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EXHIBIT 10.12
WARRANT AGREEMENT
Dated as of
July 24, 1998
between
SPLITROCK SERVICES, INC.
and
BANK OF MONTREAL TRUST COMPANY,
as Warrant Agent
---------------------------------------------
Warrants for
Common Stock of
Splitrock Services, Inc.
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Other Definitions.........................................................................5
SECTION 1.03. Rules of Construction.....................................................................6
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating...........................................................................6
SECTION 2.02. Execution and Countersignature............................................................6
SECTION 2.03. Warrant Registrar.........................................................................7
SECTION 2.04. Warrantholder Lists.......................................................................8
SECTION 2.05. Transfer and Exchange.....................................................................8
SECTION 2.06. Replacement Certificate...................................................................9
SECTION 2.07. Outstanding Warrants......................................................................9
SECTION 2.08. Temporary Warrants...................................................................... 10
SECTION 2.09. Cancelation..............................................................................10
SECTION 2.10. CUSIP Numbers............................................................................10
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise.................................................................................10
SECTION 3.02. Exercise Periods.........................................................................11
SECTION 3.03. Expiration...............................................................................11
SECTION 3.04. Manner of Exercise.......................................................................11
SECTION 3.05. Issuance of Warrant Shares...............................................................12
SECTION 3.06. Fractional Warrant Shares................................................................13
SECTION 3.07. Reservation of Warrant Shares............................................................13
SECTION 3.08. Compliance with Law......................................................................14
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock..................................................................14
SECTION 4.02. Cash Dividends and Other
Distributions..........................................................................15
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SECTION 4.03. Common Stock Issue.......................................................................16
SECTION 4.04. Issuance of Rights or Options............................................................17
SECTION 4.05. Combination; Liquidation.................................................................18
SECTION 4.06. Other Events.............................................................................19
SECTION 4.07. Superseding Adjustment...................................................................19
SECTION 4.08. Minimum Adjustment.......................................................................19
SECTION 4.09. Notice of Adjustment.....................................................................20
SECTION 4.10. Notice of Certain Transactions...........................................................21
SECTION 4.11. Adjustment to Warrant Certificate........................................................21
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement..................................................22
SECTION 5.02. Suspension...............................................................................25
SECTION 5.03. Blue Sky.................................................................................25
SECTION 5.04. Accuracy of Disclosure...................................................................26
SECTION 5.05. Indemnification..........................................................................26
SECTION 5.06. Additional Acts..........................................................................31
SECTION 5.07. Expenses.................................................................................31
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent.............................................................32
SECTION 6.02. Rights and Duties of Warrant Agent.......................................................32
SECTION 6.03. Individual Rights of Warrant Agent.......................................................34
SECTION 6.04. Warrant Agent's Disclaimer...............................................................34
SECTION 6.05. Compensation and Indemnity...............................................................34
SECTION 6.06. Successor Warrant Agent..................................................................34
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports..............................................................................36
SECTION 7.02. Persons Benefitting......................................................................37
SECTION 7.03. Rights of Holders........................................................................37
SECTION 7.04. Amendment................................................................................37
SECTION 7.05. Notices..................................................................................38
SECTION 7.06. Governing Law............................................................................38
SECTION 7.07. Successors...............................................................................38
SECTION 7.08. Multiple Originals.......................................................................39
SECTION 7.09. Table of Contents........................................................................39
SECTION 7.10. Severability.............................................................................39
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APPENDIX PROVISIONS RELATING TO WARRANTS
EXHIBIT A Form of Face of Warrant Certificate
EXHIBIT B Form of Transferee Letter of Representation
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WARRANT AGREEMENT dated as of July 24, 1998
(this "Warrant Agreement"), between SPLITROCK
SERVICES, INC., a Delaware corporation (the
"Company"), and the BANK OF MONTREAL TRUST COMPANY, a
New York banking corporation, as warrant agent (the
"Warrant Agent").
The Company desires to issue the warrants described herein.
The warrants will initially entitle the holders thereof (the "Holders") to
purchase, in the aggregate, 2,642,613 shares of Common Stock, par value $.001
per share, of the Company ("Common Stock") in connection with an offering (the
"Offering") by the Company of 261,000 units (the "Units"). Each Unit consists of
(i) $1,000 principal amount of the Company's 11 3/4% Senior Note due 2008 (a
"Note") and (ii) one warrant (each, a "Warrant") to purchase 10.124954 shares of
Common Stock.
The Warrants will not trade separately from the Notes until
the earliest date (the "Separation Date") to occur of: (i) 90 days after the
date hereof, (ii) a Change of Control, (iii) the occurrence of an Event of
Default, (iv) the date on which a registration statement with respect to the
Notes, a Registered Exchange Offer for the Notes or the Warrants is declared
effective and (v) such earlier date as determined by the Initial Purchaser in
its sole discretion.
The Company further desires the Warrant Agent to act on behalf
of the Company in connection with the issuance of the Warrants as provided
herein and the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of Warrants:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any specified Person means (i) any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any other Person who
is a director or executive officer (A) of such specified Person,
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(B) of any subsidiary of such specified Person or (C) of any Person described in
clause (i) above. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. "Affiliate" shall also
mean any beneficial owner of shares representing 5% or more of the total voting
power of all classes of Capital Stock of such Person entitled to vote in the
election of directors, managers or trustees ("Voting Stock") (on a fully diluted
basis) or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Board of Directors" or "Board" means the Board of Directors
of the Company or any committee thereof duly authorized to act on behalf of such
Board.
"Business Day" means each day that is not a Saturday, Sunday
or other day on which banking institutions in New York State are authorized or
required by law to close.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Cashless Exercise Ratio" means a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
Exercise Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Certificated Warrants" means certificated
Warrants in fully registered definitive form.
"Change of Control" shall have the meaning
assigned to it in the Indenture.
"Combination" means an event in which the Company consolidates
with, merges with or into, or conveys, transfers or leases all or substantially
all of its assets to, another Person.
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"Current Market Value" per share of Common Stock or any other
security at any date means (i) if the security is not registered under the
Exchange Act, (a) the value of the security, determined in good faith by the
Board of Directors and certified in a board resolution, based on the most
recently completed arm's-length transaction between the Company and a Person
other than an Affiliate of the Company, the closing of which occurs on such date
or shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such six-month
period, the value of the security as determined by a nationally recognized
investment banking firm or (ii) if the security is registered under the Exchange
Act, the average of the daily closing bid prices (or the equivalent in an
over-the-counter market) for each Business Day during the period commencing 15
Business Days before such date and ending on the date one day prior to such
date, or if the security has been registered under the Exchange Act for less
than 15 consecutive Business Days before such date, the average of the daily
closing bid prices (or such equivalent) for all of the Business Days before such
date for which daily closing bid prices are available; provided, however, that
if the closing bid price is not determinable for at least ten Business Days in
such period, the "Current Market Value" of the security shall be determined as
if the security were not registered under the Exchange Act.
"Event of Default" shall have the meaning assigned
to it in the Indenture.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which
such Warrant is exercised pursuant to Section 3.04.
"Extraordinary Cash Dividend" means that portion, if any, of
the aggregate amount of all dividends paid by the Company on the Common Stock in
any fiscal year that exceeds $5 million.
"Holder" or "Warrantholder" means the Person in whose name a
Warrant is registered on the Warrant Registrar's books.
"Indenture" means the Indenture dated as of July 24, 1998,
between the Company and the Trustee, with respect to the Notes, as it may be
amended or supplemented from time to time.
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"Initial Purchaser" means Chase Securities Inc.
"Issue Date" means the date on which the Warrants
are initially issued.
"Offering Memorandum" means the Offering
Memorandum dated July 21, 1998, of the Company.
