EXHIBIT 4.4
--------------------------------------------------------------------------------
WARRANT AGREEMENT
between
TVN ENTERTAINMENT CORPORATION
and
THE BANK OF NEW YORK
Dated as of July 29, 1998
--------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I
CERTAIN DEFINITIONS
ARTICLE II
ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates................................. 6
Section 2.2. Restrictive Legends.......................................... 7
Section 2.3. Execution and Delivery of Warrant Certificates............... 10
Section 2.4. Certificated Warrants........................................ 10
ARTICLE III
EXERCISE PRICE, EXERCISE AND REPURCHASE OF WARRANTS
Section 3.1. Exercise Price............................................... 11
Section 3.2. Exercise; Restrictions on Exercise........................... 11
Section 3.3. Method of Exercise; Payment of Exercise Price................ 11
Section 3.4. Repurchase Offers............................................ 12
ARTICLE IV
ADJUSTMENTS
Section 4.1. Adjustments.................................................. 16
Section 4.2. Notice of Adjustment......................................... 23
Section 4.3. Statement on Warrants........................................ 24
Section 4.4. Notice of Consolidation, Merger, Etc......................... 24
Section 4.5. Fractional Interests......................................... 25
ARTICLE V
DECREASE IN EXERCISE PRICE
ARTICLE VI
LOSS OR MUTILATION
ii
ARTICLE VII
RESERVATION AND AUTHORIZATION OF COMMON SHARES
ARTICLE VIII
WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER
Section 8.1. Transfer and Exchange........................................ 26
Section 8.2. Book-Entry Provisions for the Global Warrants................ 27
Section 8.3. Special Transfer Provisions.................................. 29
Section 8.4. Surrender of Warrant Certificates............................ 31
ARTICLE IX
WARRANT HOLDERS
Section 9.1. Warrant Holder Deemed Not a Stockholder...................... 32
Section 9.2. Right of Action.............................................. 32
ARTICLE X
REMEDIES
Section 10.1. Defaults.................................................... 32
Section 10.2. Payment Obligations......................................... 33
Section 10.3. Remedies; No Waiver......................................... 33
ARTICLE XI
THE WARRANT AGENT
Section 11.1. Duties and Liabilities...................................... 33
Section 11.2. Right to Consult Counsel.................................... 34
Section 11.3. Compensation; Indemnification............................... 35
Section 11.4. No Restrictions on Actions.................................. 35
Section 11.5. Discharge or Removal; Replacement Warrant Agent............. 35
Section 11.6. Successor Warrant Agent..................................... 36
iii
ARTICLE XII
MISCELLANEOUS
Section 12.1. Monies Deposited with the Warrant Agent..................... 37
Section 12.2. Payment of Taxes............................................ 37
Section 12.3. No Merger, Consolidation or Sale of Assets of the Company... 37
Section 12.4. Reports to Holders.......................................... 38
Section 12.5. Notices; Payment............................................ 38
Section 12.6. Binding Effect.............................................. 39
Section 12.7. Counterparts................................................ 39
Section 12.8. Amendments.................................................. 39
Section 12.9. Headings.................................................... 40
Section 12.10. Common Shares Legend........................................ 40
Section 12.12. Termination................................................. 42
Section 12.13. Governing Law............................................... 42
Section 12.14. Registration Rights......................................... 42
iv
EXHIBIT A FORM OF WARRANT CERTIFICATE
EXHIBIT B FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
EXHIBIT C-1 FORM OF CERTIFICATE TO BE DELIVERED BY TRANSFEROR IN CONNECTION
WITH TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS
EXHIBIT C-2 FORM OF CERTIFICATE TO BE DELIVERED BY TRANSFEREES IN CONNECTION
WITH TRANSFERS TO INSTITUTIONAL ACCREDITED INVESTORS
APPENDIX A LIST OF FINANCIAL EXPERTS
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of July 29, 1998 (this "Agreement"),
---------
between TVN Entertainment Corporation, a Delaware corporation (the "Company"),
-------
and The Bank of New York, a New York banking corporation (the "Warrant Agent").
-------------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the terms of a Placement Agreement dated July 24,
1998 (the "Placement Agreement"), between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
-------------------
Incorporated, as placement agent (the "Placement Agent"), the Company has agreed
---------------
to issue and sell to the Placement Agent an aggregate of 200,000 warrants (each,
a "Warrant" and collectively, the "Warrants"), each Warrant initially entitling
------- --------
the holder thereof to purchase 10.777 shares of Common Stock (as defined below)
of the Company at an exercise price of $0.01 per Common Share (as defined
below), as part of 200,000 units (the "Units"), each Unit consisting of one 14%
-----
Senior Note due 2008 of the Company (each a "Note" and collectively, the
----
"Notes") to be issued pursuant to the provisions of an Indenture, dated as of
-----
the date hereof, between the Company and The Bank of New York, as trustee (the
"Indenture"), and one Warrants;
---------
WHEREAS, the Notes and the Warrants included in each Unit will become
automatically separately transferable at the close of business upon the earliest
to occur of (i) the date that is 180 days after the Closing Date (as defined
below), (ii) the commencement of an exchange offer with respect to the Notes
undertaken pursuant to the Notes Registration Rights Agreement (as defined
below), (iii) the effectiveness of a shelf registration statement with respect
to resales of the Notes, (iv) the commencement of an Offer to Purchase (as
defined below) the Notes and (v) such earlier date as determined by the
Placement Agent in its sole discretion (the "Separation Date"); and
---------------
WHEREAS, the Company desires to engage the Warrant Agent to act on the
Company's behalf, and the Warrant Agent desires to act on behalf of the Company,
in connection with the issuance of the Warrant Certificates (as defined below)
and the other matters as provided herein, including, without limitation, for the
purpose of defining the terms and provisions of the Warrants and the respective
rights and obligations thereunder of the Company and the record holders thereof
(together with the holders of shares of Common Stock (or other securities)
received upon exercise thereof, the "Holders").
-------
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements contained herein and in the Placement Agreement, the Company and the
Warrant Agent hereby agree as follows:
2
ARTICLE I
CERTAIN DEFINITIONS
Defined terms used herein without other definition shall have the
respective meanings ascribed thereto, whether directly or indirectly by
reference, in the Placement Agreement.
"Affiliate" means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent Members" has the meaning specified in Section 8.2(a) hereof.
"Auditors" means, at any time, the independent auditors of the Company
at such time.
"Board" means the board of directors of the Company from time to time.
"Business Day" means a day except a Saturday, Sunday or other day on
which commercial banks in The City of New York, or in the city of the principle
corporate trust office of the Warrant Agent, are authorized by law to close.
"Certificated Warrants" has the meaning specified in Section 2.1
hereof.
"Certificate for Surrender" means the form on the reverse side of the
Warrant Certificate substantially in the form of Exhibit A hereto.
"Closing Date" means the date hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Shares" means the shares of the Common Stock of the Company.
"Common Stock" means the voting Common Stock, par value $0.001 per
share, of the Company.
3
"Company" has the meaning specified in the preamble to this Agreement.
"Current Market Value" has the meaning specified in Section 4.1(f)
hereof.
"Default" has the meaning specified in Section 10.1 hereof.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Exercise Price" has the meaning specified in Section 3.1 hereof.
"Expiration Date" means August 1, 2008.
"Final Surrender Time" has the meaning specified in Section 3.4(b)
hereof.
"Financial Expert" means one of the Persons listed in Appendix A
hereto.
"Global Warrants" has the meaning specified in Section 2.1 hereof.
"Holders" has the meaning specified in the recitals to this Agreement.
"Indenture" has the meaning specified in the recitals to this
Agreement.
"Independent Financial Expert" means a Financial Expert that does not,
and whose directors, executive officers and 5% stockholders do not, have a
direct or indirect financial interest in the Company or any of its subsidiaries
or Affiliates, which has not been for at least five years and, at the time it is
called upon to give independent financial advice to the Company, is not (and
none of its directors, executive officers or 5% stockholders is) a promoter,
director, or officer of the Company or any of its subsidiaries or Affiliates.
The Independent Financial Expert may be compensated and indemnified by the
Company for opinions or services it provides as an Independent Financial Expert.
"Institutional Accredited Investor" shall mean an institution that is
an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.
"Non-U.S. Person" means a Person who is not a U.S. Person as defined
in Rule 902 of Regulation S.
4
"Notes" has the meaning specified in the recitals to this Agreement.
"Notes Registration Rights Agreement" means the Registration Rights
Agreement with respect to the Notes dated July 29, 1998 between the Company and
the Placement Agent.
"Notice Date" has the meaning specified in Section 3.4(b) hereof.
"Offer to Purchase" shall have the meaning specified in the Indenture.
"Officer" means, with respect to the Company, (i) the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Operating Officer, the Chief Financial Officer, and (ii) the Treasurer or any
Assistant Treasurer, the Secretary or any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one Officer
listed in clause (i) of the definition thereof and one Officer listed in clause
(ii) of the definition thereof; provided, however, that any such certificate may
be signed by any two of the Officers listed in clause (i) of the definition
thereof in lieu of being signed by one Officer listed in clause (i) of the
definition thereof and one Officer listed in clause (ii) of the definition
thereof.
"Opinion of Counsel" means a written opinion signed by legal counsel
who may be an employee of or counsel to the Company.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Placement Agreement" has the meaning specified in the recitals to
this Agreement.
"Private Placement Legend" means the legend set forth on the Warrant
Certificates in the form set forth in Section 2.2(a) hereof.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Relevant Value" has the meaning specified in Section 3.4(d) hereof.
5
"Repurchase Event" means, and shall be deemed to occur on, any date
when the Company (i) consolidates with or merges into or with another Person
(but only where the holders of Common Stock receive consideration in exchange
for all or part of such Common Stock), if the Common Stock (or other securities)
thereafter issuable upon exercise of the Warrants is not registered under the
Exchange Act or (ii) sells all or substantially all of its assets to another
Person, if the Common Stock (or other securities) thereafter issuable upon
exercise of the Warrants is not registered under the Exchange Act; provided that
in each case a "Repurchase Event" shall not be deemed to have occurred if the
consideration for such transaction consists solely of cash.
"Repurchase Notice" has the meaning specified in Section 3.4(a)
hereof.
"Repurchase Obligation" has the meaning specified in Section 10.2
hereof.
"Repurchase Offer" means the Company's offer to repurchase the
Warrants in accordance with Section 3.4 hereof.
"Repurchase Price" has the meaning specified in Section 3.4(d) hereof.
"Right" has the meaning specified in Section 4.1(c) hereof.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Separation Date" has the meaning specified in the recitals to this
Agreement.
"Spread" means, with respect to any Warrant, the Current Market Value
of the Common Shares subject to such Warrant, less the Exercise Price of such
Warrant, in each case as adjusted as provided herein.
"Subscription Form" means the form on the reverse side of the Warrant
Certificate substantially in the form of Exhibit A hereto.
"Underlying Securities" shall mean the Common Shares (or other
securities) issuable upon exercise of the Warrants.
"Units" has the meaning specified in the recitals to this Agreement.
"Valuation Date" means the date five Business Days prior to the Notice
Date.
6
"Value Certificate" has the meaning specified in Section 3.4(d)
hereof.
"Value Report" has the meaning specified in Section 4.1(k) hereof.
"Warrant" has the meaning specified in the recitals to this Agreement.
"Warrant Agent" has the meaning specified in the preamble to this
Agreement.
"Warrant Certificates" has the meaning specified in Section 2.1
hereof.
"Warrant Registration Rights Agreement" means the Warrant Registration
Rights Agreement, dated as of July 29, 1998, between the Company and the Warrant
Agent.
"Warrant Registration Statement" has the meaning specified in Section
3 of the Warrant Registration Rights Agreement.
ARTICLE II
ORIGINAL ISSUE OF WARRANTS
Section 2.1. Form of Warrant Certificates. Certificates representing
----------- ----------------------------
the Warrants (the "Warrant Certificates") shall be substantially in the form
--------------------
attached hereto as Exhibit A, shall be dated the date on which such Warrant
Certificates are countersigned by the Warrant Agent and shall have such
insertions as are appropriate or required or permitted by this Agreement and may
have such letters, numbers or other marks of identification and such legends and
endorsements stamped, printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation pursuant thereto or with any rule or regulation of any securities
exchange on which the Warrants may be listed, or to conform to usage.
Warrants offered and sold shall be issued initially in the form of one
or more permanent global Warrant Certificates in definitive, fully registered
form, substantially in the form set forth in Exhibit A (the "Global Warrant"),
--------------
deposited with the Warrant Agent, as custodian for, and registered in the name
of the nominee for, the Depositary, duly executed by the Company and
countersigned by the Warrant Agent as hereinafter provided. The aggregate
number of Warrants represented by the Global Warrant may from time to time be
increased or decreased by adjustments made on the records of the Warrant Agent,
as custodian for the Depositary, or its nominee, as provided in Section 2.4 and
Section 8.3 hereof.
7
Warrants issued pursuant to Section 2.4 and Section 8.2(b) in exchange
for interests in the Global Warrant shall be issued in the form of permanent
Warrant Certificates in registered form, substantially in the form set forth in
Exhibit A (the "Certificated Warrants").
---------------------
The definitive Warrant Certificates shall be typed, printed,
lithographed or engraved or produced by any combination of these methods or may
be produced in any other manner permitted by the rules of any securities
exchange on which the Warrants may be listed, all as determined by the officers
executing such Warrant Certificates, as evidenced by their execution of such
Warrant Certificates.
