**Exhibit 4.10**

 

**THESESECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED, OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE ORDISTRIBUTION THEREOF. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,HYPOTHECATED OR OTHERWISE DISTRIBUTED IN THE ABSENCE OF AN EFFECTIVEREGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL, SATISFACTORYIN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIREDUNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY APPLICABLE STATESECURITIES LAWS.**

** **

**WARRANT**

 
| Warrant  No. Banking Agreement/CityNet 1 |   | Dated: July 23, 2003 |
|------------------------------------------|--------|---------------------------|

 

**To Purchase Up to 1,000,000 Shares of Common Stock of**

 

**Universal Access Global Holdings Inc. (the “Company”)**

 

# 1.                                       Number of Shares; Exercise Price; Term. This certifies that, in consideration forservices provided under the Financial Advisory/Investment Banking Agreementdated December 13, 2002, by and between the Company and Broadmark Capital,LLC, Broadmark Capital, LLC and its successors and assigns (in each case, the“Holder”) is entitled, upon the terms and subject to the conditions hereinafterset forth, at any time after the date hereof and at or prior to 11:59 p.m.Central Time, on July 22, 2007 (the “Expiration Time”), but notthereafter, to acquire from the Company, in whole or in part, from time totime, up to 1,000,000 fully paid and nonassessable shares (the “Shares”) ofCommon Stock, par value $0.01 per share of the Company (“Common Stock”), at apurchase price of $0.22 per Share (the “Exercise Price”). The number of Shares,type of security and Exercise Price are subject to adjustment as providedherein, and all references to “Common Stock” and “Exercise Price” herein shallbe deemed to include any such adjustment or series of adjustments.

#  

# 2.                                       Exercise of Warrant.

#  

(a)                                  ThisWarrant may be exercised by the Holder, in whole or in part, at any time, orfrom time to time, prior to the Expiration Time, by the surrender of thisWarrant and the Notice of Exercise annexed hereto, each duly completed andexecuted on behalf of the Holder, at the office of the Company in Chicago,Illinois, (or such other office or agency of the Company as it may designate bynotice in writing to the Holder at the address of the Holder appearing on thebooks of the Company), and upon payment of the Exercise Price for the Sharesthereby purchased (by cash, certified or cashier’s check or wire transferpayable to the order of the Company, at the time of exercise in an amount equalto the purchase price of the Shares thereby purchased). Thereupon, the Holder,as holder of this Warrant, shall be entitled to receive from the Company astock certificate in proper form representing the number of Shares so purchased,and a new Warrant in substantially identical form and dated as of such exercisefor the purchase of that number of Shares equal to the difference, if any,between the number of Shares subject hereto and the number of Shares as towhich this Warrant is so exercised.

 

(b)                                 Cashless Exercise. Notwithstandingany provisions in this Warrant to the contrary, if the fair market value of oneshare of Common Stock is greater than the Exercise Price (at the

 

----

 

date ofcalculation as set forth below), in lieu of exercising this Warrant for cash,the Holder may elect to receive shares equal to the value (as determined below)of this Warrant (or the portion of the Warrant being canceled) by surrender ofthis Warrant at the principal office of the Company together with the properlyendorsed Notice of Exercise and notice of such election in which event theCompany shall issue to the Holder a number of shares of Common Stock computedusing the following formula:

 

X = Y(A-B)

A

 

*Where:*

 

X =                             the number of shares of Common Stock to beissued to the Holder

 

Y =                              the number of shares of Common Stockpurchasable under the Warrant or, if only a portion of the Warrant is beingexercised, the number of Shares of Common Stock being purchased under Warrant

 

A =                            the “fair market value” (as defined below) ofone share of Common Stock

 

B =                              the Exercise Price per share

 

Forpurposes of the above calculation, “fair market value” of one share of CommonStock shall be determined in accordance with one of the following methods:

 

(i)                                     Ifthe Company’s Common Stock is listed on a national securities exchange orincluded for quotation on the Nasdaq Stock Market (whether the Nasdaq NationalMarket or Nasdaq SmallCap Market), the closing price of the Common Stock onsuch exchange or market on the date immediately preceding the date of exerciseof this Warrant;

 

(ii)                                  If the Company’sCommon Stock is actively traded on the over-the-counter market or an equivalentmarket, the fair market value shall be the last reported sale price of theCommon Stock from the date immediately preceding the date of exercise of thisWarrant; or

 

(iii)                               If the Company’s CommonStock is not listed on a national securities exchange or included for quotationon the Nasdaq Stock Market, actively traded on the over-the-counter market orotherwise admitted to unlisted trading privileges and closing prices are not soreported, the current fair market value shall be determined by the Company’sboard of directors in good faith.