"Officer" means the Chairman of the Board of
Directors, the Chief Executive Officer, the Chief Financial
Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company.
"Officers' Certificate" means a certificate signed
by two Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Warrant Agent. Such counsel may be an employee
of or counsel to the Company or the Warrant Agent.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Registered Exchange Offer" shall have the meaning
assigned to it in the Indenture.
"SEC" or "Commission" means the Securities and
Exchange Commission.
"Securities" means the Warrants and the Warrant
Shares.
"Securities Act" means the Securities Act of 1933,
as amended.
"Separation Date" has the meaning assigned to it
in the recitals hereto.
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"Trustee" means Bank of Montreal Trust Company, or any
successor trustee under the Indenture.
"Uniform Commercial Code" shall have the meaning
assigned to it in the Indenture.
"Warrant Agent" means the party named as such in this Warrant
Agreement until a successor replaces it and, thereafter, means the successor.
"Warrant Agreement" means this Warrant Agreement as amended or
supplemented from time to time.
"Warrant Certificates" mean the registered certificates
(including the Global Warrants) issued by the Company under this Warrant
Agreement representing the Warrants.
"Warrant Officer" means the Chairman of the Board, the
President or any other officer or assistant officer of the Warrant Agent
assigned by the Warrant Agent to administer its corporate trust matters.
"Warrant Shares" mean the shares of Common Stock (and any
other securities) for which the Warrants are exercisable or which have been
issued upon exercise of Warrants.
"Wholly Owned Subsidiaries" shall have the meaning
assigned to it in the Indenture.
SECTION 1.02. Other Definitions.
Defined in
Term Section
"Advice"............................................................... 5.01
"Cashless Exercise".................................................... 3.04
"Common Shelf Registration Statement".................................. 5.01
"Effectiveness Period"................................................. 5.01
"Exercise Price"....................................................... 3.01
"Expiration Date"...................................................... 3.02(b)
"Holders' Information"................................................. 5.01
"Registration Statement"............................................... 5.01
"Stock Registrar"...................................................... 3.07
"Stock Transfer Agent"................................................. 3.05
"Successor Company".................................................... 4.05(a)
"Warrant Registrar".................................................... 2.03
"Warrant Shelf Registration
Statement"............................................................ 5.01
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SECTION 1.03. Rules of Construction. Unless the
context otherwise requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without
limitation; and
(v) words in the singular include the plural and
words in the plural include the singular.
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating. Provisions relating to Warrants
are set forth in the Appendix, which is hereby incorporated in and expressly
made a part of this Warrant Agreement. The Warrant Certificates shall each be
substantially in the form of Exhibit A hereto, which is hereby incorporated in
and expressly made a part of this Warrant Agreement. The Warrant Certificates
may have notations, legends or endorsements required by law, stock exchange
rule, agreements to which the Company is subject, if any, or usage (provided
that any such notation, legend or endorsement is in a form acceptable to the
Company). Each Warrant Certificate shall be dated the date that it is executed
by the Company and countersigned by the Warrant Agent.
SECTION 2.02. Execution and Countersignature.
Two Officers shall sign the Warrant Certificates for the
Company by manual or facsimile signature.
If an Officer whose signature is on a Warrant Certificate no
longer holds that office at the time the Warrant Agent countersigns the Warrant
Certificate, the Warrant Certificate shall be valid nevertheless.
A Warrant shall not be valid until an authorized signatory of
the Warrant Agent manually countersigns the Warrant Certificate. The signature
shall be conclusive
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evidence that the Warrant has been authenticated under this Warrant Agreement.
The Warrant Agent shall countersign and make available for
delivery Warrant Certificates as set forth in the Appendix.
The Warrant Agent may appoint an agent reasonably acceptable
to the Company to countersign the Warrants. Any such appointment shall be
evidenced by an instrument signed by a Warrant Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
agent of the Warrant Agent may countersign Warrants whenever the Warrant Agent
may do so. Each reference in this Warrant Agreement to countersigning by the
Warrant Agent includes countersigning by such agent.
SECTION 2.03. Warrant Registrar. The Company shall maintain an
office or agency where Warrants may be presented for registration of transfer,
exchange or exercise (the "Warrant Registrar"). The Warrant Registrar shall keep
a register of the Warrants and of their transfer, exchange or exercise. The
Company may have one or more coregistrars. The term Warrant Registrar includes
any coregistrars. The Company initially appoints the Warrant Agent as (i)
Warrant Registrar in connection with the Warrants and (ii) the Warrant Custodian
(as defined in the Appendix) with respect to the Global Warrants.
The Company shall enter into an appropriate agency agreement
with any Warrant Registrar not a party to this Warrant Agreement. The agreement
shall implement the provisions of this Warrant Agreement that relate to such
agent. The Company shall notify the Warrant Agent of the name and address of any
such agent. If the Company fails to maintain a Warrant Registrar, the Warrant
Agent shall act as such and shall be entitled to appropriate compensation
therefor pursuant to Section 6.05. The Company or any of its domestically
organized Wholly Owned Subsidiaries may act as Warrant Registrar.
The Company may remove any Warrant Registrar upon written
notice to such Warrant Registrar and to the Warrant Agent; provided, however,
that no such removal shall become effective until (1) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Warrant Registrar and delivered to the Warrant
Agent or (2) notification to the Warrant Agent that the Warrant Agent shall
serve as Warrant Registrar until the appointment of a successor in accordance
with clause (1) above. The Warrant Registrar may resign at
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any time upon written notice; provided, however, that the Warrant Agent may
resign as Warrant Registrar only if the Warrant Agent also resigns as Warrant
Agent in accordance with Section 6.06. The Company and the Warrant Agent may
deem and treat the Person in whose name a Warrant Certificate is registered as
the absolute owner of such Warrant Certificate for all purposes whatsoever and
neither the Company nor the Warrant Agent shall be affected by notice to the
contrary.
SECTION 2.04. Warrantholder Lists. The Warrant Agent shall
preserve in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Warrantholders. If the Warrant
Agent is not the Warrant Registrar, the Company shall furnish, or cause the
Warrant Registrar to furnish, to the Warrant Agent, at such times as the Warrant
Agent may request in writing, a list in such form and as of such date as the
Warrant Agent may reasonably require of the names and addresses of
Warrantholders.
SECTION 2.05. Transfer and Exchange. The Warrants shall be
issued in registered form and shall be transferable only upon the surrender of a
Warrant Certificate for registration of transfer and in compliance with the
Appendix. When a Warrant is presented to the Warrant Registrar with a request to
register a transfer, the Warrant Registrar shall register the transfer as
requested if the requirements of Section 8-401(a) of the Uniform Commercial Code
are met. When Warrants are presented to the Warrant Registrar with a request to
exchange them for an equal number of Warrants of other denominations, the
Warrant Registrar shall make the exchange as requested if the requirements of
Section 8-401(a)(1) and (2) of the Uniform Commercial Code are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Warrant Agent shall countersign Warrant Certificates at the Warrant Registrar's
request. The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with any transfer,
exchange or exercise pursuant to this Section 2.05.
Any Holder of a Global Warrant (as defined in the Appendix)
shall, by acceptance of such Global Warrant, agree that transfers of beneficial
interests in such Global Warrant may be effected only through a book-entry
system maintained by (i) the Holder of such Global Warrant (or its agent) or
(ii) any Holder of a beneficial interest in such Global Warrant, and that
ownership of a beneficial interest in such Global Warrant shall be required to
be reflected in a book entry.
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All Warrants issued upon any transfer or exchange pursuant to
the terms of this Warrant Agreement will evidence the same Warrants as the
Warrants surrendered upon such transfer or exchange.