Section 2.2. Restrictive Legends. (a) The Warrant Certificates shall
----------- -------------------
bear substantially the following legend on the face thereof:
THE WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1),(2) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2)
AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER
RULE 144(k) TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d), IF
APPLICABLE, UNDER THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO
SUCH TRANSFER, RESELL OR OTHERWISE TRANSFER THE WARRANTS
REPRESENTED BY THIS CERTIFICATE EXCEPT (A) TO TVN ENTERTAINMENT
CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE
8
RESTRICTIONS ON TRANSFER OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
WARRANT AGENT) AND IF SUCH TRANSFER SUBSEQUENT TO THE DATE ON
WHICH THE WARRANTS REPRESENTED HEREBY BECOME SEPARATELY
TRANSFERABLE, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE WARRANTS
REPRESENTED BY THIS CERTIFICATE ARE TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH
ANY TRANSFER OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK
THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
WARRANT AGENT. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO EACH OF THE WARRANT AGENT AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF
THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A
PROVISION REQUIRING THE WARRANT AGENT TO REFUSE TO REGISTER ANY
TRANSFER OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
(b) Each Global Warrant shall also bear the following legend on the
face thereof:
9
UNLESS THIS WARRANT CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO TVN
ENTERTAINMENT CORPORATION OR THE WARRANT AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF THE DEPOSITORY TRUST
COMPANY OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE VIII OF THE WARRANT AGREEMENT.
(c) Each Warrant Certificate issued prior to the Separation Date shall
bear the following legend on the face thereof:
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED
AS PART OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE
14% SENIOR NOTE DUE 2008 OF TVN ENTERTAINMENT CORPORATION
(COLLECTIVELY, THE "NOTES") AND ONE WARRANT INITIALLY ENTITLING
THE HOLDER THEREOF TO PURCHASE 10.777 SHARES OF VOTING COMMON
STOCK, PAR VALUE $0.001 PER SHARE, OF TVN ENTERTAINMENT
CORPORATION. PRIOR TO THE CLOSE OF BUSINESS UPON THE EARLIEST TO
OCCUR OF (i) JANUARY 29, 1999, (ii) THE COMMENCEMENT OF AN
EXCHANGE OFFER WITH RESPECT TO THE NOTES, (iii) THE EFFECTIVENESS
OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES, (iv)
THE COMMENCEMENT OF AN OFFER TO PURCHASE (AS DEFINED IN THE
INDENTURE) THE NOTES, AND (v) SUCH EARLIER DATE AS DETERMINED BY
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED IN ITS
10
CAPACITY AS PLACEMENT AGENT AND IN ITS SOLE DISCRETION, THE
WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR
EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED
ONLY TOGETHER WITH, THE NOTES.
Section 2.3. Execution and Delivery of Warrant Certificates.
----------- ----------------------------------------------
Warrant Certificates evidencing 200,000 Warrants, each Warrant to purchase
initially 10.777 Common Shares, may be executed, on or after the date of this
Agreement, by the Company and delivered to the Warrant Agent for
countersignature, and the Warrant Agent shall thereupon countersign and deliver
such Warrant Certificates upon the order and at the written direction of the
Company signed by its Chief Executive Officer or other duly authorized executive
officer to the purchasers thereof on the date of issuance. The Warrant Agent is
hereby authorized to countersign and deliver Warrant Certificates as required by
this Section 2.3 or by Section 3.3, Article VI or Article VIII hereof.
The Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board, Chief Executive Officer, any Vice President or other
duly authorized executive officer of the Company either manually or by facsimile
signature printed thereon. The Warrant Certificates shall be countersigned by
manual signature of the Warrant Agent and shall not be valid for any purpose
unless so countersigned. In case any officer or director of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall
cease to be such officer or director of the Company before countersignature by
the Warrant Agent and the issuance and delivery thereof, such Warrant
Certificates may nevertheless be countersigned by the Warrant Agent and issued
and delivered with the same force and effect as though such Person had not
ceased to be such officer or director of the Company.
Section 2.4. Certificated Warrants. Beneficial owners of interests in
----------- ---------------------
a Global Warrant may receive Certificated Warrants (which, except as set forth
in Section 8.3(d), shall bear the Private Placement Legend) in accordance with
the procedures of the Warrant Agent and the Depositary. In connection with the
execution and delivery of such Certificated Warrants, the Warrant Agent shall
reflect on its books and records the date and a decrease in the number of
Warrants represented by the relevant Global Warrant equal to the number of such
Certificated Warrants and the Company shall execute and the Warrant Agent shall
countersign and deliver to said beneficial owners one or more Certificated
Warrants in an equal aggregate number.
11
ARTICLE III
EXERCISE PRICE, EXERCISE AND REPURCHASE OF WARRANTS
Section 3.1. Exercise Price. Each Warrant Certificate shall, when
----------- --------------
countersigned by the Warrant Agent, initially entitle the Holder thereof,
subject to the provisions of this Agreement, to purchase the number of Common
Shares indicated thereon at a purchase price (the "Exercise Price") of $0.01 per
--------------
Common Share, subject to adjustment as provided in Section 4.1 and Article V
hereof.
Section 3.2. Exercise; Restrictions on Exercise. At any time after
----------- ----------------------------------
one year after the Closing Date and on or before the Expiration Date, any
outstanding Warrants may be exercised on any Business Day; provided that the
Warrant Registration Statement is, at the time of exercise, effective and
available for the exercise of the Warrants or the exercise of such Warrants is
exempt from the registration requirements of the Securities Act. Any Warrants
not exercised by 5:00 p.m., New York City time, on the Expiration Date shall
expire and all rights of the Holders of such Warrants shall terminate.
Additionally, pursuant to Section 4.1(j)(ii) hereof, the Warrants shall expire
and all rights of the Holders of such Warrants shall terminate in the event the
Company merges or consolidates with or sells all or substantially all of its
property and assets to a Person (other than an Affiliate of the Company) if the
consideration payable to holders of Common Stock in exchange for their Common
Stock in connection with such merger, consolidation or sale consists solely of
cash or in the event of the dissolution, liquidation or winding up of the
Company.
Section 3.3. Method of Exercise; Payment of Exercise Price. In order
----------- ---------------------------------------------
to exercise all or any of the Warrants represented by a Warrant Certificate, the
Holder thereof must surrender for exercise the Warrant Certificate to the
Warrant Agent at its corporate trust office address set forth in Section 12.5
hereof, with the Subscription Form set forth on the reverse of the Warrant
Certificate duly executed, together with payment in full of the Exercise Price
then in effect for each Common Share (or other securities) issuable upon
exercise of the Warrants as to which a Warrant is exercised; such payment may be
made in cash or by certified or official bank or bank cashier's check payable to
the order of the Company and shall be made to the Warrant Agent at its corporate
trust office address set forth in Section 12.5 hereof prior to the close of
business on the date the Warrant Certificate is surrendered to the Warrant Agent
for exercise. Notwithstanding the foregoing, the Exercise Price may be paid by
surrendering additional Warrants to the Warrant Agent having an aggregate Spread
equal to the aggregate Exercise Price of the Warrants being exercised. All
payments received upon exercise of Warrants shall be delivered to the Company by
the Warrant Agent as instructed in writing by the Company. If less than all the
Warrants represented by a Warrant Certificate are exercised or surrendered (in
connection with a cashless exercise), such Warrant Certificate shall be
surrendered and a new Warrant Certificate of the same tenor and for the
12
number of Warrants which were not exercised or so surrendered shall be executed
by the Company and delivered to the Warrant Agent and the Warrant Agent shall
countersign the new Warrant Certificate, registered in such name or names as may
be directed in writing by the Holder, and shall deliver the new Warrant
Certificate to the Person or Persons entitled to receive the same. Global
Warrants will be exercised in accordance with the procedures of the Warrant
Agent and the Depositary. Upon the exercise of any Warrants following the
surrender of a Warrant Certificate in conformity with the foregoing provisions,
the Warrant Agent shall instruct the Company to transfer promptly to the Holder
or, upon the written order of the Holder of such Warrant Certificate,
appropriate evidence of ownership of any Common Shares or other security or
property to which it is entitled, registered or otherwise placed in such name or
names as may be directed in writing by the Holder, and to deliver such evidence
of ownership to the Person or Persons entitled to receive the same and
fractional shares, if any, or an amount in cash, in lieu of any fractional
shares, as provided in Section 4.5 hereof; provided that the Holder of such
Warrant shall be responsible for the payment of any transfer taxes required as
the result of any change in ownership of such Warrants or the issuance of such
Common Shares other than to the Holder of such Warrants and any such transfer
shall comply with applicable law. Upon the exercise of a Warrant or Warrants,
the Warrant Agent is hereby authorized and directed to requisition from any
transfer agent of the Common Shares (and all such transfer agents are hereby
irrevocably authorized to comply with all such requests) certificates (bearing
the legend set forth in Section 12.10 hereof, if applicable, unless a
registration statement with the Commission relating to such Common Shares shall
then be in effect or the Company and the Holder exercising such Warrant or
Warrants otherwise agree) for the necessary number of Common Shares to which
said Holder may be entitled. The Company shall enter, or shall cause any
transfer agent of the Common Shares to enter, the name of the Person entitled to
receive the Common Shares upon exercise of the Warrants into the Company's
register of stockholders within 14 days of such exercise. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
date of the surrender for exercise, as provided above, of the Warrant
Certificate representing such Warrant and, for all purposes under this
Agreement, the Person entitled to receive any Common Shares deliverable upon
such exercise shall, as between such Person and the Company, be deemed to be the
Holder of such Common Shares of record as of the close of business on such date
and shall be entitled to receive, and the Warrant Agent shall deliver to such
Person, any Common Shares to which such Person would have been entitled had such
Person been the registered holder on such date.
Section 3.4. Repurchase Offers. (a) Notice of Repurchase Event.
----------- ----------------- --------------------------
Within five Business Days following the occurrence of a Repurchase Event, the
Company shall give notice (a "Repurchase Notice") to the Holders of the Warrants
-----------------
and the Warrant Agent that such event has occurred.
13
(b) Repurchase Offers Generally. Following the occurrence of a
---------------------------
Repurchase Event, the Company shall offer to repurchase for cash all outstanding
Warrants pursuant to the provisions of this Section 3.4 (a "Repurchase Offer").
----------------
The Company shall give notice of a Repurchase Offer in accordance with Section
3.4(f) hereof. Each date on which the Company gives any such notice is referred
to as the "Notice Date." The Repurchase Offer shall commence on the Notice Date
-----------
for such Repurchase Offer and shall expire at 5:00 p.m., New York City time, on
a date determined by the Company (the "Final Surrender Time") that is at least
--------------------
30 but not more than 60 days after the Notice Date. Once a Repurchase Event has
occurred, there is no limit on the number of Repurchase Offers that the Company
may make.
(c) Repurchase Offers. (i) In any Repurchase Offer, the Company shall
-----------------
offer to purchase for cash at the Repurchase Price all Warrants outstanding on
the Notice Date for such Repurchase Offer that are properly tendered to the
Warrant Agent on or prior to the Final Surrender Time for such Repurchase Offer.
(ii) Each Holder may, but shall not be obligated to, accept such
Repurchase Offer by tendering to the Warrant Agent, on or prior to the Final
Surrender Time for such Repurchase Offer, the Warrant Certificates evidencing
the Warrants such Holder desires to have repurchased in such offer, together
with a completed Certificate for Surrender in substantially the form attached to
the Warrant Certificate. A Holder may withdraw all or a portion of the Warrants
tendered to the Warrant Agent at any time prior to the Final Surrender Time for
such Repurchase Offer. If less than all the Warrants represented by a Warrant
Certificate shall be tendered, such Warrant Certificate shall be surrendered and
a new Warrant Certificate of the same tenor and for the number of Warrants which
were not tendered shall be executed by the Company and delivered to the Warrant
Agent and the Warrant Agent shall countersign the new Warrant Certificate,
registered in such name or names as may be directed in writing by the Holder,
and shall deliver the new Warrant Certificate to the Person or Persons entitled
to receive the same; provided that the Holder of such Warrants shall be
responsible for the payment of any transfer taxes required as the result of any
change in ownership of such Warrants and any such transfer shall comply with
applicable law.
(d) Repurchase Price. (i) The purchase price (the "Repurchase Price")
---------------- ----------------
for each Warrant properly tendered to the Warrant Agent pursuant to a Repurchase
Offer shall be equal to the value (the "Relevant Value") on the Valuation Date
--------------
of the Common Shares issuable, and other securities or property of the Company
which would have been delivered, upon exercise of Warrants had the Warrants been
exercised (regardless of whether the Warrants are then exercisable), less the
Exercise Price in effect on the Notice Date for such Repurchase Offer.
