THIS WARRANT
AND THE COMMON STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE UNLESS REGISTERED
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS WARRANT AND
THE COMMON STOCK PURCHASABLE HEREUNDER ARE SUBJECT TO AND HAVE THE
BENEFIT OF A WARRANT PURCHASE AND REGISTRATION RIGHTS AGREEMENT,
DATED AS OF EVEN DATE HEREWITH BETWEEN THE COMPANY AND THE
WARRANTHOLDER(S) LISTED ON THE SIGNATURE PAGE(S) THEREOF (AMONG
OTHERS), A COPY OF WHICH IS ON FILE WITH THE
COMPANY.
Dated: September 23,
2008
BROOKSIDE TECHNOLOGY HOLDINGS
CORP.
Expiring October __,
2008
THIS
IS TO CERTIFY THAT, for value received, CHATHAM CREDIT MANAGEMENT
III, LLC, not individually, but as agent for Chatham Investment
Fund III, LLC and Chatham Investment Fund III QP, LLC (“
Chatham ”) (together with any permitted successors or
assigns, the “ Holder ”) is entitled to purchase
from BROOKSIDE TECHNOLOGY HOLDINGS CORP., a Florida corporation
(together with its successors, the “ Company ”),
at any time after 9:00 a.m., Atlanta, Georgia time, on the date
hereof and prior to 5:00 p.m., Atlanta, Georgia time, on October
___, 2008 (the “Termination Date”), at the place where
the Warrant Agency is located, at the Exercise Price, the number of
Stock Units set forth in Section 1.1 , all subject to
adjustment from time to time and upon the terms and conditions
hereinafter provided, and is entitled also to exercise the other
appurtenant rights, powers and privileges hereinafter
described.
This
Warrant is one of one or more warrants of the same form and having
the same terms as this Warrant, entitling the holders initially to
purchase certain 225,000,000 Stock Units, more particularly
described below, exercisable in accordance with the terms of this
Warrant. In order to induce the Holder to enter into that certain
Credit Agreement dated as of even date herewith (as amended,
restated, supplemented and otherwise modified from time to time the
“ Credit Agreement ”), by and among Company, as
“Parent Company” and “Guarantor” therein,
the “Borrowers” party thereto from time to time, any
other “Credit Parties” party thereto from time to time,
the financial institutions designated as “Lenders”
therein and Chatham Credit Management III, LLC, a Georgia limited
liability company, as Agent (“ Agent ”), Company
has agreed to issue this Warrant to the Holder in accordance
herewith. The Holder is entitled to certain benefits as set forth
therein and to certain benefits described in that certain Warrant
Purchase and Registration Rights Agreement, dated as of even date
herewith, by and between Company and the holder(s) of the Warrants,
including Holder (as amended and in effect from time to time, the
“ Rights Agreement ”). Company shall keep a copy
of the Rights Agreement, and any
amendments
thereto, at the Warrant Agency and shall furnish, without charge,
copies thereof to Holder upon request.
Certain
terms used in this Warrant are defined in
Article VI.
1.1.
Number of Stock Units . (a) Subject to the terms and
conditions of this Warrant, and applicable securities laws, Holder
shall have the right, upon surrender hereof and payment of the
Exercise Price, to exercise this Warrant (in whole, but not in
part) and thereby to acquire 225,000,000 Stock Units in the manner
specified in Section 1.2 (subject to adjustments as
provided in Article IV hereof).
1.2.
Method of Exercise . To exercise this Warrant, the Holder
shall deliver on any Business Day within the time period specified
above to Company, at the Warrant Agency, (a) this Warrant,
(b) a written notice of such Holder’s election to
exercise this Warrant, which notice shall specify the denominations
of the stock certificate or certificates desired and the name or
names in which such certificates are to be registered and
(c) payment of the Exercise Price with respect to such Stock
Units. Such payment shall be made on a “cashless” basis
only, that is, by the Holder’s receiving from Company in lieu
of 225,000,000 Stock Units, as would be obtainable if the Exercise
Price were permitted to be paid in cash, the number of Warrant
Stock Units equal to the quotient obtained by dividing [(A-B) times
(X)] by [A] where:
A
= the deemed fair market value of the Stock Units on the date of
Exercise, which Company and the Holder have agreed is $0.05 per
Stock Unit.
B
= the Exercise Price, which is $0.03 per share per Warrant Stock
Unit
X
= the number of Warrant Stock Units as to which this Warrant is
being exercised, which is 225,000,000.