SECTION 2.06. Replacement Certificate. If a mutilated Warrant
is surrendered to the Warrant Agent or if the Holder of a Warrant claims that
the Warrant Certificate has been lost, destroyed or wrongfully taken, the
Company shall execute and the Warrant Agent shall countersign a replacement
Warrant Certificate if the requirements of Section 8-405 of the Uniform
Commercial Code are met, such that the Holder (i) notifies the Company or the
Warrant Agent within a reasonable time after he has notice of such loss,
destruction or wrongful taking and the Warrant Agent does not register a
transfer prior to receiving such notification, (ii) makes such request to the
Company or the Warrant Agent prior to the Warrant being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (iii) satisfies any other reasonable requirements of
the Warrant Agent. If required by the Warrant Agent or the Company, such Holder
shall furnish an indemnity bond sufficient in the judgment of the Warrant Agent
to protect the Company and the Warrant Agent from any loss that either of them
may suffer if a Warrant is replaced. The Company and the Warrant Agent may
charge the Holder for their expenses in replacing a Warrant Certificate. Every
replacement Warrant is an additional obligation of the Company.
The provisions of this Section 2.06 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement of mutilated, lost, destroyed or wrongfully taken Securities.
SECTION 2.07. Outstanding Warrants. Warrants outstanding at
any time are all Warrant Certificates executed by the Company and countersigned
by the Warrant Agent except for those canceled by it, those delivered to it for
cancelation and those described in this Section 2.07 as not outstanding. A
Warrant does not cease to be outstanding because an Affiliate of the Company
holds the Warrant. A Warrant ceases to be outstanding if the Company holds the
Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.06,
it ceases to be outstanding unless the Warrant Agent and the Company receive
proof satisfactory to them that the replaced Warrant Certificate is held by a
protected purchaser.
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SECTION 2.08. Temporary Warrants. In the event that Definitive
Warrants (as defined in the Appendix) are to be issued under the terms of this
Warrant Agreement, until such Definitive Warrants are ready for delivery, the
Company may prepare and the Warrant Agent shall countersign temporary Warrant
Certificates. Temporary Warrant Certificates shall be substantially in the form
of Definitive Warrants but may have variations that the Company considers
appropriate for temporary Warrants. Without unreasonable delay, the Company
shall prepare and the Warrant Agent shall countersign Definitive Warrants and
deliver them in exchange for temporary Warrant Certificates upon surrender of
such temporary Warrant Certificates.
SECTION 2.09. Cancelation. The Company at any time may deliver
Warrant Certificates to the Warrant Agent for cancelation. The Warrant Agent and
no one else shall cancel all Warrant Certificates surrendered for registration
of transfer, exchange, exercise or cancelation and deliver canceled Warrant
Certificates to the Company pursuant to written direction by an Officer. The
Company may not issue new Warrant Certificates to replace Warrants Certificates
that have been exercised or Warrants which the Company has purchased or
otherwise acquired. The Warrant Agent shall not countersign Warrant Certificates
to replace canceled Warrant Certificates other than pursuant to the terms of
this Warrant Agreement.
SECTION 2.10. CUSIP Numbers. The Company in issuing the
Warrants may use "CUSIP" numbers (if then generally in use) and, if so, the
Warrant Agent shall also use "CUSIP" numbers in notices to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Warrant Certificates or as
contained in any notice and that reliance may be placed only on the other
identification numbers printed on the Warrant Certificates, and any such notice
shall not be affected by any defect in or omission of such numbers.
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise. Each Warrant shall initially entitle
the Holder thereof, subject to adjustment pursuant to the terms of this Warrant
Agreement, to purchase 10.124954 shares of Common Stock. The exercise price (the
"Exercise Price") of each Warrant is $.01 per share.
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SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the first anniversary of the Issue
Date; provided, however, that holders of Warrants will be able to exercise their
Warrants only if (i) the Common Shelf Registration Statement relating to the
Warrant Shares is effective or (ii) the exercise of such Warrants is exempt from
the registration requirements of the Securities Act, and the Warrant Shares are
qualified for sale or exempt from qualification under the applicable securities
laws of the states or other jurisdictions in which such Holders reside.
(b) No Warrant shall be exercisable after July 15, 2008 (the
"Expiration Date").
SECTION 3.03. Expiration. A Warrant shall terminate and become
void as of the earlier of (i) the close of business on the Expiration Date or
(ii) the date such Warrant is exercised. The Company shall give notice not less
than 90, and not more than 120, days prior to the Expiration Date to the Holders
of all then outstanding Warrants to the effect that the Warrants will terminate
and become void as of the close of business on the Expiration Date; provided,
however, that if the Company fails to give notice as provided in this Section
3.03, the Warrants will nevertheless expire and become void on the Expiration
Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised
upon (i) surrender to the Warrant Agent at the office of the Warrant Agent of
the related Warrant Certificate, together with the form of election attached
thereto to purchase Common Stock on the reverse thereof duly filled in and
signed by the Holder thereof and (ii) payment to the Warrant Agent, for the
account of the Company, of the Exercise Price for each Warrant Share or other
security issuable upon the exercise of such Warrants then exercised. Such
payment shall be made (i) in cash or by certified or official bank check payable
to the order of the Company or by wire transfer of funds to an account
designated by the Company for such purpose or (ii) without the payment of cash,
by reducing the number of shares of Common Stock obtainable upon the exercise of
a Warrant and payment of the Exercise Price in cash so as to yield a number of
shares of Common Stock upon the exercise of such Warrant equal to the product of
(a) the number of shares of Common Stock issuable as of the Exercise Date upon
the exercise of such Warrant (if payment of the Exercise Price were being made
in cash) and (b) the Cashless Exercise Ratio. An exercise of a Warrant in
accordance with the immediately preceding clause (ii) is herein called a
"Cashless Exercise". Upon surrender
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of a Warrant Certificate representing more than one Warrant in connection with
the Holder's option to elect a Cashless Exercise, the number of shares of Common
Stock deliverable upon a Cashless Exercise shall be equal to the number of
shares of Common Stock issuable upon the exercise of Warrants that the holder
specifies are to be exercised pursuant to a Cashless Exercise multiplied by the
Cashless Exercise Ratio. All provisions of this Warrant Agreement shall be
applicable with respect to a surrender of a Warrant Certificate pursuant to a
Cashless Exercise for less than the full number of Warrants represented thereby.
Subject to Section 3.02, the rights represented by the Warrants shall be
exercisable at the election of the Holders thereof either in full at any time or
from time to time in part and in the event that a Warrant Certificate is
surrendered for exercise of less than all the Warrants represented by such
Warrant Certificate at any time prior to the Expiration Date, a new Warrant
Certificate representing the remaining Warrants shall be issued. The Warrant
Agent shall countersign and deliver the required new Warrant Certificates, and
the Company, at the Warrant Agent's request, shall supply the Warrant Agent with
Warrant Certificates duly signed on behalf of the Company for such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section
2.06, upon the surrender of Warrant Certificates and payment of the per share
Exercise Price or election of a Cashless Exercise, as set forth in Section 3.04,
the Warrant Agent shall requisition from the Company, and the Company shall
issue and, if appointed, cause the transfer agent for the Common Stock ("Stock
Transfer Agent") to countersign and deliver to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same (including any depositary institution so designated by a Holder),
together with cash as provided in Section 3.06 in respect of any fractional
Warrant Shares otherwise issuable upon such exercise. Such certificate or
certificates shall be deemed to have been issued and any Person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates and
payment of the per share Exercise Price or election of a Cashless Exercise, as
aforesaid; provided, however, that if, at such date, the transfer books for the
Warrant Shares shall be closed, the certificates for the Warrant Shares in
respect of which such Warrants are then exercised shall be issuable as of the
date on which
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such books shall next be opened and until such date the Company shall be under
no duty to deliver any certificates for such Warrant Shares; provided further,
however, that such transfer books, unless otherwise required by law, shall not
be closed at any one time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not
be required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be exercised in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Shares which may be purchasable pursuant thereto. If any fraction of a Warrant
Share would, except for the provisions of this Section 3.06, be issuable upon
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash equal to the Current Market Value per Warrant Share, as
determined on the day immediately preceding the date the Warrant is presented
for exercise, multiplied by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company
shall at all times keep reserved out of its authorized shares of Common Stock a
number of shares of Common Stock sufficient to provide for the exercise of all
outstanding Warrants. The registrar for the Common Stock (the "Stock Registrar")
shall at all times until the Expiration Date reserve such number of authorized
shares as shall be required for such purpose. The Company will keep a copy of
this Warrant Agreement on file with the Stock Transfer Agent if such Stock
Transfer Agent is appointed. The Company will supply such Stock Transfer Agent,
if appointed, with duly executed stock certificates for such purpose and will
itself provide or otherwise make available any cash which may be payable as
provided in Section 3.06. The Company will furnish to such Stock Transfer Agent,
if appointed, a copy of all notices of adjustments (and certificates related
thereto) transmitted to each Holder.