14
(ii) The Relevant Value of the Common Shares and other securities or
property issuable upon exercise of all the Warrants, on any Valuation Date shall
be:
(1) (A) If the Common Shares (or other securities) are registered
under the Exchange Act, deemed to be the average of the daily market prices
(on the stock exchange that is the primary trading market for the Common
Shares (or other securities)) of the Common Shares (or other securities)
for the 20 consecutive trading days immediately preceding such Valuation
Date or, (B) if the Common Shares (or other securities) have been
registered under the Exchange Act for less than 20 consecutive trading days
before such date, then the average of the daily market prices for all of
the trading days before such date for which daily market prices are
available, in the case of each of (A) and (B), as certified to the Warrant
Agent by the Chief Executive Officer, the President, any Vice President or
the Chief Financial Officer of the Company (the "Value Certificate"). The
-----------------
market price for each such trading day shall be: (A) in the case of a
security listed or admitted to trading on any national securities exchange,
the closing sales price on such day, or if no sale takes place on such day,
the average of the closing bid and asked prices on such day, (B) in the
case of a security not then listed or admitted to trading on any national
securities exchange, the last reported sale price on such day, or if no
sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reputable quotation source designated
by the Company, (C) in the case of a security not then listed or admitted
to trading on any national securities exchange and as to which no such
reported sale price or bid and asked prices are available, the average of
the reported high bid and low asked prices on such day, as reported by a
reputable quotation service, or a newspaper of general circulation in the
Borough of Manhattan, City and State of New York customarily published on
each Business Day, designated by the Company, or, if there shall be no bid
and asked prices on such day, the average of the high bid and low asked
prices, as so reported, on the most recent day (not more than 30 days prior
to the date in question) for which prices have been so reported and (D) if
there are no bid and asked prices reported during the 30 days prior to the
date in question, the Relevant Value shall be determined as if the Common
Shares (or other securities) were not registered under the Exchange Act; or
(2) If the Common Shares (or other securities) are not registered
under the Exchange Act or if the value cannot be computed under clause (1)
above, deemed to be equal to the value set forth in the Value Report (as
defined below) as determined by an Independent Financial Expert, which
shall be selected by the Board in accordance with Section 3.4(e) hereof,
and retained on customary terms and conditions, using one or more valuation
methods that the Independent Financial Expert, in its best professional
judgment, determines to be most appropriate but without giving effect to
any discount for lack of liquidity, the fact that the Company has no class
of equity securities
15
registered under the Exchange Act or the fact that the Common Shares and
other securities or property issuable upon exercise of the Warrants
represent a minority interest in the Company. The Company shall use its
best efforts to cause the Independent Financial Expert to deliver to the
Company, with a copy to the Warrant Agent, within 45 days of the
appointment of the Independent Financial Expert in accordance with Section
3.4(e) hereof, a value report (the "Value Report") stating the Relevant
------------
Value of the Common Shares and other securities or property of the Company,
if any, being valued as of the Valuation Date and containing a brief
statement as to the nature and scope of the methodologies upon which the
determination of Relevant Value was made. The Warrant Agent shall have no
duty with respect to the Value Report of any Independent Financial Expert,
except to keep it on file and available for inspection by the Holders. The
determination as to Relevant Value in accordance with the provisions of
this Section 3.4(d) shall be conclusive on all Persons.
(e) Selection of Independent Financial Expert. If clause (d)(ii)(2)
-----------------------------------------
of this Section 3.4 is applicable, the Board of Directors of the Company shall
select an Independent Financial Expert not more than five Business Days
following a Repurchase Event. Within two Business Days following its selection
of an Independent Financial Expert, the Company shall deliver to the Warrant
Agent a notice setting forth the name of the Independent Financial Expert.
(f) Notice of Repurchase Offer. Each notice of a Repurchase Offer (an
--------------------------
"Offer Notice") given by the Company pursuant to Section 3.4(b) shall be given
------------
by the Company directly to all Holders of the Warrants, with a copy to the
Warrant Agent, shall be given simultaneously with the Repurchase Notice (or, in
the event that the Relevant Value of the Common Shares or other securities or
property issuable upon exercise of all the Warrants cannot be determined
pursuant to Section 3.4(d)(ii)(1), then such Offer Notice shall be given within
five Business Days after the Company receives the Value Report with respect to
such offer) and shall specify (A) the Final Surrender Time for such Repurchase
Offer, (B) the manner in which Warrants may be surrendered to the Warrant Agent
for repurchase by the Company, (C) the Repurchase Price at which the Warrants
will be repurchased by the Company, (D) if applicable, the name of the
Independent Financial Expert whose valuation of the Common Shares and other
securities or property was utilized in connection with determining such
Repurchase Price and (E) that payment of the Repurchase Price will be made by
the Warrant Agent. Each such notice shall be accompanied by a Certificate for
Surrender for Repurchase Offer in substantially the form attached to the Warrant
Certificate and a copy of the Value Report, if any.
(g) Payment for Warrants. Upon surrender for repurchase of any
--------------------
Warrants in conformity with the provisions of this Section 3.4, the Warrant
Agent shall thereupon promptly notify the Company of such surrender. On or
before the Final Surrender Time for
16
any Repurchase Offer, the Company shall deposit with the Warrant Agent funds
sufficient to make payment for the Warrants tendered to the Warrant Agent and
not withdrawn. After receipt of such deposit from the Company, the Warrant Agent
shall make payment, by delivering a check in such amount as is appropriate, to
such Person or Persons as it may be directed in writing by the Holder
surrendering such Warrants, net of any transfer taxes required to be paid in the
event that the check is to be delivered to a Person other than the Holder.
(h) Compliance with Laws. Notwithstanding anything contained in this
--------------------
Section 3.4, if the Company is required to comply with laws, regulations and
securities exchange or clearing procedures, rules or regulations in connection
with making any Repurchase Offer, such laws, regulations, procedures or rules
shall govern the making of such Repurchase Offer.
ARTICLE IV
ADJUSTMENTS
Section 4.1. Adjustments. The Exercise Price and the number of Common
----------- -----------
Shares issuable upon exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(a) Divisions; Consolidations; Reclassifications. In case the Company
--------------------------------------------
shall, on or before the Expiration Date, (i) issue any Common Shares in payment
of a dividend or other distribution with respect to its Common Stock, (ii)
subdivide its issued and outstanding Common Shares, (iii) consolidate its issued
and outstanding Common Shares into a smaller number of shares, or (iv)
reclassify or convert the Common Shares (other than a reclassification in
connection with a merger, consolidation or other business combination which will
be governed by Section 4.1(j)), then the number of Common Shares purchasable
upon exercise of each Warrant immediately prior to the record date for such
issue or distribution or the effective date of such subdivision, consolidation,
reclassification or conversion shall be adjusted so that the Holder of each
Warrant shall thereafter be entitled to receive the kind and number of Common
Shares which such Holder would have been entitled to receive after the happening
of any of the events described above had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto.
An adjustment made pursuant to this Section 4.1(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) Rights; Options; Warrants. In case the Company shall issue rights,
-------------------------
options, warrants or convertible or exchangeable securities (other than an
issuance of
17
convertible or exchangeable securities subject to Section 4.1(a)) to all holders
of its Common Shares, entitling them to subscribe for or purchase Common Shares
at a price per share which is lower (at the record date for such issuance) than
the then Current Market Value per Common Share, then the number of Common Shares
thereafter purchasable upon the exercise of each Warrant shall instead be
adjusted and shall be determined by multiplying the number of Common Shares
theretofore purchasable upon exercise of each Warrant by a fraction, the
numerator of which shall be the sum of (i) the number of Common Shares
outstanding immediately prior to the issuance of such rights, options, warrants
or convertible or exchangeable securities plus (ii) the number of additional
Common Shares which may be purchased or subscribed for upon exercise, exchange
or conversion of such rights, options, warrants or convertible or exchangeable
securities, and the denominator of which shall be the sum of (x) the number of
Common Shares outstanding immediately prior to the issuance of such rights,
options, warrants or convertible or exchangeable securities plus (y) the number
of shares which the total consideration received by the Company for such rights,
options, warrants or convertible or exchangeable securities so offered would
purchase at the then Current Market Value per Common Share. Except as otherwise
provided above, such adjustment shall be made whenever such rights, options,
warrants or convertible or exchangeable securities are issued, and shall become
effective retroactively immediately after the record date for the determination
of stockholders entitled to receive such rights, options, warrants or
convertible or exchangeable securities.
(c) Issuance of Common Shares at Lower Values. In case the Company
-----------------------------------------
shall sell and issue any Common Share or Right (as defined below) (excluding (i)
any Right issued in any of the transactions described in Section 4.1(a) or (b)
above, (ii) Common Shares issued pursuant to any Right issued in any transaction
described in Section 4.1(a) or (b) above, (iii) any Common Shares or Right
issued as consideration (A) when any corporation or business is acquired, merged
into or becomes part of the Company or a subsidiary of the Company or (B) in
good faith in connection with any other business collaboration, in each case in
an arm's-length transaction between the Company and a Person other than an
Affiliate of the Company and (iv) Common Shares issued upon the exercise of
Rights outstanding on the Closing Date and disclosed in the Offering Memorandum
with respect to the Notes) at a price per Common Share (determined in the case
of any such Right, by dividing (x) the total consideration receivable by the
Company in consideration of the sale and issuance of such Right, plus the total
consideration payable to the Company upon exercise, conversion or exchange
thereof, by (y) the total number of Common Shares covered by such Right) that is
lower than the Current Market Value per Common Share in effect immediately prior
to such sale or issuance, then the number of Common Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Common Shares theretofore purchasable upon exercise of such
Warrant by a fraction, the numerator of which shall be the number of Common
Shares outstanding immediately after such sale or issuance and the denominator
of which shall be the number of Common Shares outstanding immediately prior
18
to such sale or issuance plus the number of Common Shares which the aggregate
consideration received (determined as provided below) for such sale or issuance
would purchase at such Current Market Value per Common Share. For purposes of
this Section 4.1(c), the Common Shares which the holder of any such Right shall
be entitled to subscribe for or purchase shall be deemed to be issued and
outstanding as of the date of such sale and issuance and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such Right, plus the consideration or premiums
stated in such Right to be paid for the Common Shares covered thereby. In case
the Company shall sell and issue any Right together with one or more other
securities as part of a unit at a price per unit, then in determining the "price
per Common Share" and the "consideration received by the Company" for purposes
of the first sentence of this Section 4.1(c), the Board shall determine, in good
faith, the fair value of the Right then being sold as part of such unit. For
purposes of this paragraph, a "Right" shall mean any right, option, warrant or
-----
convertible or exchangeable security containing the Right to subscribe for or
acquire one or more Common Shares, excluding the Warrants. This Section 4.1(c)
shall not apply to: (i) the exercise of Warrants, or the conversion or exchange
of other securities convertible or exchangeable for Common Shares; or (ii)
Common Shares issued upon the exercise of Rights or warrants issued to all
holders of Common Shares.
(d) Distributions of Debt, Assets, Subscription Rights or Convertible
-----------------------------------------------------------------
Securities. In case the Company shall make a distribution to all holders of its
----------
Common Shares of evidences of its indebtedness, or assets, or other
distributions (excluding any issuance of Common Shares referred to in Section
4.1(a) above and excluding distributions in connection with the dissolution,
liquidation or winding-up of the Company which shall be governed by Section
4.1(j) and distributions of securities referred to in Section 4.1(a), Section
4.1(b) or Section 4.1(c)), then, in each case, the number of Common Shares
purchasable after such record date upon the exercise of each Warrant shall be
determined by multiplying the number of Common Shares purchasable upon the
exercise of such Warrant immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Value per Common Share
immediately prior to the record date for such distribution and the denominator
of which shall be the Current Market Value per Common Share immediately prior to
the record date for such distribution less the then fair value (as determined in
good faith by the Board) of the evidences of its indebtedness, or assets or
other distributions so distributed attributable to one Common Share. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of stockholders entitled to receive such distribution.
(e) Expiration of Rights, Options and Conversion Privileges. Upon the
-------------------------------------------------------
expiration of any rights, options, warrants or conversion or exchange privileges
(including, without limitation, any Rights) that have previously resulted in an
adjustment hereunder, if any thereof shall not have been exercised, exchanged or
converted, the Exercise Price and the
19
number of Common Shares issuable upon the exercise of each Warrant shall, upon
such expiration, be readjusted and shall thereafter, upon any future exercise,
be such as they would have been had they been originally adjusted (or had the
original adjustment not been required, as the case may be) as if (i) the only
Common Shares so issued were the Common Shares, if any, actually issued or sold
upon the exercise, exchange or conversion of such rights, options, warrants or
conversion or exchange rights (including, without limitation, any Rights) and
(ii) such Common Shares, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, exchange or conversion plus
the consideration, if any, actually received by the Company for issuance, sale
or grant of all such rights, options, warrants or conversion or exchange rights
(including, without limitation, any Rights) whether or not exercised.
