EX-7 9 dex7.txt SERIES B COMMON STOCK PURCHASE WARRANT Exhibit 7 SERIES B COMMON STOCK PURCHASE WARRANT OF AQUIS COMMUNICATIONS GROUP, INC. Aquis Communications Group, Inc., a Delaware corporation (the "Company"), hereby agrees that, for value received, DESERT COMMUNICATIONS I, LLC, a Delaware limited liability company ("Desert"), or its assigns, is entitled, subject to the terms set forth herein, to purchase from the Company at any time or from time to time upon the occurrence of a Trigger Event and subject to Section 2(e) hereof and before the Expiration Time (as defined below), 22,394,842 shares of Common Stock, subject to adjustment in the number of such shares as set forth herein, at a price per share of $0.01. 1. Definitions. The following terms when used in this Warrant will have the following meanings: "Act" shall mean the United States Securities Act of 1933, as amended. "AMRO Agreement" shall mean that certain Agreement, dated July 1, 2002, by and between the Company and AMRO International S.A. "Common Stock" is the authorized common shares of the Company, $0.01 par value per share. "Exercise Price" shall mean $0.01 per share of Common Stock, subject to adjustment as provided in this Warrant. "Expiration Time" shall mean the earlier of (x) 5:00 p.m., New York time, on August 12, 2012, and (y) the time upon which the Company fully repays (from sources other than refinancing, except in the amount of the Tranche A Note then outstanding with payment terms similar to the Tranche A Note) all of its obligations under and pursuant to the Tranche A Note prior to the occurrence of a Trigger Event. "FINOVA" shall mean FINOVA Capital Corporation, a Delaware corporation. "Holder" is the registered holder of this Warrant. "Registration Statement" shall mean a registration statement filed under the Act. "Restructuring Loan Agreement" shall mean that certain Second Amended and Restated Loan Agreement, dated August 12, 2002, by and between Aquis Wireless Communications, Inc., a Delaware corporation and wholly owned subsidiary of the Company, and FINOVA. "Sale Transaction" shall mean the sale of all or substantially all of the assets or capital stock of the Company, or the merger, consolidation or reorganization of the Company. "SEC" shall mean the United States Securities and Exchange Commission. "Securities" are all or any part of the Common Stock purchased by the Holder or purchasable by the Holder upon the exercise of the Warrant. "Tranche A Note" shall mean that certain senior secured promissory note in principal amount of $7,000,000 issued by the Company to FINOVA on August 12, 2002. "Trigger Event" shall mean the first to occur of (w) a Sale Transaction, (x) the sale of in excess of 50% of the capital stock of the Company, (y) a default by the Company under the Restructuring Loan Agreement or under the AMRO Agreement, or (z) September 30, 2005. "Warrant" shall mean the warrant evidenced by this document. "Warrant Shares" shall mean the shares of Common Stock issuable upon exercise of this Warrant. 2. Exercise of Warrant. (a) Except as provided for in Section 2(b) hereof, the purchase rights exercisable under this Warrant shall be exercised by the Holder surrendering this Warrant with the form of subscription attached hereto duly executed by such Holder, to the Company at its principal office, accompanied by payment, in cash or by certified or cashier's check payable to the order of the Company, of the purchase price payable in respect of the Common Stock being purchased, and accompanied by any other document reasonably required by the Company to be executed by Holder acknowledging the applicable restrictions on the transfer of the Common Stock being purchased as set forth in Section 11 hereof. Such duly executed subscription shall constitute the Holder's acknowledgment of and undertaking to comply to the satisfaction of the Company and its counsel, acting reasonably, with all applicable laws and all rules, regulations and policies of each stock exchange upon which the Common Stock may from time to time be listed or traded and of any other applicable regulatory authorities. (b) At the option of Holder, this Warrant may be exercised, at any time or from time to time, in the following "cashless exercise" transactions: (i) The Holder shall have the right to convert, in whole or in part, the Warrants (the "Conversion Right") at any time prior to the Expiration Date, into shares of Common Stock in accordance with the provisions of this paragraph by the Holder tendering to the Company written notice of exercise of such Conversion Right together with delivery of this Warrant to the Company. All documentation and procedures to be followed in connection with such "cashless exercise" shall be approved in advance by the Company, which approval shall be expeditiously provided and not -2- unreasonably withheld. (ii) Upon written notice of exercise of such Conversion Right from the Holder to the Company that the Holder is exercising this Warrant in whole or in part and as consideration of such exercise is authorizing the Company to withhold from issuance a number of shares of Common Stock issuable upon exercise of this Warrant, the Company shall deliver to the Holder (without payment by the Holder of the aggregate Purchase Price) that number of shares of Common Stock equal to the quotient obtained by dividing (x) the Spread Value by (y) the Fair Market Value of one share of Common Stock immediately prior to the exercise of the Conversion Right. The shares withheld by the Company shall no longer be issuable under this Warrant. (iii) Fair Market Value of a share of Warrant Shares as of a particular date (the "Determination Date") shall mean: a. If the Warrant Shares are principally traded on a U.S. exchange or are quoted on the Nasdaq