Before taking any action which would cause an adjustment
pursuant to Article IV to reduce the Exercise Price below the then par value (if
any) of the Common Stock, the Company shall take any and all corporate action
which may, in the opinion of counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock at
the Exercise Price as so adjusted.
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The Company covenants that all Warrant Shares which may be
issued upon exercise of Warrants shall, upon issue, be fully paid,
nonassessable, free of preemptive rights, free from all taxes and free from all
liens, charges and security interests with respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding
anything in this Warrant Agreement to the contrary, in no event shall a Holder
be entitled to exercise a Warrant unless (i) a registration statement filed
under the Securities Act in respect of the issuance of the Warrant Shares is
then effective or (ii) in the opinion of counsel the exercise of such Warrants
is exempt from the registration requirements of the Securities Act and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holders reside.
(b) If any shares of Common Stock required to be reserved for
purposes of the exercise of Warrants require, under any other Federal or state
law or applicable governing rule or regulation of any national securities
exchange, registration with or approval of any governmental authority, or
listing on any such national securities exchange before such shares may be
issued upon exercise, the Company will use its best efforts to cause such shares
to be duly registered or approved by such governmental authority or listed on
the relevant national securities exchange, as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at
any time and from time to time the Company shall (i) pay a dividend or make a
distribution on the Common Stock in shares of Common Stock or other shares of
Capital Stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock or (iv) increase or
decrease the number of shares of Common Stock outstanding by reclassification of
its Common Stock, then the number of shares of Common Stock issuable upon
exercise of each Warrant immediately after the happening of such event shall be
adjusted so that, after giving effect to such adjustment, the Holder of each
Warrant shall be entitled to receive the number of shares of Common Stock upon
exercise of such Warrant that such Holder would have owned or have been
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entitled to receive had such Warrants been exercised immediately prior to the
happening of the events described above (or, in the case of a dividend or
distribution of Common Stock, immediately prior to the record date there for).
An adjustment made pursuant to this Section 4.01 shall become effective
immediately after the distribution date, retroactive to the record date therefor
in the case of a dividend or distribution in shares of Common Stock or other
shares of Capital Stock, and shall become effective immediately after the
effective date in the case of a sub division, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In the
event that at any time and from time to time the Company shall distribute to all
holders of Common Stock (i) any dividend or other distribution (including any
dividend or distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of cash, evidences of its
indebtedness, shares of its Capital Stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for, purchase, or
which are convertible into, any of the foregoing (other than, in the case of
clause (i) and (ii) above, (A) any dividend or distribution described in Section
4.01, (B) any rights, options, warrants or securities described in Section 4.03
or Section 4.04 and (C) any cash dividends or other cash distributions from
current or retained earnings other than Extraordinary Cash Dividends), then the
number of shares of Common Stock issuable upon the exercise of each Warrant
immediately prior to such record date for any such dividend or distribution
shall be increased to a number determined by multiplying the number of shares of
Common Stock issuable upon the exercise of such Warrant immediately prior to
such record date for any such dividend or distribution by a fraction, the
numerator of which shall be the Current Market Value per share of Common Stock
on the record date for such dividend or distribution, and the denominator of
which shall be such Current Market Value per share of Common Stock less the sum
of (x) the amount of cash, if any, distributed per share of Common Stock and (y)
the then fair value (as determined in good faith by the Board of Directors,
whose determination shall be evidenced by a board resolution filed with the
Warrant Agent, a copy of which will be sent to Holders upon request) of the
portion, if any, of the distribution applicable to one share of Common Stock
consisting of evidences of indebtedness, shares of stock, securities, other
property, warrants, options or subscription or purchase rights; and subject to
Section 4.08, the Exercise Price shall be adjusted to a number determined by
dividing the Exercise Price immediately prior to such record
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date by the above fraction. Such adjustments shall be made, and shall only
become effective, whenever any dividend or distribution to which this Section
4.02 applies is made; provided, however, that the Company is not required to
make an adjustment pursuant to this Section 4.02 if at the time of such
distribution the Company makes the same distribution to Holders of Warrants as
it makes to holders of Common Stock pro rata based on the number of shares of
Common Stock for which such Warrants are exercisable (whether or not currently
exercisable). No adjustment shall be made pursuant to this Section 4.02 which
shall have the effect of decreasing the number of shares of Common Stock
issuable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.03. Common Stock Issue. In the event that at any
time or from time to time the Company shall issue shares of Common Stock for a
consideration per share that is less than the Current Market Value per share of
Common Stock as of the issuance date of such shares, the number of shares of
Common Stock issuable upon the exercise of each Warrant immediately after such
issuance date shall be determined by multiplying the number of shares of Common
Stock issuable upon exercise of each Warrant immediately prior to such issuance
date by a fraction, the numerator of which shall be the number of shares of
Common Stock out standing immediately preceding the issuance of such shares plus
the number of additional shares of Common Stock to be issued in such
transaction, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately preceding the date for the issuance of such
shares plus the total number of shares of Common Stock which the aggregate
consideration expected to be received by the Company upon the issuance of such
shares (as determined in good faith by the Board of Directors, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) would purchase at
the Current Market Value per share of Common Stock as of the date of such
issuance; and, subject to Section 4.08, in the event of any such adjustment, the
Exercise Price shall be adjusted to a number determined by dividing the Exercise
Price immediately prior to such date of issuance by the aforementioned fraction;
provided, however, that no adjustment to the number of Warrant Shares issuable
upon the exercise of the Warrants or to the Exercise Price shall be made as a
result of (i) the issuance of shares of Common Stock in bona fide public
offerings that are underwritten or in which a placement agent is retained by the
Company, (ii) the issuance of shares of Common Stock (including upon exercise of
options) pursuant to the terms of and in order to give effect to the
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1997 Incentive Share Plan (as defined in the Offering Memorandum) in an amount
of up to 10% (calculated giving effect to all issuances of such options since
the date hereof) of the fully diluted shares of Common Stock, or such greater
amount (calculated giving effect to all issuances of such options since the date
hereof) as is approved by a majority of the disinterested members of the Board
of Directors, and (iii) the issuance of shares of Common Stock in connection
with acquisitions of products and businesses other than to Affiliates of the
Company. Such adjustment shall be made, and shall only become effective,
whenever such shares are issued. No adjustment shall be made pursuant to this
Section 4.03 which shall have the effect of decreasing the number of shares of
Common Stock issuable upon exercise of each Warrant or increasing the Exercise
Price.