(f) Current Market Value. For the purposes of any computation under
--------------------
this Article IV, the "Current Market Value" per Common Share or of any other
--------------------
security (herein collectively referred to as a "security") at any date herein
specified shall be:
(i) if the security is not registered under the Exchange Act, the
value of the security (1) most recently determined as of a date within the
six months preceding such date by an Independent Financial Expert selected
by the Company in accordance with the criteria for such valuation set out
in Section 4.1(k), or (2) if no such determination shall have been made
within such six-month period or if the Company so chooses, determined as of
such a date by an Independent Financial Expert selected by the Company in
accordance with the criteria for such valuation set out in Section 4.1(k),
or
(ii) if the security is registered under the Exchange Act, the average
of the daily market prices of the security for the 20 consecutive trading
days immediately preceding such date or, if the security has been
registered under the Exchange Act for less than 20 consecutive trading days
before such date, then the average of the daily market prices for all of
the trading days before such date for which daily market prices are
available. The market price for each such trading day shall be: (A) in
the case of a security listed or admitted to trading on any national
securities exchange or a national market system, including without
limitation the Nasdaq National Market, the closing sales price, regular
way, on such day, or if no sale takes place on such day, the average of the
closing bid and asked prices on such day on the principal national
securities exchange on which such security is listed or admitted, as
determined by the Board, in good faith, (B) in the case of a security not
then listed or admitted to trading on any national securities exchange, the
last reported sale price on such day, or if no sale takes place on such
day, the average of the closing bid and asked prices on such day, as
reported by a reputable quotation source designated by the Company, (C) in
the case of a security not then listed or admitted to trading on any
national securities exchange and as to which no such reported sale price or
bid and asked prices are available, the
20
average of the reported high bid and low asked prices on such day, as
reported by a reputable quotation service, or a newspaper of general
circulation in the Borough of Manhattan, City and State of New York
customarily published on each Business Day, designated by the Company, or,
if there shall be no bid and asked prices on such day, the average of the
high bid and low asked prices, as so reported, on the most recent day (not
more than 30 calendar days prior to the date in question) for which prices
have been so reported and (D) if there are no bid and asked prices reported
during the 30 calendar days prior to the date in question, the Current
Market Value of the security shall be determined as if the security were
not registered under the Exchange Act.
(g) Consideration Received. For purposes of any computation
----------------------
respecting consideration received pursuant to this Section 4.1, the following
shall apply:
(i) in the case of the issuance of Common Shares for cash, the
consideration shall be the amount of such cash, provided that in no case
shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(ii) in the case of the issuance of Common Shares for a consideration
in whole or in part other than cash, the consideration other than cash
shall be deemed to be the fair market value thereof as determined in good
faith by the Board (irrespective of the accounting treatment thereof),
whose determination shall be conclusive and described in reasonable detail
in a board resolution which shall be provided as soon as practicable
thereafter to the Warrant Agent; and
(iii) in the case of the issuance of rights, options, warrants or
securities convertible into or exchangeable for Common Shares (including,
without limitation, any Rights), the aggregate consideration received
therefor shall be deemed to be the consideration received by the Company
for the issuance of such rights, options, warrants or securities
convertible into or exchangeable for Common Shares, plus the additional
minimum consideration, if any, to be received by the Company upon the
exercise, conversion or exchange thereof (the consideration in each case to
be determined in the same manner as provided in clauses (i) and (ii) of
this Section 4.1(g)).
(h) De Minimis Adjustments. No adjustment in the number of Common
----------------------
Shares purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the number of
Common Shares purchasable upon the exercise of each Warrant; provided, however,
that any adjustments which by reason of this Section 4.1(h) are not required to
be made shall be carried forward and taken
21
into account in any subsequent adjustment. All calculations shall be made to the
nearest one-thousandth of a share.
(i) Adjustment of Exercise Price. Whenever the number of Common Shares
----------------------------
purchasable upon the exercise of each Warrant is adjusted, as herein provided,
the Exercise Price per Common Share payable upon exercise of such Warrant shall
be adjusted (calculated to the nearest $.0001) so that it shall equal the price
determined by multiplying such Exercise Price immediately prior to such
adjustment by a fraction the numerator of which shall be the number of Common
Shares purchasable upon the exercise of each Warrant immediately prior to such
adjustment and the denominator of which shall be the number of Common Shares so
purchasable immediately thereafter. Following any adjustment to the Exercise
Price pursuant to this Article IV, the amount payable, when adjusted, shall
never be less than the par value per Common Share at the time of such
adjustment.
If, after an adjustment, a Holder of a Warrant upon exercise of it may
receive shares of two or more classes in the capital of the Company, the Company
shall determine the allocation of the adjusted Exercise Price between such
classes of shares in a manner that the Board deems fair and equitable to the
Holders. After such allocation, the exercise privilege and the Exercise Price
of each class of shares shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Shares in this Article IV.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(j) Consolidation, Merger, Etc. (i) Subject to the provisions of
--------------------------
Subsection (ii) below of this Section 4.1(j), in case of the consolidation
of the Company with, or merger of the Company with or into, or of the sale
of all or substantially all of the properties and assets of the Company to,
any Person, and in connection therewith consideration is payable to holders
of Common Shares (or other securities or property purchasable upon exercise
of Warrants) in exchange therefor, the Warrants shall remain subject to the
terms and conditions set forth in this Agreement and each Warrant shall,
after such consolidation, merger or sale, entitle the Holder to receive
upon exercise the number of shares in the capital or other securities or
property (including cash) of or from the Person resulting from such
consolidation or surviving such merger or to which such sale shall be made
or of the parent of such Person, as the case may be, that would have been
distributable or payable on account of the Common Shares if such Holder's
Warrants had been exercised immediately prior to such merger, consolidation
or sale (or, if applicable, the record date therefor); and in any such case
the provisions of this Agreement with respect to the rights and interests
thereafter of the Holders of Warrants shall be appropriately adjusted by
the Board in good faith so
22
as to be applicable, as nearly as may reasonably be, to any shares, other
securities or any property thereafter deliverable on the exercise of the
Warrants.
(ii) Notwithstanding the foregoing, (x) if the Company merges or
consolidates with, or sells all or substantially all of its property and
assets to, another Person (other than an Affiliate of the Company) and
consideration is payable to holders of Common Shares in exchange for their
Common Shares in connection with such merger, consolidation or sale which
consists solely of cash, or (y) in the event of the dissolution,
liquidation or winding up of the Company, then the Holders of Warrants
shall be entitled to receive distributions on the date of such event on an
equal basis with holders of Common Shares (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. Upon receipt of
such payment, if any, the rights of a Holder shall terminate and cease and
such Holder's Warrants shall expire. If the Company has made a Repurchase
Offer that has not expired at the time of such transaction, the holders of
the Warrants will be entitled to receive the higher of (i) the amount
payable to the holders of the Warrants described above and (ii) the
Repurchase Price payable to the holders of the Warrants pursuant to such
Repurchase Offer. In case of any such merger, consolidation or sale of
assets, the surviving or acquiring Person or, in 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. After receipt of such deposit from such
Person or the Company and after receipt of surrendered Warrant
Certificates, the Warrant Agent shall make payment 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 Holder surrendering such Warrants.
(k) If required pursuant to Section 4.1(f)(i), the Current Market
Value shall be deemed to be equal to the value set forth in the Value Report (as
defined below) as determined by an Independent Financial Expert, which shall be
selected by the Board not more than ten Business Days following the occurrence
of any event referred to in Section 4(b), 4(c), or 4(d), and retained on
customary terms and conditions, using one or more valuation methods that the
Independent Financial Expert, in its professional judgment, determines to be
most appropriate. The Company shall cause the Independent Financial Expert to
deliver to the Company, with a copy to the Warrant Agent, within 45 days of the
appointment of the Independent Financial Expert, a value report (the "Value
-----
Report") stating the value of the Common Shares and other securities or property
------
of the Company, if any, being valued as of the Valuation Date and containing a
brief statement as to the nature and scope of the examination or investigation
upon which the determination of value was made. The Warrant Agent shall have no
duty with respect to the Value Report of any Independent Financial Expert,
except to keep it on file and available for inspection by the Holders. The
23
determination as to Current Market Value in accordance with the provisions of
this Section 4.1(k) shall be conclusive on all Persons. The Independent
Financial Expert shall consult with management of the Company in order to allow
management to comment on the proposed value prior to delivery to the Company of
any Value Report.
(l) When No Adjustment Required. Without limiting any other
---------------------------
exception contained in this Section 4.1, and in addition thereto, no adjustment
need be made for:
(i) grants or exercises of Rights granted to employees, directors or
consultants of the Company or any of its subsidiaries (to the
extent that all such securities do not have an aggregate equity
value in excess of 15% of the equity value of the Company on a
fully diluted basis, as determined in good faith by the Board
and any such Rights have an exercise price at least equal to the
fair market value of the Common Shares on the date of issuance,
as determined in good faith by the Board);
(ii) grants or exercises of options, warrants or other agreements or
rights to purchase capital stock of the Company existing on the
Closing Date;
(iii) rights to purchase Common Shares pursuant to a Company plan for
reinvestment of dividends or interest;
(iv) a change in the par value of the Common Shares (including a
change from par value to no par value or vice versa);
(v) issuances of Rights or Common Shares in bona fide public
offerings or private placements pursuant to Section 4(2) of the
Securities Act, Regulation D thereunder or Regulation S,
involving at least one investment bank of national reputation
(provided any such private placement is to 10 or more beneficial
holders); and
(vi) issuances of Rights or Common Stock in connection with the
establishment of commercial bank facilities.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
Section 4.2. Notice of Adjustment. Whenever the number of Common
----------- --------------------
Shares purchasable upon the exercise of each Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall cause the Warrant Agent promptly
to mail by first class mail,
24
postage prepaid, at the expense of the Company, to each Holder notice of such
adjustment or adjustments and shall deliver to the Warrant Agent a certificate
of the Auditors setting forth the number of Common Shares purchasable upon the
exercise of each Warrant and the Exercise Price after such adjustment, setting
forth a brief statement of the facts requiring such adjustment and setting forth
the computation by which such adjustment was made. Such certificate shall be
conclusive evidence of the correctness of such adjustment except in the case of
manifest error. The Warrant Agent shall be entitled to conclusively 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 an inspection thereof during reasonable business hours upon reasonable
notice. The Warrant Agent shall not at any time be under any duty or
responsibility to any Holders to determine whether any facts exist which may
require any adjustment of the Exercise Price or the number of Common Shares
purchasable on exercise of the Warrants or any of the other adjustments set
forth in Section 4.1, 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 (or the kind or amount) of any Common
Shares which may be purchasable on exercise of the Warrants. 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 Common Shares or share certificates upon
the exercise of any Warrant.
Section 4.3. Statement on Warrants. Irrespective of any adjustment
----------- ---------------------
in the Exercise Price or the number or kind of shares purchasable upon the
exercise of the Warrants, Warrants theretofore or thereafter issued may continue
to express the same price and number and kind of shares as are stated in the
Warrants initially issuable pursuant to this Agreement.
Section 4.4. Notice of Consolidation, Merger, Etc. In case at any
----------- ------------------------------------
time after the date hereof and prior to 5:00 p.m., New York City time, on the
Expiration Date, there shall be any (i) consolidation or merger involving the
Company or sale, transfer or other disposition of all or substantially all of
the Company's property, assets or business (except a merger or other
reorganization in which the Company shall be the surviving corporation and
holders of Common Shares receive no consideration in respect of their shares) or
(ii) any other transaction contemplated by Section 4.1(j)(ii) above, then, in
any one or more of such cases, the Company shall cause to be mailed to the
Warrant Agent and shall cause the Warrant Agent to mail, at the Company's
expense, to each Holder of a Warrant, at the earliest practicable time (and, in
any event, not less than 20 days before any date set for definitive action),
notice of the date on which such reorganization, sale, consolidation, merger,
dissolution, liquidation or winding up shall take place, as the case may be.
Such notice shall also set forth such facts as shall indicate the effect of such
action (to the extent such effect may be known at the date of such notice) on
the Exercise Price and the kind and amount of the Common Shares and other
securities, money and other property deliverable upon exercise of the Warrants.
Such notice shall also specify the date as of which the holders of record of the
Common Shares or other
25
securities or property issuable upon exercise of the Warrants shall be entitled
to exchange their shares for securities, money or other property deliverable
upon such reorganization, sale, consolidation, merger, dissolution, liquidation
or winding up, as the case may be.
Section 4.5. Fractional Interests. If more than one Warrant shall be
----------- --------------------
presented for exercise in full at the same time by the same Holder, the number
of full Common Shares which shall be issuable upon such exercise thereof shall
be computed on the basis of the aggregate number of Common Shares purchasable on
exercise of the Warrants so presented. The Company shall not be required to
issue fractional Common Shares upon the exercise of Warrants. If any fraction of
a Common Share would, except for the provisions of this Section 4.5, be issuable
on the exercise of any Warrant (or specified portion thereof), the Company may
pay an amount in cash calculated by it to be equal to the then Current Market
Value per Common Share multiplied by such fraction computed to the nearest whole
cent.
Section 4.6. Initial Public Offering. Notwithstanding anything to the
----------- -----------------------
contrary herein contained, if the Company conducts an initial public offering of
equity securities (other than Common Shares), the Company will give the Holders
the opportunity to convert such Warrants into warrants to purchase such equity
securities and such Common Shares or such other securities that have been
received by the Holders upon the exercise of Warrants into such equity
securities. Such conversion opportunity will be on terms and conditions
determined to be fair and reasonable by the Board.
ARTICLE V
DECREASE IN EXERCISE PRICE
The Board, in its sole discretion, shall have the right at any time,
or from time to time, to decrease the Exercise Price of the Warrants and/or
increase the number of shares issuable upon the exercise of the Warrants.
ARTICLE VI
LOSS OR MUTILATION
Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them of the ownership and the loss, theft, destruction or
mutilation of any Warrant Certificate and of indemnity or bond satisfactory to
them and (in the case of mutilation) upon surrender and cancellation thereof,
then, in the absence of notice to the Company or the Warrant Agent that the
Warrants represented thereby have been acquired by a bona fide purchaser, the
26
Company shall execute and the Warrant Agent shall countersign and deliver to the
registered Holder of the lost, stolen, destroyed or mutilated Warrant
Certificate, in exchange for or in lieu thereof, a new Warrant Certificate of
the same tenor and for a like aggregate number of Warrants. Upon the issuance of
any new Warrant Certificate under this Article VI, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and other expenses (including the fees and
expenses of the Warrant Agent) in connection therewith. Every new Warrant
Certificate executed and delivered pursuant to this Article VI in lieu of any
lost, stolen or destroyed Warrant Certificate shall constitute a contractual
obligation of the Company whether or not the allegedly lost, stolen or destroyed
Warrant Certificates shall be at any time enforceable by anyone and shall be
entitled to the benefits of this Agreement equally and proportionately with any
and all other Warrant Certificates duly executed and delivered hereunder. The
provisions of this Article VI are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrant Certificates.