National Market or the Nasdaq SmallCap Market ("Nasdaq"), then the average of the closing or last sale price, respectively, reported for the five trading days during which there as any trading activity in the Warrant Shares immediately preceding the Determination Date. b. If the Warrant Shares are not traded on an exchange or on Nasdaq but are traded in the over-the-counter market or other similar organization (including the OTC Bulletin Board), then the average of the closing bid and ask prices reported for the five trading days during which there as any trading activity in the Warrant Shares immediately preceding the Determination Date. c. If the Warrant Shares are not traded as provided above, then the price determined in good faith by the Board of Directors of the Company, provided that (A) the basis or bases of each such determination shall be set forth in the corporate records of the Company pertaining to meetings and other actions of such board and (B) such records are available to the Holder for inspection during normal business hours of the Company upon the giving of reasonable prior notice. d. If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's certificate of incorporation, then all amounts to be payable per share to Holders of the securities then comprising -3- Warrant Shares pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Warrant Shares in liquidation under the certificate of incorporation, assuming for the purposes of this clause (d) that all of the shares of Warrant Shares then issuable upon exercise of all of the Warrants are outstanding at the Determination Date. (iv) The term "Spread Value" shall mean (i) the number of shares exercised at a given time multiplied by the Fair Market Value of one share of Common Stock, less (ii) aggregate applicable Exercise Price. (c) In case of the purchase of less than all the Common Stock purchasable under this Warrant, the Warrant shall remain exercisable in respect of the balance of the Common Stock on the terms and conditions set forth herein. Alternatively, if less than all of the Common Stock purchasable under this Warrant is purchased, the Company may, upon such exercise, execute and deliver to the Holder a new Warrant (dated the date thereof but otherwise containing terms identical to this Warrant) evidencing the number of shares of the Common Stock not so purchased. (d) As soon as practical after the exercise of this Warrant and payment of the purchase price, the Company will cause to be issued in the name of and delivered to the Holder, or as such Holder may direct, a certificate or certificates representing the shares purchased, provided that if any law or regulation requires the Company to take any action with respect to the Common Stock to be purchased before the issuance thereof, then the date of delivery of such shares of Common Stock shall be extended for the period necessary to take such action. The Company may require that such certificate or certificates contain on the face thereof a legend substantially as follows: "No sale, offer to sell or transfer of the shares represented by this certificate shall be made unless a registration statement under the federal Securities Act of 1933, as amended, with respect to such shares is then in effect or an exemption from the registration requirements of such Act and any applicable state law is then in fact applicable to such shares." (e) Notwithstanding anything contained in this Warrant to the contrary, except in the event of a Sale Transaction, the Warrant shall not be exercisable to the extent that, as a result of and immediately following such exercise, FINOVA will be deemed to beneficially own in excess of 79.99% of the issued and outstanding shares of Common Stock (in any case, as determined by the Holder, in its sole and absolute determination, with the Holder providing written notice of such determination to the Company at the time of any exercise of the Warrant). -4- 3. Reservation of Common Stock. A number of shares of Common Stock sufficient to provide for the exercise of the Warrant upon the basis herein set forth shall at all times be reserved by the Company for the exercise thereof. 4. Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of the Warrant, but the Company shall pay a cash adjustment in respect of any fraction of a share which would otherwise be issuable in an amount equal to the same fraction of the market price per share of Common Stock on the day of exercise as determined in good faith by the Company. 5. Exchange, Transfer, Assignment or Loss of Warrant. The rights and obligations of Holder hereunder are assignable with respect to all or any portion of the shares of Common Stock purchasable hereunder to any person. Notwithstanding the foregoing, no right or obligation under this Warrant is assignable unless the Company has received an opinion of counsel reasonably satisfactory in form and substance to counsel for the Company that such transaction will not violate the registration requirements of the Act or any applicable state or provincial law governing the sale of securities. Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company will prepare and deliver to the assignor and assignee, a new warrant covering the warrants to purchase shares of Common Stock assigned and retained, under the same terms and conditions as this Warrant, with the name of Holder substituted for the assignee with respect to assigned warrants to purchase shares of Common Stock. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnification agreement reasonably satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor. 6. Rights of the Holder. The Holder shall not, by virtue of this Warrant, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. 