That
is to say, [($0.05 — $0.03) x 225,000,000]
which is
90,000,000 Warrant Stock Units (corresponding to fifteen percent
(15%) of all Common Stock on a Fully Diluted Basis on the date
hereof).
Company shall,
as promptly as practicable and in any event within five
(5) Business Days after receipt of such notice and payment,
execute and deliver or cause to be executed and delivered, in
accordance with such notice, a certificate or certificates
representing the aggregate number of Stock Units specified in said
notice together with cash in lieu of any fractions of a Stock Unit
as provided in Section 1.4 . The Stock Unit certificate
or certificates so delivered shall be in such denominations as may
be specified in such notice, and shall be issued in the name of the
Holder or such other name or names as shall be designated in such
notice. This Warrant shall be deemed to have been exercised and
such certificate or certificates shall be deemed to have been
issued, and such Holder or any other Person so designated to be
named therein shall be deemed for all purposes to have become a
holder of record of Stock Units, as of the date the aforementioned
notice and payment (on a “cashless” basis, in the
manner described above) is received by Company. Company shall pay
all expenses, taxes (except income taxes of Holder) and other
charges
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payable in
connection with the preparation, issuance and delivery of Stock
Unit certificates and new Warrants, except that, if Stock Unit
certificates or new Warrants shall be registered in a name or names
other than the name of the Holder, funds sufficient to pay all
transfer taxes payable as a result of such transfer shall be paid
by the Holder at the time of delivery of the aforementioned notice
of exercise or promptly upon receipt of a written request of
Company for payment.
1.3.
Stock Units to be Fully Paid and Nonassessable . All Stock
Units issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if such Stock Unit is
then listed on any national securities exchange (as defined in the
Exchange Act) or quoted on NASDAQ, shall be duly listed or quoted
thereon, as the case may be.
1.4.
No Fractional Stock Units Required to be Issued . Company
shall not be required to issue fractions of Stock Units upon
exercise of this Warrant. If any fraction of a Stock Unit would,
but for this Section, be issuable upon final exercise of this
Warrant, in lieu of such fractional Stock Unit, Company shall pay
to the Holder, in cash, an amount equal to the same fraction of the
Fair Market Value of Company per unit of outstanding Stock Units on
the Business Day immediately prior to the date of such
exercise.
1.5.
Stock Unit Legend; Holder an Accredited Investor . Each
certificate for Stock Units issued upon exercise of this Warrant,
unless at the time of exercise such Stock Units are registered
under the Securities Act, shall bear the following
legend:
THIS SECURITY
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS REGISTERED UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. THIS SECURITY IS ALSO SUBJECT TO AND HAS
THE BENEFIT OF WARRANT PURCHASE AND REGISTRATION RIGHTS AGREEMENT,
DATED AS OF SEPTEMBER ___, 2008, BETWEEN THE ISSUER AND THE
WARRANTHOLDER(S) LISTED ON THE SIGNATURE PAGES THEREOF (AMONG
OTHERS), A COPY OF WHICH IS ON FILE WITH THE ISSUER.
Any
certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued
upon completion of a public offering pursuant to a registration
statement under the Securities Act) shall also bear such legend
unless, in the opinion of counsel selected by the holder of such
certificate (who may be an employee of such holder) and reasonably
acceptable to Company, the securities represented thereby need no
longer be subject to restrictions on resale under the Securities
Act. Holder hereby represents to Company that Holder is an
“Accredited Investor” defined in Rule 501 of
Regulation D promulgated by the Securities and Exchange
Commission and acknowledges and agrees that the issuance of this
Warrant and the Stock Units to be acquired hereunder, and the
transfer of this Warrant and any Stock Units (without the benefit
of an applicable public registration under the Securities Act), are
to be exempt from registration under Section 4(2) of the
Securities Act.
1.6.
No Restrictions on Issuance of Stock Units . Company will
keep available for issuance upon, and not enter into any agreement
restricting (other than restrictions contained in the
Company’s Certificate of Incorporation (the “
Articles ”), or bylaws (the “ Bylaws
”), each as in effect on date hereof, or the Rights
Agreement) the Holder’s rights to, exercise of the Warrants
the number of Warrant Stock Units deliverable from time to time
upon exercise of all Warrants from time to time outstanding.