ARTICLE VII
RESERVATION AND AUTHORIZATION
OF COMMON SHARES
The Company shall at all times reserve and keep available such number
of its authorized but unissued Common Shares deliverable upon exercise of the
Warrants as will be sufficient to permit the exercise in full of all outstanding
Warrants and will cause appropriate evidence of ownership of such Common Shares
to be delivered to the Warrant Agent upon its request for delivery thereof upon
the exercise of the Warrants. The Company covenants that all Common Shares of
the Company that may be issued upon the exercise of the Warrants will, upon
issuance, be duly authorized, validly issued, fully paid and not subject to any
calls for funds and free from pre-emptive rights and all taxes, liens, charges
and security interests with respect to the issue thereof.
ARTICLE VIII
WARRANT TRANSFER BOOKS; RESTRICTIONS ON TRANSFER
Section 8.1. Transfer and Exchange. The Warrant Certificates shall
----------- ---------------------
be issued in registered form only. The Warrant Agent shall keep at its office a
register for the registration of Warrant Certificates and transfers or exchanges
of Warrant Certificates as herein provided and other appropriate data as
determined by the Warrant Agent. The
27
Company shall, upon reasonable notice to the Warrant Agent, have access to such
register during the Warrant Agent's regular business hours. All Warrant
Certificates issued upon any registration of transfer or exchange of Warrant
Certificates shall be the valid obligations of the Company, evidencing the same
obligations, and entitled to the same benefits under this Agreement, as the
Warrant Certificates surrendered for such registration of transfer or exchange.
The Warrants shall initially be issued as part of the issuance of the
Units. Prior to the Separation Date, the Warrants may not be transferred or
exchanged separately from, but may be transferred or exchanged only together
with, the Notes issued as part of such Units.
A Holder may transfer its Warrants only by complying with the terms of
this Agreement. No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Holder only upon, final acceptance and
registration of the transfer by the Warrant Agent in the register. Prior to the
registration of any transfer of Warrants by a Holder as provided herein, the
Company, the Warrant Agent, and any agent of the Company may treat the Person in
whose name the Warrants are registered as the owner thereof for all purposes and
as the Person entitled to exercise the rights represented thereby, any notice to
the contrary notwithstanding. Furthermore, any holder of a Global Warrant
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 the holder of such Global Warrant (or its agent), and that
ownership of a beneficial interest in the Warrants represented thereby shall be
required to be reflected in a book-entry. When Warrant Certificates are
presented to the Warrant Agent with a request to register the transfer or to
exchange them for an equal amount of Warrants, the Warrant Agent shall register
such transfer or make such exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall execute Warrant Certificates at the Warrant Agent's request. No
service charge shall be made for any registration of transfer or exchange of
Warrants, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer of Warrants.
Section 8.2. Book-Entry Provisions for the Global Warrants. (a) The
----------- ---------------------------------------------
Global Warrant initially shall (i) be registered in the name of the Depositary
for such Global Warrant or the nominee of such Depositary, (ii) be delivered to
the Warrant Agent as custodian for such Depositary and (iii) bear legends as set
forth in Section 2.2 hereof.
Members of, or participants in, the Depositary ("Agent Members") shall
-------------
have no rights under this Agreement with respect to the Global Warrant held on
their behalf by the Depositary or the Warrant Agent as its custodian, and the
Depositary may be treated by the Company, the Warrant Agent and any agent of the
Company or the Warrant Agent as the
28
absolute owner of each such Global Warrant for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent, from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Warrants.
(b) Transfers of the Global Warrant shall be limited to transfers of
such Global Warrant in whole, but not in part, to the Depositary, its successors
or their respective nominees. Interests of beneficial owners in the Global
Warrant may be transferred in accordance with the rules and procedures of the
Depositary and the provisions of Section 8.3 hereof. Certificated Warrants
shall be transferred to beneficial owners in exchange for their beneficial
interests in the Global Warrant, (i) if the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for the Global Warrant and a
successor depositary is not appointed by the Company within 90 days of such
notice, (ii) if there is a Default or (iii) upon the request of the beneficial
owner in accordance with the rules and procedures of the Depositary and the
provisions of Section 8.3 hereof.
(c) In connection with the transfer of the entire Global Warrant to
beneficial owners pursuant to paragraph (b) of this Section 8.2, the Global
Warrant shall be surrendered to the Warrant Agent for cancellation, and the
Company shall execute, and the Warrant Agent shall countersign and deliver, to
each beneficial owner identified by the Depositary in exchange for its
beneficial interest in the Global Warrant, Certificated Warrants representing,
in the aggregate, the number of Warrants theretofore represented by the Global
Warrant.
(d) In connection with the transfer of a portion of the beneficial
interests in the Global Warrant to beneficial owners pursuant to paragraph (b)
of this Section 8.2, the Warrant Agent shall reflect on its books and records
the date and a decrease in the amount of Warrants represented by the Global
Warrant in an amount equal to the amount of Warrants represented by the
beneficial interest in the Global Warrant to be transferred, and the Company
shall execute, and the Warrant Agent shall countersign and deliver, to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the Global Warrant, Certificated Warrants of like tenor and amount.
(e) Any Certificated Warrant delivered in exchange for an interest in
the Global Warrant pursuant to paragraph (b), (c) or (d) of this Section shall,
except as otherwise provided by paragraph (d) of Section 8.3 hereof, bear the
legend regarding transfer restrictions set forth in Section 2.2 hereof.
(f) The registered holder of the Global Warrant may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests
29
through Agent Members, to take any action which a Holder is entitled to take
under this Agreement or the Warrants.
Section 8.3. Special Transfer Provisions. The following provisions
----------- ---------------------------
shall apply:
(a) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of Warrants to a QIB
(excluding non-U.S. Persons):
(i) If the Warrants to be transferred are represented by Certificated
Warrants, the Warrant Agent shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Warrant Certificate stating, or has otherwise advised the
Company and the Warrant Agent in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has signed
the certification provided for on the form of Warrant Certificate stating,
or has otherwise advised the Company and the Warrant Agent in writing, that
it is purchasing the Warrants for its own account or an account with
respect to which it exercises sole investment discretion and that it and
any such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges
that it has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
(ii) If the proposed transferee is an Agent Member, and the Warrants
to be transferred are represented by Certificated Warrants, upon receipt by
the Warrant Agent of the documents referred to in clause (i) above and
instructions given in accordance with the Depositary's and the Warrant
Agent's procedures, the Warrant Agent shall reflect on its books and
records the date and an increase in the amount of Warrants represented by
the Global Warrant in an amount equal to the amount of Warrants represented
by the Certificated Warrants to be transferred, and the Warrant Agent
shall cancel the Certificated Warrants so transferred.
(b) Transfers to Non-U.S. Persons at Any Time. The following
-----------------------------------------
provisions shall apply with respect to the registration of any proposed transfer
of Warrants to a Non-U.S. Person:
(i) The Warrant Agent shall register any proposed transfer of
Warrants to a Non-U.S. Person only upon receipt of a certificate
substantially in the form of Exhibit B from the proposed transferor.
30
(ii) If the proposed transferee is an Agent Member and the Warrants to
be transferred are represented by Certificated Warrants or an interest in
the Global Warrant, upon receipt by the Warrant Agent of the documents
referred to in clause (i) above and instructions given in accordance with
the Depositary's and the Warrant Agent's procedures, the Warrant Agent
shall reflect on its books and records the date and an increase in the
number of Warrants represented by the Global Warrant in an amount equal to
the number of Warrants represented by the Certificated Warrants to be
transferred, and the Warrant Agent shall cancel the Certificated Warrant so
transferred.
(c) Transfers to Any Other Person. The following provisions shall
-----------------------------
apply with respect to the registration of any proposed transfer of Warrants to
any Person not specified in paragraphs (a) and (b) above (including any
Institutional Accredited Investor which is not a QIB).
(i) The Warrant Agent shall register any proposed transfer of
Warrants to any such Person if (x) the transferor has delivered to the
Warrant Agent and the Company a certificate substantially in the form of
Exhibit C-1 hereto and, if required by paragraph (d) thereof, an Opinion of
Counsel to the effect set forth therein and (y) the proposed transferee has
delivered to the Warrant Agent and the Company a certificate substantially
in the form of Exhibit C-2 hereto if such transferee is an Institutional
Accredited Investor that is not a QIB.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the Global Warrant, upon receipt by the Warrant
Agent and the Company of the documents referred to in clause (i) above and
instructions given in accordance with the Depositary's and the Warrant
Agent's procedures, the Company shall execute and the Warrant Agent shall
countersign Certificated Warrants in an amount equal to the number of
Warrants represented by the Global Warrant, if any, to be transferred and
the Warrant Agent shall decrease the number of Warrants represented by the
Global Warrant so transferred.
(d) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Warrant Certificates not bearing the Private Placement Legend,
the Warrant Agent shall deliver Warrant Certificates that do not bear the
Private Placement Legend. Upon the transfer, exchange or replacement of Warrant
Certificates bearing the Private Placement Legend, the Warrant Agent shall
deliver only Warrant Certificates that bear the Private Placement Legend unless
there is delivered to the Warrant Agent an Opinion of Counsel reasonably
satisfactory to the Company and its counsel and the Warrant Agent to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
31
(e) General. (i) By its acceptance of any Warrants represented by a
-------
Warrant Certificate bearing the Private Placement Legend, each Holder of such
Warrants acknowledges the restrictions on transfer of such Warrants set forth in
this Agreement and in the Private Placement Legend and agrees that it will
transfer such Warrants only as provided in this Agreement. The Warrant Agent
shall not register a transfer of any Warrants unless such transfer complies with
the restrictions on transfer of such Warrants set forth in this Agreement and is
in compliance with applicable laws and applicable rules, regulations and
procedures of any securities exchange or clearing agency in effect from time to
time. In connection with any transfer of Warrants, each Holder agrees by its
acceptance of Warrants to furnish the Warrant Agent or the Company such
certifications, legal opinions or other information as either of them may
reasonably require to confirm that such transfer is being made pursuant to an
exemption from, or a transaction not subject to, the registration requirements
of the Securities Act or any other applicable laws of any foreign jurisdiction;
provided that the Warrant Agent shall not be required to determine (but may rely
on a determination made by the Company with respect to) the sufficiency of any
such certifications, legal opinions or other information.
(ii) The Warrant Agent shall retain copies of all letters, notices and
other written communications received pursuant to Section 8.2 hereof or
this Section 8.3. The Company shall have the right to inspect and make
copies of all such letters, notices or other written communications at any
reasonable time upon the giving of reasonable written notice to the Warrant
Agent.
Section 8.4. Surrender of Warrant Certificates. Any Warrant
----------- ---------------------------------
Certificate surrendered for registration of transfer, exchange or exercise of
the Warrants represented thereby shall, if surrendered to the Company, be
delivered to the Warrant Agent, and all Warrant Certificates surrendered or so
delivered to the Warrant Agent shall be promptly canceled by the Warrant Agent
and shall not be reissued by the Company and, except as provided in this Article
VIII in case of an exchange, Article III hereof in case of the exercise of less
than all the Warrants represented thereby or Article VI in case of a mutilated
Warrant Certificate, no Warrant Certificate shall be issued hereunder in lieu
thereof. The Warrant Agent shall deliver to the Company from time to time or
otherwise dispose of such canceled Warrant Certificates as the Company may
direct in writing, provided, however, that the Warrant Agent shall not be
required to destroy such canceled Warrant Certificates.
32
ARTICLE IX
WARRANT HOLDERS
Section 9.1. Warrant Holder Deemed Not a Stockholder. The Company and
----------- ---------------------------------------
the Warrant Agent may deem and treat the registered Holder(s) of the Warrant
Certificates as the absolute owner(s) thereof (notwithstanding any notation of
ownership or other writing thereon made by anyone), for the purpose of any
exercise thereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Accordingly, the
Company and/or the Warrant Agent shall not, except as ordered by a court of
competent jurisdiction as required by law, be bound to recognize any equitable
or other claim to or interest in the Warrants on the part of any Person other
than such registered Holder, whether or not it shall have express or other
notice thereof. Prior to the valid exercise of the Warrants, no Holder of a
Warrant Certificate, as such, shall be entitled to any rights of a stockholder
of the Company, including, without limitation, the right to vote or to consent
to any action of the stockholders, to receive dividends or other distributions,
to exercise any preemptive right or to receive any notice of meetings of
stockholders and, except as otherwise provided in this Agreement, shall not be
entitled to receive any notice of any proceedings of the Company.
Section 9.2. Right of Action. All rights of action with respect to
----------- ---------------
this Agreement are vested in the Holders of the Warrants, and any Holder of any
Warrant, without the consent of the Warrant Agent or the Holders of any other
Warrant, may, on such Holder's own behalf and for such Holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company suitable to enforce, or otherwise in respect of, such Holder's right
to exercise such Warrants in the manner provided in the Warrant Certificate
representing such Warrants and in this Agreement.