7. Anti-Dilution Provisions. The Exercise Price in effect at any time and the number and kind of securities purchasable upon exercise of each Warrant shall be subject to adjustment as follows: (a) In the event there is any change in the Common Stock of the Company by reason of any reorganization, recapitalization, stock split, stock dividend or otherwise, there shall be substituted for or added to each share of Common Stock theretofore appropriated or thereafter subject, or which may become subject, to this Warrant -5- the number and kind of shares of stock or other securities into which each outstanding share of Common Stock shall be so changed or for which each such share shall be exchanged, or to which each such share be entitled, as the case may be, and the per share price thereto also shall be appropriately adjusted. (b) The Company may retain a firm of independent public accountants of recognized standing selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section 7, and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment. (c) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of Warrants, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this and similar Warrants initially issued by the Company. 8. Reorganization, Reclassification or Merger. In case of any capital reorganization or any reclassification of the shares of Common Stock of the Company, or in the case of any consolidation with or merger or amalgamation of the Company into or with another corporation, or the sale of all or substantially all of its assets to another corporation effected in such a manner that the holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as a part of such reorganization, reclassification, consolidation, merger, amalgamation or sale, as the case may be, lawful provision shall be made so that the Holder shall have the right thereafter to receive, upon the exercise hereof, the kind and amount of shares of stock or other securities or property which the Holder would have been entitled to receive if, immediately prior to such reorganization, reclassification, consolidation or merger, the Holder had held the number of shares of Common Stock which were then purchasable upon the exercise of the Warrant had the Warrant been exercised. In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company) shall be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Holder, to the end that the provisions set forth herein (including provisions with respect to adjustments of the exercise price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant. 9. Other Events. If any change in the outstanding Common Stock of the Company or any other event occurs as to which the provisions of Section 7 or Section 8 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder upon exercise for the same aggregate Exercise Price the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. All calculations under this Warrant shall be made to the nearest one-tenth of a cent. -6- 10. Adjustments for Other Dividends and Distributions. If the Company at any time or from time to time during the term of this Warrant makes, or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution whether payable in securities of the Company or in other consideration other than shares of Common Stock, in each such event provision will be made so that the Holder will receive upon exercise of this Warrant, in addition to the number of shares of Common Stock receivable thereupon, the amount of other securities of the Company or consideration that it would have received had this Warrant been exercised on the date of such event and had it thereafter, during the period from the date of such event to and including the exercise date, retained such securities or consideration receivable by Holder as aforesaid, subject to all other adjustments called for during such period under this Warrant with respect to the rights of the Holder hereunder or with respect to such other securities or consideration, if applicable, by their terms. 11. Restriction on disposition. Neither the issuance of the Warrant nor the issuance of the shares of Common Stock issuable upon exercise of the Warrant has been registered under the Act or any applicable state law. The Warrant is issued to the Holder on the condition that the Warrant and any Common Stock purchased upon exercise of the Warrant are or will be purchased for investment purposes and not with an intent to distribute the same. All shares of Common Stock acquired by Holder upon exercise of this Warrant shall be subject to the restrictions on sale, encumbrance and other disposition contained in the Company's By-laws, or imposed by applicable U.S. and state and federal laws or regulations regarding the registration or qualification of such acquisition of shares of Common Stock, and may not be sold or otherwise disposed of unless the Company has received an opinion of counsel reasonably satisfactory in form and substance to counsel for the Company that such transaction will not violate the registration requirements of the Act or any applicable state law regulating the sale of securities. 