 

# 3.                                       Issuance of Shares. Certificates for Shares purchased hereundershall be delivered to the Holder within a reasonable period of time after thedate on which this Warrant shall have been exercised in accordance with theterms hereof. All Shares that may be issued upon the exercise of this Warrantshall, upon such exercise, be duly and validly authorized and issued, fullypaid and nonassessable and free from all taxes, liens and charges in respect ofthe issuance thereof (other than liens or charges created by or imposed uponthe Holder as the holder of the Warrant or taxes in respect of any transferoccurring contemporaneously or otherwise specified herein). The Company agreesthat the Shares so issued shall be, and shall for all purposes be deemed tohave been, issued to the Holder

 

2

----

 

# as the record owner of such Shares as of the close of business on thedate on which this Warrant shall have been exercised or converted in accordancewith the terms hereof.

#  

# 4.                                       No Fractional Shares or Scrip. No fractional Shares or scrip representingfractional Shares shall be issued upon the exercise of this Warrant. In lieu ofany fractional Share to which the Holder would otherwise be entitled, theHolder shall be entitled, at its option, to receive either (i) a cash paymentequal to the excess of fair market value for such fractional Share above theExercise Price for such fractional share (as determined in good faith by theCompany) or (ii) a whole Share if the Holder tenders the Exercise Price for onewhole Share.

#  

# 5.                                       No Rights as Shareholders. This Warrant does not entitle the Holderhereof to any voting rights or other rights as a shareholder of the Companyprior to the exercise hereof.

#  

# 6.                                       Charges, Taxes and Expenses. Certificates for Shares issued uponexercise of this Warrant shall be issued in the name of the Holder. Issuance ofcertificates for Shares upon the exercise of this Warrant shall be made withoutcharge to the Holder for any issue or transfer tax or other incidental expensein respect of the issuance of such certificates, all of which taxes andexpenses shall be paid by the Company.

#  

# 7.                                       Registration Rights. The Holder shall be entitled to thefollowing registration rights:

#  

# (a)                                  Piggyback Registration. If at anytime the Company proposes to file a registration statement under the SecuritiesAct of 1933, as amended (the “Securities Act”), with respect to a publicoffering of the Company’s Common Stock (other than a registration statementrelating to the sale of securities to participants in a dividend reinvestmentplan, a registration on Form S-4 or similar or successor form thereto relatingto a business combination or similar transaction permitted to be registered onsuch Form S-4, and a registration on Form S-8 or similar or successor formthereto relating to the sale of securities to participants in a stock oremployee benefit plan) while any Shares are outstanding, the Company shall givethe Holder at least thirty (30) days’ prior written notice of the filing ofsuch registration statement (a “Piggyback Registration”) at the address thatappears on the records of the Company. The notice shall offer to include in the registration statement any andall of the Registrable Shares (as defined below).  The Holder shall have until the 20th day after receiptof such notice to send to the Company a written request that shall specify thenumber of Registrable Shares which the Holder desires to have included in theregistration statement. Subject to Section 7(b), the Company shallinclude in the filing for registration under the Act, the aggregate number ofRegistrable Shares which the Holder requested to be included in such filingconcurrently with the registration of such other securities, all to the extentrequired to permit the public offering and sale of the Registrable Shares. TheCompany will use its reasonable efforts through its officers, directors,auditors, and counsel to cause such registration statement to become effectiveas promptly as reasonably practicable; provided, however, that the number ofRegistrable Shares that may be registered pursuant to this Section 7(a) on any suchregistration statement involving an underwriting shall be subject to thosereductions determined to be necessary by the underwriter of the offeringpursuant to Section 7(b).