ARTICLE X
REMEDIES
Section 10.1. Defaults. It shall be deemed to be a "Default" with
------------ -------- -------
respect to the Company's (or its successor's) obligations under this Agreement
if:
(a) a Repurchase Event occurs and the Company (or its successor) shall
fail to make a Repurchase Offer pursuant to Section 3.4 hereof; or
(b) the Company (or its successor) shall fail to purchase the Warrants
pursuant to the Repurchase Offer in accordance with the provisions of
Section 3.4 hereof.
33
Section 10.2. Payment Obligations. Upon the happening of a Default
------------ -------------------
under this Agreement, the Company shall be obligated to increase the amount
otherwise payable pursuant to Section 3.4(d) hereof in respect of the Repurchase
Offer to which such Default relates by an amount equal to interest thereon at a
rate per annum equal to 14% from the date of the Default to the date of payment,
which interest shall compound quarterly (all such payment obligations in respect
of such Repurchase Offer, together with all such increased amounts, being the
"Repurchase Obligation").
---------------------
Section 10.3. Remedies; No Waiver. Notwithstanding any other provision
------------ -------------------
of this Warrant Agreement, if a Default occurs and is continuing, the Holders of
the Warrants may pursue any available remedy to collect the Repurchase
Obligation or to enforce the performance of any provision of this Warrant
Agreement. A delay or omission by any Holder of a Warrant in exercising, or a
failure to exercise, any right or remedy arising out of a Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Default. All remedies are cumulative to the extent permitted by law.
ARTICLE XI
THE WARRANT AGENT
Section 11.1. Duties and Liabilities. The Company hereby appoints the
------------ ----------------------
Warrant Agent to act as agent of the Company as set forth in this Agreement. The
Warrant Agent hereby accepts the agency established by this Agreement and agrees
to perform the same upon the terms and conditions herein set forth, by all of
which the Company and the Holders of Warrants, by their acceptance thereof,
shall be bound. The Warrant Agent shall not, by countersigning Warrant
Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or authorization of the Warrants or the
Warrant Certificates (except as to its countersignature thereon) or of any
Common Shares issued upon exercise of any Warrant, or as to the accuracy of the
computation of the Exercise Price or the number or kind or amount of Common
Shares deliverable upon exercise of any Warrant or the correctness of the
representations of the Company made in the certificates that the Warrant Agent
receives. The Warrant Agent shall not be accountable for the use or application
by the Company of the proceeds of the exercise of any Warrant. The Warrant Agent
shall not have any duty to calculate or determine any adjustments with respect
to either the Exercise Price or the kind and amount of Common Shares receivable
by Holders upon the exercise of Warrants required from time to time and the
Warrant Agent shall have no duty or responsibility in determining the accuracy
or correctness of such calculation. The Warrant Agent shall not be (a) liable
for any recital or statement of fact contained herein or in the Warrant
Certificates or for any action taken, suffered or omitted by it in good faith
without gross negligence or willful misconduct in the belief that any Warrant
Certificate or any other documents or any signatures
34
are genuine or properly authorized, (b) responsible for any failure on the part
of the Company to comply with any of its covenants and obligations contained in
this Agreement or in the Warrant Certificates or (c) liable for any act or
omission in connection with this Agreement except for its own gross negligence,
bad faith or willful misconduct. The Warrant Agent is hereby authorized to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, Chief Executive Officer, any Vice President or other
executive officer of the Company and to apply to any such officer for
instructions (which instructions will be promptly given in writing when
requested) and the Warrant Agent shall not be liable for any action taken or
suffered to be taken by it in good faith without gross negligence in accordance
with the instructions of any such officer; provided, however, that, in its
discretion, the Warrant Agent may, in lieu thereof, accept other evidence of
such or may require such further or additional evidence as it may deem
reasonable. The Warrant Agent shall not be liable for any action taken with
respect to any matter in the event it requests instructions from the Company as
to that matter and does not receive such instructions within a reasonable period
of time after the request therefor.
The Warrant Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees; provided that reasonable care has been
exercised with respect to the retention of any such attorney, agent or employee.
The Warrant Agent shall not be under any obligation or duty to institute, appear
in or defend any action, suit or legal proceeding in respect hereof, unless
first indemnified to its reasonable satisfaction. The Warrant Agent shall
promptly notify the Company in writing of any claim made or action, suit or
proceeding instituted against it arising out of or in connection with this
Agreement.
The Company will perform, execute, acknowledge and deliver or cause to
be delivered all such further acts, instruments and assurances as are consistent
with this Agreement and as may reasonably be required by the Warrant Agent in
order to enable it to carry out or perform its duties under this Agreement.
The Warrant Agent shall act solely as agent of the Company hereunder.
The Warrant Agent shall not be liable except for the failure to perform such
duties as are specifically set forth herein, and no implied covenants or
obligations shall be read into this Agreement against the Warrant Agent, whose
duties and obligations shall be determined solely by the express provisions
hereof.
Section 11.2. Right to Consult Counsel. The Warrant Agent may any time
------------ -----------------------
consult with legal counsel of its selection (who may be legal counsel for the
Company), and the opinion or advice of such counsel shall be full and complete
authorization and protection to
35
the Warrant Agent and the Warrant Agent shall incur no liability or
responsibility to the Company or to any Holder for any action taken, suffered or
omitted by it in good faith without gross negligence in accordance with the
written opinion or advice of such counsel.
Section 11.3. Compensation; Indemnification. The Company agrees
------------ -----------------------------
promptly to pay the Warrant Agent from time to time and in any case within 30
days of receipt of an invoice, compensation for its services hereunder as the
Company and the Warrant Agent may agree from time to time, and to reimburse it
upon its request upon furnishing reasonable supporting documentation for
reasonable fees or expenses and reasonable counsel fees and expenses incurred in
connection with the execution and administration of this Agreement, and further
agrees to indemnify the Warrant Agent and save it harmless against any losses,
liabilities or reasonable expenses arising out of or in connection with the
acceptance and administration of this Agreement, including, without limitation,
the reasonable costs and expenses of investigating or defending any claim
(whether made by the Company or any other Person) of such liability, except that
the Company shall have no liability hereunder to the extent that any such loss,
liability or expense results from the Warrant Agent's own gross negligence, bad
faith or willful misconduct. The obligations of the Company under this Section
11.3 shall survive the exercise and the expiration of the Warrants, the
termination of this Agreement and the resignation or removal of the Warrant
Agent in respect of services or expenses incurred in connection with the
Warrants or this Agreement.
Section 11.4. No Restrictions on Actions. Nothing in this Agreement
------------ --------------------------
shall be deemed to prevent the Warrant Agent and any stockholder, director,
officer or employee of the Warrant Agent from buying, selling or dealing in any
of the Warrants or other securities of the Company or becoming pecuniarily
interested in transactions in which the Company may be interested, or
contracting with or lending money to the Company or otherwise acting as fully
and freely as though it were not the Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
Section 11.5. Discharge or Removal; Replacement Warrant Agent. The
------------ -----------------------------------------------
Warrant Agent may resign from its position as such and be discharged from all
further duties and liabilities hereunder (except liability arising as a result
of the Warrant Agent's own gross negligence, bad faith or willful misconduct),
after giving one month's prior written notice to the Company. The Company may
at any time remove the Warrant Agent upon one month's written notice specifying
the date when such discharge shall take effect, and the Warrant Agent shall
thereupon in like manner be discharged from all further duties and liabilities
hereunder, except as aforesaid. The Warrant Agent shall mail to each Holder of
a Warrant, at the Company's expense, a copy of said notice of resignation or
notice of removal, as the case may be. Upon such resignation or removal the
Company shall appoint in writing a new warrant agent. If the Company shall fail
to make such appointment within a period of 30 days after it
36
has been notified in writing of such resignation by the resigning Warrant Agent
or after such removal, then the resigning or removed Warrant Agent or the Holder
of any Warrant may apply, at the expense of the Company, to any court of
competent jurisdiction for the appointment of a new warrant agent. After 30 days
from receipt of, or giving, notice, as the case may be, and pending appointment
of a successor to the original Warrant Agent, either by the Company or by such a
court, the duties of the Warrant Agent shall be carried out by the Company. Any
new warrant agent, whether appointed by the Company or by such a court, shall be
a bank or trust company doing business under the laws of the United States or
any state thereof, in good standing and having a combined capital and surplus of
not less than $25,000,000. The combined capital and surplus of any such new
warrant agent shall be deemed to be the combined capital and surplus as set
forth in the most recent annual report of its condition published by such
warrant agent prior to its appointment, provided that such reports are published
at least annually pursuant to law or to the requirements of a federal or state
supervising or examining authority. After acceptance in writing of such
appointment by the new warrant agent, it shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
the Warrant Agent, without any further assurance, conveyance, act or deed;
however, the original Warrant Agent shall in all events deliver and transfer to
the successor Warrant Agent all property (including, without limitation,
documents and recorded information), if any, at the time held hereunder by the
original Warrant Agent and if for any reason it shall be necessary or expedient
to execute and deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Company and shall be legally and validly
executed and delivered by the resigning or removed Warrant Agent. Not later than
the effective date of any such appointment, the Company shall file notice
thereof with the resigning or removed Warrant Agent and shall forthwith cause a
copy of such notice to be mailed by the successor Warrant Agent to each Holder
of a Warrant. Failure to give any notice provided for in this Section 11.5,
however, or any defect therein, shall not affect the legality or validity of the
resignation of the Warrant Agent or the appointment of a new warrant agent, as
the case may be.
Section 11.6. Successor Warrant Agent. Any corporation into which the
------------ -----------------------
Warrant Agent or any new warrant agent may be merged or converted, or any
corporation resulting from any consolidation to which the Warrant Agent or any
new warrant agent shall be a party or any corporation succeeding to all or
substantially all the corporate agency business of the Warrant Agent, shall be a
successor Warrant Agent under this Agreement without any further act, provided
that such corporation would be eligible for appointment as successor to the
Warrant Agent under the provisions of Section 11.5 hereof. Any such successor
Warrant Agent shall promptly cause notice of its succession as Warrant Agent to
be mailed to each Holder of a Warrant.
37
ARTICLE XII
MISCELLANEOUS
Section 12.1. Monies Deposited with the Warrant Agent. The Warrant
------------ ---------------------------------------
Agent shall not be required to pay interest on any monies deposited pursuant to
the provisions of this Agreement except such as it shall agree in writing with
the Company to pay thereon. Any monies, securities or other property which at
any time shall be deposited by the Company or on its behalf with the Warrant
Agent pursuant to this Agreement shall be and are hereby assigned, transferred
and set over to the Warrant Agent in trust for the purpose for which such
monies, securities or other property shall have been deposited; but such monies,
securities or other property need not be segregated from other funds, securities
or other property except to the extent required by law. The Warrant Agent shall
distribute any money deposited with it for payment and distribution to the
Holders by mailing by first class mail a check in such amount as is required by
this Agreement to each such Holder at the address shown on the Warrant register
of the Company, or as it may be otherwise directed in writing by such Holder, in
accordance with the terms and conditions hereof. Any monies, securities or
other property deposited with the Warrant Agent for payment or distribution to
the Holders that remains unclaimed for two years after the date the monies,
securities or other property was deposited with the Warrant Agent shall be
delivered to the Company upon its request therefor.
Section 12.2. Payment of Taxes. All Common Shares issuable upon the
------------ ----------------
exercise of Warrants shall be validly issued, fully paid and not subject to any
calls for funds, and the Company shall pay any taxes and other governmental
charges that may be imposed under the laws of the United States of America or
any political subdivision or taxing authority thereof or therein in respect of
the issue or delivery thereof upon exercise of Warrants (other than income taxes
imposed on the Holders). The Company shall not be required, however, to pay any
tax or other charge imposed in connection with any transfer involved in the
issue of any certificate for Common Shares (including other securities or
property issuable upon the exercise of the Warrants) or payment of cash to any
Person other than the Holder of a Warrant Certificate surrendered upon the
exercise of a Warrant and in case of such transfer or payment, the Warrant Agent
and the Company shall not be required to issue any share certificate or pay any
cash until such tax or charge has been paid or it has been established to the
Warrant Agent's and the Company's satisfaction that no such tax or charge is
due.
Section 12.3. No Merger, Consolidation or Sale of Assets of the
------------ -------------------------------------------------
Company. Except as otherwise provided herein, the Company will not merge into or
-------
consolidate with any other Person, or sell or otherwise transfer its property,
assets and business substantially as an entirety to a successor of the Company,
unless the Person resulting from such merger or consolidation, or such successor
of the Company, shall expressly assume, by supplemental agreement satisfactory
in form to the Warrant Agent and executed and delivered to the
38
Warrant Agent, the due and punctual performance and observance of each and every
covenant and condition of this Agreement or contained in the Warrants to be
performed and observed by the Company.