SECTION 4.04. Issuance of Rights or Options. In the event
that at any time or from time to time the Company shall issue to holders of
Common Stock (i) rights, options or warrants to acquire (provided, however, that
no adjustment shall be made under Section 4.03 or 4.04 upon the exercise of such
rights, options or warrants), or (ii) securities convertible or exchangeable
into (provided, however, that no adjustment shall be made under Section 4.03 or
4.04 upon the conversion or exchange of such securities (other than issuances
specified in (i) or (ii) which are made as the result of anti-dilution
adjustments in such securities)), Common Stock entitling the holders thereof to
subscribe for or purchase shares of Common Stock at a price per share that is
less than the Current Market Value per share of Common Stock in effect
immediately prior to such issuance other than in connection with the adoption of
a shareholder rights plan by the Company, the number of shares of Common Stock
issuable upon the exercise of each Warrant immediately after such issuance shall
be determined by multiplying the number of shares of Common Stock issuable upon
exercise of each Warrant immediately prior to such issuance by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants or
securities plus the number of additional shares of Common Stock offered for
subscription or purchase or into which such securities are convertible or
exchangeable, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, warrants or securities plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company upon
the exercise, conversion or exchange of such rights, options, warrants or
securities (as determined in good faith by the Board, whose determination shall
be evidenced by a board resolution filed with the Warrant Agent, a copy of which
will be sent to Holders upon request) would purchase at the Current Market Value
per share of Common Stock as of the record date; and, subject to Section 4.08,
in the event of any such adjustment, the Exercise Price shall be adjusted to
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a number determined by dividing the Exercise Price immediately prior to such
date of issuance by the afore mentioned fraction; provided, however, that no
adjustment to the number of Warrant Shares issuable upon the exercise of the
Warrants or to the Exercise Price shall be made as a result of the issuance of
options to acquire additional shares of Common Stock pursuant to the terms of
and in order to give effect to the 1997 Incentive Share Plan (as defined in the
Offering Memorandum) in an amount of up to 10% (calculated giving effect to all
issuances of such options since the date hereof) of the fully diluted shares of
Common Stock, or such greater amount (calculated giving effect to all issuances
of such options since the date hereof) as is approved by a majority of the
disinterested members of the Board of Directors. Such adjustment shall be made,
and shall only become effective, whenever such rights, options, warrants or
securities are issued. No adjustment shall be made pursuant to this Section 4.04
which shall have the effect of decreasing the number of shares of Common Stock
issuable upon exercise of each Warrant or increasing the Exercise Price.
SECTION 4.05. Combination; Liquidation. (a) Except as provided
in Section 4.05(b), in the event of a Combination, each Holder shall have the
right to receive upon exercise of the Warrants the kind and amount of shares of
Capital Stock or other securities or property which such Holder would have been
entitled to receive upon completion of or as a result of such Combination had
such Warrant been exercised immediately prior to such event or to the relevant
record date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide, and deliver to the Warrant Agent, an
Opinion of Counsel to the effect that the surviving or acquiring Person (the
"Successor Company") in such Combination will enter into an agreement with the
Warrant Agent confirming the Holders' rights pursuant to this Section 4.05(a)
and providing for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article IV. The provisions
of this Section 4.05(a) shall similarly apply to successive Combinations
involving any Successor Company.
(b) In the event of (i) a Combination where consideration to
the holders of Common Stock in exchange for their shares is payable solely in
cash or (ii) the dissolution, liquidation or winding-up of the Company, the
Holders of the Warrants shall be entitled to receive, upon surrender of their
Warrant Certificates, such cash distributions on an equal basis with the holders
of Common Stock or other securities issuable upon exercise of the Warrants, as
if the Warrants had been exercised immediately prior to such event, less the
Exercise Price.
In the event of any Combination described in this Section
4.05(b), the surviving or acquiring Person and, in
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the event of any dissolution, liquidation or winding-up of the Company, the
Company, shall deposit promptly with the Warrant Agent the funds, if any,
necessary to pay the Holders of the Warrants the amounts to which they are
entitled as described above. After such funds and the surrendered Warrant
Certificates are received, the Warrant Agent shall make payment to the Holders
by delivering a check in such amount as is appropriate (or, in the case of
consideration other than cash, such other consideration as is appropriate) to
such Person or Persons as it may be directed in writing by the Holders
surrendering such Warrants.
SECTION 4.06. Other Events. If any event occurs as to which
the foregoing provisions of this Article IV are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors, fairly and adequately protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
such Board of Directors shall make such adjustments in the application of such
provisions, in accordance with such essential intent and principles, as shall be
reasonably necessary, in the good faith opinion of such Board of Directors, to
protect such purchase rights as aforesaid, but in no event shall any such
adjustment have the effect of increasing the Exercise Price or decreasing the
number of shares of Common Stock issuable upon exercise of the Warrants.
SECTION 4.07. Superseding Adjustment. Upon the expiration of
any rights, options, warrants or conversion or exchange privileges which
resulted in adjustments pursuant to this Article IV, if any thereof shall not
have been exercised, the number of Warrant Shares issuable upon the exercise of
each Warrant shall be readjusted pursuant to the applicable section of Article
IV as if (i) the only shares of Common Stock issuable upon exercise of such
rights, options, warrants, conversion or exchange privileges were the shares of
Common Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment (except by reason of an intervening
adjustment under Section 4.01) shall have the effect of decreasing the number of
Warrant Shares issuable upon the exercise of each
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Warrant or increasing the Exercise Price by an amount in excess of the amount of
the adjustment initially made in respect of the issuance, sale or grant of such
rights, options, warrants or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by
the preceding sections of this Article IV shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that no
adjustment of the Exercise Price or the number of shares of Common Stock
issuable upon exercise of the Warrants that would otherwise be required shall be
made unless and until such adjustment either by itself or with other adjustments
not previously made increases or decreases by at least 1% the Exercise Price or
the number of shares of Common Stock issuable upon exercise of the Warrants
immediately prior to the making of such adjustment. Any adjustment representing
a change of less than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required by this
Article IV and not previously made, would result in a minimum adjustment. For
the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise
Price or the number of shares of Common Stock and other property, if any,
issuable upon exercise of the Warrants is adjusted, as herein provided, the
Company shall deliver to the Warrant Agent a certificate of a firm of
independent accountants selected by the Board of Directors (who may be the
regular accountants employed by the Company) setting forth, in reasonable
detail, the event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis on which (i) the
Board of Directors determined the then fair value of any evidences of
indebtedness, other securities or property or warrants, options or other
subscription or purchase rights and (ii) the Current Market Value of the Common
Stock was determined, if either of such determinations were required), and
specifying the Exercise Price and the number of shares of Common Stock issuable
upon exercise of the Warrants after giving effect to such adjustment. The
Company shall promptly cause the Warrant Agent to mail a copy of such
certificate to each Holder in accordance with Section 7.05. The Warrant Agent
shall be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time, to any Holder desiring
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an inspection thereof during reasonable business hours. The Warrant Agent
shall not at any time be under any duty or responsibility to any Holder to
determine whether any facts exist which may require any adjustment of the
Exercise Price or the number of shares of Common Stock or other stock or
property issuable on exercise of the Warrants, or with respect to the nature or
extent of any such adjustment when made, or with respect to the method employed
in making such adjustment or the validity or value of any shares of Common
Stock, evidences of indebtedness, warrants, options, or other securities or
property.