 

“Registrable Shares” shall mean (i) any shares of Common Stock issuableto the Holder upon the exercise of all or any portion of the Warrant, and (ii)any other securities issued or issuable with respect to any such sharesdescribed in clause (i) above by way of a stock

 

3

----

 

dividend or stock split or in connection with a combination of shares,recapitalization, merger, consolidation, sale of assets or otherreorganization, provided, however, that shares of Common Stock shall cease tobe Registrable Shares at the time that (i) such shares have been sold to orthrough a broker or dealer or underwriter in a public distribution or a publicsecurities transaction, or (ii) such shares have been sold in a transaction exemptfrom the registration and prospectus delivery requirements of the SecuritiesAct so that all transfer restrictions and restrictive legends with respect tosuch shares are removed upon the consummation of such sale.

 

# (b)                                 Underwritten Offering. If any PiggybackRegistration involves an underwritten offering, the Company shall so advise theHolder as part of the notice given pursuant to Section 7(a). The Company shall (together with all other holders of Common Stockproposing to distribute their securities through such underwriting), ifrequested by the underwriter, enter into an underwriting agreement in customaryform with a managing underwriter selected for such underwriting by the Company. Notwithstanding any otherprovision of this Section 7(b),if the managing underwriter advises the Company in writing that the totalamount of securities requested to be included in such Piggyback Registrationexceeds the amount which can be sold in (or during the time of) such offeringwithout delaying or jeopardizing the success of the offering (including theprice per share of the securities to be sold), then the amount of securities tobe offered for the account of the Company and of any holder of securities(including the Holder) shall be reduced to a number deemed satisfactory by suchmanaging underwriter or underwriters, provided, that the securities to be excludedshall be determined in the following sequence:

 

# (i)                                     inthe event the offering was proposed by or for the account of holders ofsecurities of the Company (the “Proposing Holders”): (A) first, securitiesproposed to be offered for the account of the Company; (B) second, RegistrableShares requested to be registered by the Holder and securities requested to beregistered by any other holders of securities of the Company other thanProposing Holders or holders of “Registrable Shares” as defined in thatRegistration Rights Agreement dated July 23, 2003 by and among theCompany, CityNet Telecommunications, Inc. and other stockholders (the “CityNetRegistrable Shares” and the holders of such shares shall be the “CityNetHolders”), on a *pro rata* basis (based upon the number of shares of CommonStock beneficially held by each such holder); (C) third, CityNet RegistrableShares held by the CityNet Holders, on a *pro rata* basis (based upon the number ofCityNet Registrable Shares beneficially held by each such holder); and (D)fourth, securities held by the Proposing Holders, on a *pro rata* basis (based uponthe number or of shares of Common Stock beneficially held by each such holder);and

 

# (ii)                                  inthe event the offering was proposed by or for the account of the Company: (A)first, Registrable Shares requested to be registered by the Holder andsecurities requested to be registered by any other holders of securities of theCompany other than CityNet Registrable Shares held by the CityNet Holders, on a*pro rata*basis (based upon the number of shares of Common Stock beneficially held byeach such holder); (B) second, CityNet Registrable Shares held by the CityNetHolders on a *pro rata* basis (based upon the number of CityNet RegistrableShares beneficially held by each such holder); and (C) third, securitiesproposed to be offered for the account of the Company.

 

4

----

 

# (c)                                  No Liability. Nothing in thisAgreement shall create any liability on the part of the Company to the Holderif the Company in its sole discretion should decide not to file a RegistrationStatement proposed to be filed pursuant to Section 7(a) hereof or to withdraw such RegistrationStatement subsequent to its filing, regardless of any action whatsoever thatthe Holder may have taken, whether as a result of the issuance by the Companyof any notice hereunder or otherwise.