Section 12.4. Reports to Holders. At all times from and after the
------------ ------------------
earlier of (i) a consummation of a registered exchange offer or the
effectiveness of a shelf registration statement with respect to the Notes and
(ii) January 29, 1999 (such earlier date, the "Exchange Act Reporting Date"),
whether or not the Company is then required to file reports with the Commission,
the Company shall deliver for filing to the Commission all such reports and
other information it would be required to file with the Commission by Section
13(a) or 15(d) under the Exchange Act if it were subject thereto. The Company
shall supply the Warrant Agent and each Holder or shall supply to the Warrant
Agent for forwarding to each such Holder, without cost to such Holder, copies of
such reports and other information. At all times prior to the Exchange Act
Reporting Date, the Company shall supply the Warrant Agent and each Holder or
shall supply the Warrant Agent for forwarding to each such Holder, without cost
to such Holder, quarterly and annual reports substantially equivalent to those
which would be required by the Exchange Act. In addition, at all times prior to
the Exchange Act Reporting Date, upon the request of any Holder or any
prospective purchaser of the Warrants designated by a Holder, the Company shall
supply to such Holder or such prospective purchaser the information required
under Rule 144A.
Section 12.5. Notices; Payment. (a) Except as otherwise provided in
------------ ----------------
Section 12.5(b) hereof, any notice, demand or delivery authorized by this
Agreement shall be sufficiently given or made when mailed, if sent by first
class mail, postage prepaid, addressed to any Holder of a Warrant at such
Holder's last known address appearing on the register of the Company maintained
by the Warrant Agent and to the Company or the Warrant Agent as follows:
To the Company:
TVN Entertainment Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President of Finance
39
To the Warrant Agent:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
or such other address as shall have been furnished to the party giving or making
such notice, demand or delivery. Any notice that is mailed in the manner herein
provided shall be conclusively presumed to have been duly given when mailed,
whether or not the Holder receives the notice.
(b) Payment of the Exercise Price shall be made in accordance with the
provisions of this Agreement at the office of the Warrant Agent set forth above,
unless otherwise directed by the Warrant Agent and the Company.
(c) Any notice required to be given by the Company to the Holders
shall be made by mailing, to the Holders at their last known addresses appearing
on the register maintained by the Warrant Agent. The Company hereby irrevocably
authorizes the Warrant Agent, in the name and at the expense of the Company, to
mail any such notice upon receipt thereof from the Company. Any notice that is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given when mailed, whether or not the Holder receives the notice.
Section 12.6. Binding Effect. This Agreement shall be binding upon and
------------ --------------
inure to the benefit of the Company and the Warrant Agent and their respective
successors and assigns, and the Holders from time to time of the Warrants.
Nothing in this Agreement is intended or shall be construed to confer upon any
Person, other than the Company, the Warrant Agent and the Holders of the
Warrants, any right, remedy or claim under or by reason of this Agreement or any
part hereof.
Section 12.7. Counterparts. This Agreement may be executed manually
------------ ------------
or by facsimile in any number of counterparts, each of which shall be deemed an
original, but all of which together constitute one and the same instrument.
Section 12.8. Amendments. The Warrant Agent may, without the consent
------------ ----------
or concurrence of the Holders of the Warrants, by supplemental agreement or
otherwise, join with the Company in making any changes or corrections in this
Agreement that (a) are required to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or manifest
error herein contained or (b) add to the covenants and agreements of the Company
in this Agreement further covenants and agreements of the
40
Company thereafter to be observed, or surrender any rights or power reserved to
or conferred upon the Company in this Agreement; provided that in either case
such changes or corrections do not and will not adversely affect, alter or
change the rights, privileges or immunities of the Holders of Warrants or the
Warrant Agent. Upon the Warrant Agent's request, the Company shall promptly
provide an Officer's Certificate and Opinion of Counsel which provide all
conditions precedent to adoption of an amendment that have been satisfied.
Section 12.9. Headings. The descriptive headings of the several
------------ --------
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 12.10. Common Shares Legend. Unless and until the Common
------------- --------------------
Shares issuable upon the exercise of the Warrants are registered under the
Securities Act, or unless otherwise agreed by the Company and the Holder
thereof, such Common Shares will bear a legend substantially to the following
effect:
THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE COMMON SHARES REPRESENTED BY
THIS CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT WILL
NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k), TAKING
INTO ACCOUNT THE PROVISIONS OF RULE 144(d), IF APPLICABLE, UNDER
THE SECURITIES ACT AS IN EFFECT WITH RESPECT TO SUCH TRANSFER,
RESELL OR OTHERWISE TRANSFER THE COMMON SHARES REPRESENTED BY
THIS CERTIFICATE EXCEPT (A) TO TVN ENTERTAINMENT CORPORATION (THE
"COMPANY") OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED
41
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO
SUCH TRANSFER, FURNISHES TO THE TRANSFER AGENT AND REGISTRAR A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON SHARES
REPRESENTED BY THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRANSFER AGENT AND REGISTRAR) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE COMMON SHARES REPRESENTED BY THIS CERTIFICATE
ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE COMMON SHARES
REPRESENTED BY THIS CERTIFICATE WITHIN THE TIME PERIOD REFERRED
TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE TRANSFER AGENT AND REGISTRAR. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR,
THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO EACH OF THE
TRANSFER AGENT AND REGISTRAR AND THE COMPANY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRANSFER AGENT AND REGISTRAR TO REFUSE TO
REGISTER ANY TRANSFER OF THE SHARES OF COMMON STOCK REPRESENTED
BY THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
42
Section 12.11. Third Party Beneficiaries. The Holders shall be third
------------- -------------------------
party beneficiaries to the agreements made hereunder between the Company, on the
one hand, and the Warrant Agent, on the other hand, and each Holder shall have
the right to enforce such agreements directly to the extent it deems such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder. By acquiring Warrants, each Holder agrees to be bound by the
obligations of Holders generally as set forth herein and as such obligations may
be applicable to such Holder.
Section 12.12. Termination. Except as otherwise specified herein,
------------- -----------
this Agreement shall terminate at 5:00 p.m. (New York City time) on the tenth
anniversary of the Closing Date. Notwithstanding the foregoing, this Agreement
shall terminate on any earlier date as of which all Warrants have been
exercised.
Section 12.13. Governing Law. This Agreement shall be governed by
-------------- -------------
the laws of the State of New York. The Warrant Agent, the Company and the
Holders agree to submit to the jurisdiction of the courts of the State of New
York in any action or proceeding arising out of or relating to this Agreement or
the Warrants.
Section 12.14. Registration Rights. Each Warrant will be entitled to
------------- -------------------
the benefits, and subject to the terms and conditions, of the Warrant
Registration Rights Agreement, and each Holder shall be deemed to be a "Holder"
as defined in the Warrant Registration Rights Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
TVN ENTERTAINMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Executive Vice President
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
WARRANT AGREEMENT
EXHIBIT A
FORM OF WARRANT CERTIFICATE
TVN ENTERTAINMENT CORPORATION
[CUSIP] [CINS] [ISIN] No. _____
No. _____
WARRANTS TO PURCHASE COMMON SHARES
This certifies that ______________, or its registered assigns, is the
owner of ___________ Warrants, each of which represents the right to purchase,
after January 29, 1999, from TVN ENTERTAINMENT CORPORATION, a Delaware
corporation (the "Company"), 10.777 shares of the Common Stock, par value $.001
-------
per share, of the Company (the "Common Shares") at an exercise price (the
-------------
"Exercise Price") of $0.01 per Common Share (subject to adjustment as provided
--------------
in the Warrant Agreement hereinafter referred to below), upon surrender hereof
at the office of The Bank of New York, or to its successor, as the warrant agent
under the Warrant Agreement (any such warrant agent being herein called the
"Warrant Agent"), or such other location contemplated by Section 12.5(b) of the
-------------
Warrant Agreement, with the Subscription Form on the reverse hereof duly
executed, with signature guaranteed as therein specified and simultaneous
payment in full in cash or by certified or official bank or bank cashier's check
payable to the order of the Company. Notwithstanding the foregoing, the
Exercise Price may be paid by surrendering additional Warrants to the Warrant
Agent having an aggregate Spread equal to the aggregate Exercise Price of the
Warrants being exercised. At any time after one year after the Closing Date and
on or before the Expiration Date, any outstanding Warrants may be exercised on
any Business Day; provided that the Warrant Registration Statement is, at the
time of exercise, effective and available for the exercise of Warrants or the
exercise of such Warrants is exempt from the registration requirements of the
Securities Act.
This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of July 29, 1998 (the "Warrant Agreement"), between
-----------------
the Company and The Bank of New York, as Warrant Agent, and a Warrant
Registration Rights Agreement dated as of July 29, 1998 (the "Warrant
-------
Registration Rights Agreement"), between the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
-----------------------------
Incorporated, and is subject to the Certificate of Incorporation and Bylaws of
the Company and to the terms and provisions contained therein, to all of which
terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The terms of the Warrant Agreement and the Warrant
Registration Rights Agreement are hereby incorporated herein by reference and
made a part hereof. Reference is hereby made to the Warrant Agreement and the
Warrant Registration Rights Agreement for a full description of the rights,
limitations of rights, obligations, duties and immunities
A-2
thereunder of the Company and the Holders of the Warrants. The summary of the
terms of the Warrant Agreement and the Warrant Registration Rights Agreement
contained in this Warrant Certificate is qualified in its entirety by express
reference to the Warrant Agreement and the Warrant Registration Rights
Agreement. All terms used in this Warrant Certificate that are defined in the
Warrant Agreement and the Warrant Registration Rights Agreement shall have the
meanings assigned to them in such agreements.
Copies of the Warrant Agreement and the Warrant Registration Rights
Agreement are on file at the office of the Warrant Agent and may be obtained by
writing to the Warrant Agent at the following address:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
A "Repurchase Event", as defined in the Warrant Agreement, shall be
----------------
deemed to occur on any date when the Company (i) consolidates with or merges
into or with another Person (but only where the holders of Common Stock receive
consideration in exchange for all or part of such Common Stock), if the Common
Stock (or other securities) thereafter issuable upon exercise of the Warrants is
not registered under the Exchange Act or (ii) sells all or substantially all of
its assets to another Person, if the Common Stock (or other securities)
thereafter issuable upon exercise of the Warrants is not registered under the
Exchange Act; provided that in each case a "Repurchase Event" shall not be
deemed to have occurred if the consideration for such transaction consists
solely of cash.
Following a Repurchase Event, the Company must make an offer to
repurchase for cash all outstanding Warrants (a "Repurchase Offer"). If the
----------------
Company makes a Repurchase Offer, Holders may, until the expiration date of such
offer, surrender all or part of their Warrants for repurchase by the Company.
Warrants received by the Warrant Agent in proper form during a
Repurchase Offer will, except as otherwise provided in the Warrant Agreement, be
repurchased by the Company at a price in cash (the "Repurchase Price") equal to
----------------
the value on the Valuation Date relating thereto of the Common Shares issuable,
and other securities or property of the Company which would have been delivered,
upon exercise of the Warrants had the Warrants been exercised (whether or not
the Warrants are then exercisable), less the Exercise Price in effect on the
Notice Date for such Repurchase Offer. The value of such Common Shares and
other securities will be, to the extent not otherwise provided in the Warrant
Agreement, (i) if the Common Shares (or other securities) are registered under
the Exchange Act, determined based upon the average of the daily market prices
(as determined pursuant to Section
A-3
3.4(d)(ii)(1) of the Warrant Agreement) of the Common Shares (or other
securities) for the 20 consecutive trading days immediately preceding such
Valuation Date or (ii) if the Common Shares (or other securities) are not
registered under the Exchange Act or if the value cannot be computed under
clause (i) above, determined by the Independent Financial Expert (as defined in
the Warrant Agreement), in each case as set forth in the Warrant Agreement.
The "Valuation Date" as defined in the Warrant Agreement shall be
--------------
deemed to occur on the date five Business Days prior to the date notice of the
Repurchase Offer is first given.
If the Company fails to make or complete a Repurchase Offer (a
"Default") as required by the Warrant Agreement, it shall be obligated to
--------
increase the amount otherwise payable pursuant to the Warrant Agreement in
respect of the Repurchase Offer by an amount equal to interest thereon at a rate
per annum of [ ]% from the date of the Default to the date of payment, which
interest shall compound quarterly.
If the Company merges or consolidates with or into, or sells all or
substantially all of its property and assets to, another Person and the
consideration received by holders of Common Shares consists solely of cash, the
Holders of Warrants shall be entitled to receive distributions on the date of
such event on an equal basis with holders of Common Shares (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). Upon receipt of such
payment, if any, the rights of a Holder shall terminate and cease and such
Holder's Warrants shall expire.
The number of Common Shares purchasable upon the exercise of each
Warrant and the price per share are subject to adjustment as provided in the
Warrant Agreement. Except as stated in the immediately preceding paragraph and
in the Warrant Agreement, in the event the Company merges or consolidates with,
or sells all or substantially all of its assets to, another Person, each Warrant
will, upon exercise, entitle the Holder thereof to receive the number of shares
of capital stock or other securities or the amount of money and other property
which the holder of a Common Share (or other securities or property issuable
upon exercise of a Warrant) is entitled to receive upon completion of such
merger, consolidation or sale.
As to any final fraction of a share which the same Holder of one or
more Warrant Certificates would otherwise be entitled to purchase upon exercise
thereof in the same transaction, the Company may pay the cash value thereof
determined as provided in the Warrant Agreement.