12. Officer's Certificate. Whenever the Exercise Price shall be adjusted as required by the provisions of Section 7, Section 8 or Section 9 of this Warrant, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its transfer agent, if any, an officer's certificate showing the adjusted Exercise Price and the adjusted number of shares of Common Stock issuable upon exercise of each Warrant, determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant. 13. Notices to Warrant Holders. So long as this Warrant shall be outstanding, (1) if the Company shall pay any dividend or make any distribution upon Common Stock (other than a regular cash dividend payable out of retained earnings) or (2) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (3) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the -7- Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior to the date specified in clauses (i) and (ii), as the case may be, of this Section 13 a notice containing a brief description of the proposed action and stating the date on which (i) a record is to be taken for the purpose of such dividend, distribution or rights, or (ii) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. Mailed or telecopied communications shall be directed as follows unless written notice of a change of address or telecopier number has been given in writing in accordance with this Section: If to Holder: Holder's Address appearing on the books of the Company If to Company: Aquis Communications Group, Inc. 1719A Route 10, Suite 300, Parsippany, New Jersey 07054 Telecopier No. (973) 560-8004 14. Miscellaneous. Whenever reference is made herein to the issue or sale of shares of Common Stock, the term "Common Stock" shall include any stock of any class of the Company other than preferred stock with a fixed limit on dividends and a fixed amount payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company. The Company will not, by amendment of its Articles of Incorporation or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act or deed, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder by the Company, but will, at all times in good faith, assist, insofar as it is able, in the carrying out of all provisions hereof and in the taking of all other action which may be necessary in order to protect the rights of the Holder against dilution. The representations, warranties and agreements herein contained shall survive the exercise of this Warrant. References to the "Holder" includes the immediate Holder of shares of Common Stock purchased on the exercise of this Warrant. All shares of Common Stock or other securities issued upon the exercise of the Warrant shall be validly issued, fully paid and nonassessable. 15. Binding Effect. This Warrant shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. If possible, this Warrant shall be construed along with and in addition to any other agreement which the Company and Holder may enter into, but any provisions in this Warrant which contradicts any provision of any other agreement shall take precedence and be binding over such other provision. -8- 16. Governing Law; Waiver of Jury Trial. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York, and without giving effect to choice of laws provisions. The Company and the Holder waive all right to trial by jury in any action, suit or proceeding brought to enforce or defend any rights or remedies arising under or in connection with this Warrant, whether grounded in tort, contract or otherwise. 17. Descriptive Headings. Descriptive headings of the sections of this Warrant are inserted for convenience only and shall not control or effect the meaning or construction of any of the provisions hereof. -9- IN WITNESS WHEREOF, this Warrant has been duly executed by Aquis Communications Group, Inc., as of the 12th day of August, 2002. AQUIS COMMUNICATIONS GROUP, INC. By: /s/ Eugene I. Davis ------------------------------------- Name: Eugene I. Davis Title: President & CEO -10- EXERCISE FORM (TO BE SIGNED ONLY UPON EXERCISE OF WARRANT) To Aquis Communications Group, Inc.: The undersigned, the holder of the within warrant, hereby irrevocably elects to exercise the purchase right represented by such warrant for, and to purchase thereunder * ____________________________________________ shares of the common stock of Aquis Communications Group, Inc., and herewith makes payment of $_______________________ therefor, and requests that the certificates for such shares be issued in the name of, and be delivered to, whose address is ______________________________________________________ and social security or tax identification number is _______________________________. Dated:____________________ ___________________________________________________ (Signature must conform in all respects to the name of holder as specified on the face of the warrant) ___________________________________________________ Address ___________________________________________________ City State Zip Code In the presence of: __________________________ * Insert here all or such portion of the number of shares called for on the face of the within Warrant with respect to which the holder desires to exercise the purchase right represented thereby, without adjustment for any other or additional stock, other securities, property or cash which may be deliverable on such exercise. -11- ASSIGNMENT FORM (TO BE SIGNED ONLY UPON TRANSFER OF THE WARRANT) For value received, the undersigned hereby sells, assigns and transfers unto _______________________________________________________ whose address is _______________________________________________________________________________ and social security or tax identification number is ____________________________ _____________________________________ the right represented by the within warrant to purchase __________________________________ of the shares of common stock of Aquis Communications Group, Inc. to which the within warrant relates, and appoints _________________________________________________, attorney to transfer said right on the books of Aquis Communications Group, Inc. with full power of substitution in the premises. Dated:____________________ ___________________________________________________ (Signature must conform in all respects to the name of holder as specified on the face of the warrant) ___________________________________________________ Address ___________________________________________________ City State Zip Code In the presence of: __________________________ -12-