 

# (d)                                 Expenses of Registration. AllRegistration Expenses (defined below) incurred in connection with a PiggybackRegistration shall be borne by the Company. All Selling Expenses (definedbelow) incurred in connection with a Piggyback Registration shall be borne byHolder for the Registrable Shares so registered. For purposes of this Section 7(d):

 

# (i)                                     “RegistrationExpenses” shall mean all expenses incurred by the Company in connection with aPiggyback Registration, including, without limitation, (i) all registration andfiling fees, including NASD filing fees, (ii) all fees and expenses ofcompliance with securities or Blue Sky laws, (iii) printing expenses, (iv)messenger, telephone and delivery expenses, (v) fees and disbursements ofcounsel for the Company, (vi) fees and disbursements of all independentcertified public accountants of the Company (including expenses of any “coldcomfort” letters required in connection with this Warrant) and all otherpersons retained by the Company in connection with such Piggyback Registration,and (vii) fees and disbursements of underwriters customarily paid by theissuers or sellers of securities.

 

# (ii)                                  “SellingExpenses” shall mean all underwriting discounts and selling commissionsapplicable to the sale of the Registrable Shares in the Piggyback Registrationand all fees and disbursements of any special counsel (other than the Company’sregular counsel) of the Holder.

 

# (e)                                  Qualification for sale. Inconnection with a Piggyback Registration, the Company shall use its reasonablebest efforts to cause the Registrable Shares so registered to be registered orqualified for sale under the securities or blue sky laws of such jurisdictionsas the Holder may reasonably request; provided, however, that the Company shallnot be required to qualify to do business in any state by reason of this Section 7(e) in which it isnot otherwise required to qualify to do business.

 

# (f)                                    Effectiveness. In connection witha Piggyback Registration, the Company shall prepare and file with theSecurities and Exchange Commission (the “Commission”) a registration statementwith respect to the Registrable Shares requested to be registered and use itsreasonable best efforts to cause such registration statement to becomeeffective, and shall keep effective any Piggyback Registration and shall fromtime to time amend or supplement each applicable registration statement,preliminary prospectus, final prospectus, application, document andcommunication for such period of time as shall be required to permit Holder tocomplete the offer and sale of the Registrable Shares covered thereby.  The Company shall in no event be required tokeep any such Piggyback Registration in effect for more than twelve (12) monthsfrom the initial effective date of the Piggyback Registration; *provided,however*, that, if during the twelve (12) month period ofeffectiveness of the registration statement, the Company gives to the Holder aBlackout Notice pursuant to Section 7(g),the Company shall extend the effectiveness of 

 

5

----

 

# the registration statement for the same timeperiod as that set forth in the Blackout Notice.

 

# (g)                                 Blackout Rights. Following theeffective date of any registration statement filed pursuant to Section 7(a), the Companyshall be entitled, from time to time, to notify the Holder to discontinueoffers or sales of shares pursuant to such registration statement forRegistrable Shares for the period of time stated in the written notice (the“Blackout Notice”), if the Company determines, in its reasonable businessjudgment, that the disclosure required in connection with the offers and salesof the Registrable Shares could materially damage the Company’s ability tosuccessfully complete an acquisition, corporate reorganization, securitiesoffering or other voluntary transaction undertaken by the Company (whichinformation the Company would not be required to disclose at such time otherthan in connection with the Holder’s registration statement) that is materialto the Company and its subsidiaries taken as a whole.  The time period for which the Holder must discontinue offers orsales of shares pursuant to a Blackout Notice shall be for any period theCompany reasonably believes is necessary, and if, the Company is unable todetermine the duration of such period at the time the Blackout Notice isissued, the Blackout Notice may state that the period extends “until the Holderis otherwise notified by the Company;” provided that the Blackout Notice maynot exceed more than one hundred eighty (180) consecutive days within anyperiod of three hundred sixty-five (365) consecutive days.  The Blackout Notice shall be signed by anauthorized officer of the Company and shall certify the Company’sdetermination.  The Holder agrees thatupon receipt of a Blackout Notice it shall discontinue offers or sales ofRegistrable Shares pursuant to any such registration statement for the periodof time stated in the Blackout Notice.