SECTION 4.10. Notice of Certain Transactions. In the event
that the Company shall propose to (a) pay any dividend payable in securities of
any class to the holders of its Common Stock or to make any other non-cash
dividend or distribution to the holders of its Common Stock, (b) offer the
holders of its Common Stock rights to subscribe for or to purchase any
securities convertible into shares of Common Stock or shares of stock of any
class or any other securities, rights or options, (c) issue any (i) shares of
Common Stock, (ii) rights, options or warrants entitling the holders thereof to
subscribe for shares of Common Stock or (iii) securities convertible into or
exchangeable or exercisable for Common Stock (in the case of (i), (ii) and
(iii), if such issuance or adjustment would result in an adjustment hereunder),
(d) effect any capital reorganization, reclassification, consolidation or
merger, (e) effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company or (f) make a tender offer or exchange offer with
respect to the Common Stock, the Company shall within five days after any such
action or offer send to the Warrant Agent a notice and the Warrant Agent shall
within five days after receipt thereof send the Holders a notice (in such form
as shall be furnished to the Warrant Agent by the Company) of such proposed
action or offer. Such notice shall be mailed by the Warrant Agent to the Holders
at their addresses as they appear in the books of the Warrant Registrar, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect, if any, of such action on the
Common Stock and on the number and kind of any other shares of stock and on
other property, if any, and the number of shares of Common Stock and other
property, if any, issuable upon exercise of each Warrant and the Exercise Price
after giving effect to any adjustment pursuant to Article IV which will be
required as a result of such action. Such notice shall be given as promptly as
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possible and (x) in the case of any action covered by clause (a) or (b) above,
at least 10 days prior to the record date for determining holders of the Common
Stock for purposes of such action or (y) in the case of any other such action,
at least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Common Stock, whichever shall be
the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of
Warrant Certificate need not be changed because of any adjustment made pursuant
to this Article IV, and Warrant Certificates issued after such adjustment may
state the same Exercise Price and the same number of shares of Common Stock
issuable upon exercise of the Warrants as are stated in the Warrant Certificates
initially issued pursuant to this Warrant Agreement. The Company, however, may
at any time in its sole discretion make any change in the form of Warrant
Certificate that it may deem appropriate to give effect to such adjustments and
that does not affect the substance of the Warrant Certificate, and any Warrant
Certificate thereafter issued or countersigned, whether in exchange or
substitution for an outstanding Warrant Certificate or otherwise, may be in the
form as so changed.
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement. Subject
to Section 5.02, the Company shall cause to be filed pursuant to Rule 415 (or
any successor provision) of the Securities Act not later than 45 days after the
Issue Date, a shelf registration statement relating to the offer and sale of the
Warrants by the Holders from time to time in accordance with the methods of
distribution elected by such holders and set forth in such registration
statement (the "Warrant Shelf Registration Statement"), and shall use its best
efforts to cause the Warrant Shelf Registration Statement to be declared
effective under the Securities Act on or before 105 days after the Issue Date,
and shall cause to be filed a shelf registration statement covering the issuance
of Warrant Shares to the Holders upon exercise of the Warrants by the Holders
thereof (the "Common Shelf Registration Statement", and together with the
Warrant Shelf Registration Statement, the "Registration Statements") and shall
use its best efforts to cause the Common Shelf Registration Statement to be
declared effective on or before 365 days after the Issue Date. The Company shall
use its best efforts to cause (a) the Warrant Shelf Registration Statement to
remain
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continuously effective until the earliest of (i) such time as all Warrants
have been sold thereunder, (ii) two years after its effective date and (iii)
until all Warrants can be sold without restriction under the Securities Act and
(b) the Common Shelf Registration Statement to remain continuously effective
until the earlier of (i) such time as all Warrants have been exercised and (ii)
the Expiration Date. In connection with any Registration Statement, (i) the
Company shall furnish to the Warrant Agent and the Initial Purchaser, prior to
the filing with the Commission, a copy of any Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the prospectus
included therein and shall use its reasonable best efforts to reflect in each
such document, when filed with the Commission, such comments as the Warrant
Agent or the Initial Purchaser may reasonably propose, (ii) the Company shall
furnish to each Holder, without charge, at least one conformed copy of any
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Holder so requests in writing,
all exhibits thereto (including those incorporated by reference), (iii) the
Company shall, for so long as any Registration Statement is effective, deliver
to each Holder and the Initial Purchaser, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in such Registration
Statement and any amendment or supplement thereto as such Holder or Initial
Purchaser may reasonably request, and the Company consents to the proper use of
the prospectus therein and any amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Warrants or the
exercise, offering or sale of Warrant Shares, as the case may be, covered by
such prospectus and any amendment or supplement thereto, (iv) the Company may
require each Holder of Warrants to be sold pursuant to the Warrant Shelf
Registration Statement or to be exercised in connection with the Common Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of such Warrants or Warrant Shares as the Company
may from time to time reasonably request for inclusion in such Registration
Statement (the "Holders' Information"), and the Company may exclude from such
registration the Transfer Restricted Warrants (as defined in the Appendix) of
any Holder that fails to furnish such information within a reasonable time after
receiving such request, (v) the Company shall, if requested, promptly
incorporate in a prospectus supplement or post-effective amendment to such
Registration Statement such information as a majority in interest of the Holders
reasonably agree should be included therein and shall make all required filings
of such prospectus supplement or post-effective
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amendment as soon as practicable following notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, (vi) the
Company shall enter into such agreements (including underwriting agreements) as
are appropriate, customary and reasonably necessary in connection with any such
Registration Statement and (vii) the Company shall (A) make reasonably available
for inspection by a representative of, and counsel acting for Holders of a
majority of the Warrants and any underwriter participating in any disposition of
Warrants, all relevant financial and other records, pertinent corporate
documents and properties of the Company, (B) use its reasonable best efforts to
have its officers, directors, employees, accountants and counsel supply all
relevant information reasonably requested by such representative, counsel or any
such underwriter in connection with such Registration Statement, and (C) if
requested by Holders of a majority of Warrants, their counsel or the managing
underwriters (if any) in connection with such Registration Statement, use its
reasonable best efforts to cause (x) its counsel to deliver an opinion relating
to the Registration Statement and the Warrants or Warrant Shares, as the case
may be, in customary form, (y) its officers to execute and deliver all customary
documents and certificates requested by Holders of a majority of the Warrants,
their counsel or the managing underwriters (if any) and (z) its independent
public accountants to provide a comfort letter or letters in customary form,
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(b) The Company shall notify Holders and, if requested,
confirm in writing (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made): (i) when any Registration Statement and any
amendment thereto has been filed with the Commission and when such Registration
Statement or any post-effective amendment thereto has become effective; (ii) of
any request by the Commission for amendments or supplements to any Registration
Statement or the prospectus included therein or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Warrants or the Warrant
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and (v) of the happening of any event that requires
the making of any changes in any
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Registration Statement or the prospectus included therein in order that the
statements therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement. If any event contemplated by
clauses (ii) through (v) occurs during the period for which the Company is
required to maintain an effective Registration Statement, the Company shall
promptly prepare and file with the Commission a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered, the prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Each Holder agrees
that, upon receipt of any notice from the Company pursuant to clauses (ii)
through (v), such Holder shall discontinue disposition of such Warrants or
Warrant Shares until such Holder's receipt of copies of a supplemental or
amended prospectus or until advised in writing (the "Advice") by the Company
that the use of the applicable prospectus may be resumed. If the Company shall
give any notice under clauses (ii) through (v) during the period that the
Company is required to maintain an effective Registration Statement (the
"Effectiveness Period"), such Effectiveness Period, in the case of the Warrant
Shelf Registration Statement, shall be extended by the number of days during
such period from and including the date of the giving of such notice to and
including the date when each seller of Warrants or Warrant Shares covered by
such Registration Statement shall have received (x) the copies of a supplemental
or amended prospectus (if an amended or supplemental prospectus is required) or
(y) the Advice (if no amended or supplemental prospectus is required).