Company will not take any actions during the term of this Warrant
that would result in any
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adjustment of
the number of Stock Units issuable upon the exercise of the
Warrant, if (i) the total number of Stock Units issuable after
such action upon exercise of this Warrant, (ii) all Stock
Units issued and outstanding and (iii) all such Stock Units
then issuable (x) upon the exercise of all Options and
(y) upon the conversion or exchange of all Convertible
Securities, would exceed the total number of Stock Units then
authorized for issuance by Company. As of the date of this Warrant,
Company represents and warrants that it has outstanding (i)
___(___) shares of Common Stock, (ii) options and warrants
(inclusive of the Warrants) to acquire an additional ___(___)
shares of Common Stock, as more particularly set forth and
described on Schedule I annexed hereto, and (iii) ___shares
of Preferred A Stock convertible into ___(___) shares of Common
Stock; but no other shares of Common Stock or any securities
convertible into or exchangeable for shares of Common Stock or any
rights, options or warrants to purchase any shares of Common Stock
or any securities convertible into or exchangeable for Shares of
Common Stock. Neither the issuance of this Warrant nor the issuance
of Warrant Stock Units upon exercise of this Warrant violates or
conflicts with the Articles, Bylaws or any agreement to which
Company is a party.
WARRANT AGENCY; TRANSFER,
EXCHANGE AND REPLACEMENT OF WARRANT
2.1.
Warrant Agency . As long as any of the Warrants remain
outstanding, Company shall perform the obligations of and be the
warrant agency with respect to the Warrants (the “ Warrant
Agency ”) at its address set forth on the signature page
of this Warrant or at such other address as the Company shall
specify by notice to all Warrantholders.
2.2.
Ownership of Warrant . Company may deem and treat the person
in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing
hereon made by any person other than Company) for all purposes and
shall not be affected by any notice to the contrary, until due
presentment of this Warrant for registration of transfer as
provided in this Article II .
2.3.
Transfer of Warrant . Company agrees to maintain at the
Warrant Agency books for the registration of transfers of the
Warrants, and transfer of this Warrant and all rights hereunder
shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the Warrant Agency, together with a
written assignment of this Warrant duly executed by the Holder or
its duly authorized agent or attorney, with (if the Holder is at
any time a natural person) signatures guaranteed by a bank or trust
company or a broker or dealer registered with the NASD, and funds
sufficient to pay any transfer taxes payable upon such transfer.
Upon surrender and, if required, such payment, Company shall
execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denominations specified in the
instrument of assignment (which shall be whole numbers of Stock
Units only) and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be canceled.
2.4.
Division or Combination of Warrants . This Warrant may be
divided or combined with other Warrants upon presentment hereof and
of any Warrant or Warrants with which this Warrant is to be
combined at the Warrant Agency, together with a written notice
specifying the names and denominations (which shall be whole
numbers of Stock Units only) in which the new Warrant or Warrants
are to be issued, signed by the holders hereof and thereof or their
respective duly authorized agents or attorneys. Subject to
compliance with Section 2.3 as to any transfer or assignment
which may be involved in the division or combination, Company shall
execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with
such notice.
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2.5.
Loss, Theft, Destruction of Warrant Certificates . Upon
receipt of evidence satisfactory to Company of the ownership of and
the loss, theft, destruction or mutilation of any Warrant and
(a) in the case of any such loss, theft or destruction, upon
receipt of indemnity or security reasonably satisfactory to Company
(it being understood and agreed that if the holder of such Warrant
is Chatham or its affiliates, then a written agreement of indemnity
given by Chatham alone shall be satisfactory to Company and no
further security shall be required) or (b) in the case of any
such mutilation, upon surrender and cancellation of such Warrant,
Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of
Stock Units.
2.6.
Expenses of Delivery of Warrants . Company shall pay all
expenses, taxes (other than transfer taxes) and other charges
payable in connection with the preparation, issuance and delivery
of Warrants hereunder.
3.1.
Rights and Obligations under the Rights Agreement . This
Warrant is entitled to the benefits and subject to the terms of the
Articles, Bylaws and the Rights Agreement. Company shall keep or
cause to be kept a copy of the Rights Agreement, and any amendments
thereto, at the Warrant Agency and shall furnish, without charge,
copies thereof to the Holder upon request.
3.2.
Determination of Fair Market Value . Subject to
Section 3.3 hereof, the Holders may request that Company
determine the Fair Market Value from time to time. Each
determination of Fair Market Value hereunder shall be made in good
faith by Company. Upon each determination of Fair Market Value by
Company hereunder, Company shall promptly give notice thereof to
all Warrantholders, setting forth in reasonable detail the
calculation of such Fair Market Value and the method and basis of
determination thereof (the “ Company Determination
”).