 

# (h)                                 Distribution of Registration Statement.In connection with Piggyback Registration, the Company shall promptly furnishto the Holder such number of copies of the registration statement and of eachamendment and supplement thereto (in each case, including all exhibits), suchreasonable number of copies of each prospectus contained in such registrationstatement and each supplement or amendment thereto (including each preliminaryprospectus), all of which shall conform to the requirements of the Act and therules and regulations thereunder, and such other documents, as the Holder mayreasonably request to facilitate the disposition of the Registrable Sharesincluded in such registration.

 

# (i)                                     Notification of Effectiveness.  The Company shall notify the Holder promptlywhen such registration statement has become effective or a supplement to anyprospectus forming a part of such registration statement has been filed.

 

# (j)                                     Other Notifications. The Companyshall promptly notify the Holder at any time when the prospectus included inthe Piggyback Registration, as then in effect, would include an untruestatement of a material fact or omit to state any material fact required to bestated therein or necessary to make the statements therein not misleading inthe light of the circumstances then existing, and at the reasonable request ofthe Holder prepare and furnish to it such number of copies of a supplement toor an amendment of such prospectus as may be necessary so that, as thereafterdelivered to the purchasers of such Registrable Shares, such prospectus shallnot include an untrue statement of a material fact or omit to state a materialfact required to be stated therein or necessary to make the statements thereinnot misleading in the light of the circumstances under which they were made.

 

6

----

 

# (k)                                  Indemnificationby Company. Subject to the conditions set forth below, the Company agreesto indemnify and hold harmless the Holder from and against any and all loss,liability, charge, claim, damage, and expense whatsoever (which shall include,for all purposes of this Section 7(k), but not be limited to,reasonable attorneys’ fees and any and all reasonable expenses whatsoeverincurred in investigating, preparing, or defending against any litigation,commenced or threatened, or any claim whatsoever, and any and all amounts paidin settlement of any claim or litigation), as and when incurred, arising outof, based upon, or in connection with any untrue statement or alleged untruestatement of a material fact contained (A) in any registration statement,preliminary prospectus, or final prospectus (as from time to time amended andsupplemented), or any amendment or supplement thereto, relating to the sale ofany of the Registrable Shares or (B) in any application or other document orcommunication (in this Section 7(k) collectively called an“Application”) executed by or on behalf of the Company and based upon writteninformation furnished by or on behalf of the Company filed in any jurisdictionin order to register or qualify any of the Registrable Shares under the Act orblue sky laws thereof or filed with the Commission or any securities exchange;or any omission or alleged omission to state a material fact required to bestated therein or necessary to make the statements made therein not misleading,unless such statement or omission was made in reliance upon and in conformitywith written information furnished to the Company by or on behalf of the Holderfor inclusion in any registration statement, preliminary prospectus, or finalprospectus, or any amendment or supplement thereto, or in any Application, asthe case may be.

 

If any action is brought against the Holder in respect of whichindemnity may be sought against the Company pursuant to the foregoingparagraph, the Holder shall promptly notify the Company in writing of the institutionof such action (the failure to notify the Company within a reasonable time ofthe commencement of any such action, to the extent prejudicial to the Company’sability to defend such action, shall relieve the Company of liability to theHolder pursuant to this Section 7(k) and the Company shall promptlyassume the defense of such action, including the employment of counsel,provided that the Holder shall have the right to employ his or her own counselin any such case, but the fees and expenses of such counsel shall be at theexpense of the Holder unless the employment of such counsel shall have beenauthorized in writing by the Company in connection with the defense of suchaction or the Holder shall have reasonably concluded that there may be one ormore legal defenses available to him or her which are different from oradditional to those available to the Company, in any of which events such feesand expenses shall be borne by the Company and the Company shall not have theright to direct the defense of such action on behalf of the Holder.Notwithstanding anything in this Section 7(k) to the contrary, theCompany shall not be liable for any settlement of any such claim or actioneffected without its written consent. The Company shall not, without the prior written consent of the Holder,settle or compromise any action, or permit a default or consent to the entry ofjudgment in or otherwise seek to terminate any pending or threatened action, inrespective of which indemnity may be sought hereunder, unless such settlement,compromise, consent, or termination includes an unconditional release of theHolder from all liability in respect of such action. The Company agreespromptly to notify the Holder of the commencement of any litigation orproceedings against the Company or any of its officers or directors inconnection with the sale of any Registrable Shares or any preliminaryprospectus, prospectus, registration statement, or amendment or supplementthereto, or any application relating to any sale of any Registrable Shares.