SECTION 5.02. Suspension. During any consecutive 365-day
period, the Company shall be entitled to suspend the availability of each of the
Warrant Shelf Registration Statement and the Common Shelf Registration Statement
for up to two 45 consecutive-day periods (except for the 45 consecutive-day
period immediately prior to the Expiration Date) if the Company's Board
determines in the exercise of its reasonable judgment that there is a valid
business purpose for such suspension and provides notice that such determination
was made to the Holders of the Warrants; provided, however, that in no event
shall the Company be required to disclose the business purpose for such
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suspension if the Company determines in good faith that such business purpose
must remain confidential.
SECTION 5.03. Blue Sky. The Company shall use its best efforts
to register or qualify the Warrants and the Warrant Shares under all applicable
securities laws, blue sky laws or similar laws of all jurisdictions in the
United States and Canada in which any holder of Warrants may or may be deemed to
purchase Warrants or Warrant Shares upon the exercise of Warrants and shall use
its best efforts to maintain such registration or qualification for so long as
it is required to cause the Warrant Shelf Registration Statement (in the case of
the Warrants) and the Common Shelf Registration Statement (in the case of the
Warrant Shares) to remain effective under the Securities Act pursuant to Section
5.01; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 5.03 or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents
and warrants to each Holder and agrees for the benefit of each Holder that (i)
each of the Warrant Shelf Registration Statement and the Common Shelf
Registration Statement and any amendment thereto will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading and (ii) each of the prospectus furnished to such Holder for delivery
in connection with the sale of Warrants and the prospectus delivered to such
Holder upon the exercise of Warrants and the documents incorporated by reference
therein will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company shall have
no liability under clauses (i) or (ii) of this Section 5.04 with respect to any
such untrue statement or omission made in any Registration Statement in reliance
upon and in conformity with information furnished to the Company by or on behalf
of the Holders specifically for inclusion therein.
SECTION 5.05. Indemnification. (a) In connection with any
Registration Statement, the Company shall indemnify and hold harmless each
Holder (including, without limitation, the Initial Purchaser), its affiliates,
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their respective officers, directors, employees, representatives and agents, and
each person, if any, who controls such Holder within the meaning of the
Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 5.05 as a Holder) from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Warrants or Warrant Shares), to which that Holder may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or any
prospectus forming part thereof or in any amendment or supplement thereto or
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and
shall reimburse each Holder promptly upon demand for any legal or other expenses
reasonably incurred by that Holder in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with any Holders' Information; and provided,
further, that with respect to any such untrue statement in or omission from any
related preliminary prospectus, the indemnity agreement contained in this
Section 5.05(a) shall not inure to the benefit of any Holder from whom the
person asserting any such loss, claim, damage, liability or action received
Warrants or Warrant Shares to the extent that such loss, claim, damage,
liability or action of or with respect to such Holder results from the fact that
both (A) a copy of the final prospectus was not sent or given to such person at
or prior to the written confirmation of the sale of such Warrants (in the case
of the sale of Warrants), to such person and (B) the untrue statement in or
omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final prospectus
was a result of noncompliance by the Company with Section 5.01. This indemnity
agreement will be in addition to any liability which the Company may otherwise
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have to a Holder. The Company shall also indemnify underwriters, selling
brokers, dealer-managers and similar securities industry professionals
participating in the distribution (in each case as described in the Registration
Statement), their officers and directors and each person who controls such
persons within the meaning of the Securities Act or the Exchange Act to the same
extent as provided above with respect to the indemnification of the Holders of
the Securities if requested by such Holders.
(b) In connection with any Registration Statement each Holder,
severally and not jointly, shall indemnify and hold harmless the Company, its
affiliates, their respective officers, directors, employees, representatives and
agents, and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (collectively referred to for purposes of
this Section 5.05 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to made the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information furnished to
the Company by such Holder, and shall reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that no such Holder
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Warrants, in the case of
the Warrant Shelf Registration Statement, or the Current Market Value of Warrant
Shares at the time they were received in the case of the Common Stock Shelf
Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 5.05 of notice of any claim or the
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commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party pursuant to Section 5.05(a)
or 5.05(b), notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
under this Section 5.05 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 5.05. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 5.05 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to
the indemnified party) between the indemnified party and the indemnifying party
(in which case the indemnifying party will not have the right to direct the
defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
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30
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 5.05(a) and 5.05(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) If the indemnification provided for above is unavailable
or insufficient to hold harmless an indemnified party under Section 5.05(a) or
5.05(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company, on the one hand, and a Holder, on the other,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and such Holder, on the other, with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to the
Company or information supplied by the Company, on the one hand, or to any
Holders' Information supplied by such Holder, on the other, the intent of the
parties and their relative knowledge, access
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31
to information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 5.05(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 5.05(d) shall be
deemed to include, for purposes of this Section 5.05(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 5.05(d), an indemnifying party
that is a Holder shall not be required to contribute any amount in excess of the
amount by which the total price at which the Warrants sold, in the case of the
Warrant Shelf Registration Statement, and the Current Market Value of the
Warrant Shares at the time they were received, in the case of the Common Stock
Registration Statement, by such indemnifying party to any purchaser exceeds the
amount of any damages which such indemnifying party has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The agreements contained in this Section 5.05 shall
survive the sale of the Securities pursuant to the Registration Statements and
shall remain in full force and effect, regardless of any termination or
cancelation of this Warrant Agreement or any investigation made by or on behalf
of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the
issuance or sale of any Common Stock or other securities issuable upon the
exercise of the Warrants requires registration or approval of any governmental
authority (other than the registration requirements under the Securities Act),
or the taking of any other action under the laws of the United States or any
political subdivision thereof before such securities may be validly offered or
sold in compliance with such laws, then the Company covenants that it will, in
good faith and as expeditiously as reasonably possible, use its reasonable best
efforts to secure and maintain such registration or approval or to take such
other action, as the case may be. The Company shall promptly notify the Warrant
Agent in writing when (i) the
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Company has obtained all such governmental approvals and authorizations and (ii)
such approvals and authorizations thereafter cease to be in effect.
SECTION 5.07. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article V will be
borne by the Company, including without limitation: (i) all SEC, stock exchange
or National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all reasonable fees and expenses incurred in connection with the
compliance with state securities or blue sky laws, (iii) all expenses of any
Persons incurred by or on behalf of the Company in preparing or assisting in
preparing, printing and distributing the Warrant Shelf Registration Statement,
the Common Shelf Registration Statement or any other registration statement,
prospectus, any amendments or supplements thereto and other documents relating
to the performance of and compliance with this Article V, (iv) the fees and
disbursements of the Warrant Agent as agreed, (v) the fees and disbursements of
counsel for the Company and the Warrant Agent as agreed, (vi) the fees and
disbursements of one firm of attorneys (in addition to any local counsel) chosen
by a majority of the Holders of Warrants in the case of each of the Warrant
Shelf Registration Statement and the Common Stock Registration Statement and
(vii) the fees and disbursements of the independent public accountants of the
Company, including the expenses of any special audits or comfort letters
required by or incident to such performance and compliance.