3.3.
Contest and Appraisal Rights . (a) If the holders of
Warrants entitling such holders to purchase a majority of the Stock
Units subject to purchase upon exercise of Warrants at the time
outstanding (exclusive of Warrants then owned by Company or any
Subsidiary (as defined in the Credit Agreement) or Affiliate (as
defined in the Credit Agreement) thereof) (the “ Required
Interests ”) shall disagree with the Company
Determination and shall by notice to Company given within thirty
(30) days after Company’s notice of the Company
Determination (an “ Appraisal Notice ”) elect to
dispute the Company Determination (which Appraisal Notice shall
contain a list of not less than three (3) independent
investment banks or qualified appraisal firms which are acceptable
to such holders of the Warrants to calculate the Fair Market
Value), such dispute shall be resolved as set forth in
subsection (b) of this Section.
(b) Company
shall within thirty (30) days after an Appraisal Notice shall
have been given pursuant to subsection (a) of this Section
engage one of the investment banks or other qualified appraisal
firms on the list provided to Company by such holders of the
Warrants in the Appraisal Notice (the “ Appraiser
”) to make an independent determination of Fair Market Value
(the “ Independent Appraiser Determination ”).
The Independent Appraiser Determination shall be final and binding
on Company and all the Warrantholders. All costs of conducting the
appraisal shall be borne by Company; provided that if the
Company Determination is greater than the Independent Appraiser
Determination by more than fifteen percent (15%), then, the costs
of conducting the appraisal shall be borne entirely by the
Warrantholders; provided that, in each case, costs
separately incurred by Company and the Warrantholders shall be
separately borne by them.
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3.4
Financial Statements and Other Information . Promptly upon
transmission thereof, Company will deliver to the Holder, so long
as it shall be the holder of any Warrants, or Common Stock, copies
of any and all financial statements, proxy statements, notices and
other reports as it may send to its stockholders and copies of all
registration statements and all reports which it files with any
governmental body or agency. Company also will, and will cause its
Subsidiaries to, deliver to the Holder, so long as it shall be the
holder of any Warrants, or Common Stock, with reasonable
promptness, such other information or data with respect to Company
or any of its Subsidiaries as from time to time may be reasonably
requested by the Holder.
ANTIDILUTION AND OTHER ADJUSTMENT
PROVISIONS
4.1.
Adjustment Generally . The Exercise Price and the number of
Stock Units (or other securities or property) issuable upon
exercise of this Warrant shall be subject to adjustment from time
to time upon the occurrence of certain events as provided in this
Article IV .
4.2.
Common Stock Reorganization .
(a) If
Company shall subdivide its outstanding shares of Common Stock into
a greater number of shares of Common Stock or consolidate its
outstanding shares of Common Stock into a smaller number of shares
of Common Stock (any such event being called a “ Stock
Reorganization ”), then, the number of Stock Units for
which the Warrant Stock Units may be exercised shall automatically
be adjusted, effective at such time, to a number determined by
multiplying the number of Stock Units for which the Warrant Stock
Units could be exercised immediately before such Stock
Reorganization by a fraction, the numerator of which shall be the
number of Stock Units outstanding after giving effect to such Stock
Reorganization and the denominator of which shall be the number of
Stock Units outstanding immediately before such Stock
Reorganization.
(b) In
the event of any Stock Reorganization, the Exercise Price of the
Warrants shall be adjusted so that the aggregate exercise price of
all the Warrants shall not exceed the aggregate exercise price on
the date of the original issuance thereof.
4.3.
Issuance of Additional Common Stock .
(a) If
Company shall issue, sell or otherwise distribute any additional
shares of Common Stock, other than (i) pursuant to a
reorganization that is governed by Section 4.2 or (ii)
pursuant to employee option plans granting employees options to
purchase not more than ___(___) shares of Common Stock (the “
Employee Options ”) (any such sale or other
distribution, including any event described in paragraphs
(b) and (c) below, being herein called a “ Stock
Unit Distribution ”), for a consideration per unit less
than the Fair Market Value of Company per share of Common Stock on
the date of such Stock Distribution (before giving effect to such
Stock Unit Distribution), then, effective upon such Stock
Distribution,
(i) the number of
Stock Units subject to purchase upon exercise of this Warrant shall
be increased to a number determined by multiplying the number of
Stock Units subject to purchase immediately before such Stock Unit
Distribution by a fraction, the numerator of which shall be the
number of Stock Units outstanding immediately after giving effect
to such Stock Unit Distribution and the denomina
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