 

7

----

 

# (l)                                     Indemnification by Holder. TheHolder agrees to indemnify and hold harmless the Company, each director of theCompany, each officer of the Company who shall have signed any registrationstatement covering Registrable Shares held by the Holder, to the same extent asthe foregoing indemnity from the Company to the Holder in Section 7(k), but only withrespect to statements or omissions, if any, made in any registration statement,preliminary prospectus, or final prospectus (as from time to time amended andsupplemented), or any amendment or supplement thereto, or in any Application,in reliance upon and in conformity with written information furnished to theCompany with respect to the Holder by or on behalf of the Holder, for inclusionin any such registration statement, preliminary prospectus, or finalprospectus, or any amendment or supplement thereto, or in any application, asthe case may be.  If any action shall bebrought against the Company or any other person so indemnified based on anysuch registration statement, preliminary prospectus, or final prospectus or anyamendment or supplement thereto, or in any Application, and in respect of whichindemnity may be sought against the Holder pursuant to this Section 7(l), the Holdershall have the rights and duties given to the Company, and the Company and eachother person so indemnified shall have the rights and duties given to theHolder, by the provisions of Section 7(l).

 

# (m)                               Termination of Registration Rights.The covenants set forth in Section 7of this Warrant shall terminate on the first date on which no RegistrableShares remain outstanding.

 

# (n)                                 Lock-Up. The Holder hereby agreesthat, if so requested by the Company or any representative of the underwritersin connection with any registration of the offering of any securities of theCompany under the Act, the Holder shall not sell or otherwise transfer anyRegistrable Shares during the same period requested in writing by the managingunderwriter and agreed to in writing by the Company and all of the executiveofficers, directors and greater than ten percent stockholders of the Company(the “Market Standoff Period”).  TheCompany may impose stop-transfer instructions with respect to Shares subject tothe foregoing restrictions until the end of such Market Standoff Period.

 

# 8.                                       Exchange and Registry of Warrant. This Warrant is exchangeable, upon thesurrender hereof by the Holder as the registered holder at the office or agencyof the Company referenced in Section 2 above, for a new Warrant insubstantially identical form and dated as of such exchange. The Company shallmaintain at the office or agency referenced in Section 2 above, aregistry showing the name and address of the Holder as the registered holder ofthis Warrant. This Warrant may be surrendered for exchange or exercise, inaccordance with its terms, at the office of the Company, and the Company shallbe entitled to rely in all respects, prior to written notice to the contrary,upon such registry.

#  

# 9.                                       Loss, Theft, Destruction or Mutilation ofWarrant. Upon receipt by theCompany 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 indemnity or security reasonably satisfactory to it, and upon reimbursementto the Company of all reasonable expenses incidental thereto, and uponsurrender and cancellation of this Warrant, if mutilated, the Company will makeand deliver a new Warrant of like tenor and dated as of such cancellation andreissuance, in lieu of this Warrant.

#  

# 10.                                 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the takingof any action or the expiration of any right required or granted herein shallbe a Saturday or Sunday or

 

8

----

 

# shall be a legal holiday, then such action may be taken or such rightmay be exercised on the next succeeding day not a Saturday or Sunday or a legalholiday.

#  

# 11.                                 Adjustments of Rights. The purchase price per Share and the numberof Shares purchasable hereunder are subject to adjustment from time to time asfollows:

#  

# (a)                                  Merger or Consolidation. If at anytime there shall be a merger or a consolidation of the Company with or intoanother corporation when the Company is not the surviving corporation, then, aspart of such merger or consolidation, lawful provision shall be made so thatthe Holder shall thereafter be entitled to receive upon exercise of thisWarrant, during the period specified herein and upon payment of the aggregateExercise Price then in effect, the number of shares of stock or othersecurities or property (including cash) of the successor corporation resultingfrom such merger or consolidation, to which the Holder as the holder of thestock deliverable upon exercise of this Warrant would have been entitled insuch merger or consolidation if this Warrant had been exercised immediatelybefore such merger or consolidation. In any such case, appropriate adjustmentshall be made in the application of the provisions of this Warrant with respectto the rights and interests of the Holder as the holder of this Warrant afterthe merger or consolidation. This provision shall apply to successive mergersor consolidations.