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company in accordance with
the provisions of this Warrant Agreement and the Warrant Agent hereby accepts
such appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent
for the Company. In acting under this Warrant Agreement and in connection with
the Warrant Certificates, the Warrant Agent is acting solely as agent of the
Company and does not assume any obligation or relationship or agency or trust
for or with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (and may require an Opinion of
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Counsel before it acts or refrains from acting), and the advice of such counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with
the advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be
obligated to perform only such duties as are specifically set forth herein and
in the Warrant Certificates, and no implied duties or obligations of the Warrant
Agent shall be read into this Warrant Agreement or the Warrant Certificates
against the Warrant Agent. The Warrant Agent shall not be under any obligation
to take any action hereunder which may tend to involve it in any expense or
liability for which it does not receive indemnity if such indemnity is
reasonably requested. The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of any of the Warrant
Certificates countersigned by the Warrant Agent and delivered by it to the
Holders or on behalf of the Holders pursuant to this Warrant Agreement or for
the application by the Company of the proceeds of the Warrants. The Warrant
Agent shall have no duty or responsibility in case of any default by the Company
in the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Common Stock issuable upon exercise of each Warrant or
the Exercise Price, or with respect to the nature or extent of any adjustment
when made, or with respect to the method employed, or herein or in any supple
mental agreement provided to be employed, in making the same. The Warrant Agent
shall not be accountable with respect to the validity or value of any shares of
Common Stock or of any securities or property which may at any time be issued or
delivered upon the exercise of any Warrant or
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upon any adjustment pursuant to Article IV, and it makes no representation with
respect thereto. The Warrant Agent shall not be responsible for any failure of
the Company to make any cash payment or to issue, transfer or deliver any shares
of Common Stock or stock certificates upon the surrender of any Warrant
Certificate for the purpose of exercise or upon any adjustment pursuant to
Article IV, or to comply with any of the covenants of the Company contained in
Article IV.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its affiliates and may otherwise deal with the Company or its affiliates with
the same rights it would have if it were not Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company or
for any other legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent
shall not be responsible for and makes no representation as to the validity or
adequacy of this Warrant Agreement or the Warrant Certificates and it shall not
be responsible for any statement in this Warrant Agreement or the Warrant
Certificates other than its countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company agrees
to pay the Warrant Agent from time to time reasonable compensation for its
services as agreed and to reimburse the Warrant Agent upon request for all
reasonable out-of-pocket expenses incurred by it, including the reasonable
compensation and expenses of the Warrant Agent's agents and counsel as agreed.
The Company shall indemnify the Warrant Agent against any loss, liability or
expense (including reasonable agents' and attorneys' fees and expenses) incurred
by it without negligence or bad faith on its part arising out of or in
connection with the acceptance or performance of its duties under this Warrant
Agreement. The Warrant Agent shall notify the Company promptly of any claim for
which it may seek indemnity. The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the Warrant Agent through
wilful misconduct, negligence or bad faith. The Company's payment obligations
pursuant to this Section 6.05 shall survive the termination of this Warrant
Agreement.
To secure the Company's payment obligations under this Warrant
Agreement, the Warrant Agent shall have a lien
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prior to the Holders on all money or property held or collected by the Warrant
Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company To
Provide and Maintain Warrant Agent. The Company agrees for the benefit of the
Holders that there shall at all times be a Warrant Agent hereunder until all the
Warrants have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than 60 days after the date
on which such notice is given unless the Company otherwise agrees. The Warrant
Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent. At any time that
the Warrant Agent is also acting as Trustee under the Indenture and holders of
the Notes remove the Trustee pursuant to Section 7.08 of the Indenture, the
Company shall remove the Warrant Agent pursuant to this Section 6.06(b).
(c) The Company To Appoint Successor. In the event that at any
time the Warrant Agent shall resign, or shall be removed, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall
commence a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter
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constituted, or any other applicable Federal or state bankruptcy, insolvency or
similar law, or a decree or order by a court having jurisdiction in the premises
shall have been entered for the appointment of a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or similar official) of the Warrant
Agent or of its property or affairs, or any public officer shall take charge or
control of the Warrant Agent or of its property or affairs for the purpose of
rehabilitation, conservation, winding up or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing, filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to be
Warrant Agent hereunder; provided, however, that in the event of the resignation
of the Warrant Agent under this subsection (c), such resignation shall be
effective on the earlier of (i) the date specified in the Warrant Agent's notice
of resignation and (ii) the appointment and acceptance of a successor Warrant
Agent hereunder.
(d) Successor To Expressly Assume Duties. Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.
(e) Successor by Merger. If the Warrant Agent consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Warrant Agent.
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements
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of Section 13 or 15(d) of the Exchange Act the Company shall file with the SEC
and provide the Warrant Agent and Holders within 15 days after it files them
with the SEC, copies of its annual report and the information, documents and
other reports that are specified in Sections 13 and 15(d) of the Exchange Act.
In addition, following a public offering of the common stock of the Company, the
Company shall furnish to the Warrant Agent and the Holders, promptly upon their
becoming available, copies of the annual report to stockholders and any other
information provided by the Company to its public stockholders generally.
SECTION 7.02. Persons Benefitting. Nothing in this Warrant
Agreement is intended or shall be construed to confer upon any Person other than
the Company, the Warrant Agent and the Holders any right, remedy or claim under
or by reason of this Warrant Agreement or any part hereof.
SECTION 7.03. Rights of Holders. Holders of unexercised
Warrants are not entitled to (i) receive dividends or other distributions, (ii)
receive notice of or vote at any meeting of the stockholders, (iii) consent to
any action of the stockholders, (iv) receive notice of any other proceedings of
the Company, (v) exercise any preemptive right or (vi) exercise any other rights
whatsoever as stockholders of the Company.
SECTION 7.04. Amendment. This Warrant Agreement may be amended
by the parties hereto without the consent of any Holder for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective
provision contained herein or adding or changing any other provisions with
respect to matters or questions arising under this Warrant Agreement as the
Company and the Warrant Agent may deem necessary or desirable (including without
limitation any addition or modification to provide for compliance with the
transfer restrictions set forth herein); provided, however, that such action
shall not adversely affect the rights of any of the Holders. Any amendment or
supplement to this Warrant Agreement that has an adverse effect on the interests
of the Holders shall require the written consent of the Holders of a majority of
the then outstanding Warrants. The consent of each Holder affected shall be
required for any amendment pursuant to which the Exercise Price would be
increased, the number of Warrant Shares issuable upon exercise of Warrants would
be decreased (other than pursuant to adjustments provided herein) or the
antidilution provisions in Article IV are altered in a manner which adversely
affects the Holders. In determining whether the Holders of the required number
of Warrants have concurred in any direction, waiver or consent, Warrants
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owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
be disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Warrant Agent shall be protected in relying on any such
direction, waiver or consent, only Warrants which the Warrant Agent knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
SECTION 7.05. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Splitrock Services, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of: Vice President and
General Counsel
if to the Warrant Agent:
Bank of Montreal Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention of: Corporate Trust
Department
The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it
appears on the records of the Warrant Registrar and shall be sufficiently given
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 7.06. Governing Law. THIS WARRANT AGREEMENT AND THE
WARRANTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF
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NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
SECTION 7.07. Successors. All agreements of the Company in
this Warrant Agreement and the Warrant Certificates shall bind its successors.
All agreements of the Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any
number of copies of this Warrant Agreement. Each signed copy shall be an
original, but all of them together represent the same agreement. One signed copy
is enough to prove this Warrant Agreement.
SECTION 7.09. Table of Contents. The table of contents and
headings of the Articles and Sections of this Warrant Agreement have been
inserted for convenience of reference only, are not intended to be considered a
part hereof and shall not modify or restrict any of the terms or provisions
hereof.
SECTION 7.10. Severability. The provisions of this Warrant
Agreement are severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner affect such
clause or provision in any other jurisdiction or any other clause or provision
of this Warrant Agreement in any jurisdiction.
44
40
IN WITNESS WHEREOF, the parties have caused this Warrant
Agreement to be duly executed as of the date first written above.
SPLITROCK SERVICES, INC.,
by /s/
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
BANK OF MONTREAL TRUST
COMPANY, as Warrant Agent,
by /s/
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