All Common Shares issuable by the Company upon the exercise of
Warrants shall be validly issued, fully paid and not subject to any calls for
funds, and the Company shall
A-4
pay any taxes and other governmental charges that may be imposed under the laws
of the United States of America or any political subdivision or taxing authority
thereof or therein in respect of the issue or delivery thereof upon exercise of
Warrants (other than income taxes imposed on the Holders). The Company shall not
be required, however, to pay any tax or other charge imposed in connection with
any transfer involved in the issue of any certificate for Common Shares
(including other securities or property issuable upon the exercise of the
Warrants) or payment of cash to any Person other than the Holder of a Warrant
Certificate surrendered upon the exercise of a Warrant and in case of such
transfer or payment, the Warrant Agent and the Company shall not be required to
issue any share certificate or pay any cash until such tax or charge has been
paid or it has been established to the Warrant Agent's and the Company's
satisfaction that no such tax or charge is due.
Subject to the restrictions on and conditions to transfer set forth in
Articles II and VIII of the Warrant Agreement, this Warrant Certificate and all
rights hereunder are transferable by the registered Holder hereof, in whole or
in part, on the register of the Company maintained by the Warrant Agent for such
purpose at the Warrant Agent's office in New York, New York, upon surrender of
this Warrant Certificate duly endorsed, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Warrant Agent duly
executed, with signatures guaranteed as specified in the attached Form of
Assignment, by the registered Holder hereof or his attorney duly authorized in
writing and by such other documentation required pursuant to the Warrant
Agreement and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. Upon any partial transfer, the Company will
sign and issue and the Warrant Agent will countersign and deliver to such Holder
a new Warrant Certificate or Certificates with respect to any portion not so
transferred. Each taker and Holder of this Warrant Certificate, by taking and
holding the same, consents and agrees that prior to the registration of transfer
as provided in the Warrant Agreement, the Company and the Warrant Agent may
treat the Person in whose name the Warrants are registered as the absolute owner
hereof for any purpose and as the Person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding. Accordingly,
the Company and/or the Warrant Agent shall not, except as ordered by a court of
competent jurisdiction as required by law, be bound to recognize any equitable
or other claim to or interest in the Warrants on the part of any Person other
than such Registered Holder, whether or not it shall have express or other
notice thereof.
This Warrant Certificate may be exchanged at the office of the Warrant
Agent maintained for such purpose in New York, New York, for Warrant
Certificates representing the same aggregate number of Warrants, each new
Warrant Certificate to represent such number of Warrants as the Holder hereof
shall designate at the time of such exchange.
Prior to the exercise of the Warrants represented hereby, the Holder
of this Warrant Certificate, as such, shall not be entitled to any rights of a
stockholder of the
A-5
Company, including, without limitation, the right to vote or to consent to any
action of the stockholders, to receive any distributions, to exercise any pre-
emptive right or to receive any notice of meetings of stockholders, and shall
not be entitled to receive any notice of any proceedings of the Company except
as provided in the Warrant Agreement.
This Warrant Certificate shall be void and all rights evidenced hereby
shall cease on August 1, 2008, unless sooner terminated by the liquidation,
dissolution or winding-up of the Company or as otherwise provided in the Warrant
Agreement upon the consolidation or merger of the Company with, or sale of the
Company to, another Person or unless such date is extended as provided in the
Warrant Agreement.
This Warrant Certificate shall not be valid for any purpose until it
shall have been countersigned by the Warrant Agent.
TVN ENTERTAINMENT CORPORATION
By: _________________________
Name:
Title:
Dated:
Countersigned:
THE BANK OF NEW YORK,
as Warrant Agent
By: ___________________________
Authorized Signatory
A-6
FORM OF REVERSE OF WARRANT CERTIFICATE
SUBSCRIPTION FORM
(To be executed only upon exercise of Warrant)
To: The Bank of New York,
as Warrant Agent
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
The undersigned irrevocably exercises ________ of the Warrants
represented by this Warrant Certificate and herewith makes payment of $ _______
(such payment being in cash or by certified or official bank or bank cashier's
check payable to the order or at the direction of TVN Entertainment Corporation
or, the exercise price may be paid by surrendering additional Warrants to the
Warrant Agent having an aggregate Spread equal to the aggregate exercise price
of the Warrants being exercised) all at the exercise price and on the terms and
conditions specified in this Warrant Certificate and in the Warrant Agreement
and the Warrant Registration Rights Agreement referred to herein and surrenders
this Warrant Certificate and all right, title and interest therein to and
directs that the Common Stock, par value $0.001 per share, of TVN Entertainment
Corporation (the "Common Shares") deliverable upon the exercise of such Warrants
-------------
be registered or placed in the name and at the address specified below and
delivered thereto.
A-7
Dated: _______________________________________________________
(Signature of Owner)
_______________________________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
_______________________________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
_______________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Warrant
Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Warrant Agent in
addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
Securities and/or check or other property to be issued or delivered to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A-8
FORM OF CERTIFICATE FOR REPURCHASE OFFER
(To be executed only upon repurchase
of Warrant by TVN Entertainment Corporation)
To:
The undersigned, having received prior notice of the consideration for
which TVN ENTERTAINMENT CORPORATION will repurchase the Warrants represented by
the within Warrant Certificate, hereby surrenders this Warrant Certificate for
repurchase by TVN ENTERTAINMENT CORPORATION of the number of Warrants specified
below for the consideration set forth in such notice.
Dated:
___________________________________
(Number of Warrants)
___________________________________
(Signature of Owner)
___________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
___________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
_______________________________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Warrant
Agent, which requirements include membership or
participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Warrant Agent in
addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
A-9
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A-10
FORM OF ASSIGNMENT
In consideration of monies or other valuable consideration received
from the Assignee(s) named below, the undersigned registered Holder of this
Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants constituting
a part of the Warrants evidenced by this Warrant Certificate not being assigned
hereby) all of the right of the undersigned under this Warrant Certificate, with
respect to the number of Warrants set forth below:
Name(s) of Assignee(s): ______________________________________
Address: _____________________________________________________
No. of Warrants: _____________________________________________
Please insert social security or other identifying number of assignee(s):
and does hereby irrevocably constitute and appoint ________________________ the
undersigned's attorney to make such transfer on the books of __________________
maintained for the purposes, with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES]
In connection with any transfer of Warrants, the undersigned confirms that
without utilizing any general solicitation or general advertising that:
[Check One]
[_] (a) these Warrants are being transferred in compliance with the exemption
from registration under the U.S. Securities Act of 1933, as amended,
provided by Rule 144A thereunder.
or
[_] (b) these Warrants are being transferred other than in accordance with (a)
above and documents are being furnished which comply with the conditions of
transfer set forth in this Warrant Certificate and the Warrant Agreement.
or
[_] (c) these Warrants are being transferred pursuant to an effective
registration statement under the U.S. Securities Act of 1933, as amended.
A-11
If none of the foregoing boxes is checked, the Warrant Agent shall not be
obligated to register the Warrants in the name of any Person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Article VIII of the Warrant Agreement shall
have been satisfied.
Dated:
___________________________________
(Signature of Owner)
___________________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
___________________________________
(City) (State) (Zip Code)
Signature Guaranteed By:
__________________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Warrant Agent, which requirements include
membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be
determined by the Warrant Agent in addition to, or
in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing the Warrant(s) for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the U.S. Securities Act of 1933, as
amended, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding TVN
Entertainment Corporation as the undersigned has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's
A-12
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Dated:________________
_______________________________________________
[NOTE: To be executed by an executive officer]
EXHIBIT B
Form of Certificate to be Delivered
in Connection with
Transfers Pursuant to Regulation S
----------------------------------
[Date]
TVN Entertainment Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
Re: Warrants (the "Warrants") to Purchase
--------
Common Shares of TVN Entertainment Corporation (the "Company")
-------
Ladies and Gentlemen:
In connection with our proposed sale of _______________ Warrants, we
hereby certify that such sale has been effected pursuant to and in accordance
with Regulation S under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, we represent that:
---------------
(1) the offer of the Warrants was not made to a Person in the United
States and not to a U.S. Person (as defined in Regulation S under the
Securities Act);
(2) at the time the buy order was originated, the transferee was outside
the United States or we and any Person acting on our behalf reasonably
believed that the transferee was outside the United States;
(3) no directed selling efforts (as such term is defined in Rule 902(b)
of Regulation S under the Securities Act) have been made by us, any of
our affiliates or any Persons acting on our behalf in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, as applicable; and
B-2
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
Each of you is entitled to rely upon this letter and is irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby. Terms used in this certificate have the meanings set
forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: _________________________
Authorized Signature
EXHIBIT C-1
Form of Certificate to be
Delivered by Transferor in Connection with
Transfers to Institutional Accredited Investors
-----------------------------------------------
[Date]
TVN Entertainment Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Trustee Administration
Re: Warrants (the "Warrants") to Purchase
--------
Common Shares of TVN Entertainment Corporation (the "Company")
-------
Ladies and Gentlemen:
We hereby certify that such transfer is being effected in compliance
with the transfer restrictions applicable to the Warrants or interests therein
transferred pursuant to and in accordance with the U.S. Securities Act of 1933,
as amended (the "Securities Act"), and accordingly we hereby further certify
--------------
that (check one):
(a) [_] such transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) [_] such transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [_] such transfer is being effected pursuant to an effective
registration statement under the Securities Act;
or
C1-2
(d) [_] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A, Rule 144
or Rule 904 thereunder, and we hereby further certify that such transfer
complies with the transfer restrictions applicable to the Warrants or interests
therein transferred to Institutional Accredited Investors and in accordance with
the requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel provided by us or the transferee (a copy of which we have
attached to this certification), to the effect that such transfer is in
compliance with the Securities Act. Upon consummation of the proposed transfer
in accordance with the terms of the Warrant Agreement, the transferred Warrants
or interests therein will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Certificated Warrant and in the
Warrant Agreement and the Securities Act.
Very truly yours,
[Name of Transferor]
By: _______________________________
Authorized Signature
EXHIBIT C-2
Form of Certificate to be
Delivered By Transferees in Connection with
Transfers to Institutional Accredited Investors
-----------------------------------------------
[Date]
TVN Entertainment Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., ▇/▇▇/ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Warrants (the "Warrants") to Purchase
--------
Common Shares of TVN Entertainment Corporation (the "Company")
-------
Dear Sirs:
In connection with our proposed purchase of ___________ aggregate
number of Warrants, we confirm that:
1. We understand that any subsequent transfer of the Warrants, any
interest therein or the Common Shares issuable upon exercise of any Warrant
(the "Warrant Shares") is subject to certain restrictions and conditions set
--------------
forth in the Warrant Agreement dated as of July 29, 1998 relating to the
Warrants (the "Warrant Agreement") and the Warrant Registration Rights
-----------------
Agreement dated as of July 29, 1998 relating to the Warrants (the "Warrant
-------
Registration Rights Agreement") and the undersigned agrees to be bound by,
-----------------------------
and not to resell, pledge or otherwise transfer the Warrants or Warrant
Shares except in compliance with, such restrictions and conditions and the
U.S. Securities Act of 1933, as amended (the "Securities Act").
--------------
2. We understand that the Warrants represented by this Warrant
Certificate and, as of the date this Warrant Certificate was originally
issued, the Warrant Shares have not been registered under the Securities
Act, and accordingly may not be offered, sold, pledged or otherwise
transferred within the United States or to, or for the account or benefit
of, U.S. Persons except as set forth in the following sentence. We agree
that
C2-2
we will not, within the time period referred to under Rule 144(k) of the
Securities Act (taking into account the provisions of Rule 144(d) under the
Securities Act, if applicable) under the Securities Act as in effect on the
date of the transfer of this Warrant, resell or otherwise transfer the
Warrants represented by this Warrant Certificate except (a) to TVN
Entertainment Corporation or any subsidiary thereof, (b) to a qualified
institutional buyer in compliance with Rule 144A under the Securities Act,
(c) outside the United States in an offshore transaction in compliance with
Rule 904 under the Securities Act, (d) pursuant to the exemption from
registration provided by Rule 144 under the Securities Act (if available),
(e) to an institutional accredited investor that, prior to such transfer,
furnishes to you, to the Company and, in the case of the Warrant Shares, to
the transfer agent and registrar therefor, a signed letter containing
certain representations and agreements relating to the restrictions on
transfer of the Warrants represented by this Warrant Certificate (the form
of which letter can be obtained from the Warrant Agent) and an opinion of
counsel acceptable to the Company and its counsel that such transfer is in
compliance with the Securities Act or (f) pursuant to an effective
registration statement under the Securities Act and, in each case, in
accordance with applicable state securities laws.
3. We understand that, on any proposed resale of any Warrants, any
interest therein or Warrant Shares, we will be required to furnish to each
of you such certifications, legal opinions and other information as either
of you may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Warrants
purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Warrants, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment for an indefinite period of
time.
5. We are acquiring the Warrants purchased by us for our own account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
C2-3
Each of you and, if applicable, the transfer agent and registrar for
the Warrant Shares are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceedings or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[Name of Transferee]
By: _________________________________
Authorized Signature
APPENDIX A
LIST OF FINANCIAL EXPERTS
-------------------------
BankAmerica ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Bear, ▇▇▇▇▇▇▇ & Co., Inc.
Broadview Associates LLP
BT Alex. ▇▇▇▇▇
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp.
▇▇▇▇▇ & Company
Credit Suisse First Boston Corporation
Deutsche ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇, Read & Co. Inc.
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇▇▇▇ ▇▇▇▇, LLP
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Lazard Freres & Co.
▇▇▇▇▇▇ Brothers
Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
NationsBank ▇▇▇▇▇▇▇▇▇▇ Securities
PaineWebber Incorporated
Prudential Securities Inc.
Salomon Brothers Inc
▇▇▇▇▇ ▇▇▇▇▇▇ Inc.