 

# (b)                                 Reclassification, Recapitalization, etc.If the Company, at any time shall, by subdivision, combination orreclassification of securities, recapitalization, automatic conversion, orother similar event affecting the number or character of outstanding Shares, orotherwise, change any of the securities as to which purchase rights under thisWarrant exist into the same or a different number of securities of any otherclass or classes, this Warrant shall thereafter represent the right to acquiresuch number and kind of securities as would have been issuable as the result ofsuch change with respect to the securities that were subject to the purchaserights under this Warrant immediately prior to such subdivision, combination,reclassification or other change.

 

# (c)                                  Split, Subdivision or Combination of Shares.If the Company, at any time while this Warrant remains outstanding andunexpired, shall split, subdivision or combine the securities as to whichpurchase rights under this Warrant exist, the Exercise Price shall beproportionately increased or decreased as appropriate to adjust for the split,subdivision or combination.

 

# (d)                                 Common Stock Dividends. If theCompany at any time while this Warrant is outstanding and unexpired shall pay adividend with respect to Common Stock payable in shares of Common Stock, thenthe Exercise Price shall be adjusted, from and after the date of determinationof the shareholders entitled to receive such dividend, to that price determinedby multiplying the Exercise Price in effect immediately prior to such date ofdetermination by a fraction (i) the numerator of which shall be the totalnumber of shares of Common Stock outstanding immediately prior to suchdividend, and (ii) the denominator of which shall be the total number of sharesof Common Stock outstanding immediately after such dividend. This paragraphshall apply only if and to the extent that, at the time of such event, thisWarrant is then exercisable for Common Stock.

 

# (e)                                  Adjustment of Number of Shares.Upon each adjustment in the Exercise Price pursuant to Section 11(c) or 11(d)hereof, the number of Shares purchasable hereunder shall be adjusted, to thenearest whole Share, to the product obtained by multiplying the number ofShares purchasable immediately prior to such adjustment in the Exercise Priceby a

 

9

----

 

# fraction (i) the numerator of which shall bethe Exercise Price immediately prior to such adjustment, and (ii) thedenominator of which shall be the Exercise Price immediately after suchadjustment.

 

# 12.                                 Notice of Adjustments; Notices. Whenever the Exercise Price or number ortype of securities issuable hereunder shall be adjusted pursuant to Section 11hereof, the Company shall issue and provide to the Holder as the holder of thisWarrant a certificate signed by an officer of the Company setting forth, inreasonable detail, the event requiring the adjustment, the amount of theadjustment, the method by which such adjustment was calculated and the ExercisePrice and number of Shares purchasable hereunder after giving effect to suchadjustment.

#  

# 13.                                 Binding Effect; Governing Law. This Warrant shall be binding upon anysuccessors or assigns of the Company. This Warrant shall constitute a contractunder the laws of Illinois and for all purposes shall be construed inaccordance with and governed by the laws of said state, without giving effectto the conflict of laws principles.

#  

# 14.                                 Attorneys’ Fees. In any litigation, arbitration or courtproceeding between the Company and the Holder as the holder of this Warrantrelating hereto, the prevailing party shall be entitled to reasonableattorneys’ fees and expenses incurred in enforcing this Warrant.

#  

# 15.                                 Amendments. This Warrant may be amended and the observance of any term of thisWarrant may be waived only with the written consent of the Company and theHolder as the holder hereof.

