant, the holder shall be entitled to receive, such
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dividend or distribution that such holder would have received had such Warrant
been exercised immediately prior to the record date for such dividend or
distribution. Prior to any Special Distribution described in this Section 8, the
Company shall notify each holder (not less than ten Business Days prior to the
occurrence of each Special Distribution) of its intent to make such Special
Distribution and the holder, if it elects to have such distribution set aside
the amount thereof rather than have an adjustment to the Exercise Price as
provided in Section 6, shall notify the Company by sending a notice prior to the
date of any such Special Distribution.
IX. CERTAIN EVENTS. If any event occurs as to which the provisions of
this Warrant are not strictly applicable or, if strictly applicable would not
fairly protect the rights of the Holder in accordance with the essential intent
and principles of such provisions, then the Company and the Holder shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect the Holder's rights as
aforesaid.
X. The Company shall prepare and file, and cooperate with the holder of
this Warrant so that it may prepare and file, in each case within five Business
Days of a request by such holder, notification and report forms in compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and shall otherwise fully comply with the requirements of the HSR
Act, to the extent required in connection with the exercise of the Warrant. The
Company shall bear all of its own expenses and all of its own out-of-pocket
expenses (including reasonable legal fees) and any fees and expenses of the
holder.
XI. TERM OF WARRANT. This Warrant shall remain outstanding and
exercisable until the Expiration Date. To the extent not previously exercised,
the rights represented by this Warrant shall thereupon terminate.
XII. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon the total or partial exercise of this Warrant shall be made without charge
to the Holder for any issuance tax in respect thereof.
XIII. CLOSING OF BOOKS. The Company will at no time close its transfer
books in any manner which interferes with the timely exercise of the rights
represented by this Warrant.
XIV. NO VOTING RIGHTS. This Warrant shall not entitle the Holder to any
voting rights as a shareholder of the Company.
XV. NOTICES. All notices and communications provided for herein or made
hereunder shall be delivered, or mailed first class with postage prepaid, or
telecopied, addressed in each case as follows, until some other address shall
have been designated in a written notice given in like manner, and shall be
deemed to have been given or made when so delivered or mailed or telecopied:
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(a) if to the Company: Z-Tel Technologies, Inc.
Suite 220
601 S. Harbour Island Boulevard
Tampa, FL 33602
Attn: D. Gregory Smith
Chief Executive Officer
Facsimile No.: (813) 233-4623
(b) with a copy to: Jeffrey H. Kupor
General Counsel
Z-Tel Technologies, Inc.
Suite 220
601 S. Harbour Island Boulevard
Tampa, FL 33602
Facsimile No.: (813) 277-9753
(c) if to the Holder, at such holder's last known address appearing on
the books of the Company:
Or to such other person or address as the party entitled to notice hereunder
shall designate by notice in accordance with this Warrant.
XVI. REPLACEMENT OF WARRANT. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant, and
upon receipt of written indemnification of the Company by the Holder in form and
substance satisfactory to the Company, the Company shall execute and deliver to
the Holder a new Warrant of like date, tenor and denomination.
XVII. GOVERNING LAW. This Warrant shall be construed and interpreted in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
XVIII. SUCCESSORS AND ASSIGNS. The provisions of this Warrant shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and transferees.
XIX. FURTHER ASSURANCES. The Company agrees that it will execute and
record such documents as the Holder shall reasonably request to secure for the
Holder any of the rights represented by this Warrant.
XX. AMENDMENT AND MODIFICATIONS. This Warrant may be amended, modified
or supplemented only by written agreement of the Company and the Holder.
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XXI. TRANSFER OF WARRANTS. Any transfer of the rights represented by
this Warrant Certificate shall be effected by the surrender of this Warrant
Certificate, along with the form of assignment attached hereto, properly
completed and executed by the registered holder hereof, at the principal
executive office of the Company in the United States of America, together with
an appropriate investment letter, if deemed reasonably necessary by counsel to
the Company to assure compliance with applicable securities laws. Thereupon, the
Company shall issue in the name or names specified by the registered holder
hereof and, in the event of a partial transfer, in the name of the registered
holder hereof, a new Warrant Certificate or Certificates evidencing the right to
purchase such number of shares of Common Stock as shall be equal to the number
of shares of Common Stock then purchasable hereunder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officers and this Warrant to be dated as of the
10th day of November, 2000.
Z-TEL TECHNOLOGIES, INC.
By: /s/ D. Gregory Smith
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D. Gregory Smith
President and Chief Executive Officer
14
<PAGE> 15
EXHIBIT A
EXERCISE NOTICE
To:
The undersigned Holder, pursuant to the terms and conditions
of that certain Warrant, issued by Z-Tel Technologies, Inc., a Delaware
corporation, and dated as of September _, 2000, hereby exercises such Warrant to
the extent of
( ) shares of the Common Stock covered by such Warrant, and hereby agrees to
make payment in full for each of such shares at the per share exercise price
provided by such Warrant.
Date:
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Signature:
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Address:
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<PAGE> 16
[Form of Assignment Form]
[To be executed upon assignment of Warrants]
The undersigned hereby assigns and transfers this Warrant
Certificate to ____________________ whose Social Security Number or Tax ID
Number is _________________ and whose record address is
_____________________________________, and irrevocably appoints ________________
as agent to transfer this security on the books of the Company. Such agent may
substitute another to act for such agent.
Signature:
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Date:
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