#  

# 16.                                 Notice. All notices hereunder shall be in writing and shall be effective (a)on the day on which delivered if delivered personally or transmitted byfacsimile or telegram or telecopier with evidence of receipt, (b) one businessday after the date on which the same is delivered to a nationally recognizedovernight courier service with evidence of receipt, or (c) five business daysafter the date on which the same is deposited, postage prepaid, in the U.S.mail, sent by certified or registered mail, return receipt requested, andaddressed to the party to be notified at the address indicated below for theCompany, or at the address for the Holder as set forth in the registrymaintained by the Company pursuant to Section 8, or at such otheraddress and/or facsimile or telecopier and/or to the attention of such otherperson as the Company or the Holder may designate by ten-day advance written notice.

#  

# 17.                                 Entire Agreement. This Warrant and the form attached heretocontain the entire agreement between the parties with respect to the subjectmatter hereof and supersede all prior and contemporaneous arrangements orundertakings with respect thereto.

 

10

----

 

# IN WITNESS WHEREOF, Universal Access Global Holdings Inc. has causedthis Warrant to be executed by its duly authorized officer.

#  

| Dated:  July 23, 2003 |                                    |                |
|----------------------------|-----------------------------------------|---------------------|
|                       |                                    |                |
|                       | UNIVERSAL  ACCESS GLOBAL HOLDINGS  INC. |
|                       |                                    |                |
|                       | By:                                     | /S/  Randall R. Lay |   |
|                       | Name:  Randall R. Lay                   |
|                       | Title:  Chief Executive Officer         |

 

11

----

 

**FORM OFNOTICE OF EXERCISE**

 

To:Universal Access Global Holdings Inc.

 

# 1.                                       The undersigned hereby elects to purchase                     shares (the “Shares”) of Common Stock, $0.01 par value of Universal AccessGlobal Holdings Inc. (the “Company”) pursuant to the terms of the attachedWarrant, and tenders herewith payment of the purchase price and any transfertaxes payable pursuant to the terms of the Warrant, together with an investmentRepresentation Statement in form and substance satisfactory to legal counsel tothe Company.

#  

# 2.                                       The Shares to be received by the undersignedupon exercise of the Warrant are being acquired for its own account, not as anominee or agent, and not with a view to resale or distribution of any partthereof, and the undersigned has no present intention of selling, granting anyparticipation in, or otherwise distributing the same, except in compliance withapplicable federal and state securities laws. The undersigned furtherrepresents that it does not have any contract, undertaking, agreement orarrangement with any person to sell, transfer or grant participation to suchperson or to any third person, with respect to the Shares. The undersignedbelieves it has received all the information it considers necessary orappropriate for deciding whether to purchase the Shares.

#  

# 3.                                       The undersigned understands that the Sharesare characterized as “restricted securities” under the federal securities lawsinasmuch as they are being acquired from the Company in transactions notinvolving a public offering and that under such laws and applicable regulationssuch securities may be resold without registration under the Securities Act of1933, as amended (the “Act”), only in certain limited circumstances. In thisconnection, the undersigned represents that it is familiar with Rule 144 of theAct, as presently in effect, and understands the resale limitations imposedthereby and by the Act.

#  

# 4.                                       The undersigned understands the certificatesevidencing the Shares may bear one or all of the following legends:

#  

# (a)                                  “THESESECURITIES HAVE NOT BEEN REGISTERED UNDERTHE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECTWITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSELSATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESSSOLD PURSUANT TO RULE 144 OF SUCH ACT.”

 

# (b)                                 Anylegend required by applicable state law.

#  

# 5.                                       Please issue a certificate or certificatesrepresenting said Shares in the name of the undersigned.

#  

|   | Broadmark  Capital, LLC |
|--------|-------------------------|
|   |                    |   |
|   | By:                     |   |   |
|   |                    |   |
|   | Title:                  |   |   |
|   |                    |   |
| Date:  |                    |   |   |   |
|        |                         |  |  |  |  |  |  |

 

1

----

 

# 6.                                       Please issue a new Warrant for theunexercised portion of the attached Warrant in the name of the undersigned.

#  

|   | Broadmark  Capital, LLC |
|--------|-------------------------|
|   |                    |   |
|   | By:                     |   |   |
|   |                    |   |
|   | Title:                  |   |   |
|   |                    |   |
| Date:  |                    |   |   |   |
|        |                         |  |  |  |  |  |  |

 

2

----